QUEENSLAND CIVIL AND 
ADMINISTRATIVE TRIBUNAL

CITATION:	Allcroft & Anor v Shem-mell Pty Ltd trading as Capalaba Car World [2021] QCAT 375	
PARTIES:	blake allcroft	
	(first applicant)	
	monique barendregt	
	(second applicant)	
	v	
	shem-mell pty ltd trading as capalaba car world	
	(respondent)	
APPLICATION NO/S:	MVL099-21	
MATTER TYPE:	Motor vehicle matters	
DELIVERED ON:	12 November 2021	
HEARING DATE:	11 November 2021	
HEARD AT:	Brisbane	
DECISION OF:	Member Cranwell	
ORDERS:	1.	Blake Allcroft and Moniquie Barendregt are required to return the motor vehicle the subject of these proceedings to Shem-mell Pty Ltd trading as Capalaba Car World within 7 days of the date of these orders.
2.	Shem-mell Pty Ltd trading as Capalaba Car World is required to pay Blake Allcroft the amount of $24,686.50 within 28 days of the date of these orders.	
CATCHWORDS:	TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – GUARANTEES, CONDITIONS AND WARRANTIES IN CONSUMER TRANSACTIONS – GUARANTEES, CONDITIONS AND WARRANTIES – whether motor vehicle of acceptable quality – whether failure to comply with consumer guarantee a major failure – whether consumer entitled to a refund – whether consumer entitled to damages 
Australian Consumer Law, s 54, s 259, s 260, s 262
Competition and Consumer Act 2010 (Cth), Schedule 2
Fair Trading Act 1989 (Qld), s 50A, s 50C
ACH Computing Pty Ltd v Austral Pty Ltd trading as Brisbane City Jaguar Land Rover [2020] QCAT 176
Australia Rong Hua Fu Pty Ltd v Ateco Automotive Pty Ltd [2015] VCAT 756
Foley v Westco Cairns Pty Ltd [2020] QCAT 345
Haisman v Drive (Aust) Pty Ltd [2020] QCAT 44
Kablar Financial Services Pty Ltd v LSH Auto (Brisbane) Pty Ltd trading as Mercedes-Benz Brisbane [2020] QCAT 346
Knox v Tait Motors Pty Ltd t/as Tait Auto Group [2021] QCATA 87
Laceur v Townsville Auto Group Pty Ltd & Anor [2021] QCAT 247
Lawless v Austral Pty Ltd trading as Brisbane City Land Rover [2021] QCAT 297
Medtel Pty Ltd v Courtney (2003) 130 FCR 182
Rigby v LDV Automotive Pty Ltd & Anor [2021] QCAT 316
Sullivan & Anor v James Frizelle’s Automotive Group Pty Ltd [2021] QCAT 49, Crawford v Sunco Motors Pty Ltd [2021] QCAT 183	
APPEARANCES & REPRESENTATION:	

Applicant:	
Self-represented	

Respondent:	
Self-represented	

REASONS FOR DECISION
[1]	On 19 May 2021, Blake Allcroft (‘the first applicant’) and Monique Barendregt (‘the second applicant’) filed an Application – Motor Vehicle Dispute with the Tribunal.  The respondent is Shem-mell Pty Ltd trading as Capalaba Car World (‘the respondent’).
[2]	The applicants are the owners of a 2011 Nissan Navara (‘the motor vehicle’).  
[3]	The first applicant entered into a contract to purchase the motor vehicle from the respondent on 20 February 2021 for $23,685.  At the time of purchase, the motor vehicle had an odometer reading of 125,765 kms.
[4]	The second applicant, who is the de facto partner of the first applicant, was registered as a co-owner of the motor vehicle.
[5]	The applicants seek relief under the Australian Consumer Law, which is Schedule 2 to the Competition and Consumer Act 2010 (Cth).  Section 50A of the Fair Trading Act 1989 (Qld) vests the Tribunal with jurisdiction in relation to motor vehicles in respect of certain actions under the Australian Consumer Law.  The relief sought by the applicants is a refund plus damages.
