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Lett v AK Autos Limited - Reference No. MVD 393/2022 [2023] NZMVDT 49 (17 March 2023)

Last Updated: 2 May 2023

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 393/2022
[2023] NZMVDT 049

BETWEEN BARRY JOHN LETT

Purchaser

AND AK AUTOS LIMITED

Trader

HEARING on 12 December 2022 and 8 March 2023
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator
A B Cate – Assessor

APPEARANCES

B J Lett, Purchaser
A T Kibblewhite, Director of Trader
T D Phillips, Director of Palmerston North Automotive Ltd, witness for trader
J M R Harrison, SBL International Vehicle Broking, witness for trader

DATE OF DECISION 17 March 2023

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________


  1. Barry Lett’s application to reject his Mercedes-Benz E 300 is not upheld.
  2. AK Autos Limited must (at its expense) replace the vehicle’s rear brake rotors and pads, and fix the issue causing the cornering light warning to appear.
  1. The repairs in B must be completed no later than one month after the date of this decision unless either party applies for and is granted an extension.
  1. If it is not practicable to complete the repairs in accordance with C above, either party may apply to convert this repair order into an order to pay a specific sum, reflecting the estimated reasonable repair cost.
  2. In all other respects, Mr Lett’s application is dismissed.

___________________________________________________________________

REASONS

Table of contents


Introduction

[1] Barry Lett has rejected the 2012 Mercedes-Benz E 300 that he and Eileen Lett agreed to purchase from AK Autos Ltd on 23 October 2021 for $19,485. Mr Lett says the vehicle does not meet its description and has many faults. In his application to the Tribunal, Mr Lett claims a total of $32,634.75, which includes the vehicle’s purchase price and other losses Mr Lett claims to have suffered.
[2] With his application, Mr Lett provided a document headed “25 collected issues to raise at Tribunal hearing”. Boiled down, Mr Lett’s collected issues relate to:
[3] Some of the collected issues overlap. So the following list, my summary of the concerns raised by Mr Lett, has fewer than 25 items on it.
[4] Broadly speaking, the issues for the Tribunal to determine are as follows:

Alleged misleading conduct

[5] Mr Lett complains that the trader did not openly tell him of anything that could be regarded as a fault or expense he might face after purchase. Rather, Mr Lett gradually discovered faults after he purchased the vehicle. Mr Lett says that if the trader had disclosed the faulty aspects of the vehicle, he would not have purchased it.
[6] Mr Lett gave many examples of such non-disclosure in his application. I summarise these examples below.

Lack of a spare key

[7] The vehicle was supplied to Mr Lett with only one key. The lack of a spare key was not disclosed until Mr Lett asked. The evidence clearly showed that Mr Kibblewhite, AK Autos’ director, told Mr Lett that there was only one key, before he decided to purchase the vehicle. At the first hearing on 12 December 2022, Mr Lett confirmed that he was not pursuing his claim regarding the lack of a spare key.

Faulty bonnet opener

[8] Mr Lett says the bonnet opener was faulty as it did not fit properly into the body of the car. The bonnet opener has a backing plate which has four tabs. One of the tabs was folded over, which made the backing plate protrude. One of the tabs on that same side of the backing plate could not plug into the square hole, but the other two did, which is why the assembly looked as if it was satisfactory when it was not. So, when Mr Lett pulled the lever the entire assembly came off because it was not mounted properly. Mr Lett said this fault was present from the time when the car was assembled. He does not accept Mr Kibblewhite would not have known about this fault as he and his mechanics must have opened the bonnet several times, including when Mr Lett collected the car. Mr Lett has fixed this problem himself without alerting the trader to the existence of the fault beforehand. However, Mr Lett emphasised that he is not concerned about getting the fault fixed, but with the trader’s non-disclosure of the fault.

Exaggeration of Mr Lett’s delay in claiming the vehicle was faulty

[9] Mr Lett says Mr Kibblewhite exaggerated about the length of time Mr Lett had possessed the vehicle before he emailed AK Autos with a list of its faults (Mr Kibblewhite said it was eight months but Mr Lett says the true period is six and a half months).

Incorrectly recorded odometer reading

[10] The vehicle’s odometer reading was incorrectly recorded in the consumer information notice (CIN) and the vehicle offer and sale agreement. Mr Kibblewhite accepts that the vehicle’s odometer reading was understated by 1,158 km in these documents. They record the odometer reading as 56,000 km but, according to Mr Lett, the vehicle was delivered to him with an odometer reading of 57,158 km. Mr Kibblewhite says that this was not a deliberate error. Mr Lett says eventually this odometer discrepancy will lead to him suffering financial losses in respect of the vehicle. He said there is no way of quantifying his loss because nobody knows how long it will be before the car will start to break down. He submitted that the difference between the advertised odometer reading and the true reading was not significant enough to change his decision to purchase the vehicle. The main reason Mr Lett wished to bring this matter to the Tribunal’s attention was “to add further proof that some devious behaviour by the vehicle trader had taken place”.

