Jones v Counties Motor Group Limited t/a Counties Toyota - Reference No. MVD 203/2011 (Auckland) [2011] NZMVDT 171 (13 December 2011)

Motor Vehicle Disputes Tribunal of New Zealand

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Jones v Counties Motor Group Limited t/a Counties Toyota - Reference No. MVD 203/2011 (Auckland) [2011] NZMVDT 171 (13 December 2011)

Last Updated: 8 February 2012

Decision No. AK 137 /2011

Reference No. MVD 203/2011

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN JUDITH JONES

Purchaser

AND COUNTIES MOTOR GROUP LIMITED T/A COUNTIES TOYOTA

Trader

T BEFORE THE AUCKLAND MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARINGS at Auckland on 8 November and 8 December 2011

APPEARANCES
Mrs J Jones, purchaser
Mr P Godolphin, purchaser’s husband and witness
Mr P A B Hearn, Aftersales Manager representing the trader
Mr J Pickford, Director and Branch manager for the trader

DECISION

Background

[1] On 7 January 2009 Mrs Jones (“the purchaser”) purchased a new 2008 Toyota Yaris 1.3 vehicle registration number ETY516 (“the vehicle”) for $19,800 from Counties Motor Group Limited trading as Counties Toyota (“the trader”). The purchaser has rejected the vehicle because she claims it has “big serious problems” and seeks the Tribunal’s order upholding that rejection and ordering the trader to refund the purchaser with her purchase price.

[2] The trader says the vehicle has been and still is operating in a manner consistent with that model. The trader says it has never refused to inspect or repair the vehicle, and that the vehicle has no faults apart a repair to the differential which has now been done.

[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] The purchaser purchased the vehicle new from the trader in January 2009 for $19,800 after discount.

[5] The purchaser claims that since purchasing the vehicle it has had a large number of faults. The faults which the purchaser says the vehicle has had, and the trader’s response to each of the purchaser’s claims is as follows:

(a) Unrestrained floor mats
[6] The purchaser says the floor mats in the vehicle were unrestrained. The trader says that unrestrained floor mats were noted by the trader and reported to the purchaser on 16 September 2010 (21 months after supply) at 30,313kms and it was recommended to the purchaser to remove the mats and install genuine Toyota mats.

(b) Steering stiff and steering wheel did not centre after turns
[7] The purchaser says that within a day of taking delivery of the vehicle she returned it to the trader because the steering was stiff. She also claimed she had difficulty engaging reverse gear. The purchaser says the trader told her the vehicle’s steering would free up with use. The issue was still present in early 2010 and although the trader oiled and adjusted the steering the purchaser remained dissatisfied with it and by August 2010 the steering was noisy and in September 2010 the trader replaced the steering column assembly.

[8] The trader says the vehicle was returned on 25 March 2010 at 18,559kms to have it inspect the steering which the purchaser said was making a “graunching noise” when turning left to right. The trader says it was unable to recreate the fault however it heard a slight noise from the steering column which was stripped and checked but no faults were found. All moving parts were lubricated. On 5 August 2010 at 27,652kms the vehicle was again returned to the trader and a test driven. The vehicle was scanned and a code was downloaded relating to a loss of communication between the ECM (engine control module) and the PCM (powertrain control module). The electrical operation of the steering system was checked and no faults were found but the technician carried out an initialisation of the system (revoking all learned information) and also a procedure to reset the centre point of the steering angle sensor following which no noises were located.

[9] On 14 September 2010 the vehicle was taken to the trader for a budget express service at 30,304kms and inspection of noises which the purchaser claimed were in the steering. The trader says the steering column was disconnected from the rack and checked for tightness in the steering universal joints and the steering rack was checked for tight spots. A tester was connected to check the electrical system and there were no issues found other than a slight groan on turning in slow speeds. In conjunction with Toyota New Zealand and it was decided to replace the entire column assembly which also houses the power steering motor. That repair was completed on 16 September 2010 at 30,313kms and Mr Godolphin reported some days later that all issues were rectified.

