Brett v Samwoo Trading Limited T/A Godo Motors - Reference No. MVD 158/11 (Wellington) [2011] NZMVDT 121 (21 September 2011)

Last Updated: 17 October 2011

Decision No. WN 20 /2011

Reference No. MVD 158/11

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN CHARMAINE BRETT

Purchaser

AND SAMWOO TRADING LIMITED trading as GODO MOTORS

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

N J Wills - Barrister, Adjudicator
S Gregory - Assessor

HEARING at Auckland on 31 August 2011

APPEARANCES

Charmaine Brett, purchaser
Brett Newton, witness for the purchaser
Kelvin Rice, witness for the purchaser (by telephone)
Hyun Sik Park, Company Director for the trader
Moana Kadarmia, Office Manager for the trader

DECISION

Background

[1] On 12 December 2010 Charmaine Brett (the purchaser) purchased a Nissan Tiida, registration FRT992 (the car) for $12,800 from Samwoo Trading Limited trading as Godo Motors LMVD (the trader). Ms Brett alleges that the car has failed the guarantee of acceptable quality. She says that the trader has refused to repair the car and wants to be reimbursed for the cost of repairs she has had carried out on the car.

[2] The trader’s position is that it is not responsible for the cost of repairs because Ms Brett did not give the trader an opportunity to assess the car or carry out the repairs and so she is not entitled to recover the cost of repairs carried out elsewhere.

[3] Prior to the commencement of the hearing the tribunal appointed Mr Gregory as the tribunal’s assessor and he 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 Gregory assisted the adjudicator but the application was determined by the adjudicator alone.

Summary

[4] Ms Brett is entitled to recover the cost of repairs to the transmission because:

• [a] The transmission failure is a failure in the guarantee of acceptable quality;
• [b] The purchaser asked the trader to repair the transmission but the trader refused.
  

[5] The tribunal’s detailed findings of fact and reasoning are set out below.

Facts

[6] Ms Brett purchased the car from the trader on 12 December 2010 for $12,800. The car is a six year old Nissan Tiida that had an odometer reading of 60,000 kilometres at the time of sale. The vehicle offer and sale agreement (VOSA) records as “special conditions” that the car would be supplied with a full tank of fuel, six months registration and a three month warranty.

[7] Ms Brett’s told the tribunal that on 16 May 2011 the car started making what she described as a terrible noise. By way of background she explained that from the time she purchased the car it had made a whining noise that she and Mr Newton had assumed was normal because it was there when she purchased the car but that on the 16th the car suddenly started making a clunking noise. She took the car to Watson Haworth Motors Ltd (Watson Haworth) who inspected the car and told her there was a problem with the transmission. She was advised to contact the trader.

[8] Ms Brett called the trader and spoke to Mr Park who she knew as Harry Park – the person who had sold the car to her. She told Mr Park that she was having problems with the car and that she had been told that there was a problem with the transmission. She asked Mr Park if the trader would repair the car. Her evidence to the tribunal was that Mr Park’s response was that he refused to assist with repairs. She told the tribunal Mr Park said that because she had owned the car for five months it was outside the three month warranty and for that reason the trader was not obliged to assist with repairs.

[9] Ms Brett said she told Mr Park that under the Consumer Guarantees Act the car was not fit for purpose and that he should at least have a look at the car. She said that Mr Park said he would look at the car but that this would be at Ms Brett’s expense because the warranty period was over. Ms Brett said that the last thing she said to Mr Park was “so what you’re saying is, I can bring the car to you but any costs for repairs would be on me?” and that his reply was “yes”.

[10] Ms Brett contacted Watson Haworth who referred her to a transmission specialist. She and her partner Mr Newton first took the car to Jim Wright Nissan in Otorahanga to see if they had encountered similar problems with Nissan Tiida’s. The car was inspected and a transmission problem confirmed and recommended the car be taken to CVT NZ (CVT), a transmission specialist.

[11] Mr Newton contacted CVT. The car was collected on a trailer and taken to CVT for repairs to be carried out. The CVT invoice records that the transmission was noisy and not performing well when CVT inspected the car. A complete transmission overhaul was carried out at total cost of $3,392.50. The CVT warranty form for the work carried out indicates that the car’s odometer reading at the time of repair was 68,866 kilometres. Ms Brett provided the tribunal with a copy of a letter she and Mr Newton had received from CVT. The letter was dated 27 May 2011 and set out the following:

“Dear Brett & Charmaine,

Just a quick note with some info about your car.

The CVT fluid should be changed every 40,000km.

The correct fluid to use is NS-2 CVT fluid.