Consumer guarantees 
[6]	Section 54(1) of the Australian Consumer Law provides that, where a person supplies goods in trade or commerce, the goods are guaranteed to be of ‘acceptable quality’.
[7]	The time at which goods are to be of acceptable quality is the time at which the goods are supplied to the consumer: Medtel Pty Ltd v Courtney (2003) 130 FCR 182 at [64] and [70].  However, information available after the time of supply may be taken into account in deciding whether the goods were of acceptable quality at the time of supply.
[8]	Sections 54(2) and (3) of the Australian Consumer Law define acceptable quality as follows:
(2)	 Goods are of acceptable quality if they are as:
(a) fit for all the purposes for which goods of that kind are commonly supplied; and
(b) acceptable in appearance and finish; and
(c) free from defects; and
(d) safe; and
(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) The matters for the purposes of subsection (2) are:
(a) the nature of the goods; and
(b) the price of the goods (if relevant); and
(c) any statements made about the goods on any packaging or label on the goods; and
(d) any representation made about the goods by the supplier or manufacturer of the goods; and
(e) any other relevant circumstances relating to the supply of the goods.
Evidence
[9]	The second applicant gave the following evidence:
(a)	On 24 February 2021, the applicants took possession of the motor vehicle.
(b)	On 6 March 2021, the applicants were on a trip to Rainbow Beach.  They noticed the motor vehicle’s temperature was increasing quickly, and pulled the vehicle over to allow it to cool.
(c)	The applicant subsequently took the motor vehicle to Rainbow Beach Automotive and Fabrication.  They were advised that the motor vehicle had a ‘cracked head’, and were provided with a verbal quote of $5,000 for repairs.  They were also told not to drive the motor vehicle.
(d)	The first applicant contacted the respondent, who advised the applicants to take the motor vehicle to his mechanic Dave Muller in Tingalpa.
(e)	On 8 March 2021, the first applicant’s father unsuccessfully attempted to hire a tow trailer to transport the motor vehicle.  Ultimately, the applicants paid $707 to hire a tilt-truck.
(f)	On 16 March 2021, the motor vehicle arrived at Dave Muller’s workshop.
(g)	A few days later, the applicants were told that they would have to pay $1,450 for replacement of the timing chain.  They initially agreed to do this, although they were subsequently informed by the Office of Fair Trading that this was the respondent’s costs.
(h)	On 22 March 2021, Dave Muller advised the applicants that the respondent had removed the motor vehicle from his workshop.
(i)	On 24 March 2021, the first applicant sent the respondent an email requesting a full refund of the purchase price.
(j)	The applicants filed a police report alleging that the motor vehicle was stolen.
(k)	On 16 April 2021, the respondent advised that the motor vehicle was repaired and was ready for collection.  The respondent advised that he would charge for storing the motor vehicle.
(l)	On 22 May 2021, after negotiations involving the first applicant’s mother, the applicants took possession of the motor vehicle.  The applicant’s paid $1,450 for replacement of the timing chain, but did not pay the storage fees.
(m)	On 24 May 2021, the applicants took the motor vehicle to the RACQ for an inspection.
(n)	The respondent undertook further minor repairs after the RACQ report was obtained.
(o)	The applicants have not had any further issues with the motor vehicle, but they have been driving the motor vehicle for short distances only.
[10]	The applicants provided an invoice from Bamullant Towing in the amount of $707.
[11]	The applicants also provided a statutory declaration from Richard Allcroft which stated:
I incurred expenses of $146 for trailer hire and $77 for fuel on this day and a further $150 trailer hire and $50 fuel on the second attempt to retrieve the car before a tilt tray was hired.
[12]	The applicants also provided a quote from Rainbow Beach Auto Care for repair of the motor vehicle in the amount of $6,000.
[13]	The applicants also provided a report of the RACQ inspection which took place on 24 May 2021.  This listed a number of defects which required attention.  The summary stated:
Service history is incomplete
Wiring burnt on rear exhaust pipe near differential.  See photo.
