Sayer v Blue Lake Holdings Limited T/A Rotorua Mitsubishi; Reference No. MVD 248/2010 (Auckland) [2011] NZMVDT 9 (11 February 2011)

Last Updated: 6 April 2011

Decision No. AK 8 /2011

Reference No. MVD 248/2010

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN CHERIE ANNE SAYER

Purchaser

AND BLUE LAKE HOLDINGS LIMITED TRADING AS ROTORUA MITSUBISHI

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr D Clough, Assessor

HEARING at ROTORUA on 9 February 2011

APPEARANCES

Mrs C A Sayer, the purchaser

Mr C P Simanu, General Manager, for the trader
Mr G Loveridge, Service Manager, witness for the trader

DECISION

Background

[1] On 9 September 2009 Mrs Sayer (“the purchaser”) purchased a 2003 Mitsubishi Galant (“the vehicle”) for $8,995 from Blue Lakes Holdings Limited trading as Rotorua Mitsubishi (“the trader”). The vehicle’s odometer was then 99,514 kilometres.

[2] The purchaser claims to recover from the trader the cost she incurred and paid the trader to repair the vehicle’s transmission of $1,753-61 because she says the vehicle’s transmission did not comply with the guarantee of acceptable quality in the Consumer Guarantees Act 1993 (“the Act”).

[3] The trader’s position is that the wear to the transmission- in particular its reverse gear and syncro rings and sleeves was probably caused by clutch dragging. The trader says the vehicle was 6 years old when sold to the purchaser and that it has been driven for 28,978 kilometres in the 14 months from the time it was supplied to the purchaser and when she experienced the problem. The trader considers that it ought not to be responsible for the vehicle under the Act.

[4] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal appointed Mr D Clough, as expert assessor to assist in the determination of the complaint however the application was determined by the Adjudicator alone. Mr Clough took the oath required by clause 10(2) of Schedule 1 to that Act.

Facts

[5] The purchaser bought the vehicle in her name after her husband took it for short test drive during which it performed satisfactorily.

[6] The purchaser also bought a 24 month mechanical breakdown policy from the trader for $475. The policy was underwritten by Swann Insurance a division of IAG New Zealand Ltd. It was a condition of that policy that the vehicle be serviced every 15,000kms or 12 months whichever first occurred.

[7] The purchaser was the main driver of the vehicle. She says she has experience of driving manual vehicles. She gave evidence that on 27 November 2010 she was unable to engage reverse gear in the vehicle. She contacted the trader who asked her to bring the vehicle to them. Mr Loveridge, the trader’s Service Manager gave evidence that when the vehicle was brought into the trader on 30 November 2010 it would not select reverse gear.

[8] The purchaser authorised the trader to dismantle the gearbox and price the repairs. Swann Insurance was advised that the purchaser wished to make a claim under her mechanical breakdown policy. However when Swann Insurance discovered that the purchaser had only had the vehicle serviced once since she bought it- on 30 September 2010 when the vehicle’s odometer was 124,332kms- they declined her claim because she had not complied with the terms of the policy and had the vehicle serviced after 15,000kms use. The purchaser attempted to have Swann Insurance review its decision but the insurer was unwilling to do so.

[9] On dismantling the gearbox the trader found that the reverse gear synchro teeth were worn. The trader obtained approval from the purchaser’s husband to obtain and fit a second hand reverse gear assembly and synchro to the vehicle at a total cost of $1753.61 which the trader completed and the purchaser paid for on 15 December 2010.

[10] Before the repair work was completed by the trader the purchaser sent an email to the trader on 14 December 2010 claiming that the fault was not due to wear and tear and that the transmission was not as durable as she expected. The trader’s General Manager Mr Simanu replied to the purchaser by email the same day saying that the vehicle was sold 14 months ago and the guarantee of acceptable quality did not have an unlimited timeframe. Mr Simanu’s email also referred to the initial cost of the vehicle as being a relevant factor in determining whether a vehicle is of acceptable quality. Mr Simanu advised the purchaser that the trader would do its best to keep the repair costs down as much as possible.

