Harris v Russell Greer Motors Limited; Reference No. MVD 36/11 (Auckland) [2011] NZMVDT 29 (17 March 2011)

Last Updated: 19 April 2011

Decision No. AK 26 /2011

Reference No. MVD 36/11

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN EVELINE MARGARET HARRIS

Purchaser

AND RUSSELL GREER MOTORS LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at NAPIER on 15 March 2011

APPEARANCES

Mrs E M Harris, the purchaser
Mr M G Harris, witness for the purchaser
Mr R W Greer, Managing Director for the trader

Mr N Dunn, Sales Manager for the trader

DECISION

Background

[1] On 13 May 2010 Mrs Harris (“the purchaser”) purchased a 1996 Honda Orthia registration number BAQ538 (“the vehicle”) for $3,990 from Russell Greer Motors Limited (“the trader”). The purchaser has rejected the vehicle because she says that the vehicle has serious faults comprising of a water leak into the vehicle, a hatch which fails to lock, and a faulty transmission and radio. The purchaser seeks a refund of her purchase price.

[2] The trader says that it is happy to reinvestigate the water leak and fix it but it does not consider that it has any responsibility to fix the other issues because it says it did not have notice of them until December 2010.

[3] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal has appointed Mr S Gregory as expert assessor to assist in the determination of the complaint. Mr Gregory took the oath required by (2) of Schedule 1 to that Act. As an assessor Mr Gregory assisted the adjudicator but the application was determined by the adjudicator alone.

Facts

[4] The purchaser had previously bought a vehicle from the trader and telephoned the trader to ask if it had a vehicle suitable for her husband’s use. The purchaser says that she did not have the vehicle inspected by a mechanic or even take the vehicle for a test drive before agreeing to purchase it for $3,990. The vehicle’s odometer at the time of sale was 162,280kms.

[5] The Vehicle Offer and Sale Agreement signed by the parties contains as one of five special conditions, the following condition: “Sold without warranty, as is”. It was initialled by the trader’s salesman Mr Dunn who told the Tribunal it was his attempt to make the purchaser aware that the vehicle was old and that it did not come with a warranty (other than the statutory guarantees in the Consumer Guarantees Act 1993 which Mr Dunn said he had no intention of attempting to negate).

[6] Subsequently the purchaser’s husband drove the vehicle and says the vehicle pulled to the left and there was a minor oil leak around the rocker cover. The trader readily agreed to fix both these faults and did so.

[7] The purchaser says that the vehicle smelt musty during the first month she owned it and whilst Mr Harris was in hospital she left it in her garage with the windows open and even put a dehumidifier in the vehicle to try and remove the musty odour.

[8] The purchaser and Mr Harris gave evidence that they drove the vehicle in the rain and were not aware of any rainwater entering the vehicle. However in July 2010 the vehicle was left out overnight and Mr Harris says the carpets were wet and there was 2cm of water in the driver’s foot well the next morning. He says he thought that he may have left the vehicle’s window open and this is why he did not immediately contact the trader at that time.

[9] In early September the vehicle leaked water again after heavy rain and Mr Harris rang the trader who promised to fix the leak. A short while later the vehicle’s windscreen was chipped. It was repaired by Novus who replaced the front windscreen. Mr Harris says at the time he thought the replacement of the windscreen would have cured any water leak, because it was resealed, but on 12 October the vehicle leaked again and he telephoned the trader to arrange for the leak to be fixed.

[10] On about 25 November 2010 Mr Harris took the vehicle to the trader who kept it for three days and gave him a loan car to use. Mr Greer produced an internal invoice dated 30 November 2010 which records the work done by the trader during those three days as follows:
“Check water leak on drivers side.
Check windscreen for leaks, OK. Remove wiper mechanism and check plenum chamber for any holes, run hose and check. Remove under steering cover, fuse box and related wiring, located small amount of water pooled, advised Neal, stripping of vehicle required. Re-assemble
Labour 1.90 hours $144.40 gross $14.44 discount $129.96net Total $129.96”

[11] Mr Dunn says that he believes the technician applied sealant to some seams but he cannot say which seams. Mr Dunn says he left a message on the purchaser’s answer phone to tell them the vehicle was ready but he did not tell them the vehicle required stripping to fix the source of the leak.

[12] Mr Harris collected the vehicle from the trader but by mid December it was still leaking and he returned it to the trader on16 December. He says that Mr Dunn became angry when he returned the vehicle and was rude to him in front of other customers and told him that the trader had already spent a great deal of money on the vehicle and that he was annoyed that he had not sent the vehicle to auction and that it was only a cheap car and what did Mr Harris expect for $3000. Apparently Mr Dunn then refused to even inspect the water in the vehicle or to fix the leak. Mr Harris sent the trader an email on 23 December reporting on his visit on 16 December and asking to meet Mr Greer.

[13] Mr Harris says that in December electrical faults in the vehicle had become apparent in particular the intermittent failure of the operation of the electric windows, the electric mirrors, the central locking, the radio and the transmission and he believes they may all be linked with the water leak although he has no technical evidence or reports from either an auto electrician or a transmission specialist to support that theory. He says that he only drew the trader’s attention to these faults in December.

[14] Mr Greer telephoned Mr Harris on 7 January 2011. Mr Harris requested that the trader refund the purchase price but Mr Greer refused that request and also refused to pay for repairs to the vehicle’s brakes done by another repairer in November. Mr Greer sent an email to Mr Harris the same day in which he advised that it was “happy to have a look at the other concerns you have and report back our findings.”

[15] The purchaser sent the trader a letter on 7 January 2011 rejecting the vehicle claiming the vehicle had serious faults including the water leak, the brakes (which by that time the purchaser had paid Young Motors to repair) faulty central locking, a fault in the transmission, and the radio turning off and on when the driver’s door is opened.