We can do this for you or you should take it to your local Nissan Dealer.

DO NOT let anyone at a garage top up the fluid; the correct NS-2 fluid must be used.

If an incorrect fluid is used, even for topping up, it will cause damage and failure of the CVT.

We also noticed that the idler for the fan belt has a worn bearing which is causing a whining noise and we would suggest that you take it to your local Nissan Dealer to be replaced. ...”

[12] On 31 May 2011 Ms Brett wrote to the trader:

“As you are aware from our phone conversation on the 16th May 2011, I have had mechanical problems with my car. You informed me on the phone that you were not responsible for any repairs needed as my warranty of 3 months had expired.

I explained to you that under the Consumer Guarntees [sic] act that I would be covered as the car was not fit for purpose and asked you to fix it free of charge which you declined to do.

I have attached the copy of the first invoice I have received for work carried out on the transmission, but have been notified that there is still another repair for a faulty bearing that needs replacing.

I fell that these cost should be paid by you as I paid good money (12,800) for a car that didn’t even last 10,000 kilometres or even 6 months. ...”

[13] The trader replied on 6 June 2011:

“Further to your letter dated 31 May last, we dispute your allegations in your second and third paragraphs. We also refute your allegation that we declined to fix the car. We were willing to look into the matter and would have taken the appropriate action. Common sense says that we have to look into the matter and make decision once all the facts are before us. As you know, you are required to return the car to us before undertaking any repairs.

Given that you have taken away our rights to the vehicle we feel that we are not responsible for the repair bill. ...”

[14] The car went back to Watson Haworth who replaced a bearing in the air-conditioner pump at a cost of $258.755. An invoice for that repair was dated 9 June 2011.

[15] The parties were unable to reach any agreement about who should pay for the repairs and the purchaser then applied to the tribunal.

[16] During the hearing Mr Gregory, the tribunal’s assessor, asked Ms Brett whether she had had the car serviced during her ownership. Ms Brett confirmed that Watson Haworth had carried out a service on the car on 18 February 2011 and produced the car’s Vehicle Service Book that contained a record of that service. The service record indicates that (amongst other things) a check was carried out on the transmission fluid level but did not identify whether any transmission fluid was replaced or topped up. Ms Brett did not have a copy of the invoice for that service with her, nor could she find a record of her payment in her cheque book but she told the tribunal she thought it had cost $170.

[17] The tribunal also heard from Kelvin Rice, the Service Manager at Watson Haworth (by telephone). Mr Rice is not a qualified mechanic but has over 20 years experience repairing vehicles. He confirmed that the car had been inspected at Watson Haworth and a problem with the transmission diagnosed. He said that there was a noise in the transmission but no problem with the car shifting gears erratically. He confirmed that the transmission fluid levels had been checked but not topped up.

[18] Mr Rice also confirmed that Watson Haworth had previously carried out a service on the car that he was not involved in. While speaking to the tribunal he was unable to refer to the service invoice in order to provide the tribunal with any details of the work carried out. Ms Brett undertook to obtain a copy of the invoice for that service and provide that to the tribunal after the hearing. The parties were advised that everyone would be provided with a copy and the opportunity to provide any comments/submissions in response to information contained in the invoice.

[19] Mr Rice explained that when the car was inspected it was discovered that the noisy bearing identified by CVT was the air-conditioner bearing (not the idler bearing) and it was this bearing that was replaced after the transmission repairs had been undertaken.

[20] At the hearing the trader did not take the opportunity provided to ask Mr Rice any questions about the work carried out by Watson Haworth. The trader also declined an opportunity ask any questions of the mechanic at CVT who carried out the work on the transmission (who was available by telephone if necessary).

[21] At the hearing Mr Kadarmia presented both oral and written submissions on behalf of the trader. Mr Kadarmia started by making submissions about the conversation between Mr Park and Ms Brett on 16 May 2011. Although the tribunal is able to accept hearsay evidence, it is preferable, particularly if the witness is present, to hear evidence from the person who was involved in the conversation. On that basis the tribunal indicated that it would be preferable to hear this evidence directly from Mr Park.

[22] Mr Park told the tribunal that he could not remember everything about the conversation on May 16. He said that Ms Brett mentioned the noise the car was making but he couldn’t remember exactly what she said – he got the impression it was a minor problem. When asked by the tribunal about Ms Brett’s evidence that he had refused to repair the car because it was outside the three month warranty, Mr Park said that he probably would have said that the trader cannot always pay for the repair costs because it may be a “worn out” problem. When asked again if he had said that the three month warranty had expired, Mr Park said that because he did not have the vehicle offer and sale agreement with him when he was on the phone to Ms Brett he did not think he mentioned the three month warranty (three month warranties are provided to some but not all customers).