(c) Tyre wear
[10] The purchaser claims that in October and November 2010 highly accelerated tyre wear started to occur on the inner edges of the front wheels and in December 2010 he referred the matter to the trader. He says the front wheels were found to be outside the tracking specification and were re-aligned and the steering geometry was checked but the trader refused his request to supply a new set of tyres and in January 2011 the undamaged rear tyres were swapped to the front of the vehicle.

[11] When the purchaser took the vehicle for a warrant of fitness on 5 January 2011 at 37,273kms the tyres were noted as borderline with the right rear just passing. The tread depths of the tyres recorded on the WOF check sheet were 3mm on the front and 2mm on the rear tyres (minimum for a WOF pass is 1.5mm).

[12] On 8 April 2011 Mr Godolphin took the vehicle back to Firestone Pukekohe when its odometer was 42,764kms. The vehicle’s wheel alignment was within specification but he says the inner edges of the tyres had been damaged. The purchaser replaced the tyres with four new tyres at her cost on 19 April 2011 when the vehicle’s odometer was 43,355kms. Mr Godolphin says that the tread is warming and wearing on the inner front edges of the tyres and he believes there is still a fault with the front wheel alignment.

[13] The trader says the vehicle was presented on 10 December 2010 at 35,997kms with a letter from the purchaser expressing concern at the uneven tyre wear. The vehicle was inspected by the trader and no faults were found which might contribute to tyre wear apart from low tyre pressure. The left hand front shock absorber had leaked fluid and this was replaced under the manufacturer’s warranty. The front tyres were significantly worn so they were rotated front to rear to aid a wheel alignment check which the purchaser had done by Firestone Pukekohe. Firestone Pukekohe discovered a significant error in the front toe setting which they corrected. The trader’s Aftersales Manager Mr Hearn discussed the matter with Mr Godolphin and informed him first that there was no mechanical fault that had contributed to the uneven tyre wear but that the wheel alignment was significantly out of specification and had been adjusted. Second that the tyres on the vehicle were in a borderline condition and the trader was willing to supply new Bridgestone tyres at the cost price to the trader with free fitting. The trader says the tyre wear issue was not connected to the repair to the steering column. It produces a letter dated 3 November 2011 from Mr Anderson the Manager of Firestone Pukekohe which states that in his opinion the vehicle is driving around town and is doing sharp turns causing the tyres to wear on the inside shoulder and he saw chunks taken out from the tyre as if the vehicle was being driven on rough or unsealed roads.

(d) Seatbelt sticking
[14] The purchaser says that in April the vehicle was taken to the trader with a fault with the seat belt and the driver was frequently trapped in the vehicle by a jamming mechanism in the seat belt.

[15] The trader says the purchaser took the vehicle into the trader regarding the female portion of the seatbelt stalk not working correctly. Mr Main an employee of the trader found the internal moving parts sticking due to dust ingress and rectified the issue by lubricating the moving parts. No repair order was generated and no charge made to the purchaser as a goodwill gesture.

(e) Whining noise from engine, droning exhaust, bad starting
[16] On 18 May 2011 the purchaser took the vehicle back to the trader complaining that its engine was making a whining noise, the exhaust was droning and the vehicle was hard to start and wheezy. This coincided with the third service of the vehicle. The purchaser says the vehicle was returned to her without those faults being rectified. In July the purchaser claimed the whining noise was getting louder and the vehicle failed to start on one occasion in the morning. The vehicle was returned to the trader on 29 July and the purchaser says that Mr Hearn thought the whining noise was the differential which the trader would need to import parts to fix.

[17] The trader says the vehicle was brought in to it on 18 May 2011 at 45,092kms to carry out a budget express service and investigate an engine whistle noise at 3500rpm. The vehicle’s engine was investigated by two technicians but no abnormal noises were noted at that time and no charges were made on the manufacturer’s warranty or to the purchaser.

