Linstead v Simcock t/a Direct Trade Sales - Reference No. MVD 142/13 (Wellington) [2013] NZMVDT 120 (30 October 2013)

Last Updated: 18 November 2013

Decision No. WN 21/2013

Reference No. MVD 142/13

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN WILLIAM LINSTEAD

Purchaser

AND JOSHUA PHILLIP SIMCOCK trading as DIRECT TRADE SALES

Trader

BEFORE THE WELLINGTON MOTOR VEHICLE DISPUTES TRIBUNAL

N J Wills - Barrister, Adjudicator
N Barrett - Assessor

HEARING at Christchurch on 22 October 2013

APPEARANCES

William Linstead, purchaser
Jessica Miller, witness for the purchaser
David Lattimore, witness for the purchaser (by telephone)
No appearance for the trader

DECISION

Background

[1] On 28 June 2013, William Linstead (the purchaser) purchased a 1995 Subaru Legacy, registration YQ 9395 (the car) for $1,800 from Joshua Simcock trading as Direct Trade Sales (the trader). Mr Linstead alleges that the car was not of acceptable quality and that the failure was substantial entitling him to reject the car and obtain a refund of the purchase price.

[2] The trader, Joshua Simcock did not appear at the hearing. The tribunal file notes that Mr Simcock was aware of the hearing and had indicated he would either attend the hearing or apply for an adjournment. No adjournment request was received.

[3] Prior to the commencement of the Tribunal’s inquiry the Tribunal appointed Mr Barrett who took the oath required of an assessor by Schedule 1, cl.10(2) of the Motor Vehicle Sales Act 2003. As an assessor appointed pursuant to the Motor Vehicle Sales Act 2003 Mr Barrett assisted the adjudicator but the application was determined by the adjudicator alone.

Facts

[4] On 28 June 2013 Mr Linstead bought the car from the trader for $1,800. A search of the trader register reveals that Mr Simcock is a registered motor vehicle trader (under the Motor Vehicle Sales Act 2003). When he bought the car, Mr Linstead was told by Mr Simcock that he was selling the car on behalf of someone else but did not say who that person was. Mr Linstead was not provided with any agreement for sale and purchase of the car, nor was he provided with a consumer information notice.

[5] At the time of sale the car’s odometer reading was 222,986 kilometres. Before he decided to buy the car, Mr Linstead had identified that the car had a wheel bearing issue and had been advised by a mechanic that it would cost a few hundred dollars to fix.

[6] The next day Mr Linstead drove the car from Christchurch to Queenstown. On arrival in Queenstown Mr Linstead noticed that the car was smoking from the engine bay area. . He took the car to Stewart Motors who inspected the car and advised Mr Linstead that the smoke was coming from oil leaking from the rocker cover gaskets and dripping onto the exhaust maniflold. The technician also noticed that the vehicle was low on engine coolant because the head gasket had blown. The cost of this diagnosis was $86.25.

[7] The tribunal heard from Mr Lattimore, the automotive technician from Stewart Motors who inspected the car. He confirmed Mr Linstead’s evidence. A pressure test was conducted to confirm the blown head gasket. Mr Lattimore estimated the minimum cost of repairing the car to be around $1,600 (to replace the head gasket and leaking rocker cover gaskets which are included in the “head set” used to repair the head gaskets). Mr Lattimore confirmed that the car’s thermostat had been removed, and told the tribunal that this was often done to hide the fact that there was a problem with the head gasket.

[8] Mr Linstead contacted the trader who was initially quite helpful. Copies of text messages show that the trader initially talked about repairing the car and then suggested Mr Linstead sell the car and that the trader would refund the difference in price. The trader then offered to pay “some” of the purchase price but this did not eventuate.

[9] On 16 August 2013, Mr Linstead formally rejected the car by letter dated 13 August 2013. Mr Linstead has not received any response to this letter from the trader. The car is still in Queenstown and has not been driven since Mr Linstead drove it to Queenstown.

[10] The trader did not appear at the hearing. Because Mr Linstead was told by the trader that he was selling the car on behalf of someone else, Mr Linstead made some enquiries about the previous owner. Mr Linstead produced a copy of the NZTA Certificate of Particulars for the car which shows that the previous owner was Morrison Car Company Ltd of Christchurch. Mr Linstead told the tribunal that he contacted Morrison Car Company and was advised that the company had owned the car until the end of May 2013 at which point it was sold to Mr Simcock. As at the date of the hearing, Mr Linstead had not received written confirmation of this but provided a copy of his phone records to show that the telephone conversation had taken place.

