VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
civil DIVISION
CIVIL CLAIMS LIST		VCAT REFERENCE NO. C2564/2022
CATCHWORDS	
Purchase of a used vehicle in an online auction – defects in the engine – claim by the purchaser under section 29(1)(a) of the Australian Consumer Law (Victoria) and section 19 of the Goods Act 1958 – section 64(a)& (b) of the Goods Act 1958 (Vic)	

APPLICANT	Ekram Gulasi	
RESPONDENT	Grays (Vic) Pty Limited ACN:085 287 289	
WHERE HELD	Melbourne	
BEFORE	I. Lulham, Deputy President	
HEARING TYPE	Hearing	
DATE OF HEARING	21 March 2023	
DATE OF ORDER	24 March 2023	
CITATION	Gulasi v Grays (Vic) Pty Ltd (Civil Claims) [2023] VCAT 316	

Order
The proceeding is dismissed.

I. Lulham 
Deputy President			

APPEARANCES:		
For Applicant	In person	
For Respondent	Mr J Watt, company officer	

Reasons
1	Mr Gulasi bought a used 2014 model Jeep Cherokee Limited WK Turbo Diesel from Grays in an online auction conducted on 30 March 2022. The vehicle had Victorian registration expiring on 5 April 2022. Mr Gulasi resides in New South Wales and Grays conducted the auction from Victoria. Mr Gulasi paid $28,877.00 plus a buyer’s premium.
2	When the car was delivered to Mr Gulasi he quickly found that it had a knock in the engine. Mr Gulasi obtained a report from Parramatta Motors, a licensed Jeep dealer, in New South Wales. Parramatta Motors charged $236.36 for carrying out the inspection. It stated its observations in its invoice. Parramatta Motors wrote:
Job 1: check ticking noise from engine:
Carried out on-board diagnostic system checks on vehicle. Confirmed concern. Found ticking noise upon inspection to be in relation to internal engine issue. Will require further investigation [removal of engine manifold and cylinder heads to isolate issue] – possible con-rod bearing failure. If con-rod issue, will require complete overhaul of engine or replacement of long block engine assembly.
Job 2:check vehicle engine cooling system overheating:
Inspected vehicle cooling system – carried out pressure test – no physical leaks present. Found excessive pressure from cooling system – found coolant leaking from reservoir due to excessive pressure from cooling system. Possible internal engine head gasket issue.
3	Parramatta Motors did not provide a quote or estimate for the cost of removing the engine manifold and cylinder heads, to overhaul the engine, or to replace the long block engine assembly. Mr Gulasi said on the basis of his general knowledge that a second-hand engine purchased from a wrecker would cost around $10,000.00, and a reconditioned engine would cost more. Labour charges would be incurred to have such a replacement engine installed. 
4	Mr Gulasi has not had the vehicle repaired, and it has sat on his property unused for about a year. He sues Grays for a refund of the purchase price and buyer’s premium.
5	Grays submits that as a matter of law it is not liable to Mr Gulasi. As such it has not inspected the Jeep and does not seek to argue, for example, that the Jeep is not defective. In the hearing it did not seek to challenge the view expressed by Parramatta Motors.
6	Mr Gulasi acknowledges that the consumer guarantees under sections 54 and 55 of the Australian Consumer Law (Victoria) do not apply to sales of goods by auction. He sues Grays relying on section 29(1)(a) of the Australian Consumer Law (Victoria) and section 19 of the Goods Act 1958 (Vic).
7	Section 29(1)(a) is one of the “specific protection” provisions which appear in Chapter 3 of the Australian Consumer Law (Victoria), and is narrower in scope than section 18 which appears in Chapter 2. It says:
(1)	A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
(a)	make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use;
8	I mention here that Miller’s Australian Competition and Consumer Law Annotated, at paragraph [ACL 29.80] cites relevant authorities and concludes that the Courts have not distinguished the expression “false or misleading” in section 29(1) from the expression “misleading or deceptive” in section 18, and that, “In consequence, the accepted position is that in section 29 the term “false” rather than involving trickery or moral turpitude can be equated to “contrary to fact” and therefore requires no knowledge on the part of the person making the representation that the representation is untrue”. 
9	Section 19 of the Goods Act 1958 (Vic) says:
Subject to the provisions of this Part and of any Act in that behalf there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows—
(a)	where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller’s skill or judgment and the goods are of a description which it is in the course of the seller’s business to supply (whether he be the manufacturer or not) there is an implied condition that the goods shall be reasonably fit for such purpose: Provided that in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose;
(b)	where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not) there is an implied condition that the goods shall be of merchantable quality: Provided that if the buyer has examined the goods there shall be no implied condition as regards defects which such examination ought to have revealed;
(c)	an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade; 
(d)	an express warranty or condition does not negative a warranty or condition implied by this part unless inconsistent therewith.
10	Section 3 of the Goods Act 1958 (Vic) contains these definitions:
“buyer” means a person who buys or agrees to buy goods; 
“seller” means a person who sells or agrees to sell goods.
11	Section 64 contains some provisions on sales by auction. The Goods Act 1958 (Vic) does not specifically define “auction” or “auctioneer”, or define “seller” to include in auctioneer. Nevertheless an auctioneer would fall within a plain reading of the definition of “seller”, and section 64(b) is consistent with an auctioneer being a seller because it says:
a sale by auction is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner. Until such announcement is made any bidder may retract his bid;
12	Mr Gulasi says that the representations and descriptions made by Grays which give rise to his claim were contained in the advertisement for the sale of the Jeep, seen in the context of other advertisements. By seeking to compare the advertisement of the Jeep with other advertisements by Grays in respect of other vehicles, Mr Gulasi seeks to extrapolate so that – for example – where an advertisement for another vehicle discloses a defect in the advertised vehicle, but the advertisement for this Jeep does not, Mr Gulasi submits that Grays positively represented that the Jeep did not have a defect.
13	Mr Gulasi attached to his Points of Claim three sample advertisements published by Grays in respect of other vehicles. 
14	The first was for the sale of a 2006 Audi in an auction on another date. It contained some photographs of the Audi; a description of the vehicle basically taken from the manufacturer’s details (eg, engine capacity, number of cylinders, fuel type, transmission etc) plus some other information taken by Grays from the vehicle itself such as the odometer reading, and its history of having previously been registered in South Australia. Under the heading, “The below condition assessment is the opinion of our booking staff which may differ from your own opinion”, the advertisement said in bullet points, “seats and upholstery: fair / controls and dash: good / paint and panel: good / exterior minor scratches evident / engine and mechanical: engine knock evident, rough engine idle, requires attention”. Mr Gulasi emphasises those observations about the engine. 
15	The second was an advertisement of a 2015 Jeep Cherokee, again from another auction conducted by Grays, where under the heading, “The below condition assessment is the opinion of our booking staff which may differ from your own opinion”, the advertisement said, “Engine & Mechanical: engine noise, ticking/knocking noise”. 
16	The third example was an advertisement of a 2007 Mitsubishi Pajero, where under the heading, “The below condition assessment is the opinion of our booking staff which may differ from your own opinion”, the advertisement said, “Engine & Mechanical: engine light on, engine noise”.
17	Grays submits that its advertisement of the Jeep must be given its plain meaning, and that it did not make any positive representation about the condition of the Jeep. On the contrary, Grays expressly said that it made no representations about the condition of the Jeep and that buyers should make their own enquiries.
18	The relevant content of the advertisement of the Jeep which Mr Gulasi purchased are as follows:
(a)	It contains photographs of the Jeep taken from all angles
(b)	Under the heading “Overview”, it says the “Condition” of the Jeep is “Used” and that there is no reserve sale price 
(c)	Under the heading “Description” it lists matters such as the body type, number of seats, VIN, registration number and expiry date, and the odometer reading as 88,504 km
(d)	Under the heading “General Condition for age and kilometres” it said that two keys would be provided, that there was an owners’ manual with service history, and that the engine turns over
(e)	Under the heading, “The below condition assessment is the opinion of our booking staff which may differ from your own opinion”, the advertisement listed three things, in bullet points: “seats and upholstery: good / controls and dash: good / paint and panel: good”. That is, in this section there is no reference to any mechanical issues, only to matters which would be apparent on a brief visual inspection
(f)	After the heading “Features”, which was followed by 22 items in bullet points (eg CD player, Bluetooth capability) was this paragraph in bold print:
Sale is on As is Where is basis. No Statutory Warranty/Cooling off periods apply. Vehicle inspection is based on walk-around and start-up only and is the opinion of the Booking-in Officer. Sale description is a guide only as vehicle may have unsighted damage/issues. Full inspection is recommended
(g)	Under the heading “Asset Condition” was a paragraph which included:
Please refer to the individual lot description for asset condition. All lots have pictures assigned to them. These should be taken as a guide only. Assets included in the sale may be used, therefore inspection is highly recommended prior to bidding. If classed as ‘Used’ the asset may have experienced moderate to heavy usage by consumers and have not been tested to ensure that they function according to the manufacturer’s specifications. ... Bids on assets in this sale should be made based on your own inspection and assessment of the assets.
(h)	Under the heading “Inspection Terms” was this paragraph, and the words within the inverted commas were printed in bold:
Bids on assets in this sale should be made based on your inspection and assessment of the assets. While we have endeavoured to provide correct asset details, “Descriptions, photographs and data forms (if attached in lot) should be used as a guide only, assets are sold on an as is, where is basis. If you are unsure please do not bid, as no refunds will be given”.   
(i)	In the same section there are paragraphs that say: 
Note: As with standard auction practice, the vehicles may be inspected and started during inspection but not driven 
…
Please Note: The data form ( if attached below the description in the lot) is a guide only. The vehicles are not driven or tested and the description is based on an engine start-up only. There may be other damages, mechanical issues or body blemishes that have not been sighted or contained in the description at time of arrival or booking in. Therefore a full inspection is highly recommended prior to bidding.