Claim about front tyres

[11] After Mr Lett had purchased the vehicle, he said the trader claimed to him that the front tyres were Bridgestone. In fact, they are the inferior Triangle brand.

Claim about test drive

[12] Mr Kibblewhite says he invited Mr Lett to take the vehicle for a test drive before taking possession of it. Mr Lett says this is incorrect.

Failure to disclose broken petrol cap restraining cord

[13] Mr Lett alleges the trader failed to disclose a broken petrol cap restraining cord. Mr Lett says the trader “should certainly have known about” this defect.

General statements about quality of vehicles sold by trader

[14] Mr Lett alleges the trader made various misleading statements designed to raise confidence in the trader’s quality control and that all of his vehicles were of the highest standard. For example, the statement that upon arrival in New Zealand all of the trader’s vehicles “get a very vigorous and thorough VINZ certification check in which the vehicles are stripped down and inspected and any issues needing rectification are advised to the trader on the compliance sheet”.

Specific statements about the quality of the vehicle purchased by Mr Lett

[15] Mr Lett alleges it was misleading of the trader to claim that the vehicle Mr Lett purchased had an auction grade of 4.5 out of 5, indicating that it was in very good condition. Initially, Mr Lett went further and claimed that the trader had misrepresented the vehicle’s auction grade as 4.5. In fact, according to Mr Lett, the auction sheet said it was a grade 4 vehicle. However, on closer review of the sheet, Mr Lett withdrew this claim.
[16] Mr Lett also alleges that it was misleading of the trader to claim that the vehicle had passed compliance and had any work completed as needed to satisfy warrant of fitness requirements.

Fuel economy

[17] Mr Lett alleges the trader falsely advertised the vehicle as having fuel economy of 8.1 L/100 km. Mr Lett says that he has experienced much higher fuel consumption than that claimed: 12.21 L/100 km based on about two thirds motorway driving and one third town driving.

Fresh warrant of fitness and service

[18] Mr Lett said the trader erroneously claimed the vehicle had a fresh warrant of fitness and service as at the date of purchase. The most recent warrant of fitness was issued on 28 October 2021, the day before Mr Lett took delivery of the vehicle. However, the most recent record of service indicates that the vehicle received an oil service by Palmerston North Automotive on 15 July 2021 when its odometer reading was 56,981 km. Mr Lett said that on 30 September 2022 a message on the vehicle’s dashboard indicated that the vehicle was 70 days overdue for service. Assuming the vehicle has an annual servicing requirement, this warning would broadly correspond with that, as 30 September 2022 is one year and 76 days after 15 July 2021, the date the vehicle had last been serviced.

Alleged quality defects

[19] Mr Lett alleges the vehicle has or had the following quality defects. The Tribunal will assess these alleged defects against the guarantee of acceptable quality in s 6 of the CGA.

Battery

[20] The vehicle had a battery which was nearly dead when Mr Lett took delivery and became “totally dead” within about three weeks. On 19 November 2021, After Mr Lett had finished cleaning the vehicle and went to close the windows and lock the car, nothing would happen, and the car would not lock. Mr Lett checked the vehicle’s battery and found it was down to 2 volts (it should be 12 volts). Mr Lett considers the battery was essentially dead long before he got the car. Using his engineering expertise, he built a new battery charger the next day so he could get the old battery working sufficiently to drive the vehicle to the battery shop and replace the battery with a new one. Mr Lett confirmed he did not raise the issue of the battery with the trader before replacing it. Indeed it was nearly another five months before Mr Lett raised the issue with the trader. Mr Lett alleges that the trader did not test the battery and should have done so before delivering the car to him.

Front tyres

[21] Mr Lett says there are “very poor quality” Triangle brand tyres on the front wheels that produce loud noises when driving, are unsafe in the wet and cause the steering wheel to vibrate. Mr Lett says these tyres make him feel unsafe while driving the vehicle. Although they are not worn out, the tyres appear to be old, with indications that they were manufactured in 2013. Mr Lett says that the right front tyre has a fault in the form of a three centimetre V-shaped piece of rubber detached back from a point on the tyre. However, Mr Lett says he has been advised by a “tyre expert” that the fault is not dangerous because the lifting rubber does not extend to the wires.
[22] At the first hearing, Mr Lett said he is not arguing that the tyres did not meet minimum legal requirements. He accepts they were lawful at the time of purchase. Indeed, the tyres passed a warrant of fitness inspection just prior to purchase in respect of tyre condition, tyre tread and depth. But, Mr Lett says, the Triangle tyres do not meet quality standards for a Mercedes vehicle.
[23] A report Mr Lett obtained from Driven Mechanical Services on 13 July 2022 states that although the Triangle tyres would have passed a warrant of fitness, they are of poor quality (inferior to that of the rear tyres) and that they are very noisy. Driven Mechanical Services recommended that the Triangle tyres be replaced.
[24] Mr Lett confirmed that, prior to purchasing the vehicle, he asked no questions of the trader about the vehicle’s tyres. Mr Lett also confirmed that the trader made no pre-sale representations about the tyres.
[25] On 9 February 2023, Mr Lett advised that he had spoken with a Mercedes franchise dealer who told him that Mercedes would accept the Triangle tyres but recommends replacing them with Bridgestone Potenza RE003 tyres.