[11] The tribunal has a discretion to accept hearsay evidence. In this case, the tribunal is satisfied that notwithstanding Mr Simcock’s advice to Mr Linstead that he was selling the car on behalf of someone else, the available evidence suggests otherwise. The tribunal found Mr Linstead to be an open and honest witness, and accepts that he was advised by Morrison’s that they had sold the car to Mr Simcock. Mr Simcock has been served with this application and has not responded to the application by advising the tribunal that the car was sold on behalf of anyone else. The tribunal finds that there is no evidence to support a finding that the car was sold on behalf of someone else and that it was sold by Mr Simcock to Mr Linstead.

The Consumer Guarantees Act 1993

The guarantee of acceptable quality

[12] Section 6 of the Consumer Guarantees Act 1993 provides a guarantee as to the acceptable quality of goods sold:

"6 Guarantee as to acceptable quality

(1) Subject to section 41 of this Act, where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality.

(2) Where the goods fail to comply with the guarantee in this section,—

(a) Part 2 of this Act may give the consumer a right of redress against the supplier; and

(b) Part 3 of this Act may give the consumer a right of redress against the manufacturer."

[13] Section 7 sets out a definition of the guarantee of acceptable quality:

"7 Meaning of “acceptable quality”
(1) For the purposes of section 6 of this Act, 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,—
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—
(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 obtain 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] In considering whether or not goods meet the guarantee of acceptable quality, the Tribunal must consider the quality elements as set out in section 7(1)(a) to (e) as modified by the factors set out in section 7(1)(f) to (j) from the perspective of a “reasonable consumer”. This test is an objective test. It is not a review of those factors from the purchaser’s subjective perspective.

In this case the goods supplied are an 18 year old second hand car with an odometer reading of 222,986 kilometres sold for a purchase price of $1,800. Bearing in mind those factors the expectations of a reasonable consumer would be quite low. However within a few hundred kilometres of driving, the car required repairs of at least $1,600. The tribunal has no difficulty finding that a reasonable consumer would not consider this car to be of acceptable quality. No reasonable consumer would expect to essentially pay $1,800 for a day’s motoring.

Was the failure a substantial failure in the guarantee of acceptable quality?

[15] Section 21 sets out the circumstances in which a failure is deemed to be a substantial failure in the guarantee of acceptable quality. Whether or not the failure is substantial as defined in section 21 has ramifications for the remedies available to the purchaser.

[16] Section 21 provides:

“21 Failure of substantial character

For the purposes of section 18(3) of this Act, a failure to comply with a guarantee is of a substantial character in any case where—

(a) The goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or

(b) The goods depart in one or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) The goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) of this Act applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) The goods are not of acceptable quality within the meaning of section 7 of this Act because they are unsafe.”

[17] Having carefully considered the facts of this case, the tribunal finds that the failure in the guarantee of acceptable quality identified above is a substantial failure as set out in section 21. The tribunal is satisfied that a reasonable purchaser, acquainted with the nature and extent of the failure would not have purchased this car.

What are the remedies available to the purchaser?

[18] Section 18 of the Consumer Guarantees Act 1993 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 of this Act 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—
(a) Require the supplier to remedy the failure within a reasonable time in accordance with section 19 of this Act:
(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,—
(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 of this Act, reject the goods in accordance with section 22 of this Act.
(3) Where the failure cannot be remedied or is of a substantial character within the meaning of section 21 of this Act, the consumer may—
(a) Subject to section 20 of this Act, reject the goods in accordance with section 22 of this Act; 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) of this section, 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."

[19] In this case the tribunal is satisfied that Mr Linstead has two grounds for rejection. The first is that the trader refused to remedy the failure (section 18(2)(b)(ii) and the second ground is that the failure in the guarantee of acceptable quality is a substantial failure (see section 18(3) above).

[20] Given that the car cannot be returned to the trader without significant cost to the purchaser, it is appropriate that the trader take responsibility for uplifting the car from Queenstown. Mr Linstead is also entitled to recover the cost of diagnosing the problem with the car.

Orders

1. William Linstead’s rejection of the car is upheld.
2. The trader will immediately pay William Linstead $1886.25
3. Once the payment outlined in order 2 has been made to the purchaser, the purchaser will allow the trader to uplift the car.
   

DATED at WELLINGTON this 30th day of October 2013