[18] On 29 July 2011 the vehicle was returned to the trader at 49,411kms. Mr Hearn says he test drove the vehicle and found it made a differential gear type whine noise from the gear box in fifth gear or on smooth seal. He contacted Mr Godolphin and informed him the differential would be repaired under the manufacturer’s warranty. On 6 September the parts arrived and the vehicle was repaired.

[19] On 1 September 2011 the purchaser sent the trader a letter rejecting the vehicle claiming a number of big serious problems with the vehicle.

(f) Unintended acceleration
[20] After filing her application with the Tribunal the purchaser claimed there was an incident of unintended acceleration. The trader had the vehicle transported to North Shore Toyota to have it inspected for unintended acceleration and to obtain an independent inspection of the faults claimed by the purchaser to be present in the vehicle. The trader produces a copy of the report of Mr Lambert Technical Advisor at North Shore Toyota which confirms that there are no faults with the vehicle and Mr Lambert can see nothing out of character in the vehicle compared to other like Yaris vehicles.
(g) Faults at time of hearing
[21] Prior to the hearing the purchaser was requested in writing to obtain a report on the vehicle’s faults from another Toyota franchised garage, for example Manukau Toyota. Unfortunately the purchaser failed to do so because she said she thought that another Toyota dealer could not be trusted to be objective about the vehicle. In answer to a question from the Tribunal’s Assessor as to what faults the vehicle has at present Mr Godolphin said there were still six faults which he listed as follows:
(a) Reverse gear is noisy
(b) There is an intermittent exhaust noise
(c) Difficulty in engaging first and reverse gears
(d) The vehicle takes three or four attempts to start
(e) The central locking relocks the vehicle (not yet notified to the trader)
(f) Tyre wear.

(h)Transmission
[22] At the conclusion of the hearing on 8 November 2011 the Tribunal notified the purchaser that it wished to give her a further opportunity to produce to the Tribunal a written report from a transmission specialist to verify the existence and likely cost to rectify the faults that she claims exist in the vehicle’s transmission. The trader was also invited to have the transmission inspected by its transmission specialist and for a report to be sent to the Tribunal. The Tribunal issued a Minute on Friday 11 November requiring the purchaser to obtain such a report within 7 working days. The purchaser did not produce a written report from a transmission specialist on the vehicle’s transmission. Mr Godolphin said that he did not consider that the Tribunal had given the purchaser sufficient time in which to do so although the purchaser had 7 working days within which to obtain a report. The trader had the vehicle examined by Gearboxes ‘R’ Us Ltd and the trader produced their written report which states that it was asked to assess 4 issues with the vehicle:
1.hard selection of reverse gear
2.hard selection of first gear
3.noisy reverse gear
4. noise under drive

[23]The report of Gearboxes ‘R’ Us Ltd states of the first two matters of hard selection that the selection was well within normal operating range and the clutch was releasing as normal. The vehicle was driven under different speeds on a smooth road and no noise was detected on drive or overrun. The report states the gears are noisy in reserve because they are a straight cut gear not helical so a certain amount of noise will be detected but the author of the report found the noise to be “perfectly correct for these types of gears”.

[24] At the conclusion of the hearing on 8 December 2011 the Tribunal’s Assessor test drove the vehicle which then had 56,302kms on its odometer and for comparison purposes another manual transmission Toyota Yaris supplied by the trader which had 18,000kms on its odometer.

Issues

[25] The facts raise the following issues:
[a] Whether the vehicle was of “acceptable quality” within the meaning of s 7 of the Act?
[b] If not, did the purchaser require the trader to remedy the defect(s) and if so did the trader remedy the defects within a reasonable time?
[c] Was there a failure of substantial character?

Issue (a): Was the vehicle of “acceptable quality” within the meaning of s7 of the Act?

[26] 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.”

[27] 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.”