Low tyre pressure

[26] Mr Lett alleged that the vehicle had low tyre pressures at the time of purchase. When he checked the tyre pressures, he discovered, to his surprise, that all the tyres were at approximately 22 psi. Mr Lett says that they are supposed to be at 35 psi to 36 psi according to the chart on the inside of the fuel fill cover. As Mr Lett only has a foot pump, he says it took him 160 foot and leg pushes for each tyre to bring the pressures up to the specified level. In total, he did 640 pumps with his foot and leg. Mr Lett asks, how did this wrong pressure get past the trader’s claimed rigorous checking?

“Check right cornering light” warning

[27] Mr Lett says that there is a “check right cornering light” warning on the dashboard display which has been illuminated ever since Mr Lett purchased the vehicle.[1]
[28] Mr Lett assumes this is the result of a faulty electrical connection, as there does not appear to be any fault with the cornering light itself. This fault has not been fixed and Mr Lett confirmed at the hearing that he had not asked the trader to fix it.

Cabin air filter and engine air filter

[29] The cabin air filter was not replaced during the servicing work prior to delivery and Mr Lett says it was “clogged with dirt”. He has replaced the filter at his own expense. He did not mention this issue to the trader before replacing the filter himself. Mr Lett told the Tribunal: “I don’t have to ask for any permission to get that work done”.
[30] Mr Lett says he also replaced the engine air filter, but he did not present any evidence to establish that the engine air filter that was supplied with the vehicle was not of acceptable quality.

Rear brake rotors

[31] Mr Lett says that the vehicle’s rear brake rotors are in a poor state and need to be replaced. Driven Mechanical Services’ report of 13 July 2022 confirms that the vehicle’s rear disc rotors are worn and the rear pads are low. It recommends that the rotors be replaced when the pads are replaced. The Vehicle Testing New Zealand (VINZ) compliance documentation for the vehicle states that the rear disc rotors were only “just legal” in July 2021. Despite this, the compliance inspector only required the front rotors, and not the rear rotors, to be replaced.

Quality of front brake rotors

[32] Mr Lett says that the vehicle’s front brake rotors, which were replaced as part of the compliance process, are made of a metal that rusts easily and produces a large quantity of brake dust. Therefore, according to Mr Lett, they must be of an inferior quality.

Front brake pads

[33] When the vehicle was going through compliance before being sold to Mr Lett, its front brake rotors were replaced. At the same time, instead of replacing the front brake pads, the trader’s mechanic merely “refaced” them. According to Mr Lett, this does not meet the high standard of repair or quality claimed by the trader in respect of the vehicle.

Right wing mirror

[34] Mr Lett says that the vehicle’s right wing mirror makes a grinding sound, as if the gears are skipping over each other trying to close the mirror, when it retracts. After a timed interval, the grinding sound stops.

Seat belt adjustment

[35] Automatic seat belt adjustment is designed to adjust the driver’s and front passenger’s seatbelts to fit the upper body of the occupants. The car applies a retraction force if slack is detected between the occupant and the seatbelt. Mr Lett alleges that adjustment is only occurring sometimes for the driver’s seat belt. He claims this intermittent fault has existed at least since the time he purchased the vehicle.
[36] At the first hearing, I asked Mr Lett how he knows the vehicle has a fault with its automatic seatbelt adjustment. He confirmed he did not have any evidence from a workshop to confirm there was a fault (as opposed to it being part of the vehicle’s design).
[37] Mr Lett was given a further opportunity to provide evidence supporting his assertions regarding this fault. However, on 9 February 2023, he advised that he would not provide further evidence on this fault as the alleged failure to tighten the belt is “random” and would require extensive testing which was not practicable because, according to Mr Lett, the vehicle “is not legally drivable on the road for carrying out tests” (as he has let its warrant of fitness, licence and insurance lapse).
[38] The Tribunal’s Assessor, Mr Cate, advised that the vehicle’s seatbelt tensioning system is very complicated. The vehicle assesses whether the pretensioner needs to be operated or not. It assesses the driver and passenger seat belts separately due to the different spatial configuration at each seat (including the presence of a steering wheel in front of the driver). Mr Cate said the system is monitored by the vehicle’s own systems. If it has a fault, a warning will be generated.

