Reference No. MVD 259/07 (AK) [2007] NZMVDT 219 (27 November 2007)

Last Updated: 14 February 2008

Decision No. AK 172 /2007

Reference No. MVD 259/07

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN XXXX XXXX & XXXX XXXX XXXX XXXX

Purchasers

AND XXXX

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr G Burkett, Advanced Trade Mechanical Member, Assessor

HEARING at WELLINGTON on 23 November 2007

APPEARANCES

Miss H MXXXX XXXX and Mr CS XXXX, the purchasers

Mr XXXX, representing the trader
Mr XXXX, witness for the trader

DECISION

Introduction

[1] On 24 February 2006 Miss XXXX XXXX and Mr XXXX (“the purchasers”) purchased a 1997 Subaru Forrester registration number XXXX (“the vehicle”) from XXXX (“the trader”) for $11,990. The purchasers also paid the trader for motor registration charges of $350, the premium for a 3 year mechanical insurance warranty of $1200 and the cost of a vehicle alarm of $695; a total of $14,235. The vehicle’s odometer reading was 116,336 kilometres at the date of sale according to the Vehicle Offer and Sale Agreement and 116,287 kilometres according to the Supplier Information Notice signed by the parties.

[2] The purchasers purported to reject the vehicle by letter to the trader dated 10 November 2007 under the Consumer Guarantees Act 1993 (“the Act”) and seek the Tribunal’s orders upholding their rejection of the vehicle and ordering that the trader refund them their full purchase price and other sums spent on the vehicle over the period they have owned it on the grounds that there has been a failure of a substantial character within the meaning of the Act because it’s engine failed in September 2007 and the trader has since refused to repair it.

[3] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal has appointed Mr G Burkett, as expert assessor to assist in the determination of the complaint. Prior to the hearing Mr Burkett took the oath required by clause 10(2) of Schedule 1 to that Act.

The purchasers’ evidence

[4] The purchasers prepared a full brief of their evidence and submitted it with copies of documents and correspondence with the trader as part of their application. The Tribunal received a copy of the brief and the documents which were attached to it as exhibit 1. The account which follows is a summary of the relevant evidence contained in that brief, supplemented by other information provided by the purchasers and answers to questions put to each of the purchasers by the Tribunal in the course of the hearing.

[5] On 28 February 2006 the purchasers noticed a sudden increase in the engine temperature and found that the cause was a cracked radiator which was repaired by the trader at its cost.

[6] At the same time they notified the trader that the CD player fitted to the vehicle was not operating and the trader had it removed and sent to XXXX who repaired it but when it was reinstalled in the vehicle it did not work and again the trader removed it and sent it to XXXX for repair. The CD player worked when the vehicle was stationary but it did not work when the vehicle was being driven. Miss XXXX XXXX says the purchasers did not do anything more about the CD player.

[7] On 11 May 2006 Mr XXXX took the vehicle to XXXX for a lube, engine clean and oil change when the vehicle’s odometer was 119,299 kilometres because the policy terms of the XXXX mechanical insurance warranty stipulated that the purchasers had to have the vehicle properly serviced within the first 5000 kilometres of purchasing the cover and the next and successive services at 10,000 kilometre or 12 monthly intervals thereafter.

[8] Within a week after the XXXX service the vehicle started to leak oil. The purchasers did not take it back to XXXX but took it instead to XXXX Ltd (“XXXX”) who, at 119,825 kilometres, and following agreement between the parties as to how the repair costs were to be borne, replaced the rocker cover gaskets, removed the radiator, replaced the cam belt and cam seals, the tensioner and idler wheels, removed the oil pump and replaced its seals at a cost to the purchasers of $685.24 according to the invoice of XXXX which the purchasers produce. This invoice notes that the trader paid for 6 hours labour, the cam seals, and rocker cover gaskets.

[9] On 28 May 2006 the purchasers noticed a leak in the sunroof which was letting water in around the seals. The trader agreed to repair the leak at its expense. The following day after the vehicle was returned by the trader’s repairer and exposed to overnight rain, the leak was worse and water had stained the headlining and caused damage to an interior light. The leak was repaired but the trader would not accept responsibility for the headlining stain or damaged ceiling light which still does not work.

