Snedden v Select Cars Greenlane Limited - Reference No. MVD 176/2011 (Auckland) [2011] NZMVDT 127 (4 October 2011)

Last Updated: 14 November 2011

Decision No. AK 103 /2011

Reference No. MVD 176/2011

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN TOMAS QUANE SNEDDEN

Purchaser

AND SELECT CARS GREENLANE LIMITED

Trader

BEFORE THE AUCKLAND MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr S Gregory, Assessor

HEARING at Auckland on 28 September 2011

APPEARANCES
Mr T Q Snedden, the purchaser
Mr P Snedden, support person for the purchaser
Mr S J Sullivan representing the trader

DECISION

Background

[1] On 17 July 2011 Mr Snedden (“the purchaser”) purchased a 1997 Subaru Impreza registration number DEG696 (“the vehicle”) for $4,900. The purchaser says he purchased the vehicle from Select Cars Greenlane Limited (“the trader”). The purchaser seeks to reject the vehicle because he says it is not of acceptable quality under the Consumer Guarantees Act 1993 (“the Act”) and the failures are of substantial character.

[2] The trader denies that it sold the vehicle to the purchaser and says that the vehicle was sold privately by C Collins to the purchaser as a consequence of which the Act has no application.

[3] Prior to the commencement of the Tribunal’s inquiry, the Tribunal appointed Mr Gregory 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 Gregory assisted the adjudicator but the application was determined by the adjudicator alone.

Facts

[4] In mid July 2011 the purchaser says he saw the vehicle advertised for sale on TradeMe for $4,900. The TradeMe advertisement was not kept by the purchaser but the trader supplied a copy of the advertisement which listed the vehicle for sale, initially for an asking price of $5,250 on 25 June 2011. Mr Sullivan told the Tribunal the price was subsequently reduced. The TradeMe advertisement showed the vehicle’s odometer as 122,909km and stated that the vehicle could be viewed 7 days a week between 9am and 4pm at 396 Great South Road Greenlane. The seller’s details showed the seller was “collinsd”.

[5] On 17 July the purchaser went to 396 Great South Road Greenlane on which there was signage identifying the premises as occupied by the trader. The purchaser met Mr Stephen Sullivan, a salesman for the trader who handed the purchaser his business card which has the trader’s name on both sides. Mr Sullivan went with the purchaser on a test drive and agreed to groom the vehicle when the purchaser commented that its interior was dirty. The purchaser expressed interest in buying the vehicle but said that he wanted to discuss it with his girlfriend.

[6] The purchaser telephoned Mr Sullivan a little later the same day to see if the price was negotiable and says Mr Sullivan told him it was not because “we brought it down from $5,200”. The purchaser then returned to the trader’s premises with his girl friend to show her the vehicle, met Mr Sullivan and agreed to buy the vehicle. The purchaser says that at that time Mr Sullivan told him it was a private sale. The purchaser paid Mr Sullivan $4,900 in cash which Mr Sullivan counted out and then hand wrote a receipt showing the person who had received payment as “C Collins 170 Pakuranga Highway, Pakuranga, Auckland”. He gave the receipt to the purchaser. In the course of counting out the money a woman named Donna walked into the trader’s premises and Mr Sullivan asked her to give the purchaser a receipt and the purchaser was then given a GST tax invoice with the trader’s name on it as the supplier of the vehicle (invoice number SN/1714 dated 17 July 2011) and which records the vehicle’s odometer as “121,000”. The vehicle was groomed and delivered to the purchaser at his home on 19 July. The vehicle was not issued with a new warrant of fitness at the time it was sold; the warrant of fitness on the vehicle expired on 11 September 2011.

[7] The purchaser used the vehicle for his work as a courier driver from 19 July to 31 August during which he travelled about 5,215kms in it although the exact distance travelled is unknown because the odometer reading listed on the trader’s sales invoice of 121,000kms may not have been the true odometer reading at the time of sale.

[8] On 13 August the purchaser took the vehicle to be serviced by Cartune Ponsonby (“Cartune”). Cartune told the purchaser the vehicle would not pass a warrant of fitness for several reasons and that there were other service items which required attention. The purchaser produces a tax invoice from Cartune which lists the faults found as follows:
“Power steering drive belt perishing
Front and rear brake pads low
R/H steering rack boot split
R/H inner CV boot split
L/H outer CV boot split
R/H rear camshaft seal leaking oil
Transmission fluid dirty”.