Engine tuning

[39] Mr Lett says the vehicle’s engine is tuned for power output and has “enormous acceleration”. He says he was not told this prior to purchasing the vehicle. Mr Lett says his other, “practically identical” Mercedes has “nowhere near the power” that this vehicle has. He says his other vehicle’s fuel economy is better too. Mr Lett says his head was thrust back hard when his wife was driving the car from a stand-still and he was not expecting the vehicle to have such powerful acceleration.
[40] Mr Lett argues there is a connection between his vehicle’s heavy brake wear and the engine modification Mr Lett says the vehicle has undergone. Mr Lett’s other Mercedes has travelled nearly three times the distance but has never needed to have its brake rotors replaced. He concludes, from the excessive rotor wear and the very high acceleration, that the car sold to him by AK Motors would have been a “boy racer” car.
[41] On 9 February 2023, Mr Lett withdrew this allegation as he conceded he was unable to establish that engine modification had taken place.

Defective oxygen sensor?

[42] Mr Lett initially presented his claims regarding the vehicle’s fuel economy as a misleading conduct claim. He obtained a further diagnostic check on the vehicle on 2 February 2023 which recorded a stored fault for an oxygen sensor. He was advised by the technician carrying out the check that if the oxygen sensor is not working correctly it can throw the air fuel ratio a little off and potentially cause increased fuel consumption.

Radio antenna fault

[43] The 2 February 2023 diagnostic report also recorded a current and stored fault regarding an open circuit for “radio antenna 2”.

First hearing – 12 December 2022

[44] At the first hearing of Mr Lett’s claim, on 12 December 2022, he did not complete his oral submissions, leaving no time for Mr Kibblewhite to respond orally on behalf of the trader. A resumed hearing was initially scheduled for 19 January 2023. Mr Lett was permitted to supply written reply notes responding to the trader’s written submissions. Mr Lett also sought an opportunity to provide “independent confirmation” in respect of certain matters where I had indicated at the first hearing that there was a lack of objective evidence to support his allegations. However, Mr Lett advised his “expert” was unavailable until 23 January, leaving him no time to get his vehicle assessed before the date scheduled for the resumed hearing. As a result, I adjourned the 19 January hearing.
[45] On 26 January 2023, the case manager emailed Mr Lett to confirm that I had allowed Mr Lett the opportunity (if he wished) to supply further evidence from a qualified technician to support his allegations that the vehicle's automatic seatbelt adjustment system is faulty and that its engine has been tuned or modified outside standard parameters. I allowed Mr Lett the opportunity to provide any evidence to support his allegation that the vehicle's front tyres do not meet Mercedes-Benz's specifications for the vehicle. Mr Lett was also permitted to provide valuation evidence if he wished to argue that the erroneous odometer reading has reduced the vehicle's value below the purchase price.
[46] I emphasise that I did not direct Mr Lett to provide any further evidence. He was permitted to do so but it was purely optional, in light of his request after the hearing.
[47] Any further evidence on these topics (only) was required to be provided no later than 9 February 2023. The trader then had 14 days after the evidence was received to provide any written response. A further two hour hearing was scheduled for 8 March 2023. At that hearing, Mr Lett was entitled to speak for up to 30 minutes to address any further evidence (within the above specified categories). The trader was entitled to use the remainder of the hearing time to respond to Mr Lett's whole claim.
[48] On 1 February 2023, Mr Lett wrote to the case manager to complain that he had only just received her 26 January email on 31 January, which meant that he only had nine days to respond. I asked the case manager to advise Mr Lett that if he needed more time to respond, he should ask. But he did not do so.
[49] On 9 February 2023, Mr Lett supplied further submissions on the following topics: automatic seat belt tightening, engine tuning or modification, fuel consumption, Triangle brand tyres and erroneous odometer reading. Mr Lett also supplied a report of a Diagzone diagnostic test of the vehicle carried out on 2 February 2023. A summary of these submissions and of the diagnostic report is included above, referenced against each relevant topic.

Second hearing – 8 March 2023

[50] Because Mr Lett had thoroughly summarised the additional submissions he wished to make in his written submissions filed on 9 February 2023, he was able to easily complete his oral submissions within the 30 minutes allocated for him at the resumed hearing on 8 March. He emphasised the various instances where, he said, the trader had failed to disclose various defects as outlined above.
[51] Mr Lett also mentioned Mr Kibblewhite’s claim (in the final stages of Mr Lett’s negotiations to purchase the vehicle) that VINZ had carried out a 120 point check on all facets of the vehicle to ensure that it complies with New Zealand standards. Mr Lett said he had not been provided with evidence of that 120 point check. Mr Kibblewhite produced the VINZ checksheet that confirms the vehicle passed its compliance recheck inspection on 19 July 2021, after the front wheel bearings had been adjusted, the front brake rotors replaced and a brake repair declaration completed. No specific evidence was produced to confirm whether a “120 point check” was completed, but neither was any evidence produced by Mr Lett to confirm that the checks carried out by VINZ had fewer than 120 points. The Tribunal was accordingly unable to determine whether this was a misleading statement.

