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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 27 February 2011
Decision No. WN 31A /2010
Reference No. MVD 180/10
IN THE MATTER of the Motor Vehicle Sales Act 2003
AND
IN THE MATTER of a dispute
BETWEEN MELISSA JONES
Purchaser
AND BLING BLING MOTOR CO LIMITED
Trader
BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
N J Wills - Barrister, Adjudicator
N Barrett - Assessor
HEARING at Christchurch on 3 November 2010
APPEARANCES
Melissa Jones, purchaser
Bob Rocksford, witness for the
purchaser
Anthony Muir, witness for the purchaser
John Kitely, director
for trader
Wayne Martin, witness for the trader
Simon Bates, witness for
the trader
DECISION
Background
[1] On 14 July 2010 Melissa Jones (the purchaser) purchased a 1999 Nissan Skyline (the car) for $24,990 from Bling Bling Motor Co Ltd (the trader). The purchaser has applied to the tribunal because she has formally rejected the car pursuant to the Consumer Guarantees act 1993 but the trader has not accepted that rejection.
[2] The trader's position is that the problems with the car can be easily remedied and that Ms Jones is not entitled to reject the car.
[3] Prior to the commencement of the Tribunal’s inquiry the Tribunal appointed Mr Barrett 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 Barrett assisted the adjudicator but the application was determined by the adjudicator alone.
Summary
[4] Ms Jones is entitled to reject the car and obtain a refund of the purchase price. The tribunal finds that she is entitled to do so because:
- [a] The car failed the guarantee of acceptable quality because it did not have LVV certification for a number of modifications made to the car when it was sold. That fact and other problems with the car meant that it should not have passed a warrant of fitness inspection. The car could not legally be driven on the road.
- [b] The failure is a substantial failure in the guarantee of acceptable quality because the car was substantially unfit for the purpose for which it was supplied – driving on the road. Accordingly Ms Jones has the right to reject the car for that failure without having to give the trader an opportunity to repair the problem.
[5] The tribunal’s findings of fact and reasoning are set out below.
Facts
[6] Ms Jones purchased the car from the trader on 14 July 2010. The vehicle offer and sale agreement records the purchase price as $24,990. Ms Jones traded in her Toyota Altezza for $6,500 and the trader arranged finance with Fair City Finance for $6,500 of the purchase price. Ms Jones paid $6,000 in cash and for some reason the trader “paid” $5,990 of the purchase price so that the total consideration for the car was $19,000.
[7] Ms Jones saw the car on the Trade Me web-site and agreed to purchase the car without having taken it for a test drive. At the time she purchased the car, the odometer reading was 134,800 kilometres. The car had been modified in the past and was fitted with a low volume vehicle (LVV) certificate detailing the modifications for which the certificate had been granted. Details of any modifications certified in this way are recorded physically on the car by means of an LVV plate attached to the firewall in the engine bay.
[8] The car was sold to Ms Jones with a current warrant of fitness. The tribunal notes that the warrant of fitness checksheet for that inspection provided by the trader has no details specifying who carried out the inspection and that printed at the top of the checksheet are the words “Please ensure the VI or IO name appears or the checksheet is invalid”.
[9] The LVV plate on the car recorded that the car had modified wheel rims. The certificate allowed rims of 17” (the diameter of the rim) x 8” (the width of the rim) for the front and rear of the car. Mr Rocksford measured the rims currently on the car as 18” x 9” on the front of the car and 18” x 10” on the rear of the car. The tyre measurements the car was sold with are 225/40 x 18 (225 being the width of the tyre in millimetres, 40 being the profile of the tyre as a percent of the width and 18 being the wheel diameter that it is appropriate to fit the tyre to).
[10] After the hearing, Mr Barrett conducted some research which revealed that the maximum wheel width the tyres on the car should have been fitted to was nine inches. This research has been referred to both Mr Kitely and Ms Jones for their comment prior to the tribunal reaching a decision. Mr Kitely has suggested that Mr Rocksford may not have measured the rims properly and says he has been told that both the front and rear wheels have nine inch rims. He was not able to produce any direct evidence to support this. The tribunal finds it inherently unlikely that Mr Rocksford measured the front wheels correctly and the rear wheels incorrectly. Nor is it likely that he would have measured the front and back wheels as different measurements if they were the same. If he was measuring incorrectly, it would be more likely that he measured both sets of wheels in the same “incorrect” fashion.
[11] When Ms Jones drove the car home from Christchurch to Kaikoura, she had problems with air leaking out of one of the back tyres. When she arrived in Kaikoura she had a local mechanic, Mr Rocksford check the car over. He identified a number of problems with the car. On receipt of his advice Ms Jones decided to reject the car and did so by letter dated 20 July 2010. The letter attached a list of problems identified by the mechanic and advised that Ms Jones was rejecting the car under the Consumer Guarantees Act on the basis that the problems discovered were substantial. Ms Jones asked for a refund.
