Hodgson v Saunders T/A Harewood Imports - Reference No. MVD 38/2011 (Auckland) [2011] NZMVDT 55 (3 May 2011)

Last Updated: 14 June 2011

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Decision No. AK 49/2011

Reference No. MVD 38/2011

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN MITCHEL JON HODGSON

Purchaser

AND TREVOR JOHN SAUNDERS T/A HAREWOOD IMPORTS

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr G Middleton, Assessor

HEARING at CHRISTCHURCH on 28 April 2011

APPEARANCES

Mr M J Hodgson, the purchaser

Ms H Miles, support person for the purchaser
Mr T J Saunders, the trader

DECISION

Background

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[1] On 31 December 2010 Mr Hodgson (“the purchaser”) purchased a 1991 Nissan Terrano registration WN2277 (“the vehicle”) for $3,850 from Trevor John Saunders trading as Harewood Imports (“the trader”). The purchaser claims the vehicle was not of acceptable quality and he seeks to recover from the trader the sum of $1,785.54 he has spent in repairing the vehicle.

[2] The trader’s position is that he accepts that there may be grounds for some liability on his part but requests that the Tribunal have regard to the age and the distance the vehicle has travelled.
[3] Prior to the commencement of the Tribunal’s inquiry, the Tribunal appointed Mr G Middleton 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 Middleton assisted the adjudicator but the application was determined by the adjudicator alone.

Facts

[4] On 29 December 2010 the purchaser arranged to inspect the vehicle at the trader’s home. He took it for a short test drive, agreed to buy it for $3,850 and paid the trader a deposit of $100. He returned on 31 December and completed the purchase by paying the balance of the purchase price. The trader did not display a Consumer Information Notice (“CIN”) on the vehicle or require the purchaser to sign a CIN at the time of sale but after the sale the trader did prepare a CIN which he had the purchaser sign and this was dated 4 January 2011. The vehicle’s warrant of fitness had been issued on 10 August 2010. The trader did not obtain a fresh warrant of fitness for the vehicle within 28 days prior to the date of sale. The parties agree that the odometer of the vehicle at the time of sale was about 209,234 kilometres.

[5] The purchaser says that on 2 January 2011 two days after he took delivery of the vehicle he noticed it was leaking fluid but thought nothing of it at the time. He says the vehicle also pulled slightly to the right under braking. About three weeks later he had the vehicle checked by Baylis Motor Company ChCh Ltd (“Baylis”) who recommended he have it checked by a diesel specialist. On 2 February 2011 ChecKing a mobile leak down and compression testing firm did a leak down and compression test on the engine. Their report shows compression was low in cylinders number 2 (340psi) and 3 (280psi). Their report also records the vehicle’s odometer as “210,843” at that time.

[6] The purchaser contacted the trader on 4 February and informed the trader that the diesel pump was leaking and there was damage to the connecting rods caused by hydraulicing (water entering the combustion chambers causing damage). The trader offered the purchaser $1,000 towards his repair costs but through a lack of information (other than the compression test results) neither party knew at that time what the problem was or what it would cost to rectify.

[7] On 7 February the purchaser had Baylis do a warrant of fitness check on the vehicle. It failed because the left front seatbelt was twisted and would not retract, the right rear seatbelt would not retract, the brakes were unbalanced and the vehicle pulled to the right, there was a leak from the diesel pump, and the vehicle was blowing excessive smoke. The odometer is recorded on the WOF checksheet as 210,843kms. On 8 February the purchaser provided these figures to the trader in a telephone call and informed the trader that if he gave the purchaser $2,000 the matter would “go away”. The trader denied any liability.

[8] On 11 February the purchaser had the vehicle assessed by Yukon Diesel Services Ltd (“Yukon”) whose report is produced and states:
“Quote to repair leaking fuel pump
Remove power steering pump and cables, hoses etc to gain access to injection pump
Replace throttle shaft O ring and top cover gasket
Replace lower side O ring and reassemble pump
Check and set fuel mix, reassemble
Road test and tune in auto trans
Remove and refit rear seat belt
Pump o/haul kit 245.00
Seat belt 65.00
Technician fee 455.00
Subtotal $765.00
Plus GST $114.75
Total $879.75

[9] On 14 February 2011 the purchaser took the vehicle to Yukon and paid Yukon $192.63 to reset the tappets. Yukon’s Invoice states:
“Vehicle running on three cylinders, remove rocker cover to find number three inlet push rod to have come out from under rocker. Rocker adjuster fully backed out and lock nut loose. Reset tappets and reassemble. Ru[n] up vehicle and road test
Note:
Warrant expired, service sticker very old and unable to read.
Injection pump is leaking.”

[10] On 23 February the purchaser took the vehicle back to Yukon to have the injection pump leak repaired and the faults identified by Baylis when they did the WOF rectified. The cost, with GST was $1,207.50.