Mr Kibblewhite’s submissions on behalf of the trader

[52] In his submissions on behalf of AK Autos, Mr Kibblewhite emphasised the length of time it had taken for Mr Lett to raise concerns about the vehicle. He said it was not until 12 May 2022 that Mr Lett first communicated with him about the vehicle’s alleged faults, some 195 days after the date of purchase.
[53] Mr Kibblewhite invited Todd Phillips, director of Palmerston North Automotive, to address some of the specific concerns raised by Mr Lett.

Battery

[54] Mr Phillips confirmed that, when he serviced the vehicle in July 2021, he had no difficulty starting the vehicle and was unaware of any problems with its battery. However, he did not perform any specific battery checks. He said that if he had been aware the battery was flat, he would have recommended that it be replaced.

Filters

[55] Mr Phillips confirmed that he did not check the state of the cabin filter. Rather, the service he carried out was a basic service involving checking fluid levels and changing the engine oil and filter. Mr Phillips’ invoice records that he cleaned the engine air filter.

Refaced front brake pads

[56] Mr Phillips confirmed that, at the time he serviced the vehicle, the front brake pads did not need to be replaced to meet warrant of fitness requirements, which is why he only “refaced” them, at the same time as he replaced the front brake rotors.

Fuel economy/oxygen sensor

[57] Mr Phillips did not consider that the evidence produced by Mr Lett, including the fuel consumption testing he had carried out, indicated that the vehicle had a problem with its fuel economy. Mr Phillips said that the alleged fuel consumption problems would need to be assessed by reference to the vehicle’s fuel trim data by a competent technician. Similarly, the diagnostic report indicating a stored fault with an oxygen sensor does not support the claim of abnormal fuel consumption. Nor is the report even sufficient basis for concluding that the oxygen sensor needs replacing. More testing would be required to reach that conclusion.

Radio antenna fault

[58] Mr Phillips said that the radio antenna “fault” recorded in the diagnostic report is not in fact a fault. Rather, it is a consequence of the installation (by Mr Phillips) of a band expander. This was necessary because the vehicle was imported from Japan and its original radio would not have been capable of tuning into all New Zealand radio stations.

Check right cornering light warning

[59] Mr Phillips said that this warning is likely to be the result of a bad wiring contact. It can likely be fixed following a voltage and resistance check and may be as simple as cleaning a terminal.

Wing mirror

[60] Mr Phillips said the wing mirror may be something that can be fixed relatively easily by “clicking it back out manually”. Otherwise, it could be a fault with the gearing in the mirror (but if so it would generally leave a stored fault that would have come up on the diagnostic report).

Issue 1: Did AK Autos Ltd breach section 9 of the FTA?

[61] Section 9 of the FTA provides:

9 Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

[62] The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corp Ltd v Ellis:[2]

The question to be answered in relation to s 9 ... is ... whether a reasonable person in the claimant’s situation – that is, with the characteristics known to the defendant or of which the defendant ought to have been aware – would likely have been misled or deceived. If so, a breach of s 9 has been established.

[63] In considering whether AK Autos breached s 9, I only intend to examine representations made prior to Mr Lett’s purchase of the vehicle. This Tribunal only has jurisdiction to inquire and determine claims “in respect of the sale of any motor vehicle”.[3] Representations made after Mr Lett purchased the vehicle cannot have influenced his purchasing decision and are outside the scope of the Tribunal’s proper inquiries in respect of Mr Lett’s application. For this reason, I do not intend to consider further Mr Lett’s claims of misleading conduct in respect of the following representations made after the sale of the vehicle:
[64] An omission to inform a purchaser about a vehicle’s defect or characteristic can constitute misleading or deceptive conduct if a reasonable consumer would expect the information to have been disclosed.[4] However, I dismiss Mr Lett’s claims of misleading omissions in respect of the following matters, because Mr Lett has not satisfied me that AK Autos knew about these defects at the time the vehicle was sold:
[65] As mentioned above, Mr Lett withdrew his claims in respect of the lack of a spare key, the vehicle’s auction grade, and engine modification.
[66] AK Autos conceded it incorrectly recorded the vehicle’s odometer reading in the CIN and the vehicle offer and sale agreement. In respect of this misleading representation, Mr Lett has established that AK Autos Ltd breached s 9 of the FTA.
[67] I dismiss Mr Lett’s other FTA claims:

DISCLAIMER: The information on this label is provided for comparative purposes. Your actual cost per year and fuel consumption will vary from that shown, depending on factors such as vehicle condition and any vehicle modifications, driving style, traffic conditions, distance travelled and fuel price variations. You should not expect to meet exactly what this label says. Visit www.fuelsaver.govt.nz to find out more about this label, and how to improve fuel economy.

