Home
| Databases
| WorldLII
| Search
| Feedback
Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 2 September 2009
Decision No. WN 22 /2009
Reference No. MVD 106/09
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 WELLINGTON MOTOR VEHICLE DISPUTES TRIBUNAL
N J Wills - Barrister, Adjudicator
M Whinham - Assessor
HEARING at WELLINGTON on 13 August 2009
APPEARANCES
XXXX, purchaser
AAAA, witness for purchaser (by telephone)
BBBB,
Manager for trader
DECISION
Background
[1] On 6 March 2009 XXXX (the purchaser) purchased a 1999 Landrover Freelander (the car) for $ 9,990 from YYYY (the trader). Since purchasing the car Mr XXXX has had various problems with it. He now wishes to reject the car and obtain a refund of the purchase price from the trader.
[2] The trader submits that Mr XXXX is not entitled to reject because the trader has complied with its obligations under the Consumer Guarantees Act.
[3] Prior to the commencement of the Tribunal’s inquiry the Tribunal appointed Mr Whinham who took the oath required of an assessor by Schedule 1, cl.10(2) of the Motor Vehicle Sales Act 2003. As an assessor appointed pursuant to the Motor Vehicle Sales Act 2003 Mr Whinham assisted the adjudicator but the application was determined by the adjudicator alone.
Issues
[4] The Tribunal has jurisdiction to inquire into and determine issues arising under the Fair Trading Act 1986, the Consumer Guarantees Act 1993 or the Sale of Goods Act 1908. Having reviewed the evidence in this case the Tribunal concludes that the issues raised require consideration of the purchaser’s position under the Consumer Guarantees Act. In particular the issues are:
- [a] Whether any of the problems with the car amount to a failure in the guarantee of acceptable quality provided for in the Consumer Guarantees Act;
- [b] If any failure in the guarantee of acceptable quality is a substantial failure; and
- [c] What remedies, if any, is the purchaser entitled to – in particular is the purchaser entitled to reject the car?
[5] The tribunal notes that Mr XXXX has alleged the trader provided incorrect information which could, if established, form the basis of a claim for misleading conduct pursuant to the Fair Trading Act. The allegations are set out below as part of the background information (no supplier information notice displayed, incorrect information on supplier information notice, incorrect information as to the “trade-in” status of the car) but have not been considered in detail. This is because it was clear that Mr XXXX was not relying on those matters in pursuing his claim, nor was there any suggestion that any loss or damage arose from the alleged behaviour.
Facts
[6] Mr XXXX bought the car from the trader on 6 March 2009. One of the conditions of sale was that the trader would supply a replacement mirror cover (which was missing from the car). At the time of purchase Mr XXXX also noted that there was a warning light indicating and asked the trader to find out what this meant. The car had a sunroof which the purchaser and the trader agreed could be sealed closed because it didn’t work. Shortly after Mr XXXX collected the car, the sunroof opened again. He took the car back to the trader and the sunroof was locked down in the closed position.
[7] On 9 April 2009 (the Thursday before the Easter break) Mr XXXX headed off from CCCC on holiday in the car with his family. South of DDDD the car broke down and wouldn’t start. Mr XXXX called the EEEE who after a delay of around two hours checked out the car and diagnosed a problem with the petrol pump. Mr XXXX considered his options and decided that the best course of action would be to have the car towed back to CCCC. This required a seven seater tow truck (to accommodate the entire family) and cost $400.
[8] The other options were not feasible – Mr XXXX could have had the car towed to FFFF but it could not be repaired until the Tuesday after Easter. Mr XXXX also enquired about hiring a car but there were none available.
[9] Mr XXXX and his family were towed back to CCCC. They collected their other car and proceeded on holiday. Their intention was to contact the trader about the car when they got back from holiday. During their holiday Mr XXXX received a text message from the trader and in his reply advised of the breakdown.
[10] When Mr XXXX arrived back from holiday Mr XXXX decided to reject the car. He took some advice from GGGG and wrote a letter dated 21 April 2009 to the trader rejecting the car and asking for a refund of the purchase price on the grounds that the car failed the guarantee of acceptable quality. He went on to say that the problems were serious so he was entitled to reject the car. The problems set out in support of his rejection were;
- [a] The failure to fix the sunroof properly (although this was now properly closed as agreed);
- [b] The failure to supply the mirror cover;
- [c] The failure to display the supplier information notice prior to sale (Mr XXXX was supplied with a supplier information notice at the time of sale);
- [d] Incorrect information on the supplier information notice (which referred to Japan rather than Singapore as where the car was last registered);
- [e] Incorrect advice that the car was a recently acquired trade in.
- [f] The failure to provide information about the warning light that had displayed since purchase; and
- [g] Failure to register the change of ownership.
[11] There was some delay in response to this letter because of confusion as to the trader’s address. On 15 May 2009 the trader wrote to Mr XXXX. The letter responded to each of the problems set out as grounds for rejection in Mr XXXX’s letter. In summary, the letter advised that:
- [a] The sun-roof had been repaired;
- [b] The mirror cover was being sourced (there had been some difficulty obtaining it);
- [c] The supplier information noticed was not displayed but a notice was displayed advising that the car was not yet prepared for sale;
- [d] The trader accepted that the supplier information notice provided incorrectly recorded the origin of the car.
