Lawlor v Street Machines (2010) Limited; Reference No. MVD 21/2011 (Auckland) [2011] NZMVDT 25 (10 March 2011)

Last Updated: 19 April 2011

Decision No. AK /2011

Reference No. MVD 21/2011

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN CLARE THERESE LAWLER AND STEVEN PAUL HURLEY

Purchasers

AND STREET MACHINES (2010) LIMITED

Trader

BEFORE THE AUCKLAND MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at AUCKLAND on 7 March 2011

APPEARANCES
Miss C T Lawler, purchaser
Mr S P Hurley, purchaser
Mr C Browne, manager for the trader

DECISION

Background

[1] On 20 December 2010 Miss Lawler and Mr Hurley (“the purchasers”) purchased a 1998 Subaru Legacy registration number FGK62 (“the vehicle”) for $4,990 from Street Machines (2010) Ltd(“the trader”). The purchasers seek to recover the sum of $768.37 which they have incurred in repairing the vehicle and in consequential loss after the vehicle’s radiator overheated because they say the vehicle supplied to them by the trader did not comply with the guarantee of acceptable quality in the Consumer Guarantees Act 1993.

[2] The trader says that the purchasers did not give it the opportunity to remedy the defect with the radiator before having it replaced and that the cost of repairing the radiator is unreasonably high.

[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 purchasers purchased the vehicle from the trader on 20 December 2010 for $4,990. The vehicle’s odometer was 146,081kms at the time of purchase.

[5] On 7 January 2011 the purchaser Miss Lawler set off from her home on the North Shore to drive to Wanganui. She travelled for a little more than one hour as far as Ohinewai before the vehicle overheated. She had the vehicle towed by the AA to Moorfield Motors Ltd in Te Kauwhata who diagnosed the problem as a faulty radiator top tank. The vehicle’s odometer was then 146,550kms or 469kms greater than when the vehicle was sold to the purchasers. Miss Lawler arranged to leave the vehicle at Moorfield Motors Ltd and travelled on to Wanganui with a relative. She telephoned her partner Mr Hurley about 11-30am on 7 January and told him what had happened. Mr Hurley telephoned Moorfield Motors Ltd who told him that the likely cost of repairing the radiator would be $290.

[6] Mr Hurley says he went to the trader’s premises at about 12-30pm on 7 January and after speaking to Mr Browne’s brother, met Mr Browne. He says he told Mr Browne what had happened to the vehicle and the estimated cost he had been given of $290 to repair the radiator’s top tank. He says he asked Mr Browne whether the vehicle was still under warranty. He says Mr Browne told him that he had no warranty, that he should have purchased a mechanical breakdown insurance policy from the trader, that the damage to the radiator was not the trader’s problem, and that if the purchaser wanted the trader to repair the vehicle he would have to have it towed back to Auckland. Mr Hurley says he could not afford the cost of towing the vehicle back from Te Kauwhata to Auckland.

[7] Mr Hurley says that after being told by Mr Browne that the purchasers had no warranty he telephoned Moorfield Motors Ltd and told them to proceed to repair the vehicle’s radiator. Mr Hurley says that Moorfield Motors Ltd rang him on 11 January and told him the radiator had been damaged by a frontal accident to the vehicle at some time in the past and that they would need to replace the radiator at a cost of $708. He produces the invoice of Moorfield Motors Ltd dated 14 January 2011 which records they sent the radiator to Cookes Radiators on 10 January and refitted a new radiator and thermostat to the vehicle which, with coolant, freight and GST came to $708.37. The purchasers collected the vehicle about 17 January.

[8] Mr Hurley says he telephoned the trader after the vehicle was repaired following advice from the Ministry of Consumer Affairs that the trader was probably liable for the repair costs and told Mr Browne that the replacement of the radiator had cost $708.37 but Mr Browne refused to pay for the repair. Mr Hurley says that since filing the purchasers’ application with the Tribunal on 2 February 2011 he has not had any contact from anyone from the trader to discuss or mediate the claim.

