Holt-Lea v O'Connor[2022] QCAT 363

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   Mr Holt purchased a 2004 Nissan Maxima sedan from the respondent dealers, trading as Karway Auto Wholesale, on 22 March 2021 for $8,000. It had travelled 115,829 kms as at date of sale.
2. [2]
   The car started to use excessive oil and around 13 October 2021 Mr Holt took it to Tanzer’s Autocare Yeppoon for inspection. That workshop found a suspected piston ring failure linked with the excessive oil use and observable emission of smoke. At the time of inspection the vehicle had travelled 122,459 kms, meaning the vehicle had travelled 6,630 km over a period nearing 7 months from time of purchase.
3. [3]
   The workshop made comment that it appeared a replacement radiator had been fitted, there were signs of sealant and the replacement radiator was not aligned with the original seals, all of which suggested the vehicle may have previously, at some time, overheated and oil was bypassing the piston rings.
4. [4]
   Mr Holt asked the respondents to refund him the purchase price or supply him with another car, but they refused.
5. [5]
   He commenced proceedings in the Tribunal claiming return of the purchase price.
6. [6]
   The applicant did not appear at hearing, but rather his mother did on his behalf. She was granted leave to represent her son. The O'Connors did not object.
7. [7]
   Mrs Holt said that as at date of hearing the vehicle was still running, still being driven, but was blowing smoke. She suggested the vehicle had a blown head gasket. It was using a lot of oil. She said she was told by Tanzer’s Autocare Yeppoon that the motor had been “cooked”. Mrs Holt said she did not know what the odometer showed as at date of hearing. She said the car could blow up at any time.
8. [8]
   Mrs Holt relied on a short report to be found in an invoice from Tanzer’s Autocare Yeppoon after that workshop had worked on the car on 13 October 2021. The report said:

Job Description

Carry out maintenance service & safety check. Replace air filter. Suspect piston ring failure, as engine blowing smoke. The leak at radiator (replacement radiator) and hoses replaced and signs of sealant not aligned with original seals, indicate this vehicle may have overheated in past life and caused ring (sic) to collapse allowing oil to by-pass.

9. [9]
   Mrs Holt admitted her son still drove the vehicle, but she said there was always a lot of smoke and he was using litres of oil every couple of weeks. She said he had driven the vehicle on the day of hearing.
10. [10]
    She said she was told at time of purchase that the motor was fine, Mr O'Connor had driven the car down South, it was a great car, and there were no worries with it.
11. [11]
    The claim is made pursuant to the Competition and Consumer Act 2010 (Cth) Schedule 2 (‘ACL’), a claim of breach of the guarantee as to acceptable quality,  s 54 ACL which provides:

Section 54

1. (1)
   If:

1. (a)
   a person supplies, in trade or commerce, goods to a consumer; and
2. (b)
   the supply does not occur by way of sale by auction;

there is a guarantee that the goods are of acceptable quality.

2. (2)
   Goods are of acceptable quality if they are as:

1. (a)
   fit for all the purposes for which goods of that kind are commonly supplied; and

2. (b)
   acceptable in appearance and finish; and
3. (c)
   free from defects; and
4. (d)
   safe; and
5. (e)
   durable;

as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3).

3. (3)
   The matters for the purposes of subsection (2) are:

1. (a)
   the nature of the goods; and

2. (b)
   the price of the goods (if relevant); and
3. (c)
   any statements made about the goods on any packaging or label on the goods; and
4. (d)
   any representation made about the goods by the supplier or manufacturer of the goods;
5. (e)
   any other relevant circumstances relating to the supply of the goods.