Further explanations and disclaimers are contained on the Fuelsaver website, including that the energy economy information is sourced from the Fuelsaver database, standardised to the Worldwide Harmonised Light Vehicle Test Procedure, 3 Phase (3p WLTP). The WLTP is a laboratory based, worldwide standard for testing fuel economy, carbon dioxide emissions and electric vehicle range in passenger and light commercial vehicles. WLTP data does not necessarily represent the actual fuel economy an individual driver will achieve. Accordingly, I reject Mr Lett’s claim that AK Auto misled him in providing this information. Rather, it was obligated to provide the information, and Mr Lett has misinterpreted what it means.

(c) The evidence indicates that the vehicle had a fresh warrant of fitness at the time of sale. The engine service occurred a couple of months prior to the sale but was still reasonably “fresh” in the sense that the vehicle was not used much between the date of service and delivery to Mr Lett. The odometer reading recorded on the servicing invoice is 56,981 km. Apart from the additional mileage added when the vehicle was delivered from Palmerston North to Whitby, it appears the vehicle was driven very little between when it was serviced by Palmerston North Automotive on 17 July 2021 and the date of delivery.

Issue 2: Did the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the CGA?

[68] Section 6(1) of the CGA provides that “where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality”. According to s 2 of the CGA, “goods” includes vehicles.
[69] “Acceptable quality” is defined in s 7 of the CGA (as far as is relevant) as follows:
  1. Meaning of acceptable quality

(1) For the purposes of section 6, goods are of acceptable quality if they are as—

(a) fit for all the purposes for which goods of the type in question are commonly supplied; and

(b) acceptable in appearance and finish; and

(c) free from minor 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, would regard as acceptable, having regard to—

(f) the nature of the goods:

(g) the price (where relevant):

(h) any statements made about the goods on any packaging or label on the goods:

(ha) the nature of the supplier and the context in which the supplier supplies the goods:

(i) any representation made about the goods by the supplier or the manufacturer:

(j) all other relevant circumstances of the supply of the goods.

...

[70] Whether a vehicle is of acceptable quality is considered from the point of view of a reasonable consumer who is fully acquainted with the state and condition of the vehicle, including any hidden defects.
[71] I find that Mr Lett has established the vehicle failed to comply with the guarantee of acceptable quality in respect of:
[72] As mentioned above, Mr Lett withdrew his claims in relation to the engine tuning.
[73] I dismiss all of Mr Lett’s other claims in respect of the vehicle’s quality:

Issue 3: What is the appropriate remedy?

Remedy under the FTA

[74] The remedies available for a breach of the FTA are set out in s 43, which relevantly provides:

43 Other orders

(1) This section applies if, in proceedings under this Part or on the application of any person, a court or a Disputes Tribunal finds that a person (person A) has suffered, or is likely to suffer, loss or damage by conduct of another person (person B) that does or may constitute any of the following:

(a) a contravention of a provision of Parts 1 to 4A (a relevant provision):

...

(2) The court or the Disputes Tribunal may make 1 or more of the orders described in subsection (3)—

...

(3) The orders are as follows:

(a) an order declaring all or part of a contract made between person A and person B, or a collateral arrangement (for example, a collateral credit agreement) relating to such a contract,—

(i) to be void; and

(ii) if the court or the Disputes Tribunal thinks fit, to have been void at all times on and after a date specified in the order, which may be before the date on which the order is made:

...

(c) an order in respect of a contract made between person A and person B, or a collateral arrangement (for example, a collateral credit agreement) relating to such a contract,—

(i) varying the contract or the arrangement in the manner specified in the order; and

(ii) if the court or the Disputes Tribunal thinks fit, declaring the varied contract or arrangement to have had effect on and after a date specified in the order, which may be before the date on which the order is made:

...

(e) an order directing person B to refund money or return property to person A:

(f) an order directing person B to pay to person A the amount of the loss or damage:

(g) an order directing person B, at person B’s own expense, to repair, or to provide parts for, goods that have been supplied by person B to person A:

(h) an order directing person B, at person B’s own expense, to supply specified goods or services to person A.