[12] The trader did not accept that Ms Jones was entitled to reject the car and so Ms Jones has made this application to the tribunal. Prior to the application being heard, Ms Jones had a VTNZ warrant of fitness inspection carried out on the car. The items for which the car failed were recorded as follows:
“Window tint to comply
Tyres & Rims to comply with LVV cert fitted plate
Brake imbalance Rear & to maintain 20% or less on full application
Confirm frontal impact complies
Confirm rear Diff modification to comply ie locked diff.”
[13] The tribunal heard evidence about the state of the car from Ms Jones, Mr Rocksford (the owner of the workshop that evaluated the car for her), Mr Muir (a panel-beater who inspected the car for Ms Jones), Mr Kitely (the director of the trader), Mr Martin, an automotive engineer, panel beater and Low Volume Vehicle certifier (who gave evidence for the trader).
[14] The tribunal does not propose to set out in detail all the evidence received by the tribunal about the car. It is sufficient for the purposes of this decision to note that there were a number of problems with the car identified by Mr Rocksford that, while they may have been of concern to Mr Rocksford, were not sufficiently serious to have failed a warrant of fitness inspection carried out by VTNZ. After hearing from Mr Rocksford, it was clear that his approach tended to a very strict interpretation of the warrant of fitness regulations. The tribunal reaches this conclusion by a comparison of his evidence and the subsequent VTNZ inspection (which passed many of the items that in Mr Rocksford’s view should have failed).
[15] The problems identified by VTNZ require further consideration.
Window tint
[16] The VTNZ inspection noted that the window tint did not comply. The trader did not dispute this but noted that this was easily remedied by removal of the adhesive window tint.
Tyres & rims
[17] Ms Jones gave evidence that on the drive home from the trader’s yard after she purchased the car, she had problems with air leaking out of one of the rear tyres. Just before Cheviot she had to replace the tyre with the spare tyres. She said that the tyre that was leaking looked as if the tyre was peeling off the rim.
[18] Mr Rocksford said that when he inspected the car, (Ms Jones took it to him when she arrived in Kaikoura), about 5mm of the rim was visible past the tyre. Mr Rocksford confirmed that the car was fitted with 225/40 x 18 tyres and that when he inspected the car the tyre was sitting off the rim and had been filled with a silicone sealant to stop the tyre from leaking. Mr Barrett’s research revealed that the maximum wheel width appropriate for this type of tyre is nine inches. Mr Rocksford measured the front wheels rims at 9 inches width and the rear wheel rims as ten inches width. The tribunal accepts those measurements as correct. Mr Barrett’s view, which is accepted by the tribunal, is that fitting a tyre to a rim wider than the tyre was designed for was the likely cause of the tyre detaching from the rim. This silicone sealant had no doubt been applied in an attempt to hold the tyre in place.
[19] Mr Martin, a witness for the trader, is a qualified automotive engineer, LVV certifier and has previously worked as a panel beater. He is the LVV certifier who issued the LVV certificate for this vehicle in 2007. He gave evidence that about two years ago the certification process had changed so that any wheel change is now recorded on the LVV plate. He said that in this instance the car was certified with 17” diameter rims and that they had subsequently been changed to 18” diameter rims and tyres so the car no longer had the appropriate LVV certification.
Brake imbalance/rear differential modification
[20] These two issues are dealt with together because the trader has submitted that the VTNZ diagnosis of a brake imbalance cannot be correct if it is accepted that the car has been modified so that it has a locked differential.
[21] The VTNZ inspection questioned whether or not the vehicle had a differential modification. The issue is whether or not the vehicle has been fitted with a locked differential (which is illegal and not able to be certified) or has a limited slip differential – which is legal but must be certified. What became clear through the course of the hearing is that it is very difficult to tell (without complete disassembly) whether a differential is “locked” (ie, so that the rear wheels cannot rotate at different speeds when cornering) or whether it is a limited slip differential that has been adjusted tightly so that it will allow the wheels to rotate at different speeds when cornering but only under a high loading. Detection of a locked differential is usually carried out by driving the vehicle in a circle to detect tyre slippage and bind-up on the axle with the suspected locked differential. Mr Rocksford drove the car and his firm opinion was that the differential was locked. He said that when he was driving the car out of a sharp corner he could feel the rear of the car pushing out. He said that was an indication that the differential was locked.
[22] Mr Kitely’s submission was that there could not be a brake imbalance (as was detected by VTNZ) if the car was fitted with a locked differential, the rear wheels work in tandem which is inconsistent with differing brake measurements on each side of the car because both of the rear wheels would be turning at the same speed. It was submitted by the trader that the only possible cause of such a reading when a car had a locked differential is if there was a calibration problem with the brake testing machinery. There is a degree of logic to that submission.
[23] The tribunal’s conclusion is that it has not been proven on the balance of probabilities that the car is fitted with a locked differential. The evidence regarding the brake imbalance does throw doubt on that as a possibility and the performance of a vehicle with a limited slip differential that has been tightly or over adjusted is not dissimilar to the performance of a vehicle with a locked differential.
