Phelps v Rocket Limited T/A Rocket Cars - Reference No. MVD 170 /2010 (Auckland) [2010] NZMVDT 133 (7 October 2010)

Last Updated: 18 February 2011

Decision No. AK 111 /2010

Reference No. MVD 170/2010

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN HOPE ELIZABETH POWELL-PHELPS

Purchaser

AND ROCKET LIMITED T/A ROCKET CARS

Trader

BEFORE THE AUCKLAND MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr M Whinham, Assessor

HEARING at AUCKLAND on 6 October 2010

APPEARANCES,
Ms H E Powell-Phelps the purchaser
Mr M Howson, witness for the purchaser
Mr S D Browning, Director, representing the trader

DECISION

Background

[1] On 30 June 2010 Ms Powell-Phelps(“the purchaser”) purchased a 2001 Honda Civic registration number FLA138 (“the vehicle”) from Rocket Limited trading as Rocket Cars (“the trader”) for $8,000. The purchaser says the vehicle is not water-tight and rainwater is causing damage to the vehicle, its carpets, upholstery and trim. She requires the trader to remedy the problem at its cost.

[2] The trader says that it is willing to have its panel repairer fix the cause of the leak and dry out the vehicle’s carpet, upholstery and trim but the purchaser has not returned the vehicle to it in Takanini to enable it to do so. It agrees to provide a rental car at its expense for the purchaser’s use whilst repairs are being carried out.

[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 Mr Whinham assisted the adjudicator but the application was determined by the adjudicator alone.

Facts

[4] The purchaser purchased the vehicle from the trader on 30 June 2010 for $8,000. The vehicle had travelled 134,332kilometres at the time of sale. The trader supplied the vehicle to the purchaser without a warrant of fitness issued within 1 month prior to the date of sale.

[5] The purchaser had VTNZ Te Rapa carry out a warrant of fitness test on the vehicle on 2 July 2010 which cost her $49. The trader promised to reimburse the purchaser with that sum but has not done so.

[6] On 3 July the vehicle’s right wheel bearing collapsed and the trader paid Firestone Direct $216.50 on or about 5 July to have the ball joint repaired and a wheel alignment carried out and shortly afterwards the right front CV joint was replaced at a cost of $175 which was also paid by the trader.

[7] The purchaser says that VTNZ told her in the course of inspecting the vehicle on 2 July for a WOF that they had found water in the vehicle’s spare wheel well. The purchaser sent the trader an email on 6 July informing it of the problem but received no response from the trader.

[8] The purchaser says that the vehicle has continued to leak rain water into the vehicle which collects in the spare wheel well and because there is no drain hole in the spare wheel well she and Mr Howson have had to mop it out on several occasions. Water has now affected the vehicle’s rear seat and carpets to such an extent that mould is growing on the upholstery and the vehicle has an unpleasant musty smell. The purchaser says that she has tried to contact the trader about this fault but its phone is not answered.

[9] On 12 August the purchaser took the vehicle to Panel & Paint in Frankton who gave her an estimate of $742.50 to remove the seats, kick panel, pillar trims, carpet and boot trims to dry them out and test for leakage but this estimate does not cover the cost of fixing the leak(s) found in the vehicle. Soon after receiving this estimate Mr Howson searched the Motor Vehicle Trader’s Register to find the address of the director of the trader, Mr Browning, and sent a letter to his residential address, which is also the registered office of the trader company, requiring the trader to remedy the fault. He produces a copy of the letter he says he sent. Unfortunately the letter is undated. Mr Browning denies receiving the letter.

[10] The purchaser filed an application with the Tribunal on 8 September a copy of which was immediately sent to the trader. On 11 September the trader sent the purchaser and Mr Howson an email saying that to address the leak the trader required the vehicle for 2 or 3 days. The purchaser would prefer to have the vehicle’s fault repaired in Hamilton to avoid the expense and inconvenience to her in having to bring the vehicle back to the trader’s premises in Takanini and drive back several days later to collect it after it has been repaired.