[9] Mr Browne says that he thought that Mr Hurley had already had the vehicle’s radiator repaired when he came to see him on 7 January. He does not deny that he told the purchaser that he had no warranty and that the radiator repairs were Mr Hurley’s problem. Mr Browne produces a quote from North Harbour Brakes & Steering Ltd of $510.60 for a new radiator and fitting costs and coolant and Mr Browne also says he has had oral quotes of $123 plus GST for a second hand radiator and $395 plus GST for a reconditioned radiator. Mr Browne agrees that he has not made any contact with the purchasers since they filed their application and a copy of it was sent to the trader by the Tribunal with a letter requesting the trader to attempt to mediate the claim.

[10] The purchasers claim as consequential damages the cost of $60 a coach fare from Wanganui to Auckland for Miss Lawler on 16 January 2011.

Issues

[11] The facts raise the following issues:
[a] Whether the vehicle complied with the guarantee of acceptable quality in section 6 of the Consumer Guarantees Act 1993?
[b] If not whether the purchasers required the trader to remedy the fault and if so did the trader do so within a reasonable time?
[c] If the trader did not remedy the fault what remedy are the purchasers entitled to?

[12] In terms of s.89 of the Motor Vehicle Sales Act 2003 (“the MVSA”) the Tribunal only has jurisdiction to inquire into and determine applications or claims between a motor vehicle trader and the purchaser of a motor vehicle. The Tribunal may apply the provisions of the Sale of Goods Act 1908, the Fair Trading Act 1986, the Contractual Remedies Act 1979 or the Consumer Guarantees Act 1993, as applicable to the circumstances of the case. The Consumer Guarantees Act is relevant to this application.

The Consumer Guarantees Act 1993 (“the Act”)

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

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

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

“7 Meaning of acceptable quality

(1) For the purposes of section 6, goods are of acceptable quality if they are as –

(a) fit for all the purposes for which goods of the type in question are commonly

supplied; and

(b ) acceptable in appearance and finish; and

(c) free from minor defects: and

(d) safe; and

(e ) durable, ¾

as a reasonable consumer fully acquainted with the state and condition of the

goods, including any hidden defects, would regard as acceptable, having

regard to ¾

(f) the nature of the goods:

(g ) the price (where relevant):

(h) any statements made about the goods on any packaging or label on the

goods:

(i) any representation made about the goods by the supplier or the

manufacturer

(j) all other relevant circumstances of the supply of the goods.

(2) Where any defects in goods have been specifically drawn to the consumer’s

attention before he or she agreed to the supply, then notwithstanding that a

reasonable consumer may not have regarded the goods as acceptable with

those defects, the goods will not fail to comply with the guarantee as to

acceptable quality by reason only of those defects.

(3) Where goods are displayed for sale or hire, the defects that are to be treated

as having been specifically drawn to the consumer’s attention for the purposes

of subsection (2) of this section are those disclosed on a written notice

displayed with the goods.

(4) Goods will not fail to comply with the guarantee of acceptable quality if—

(a) The goods have been used in a manner, or to an extent which is

inconsistent with the manner or extent of use that a reasonable consumer

would expect to maintain from the goods; and

(b) The goods would have complied with the guarantee of acceptable quality if

they had not been used in that manner or to that extent.

(5) A reference in subsections (2) and (3) of this section to a defect means any

failure of the goods to comply with the guarantee of acceptable quality.”

[15] 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.

[16] In Stephens v Chevron Motor Court Limited [1996] DCR1, the District Court held that the correct approach to the Act was first to consider whether the vehicle was of “acceptable quality”. If the vehicle was not of acceptable quality, the next point to consider was whether the purchaser required the trader to remedy any faults within a reasonable time in accordance with s 19 of the Act. If the failure to comply with the guarantee of acceptable quality was of a “substantial character” within the meaning of s 21, or if the faults cannot be remedied, the Tribunal is directed to ask whether the purchaser exercised his right to reject the vehicle within a reasonable time.
[17] In this application the factors to be considered by the Tribunal in deciding if the vehicle was of acceptable quality- and in particular whether it was as durable as a reasonable purchaser would regard as acceptable are first, that the vehicle was, at the time of sale on 20 December 2010 a 12 year old imported Subaru Legacy which had then traveled 146,081kms and was sold for $4,990. Within 18 days and 469kms of use the radiator failed through no fault or oversight by the purchasers. The cause of this fault was a leaking top radiator tank but because the vehicle had apparently been involved in a frontal accident in the past the whole radiator had to be replaced. The Tribunal does not think that any reasonable purchaser of a vehicle of this type, mileage and price would regard it as acceptable for the radiator to fail so soon after purchase. The Tribunal therefore finds that the vehicle did not comply with the guarantee of acceptable quality in s 6 of the Act because the vehicle was not durable.