- [e] The verbal advice that the car was a trade-in was correct.
- [f] The change of ownership was held up because the trader was waiting for drivers licence details from the purchaser.
[12] The letter did not respond to the query about the warning light. In respect of the breakdown. The letter responded:
“Failure of the Vehicle
We learned of this only upon repeatedly trying to obtain your drivers licence version number in order that the transfer of ownership could be completed. It is normal practice to contact a vendor before repairs are made should there be perceived shared responsibility.”
[13] At the conclusion of the letter the trader advised:
“As the sales person who negotiated this sale with you and your wife, I see no reason to do anything other than correct the outstanding issue, that being the mirror cover, which as stated, will be done at a convenient time.”
[14] On the basis of that response Mr XXXX arranged for the car to be checked to determine what was wrong with it. He took the car to HHHH and asked them to diagnose the problem. AAAA of HHHH gave evidence of that inspection. He is a trade certified mechanic with 34 years experience. He inspected the car and determined that the problem was a faulty rotor and distributor cap. Mr AAAA’s evidence was that the fault was diagnosed by installing replacement parts and testing the car. For that reason the car was actually repaired as part of the diagnosis process. The repair cost Mr XXXX $193.35.
[15] Mr XXXX wrote to the trader on 29 May 2009 advising that the cause of the problem had been discovered, and that because the fault was not serious (as he originally considered) he no longer sought a refund but wanted to be reimbursed for the cost of repairs and towing – a total of $593.35.
[16] Mr XXXX did not receive any response to that letter and on 5 July 2009 he filed this application with the tribunal. Since that time another problem has developed with the car. On a drive from JJJJ to CCCC the radiator started boiling. Mr XXXX took the car back to HHHH. Mr HHHH’s evidence was that he pressure tested the cooling system to check for leaks and ran the engine to check the cooling fan but was unable to find any problem with the radiator.
[17] As part of the tribunal process, the trader made an offer to the purchaser to reimburse Mr XXXX for the expenses incurred in repairing the rotor and distributor cap ($193.35) and what the trader considered were reasonable towing costs ($280). In support of that offer Mr BBBB produced a quote obtained via the internet for $244.13 to transport a car from KKKK to CCCC. Mr BBBB’s submission was that had the trader been contacted when the car broke down, he could have arranged for the car to be transported back to CCCC.
[18] Mr BBBB’s evidence was that had Mr XXXX approached him about the breakdown after he returned from holiday, the trader would have repaired the car. He could not explain however, why his letter dated 15 May 2009 stated that the only issue the trader had responsibility for was the replacement of the mirror cover (other than to say that the trader’s manager had drafted the letter and he had signed it without looking through it).
[19] Mr BBBB said that the mirror cover had now arrived and was available for fitting to the car.
Was there a failure in the guarantee of acceptable quality?
The guarantee of acceptable quality
[20] Section 6 of the Consumer Guarantees Act 1993 provides a guarantee as to the acceptable quality of goods sold:
"6 Guarantee as to acceptable quality
(1) Subject to section 41 of this Act, where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality.
(2) Where the goods fail to comply with the guarantee in this section,—
(a) Part 2 of this Act may give the consumer a right of redress against the supplier; and
(b) Part 3 of this Act may give the consumer a right of redress against the manufacturer."
[21] Section 7 sets out a definition of the guarantee of acceptable quality:
"7 Meaning of “acceptable quality”
(1) For the purposes of section 6 of this Act, 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:
(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 obtain 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."
[22] In considering whether or not goods meet the guarantee of acceptable quality, the Tribunal must consider the quality elements as set out in section 7(1)(a) to (e) as modified by the factors set out in section 7(1)(f) to (j) from the perspective of a “reasonable consumer”. This test is an objective test. It is not a review of those factors from the purchaser’s subjective perspective.
[23] The time at which the quality of the vehicle is assessed is at the time of sale – although the durability characteristic may involve consideration of evidence of failure at a later date.
[24] In his grounds for rejection, Mr XXXX referred to specific problems with the sunroof, mirror cover, the breakdown (rotor and distributor cap). He also referred to the possibility of an underlying problem indicated by the warning light. At the hearing, an issue with the radiator was added to the list. These are the issues raised by Mr XXXX that are relevant to consideration of the guarantee of acceptable quality.
[25] As noted at the beginning of this decision, Mr XXXX also made allegations about the trader’s behaviour – failure to display a supplier information notice prior to sale, incorrect information on the supplier information notice that was provided at the time of sale and allegedly incorrect verbal information. In the context of consideration of the purchaser’s rights under the Consumer Guarantees Act, these issues have no relevance because they do not relate to the quality or otherwise of the car.
[26] The sun-roof was the first issue raised. This is a problem that was identified prior to sale and the trader undertook to remedy. The problem has now been fixed to Mr XXXX’s satisfaction so that problem cannot support any finding of a failure in the guarantee of acceptable quality.