[23] When asked if he had offered to look at the car but only if Ms Brett were prepared to accept the costs of that inspection, Mr Park said that because the conversation was more than five months ago he could not remember if he had said anything of that nature but said that if he had said anything it would have been to tell Ms Brett that she may have to pay for the cost of inspection/repair.

[24] Mr Kadarmia made oral submissions on behalf of the trader. In essence it was denied that the trader had refused to repair the car and submitted that the transmission problem had not been diagnosed when Ms Brett called on 16 May and that contrary to Ms Brett’s evidence the trader had offered to look at the car and diagnose the problem. The trader says that Ms Brett should have notified the trader of the diagnosis of the problem before undertaking any repair work.

[25] The trader also submitted that Ms Brett did not inform the trader of the problem with the air-conditioning pump bearing and had it fixed without the trader’s knowledge.

[26] In the trader’s written submission, the trader notes concerns about the CVT invoice and says that the trader has questions about the work done, the prices charged and the overall look of the statement. There is a suggestion that the invoice may not be a real invoice. Although this was included in the trader’s written submissions it was not pursued at the hearing (the trader was given the opportunity to question CVT but chose not to). The tribunal notes that from the perspective of the tribunal and the tribunal’s assessor there is nothing about the CVT invoice that excites any suspicion as to the authenticity of that invoice.

[27] The trader’s final submission is that the car was of acceptable quality when sold to Ms Brett. The trader says that the car travelled around 11,000 kilometres in the five months since sale to Ms Brett and that given that mileage travelled and the price of the car, the transmission problem was a “normal maintenance situation”. In support of that submission the trader has cited another Motor Vehicle Disputes Tribunal case. As indicated at the hearing, the tribunal does not find reference to other tribunal cases of much assistance. The tribunal considers each case on its merits: making findings about acceptable quality requires consideration of a number of circumstances that must be considered in their totality in order to reach a decision. Consideration of a case that is similar in some respects will not generally assist the tribunal in reaching a conclusion about this case.

[28] After the hearing, the purchaser provided two documents to the tribunal – the job card and service invoice for the service that was carried out on 18 February 2011. The circumstances surrounding the provision of those documents and the parties’ response to those documents are set out in the tribunal’s minute of 15 September 2011. In that minute the tribunal declined what was in effect an application to re-convene the hearing and allow the trader to ask questions of CVT about the impact of topping up the transmission with the wrong fluid and to try and ascertain if that had happened in this case. The reasoning behind that decision is set out in the tribunal’s minute of 15 September 2011.

[29] The tribunal notes for the sake of completeness that questions about the impact of topping up the car with the incorrect transmission fluid would have been redundant. CVT has already confirmed in writing that the use of incorrect fluid would cause damage to the transmission. Similarly questions about whether the use of incorrect fluid caused the failure in this case would not clarify matters in the absence of evidence that this had occurred during the purchaser’s ownership. In any event, the trader had the opportunity to ask those questions at the hearing but declined (and did not need to see the service invoice or job sheet in order to frame those questions).

The issues before the Tribunal

[30] The following issues arise:

• [a] Whether the transmission failure and air-conditioning bearing failure amount to failures in the guarantee of acceptable quality?
• [b] If so, is the purchaser entitled to recover the cost of repairs from the trader?

The Consumer Guarantees Act 1993

The guarantee of acceptable quality

[31] Section 6 of the Consumer Guarantees Act 1993 (the Act) 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."

[32] 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."

[33] 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.

[34] The goods must be of acceptable quality when they are sold to the consumer. Acceptable quality involves a durability aspect and it is this quality element in particular that is in question in this case. In essence the purchaser is saying that the transmission did not last long enough so the car did not meet the guarantee of acceptable quality. The trader is saying that there is a possibility that the problem was not related to the state of the car at the time of sale or that even if it did, bearing in mind all the other circumstances, the car was sufficiently durable and met the guarantee of acceptable quality.

[35] Neither party made any submissions on the issue of whether or not the failure of the air-conditioner bearing amounted to a failure in the guarantee of acceptable quality.