Note: Requires timing chain correlation to check timing chain.
Noises from front engine area requires further dismantling to assess and diagnose.
This vehicle has aftermarket components fitted which are not checked as part of this inspection.
This vehicle is considered to be in a poor condition.
[14]	Michael Winn, the sales manager of the respondent, gave evidence on its behalf.  Mr Winn stated:
(a)	Mr Winn has 12 years of experience as a mechanic before moving into sales.
(b)	The problem with the motor vehicle overheating was rectified by the respondent.  New head, belt and injectors were fitted.  
(c)	The repairs cost the respondent over $4,000.
(d)	The mechanical work was undertaken by Bayside Automotive, and the parts were provided by RLC Engineering and Reconditioning.
(e)	The timing chain was due to be replaced in two or three months.  This would cost approximately $2,500 at a service.  By having the timing chain replaced at the same time, this saved the applicants approximately $1,000.
(f)	The repairer would not have provided a warranty on the work if the old timing chain had been refitted.
(g)	The applicants did pay $1,450 to the respondent for the timing chain.
(h)	The respondent undertook further repairs following receipt of the RACQ report.
[15]	It is not in dispute that the motor vehicle experienced a ‘cracked head’ approximately three weeks after the date of purchase.
[16]	While I acknowledge that the applicants have concerns about whether the respondent fitted a new head, belt and injectors as claimed, they provided no expert evidence to dispute the respondent’s claims.  I accept Mr Winn’s sworn evidence that the repairs were carried out as claimed.
[17]	It is also not in dispute that a new timing chain was also fitted to the motor vehicle.
[18]	I accept that the RACQ report listed a number of defects which required attention.  It is not in dispute that the respondent addressed at least some of these defects.  There is no evidence before me as to which defects, if any, remain outstanding.
[19]	I have taken into account that the motor vehicle was 9 years old and had travelled 125,765 kms at the time of purchase.  I have also taken into account that the purchase price was $23,685.  Nevertheless, I do not consider that a reasonable consumer would expect to have to replace a cylinder head shortly after of purchase at a cost in the vicinity of $4,000 to $6,000, with the result that the motor vehicle was off the road for 41 days.
[20]	Based on the evidence before me, I find that a reasonable consumer fully acquainted with the state of the motor vehicle at the time of purchase would not regard the motor vehicle as free from defects and durable.
Remedies 
[21]	The remedy available to the consumer against the supplier depends in the first instance on whether the failure is a ‘major failure’.  That term is defined in s 260(1) of the Australian Consumer Law to relevantly mean:
(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
(b)	the goods depart in one or more significant respects:
(i) if they were supplied by description—from that description; or
(ii) if they were supplied by reference to a sample or demonstration model—from that sample or demonstration model; or
(c)	the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
(d)  the goods are unfit for a disclosed purpose that was made known to:
(i) the supplier of the goods; or
(ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made;
and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
(e)	the goods are not of acceptable quality because they are unsafe.
[22]	In Knox v Tait Motors Pty Ltd t/as Tait Auto Group [2021] QCATA 87 at [54], the Appeals Tribunal posited that the test for a major failure was ‘whether a reasonable consumer, given the option of acquiring the vehicle or alternatively purchasing either nothing or a different model, would have acquired the vehicle if they had been aware of the nature and extent of the failure’.  With respect to the Appeals Tribunal, this appears to me to be an impermissible gloss on the language contained in s 260(1)(a), which does not refer to the options of purchasing a different vehicle or no vehicle at all.  In particular, the inquiry as to whether a reasonable consumer would instead have chosen to purchase a different vehicle (presumably one free from defects) will invariably only have one answer.  As was stated in Australia Rong Hua Fu Pty Ltd v Ateco Automotive Pty Ltd [2015] VCAT 756 at [32]:
Of course, if the reasonable consumer could see the future, and see problems that would occur with a particular good, the consumer would buy a different good.  However, if the reasonable consumer was not prepared to purchase any [vehicle] because [vehicles] may experience … faults soon after purchase, which would be repaired under warranty, then the reasonable consumer would not purchase any [vehicle].