[10] On 10 January 2007 the vehicle failed its second warrant of fitness since the purchasers bought the vehicle. MissXXXX XXXX produces a copy of the warrant of fitness worksheet which records the odometer at that date as 128,878 kilometres. The reasons the vehicle failed its warrant of fitness were: there was too much travel in the handbrake, the right front park light was not working, both inner rack ends had play, both front lower control arms were leaking and the front discs and brake pads were worn. The purchasers did not approach the trader to pay for this work which costs them $678.28.

[11] In July 2007 the purchasers submitted the vehicle for a warrant of fitness at 137,361 kilometres. The only defect found was the right rack boot was split and required replacement. At the same time they told XXXX that the vehicle’s engine was missing and XXXX found that the vehicle needed new spark plugs and that an aftermarket intake hose had rubbed through and needed to be replaced and remounted. The right rack boot and spark plugs (but not the hose) were replaced and with the warrant of fitness cost the purchasers $314.65. The XXXX worksheet produced by the purchasers notes that the vehicle “ requires an oil change $110ish right front tyre is wearing $67.50 ish supply oil filter $14.50 inc” The purchasers did not approach the trader to pay for this work.

[12] Mr XXXX says he decided to replace the engine oil and filter himself at home which he did on 14 July 2007 with help from a mechanic friend.

[13] On 27 September the purchasers say that they heard a tapping noise in the engine. When they took the vehicle to XXXX they were told the noise could be due to a cracked piston. In a letter dated 9 October 2007 produced by MissXXXX XXXX the Manager of XXXX writes that the noise “ is most noticeable when the engine is warm and under load or holding approximately 2000rpm. The noise is not evident when the engine is cold”. The purchasers had XXXX submit a claim to XXXX Insurance NZ Ltd for the repairs to the engine but the claim was declined because the purchasers had not complied with the servicing requirements of the mechanical insurance policy.

[14] The purchasers then wrote to the trader on 10 November 2007 recounting the faults and repairs done to the vehicle and advising the trader that the cost of repairs to the engine were estimated to cost $6000 or a replacement engine would be necessary. The purchasers then claimed “I believe the problems are serious and I no longer want the motor vehicle. I am rejecting the motor vehicle and requesting a full refund from your company.” The trader replied on 18 October acknowledging receipt of the rejection letter saying that it believed it had performed its obligations and did not accept any liability under the Act.

[15] Mr XXXX claimed that XXXX Insurance Co Ltd avoided its responsibility by relying on the strict terms of the mechanical insurance warranty policy but that in fact the vehicle had been serviced many times.

[16] In reply to questions from the Assessor, Mr XXXX acknowledged that he had been told at the time the oil leak was found in May 2006 that it was necessary as a normal service item to replace the cam (or timing) belt and the tensioners when a vehicle has travelled 100,000 kilometres. Mr XXXX also agreed that there was no evidence of what was wrong with the vehicle’s engine other than the letter from XXXX dated 9 October 2007.

The trader’s evidence

[17] Mr XXXX produces a brief of his evidence (exhibit A) which he reads to the Tribunal.

[18] He says that the basis of the trader’s defence is that it believed it acted reasonably by assisting the purchasers to rectify some minor issues they had with the vehicle and also offered and paid for repairs , spares and labour and allowed the purchasers the use of a courtesy car whenever it was possible. However the trader denies that the vehicle is not durable and claims that the vehicle is able to be used for its normal purposes considering its age and distance travelled.

[19] He says that the vehicle lacked proper servicing at regular intervals and that the purchasers failed to ensure that the vehicle was properly serviced and in a sound and roadworthy condition so as to meet the minimum warrant of fitness standards.

[20] He says that the trader paid $324.90 to have the cracked radiator tank replaced on 2 March 2006 and produces the invoice of XXXX as evidence of this.