12. [12]
    Mr Tanzer from Tanzer’s Autocare Yeppoon gave evidence that he had observed the vehicle blowing smoke at time of his servicing the vehicle on 13 October 2021. He had only seen the vehicle that one time. He said, given it was blowing smoke, the vehicle was not roadworthy.
13. [13]
    He was of the opinion that the car had overheated sometime in the past and there had been damage caused. The radiator would probably have been repaired and the top of the motor removed and new gaskets fitted. That would have been the usual course of repair. But, he said, with that sort of repair, it would not be unexpected that sometime in the future there might be problems with other things such as piston rings or bearings.
14. [14]
    He couldn’t recall much else concerning the vehicle.
15. [15]
    In response to the question, is there a problem with the vehicle, he said the problem was it was burning oil and blowing smoke. Therefore it was not roadworthy.
16. [16]
    He said if asked how long the vehicle would last, he would respond “how long is a piece of string?” It  might be able to drive to Perth and back or it might breakdown tomorrow.
17. [17]
    When asked how long the problem of the car burning excessive amounts of oil and blowing smoke had existed prior to his inspection he said he could not say.
18. [18]
    When challenged by Mr O'Connor that the problem might been caused by a failure on the part of the applicant to keep oil up in the motor, Mr Tanzer said he would expect a different fault to show had that been the case, namely bearing failure, not the car blowing smoke.
19. [19]
    Mrs Holt claimed the vehicle used a lot of oil from time of first purchase. Mr Tanzer said if the vehicle was using a lot of oil then there was an issue to be resolved, however the cost of fixing the problem would probably outweigh the value of the vehicle.
20. [20]
    Mr Tanzer said he had no idea how long the vehicle would last.
21. [21]
    Mr O'Connor’s evidence was that Mrs Holt had attended at his car yard on a number of occasions after the purchase of the vehicle. She had been looking for another car for her daughter. He said she made no mention of a problem with the Nissan in those visits. She said nothing about the car blowing smoke. She agreed.
22. [22]
    Mrs Holt said there was no evident problem with the car for a couple of months after purchase. Mr O'Connor put to her that it was probably 3 to 4 months following purchase that she visited his car yard. She said she did not know, but she had rung the mechanic who had done the roadworthy for the car (CK Motors) prior to purchase to ask if they had forgotten to put oil in the car given it was using so much.
23. [23]
    She said she and her son hadn’t realised there was anything seriously wrong with the car until they took it to Tanzer’s Autocare Yeppoon.
24. [24]
    Mr O'Connor said it was not until 14 October 2021 when Mr Holt-Lea came to the car yard to complain about the Nissan that he had any indication that there was a claimed problem with the vehicle.
25. [25]
    Mrs O'Connor gave evidence. She said she had seen the vehicle driving in the local area. On 10 January 2022 she saw the Nissan vehicle pulled up at a shop. She stopped there too to do shopping. The Nissan’s engine was idling. She saw no smoke emission.
26. [26]
    On 25 January 2022 she again saw the Nissan being driven by Mr Holt. Again she did not see any problem with the car, it was “driving fine” and she did not see any smoke.
27. [27]
    Then on 9 May 2022, Mr O'Connor said he saw the vehicle being driven, there didn’t seem to be a problem and he saw no smoke. He suggested if the car had a blown head gasket there would have been a great deal of smoke and it would have been very visible.
28. [28]
    I accept Mr Tanzer’s evidence that when he inspected the vehicle there was a problem with the vehicle. It was burning oil and blowing smoke. There is scant evidence however that the defect existed as at date of sale. Mr Tanzer was unable to say anything about that.
29. [29]
    The question of whether goods are of acceptable quality is to be answered by reference to the quality of the goods at time of supply determined by reference to what a hypothetical reasonable consumer would objectively find acceptable having regard to the matters listed in s 54(2) ACL.^[1]
30. [30]
    Mrs Holt made no mention of burning oil or smoke to Mr O'Connor when she visited the car yard looking for another vehicle for her daughter. Mr O'Connor said was over a period of 3 to 4 months and I accept that was the case. Mrs Holt said she telephoned CK Motors to ask about oil consumption, but she made no mention of asking them about any smoke issuing from the vehicle. Indeed the issue about smoke appears to have been first raised by Mr Tanzer on 13 October 2021.
31. [31]
    Whilst I accept that the vehicle had a defect when Mr Tanzer inspected the vehicle on 13 October 2021, I am not satisfied that the defect was present in the vehicle when it was purchased on 22 March 2021. Whilst the vehicle may have overheated and a head gasket blown, Mr Tanzer conceded the usual repair could have been to replace the head gasket and fix any coolant problems. What he found in his examination supports a conclusion to that effect. He also said however that whilst that would repair the problem additional strain could be placed in the motor and other problems arise in the future. I suspect that is what has happened here.
32. [32]
    Mr Holt bears the burden of establishing on the balance of probabilities that the defect complained of existed as at time of sale. He has failed to do that. His application must be dismissed.