[23]	In this regard, the Appeals Tribunal must be considered to have misdirected itself.  The consequences of this alternative approach become further apparent below.  
[24]	In my view, the ‘reasonable consumer’ test in s 260(1)(a) must be considered in the context of the statutory scheme set out in the Australian Consumer Law.   The remedies which are available for a failure which is not a major failure, and a major failure, are relevantly set out in s 259 as follows:
(2)  If the failure to comply with the guarantee can be remedied and is not a major failure:
(a)  the consumer may require the supplier to remedy the failure within a reasonable time; or
(b)  if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time—the consumer may:
…
(ii)  subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection.
(3)  If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:
(a)  subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; …
[25]	In general terms, a failure which is not a major failure leads to repair within a reasonable time, whereas a major failure is one which leads to rejection.
[26]	The statutory scheme in the Australian Consumer Law, which I have set out above, accepts that a reasonable consumer would proceed to acquire a vehicle despite being acquainted with some failures, as there is a risk of failure inherent in the decision to purchase.  Again, as was stated in Australia Rong Hua Fu Pty Ltd v Ateco Automotive Pty Ltd [2015] VCAT 756 at [42], ‘a reasonable consumer takes risks when purchasing goods, which are most often addressed by repair of the goods’.  The issue of whether a failure is capable of being remedied within a reasonable time appears to me to be clearly relevant in determining whether the failure constitutes a major failure.  In my view, the inquiry contemplated by s 260(1)(a) is whether a reasonable consumer would have acquired the goods despite being acquainted with the nature and extent of the failure, having regard (amongst other things) to the availability of repairs within a reasonable time.  
[27]	For completeness, I note that in the case of two or more failures, s 260(2) requires a consideration of those failures ‘taken as a whole’.
[28]	In the present case, the motor vehicle was off the road from 41 days off the road shortly after purchase.  While the cylinder head was repaired by the respondent, I do not consider that a reasonable consumer would have purchased a motor vehicle in circumstances where they would not have the use of the motor vehicle for such an extended period of time almost immediately after purchase.  It is likely that there was an incidental relationship between the cost of repairs, being in the vicinity of 20% to 25% of the purchase price of the motor vehicle, and the time taken to complete the repairs.
[29]	I note that this is consistent with my approach in many other cases, including Haisman v Drive (Aust) Pty Ltd [2020] QCAT 44, ACH Computing Pty Ltd v Austral Pty Ltd trading as Brisbane City Jaguar Land Rover [2020] QCAT 176, Foley v Westco Cairns Pty Ltd [2020] QCAT 345, Kablar Financial Services Pty Ltd v LSH Auto (Brisbane) Pty Ltd trading as Mercedes-Benz Brisbane [2020] QCAT 346, Sullivan & Anor v James Frizelle’s Automotive Group Pty Ltd [2021] QCAT 49, Crawford v Sunco Motors Pty Ltd [2021] QCAT 183, Laceur v Townsville Auto Group Pty Ltd & Anor [2021] QCAT 247, Lawless v Austral Pty Ltd trading as Brisbane City Land Rover [2021] QCAT 297 and Rigby v LDV Automotive Pty Ltd & Anor [2021] QCAT 316.
[30]	In order to obtain a refund, the consumer is required to reject within the ‘rejection period’.  That term is defined in s 262(2) of the Australian Consumer Law to mean:
 (2) The rejection period for goods is the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to comply with a guarantee referred to in section 259(1)(b) to become apparent having regard to:
(a) the type of goods; and
(b) the use to which a consumer is likely to put them; and
(c) the length of time for which it is reasonable for them to be used; and
(d) the amount of use to which it is reasonable for them to be put before such a failure becomes apparent.
[31]	The first applicant sought a refund of the motor vehicle on 24 March 2021.  This was one month after the applicants took possession of the motor vehicle.  In these circumstances, I am satisfied that the first applicant rejected the motor vehicle within the rejection period.