[21] He says that he had not heard from the purchasers that there was still a problem with the CD player and that the trader, whilst submitting that the CD player does not contribute to the mechanical issues raised by the purchasers, was willing to offer to replace the radio/CD to settle the dispute but this offer was rejected by the purchasers.

[22] He says that the service carried out by XXXX on 11 May 2006 was done within the distance requirement (within 5,000 kms of purchase) set by XXXX but that all XXXX did was an oil change which he says does not comply with XXXX’s requirements under its policy. He says the trader considers that if the purchasers had serviced the vehicle on 11 November 2006 (being 6 months after the first service) or before the vehicle had travelled 10,000 more kilometres- ie before it had done 129,299 they would have minimised the risk of having XXXX reject their claim in September 2007 and would have also prevented the mechanical problems highlighted in the XXXX letter of 9 October 2007.

[23] He says that the purchasers were negligent in placing themselves in a position where the costs of repair are estimated to be in excess of $6000 or the vehicle will require a second hand reconditioned engine fitted.

[24] The trader considers it unreasonable that the purchasers, having neglected to service the vehicle regularly can still elect to claim from the trader under the Act and even more unreasonable that they are able to claim a refund of the full purchase price of $14,235 plus consequential loss.

[25] He says that the oil leak which occurred on 17 May 2006 occurred after the vehicle was serviced by XXXX and could have arisen because of XXXX’ work or, if not caused by their faulty workmanship, it should have been detected by XXXX on the 11 May when they did the service. In any event he says the trader contributed towards the repairs and the purchasers accepted this contribution when they paid the balance of $685.24 and the matter was thus settled at that time.

[26] The leak in the sunroof was addressed by the trader and repaired by its contractor XXXX at a cost of $281.25. He says he was unaware that the interior light was not working and if the trader had known that it would have been willing to pay to get the bulb in the light replaced having already spent $281.25 in getting the leak fixed.

[27] He says that the trader considers the vehicle was overdue for service in January 2007 when it was taken for a warrant of fitness and the vehicle had then travelled 128,878 kilometres. The purchasers should also be responsible for their own costs in maintaining the vehicle in a roadworthy condition.

[28] The repairs done on 15 January 2007 on the vehicle were all normal wear and tear items but they should have been done in November 2006 when the vehicle was due to be serviced. The purchasers’ admission that they did not approach the trader for it to pay for this work at the time is an acknowledgment that they considered themselves to be responsible for such costs associated with the vehicle’s normal wear and tear.

[29] The work done on the vehicle on 11 July 2007 arose because the vehicle again failed its warrant of fitness at that time and the purchasers only raised the issue of “lack of power when accelerating” after the vehicle failed its warrant. In spite of being quoted to change the oil the purchasers did not have XXXX do an oil and filter change. As of 12 July 2007 the second service was some 8 months overdue.

[30] The service work done by XXXX on 1 August was nothing more that a wheel balance and wheel alignment and XXXX did not change the vehicle’s oil.

[31] The cost of repairing the knocking sound discovered on 27 September 2007 of $6000 is pure speculation by XXXX.

[32] The reason XXXX Insurance rejected the purchasers’ claim to repair the damage to the vehicle was because the purchasers have not met their obligations under the policy by failing to service the vehicle within a specified number of kilometres travelled.

[33] In summary the trader denies it is liable to the purchasers. Had the purchasers complied with the terms of the XXXX warranty they would have avoided the resulting damage to their vehicle.

[34] He then produces a report dated 28 September 2007 from XXXX of XXXX Limited (exhibit B) which records the vehicle’s odometer as 139,777 at the date of the report.. He says XXXX do many of the XXXX Insurance assessments. He says the trader arranged for this report to be done on the vehicle. The contents of the report are as follows:

“Findings
1.1 Car is in the workshop and is still all complete and runs.
1.2 Start car up and motor big ends knocking badly.
1.3 Oil level is just under minimum.
1.4 There is anti freeze in the water and radiator looks ok.
1.5 All water hoses look ok and there are no signs of any water leaks.
1.6 All drive belts look ok.
1.7 Oil condition is very poor

Comments and Observations
Engine bearing failure is very common for these turbo motors if oil is not maintained.
Motor to be stripped to assess damage and cause.

