Lawrence v Buy Right Cars Limited - Reference No. MVD 208/12 (Auckland) [2013] NZMVDT 5 (25 January 2013)

Last Updated: 25 March 2013

Decision No: AK 5/2013
Reference No. MVD 208/12

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN DAVID NICHOLAS LAWRENCE

Purchaser

AND BUY RIGHT CARS LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Auckland on 23 January 2013

APPEARANCES

Mr D N Lawrence, the purchaser

Mr S R Orlandini, branch manager for the trader

DECISION

Background

[1] On 26 June 2011 Mr Lawrence bought a 2003 Mazda RX-8 from Buy Right Cars Limited for $15,500. In March 2012 the car’s engine would not start and Mr Lawrence replaced the engine in May 2012 at a cost of $6,283.03. He has applied to the Tribunal to recover the $6,283.03 he incurred because he says the car was not of acceptable quality at the time of sale.

[2] Mr Orlandini for Buy Right says first, that the car had been driven about 9,000kms over an eight month period since Mr Lawrence had bought it. Because of that use, Buy Right does not consider the car failed the guarantee of acceptable quality. Second, that even if the car’s engine had failed the guarantee of acceptable quality, Mr Lawrence did not require Buy Right to remedy the faulty engine before having it replaced and hence he is not entitled to recover his costs. Accordingly, Buy Right denies any liability to Mr Lawrence.

[3] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal has appointed Mr Gregory as expert assessor to assist in the determination of the complaint. Mr Gregory took the oath required by (2) of Schedule 1 to that Act. As an assessor Mr Gregory assisted the adjudicator but the application was determined by the adjudicator alone.

The issues

[4] The following issues require consideration:
[a] Whether the car was of acceptable quality at the time of sale?
[b] If it was not, whether Mr Lawrence required Buy Right to remedy any defect before he had the engine replaced?
[c] Whether Mr Lawrence is entitled to recover his engine replacement costs?

Issue [a]: Whether the car sold to Mr Lawrence was of acceptable quality at the time of sale?

The relevant law

[5] Section 6 of the Consumer Guarantees Act 1993 (“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.”

[6] 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.”

[7] 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.

[8] When Mr Lawrence purchased the car its odometer reading was 87,227kms. It had been imported from Japan and had no service history. Mr Lawrence thought that Buy Right had serviced the car before selling it to him but he was unsure what that service comprised of.

[9] Within a month of buying the car the engine warning light came on. Mr Lawrence returned it to Buy Right who had I & J Compliance Ltd scan the engine for fault codes. A misfire code was found which I & J suspected was caused by the coil(s) but their report says the engine was running OK. They flushed the engine oil system and identified condensation at the oil filler cap.

[10] On 16 August 2011 the engine check light came on again. Instead of returning the car to Buy Right, Mr Lawrence took it to Prestige Tyres & Automotive who found the cause of the engine light was a faulty coil which they replaced. They also supplied and fitted a ventilation kit, changed the oil and oil filter and serviced the car. The cost of that work was $1,277.80 which Mr Lawrence paid.

[11] In November or December 2011 the car became hard to start. Mr Lawrence bought a replacement battery and that seemed to solve the starting problem until March 2012 when the car refused to start. Mr Lawrence took it to Just Automotive and Electrical Ltd who found the engine’s compression was low. They initially quoted $3,501.05 on 12 March 2012 to address the low compression problem by stripping down the engine and replacing all oil seals and the corner seals. Mr Lawrence says at that time he sent an email to the salesman at Buy Right with whom he had dealt when he bought the car, a man named “Dutch”. Mr Lawrence was unable to supply a copy of the email he sent to Buy Right because he says his computer had a virus which caused the loss of all emails. He has been unable to obtain a copy from his internet service provider. Without attempting to make any further contact with Buy Right by telephone or going to see them, Mr Lawrence gave Just Automotive permission to replace the engine in the car in late April or early May 2012. The cost of replacing the engine was $6,283.03. The invoice from Just Automotive does not record the car’s mileage at that time but Mr Lawrence estimates he had driven about 9,000kms in the eight months he had owned the car.

[12] Mr Lawrence did not approach Buy Right about reimbursing him with his engine replacement cost until August 2012 when he went to meet Mr Orlandini. Mr Orlandini had Buy Right’s IT provider make a search for the email from Mr Lawrence which he said he had sent to Dutch but has been unable to find any record of receiving an email to “Dutch” from Mr Lawrence. Dutch ceased to be employed by Buy Right and had his mailbox deleted in April 2012.

[13] Mr Lawrence did not file his application with the Tribunal until 6 December 2012 because he says he was busy with his studies. When they received his application Buy Right sent Mr Lawrence an email on 19 December 2012 containing an offer to pay him $500 towards the repairs as settlement. That offer was not acceptable to Mr Lawrence.

[14] The Tribunal is required to decide if the car sold to Mr Lawrence complied with the guarantee of acceptable quality in s6 of the Act. This involves it considering whether the car met the test of acceptable quality in s7 of the Act. The Tribunal has had regard to the fact that the car was an eight year old Japanese import Mazda RX-8 with a rotary engine, that it had travelled 87,227kms at the time it was sold for $15,500 and that it travelled a further 9,000kms in the following eight months before it had its engine replaced in May 2012. The Tribunal thinks the car was probably free from minor defects at the time of sale and that its engine, which, being a rotary engine, probably did not have the durability and longevity of a piston engine, lasted a further eight months and 9,000kms. The Tribunal finds the engine was probably as durable as a reasonable consumer of such a car would regard as acceptable.

Conclusion on issue [a]:

[15] The car complied with the guarantee of acceptable quality at the time of sale and Mr Lawrence’s claim must therefore be dismissed. In case the Tribunal is held to be wrong in making this finding it will also consider issue [b].

Issue [b]: whether Mr Lawrence required Buy Right to remedy any defect before he had the engine replaced?

Relevant law

[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] In Acquired Holdings Limited v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 Winkleman J said:
“I consider that on a plain reading of s 18 in circumstances where the defect can be remedied and is not of a substantial character, the purchaser must follow the requirement in s 18(2) to allow the supplier an opportunity to remedy the failure within a reasonable time in accordance with the provisions of s 19.”

Application of law to facts

[18] The Tribunal has noted Mr Lawrence’s evidence that he believed he had sent an email to Buy Right asking it to accept responsibility for the engine replacement before he authorised the replacement of the engine. Unfortunately for Mr Lawrence he was unable to provide any evidence to prove that he had sent an email to Buy Right and there is no record of that email request having been received by Buy Right. Under those circumstances the Tribunal is unable to find that Mr Lawrence required Buy Right to remedy the engine fault before he went ahead and authorised the replacement of the engine. Mr Lawrence acknowledged that, unwisely, when he did not receive any acknowledgment to the email he believed he had sent, he made no attempt to telephone or go and see Buy Right in April 2012 before he had the engine replaced.

Conclusion on issue [b]:

[19] Mr Lawrence did not require Buy Right to remedy the fault with the engine before he replaced it and, on the basis of s18(2) of the Act he is not now entitled to obtain from Buy Right the reasonable costs he incurred in having the fault remedied.

Order

Mr Lawrence’s application is dismissed.

DATED at AUCKLAND this 25 January 2013.

C.H Cornwell
Adjudicator