Reference No. MVD 104/08 (AK) [2008] NZMVDT 114 (20 June 2008)

Last Updated: 5 September 2008

Decision No. AK 91/2008

Reference No. MVD 104/08

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN XXXX

Purchaser

AND YYYY

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr G Burkett, Assessor

HEARING at AUCKLAND on 17 June 2008

APPEARANCES
Miss XXXX, the purchaser
Mr BBBB, the trader

DECISION

Introduction

[1] On 1 August 2007 Miss XXXX (“the purchaser”) purchased a 1997 Toyota Camry registration number RRRR (“the vehicle”) for $4,995 from YYYY trading as YYYY (“the trader”). The purchaser claims that the vehicle was not of acceptable quality under the Consumer Guarantees Act 1993 and by this application seeks to reject the vehicle and recover from the trader the sums she has paid pursuant to a collateral credit agreement.

[2] The trader says that the purchaser did not contact him to tell him there were any problems with the vehicle but continued to drive it until he arranged to have it repossessed because the purchaser failed to make regular payments owing on the vehicle under the collateral finance agreement.

[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 purchaser’s evidence

[4] The purchaser says that in January 2007 she bought a DDDD car from the trader the engine of which failed and she returned it to the trader who agreed to accept it as a trade in on the vehicle. She says that she then agreed to buy the vehicle from the trader on 1 August 2007 for $4,995 which, with a documentation fee of $250 and interest totalled $7143.40 all of which was financed by the trader over a term of 24 months on her agreement to pay $68.70 a week in repayments. The vehicle’s odometer at the date of sale was 171,806 kilometres. The vehicle had a new warrant of fitness.

[5] The purchaser says that as soon as she purchased the vehicle she found that its front CV joint required replacement and the trader arranged to have this done and she agreed to pay $250.00 for the parts and labour for which she produces the receipt dated 1 August 2007.

[6] The purchaser says she became concerned that the vehicle’s tyres screeched on corners and she took the vehicle to EEEE on 23 August 2007 who measured the vehicle’s wheel alignment and told her it was out of alignment. She produces the alignment report. She says that EEEE told her the alignment could not be corrected but she has no report to confirm this. She says she telephoned the trader but the trader told her he was sorry but he would not do anything about the alignment because he had spent a lot of money already on the vehicle. She says that soon after she ceased to make payments under the finance agreement but took no step to reject the vehicle at that time.

[7] The purchaser continued to drive the vehicle although she says it shook when driven at open road speed on the motorway. In November 2007 she paid $280 to have it checked by FFFF when it would not start and a further $177.80 on 21 February 2008 to repair the front lights. On neither occasion did she request the trader to carry out these repairs to the vehicle before having them done.

[8] On 28 February 2008 the purchaser took the vehicle to GGGG for a warrant of fitness, the previous warrant having expired on 16 January 2008. The vehicle’s odometer was then 179,393 kilometres. The vehicle failed its warrant of fitness because both front tyres were worn.

[9] She says the trader repossessed the vehicle about 8 April 2008. On 17 April she went to the Ministry of Consumer Affairs who wrote a letter to the trader for her and prepared a letter for her to send in with an application to the Tribunal which she did in late April, her application being received by the Tribunal on 1 May 2008. She says that the remedy she would like is to have a refund of all payments made to the trader. She says in response to questions from the Tribunal that the reason she wants to reject the vehicle is because its wheel alignment was not safe. She says that she believes the vehicle had been in an accident.

The trader’s evidence

[10] Mr BBBB says that the vehicle was sold to the purchaser with a new warrant of fitness issued by HHHH, a copy of the checksheet for which he produces. The vehicle’s registration had expired so he had had to have it re-complied and produces a copy of the IIII compliance certification checksheet for the vehicle.

[11] He says that after he accepted back the damaged DDDD, previously sold to the purchaser for $1688, as a trade in on the vehicle, he told the purchaser that the CV joint in the vehicle was defective and because it was not a warrant of fitness item he would not fix it himself but would be prepared to have the job done for the cost of parts and labour of $250, which the purchaser agreed to pay.

[12] He says that after he sold the vehicle to the purchaser he heard nothing further from her and in fact had to get three debt collecting agencies to try and find the purchaser so that he could repossess the vehicle when the purchaser only paid 5 weekly payments of $68.70 before defaulting.

[13] He denies that she contacted him regarding the wheel alignment and also denies telling the purchaser that he was not prepared to repair the wheel alignment.

Legal Principles

[14] In terms of s.89 of the Motor Vehicle Sales Act 2003 the Tribunal has jurisdiction to inquire into and determine applications or claims between a Motor Vehicle Trader and the purchaser of a motor vehicle. In doing so, it may apply the provisions of the Sale of Goods Act 1908, the Fair Trading Act 1986 or the Consumer Guarantees Act 1993, as applicable to the circumstances of the case. In this case the purchaser claims that the trader has breached the provisions of the Consumer Guarantees Act 1993 (“the Act”).

Consumer Guarantees Act 1993

[15] 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".

[16] 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.”

[17] 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."

[18] 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 purchaser has
exercised her right to reject the vehicle within a reasonable time.

The Tribunal’s assessment

[19] The Tribunal is satisfied on the evidence of the trader that the vehicle sold to the purchaser was of acceptable quality at the time of sale having regard to the fact that the vehicle was a 10 year old car which had travelled 171,806 kilometres and was sold for only $4,995 to the purchaser. The vehicle had a new warrant of fitness and had recently been through a VTNZ compliance check. Apart from the worn CV joint the vehicle was in good condition and the purchaser agreed to pay for the CV joint to be repaired at her cost as part of the sale.

[20] Within three weeks of the date of sale the purchaser took the vehicle to have its wheel alignment checked and claims that she was told by EEEE that the alignment was so far “out” that it could not be repaired yet she failed to obtain a report from EEEE to verify this and continued to drive the vehicle from 23 August when she had the alignment checked until the vehicle was repossessed in April 2008 almost 8 months later.

[21] The Tribunal was not satisfied that the purchaser had ever contacted the trader to have the wheel alignment repaired and she admitted in giving her evidence that she had not contacted the trader to repair either of the electrical faults she experienced with the vehicle in November 2007 or shortly before she took the vehicle for a warrant of fitness check on 28 February 2008. The Tribunal, after having the opportunity to listen to and observe the parties prefers the evidence of the trader to that of the purchaser on this point because it found the purchaser to be a less than convincing witness.

[22] The Tribunal is therefore satisfied that the purchaser did not contact the trader and require him to repair the wheel alignment or the electrical defects which arose in November and February. And for this reason the purchaser has no grounds now to seek to reject the vehicle for faults of which she says she first became aware in August 2007.

[23] The Tribunal is also satisfied that any fault to the wheel alignment was not so significant as to cause the vehicle to be rejected for a warrant of fitness when the purchaser took it to be tested on 28 February 2008 after travelling some 7,587 kilometres in the vehicle. The only reason the vehicle failed its warrant of fitness at that time was for two worn front tyres.

Conclusion

[24] The Tribunal therefore finds, first, that the vehicle was of acceptable quality for its age, high mileage and price at the time of sale. Second, that the purchaser failed to require the trader to repair or rectify any faults which emerged after she purchased the vehicle. Third, that the purchaser did not reject the vehicle in the manner required by section 22 of the Act and fourth, even had she rejected the vehicle the Tribunal would not have found that she did so within a reasonable time as required by section 20 of the Act. The purchaser’s application will be dismissed.

Order

[25] The purchaser’s application is dismissed.

DATED at AUCKLAND this 20th June 2008

C H Cornwell
Adjudicator