Recommendation:
Remove motor and strip and recondition as required.
Send out radiator for testing.

Other Notes:
Check service sticker and it says next service due at 129295kms or 11/11/06
So servicing is well over”

[35] In reply to questions from the Assessor he says the trader was not told that
the vehicle’s interior light was not working after the roof leaked; had it been told it would have paid to fix the light.

Evidence of XXXX

[36] XXXX says he is the general manager of XXXX & XXXX Ltd and that he is a certified motor engineer. He says his company has a business relationship with the trader; it tests, complies and repairs vehicles for the trader. He says he is surprised that the purchasers did not take the vehicle back to XXXX on 17 May 2006 when the oil leak appeared a week after the vehicle was serviced by XXXX.

[37] He says he inspected the vehicle when it was in XXXX’ workshop in September 2007 but the purchasers requested that information regarding the vehicle not be released and he respected their wishes. He says that his company is the agent for XXXX vehicles in the XXXX and the faults which arise in vehicles are not confined to second hand vehicles.

[38] In reply to the Assessor he says he did not hear the vehicle running.

Response to Trader’s Evidence

[39] In response to the trader’s evidence MissXXXX XXXX says that the requirements of XXXX regarding frequency of service are not requirements of the Act and that she is perfectly entitled to bring a claim against the trader under the Act.

[40] She says she definitely went back to XXXX the trader’s salesman who sold the vehicle regarding the faulty CD player and the interior light but that the latter item was not simply a blown bulb but faulty electrics.

[41] The purchasers deny that they were negligent in not having the vehicle serviced. They say that they do not think that the seals- the cause of the oil leakage in May 2006 would have been touched by XXXX so the oil leak was not caused by their work. The inspection on 1 August 2007 by XXXX was produced to show that the purchasers have looked after the vehicle. The vehicle’s current odometer reading is 139,788 kilometres.

The Consumer Guarantees Act 1993

[42] Section 6 of the Act imposes on a supplier (in this case the trader) "a guarantee that the goods are of acceptable quality." Section 2 of the Act defines "goods" as including "vehicles".

[43] The expression "acceptable quality" is defined in Section 7 as follows:

“(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, ¾

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 ¾

(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:

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

manufacturer

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

(2) Where any defects in goods have been specifically drawn to the consumer’s

attention before he or she agreed to the supply, then notwithstanding that a

reasonable consumer may not have regarded the goods as acceptable with

those defects, the goods will not fail to comply with the guarantee as to

acceptable quality by reason only of those defects.

(3) Where goods are displayed for sale or hire, the defects that are to be treated

as having been specifically drawn to the consumer’s attention for the purposes

of subsection (2) of this section are those disclosed on a written notice

displayed with the goods.

(4) Goods will not fail to comply with the guarantee of acceptable quality if—

(a) The goods have been used in a manner, or to an extent which is

inconsistent with the manner or extent of use that a reasonable consumer

would expect to maintain from the goods; and

(b) The goods would have complied with the guarantee of acceptable quality if

they had not been used in that manner or to that extent.

(5) A reference in subsections (2) and (3) of this section to a defect means any

failure of the goods to comply with the guarantee of acceptable quality.”

[44] Under Section 18 of the Act, where a consumer has a right of redress against the supplier in accordance with Part 2 of the Act as a result 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 ¾
(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, ¾
(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 ¾

(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."

[45] Section 21 of the Act defines the circumstances in which a failure to comply with the guarantee as to acceptable quality will be regarded as being a failure of a substantial character for the purposes of s.18(3). Section 21 provides as follows:

“21 “For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where ¾

(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 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe."

[46] In Stephens v Chevron Motor Court Limited [1996] DCR1, the District Court held that the correct approach to the Act was first to consider whether the vehicle was of “acceptable quality”. If the vehicle was not of acceptable quality, the next point to consider was whether the purchasers required the trader to remedy any faults within a reasonable time in accordance with Section 19 of the Act. If the failure to comply with the guarantee of acceptable quality was of a “substantial character” within the meaning of Section 21, or if the faults cannot be remedied, the Tribunal is directed to ask whether the purchasers have exercised their right to reject the vehicle within a reasonable time.