[9] The purchaser and his brother arranged to meet Mr Sullivan on 14 August. At that meeting Mr Sullivan maintained that the sale of the vehicle to the purchaser was a private sale. The purchaser told Mr Sullivan that he wanted to reject the vehicle and get a refund of his purchase price but Mr Sullivan said he was unable to make that decision and the purchaser would need to speak to the manager, Mr Collins. The purchaser then handed Mr Sullivan a letter of rejection which he had prepared claiming the faults with the power steering drive belt, front and rear brake pads and right hand steering rack boot estimated to cost $687.70 were failures of substantial character. On 15 August Mr Collins telephoned the purchaser and asked if Mr Sullivan had told him it was a private sale. Mr Collins insisted the sale to the purchaser was a private sale. The purchaser then telephoned his brother who on 15 August sent a letter from his firm, Patrick M Molloy, Solicitors, to the trader requiring a refund of $4,900 by 4pm the following day.

[10] The purchaser says he has not had any request to mediate the dispute from the trader since filing his application.

[11] Mr Sullivan says that he is an independent sales contractor and has been working for the trader for the past 14 months. He says that the vehicle was advertised for sale under Donna Collins TradeMe account because it was a trade in which the trader wanted to cash up on TradeMe because it was not a type of car normally retailed by the trader. He says he did explain to the purchaser that the sale was a private one and that he would not be given a vehicle offer and sale agreement. He says the trader paid for the vehicle to be groomed before it was supplied to the purchaser.

[12] Mr Sullivan says that 4 weeks after the vehicle was sold the purchaser and his brother came into the dealership and for various reasons Mr Sullivan was unable to speak to them immediately however when he spoke to them on the afternoon of 14 August they handed him a letter of rejection. Mr Sullivan says the trader was never given the opportunity to rectify the issues and the letter from Patrick M Molloy, Solicitors dated 15 August sent by the purchaser’s brother on his behalf made it clear that the purchaser was only prepared to accept a refund of his purchase price.

Issues

[13] The facts raise the following issues:
[a] Whether the vehicle was sold privately or by the trader?
[b] If it was sold by the trader whether the vehicle was of “acceptable quality” within the meaning of the Consumer Guarantees Act 1993?
[c] If it was not, whether the failures are of substantial character?

Issue (a): whether the vehicle was sold privately or by the trader?

[14] In order to decide if the sale to the purchaser was a private sale by Donna Collins or “C Collins” or a sale by the trader the Tribunal has had regard to all the circumstances of the transaction. The Tribunal notes first that the advertiser was “collinsd” who Mr Sullivan says is Donna Collins. Mrs Donna Collins is a director of the trader. Second, the vehicle was advertised as being available for inspection 7 days a week during business hours at 396 Great South Road Greenlane, which is the registered office and place of business of the trader. Third, the vehicle was demonstrated to the purchaser and subsequently inspected by the purchaser’s girl friend at the trader’s premises where it was displayed. Fourth, the vehicle was demonstrated and sold to the purchaser by Mr Stephen Sullivan a salesman for the trader who, on first meeting the purchaser gave the purchaser his business card which appears to show he represents the trader in a sales capacity. Fifth, according to the purchaser’s evidence, it was only after he agreed to buy the vehicle that he was told by Mr Sullivan that the sale was a private sale. Sixth, the purchaser paid the purchase price for the vehicle in cash to Mr Sullivan and was initially given a hand written receipt, not by Mrs Collins as advertiser of the vehicle but by Mr Sullivan which showed that payment had been received by “C Collins”, whom the Tribunal notes is also a director of the trader company and resides at 170 Pakuranga Road, Pakuranga. Seventh, a GST invoice was subsequently given to the purchaser by Donna Collins showing the supplier of the vehicle as the trader. Finally, Mr Sullivan and neither Mr nor Mrs Collins appeared at the hearing.