[24] The VTNZ inspection measured the rear axle braking as 170 on the left and 190 on the right and a maximum imbalance of 40%. The legal requirement is for 20% or less. The concern with such an imbalance is that under heavy braking such an imbalance can cause a vehicle to slew. Mr Kitely submitted that the figures recorded only showed a 20% imbalance. This may have been the case at some point during the test but the VTNZ inspection sheet clearly records a 40% imbalance and it is the maximum imbalance that is important.
Frontal impact
[25] The VTNZ inspection noted “confirm frontal impact complies”. Mr Rocksford’s evidence was that it was clear that some work had been carried out on the front of the car. Mr Muir, a panel beater who inspected the car said that at the left front side of the car some work had been carried out under the battery box. He was unable to assist the tribunal in regard to whether the work was carried out as a result of an impact, repair or modification as it was difficult to see.
[26] Mr Kitely gave evidence to the tribunal that he had contacted the previous owner who told him that he had fitted a front-mounted inter-cooler. Mr Kitely said that this type of modification requires certification and would pass the requirements for certification provided the chassis was unaffected. Mr Kitely accepted that this modification had not been certified and this would need to be carried out before the car could legally be driven.
The issues before the Tribunal
[27] The following issues require consideration:
- [a] Whether the car met the standard of acceptable quality when it was sold to Ms Jones?
- [b] If so, was she entitled to reject the car?
The Consumer
Guarantees Act 1993
The guarantee of acceptable quality
[28] 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."
[29] 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."
[30] 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.
[31] The reasonable consumer test is derived from the statement of Dickson J in Australian Knitting Mills Limited v Grant [1933] HCA 35; (1937) 50 CLR 387:
"The condition that goods are of merchantable quality requires that they should be in such an actual state that a buyer fully acquainted with the facts and, therefore, knowing what hidden defects exist, and not being limited to their apparent condition would buy them without abatement or price ... and without special terms".
[32] In this case the goods are an eleven year old second-hand vehicle with an odometer reading of 134,800 kilometres sold to the purchaser for an ostensible price of $24,990 and actual payments of $19,000. Although the car was sold with a current warrant of fitness, it clearly should not have passed a warrant of fitness inspection and based on the paper-work there is some doubt as to the validity of that inspection.
[33] Because the car did not have the appropriate certification for the modifications it had and because of the brake imbalance and the non-complying window tints, it should not have passed the warrant of fitness inspection undertaken prior to sale. The other factors raised – the locked differential and possible frontal impact have not been established on the evidence and have not been taken into account by the tribunal in assessing the state of the car.
[34] The car’s state as determined by the tribunal is such that it is not legally able to be driven on New Zealand Roads and it is therefore unfit for a purpose for which goods of the type in question are commonly supplied (section 7(1)(a) above). The tribunal is also satisfied that a reasonable consumer acquainted with knowledge of that state of affairs would not have regarded the car as acceptable. For those reasons the tribunal finds that there is a failure in the guarantee of acceptable quality.
Was the failure a substantial failure in the guarantee of acceptable quality?
[35] 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.
[36] 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.”
[37] The tribunal finds that the failure in this case was substantial. The fact that the certification process and/or any necessary repairs may be easily and possibly relatively inexpensive to carry out does not alter the fact that when the car was sold it was not legally able to be driven on the road. That fact renders the car substantially unfit for a purpose for which goods of that type are commonly supplied. In addition, the tribunal is satisfied that a reasonable consumer acquainted with knowledge of state of the car would not have purchased the car.
What are the remedies available to the purchaser?
[38] Section 18 of the Consumer Guarantees Act 1993 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 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."
[39] In this case Ms Jones rejected the car on 20 July 2010 only a few days after she took possession of the car on 15 July 2010. Following correspondence between her lawyer and the trader and her application to this tribunal Ms Jones sent another letter of rejection. Ms Jones’ rejection is upheld by the tribunal. She is entitled to a refund of any money paid or other consideration. The purchase price was $24,990 but the consideration paid only amounted to $12,500. $6,500 of that came from a trade-in – the tribunal has no jurisdiction to order return of that vehicle so the trader will be ordered to refund $6,500 together with the cash payment of $6,000.
[40] Because the trader arranged the finance agreement for Ms Jones, it is appropriate that the tribunal make an order vesting the finance agreement in the trader. In those circumstances Ms Jones is entitled to a refund of any capital payments made up until she rejected the car (20 July 2010). She is also entitled to be refunded both capital and interest payments made after that date. If the parties cannot agree as to the appropriate amount to be paid, leave is reserved for that issue to be brought back before the tribunal for determination.
[41] Because the car is not able to be legally driven, it is appropriate that the trader make any arrangements necessary to uplift the car from Ms Jones.
Orders
DATED at WELLINGTON this day of 2010
___________________
N Wills
Adjudicator
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2010/174.html