Tribunal’s Assessment

[47] The vehicle sold to the purchasers on 24 February 2006 was a 9 year old Japanese import with 116,336 kilometres on the odometer. The vehicle was sold for $11,990. The purchasers were the first New Zealand owners.

The Radiator and CD Player

[48] A crack in the vehicle’s radiator tank appeared within the first week and 100 kilometres of use by the purchasers which was repaired by the trader. At the same time it was found that the CD player in the vehicle was faulty and the purchasers took the vehicle back to the trader twice to get this fixed. The Tribunal accepts the evidence of the purchasers that although the CD was twice repaired it did not function properly and yet, surprisingly the purchasers appeared to have accepted the fault. MissXXXX XXXX said that the purchasers had not persisted in getting the trader to fix or replace the CD player and had not exercised their right under the Act to have it fixed elsewhere. They simply accepted the faulty CD and appeared to have ignored it until they filed the application. The Tribunal also accepts Mr XXXX’s evidence that he was unaware the CD player was not working. Unfortunately the purchasers have lost their right to reject the vehicle because of either the radiator tank leak or the CD fault. This is because not only did they elect to have the trader repair these items at its expense, but also s.20 of the Act provides that the right to reject shall not apply if the right is not exercised within a reasonable time. These defects became apparent by the end of February 2006 yet the purchasers did not purported to reject the vehicle until 10 November 2007 which the Tribunal finds is not a reasonable time within which to reject the vehicle.

The May 2006 oil leak

[49] In May 2006 the vehicle leaked oil after it had a service by XXXX. Surprisingly the purchasers did not take the vehicle back to XXXX but made an arrangement with the trader for the repair work to be done by XXXX- involving the replacement of the timing belt and gaskets and seals to be paid for on a basis that involved their paying $685.24 of the repair costs and the trader paying part of the labour cost and contributing to the cost of the parts. The Tribunal notes, first, that the replacement of a cam belt for a vehicle which has done in excess of 100,000 is part of normal preventive maintenance and, second, that there was an agreed settlement of any dispute over who was to pay the repair costs at that time and that the issue was thus, in the trader’s words “put to bed” in May 2006.

The leaking sunroof in May 2006

[50] It is not disputed that the vehicle’s leaking sunroof was repaired at the trader’s expense in May 2006. The interior light failed- the purchasers claim as a result of the leak but the Tribunal accepts the evidence of the trader that it was not aware of this and would have repaired the light if it had known it was not working. The stained headlining does not appear to have been raised with the trader as an issue by the purchasers. The Tribunal considers that the purchasers have lost their right to reject the vehicle for any leak in the sunroof or its consequent damage because they have not done so within a reasonable time of the defect becoming apparent.

The January and July 2007 faults arising from WOF tests

[51] The vehicle did not pass its second warrant of fitness test after purchase on 10 January 2007 some 11 months and 12,591 kilometres after the date of sale. This was due, the Tribunal finds, to matters of normal wear and tear and not to any defects in the vehicle at the time of sale. The Tribunal notes that the claim that the trader should reimburse the purchasers for their repair costs of $678.28 was not made until the application was filed in mid October 2007. Similarly the repairs done after the vehicle failed its third warrant of fitness on 11 July 2007 were normal wear and tear items which should have been replaced during normal regular service and were not a fault in the vehicle at the time of sale. The purchasers, properly in the Tribunal’s view, made no claim for reimbursement of the cost of the July 2007 repairs.