Issue (b): Whether the purchasers required the trader to remedy the fault and if so did the trader do so within a reasonable time?

[18] 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."

[19] The Tribunal considers that the vehicle’s radiator fault was one which could easily be remedied. The Tribunal accepts the evidence of Mr Hurley that he went to the trader’s premises on the afternoon of 7 January 2011 before the radiator was replaced and requested the trader to remedy the defect with the radiator. The Tribunal considers Mr Hurley’s evidence to be far more credible than Mr Browne’s on what was said at that meeting. The Tribunal believes, on the basis of Mr Hurley’s evidence, that Mr Browne refused to accept any responsibility for the cost of repairing the radiator and told Mr Hurley that the repairs were the purchasers’ problem. The Tribunal considers Mr Browne’s claim that he thought the vehicle had already been repaired when Mr Hurley came to see him to be not credible; if Mr Browne mistakenly believed that there was no reason for him to have told Mr Hurley to tow the vehicle back to Auckland to be repaired by the trader. In summary, the Tribunal considers that Mr Browne refused on the trader’s behalf to remedy the defect with the radiator on 7 January 2011.

Issue (c): what remedy are the purchasers entitled to?

[20] The Tribunal, on the advice of its Assessor considers the costs charged to the purchasers by Moorfield Motors Ltd of $708.37 to replace the radiator and thermostat to be fair and reasonable and will order the trader to reimburse the purchasers with that amount and their damages of $60 for the coach fare from Wanganui to Auckland which was a reasonably foreseeable consequence of the vehicle’s radiator failure on 7 January 2011.

Costs

[21] The Tribunal has limited power to make an award of costs to or against a party to any proceedings under clause 14(1) of Schedule 1 to the Motor Vehicle Sales Act 2003. The relevant provision is as follows:

“14 Disputes Tribunal may award costs in certain circumstances

(1) The Disputes Tribunal may award costs to or against a party to any proceedings before it only if,-

• (a) in the opinion of the Disputes Tribunal,-

(i) the proceedings are frivolous or vexatious or ought not to have been brought:

(ii) the matter ought reasonably to have been settled before proceeding to a hearing but that the party against whom an award of costs is to be made refused, without reasonable excuse, to take part in the discussions referred to in clause 5(1)(b) or acted in a contemptuous or improper manner during those discussions; or

(b) any applicant after receiving notice of the hearing, fails to attend the hearing without good cause.
(2) In any case to which subclause (1) applies, the Disputes Tribunal may order a party to pay---

• (a) to the Crown all or any part of either or both of the following:
  • (i) the reasonable costs of the Disputes Tribunal hearing:
  • (ii) the fees and expenses of any witness that have been paid or are payable by the Crown; or

(b) to another party all, or any part of the reasonable costs of that other party in connection with the proceedings.”

[22] The Tribunal finds, on the evidence of the purchasers, acknowledged by the trader’s representative, that the trader did not make any effort to contact the purchasers after their application to the Tribunal was filed to take part in the discussions referred to in cl 5(1)(b) of the Schedule to the Motor Vehicle Sales Act 2003. The Tribunal considers that the matter ought to have been settled by the trader before proceeding to a hearing and will therefore order the trader to pay the reasonable costs of the Tribunal’s hearing of $500.

Orders

1. The trader shall pay the purchasers $768.37 immediately.

2. The trader shall within 21 days of the date of this Decision pay the Crown at Auckland District Court, Albert Street Auckland the cost of the hearing of $500.

DATED at Auckland this 10 March 2011

C.H.Cornwell
Adjudicator