Bell v Adopt A Car Limited - Reference No. MVD 124/2011 (Auckland) [2011] NZMVDT 98 (20 July 2011)

Last Updated: 21 August 2011

Decision No. AK 79 /2011

Reference No. MVD 124/2011

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN JONATHON ROBERT BELL

Purchaser

AND ADOPT A CAR LIMITED

Trader

BEFORE THE AUCKLAND MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Palmerston North on 18 July 2011

APPEARANCES
Mr J R Bell, the purchaser
Mrs T Taylor-Bell, wife and witness for the purchaser
Mr M McQuade, director for the trader

DECISION

Background

[1] On 29 October 2010 Mr Bell (“the purchaser”) purchased a 1994 Mitsubishi L200 vehicle registration number ST2345 (“the vehicle”) for $8,500 from Adopt A Car Limited (“the trader”). The purchaser has applied to the Tribunal to recover from the trader $1,434.26 he has incurred in repairing the vehicle.

[2] The trader says first that it is not liable to pay the purchaser’s repair cost because it gave the purchaser an allowance of $500 off the asking price for the vehicle to pay for a cambelt replacement and the trader also offered to pay the purchaser one half of the cost of the windscreen repairs of between $200 and $300 but the purchaser chose not to take that offer.

[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 agreed to purchase the vehicle for $8,500 on 29 October 2010. He paid the trader $6,500 cash and accepted an advance of $2,215 repayable at 18% interest (including a $200 establishment fee and a $15 PPSR fee) from the trader. The vehicle’s odometer was 181,000kms at the time of sale.

[5] Several days after purchasing the vehicle the purchaser noticed an oil leak coming from the engine which he had inspected by McVerry Crawford Mitsubishi Ltd on 5 November. The oil leak was coming from the front end crankshaft seal and possibly the oil pump as well. The purchaser returned the vehicle to the trader who had the vehicle for 2 days and returned it to the purchaser on 11 November. The trader’s repairer put a stop leak additive into the oil and cleaned the oil sump. However a few days later the purchaser says the oil sump was covered in oil.

[6] On 28 November the purchaser says he noticed water dripping from the top of the windscreen into the vehicle’s floor and seats. He contacted the trader about that, the continuing oil leak, and an alternator problem on 22 December. The purchaser took the vehicle back to the trader on 23 December. The purchaser says the trader had the alternator fixed but said that it could do nothing about the oil leak because the vehicle was 16 years old. Upon returning the vehicle to the purchaser the trader told the purchaser that the windscreen leak was a $200-$300 fix which the trader was willing to pay only one half of that amount to fix. The trader also asked the purchaser to pay for one half of the cost of repairing the alternator. The purchaser says that he agreed to have the windscreen leak repaired at his cost on the trader’s advice that it would only cost $200 to $300 and the trader paid for the repair of the alternator.

[7] The purchaser had the oil leak repaired and the timing belt replaced on 11 March 2011 by Main Street Automotive for $603.34. The purchaser says however, that he only seeks to recover the sum of $341.76 from the trader in respect of the cost he incurred in having the leaking oil seals replaced. He produces a letter from Main Street Automotive which confirms that the cost of purchasing and installing the oil seal kit in the vehicle with GST and freight was $341.76. Mr McQuade for the trader, after initially claiming that the trader agreed to give the purchaser a $500 deduction off the purchase price to replace the timing belt, says he is willing for the trader to pay the sum of $341.76 for the oil seal repairs.

[8] On 25 March 2011 the purchaser took the vehicle to Palmerston North Panel and Paint Limited who fixed the windscreen leak which they found was caused by rust and filler around the top of the frame and the “A” Pillar. The purchaser produces a set of colour photographs of the rust affected areas taken by Palmerston North Panel and Paint Ltd which show the extent of the damage to the “A” Pillar and frame. The cost to remove the rust and repair around the front screen was $1,092.50 and the purchaser produced the repair invoice and a letter from Palmerston North Panel and Paint Ltd to confirm that cost.

[9] Mr McQuade for the trader says that the trader obtained a quote from Steve Smith of The Dent Shop of $200 plus GST to repair the windscreen but he says this was given without Mr Smith seeing the vehicle and Mr McQuade agrees with the Tribunal, having now seen the colour photographs of the damage to the “A” Pillar and the vehicle’s roof that the repair cost would be “different”. However Mr McQuade says that a water leak in a 16 year old vehicle is a maintenance issue.

[10] Mr McQuade acknowledged in response to a question from the Tribunal that on receiving the purchaser’s application and a letter from the Tribunal requiring the trader to attempt to mediate the purchaser’s dispute as required by clause 5(1) of the Schedule to the Motor Vehicle Sales Act 2003, he had ignored the requirement because he considered it, from past experience, to be a waste of time to try and mediate disputes.