The Vehicle’s Servicing
[52] The Tribunal agrees with the purchasers’ claim that the Act does not contain any provision which stipulates that a consumer must have a vehicle serviced at any particular interval. To that extent the fact that the purchasers, through their carelessness in not having the vehicle serviced properly, lost the benefit of the XXXX mechanical insurance warranty, is not determinative of any issue before the Tribunal. However the Tribunal considers that s. 7 (4) of the Act is relevant ( s.7(4) is reproduced in para 43 above) . To fail to service a vehicle is, in the Tribunal’s view tantamount to “using a vehicle in a manner inconsistent with the manner that a reasonable consumer would expect to use a vehicle”. Put simply, a reasonable consumer would understand that a vehicle requires regular preventive maintenance and servicing. The Tribunal finds on the evidence it received from the parties that the vehicle was not regularly serviced. There are four reasons the Tribunal makes this finding. First, the service carried out by XXXX on 11 May 2006 at 119,299 kilometres was no more than a lube, engine flush, filter and oil change. The Tribunal does not consider it was an adequate service for a Japanese imported vehicle, the service history for which was unknown. Second, whilst the purchasers claimed that the vehicle had been regularly serviced by XXXX as the result of the work they did on the vehicle, an examination of the invoices for the work XXXX did shows that XXXX only ever carried out mechanical repairs on the vehicle; not matters of engine maintenance- apart from the replacement of the spark plugs in July 2007. Third, the vehicle’s engine should have been properly serviced by a qualified mechanic every 10,000 kilometres to avoid the very problem which has now caused the knocking sound. It was not. Fourth, Mr XXXX said in giving evidence that he flushed out the old engine oil and replaced the engine oil and filter after the 14 July 2007 warrant of fitness inspection and the written advice to him on XXXX’s invoice: “REQUIRES AN OIL CHANGE.” The vehicle’s odometer was then 137,361 kilometres. Yet within a further 2,416 kilometres when XXXX examined the engine oil he found its level below minimum and the oil condition very poor.

Conclusions

[53] In summary the Tribunal finds as follows: first, that the vehicle was not of acceptable quality when it was sold to the purchasers in February 2006 because, within 3 months the radiator tank leaked, the CD player stopped working and the sunroof leaked. A reasonable purchaser would not expect a vehicle of the nature of this vehicle costing $11,990 to exhibit these faults so soon after sale. The purchasers exercised their right under s.18(2)(a) of the Act and required the trader to fix these failures within a reasonable time and the trader did so at its cost. The purchasers have lost any right they may have had to reject for this congeries of defects by over 17 months delay after these faults became apparent to them.

[54] Second, the Tribunal is unsure whether the work done as the result of the oil leaks in May 2006 was caused by faulty workmanship by XXXX, by a defect in the vehicle at the date of sale, or by wear and tear but in any event it finds that the parties made an agreement to resolve the issue in May 2006 under which the purchasers would have the necessary repair work done and they accepted a contribution towards their costs from the trader.

[55] Third, the Tribunal finds that the faults discovered in the vehicle during its January and July 2007 warrant of fitness tests were all matters of normal wear and tear. The purchasers apparently thought so too at the time because they did not approach the trader about these items.

[56] Fourth, the Tribunal is satisfied on a balance of probabilities that the engine knocking sound which precipitated the purchasers’ purported rejection of the vehicle on 10 November 2007 is not a failure of the guarantee of acceptable quality of a substantial character as the purchasers claimed. Instead the Tribunal finds that this fault with the engine is most likely to have been caused by the purchasers’ failure to ensure that the engine oil was changed regularly allowing minute particles of dirt to damage the engine’s bearings. The Tribunal’s reasons are first, XXXX of XXXX Ltd who heard the engine noted “motor big ends knocking badly” and has also stated in his report that such a failure is very common for this type of motor if oil is not maintained. Second, that this knocking sound was not heard in the engine until it had travelled 23,500 kilometres, 19 months after being sold to the purchasers, and is thus most unlikely to have been a fault in the vehicle at the date of sale.

[57] For the foregoing reasons the Tribunal considers that the purchasers’ application to reject the vehicle must be dismissed. The purchasers received an offer of settlement from the trader on 6 November in which it offered to replace the CD /radio in the vehicle but the purchasers rejected this offer and, for the avoidance of any doubt, the Tribunal notes that the trader’s offer to replace the CD/radio no longer has any legal effect.

The Order

The purchasers’ application is dismissed.

DATED at AUCKLAND this 27th day of November 2007

C.H.Cornwell

Adjudicator