...
[75] In Red Eagle, the Supreme Court set out the approach to be taken in applying s 43.[7] The exercise of the power to make an order for payment under s 43 is, in the end, a matter of doing justice to the parties in the circumstances of the particular case and in terms of the policy of the FTA.[8]
[76] Applying that approach, the Tribunal must consider whether:
[77] I have found that Mr Lett was misled as to the vehicle’s odometer reading, which was understated by 1,158 km.
[78] The question whether Mr Lett has suffered or is likely to suffer loss or damage is best assessed by reference to the value of the vehicle and whether Mr Lett can be said to have paid too much for the vehicle. Even after I gave him the opportunity to do so, Mr Lett declined to produce any relevant valuation evidence establishing loss or likely loss. Mr Lett has the onus to establish his actual or likely losses. Accordingly, I am unable to conclude that Mr Lett has suffered, or is likely to suffer, loss or damage as a result of the odometer reading being understated by a small amount. As a check, reference to the Trade Me valuation tool suggests that the current mid-point valuation of this vehicle of $19,000 is unaffected by whether the odometer reading is 56,000 km, 57,158 km or 62,000 km.[9]
[79] As Mr Lett has not established loss or likely loss, he is not entitled to any compensation under the FTA.

Remedy under the CGA

[80] The remedies available to a consumer where a vehicle does not comply with the guarantee of acceptable quality are set out in s 18 of the CGA, which provides:
  1. Options against suppliers where goods do not comply with guarantees

(1) Where a consumer has a right of redress against the supplier in accordance with this Part in respect of the failure of any goods to comply with a guarantee, the consumer may exercise the following remedies.

(2) Where the failure can be remedied, the consumer may—

(a) require the supplier to remedy the failure within a reasonable time in accordance with section 19:

(b) where a supplier who has been required to remedy a failure refuses or neglects to do so, or does not succeed in doing so within a reasonable time,—

(i) have the failure remedied elsewhere and obtain from the supplier all reasonable costs incurred in having the failure remedied; or

(ii) subject to section 20, reject the goods in accordance with section 22.

(3) Where the failure cannot be remedied or is of a substantial character within the meaning of section 21, the consumer may—

(a) subject to section 20, reject the goods in accordance with section 22; or

(b) obtain from the supplier damages in compensation for any reduction in value of the goods below the price paid or payable by the consumer for the goods.

(4) In addition to the remedies set out in subsection (2) and subsection (3), the consumer may obtain from the supplier damages for any loss or damage to the consumer resulting from the failure (other than loss or damage through reduction in value of the goods) which was reasonably foreseeable as liable to result from the failure.

[81] The primary remedy available to a consumer where a vehicle fails to comply with the guarantee of acceptable quality is set out in s 18(2)(a) and allows the consumer to require the supplier to remedy the failure within a reasonable time.
[82] Section 18(2)(a) of the CGA provides that where a failure can be remedied, the consumer must give the trader an opportunity to remedy the failure before going ahead and getting repairs done by someone else. The High Court confirmed in Acquired Holdings Ltd v Turvey that a consumer must follow a particular sequence of steps in order to be eligible to obtain a remedy under s 18 of the CGA.[10] In that case, the Court held a purchaser must follow the requirement in s 18(2)(a) to allow the supplier an opportunity to remedy the failure within a reasonable time.[11] The subsequent self-help remedy in s 18(2)(b), in which a consumer may have the failure remedied elsewhere and obtain from the supplier all reasonable costs in doing so is exercisable only if the supplier refuses or fails to remedy the failure under s 18(2)(a).[12]
[83] Mr Lett is correct that he does not have to ask the trader’s permission to get work done on his own vehicle.[13] However, to have a chance of recovering repair costs from the trader in a contested proceeding in this Tribunal, a consumer must generally provide the trader with an opportunity to repair or replace the vehicle, before commissioning the repairs themselves. This is to allow the supplier to assess whether the goods have been subjected to unreasonable use, whether a defect has caused a problem and, in particular, to control the quality of the repair.[14]
[84] Accordingly, Mr Lett is not entitled to any reimbursement in relation to the battery, due to the fact that he went ahead and replaced the vehicle’s battery long before advising the trader it was faulty and requesting the trader’s assistance. I understand that he felt compelled to replace the battery urgently. But his claim must be dismissed due to his failure to comply with the preconditions set by the CGA to obtain a remedy from the trader.
[85] Mr Lett is, however, entitled to an order that the trader must replace the rear brake rotors and pads, and to fix the issue causing the cornering light warning to appear. These repairs must be completed no later than one month after the date of this decision unless either party applies for and is granted an extension. The parties are encouraged to agree on practical arrangements for the repairs. AK Autos is not entitled to insist that the repairs be carried out at a repairer that far away from where Mr Lett lives unless it is prepared to transport the vehicle there at its cost and compensate him for any additional mileage added to the vehicle in the process. Likewise, Mr Lett will need to take steps to ensure the vehicle is re-warranted, licensed and insured. He is not entitled to insist that the vehicle be repaired by the Mercedes agent. However, if the parties cannot cooperate to achieve a practical resolution then I reserve the right to make an award of damages that will take into account the quote supplied by Gazley Motors for replacement of the rear brake rotors and pads: $859.30.
[86] In all other respects Mr Lett’s application is dismissed. To conclude this decision, I will briefly explain why the two primary remedies sought by Mr Lett, rejection and compensation for costs he says have been incurred by him, are not available in the circumstances of this case.