[11] The trader represented by Mr Browning says that the vehicle was not leaking when the trader owned it. His panel beater (without having inspected the vehicle) thinks it is probable that water is gaining access through the tail lights and splashing onto the bottom of the bench seat which has soaked the water up. The trader’s panel beater needs the vehicle for 2 or 3 days to dry out the interior, trace and repair the leak(s) and Mr Browning says he is willing to arrange for the work to be done as soon as the vehicle is returned to him in Takanini but needs to give his panel beater several days’ notice.

Issues

[12] The facts raise the following issues:
[a] Whether the vehicle failed the guarantee of acceptable quality in section 6 of the Consumer Guarantees Act 1993 (“the Act”)?
[b] If so what remedies are available to the purchaser?

The Consumer Guarantees Act 1993

Issue (a): Did the vehicle fail the guarantee of acceptable quality in section 6 of the Act?

[13] Section 6 of the Act imposes on a supplier and the manufacturer of consumer goods "a guarantee that the goods are of acceptable quality." Section 2 of the Act defines "goods" as including "vehicles.”

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

“7 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, 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.”

[15] 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) of the Act as modified by the factors set out in section 7(1)(f) to

(j) from the perspective of a “reasonable consumer”. The test is an objective

one; it is not a view of those factors from the purchaser’s subjective perspective.

[16] 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 purchaser 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 exercised her right to reject the vehicle within a reasonable time.
[17] The factors to be considered by the Tribunal in this case in deciding if the vehicle was of acceptable quality are that the vehicle was, at the time of sale a
9 year old second hand Honda Civic which had travelled 134,332km at the time it was sold to the purchaser for $8,000. Having heard the evidence the Tribunal is satisfied that at the time of sale the vehicle was probably already leaking because the purchaser gave evidence that VTNZ had seen the water in the spare wheel well when they did the WOF inspection 48 hours after the vehicle was supplied to the purchaser. Her account of this is supported by her email to the trader on 6 July. The vehicle was therefore not free of minor faults or as durable as a reasonable purchaser of such a vehicle would regard as acceptable and thus did not comply with the guarantee of acceptable quality in section 6 of the Act.

Issue (b): What are the remedies available to the purchaser?

[18] Section 18 of the Act sets out the remedies available to the purchaser in respect of a failure in the guarantee of acceptable quality. It provides as follows:

“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 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 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 s.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.”

[19] In this case the purchaser’s partner wrote to the trader and asked the trader to remedy the problem with the water leaking in to the vehicle but unfortunately there is no record of the date this request was sent or proof the trader received it. The trader has however been aware that there is a leak in the vehicle since 6 July 2010 and was also aware by 11 September from receiving the purchaser’s application to the Tribunal that the problem was one the purchaser required it to remedy. The purchaser has an obligation under s.18(2)(a) of the Act to deliver the vehicle to the trader and “require” it to remedy the fault within a reasonable time. The Tribunal considers that the purchaser should do this without further delay at a time when the trader can arrange to provide her with a loan car for so long as it takes to remedy the fault. The parties need to communicate with each other to arrange this.

[20] Given the trader’s agreement to remedy the fault at its cost and to do so as soon as the vehicle is returned to it, the Tribunal has decided to adjourn the further hearing of this application for one month so that if the vehicle is properly repaired so that it does not leak, the purchaser can notify the Tribunal to dismiss her application as settled. If the vehicle is not properly repaired within a reasonable time, which the trader accepted was about three days after it receives the vehicle back, the purchaser can exercise her option under section 18(2)((b) (i) or (ii) of the Act and either take the vehicle away and have it repaired elsewhere and obtain from the trader all reasonable costs incurred in doing so, or reject the vehicle and have a full refund of her purchase price.

Orders

1. The trader shall within a reasonable time of the vehicle being returned to it remove and dry the upholstery carpets and trim, remedy the leak(s) in the vehicle so that the vehicle is water-tight and does not leak, and refit the dried upholstery carpet and trim to the vehicle.

2. The purchaser’s application is adjourned. Leave is reserved to the purchaser to have the application considered by the Tribunal upon written notice given by the purchaser within one month of the date of this order.

3. The trader shall within 7 days of the date of this order reimburse the purchaser with $49 she incurred for a warrant of fitness which the trader should have obtained before selling the vehicle to the purchaser.

DATED at Auckland this 7th day of October 2010

C.H.Cornwell
Adjudicator