[11] On 12 March 2011 when the vehicle had travelled 211,309kms the purchaser took the vehicle back to Baylis for another WOF inspection. More than 28 days had expired since the 7 February 2011 WOF inspection had been done so the purchaser was charged another $29 for the second WOF inspection. The vehicle passed the 12 March WOF inspection although the purchaser says he was told by the inspector to have the front and rear brake disc pads replaced because they were worn.

[12] The purchaser took the vehicle to Yukon on 15 March and paid them $267.70 to have the front and rear disc pads replaced.

[13] The trader says he obtained the vehicle as a trade-in from a customer in Alexandra who had owned it for 5 years and had it serviced every 5,000 to 10,000kms by Fulton Hogan at Alexandra. Mr Saunders says he now accepts that the vehicle had not been hydraulicing as first stated by the purchaser and the mechanic at Baylis and that the cause of the rough running and smoking engine was caused by the tappet adjuster lock nut on cylinder number 3’s inlet valve becoming loose causing the pushrod to become dislodged. He says that at the time of sale the vehicle was not smoking excessively and there was no loss of compression. He also says the diesel injector pump was not leaking at the time of sale.

[14] Mr Saunders also says the vehicle was not pulling to the right under braking or the purchaser would have noticed it doing so on his 2km test drive. He says the front seat belt was not twisted but he accepts the rear seat belt may not have been working correctly.

The issues before the Tribunal

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

[a] Whether the vehicle was of acceptable quality at the time of sale?
[b] If not whether the purchaser required the trader to remedy the vehicle’s faults and whether the trader did so within a reasonable time?
[c] What amount ought reasonably to be paid by the trader?

[16] 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 Contractual Remedies Act 1979, the Fair Trading Act 1986 or the Consumer Guarantees Act 1993, as applicable to the circumstances of the case.

Issue (a): Whether the vehicle was of acceptable quality at the time of sale?

[17] 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.”

[18] 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.”

[19] 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. The test

is an objective test, not a review of those factors from the purchaser’s subjective

perspective.

[20] 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 Section 19 of the Act. If the failure to comply with the guarantee of acceptable quality was of a “substantial character” within the meaning of Section 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.

[21] The vehicle supplied to the purchaser by the trader is a 19 year old Japanese imported Nissan Terrano diesel which had travelled 209,234kilometres at the time of sale and was sold for only $3,850. The trader supplied the vehicle without first obtaining a warrant of fitness issued within 28 days prior to the date of sale as he is required to do by the Transport Regulations. The trader says the vehicle was free of any faults at the time of sale but a warrant of fitness check done by Baylis the month after sale and after the vehicle had travelled only 1609kms later shows the vehicle had a number of faults; there was a diesel leak from the injector pump, the vehicle was blowing excessive smoke, the brakes were unbalanced, the seatbelts would not retract and the front seatbelt was twisted. The purchaser incurred $1400.13 in repair costs to get the vehicle to WOF standard. The Tribunal therefore does not accept the trader’s evidence that the vehicle was free of faults at the time of sale and finds as a fact that at the time of sale the vehicle was neither free of minor faults nor as durable as a reasonable purchaser of such a vehicle would regard as acceptable. The Tribunal therefore concludes that the vehicle was not of acceptable quality at the time of sale as is guaranteed to a buyer of consumer goods under s 6 of the Act.

Issue (b) Did the purchaser require the trader to remedy the faults and did the trader do so within a reasonable time?
[22] 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."

[23] The Tribunal accepts that the purchaser approached the trader to ask him to pay to have the various faults rectified but the trader became convinced that the loss of compression and smoking from the engine was the result of the engine becoming hydrauliced after the purchaser submerged the vehicle’s engine bay/induction system into water. The trader decided (without any reliable evidence) that the vehicle’s faults were attributable to the manner the purchaser had used the vehicle and that absolved him from any responsibility. The Tribunal is therefore satisfied that the purchaser did require the trader to remedy the faults but the trader decided not to do so.

Issue (c) What amount is reasonably payable by the trader?

[24] The Tribunal considers that the trader should now reimburse the purchaser for the following sums which were reasonably incurred by the purchaser:

a) Cost of resetting tappets $ 192.63
b) Cost of repairing injector pump, cleaning brakes and repairing
seat belts $1,207.50
c) Cost of WOF inspection on 7 February 2011-05-02 $ 29.00
d) Cost of hiring transporter to take to Yukon $ 59.71
TOTAL $1,488.84

[25] The Tribunal does not consider the cost the purchaser incurred in having the second warrant of fitness inspection done on 12 March of $29 should be paid by the trader because it was the purchaser’s delay in getting the vehicle re-checked before 7 March (when the 28 day period expired) that resulted in that charge. Nor does the Tribunal consider the cost of $267.70 the purchaser incurred in getting the brakes relined on 15 March should be paid by the trader because first, the vehicle’s brakes passed a WOF on 12 March 2011 and second, brakes are a routine service or maintenance item.

Order

The trader shall pay the purchaser the sum of $1,488.84

DATED at AUCKLAND this 3rd May 2011

C.H Cornwell
Adjudicator