[27] The lack of a mirror cover is clearly a failure in the guarantee of acceptable quality. It was an issue that was identified at the time of sale and the vehicle offer and sale agreement records that the trader would supply a mirror cover. This has not yet been done and it is clear from the evidence that there has been some delay in obtaining a mirror cover but it is also clear that the mirror is now available but has not been fitted primarily because of the way the dispute between the parties has played out.
[28] The breakdown caused by the faulty rotor and distributor cap occurred when the car had travelled only approximately 1,000 kilometres since purchase. Bearing in mind the age, mileage and price of the car the tribunal is satisfied that this breakdown was a failure in the guarantee of acceptable quality.
[29] There is no evidence to support a conclusion that there is anything wrong with the car’s cooling system. Although there has been an incident when the car overheated, the purchaser’s own mechanical evidence is that nothing could be found wrong with the car.
Do the failures amount to a substantial failure in the guarantee of acceptable quality?
[30] Section 21 sets out the circumstances in which a failure is deemed to be a substantial failure in the guarantee of acceptable quality. Whether or not the failure is substantial as defined in section 21 has ramifications for the remedies available to the purchaser.
[31] Section 21 provides:
“21 Failure of substantial character
For the purposes of section 18(3) of this Act, a failure to comply with a guarantee is of a substantial character in any case where—
(a) The goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
(b) The goods depart in one or more significant respects 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) of this Act 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 of this Act because they are unsafe.”
[32] The tribunal is not persuaded that there has been any substantial failure in the guarantee of acceptable quality. This is accepted to some extent by Mr XXXX who, when he discovered the cause of the breakdown modified his request of the trader from rejecting the car and obtaining a refund to reimbursement for repairs.
What remedies are available to the purchaser?
[33] Section 18 of the Consumer Guarantees Act 1993 sets out the remedies available to the purchaser for a failure in the guarantee of acceptable quality. It provides:
"18 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 of this Act 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 of this Act:
(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 of this Act, reject the goods in accordance with section 22 of this Act.
(3) Where the failure cannot be remedied or is of a substantial character within the meaning of section 21 of this Act, the consumer may—
(a) Subject to section 20 of this Act, reject the goods in accordance with section 22 of this Act; 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) of this section, 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."
[34] The purchaser and the trader agreed that the trader would obtain a mirror cover for the car (effectively a requirement to repair under section 18(2)(b) of the Act.) It is then only in circumstances where the trader refuses, neglects or fails to remedy the problem that the right to reject arises. The tribunal is not persuaded that the purchaser has established on the balance of probabilities (the required level of proof) that the trader meets that criteria. There was clearly some difficulty in obtaining the mirror cover. The tribunal accepts that the difficulty experienced by the trader was not reflective of statements to the purchaser that it would not be difficult but there is no evidence that those assurances were made in any dishonest way. By 15 May when the trader wrote to the purchaser the arrival of the correct mirror cover was imminent and the delay thereafter has been because of the wider dispute. It could presumably be fitted as soon as the purchaser’s makes the car available to the trader.
[35] Mr XXXX originally sought to reject the car after the breakdown caused by the faulty rotor and distributor cap. This remedy was not available to him because the failure was not a “substantial” failure as defined in the Act however he did not know that because the cause of the breakdown had not been diagnosed. In light of the trader’s letter indicating it had no responsibility for the failure that caused the breakdown, Mr XXXX had no option but to take the car to a mechanic to diagnose the problem so that he could bring these proceedings.
[36] In those circumstances he is entitled to recover the cost he incurred obtaining that diagnosis (which the tribunal accepts was equal to the costs of repair). Having established that the rotor and distributor cap problem was a failure in the guarantee of acceptable quality, Mr XXXX is also entitled to recover damages for reasonably foreseeable loss liable to result from the failure in the guarantee of acceptable quality (section 18(4)). The tribunal finds that the towing costs and transportation of Mr XXXX’s family were a reasonably foreseeable consequence of the breakdown of the car. Although the trader may have been able to arrange for the car to be towed at a lesser cost than that claimed by Mr XXXX, there is the additional issue in this case of requiring a towing vehicle that could seat seven people. The tribunal is satisfied that the $400 towing costs were reasonable and that Mr XXXX is entitled to be reimbursed for them.
[37] For the sake of clarity, the tribunal notes that the right to recover damages for consequential loss (ie not the failure itself but expenses that a reasonably foreseeable to result as a consequence of the failure) is not predicated on a first approach to the trader before committing to any expense.
Orders
DATED at WELLINGTON this 24 day of August 2009
__________________
N Wills
Adjudicator
DIRECTION TO THE CHIEF EXECUTIVE, MINISTRY OF JUSTICE
Section 94 of the Motor Vehicle Sales Act 2003 provides that if an application is made to this Tribunal which falls within its jurisdiction and that in determining the application the Tribunal decides against a motor vehicle trader, the Tribunal must direct the Chief Executive of the Department for Courts (now Ministry of Justice) to publish a notice in the Gazette containing the particulars set out in subsection (2). The notice is only to be published once the circumstances described in subsection (3) have occurred. The Chief Executive is directed accordingly.
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/cases/NZMVDT/2009/93.html