[11] Mr Loveridge gave evidence that the reverse gear and syncro rings and sleeves were badly worn on the edges which prevented the reverse gear from engaging. He says that in his opinion, having observed the purchaser reverse the vehicle, the wear was probably caused from clutch dragging. Mr Loveridge says the trader inspected the clutch and decided that it did not need to be replaced. The day after the vehicle had been returned to the purchaser it was returned to the trader by the purchaser who claimed it would still not go into reverse gear. Mr Loveridge says that he was able, without difficulty, to get the vehicle to engage reverse gear. When the purchaser reversed up into the trader’s workshop the engine was revving so high and the clutch was ridden to the point that the clutch was slipping and smelt of burning linings. The purchaser’s husband and Mr Loveridge took the vehicle for a test drive and both were able to engage reverse gear.

[12] Mr Loveridge says that the clutch shudders at low engine revs and he offered to replace the clutch assembly free of labour costs if the purchaser paid for the clutch assembly of approximately $350 to $400 but the purchaser did not accept that offer.

The issues before the Tribunal

[13] Having considered the facts, the Tribunal concludes that the following issues require consideration:
[a] Whether the vehicle complies with the guarantee of “acceptable quality” within the meaning of s.7 of the Act?
[b] If not whether the trader is liable for the purchaser’s repairs to the transmission?

Legal Principles

[14] 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 case the facts and the issues raised require consideration of the Consumer Guarantees Act 1993.

The Consumer Guarantees Act 1993

[15] Section 6 of the Act imposes on a supplier (in this case the trader) "a guarantee that the goods are of acceptable quality." Section 2 of the Act defines "goods" as including "vehicles.”

[16] Section 6 of the Act contains a guarantee that goods supplied to a consumer carry a guarantee that the goods are of acceptable quality.

[17] 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.”

[18] The remedy for a breach of s. 6 is contained in section 18 of the Act which 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.

[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 Section 19 of the Act.

Issue (a): Whether the vehicle complied with the guarantee of acceptable quality?

[20] The vehicle sold to the purchaser was, at the time of sale, a 6 year old Mitsubishi Galant which had travelled 99,514kms and was sold for $8,995. The vehicle was not serviced by the purchaser until 30 September 2010 during which time it travelled 24,818kms. The purchaser experienced difficulty getting the vehicle into reverse gear suddenly on 27 November 2010 when the vehicle had travelled 128,426kms (28,912kms more than at the date of sale). It was returned to the trader to have the transmission repaired.

[21] The Tribunal is satisfied, on the purchaser’s evidence that at the time of supply to the purchaser the vehicle was fit for the purpose for which it was sold because it was free from minor defects, acceptable in appearance and finish, and safe. However the Tribunal is also required to decide if the vehicle is as durable as a reasonable purchaser would regard as acceptable. In that connection the Tribunal heard evidence from Mr Loveridge the Service Manager of the trader as to the manner that the purchaser reversed the vehicle at the trader’s premises after it had been repaired. The Tribunal accepts that the purchaser apparently revved the engine so high and rode the clutch that the clutch began to slip and the linings burnt. The Tribunal also accepts the trader’s explanation of the fault which it found when it disassembled the transmission; the reverse gear and synchro rings and sleeves were badly worn on the edges preventing reverse gear from engaging. The Tribunal considers it probable that the purchaser caused the damage to the transmission by the manner that she operated the vehicle in reverse. That heavy reversing caused clutch lining particles to clog up the clutch plate spline which in turn prevented the engine drive from disconnecting from the gearbox completely. This resulted in the reverse gear and synchro becoming worn and eventually failing.

[22] In summary the Tribunal is not satisfied that the purchaser proved either that the vehicle either had a fault at the time of sale or was not as durable as a reasonable purchaser would regard as acceptable. Hence the Tribunal is not satisfied that the purchaser proved the vehicle was not of acceptable quality. Her claim for reimbursement of her repair costs must therefore be dismissed.

Order

The purchaser’s application is dismissed.

DATED at AUCKLAND this 11th February 2011

C.H Cornwell
Adjudicator