Issues

[11] The facts raise the following issues:
[a] Whether the vehicle is of acceptable quality in terms of the guarantee in s6 of the Consumer Guarantees Act 1993?
[b] If not, whether the purchaser required the trader to remedy the faults?
[c] If so, what sum is the purchaser reasonably entitled to recover from the trader?

The Consumer Guarantees Act 1993 (“the Act”)

[12] 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.”

[13] 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.”

[14] 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.

[15] 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.
Issue (a): Whether the vehicle is of acceptable quality in terms of the guarantee in s6 of the Act?

[16] The vehicle in this application was a 16 year old Mitsubishi L200 4WD double cab diesel truck which had travelled 181,000kms when it was sold to the purchaser for $8,500. There was no evidence whatsoever of any agreement that the trader had reduced the purchase price to cover the cost of a timing belt to be replaced by the purchaser.

[17] Within days of the vehicle being sold to the purchaser its engine started to leak oil. The trader made an unsuccessful effort to repair the oil leak by having its mechanics add a stop leak additive to the engine oil and when the oil leak reappeared the trader told the purchaser that an engine oil leak was to be expected from a 16 year old vehicle.

[18] Within a month from the date of sale the vehicle’s windscreen started to leak. This was caused by filler and extensive rust in the vehicle’s roof and right hand “A” Pillar which the Tribunal considers was probably present at the time of sale. The Tribunal specifically rejects as not credible the trader’s submission that a leak in a 16 year old vehicle’s windscreen appearing one month after sale is a maintenance issue. The purchaser also gave evidence that the vehicle’s alternator failed within the first 2 months of sale.

[19] In summary, at the time of sale and within 2 months thereafter the vehicle was neither free of minor defects (because of the leaking windscreen and oil leak) nor was it as durable (because of the alternator) as a reasonable purchaser would regard as acceptable for a $8,500 vehicle- even one of this age and high mileage. The Tribunal therefore finds the vehicle did not comply with the guarantee of acceptable quality in s6 of the Act.

Issue (b): Did the purchaser require the trader to remedy the faults?

[20] Section 18 of the Act sets out the remedies available to the purchaser in respect of a failure in the guarantee of acceptable quality. It 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."

[21] Where the failure is not one of substantial character the Act requires a purchaser to give the trader a reasonable time within which to remedy the defect. In this application the purchaser gave evidence that he returned the vehicle twice to the trader to have the oil leak repaired and the trader, after first having a stop leak additive added- which was ineffective- refused to repair the oil leak. The Tribunal also finds that the trader did replace the alternator when requested to do so. However the Tribunal is not satisfied, on the evidence given by the parties, that the trader was willing to repair the leaking windscreen. The trader was only ever willing to pay one half of its repairer’s estimate of the cost of $200 plus GST for stopping the water leak; a cost which the trader’s repairer apparently gave without even looking at the vehicle. Furthermore, the Tribunal finds that there was no enforceable agreement made by the trader to repair the alternator in return for the purchaser agreeing to repair the windscreen leak. This is because the trader gave no consideration for the purchaser’s promise to do so; the trader had already repaired the alternator before it sought to obtain the purchaser’s agreement to pay for the windscreen repairs.

[22] The Tribunal therefore finds that the purchaser did require the trader to remedy the oil leak and windscreen leak but the trader has failed or refused to remedy those defects.

Issue (c): What amount is the purchaser reasonably entitled to recover from the trader?

[23] The Tribunal is satisfied that the trader should, as it agreed to do at the hearing, pay the cost of the oil leak repairs of $341.76. In addition the Tribunal finds that the reasonable cost to repair the windscreen leak was $1,092.50 and the trader shall also reimburse the purchaser with that sum; a total of $1,434.26.

Costs

[24] 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 to the Disputes Tribunal, 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 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 the reasonable costs of that other party in connection with the proceedings.”

[25] The Tribunal finds, on the evidence given by Mr McQuade that the trader made no attempt to mediate the dispute with the purchaser after his application to the Tribunal was filed or to take part in the discussions referred to in clause 5(1)(b) of the Schedule to the Motor Vehicle Sales Act 2003. The Tribunal considers that the matter should have been resolved in mediation and will therefore order the trader to pay the sum of $500 towards the reasonable costs of the Tribunal’s hearing in Palmerston North.

Orders

1. The trader shall pay the purchaser the sum of $1,434.26 by Bank Cheque.

2. Within 14 days of the date of this order the trader shall pay to the Crown the reasonable costs of the hearing of $500 to the Auckland District Court, Albert Street, Auckland.

DATED at Auckland this 20th day of July 2011.

C.H.Cornwell
Adjudicator