Pei v C & R Motors Limited t/a JP Autos - Reference No. MVD 79/12 (Auckland) [2012] NZMVDT 57 (29 June 2012)

Last Updated: 19 July 2012

Decision No. AK 47 /2012

Reference No. MVD 79/12

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN ZE PEI

Purchaser

AND C & R MOTORS LIMITED T/A JP AUTOS

Trader

BEFORE THE AUCKLAND MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Auckland on 25 June 2012

APPEARANCES
Mr Ze Pei, the purchaser
Ms Mo Zhu, purchaser’s wife and witness
Ms E Zhao, Assistant manager of the trader

DECISION

Background

[1] On 2 March 2012 Mr Pei (“the purchaser”) purchased a 2004 Nissan Presage (“the vehicle”) for $12,800 from C & R Motors Limited trading as J P Autos (“the trader”).

[2] This is a dispute over a battery. The purchaser says the battery supplied with the 8 year old used vehicle was faulty but the trader would only agree to replace it with a second hand battery. The purchaser’s wife insisted on a new battery which she had fitted to the vehicle. The purchaser seeks an order that the trader pay him the sum of $150 for the new battery and consequential losses of $120.
[3] The trader says it was willing to provide a second hand battery to the purchaser but that was not acceptable to the purchaser’s wife who insisted on a new battery which she had fitted at a cost of $150. The trader has since offered to pay the purchaser $75 towards the cost of the new battery but that offer has also been rejected. The trader says it ought to be responsible for no more than the cost of a second hand battery.

[4] Prior to the commencement of the Tribunal’s inquiry, the Tribunal appointed Mr 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
[5] The vehicle sold to the purchaser by the trader on 2 March 2012 for $12,800 (including on road costs) had 85,217kms on its odometer at the time of sale. The vehicle had been imported from Japan and the purchaser was the first New Zealand owner of it.

[6] On 25 March 2012 the vehicle would not start because the battery was flat and the purchaser called the AA to jump start it. On 21 April the purchaser’s wife Mrs Zhu found the vehicle’s battery was flat and asked a friend to jump start the vehicle for her. She allowed the vehicle to run for half an hour thinking that would recharge the battery but when she tried to start the vehicle the next day the battery was still flat and once again asked her friend to jump start the vehicle. Mrs Zhu then drove the vehicle for about 40 minutes from Henderson to Panmure to get Chinese medicine. The vehicle would not restart. The AA were called to jump start it and the AA technician pointed out that the battery was the original equipment supplied by the manufacturer and was thus 8 years old and as such at the end of its life. Mrs Zhu drove the vehicle to the trader to have it replace the battery.

[7] When Mrs Zhu went to the trader’s premises on 22 April to have the battery replaced the trader’s salesman claimed that the trader only provided a one month warranty on vehicles it sold but that as “we are all Chinese” they would replace the battery. The trader made to replace the battery in the purchaser’s vehicle with a used battery from another Nissan Presage on the trader’s yard. Mrs Zhu asked for a new battery but the trader refused to supply a new battery whereupon Mrs Zhu went to Trustworthy Automotive Ltd and had them test the battery in her presence. Trustworthy Automotive Ltd confirmed to her that the battery was faulty and not simply flat and they replaced it with a new battery at a cost of $150. The battery was supplied with a 3 year warranty.

[8] On 17 May the purchaser sent the trader a letter informing it he had spent $150 on a new battery and that if he did not hear from the trader within 5 working days he would file a claim with the MVDT. The trader called the purchaser on 18 May and offered to pay one half of the cost of the new battery of $75 but this was not acceptable to Mrs Zhu who counter-offered $100 which the trader would not agree to pay. The trader repeated its offer of $75 on 8 June 2012 after the purchaser filed his application to the Tribunal and a copy was sent to the trader asking it to mediate the claim. This was again rejected by the purchaser.

[9] The purchaser also claims the cost of two call outs by the AA of $120 on the basis that although neither he nor Mrs Zhu had to pay the AA for the call outs on 25 March and 22 April, the number of free call-outs the purchaser gets has been reduced by two which he reckons to be worth $60 each.

Issues

[10] The facts raise the following issues:
[a] Whether the vehicle was of “acceptable quality” at the time of sale?
[b] If not was the purchaser entitled to replace the battery with a new battery when the trader refused to supply a new battery?
[c] What amount is the purchaser entitled to have refunded?

Issue [a]: Whether the vehicle was of “acceptable quality” at the time of sale?

[11] 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.”

[12] 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.”

[13] 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.

[14] 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.
[15] The vehicle sold to the consumer in this case was an 8 year old used Japanese imported Nissan Presage which was sold on 2 March 2012 for $12,800 including on road costs, which had travelled 85,217kms at the time of sale. Within about three weeks of the date of supply the battery was found to be flat and the vehicle had to be jump started by the AA. Within a further month the battery failed again on 22 April and would not hold a charge overnight or after the vehicle was driven from Henderson to Panmure the following day. The Tribunal does not consider that any reasonable purchaser paying $12,800 for an 8 year old vehicle would regard it as durable where the battery failed after only 7 weeks. The Tribunal therefore concludes the vehicle did not comply with the guarantee of acceptable quality in s6 of the Act.

Issue (b): Was the purchaser entitled to replace the battery with a new battery when the trader refused to supply a new battery?

[16] 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."

[17] Mrs Zhu’s evidence which was not disputed by the trader was that when the battery would not start the vehicle on 22 April she drove to the trader and asked it to replace the battery. The trader was willing to replace the battery but not with a new battery which was the only acceptable remedy to Mrs Zhu.

[18] The Tribunal considers that the parties both complied with their obligations under s18(2) of the Act. Mrs Zhu, on behalf of the purchaser required the trader to remedy the fault and the trader was willing to do so. However the trader’s solution of taking a battery from another Nissan Presage was probably less than optimal. The Tribunal thinks that a reasonable solution would have been for the trader to have provided Mrs Zhu with a second hand battery with a guarantee of at least 6 months. The trader claimed that its supplier of second hand batteries provides batteries for $35 with a 6 month guarantee but if that is true, and Mrs Zhu says she was told it was only 3 months when she checked, that information does not appear to have been explained to Mrs Zhu by the trader on 22 April.

Issue [c]: What amount is the purchaser entitled to have refunded?

[19] The Tribunal considers that in this case the purchaser has received an element of betterment of about 20% in replacing the battery with a new battery with a 3 year guarantee represented by the increased life and reliability he will receive from a new battery compared with a good second hand battery. The Tribunal therefore thinks the trader should pay the purchaser $120 towards the $150 cost of the battery purchased by Mrs Zhu. The purchaser’s claim for $120 for towing charges which were not in fact incurred is too remote and is disallowed. The filing fee of $50.11 is a cost and as such the purchaser cannot claim it from the trader.

Order

The trader shall pay the purchaser $120.00

DATED at Auckland this 29th June 2012.

C.H.Cornwell
Adjudicator