[28] 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.
[29] The vehicle supplied to the purchaser by the trader on January 2009 was a new Toyota Yaris. The purchaser and her husband claimed that the vehicle had over the 2 years and eight months they used it to drive some 52,784kms given them a number of problems. In reviewing the history of the purchaser’s ownership the Tribunal accepts that there have been several faults repaired by the trader under the manufacturer’s warranty. In particular the replacement of the steering column on 16 September 2010 at 30,313kms, the replacement of a left hand front shock absorber on 10 December 2010 at 35,997kms and the replacement of the differential on 27 October 2011 at 54,205kms. To that extent the Tribunal finds that a reasonable purchaser buying a new Toyota Yaris would probably not regard such faults to be acceptable in a new car for which they had paid $19,800. Accordingly because of the existence of those three faults the Tribunal finds that the vehicle did not comply with the guarantee of acceptable quality because it was not as durable as a reasonable purchaser would regard as acceptable.

[30] The purchaser also claimed that there are a number of other faults present in the vehicle. Unfortunately despite being requested both before the hearing to obtain a report from a Toyota franchised garage to establish the existence of the faults and on 8 November to obtain a report on the transmission, the purchaser chose not to do so. She therefore failed to discharge the burden of proof on her to establish, on a balance of probabilities that the faults she claims are still present in the vehicle do exist. The claimed faults that fall into this category are the transmission, the intermittent exhaust noise, the difficulty in starting, the central locking fault, the tyre wear issue and the most recent claimed fault of unintended acceleration. On the other hand the trader has provided a report from Mr Lambert a technician at North Shore Toyota and a report from Gearboxes ‘R’ Us Ltd which addresses those claimed faults and finds that they do not exist.

Issue (b): Did the purchaser require the trader to remedy the defect and if so did the trader do so within a reasonable time?

[31] Section 18 of the Act 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 Section 21, the consumer may ¾

(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."

[32] The regime of the Act requires that a purchaser, where the fault complained of is not one which cannot be remedied or is not one of substantial character (as defined in s 21 of the Act) must require the supplier (here the trader) to remedy the defect(s) and give the supplier a reasonable time within which to do so. If the supplier fails, refuses, or does not succeed in repairing the fault(s) within a reasonable time the purchaser may then elect to either have the fault(s) rectified elsewhere and recover the reasonable cost of doing so from the supplier, or to reject the vehicle. In this application the purchaser did require the trader to remedy each of the faults when they occurred and the trader did so on each occasion under the manufacturer’s guarantee.

Issue (c): Was there a failure of substantial character?

[33] The purchaser claimed in its letter of rejection to the trader dated 1 September 2011 that there were many big serious problems with the vehicle and there always had been since day one. The Tribunal understands that the purchaser was thus claiming the faults were ones of substantial character. Section 21 of the Act provides as follows:

“ 21 Failure of substantial character
For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where ¾
(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 1 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) 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 because they are unsafe."

[34] The Tribunal notes that the only fault that had not been repaired by the trader at the purchaser’s request at the time the purchaser sent her letter of rejection to the trader on 1 September 2011 was the fault with the differential. That was because the trader did not obtain the parts to repair that fault until 6 September. The Tribunal does not consider the fault with the differential falls into any of the definitions of a failure of substantial character in s 21 of the Act because the vehicle could still be safely driven and the Tribunal does not think the fault would have deterred a reasonable consumer from acquiring the vehicle. The Tribunal does not think therefore that the purchaser had grounds to reject the vehicle on 1 September 2011, first because each of the faults (apart from the differential) which had been established as existing were repaired by the trader at the purchaser’s request in the period she owned and used the vehicle. Second because although the purchaser rejected the vehicle before the trader repaired the differential, that fault was not one of substantial character and so in terms of s 18(2)(a) of the Act the purchaser was still obliged to require the trader to remedy that fault and give it a reasonable time within which to do so.

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

DATED at Auckland this 13th day of December 2011

C.H.Cornwell
Adjudicator