[32]	In Haisman v Drive (Aust) Pty Ltd [2020] QCAT 44 at [24], I found that the Tribunal has jurisdiction to make an order requiring the supplier to pay to the consumer a stated amount of money, namely the amount of the refund payable under s 263(4)(a).  In this case, the first applicant has notified the respondent that the goods have been rejected in accordance with s 263(1) of the Australian Consumer Law.  I will give effect to the requirement in s 263(2) that the goods be returned by so ordering.  Upon the return of the motor vehicle, the first applicant will be entitled to a refund pursuant to s 263(4).
Damages
[33]	The Tribunal is vested with jurisdiction in respect of actions under s 259(4) of the Australian Consumer Law, which provides:
The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee, if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
[34]	I accept that the applicant incurred costs of $707 in towing expenses with Bambullant Towing.  I consider it reasonably foreseeable that the applicants would need to have the motor vehicle towed.
[35]	While Richard Allcroft has given evidence as to the costs he incurred in attempting to transport the motor vehicle, Mr Allcroft is not a party to these proceedings.  There is no evidence before me to indicate that the costs incurred by Mr Allcroft were reimbursed by the applicants.  In any event, I do not consider that it is reasonably foreseeable that the applicants would attempt to retrieve the motor vehicle using ineffective towing methods.  The respondent should not be forced to bear the costs of the applicants’ mistakes in this regard.
[36]	The applicants have also claimed $294.50 in interest on the loan for the period the respondent had possession of the motor vehicle.  In in Knox v Tait Motors Pty Ltd t/as Tait Auto Group [2021] QCATA 87 at [90], the Appeals Tribunal disallowed a claim for interest in the following language:
Presumably had he purchased a different vehicle he would have been required to borrow funds which in turn would have incurred interest charges. The claim for interest is not allowed.
[37]	I decline to follow the Appeals Tribunal, as this finding appears to be infected by the impermissible gloss placed on the language in s 260(1)(a) which I have discussed above.  It does not seem to me to be to be a permissible approach under s 259(4) to take an actual loss incurred by the applicants and to offset against it a hypothetical loss arising out of a hypothetical loan on the purchase of a different vehicle.
[38]	In the present case, I consider it reasonably foreseeable that the applicants would have incurred interest payments during the period that the motor vehicle was unavailable to be used by them.  The applicants have provided evidence of interest charges on a personal loan used to fund the purchase of the motor vehicle, and I will allow the amount claimed.
[39]	The applicants have also claimed $331 in lost holiday expenses.  This includes items such as unused passes to Fraser Island and camping site fees.  I do not consider that these items are reasonably foreseeable.
[40]	The applicants have also claimed $5,000 compensation for pain and suffering.  Even though I have found the motor vehicle was affected by a major failure, the respondent nevertheless acted reasonably in proceeding to repair the cylinder head.  There is nothing in the respondent’s conduct that would justify an award of damages of the nature claimed by the applicants.  In these circumstances, I do not consider this amount to be recoverable.  
[41]	I note that the applicants have not claimed the amount of $1,450, being the cost of a new timing chain.
Costs
[42]	Section 50C of the Fair Trading Act 1989 (Qld) provides that the Tribunal may make a costs order against the respondent in the amount of the prescribed filing fee paid by the applicant.  This power is subject to s 102(1) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld), which provides that the Tribunal may make a costs order if the interests of justice require it.
[43]	The applicant has been substantially successful in the proceedings.  However, the outcome of the proceeding has turned upon my view of whether the cracked cylinder head constitutes a major failure.  While I have found that the respondent’s view that it was not a major failure to be incorrect, the respondent nevertheless acted reasonably in proceeding to repair the cylinder head.  In these circumstances, I do not consider that it is in the interests of justice to order the respondent to pay the filing fee of $352.
Orders
[44]	The orders of the Tribunal are:
1.	The applicants are required to return the motor vehicle the subject of these proceedings to the respondent within 7 days of the date of these orders.
2.	The respondent is required to pay to the first applicant the amount of $24,686.50 within 28 days of the date of these orders.