19	In the hearing, Mr Watt, who gave evidence for the respondent as its Liaison Officer, noted the numerous references in the advertisement to the “booking in” of vehicles for auction, and said that Grays’ booking staff were not mechanics, and that their tasks of doing a “walk-around and start-up” were performed as a layperson’s task.
20	Mr Gulasi did not deny that the advertisement contained the phrases referred to above, but as I said, he sought to interpret the advertisement by reference to statements in other advertisements in which the booking staff had made some references to vehicles’ engines.
Did Grays contravene section 29(1)(a)? 
21	There are a number of authorities that stand for the proposition that silence may amount to misleading or deceptive conduct, which is prohibited under section 18 of the Australian Consumer Law (Victoria). Miller’s Australian Competition and Consumer Law Annotated, at paragraph [ACL 18.380], cites relevant authorities and concludes that the essential question is whether, in all the circumstances constituted by acts, omissions, statements or silence, there has been conduct likely to mislead or deceive. As a general proposition, section 18 does not require a party to commercial negotiations to volunteer information which will assist the decision-making of the other party. It does not impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard for its own interests of another party of equal bargaining power and confidence. However if the circumstances of the particular case would give rise to a reasonable expectation that, if a fact existed, it would be disclosed, then the failure to disclose that fact may give rise to an inference that the fact does not exist. 
22	These principles also apply to section 29(1)(a) with the result that it is possible, in theory, for silence to constitute a false or misleading representation. It follows that Grays’ submission that it did not positively represent the condition of the Jeep is not definitive.
23	For Mr Gulasi to succeed under the section, he must show that Grays, expressly or by silence, made a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use.
24	An analysis of the advertisement of the Jeep shows that Grays did not make any such representation expressly.
25	A proper consideration of the advertisement, both as to what it says and what it omitted to say, also leads to the conclusion that Grays did not make any such representation by silence.
26	It is not a matter of Grays making a false or misleading representation, but then seeking to avoid liability by relying on “disclaimer provisions” or “exemption clauses”. Instead, the cautionary words in the advertisement result in Grays having not made a false or misleading representation at all.
27	Saying that an engine “turns over” is in no way a representation that the engine is in good condition. To my mind, it says no more than that the engine has not seized. 
28	Saying that observations recorded in the advertisement had been gathered in a “walk-around and start-up” makes it very clear that the observations are very superficial, and seen in the context of recommendations that an intending bidder inspect the Jeep, show that the observations were not to be relied upon.
29	Mr Gulasi is hard pressed to use the contents of other advertisements as his context for interpreting the advertisement of the Jeep. Section 64(a) of the Goods Act 1958 (Vic) provides that in the case of a sale by auction, where goods are put up for sale by auction in lots, each lot is prima facie deemed to be the subject of a separate contract of sale. In addition, the fact that the three sample advertisements which Mr Gulasi produced contained quite different observations, for example with only the first sample saying “requires attention” even though both the first and second referred to an engine knock, would put any reader on notice that the observations are superficial and are not to be relied upon even in the absence of words of warning elsewhere in the advertisement.
30	For these reasons Mr Gulasi’s claim under section 29(1)(a) must fail.
Did Grays give a relevant warranty or condition under section 19?
31	Section 19 of the Goods Act 1958 (Vic) begins with the words that there is no implied condition or warranty as to the quality or fitness of goods for any particular purpose unless sub-sections (a) or (b) apply.
32	Section 19(a) does not apply. Mr Gulasi simply purchased the Jeep in an online auction. He gave evidence, doubtless based on his observation of data displayed by Grays during or after the auction, that there were 164 bidders for the Jeep in the auction. Mr Gulasi did not expressly or even by implication make known to Grays the particular purpose for which the Jeep was required. Mr Gulasi did not rely on Grays’ skill or judgment.
33	Section 19(b) applies, in the sense that Mr Gulasi bought the Jeep by description, but the subsection does not assist him because that description includes all of the words in the advertisement, which as I have quoted above, plainly convey that the Jeep was sold “as is”, without having been inspected by Grays in a meaningful sense but only subject to a walk-around by an unskilled staff member and with a warning that the vehicle may have unsighted damage/issues and therefore should be inspected. Taking the description as a whole, there is no implied condition that assists Mr Gulasi. The Jeep was only to be of merchantable quality that was heavily qualified by the various words of warning in the advertisement.
34	Accordingly, Mr Gulasi’s claim must be dismissed.

I. Lulham
Deputy President