[16] The parties met in mediation on 24 February 2011 following the filing of the purchaser’s application on 15 February. Mr Harris on behalf of the purchaser would only accept a full refund and also required the trader to pay his repair cost for the brakes, and the trader was willing to fix the leak but little else. The trader says the brakes are a normal service item to be expected in a vehicle which has done 166,000kms.

The issues before the Tribunal

[17] Having considered the facts, the Tribunal concludes that the following issues require consideration:

[a] Whether the vehicle complies with the guarantee of acceptable quality in s.6 of the Consumer Guarantees Act 1993?
[b] If not, whether the purchaser has given the trader a reasonable time within which to remedy the faults?
[c] Whether the purchaser is entitled to reject the vehicle?

Legal Principles

[18] In terms of s.89 of the Motor Vehicle Sales Act 2003 the Tribunal has jurisdiction to inquire into and determine applications or claims between a Motor Vehicle Trader and the purchaser of a motor vehicle. In doing so, it may apply the provisions of the Sale of Goods Act 1908, the Fair Trading Act 1986 or the Consumer Guarantees Act 1993, as applicable to the circumstances of the case. In this application the Consumer Guarantees Act is applicable.

Issue [a]: Whether the vehicle complied with the guarantee of acceptable quality in s.6 of the Consumer Guarantees Act 1993 (“the Act”)?

[19] 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.”

[20] The expression "acceptable quality" is defined in s 7 of the Act 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.”

[21] In considering whether or not goods meet the guarantee of acceptable

quality, the Tribunal must consider the quality elements as set out in s 7(1)(a)

to (e) of the Act as modified by the factors set out in s 7(1)(f) to (j) from the

perspective of a “reasonable consumer”. The test is an objective one; it is not a

view of those factors from the purchasers’ subjective perspective.

[22] 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 her right to reject the vehicle within a reasonable time.
[23] The factors to be considered by the Tribunal in deciding if the vehicle is of acceptable quality are that at the time of sale the vehicle was a 14 year old Japanese imported Honda which had 162,280kms on its odometer and was sold for only $3,990. The purchaser gave evidence that when she bought the vehicle it smelt musty and that she had tried to remove that musty smell by leaving the windows open and by putting a dehumidifier in the vehicle. Mr Harris says he first became aware of the leak in July. The Tribunal considers that it is more likely than not that the vehicle leaked before it was supplied to the purchaser in May 2010. Even having regard to the fact that this vehicle was an old, highly travelled, cheap car, a reasonable purchaser of such a vehicle would probably not regard it as acceptable for the vehicle to leak at the time of purchase. Accordingly, with some hesitancy the Tribunal has decided that the vehicle was probably not of acceptable quality at the time of sale because it has a minor fault namely a leak.

Issue (b): Whether the purchaser has given the trader a reasonable opportunity to remedy the fault?

[24] 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—

(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.”

[25] The purchaser first required the trader to rectify the leak in November. The trader was quite willing to repair the leak at that time but the Tribunal, after examining the trader’s internal repair invoice and listening to the evidence of Mr Greer and particularly the evidence of Mr Dunn, considers that the trader made a cursory and feeble attempt to fix the fault. The Tribunal forms this view from reading the trader’s repair invoice dated 30 November in which there is no mention made of the remedial work done by the trader’s technician on the seams. Mr Dunn (without any supporting evidence from the technician who did the job) claimed that the seams had been sealed. The Tribunal thinks this very unlikely. Second, the trader’s repair invoice clearly records the need for the vehicle to be stripped. The trader chose not to do so.
[26] Mr Harris took the vehicle back to the trader on 16 December to tell him the vehicle was still leaking. Mr Dunn’s response amounted to a refusal by the trader to remedy the fault. Whilst the Tribunal accepts that the trader has since apologised to Mr Harris for Mr Dunn’s behaviour on 16 December it does not alter the fact that when the vehicle was taken back on 16 December for the second time to have the leak repaired the trader (represented by Mr Dunn its Sales Manager) refused to do so. The fact that Mr Greer offered at the mediation meeting with the purchaser on 24 February to re-repair the leak is irrelevant because the offer to re-repair the leak came too late; the purchaser had already rejected the vehicle.

Issue (c): Is the purchaser entitled to reject the vehicle?

[27] The Tribunal considers that the purchaser is entitled to reject the vehicle because first, the trader failed or refused to remedy the fault within a reasonable period of being requested to do so by Mr Harris. The purchaser is thus entitled by s 18(2)(b)(ii) of the Act to reject the vehicle. Second, the purchaser exercised her right of rejection by notifying the trader in writing of her decision to reject the vehicle on 7 January 2011 in accordance with s 22(1) of the Act. The Tribunal does not consider the purchaser’s decision to reject the vehicle is invalidated by the fact that the notice of rejection was signed by Mr Harris rather than the purchaser. Third, the Tribunal considers that the purchaser’s decision to reject the vehicle was exercised within 8 months of the date of supply which is probably just within a reasonable time as defined in s 20 of the Act having regard to the purchaser’s obligation to require the trader to remedy the fault and to give the trader a reasonable time within which to do so.

[28] The purchaser claimed to recover the cost of repairs to the vehicle’s brakes. The Tribunal is not satisfied that the purchaser or Mr Harris ever required the trader to remedy the brakes before having the work done by another repairer and hence the purchaser cannot now recover that cost for the reasons given by Winkelmann J in Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107.

Orders

1. The purchaser’s rejection of the vehicle is upheld.

2. The trader shall pay the purchaser $3,990 immediately.

3. As soon as the purchaser receives the trader’s payment of $3,990 she shall immediately return the vehicle to the trader.

DATED at Auckland this 17th day of March 2011

C H Cornwell
Adjudicator