Rejection

[87] On 12 May 2022, Mr Lett emailed Mr Kibblewhite a list of “distressing faults” and warned of his “impending rejection” of the vehicle. Included in Mr Lett’s list of faults were the rear brake rotors and pads, and the “check right cornering light” warning. Mr Kibblewhite responded on 13 May 2022 that AK Autos “accept zero liability in the points that you raise, nor are we going to pay for any of the complaints that you raise.” At the hearings of this dispute, Mr Kibblewhite maintained that his company was not liable to pay for any repairs.
[88] Based on AK Autos’ refusal to repair the vehicle’s faults, Mr Lett would have been entitled to reject the vehicle under s 18(2)(b)(ii) of the CGA. However, I conclude that Mr Lett lost any right of rejection under s 20. That section requires (among other things) any right of rejection to be exercised within a reasonable time after the date of supply of the vehicle. In measuring what is a reasonable time, the actual experience of the consumer is relevant, tested against objective criteria.[15] As a general rule, the older the vehicle, the shorter will be the reasonable time.[16] The first time Mr Lett unequivocally rejected his vehicle was in October 2022, when he made his Tribunal application. (In his May 2022 correspondence Mr Lett merely threatened rejection if AK Autos did not fix the faults and compensate him for repairs already carried out.) Mr Lett’s rejection was about a year after the date of purchase which, in the circumstances, I conclude is too long after the relevant defects would have become apparent for Mr Lett to have retained any right to reject the vehicle.

Additional damages claimed by Mr Lett

[89] As well as a refund of the vehicle’s purchase price, $19,485, Mr Lett claims damages of $13,149.75. reflecting:
[90] Mr Lett is not entitled to recover any of these amounts. He withdrew his claim in respect of the key. And his claims in respect of the filters, battery and fuel consumption were not upheld.
[91] In respect of Mr Lett’s claim for his labour costs, the Tribunal only has a limited jurisdiction to award costs.[17] Mr Kibblewhite’s sustained resistance to remedying the vehicle’s faults might be considered a refusal to take part in settlement discussions, contrary to the requirements of the Motor Vehicle Sales Act 2003.[18] However, the volume of Mr Lett’s complaints, most of which were unsuccessful, appears to have overwhelmed any enthusiasm Mr Kibblewhite might otherwise have had to settle the dispute. In my assessment, the prospect of any settlement being achieved in the present case was negligible. In light of this, and Mr Lett’s modest overall success, I conclude that no costs award is warranted.

Conclusion

[92] The Tribunal’s formal orders are as set out at the beginning of the decision.

J S McHerron
Adjudicator


[1] This is a light which lights up the area to the right of the vehicle when turning in that direction.

[2] Red Eagle Corp Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].

[3] Motor Vehicle Sales Act 2003, s 89(1)(a).

[4] Des Forges v Wright [1996] 2 NZLR 758 (HC) at 764; Hieber v Barfoot & Thompson (1996) 5 NZBLC 104,179 (HC); Tuiara v Frost & Sutcliffe [2003] 2 NZLR 833 (HC) at [91]; Guthrie v Taylor Parris Group Cossey Ltd (2002) 10 TCLR 367 (HC) at [31] and [32]; McBride Street Cars Ltd v District Court (Dunedin Registry) [2018] NZHC 111, [2018] NZAR 289.

[5] https://resources.fuelsaver.govt.nz/label-generator/

[6] Energy Efficiency (Vehicle Energy Labelling) Regulations 2007.

[7] Red Eagle Corp Ltd v Ellis, above n 2, at [29]-[30].

[8] At [31].

[9] https://www.trademe.co.nz/a/value-my-car, 16 March 2023.

[10] Acquired Holdings Ltd v Turvey (2008) NZBLC 102,107 (HC).

[11] At [11].

[12] At [11].

[13] See above at [29].

[14] Rodger Thornton (ed) Gault on Commercial Law (online loose-leaf ed, Thomson Reuters) at [CG 18.06].

[15] Nesbit v Porter [2000] NZCA 288; [2000] 2 NZLR 465 (CA) at [35].

[16] At [36].

[17] Motor Vehicle Sales Act 2003, sch 1, cl 14.

[18] Schedule 1, cl 5.


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