The transmission failure

[36] The tribunal is entitled to accept any relevant information or evidence (whether or not it would ordinarily be admissible in a court of law) – see Schedule 1, clause 8(2) of the Motor Vehicle Sales Act 2001. Having heard from the witnesses and having reviewed the various job card and invoice for the service in February and the invoices for repair work carried out by Wilson Haworth and CVT the tribunal finds that the car suffered a transmission failure that required an overhaul of the transmission. The purchaser and her partner’s experience with the car was consistent with transmission failure, Mr Rice told the tribunal of Wilson Haworth’s diagnosis of transmission failure and the CVT invoice confirms this. The repair cost $3,392.50. No issues were raised with the tribunal as to the reasonableness or otherwise of those repair costs, nor did the tribunal’s assessor Mr Gregory have any concerns about the cost of those repairs.

[37] The tribunal is not persuaded that there is any evidence to support a conclusion that the transmission failure was caused by events that occurred after the purchaser took possession of the car. The trader has suggested two possible causes of the transmission failure that could be laid at the feet of the purchaser – the use of incorrect transmission fluid and the purchaser ignoring the whining noise in the car.

[38] The evidence before the tribunal supports the conclusion that the purchaser did not have the car topped up with the wrong transmission fluid during the period she has owned the car. A review of the job card and invoice for the service carried out in February 2011 (the only service the purchaser has had carried out on the car) indicates that the transmission fluid was not “topped up” during that service. Against that background it seems likely that even if it could be established that the cause of the failure was the use of the wrong transmission fluid, it is much more likely that this would have occurred before the car was sold to the purchaser.

[39] The trader has also criticised the purchaser for not having the whining noise in the car checked out when it was noticed at the time of sale. The conclusion the tribunal is being invited to reach is that the whining noise was related to the transmission failure and that the failure occurred because she took no steps to have the car looked at. Ms Brett’s evidence was that the noise stopped after the repairs had been completed (both to the transmission and the air-conditioning bearing). It is not clear which problem the whining related to. In any event, in circumstances where it was not detected as abnormal when the car was serviced by Watson Haworth in February 2011, it could not be said that this was a clear symptom of a problem that should have been attended to.

[40] The tribunal is satisfied that the transmission failure was not caused as a result of any actions taken (or not taken) after the car was sold to Ms Brett. In those circumstances, the tribunal must consider whether the transmission failure was a failure in the guarantee of acceptable quality as described in section 7 of the Act and in particular whether the car was sufficiently durable when it was sold to Ms Brett.

[41] The car is a six year old second-hand vehicle that, when sold to Ms Brett, had an odometer reading of 60,000 kilometres. The purchase price was $12,800. The transmission failed after five months and around 8,900 kilometres after purchase and cost $3,392.50 to repair. The tribunal accepts the trader’s submission that the car’s mileage is at the high end of what would be considered ‘normal’ use for the period of time the purchaser has owned the car. For that reason the tribunal has placed more emphasis on the mileage that the purchaser’s period of ownership of the car. Having regard to the price paid for the car and its age and mileage, the tribunal finds that a reasonable consumer would not regard a failure of this nature and expense after less than 9,000 kilometres use of the car to be acceptable and concludes that the transmission failure is a failure in the guarantee of acceptable quality.

The air-conditioning bearing

[42] The replacement bearing in the air-conditioning pump is a minor repair (costing $258.75) and is the kind of repair that may reasonably be expected in a car of this price, age and mileage. The bearing failure is not a failure in the guarantee of acceptable quality.

What are the remedies available to the purchaser?

[43] 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."

[44] In this case Ms Brett is seeking to recover the cost of repairing the transmission failure ($3,392.50) pursuant to section 18(2(b)(i). Ms Brett’s case is that she asked Mr Park to fix the problem, he refused and therefore she is asking that she be reimbursed for the cost of repair.

[45] Having heard from both Ms Brett and Mr Park about the conversation on 16 May 2011, the tribunal prefers Ms Brett’s version of events. The tribunal accepts Ms Brett’s evidence that she told Mr Park of a problem with the transmission and asked Mr Park what he was prepared to do to fix the car. The tribunal also accepts that he told her that the trader would not help her because the three month warranty period had expired and that any repairs that the trader carried out would be at the purchaser’s cost. Ms Brett was very clear in her recollection of events – as might be expected given that the break-down was a significant and potentially expensive occurrence in her life. Mr Park on the other hand was not at all clear in his recollection of events and spoke about what he “would” have said rather than reciting a clear recollection of what he did say.

[46] In those circumstances the tribunal is satisfied that the trader has refused to remedy a failure in the guarantee of acceptable quality and pursuant to section 18(2)(b)(i) of the Act Ms Brett is entitled to recover the reasonable costs of repair. The tribunal is satisfied that the $3,392.50 incurred on the repairs is reasonable.

Orders

1. The trader is ordered to pay the purchaser $3,392.50.
   

DATED at WELLINGTON this day of 2011

___________________
N Wills
Adjudicator