[15] Having regard to the above facts the Tribunal is in little doubt that although the advertiser of the vehicle was “collinsd” which the Tribunal accepts is Mrs Donna Collins TradeMe account, there is nothing else in the circumstances of this transaction which make this a private sale. The Tribunal finds as a fact that the sale was not a private sale by either Mr or Mrs Collins but a sale by the trader in trade to a consumer in what appears to be an attempt by the trader to dispose of a trade-in without the responsibility of the statutory guarantees which consumer buyers are entitled to receive under the Act. In particular the Tribunal relies in coming to this decision on the facts that the vehicle was demonstrated and sold from the trader’s premises by the trader’s salesman and that the trader recorded the sale as its business transaction by issuing its GST invoice to the purchaser. It follows from this that the sale was one in which the trader failed to display or supply the purchaser with the Consumer Information Notice which it is required to display on every vehicle it sells and have the purchaser sign. To that extent the trader appears to have breached the provisions of the Consumer Information Standards (Used Motor vehicles) Regulations 2008 which are enforced by the Commerce Commission. That is a matter the purchaser may wish to refer to the Commission for investigation.

Issue (b): Was the vehicle of “acceptable quality” within the meaning of the Act?

[16] 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.”

[17] The expression "acceptable quality" is defined in s 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.”

[18] The guarantee of acceptable quality is in three parts. A set of quality elements set out in s. 7(1)(a) to (e), a reasonable consumer test which applies a consumer’s objective evaluation of those quality elements and a set of factors in s.7(1)( f) to (j) which are to be taken into account by the reasonable consumer to modify his or her assessment of the quality of the goods.

[19] 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 s19 of the Act. If the failure to comply with the guarantee of acceptable quality was of a “substantial character” within the meaning of s21, or if the faults cannot be remedied, the Tribunal is directed to ask whether the purchaser exercised his/her right to reject the vehicle within a reasonable time.
[20] The vehicle the subject of this application is a 14 year old Japanese imported Subaru Impreza which had travelled about 121,000kms when it was sold to the purchaser for only $4,900. The vehicle had a current warrant of fitness issued, according to the Carjam report produced by Mr Sullivan, on 28 February 2011 at 119,884kms. The issue the Tribunal has to determine is whether at the date of sale the vehicle was fit for purpose, free from minor defects, safe and as durable as a reasonable purchaser would expect of a vehicle of that age, mileage and price. The Tribunal considers it also relevant that after he purchased the vehicle, the purchaser drove it for a little more than a month from 19 July to 31 August as a courier vehicle during which he travelled about 5,000kms. The Tribunal notes that there was no problem with the brakes or steering which caused the purchaser to take the vehicle to Cartune on 13 August; it was simply his wish to have the vehicle serviced. The vehicle’s odometer reading on 28 September was 126,219kms.

[21] The Tribunal’s Assessor has carefully inspected the 8 photographs of the rear and front brakes, inner CV boot and left hand outer CV boot, right hand steering rack boot and right hand camshaft seal and has advised the Tribunal that in his view, which the Tribunal accepts, the wear on the brake linings is consistent with the age and high mileage of the vehicle and whilst marginal, would probably pass a warrant of fitness. The Tribunal also notes that there would have been extraordinary wear on the brakes in the five weeks the vehicle was used by the purchaser as a courier vehicle. Second, the Assessor has advised the Tribunal that the worn inner CV and outer CV boots and the steering rack boot could, in a vehicle of this age have split at any time since the vehicle was sold to the purchaser and that very little in the way of durability can be expected of such parts in a 14 year old vehicle which has done 121,000kms. Finally the Assessor cannot detect from the photograph anything more than a slight oil weep from the right hand camshaft seal. The Assessor’s views are consistent with the VTNZ report which the purchaser had done at 126,074kms which only reports as items requiring attention a coolant leak, the right hand steering boot and the rear brakes are uneven. The VTNZ report also notes the engine is leaking oil and the left front CV boot is split.

[22] The Tribunal has concluded that it is not satisfied that at the time of sale the vehicle was shown to have minor faults, was unsafe or not fit for purpose. The Tribunal considers that no reasonable purchaser would expect a great deal in the way of durability of a vehicle of the age, mileage and price of this vehicle. Accordingly the Tribunal is not willing to make a finding that the vehicle was not of acceptable quality at the time of sale and as a consequence the purchaser’s application must be dismissed.

Order

The purchaser’s application to reject the vehicle is dismissed.

DATED at Auckland this 4th October 2011.

C.H.Cornwell
Adjudicator