Seymour v U-Sell North Shore Limited - Reference No. MVD 54/13 (Auckland) [2013] NZMVDT 50 (16 May 2013)

Last Updated: 20 June 2013

Decision No. AK 46/2013

Reference No. MVD 54/13

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN DARREN HENRY COLLIN SEYMOUR

Purchaser

AND U-SELL NORTH SHORE LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at AUCKLAND on 13 May 2013

APPEARANCES

Mr D H C Seymour, the purchaser

Mr G A McPheat, director, representing the trader

DECISION

Background

[1] On 21 March 2013 Mr Seymour bought a 2000 Toyota Estima car for $10,450 from U-Sell North Shore Limited. Mr Seymour found the car’s alloy wheels had cracked within 13 days of buying the car and he returned it to U-Sell and asked it to replace the wheels. U-Sell refused to do so. Mr Seymour paid $649.98 to have the wheels replaced which he is claiming from U-Sell.

[2] U-Sell say that wheels are not covered by the Consumer Guarantees Act 1993. It also says that it has not had an opportunity to have the wheels examined by its expert and has accordingly refused to pay Mr Seymour’s cost to replace them.
[3] Prior to the commencement of the hearing the Tribunal appointed Mr Middleton as the Tribunal’s assessor and he 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.

The issues

[4] The issues are as follows:
[a] Whether the car was of acceptable quality at the time of sale?
[b] If not, did Mr Seymour require U-Sell to rectify the fault and if so did they do so within a reasonable time?
[c] What sum is Mr Seymour entitled to recover from U-Sell?

Issue [a]: Was the car of acceptable quality at the time of sale?

[5] Section 6 of the Consumer Guarantees Act 1993 (“the Act”) imposes on a supplier "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 s 19 of the Act. If the failure to comply with the guarantee of acceptable quality was of a “substantial character” within the meaning of s 21, or if the faults cannot be remedied, the Tribunal is directed to ask whether the purchaser has exercised his/her right to reject the vehicle within a reasonable time.

Application of law to facts

[8] The car, the subject of this application, is a 13 year old imported Toyota Estima which had travelled 70,625 kms when Mr Seymour agreed to buy it for $10,450. The car was issued with a warrant of fitness on 20 March 2013. On 3 April 2013 some 13 days after it was supplied to Mr Seymour, the left front wheel was found to be damaged by cracks across all five spokes of the wheel. Mr Seymour replaced the damaged left front wheel with the spare wheel.
[9] Mr Seymour telephoned U-Sell on 3 April and immediately took the car back to U-Sell to show Mr McPheat the damaged wheel. Mr Seymour also pointed out to Mr McPheat minute cracks in the spokes of the other wheels on the car. Mr McPheat asked his car groomer if the cracks were present when he groomed the car and the groomer told Mr McPheat they were not. Mr McPheat says he also called the inspector who had issued the warrant of fitness for the car who also told Mr McPheat that he had not noticed the cracks in the wheels when he had inspected the car for a warrant of fitness. Mr Seymour asked Mr McPheat for a replacement set of wheels for the car. Mr McPheat refused that request but offered to refer Mr Seymour to a supplier who would sell Mr Seymour replacement wheels at a trade price. Mr McPheat also told Mr Seymour that alloy wheels were not covered by the guarantees in the Act. That information was incorrect. The Act applies as much to alloy wheels as it does to all the components of a motor vehicle.

[10] Mr Seymour says he took the car to North Shore Toyota who quoted him $649.98 to replace the wheels with a set of after-market 15 inch alloy wheels. Before agreeing to buy the replacement wheels Mr Seymour says he telephoned Mr McPheat and asked him once again to replace the wheels. Mr McPheat again refused that request so Mr Seymour bought the replacement wheels and had them fitted to the car.

[11] Mr Seymour produced colour photographs of the damaged wheels and also brought to the hearing the damaged left front wheel which the Tribunal’s Assessor and Mr McPheat inspected. Following the hearing the Tribunal and the parties went to a car park opposite the Auckland District Court and inspected the other three wheels.

[12] The Tribunal finds first, that each of the five spokes on each of the four wheels that it inspected are damaged. Second, that the failure has occurred in similar areas in each of the four wheels. Third, that apart from the left front wheel all the cracks have originated from the rear of the spoke outwards and this explains why the warrant of fitness inspector did not detect the failure on three of the wheels. Fourth, that all cracks in the wheels have aged brake dust and road grime in the cracks indicating the fault has been present for some time. Fifth, apart from routine light kerb marks/scratches to the outer edges of all wheels there is no evident damage to the wheels which would have affected their structural integrity. Finally, the inside rim area of all four wheels (which is the weakest by design) show no signs of impact damage consistent with travelling over judder bars/sharp kerbs at unreasonable speed. The Tribunal’s Assessor considers the cracks are probably caused by a lack of durability in poorly manufactured after-market wheels.

Conclusion on issue [a]

[13] The car did not comply with the guarantee of acceptable quality because its wheels were not safe, free of minor defects or as durable as a reasonable consumer would regard as acceptable for a 13 year old Toyota Estima which had travelled only 70,625kms and was sold for $10,450.

Issue [b]: Did Mr Seymour require U-Sell to rectify the fault and if so did they do so within a reasonable time?

[14] Section 18 of the Act sets out the options a consumer has regarding the supply of goods which do not comply with the guarantees in the Act. 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."

Application of law to facts

[15] Mr Seymour returned the car to U-Sell as soon as he discovered the damage to the wheels and asked U-Sell to rectify the damage. Mr McPheat was thus given the opportunity to inspect the wheels and remedy the fault on 3 April 2013. Mr McPheat refused to replace the wheels. The Tribunal therefore finds that Mr Seymour became entitled on 3 April after Mr McPheat refused to replace the wheels, to exercise his option under s18(2)(b)(i) of the Act and have the failure remedied. He is now entitled to obtain from U-Sell all reasonable costs incurred in having the failure remedied. The wheels are not able to be repaired and their cracked spokes make the car unsafe to be driven on the road.

Conclusion

[16] Mr Seymour required U-Sell to remedy the fault. U-Sell’s director refused on its behalf to do so. Mr Seymour immediately became entitled to replace the wheels and recover the reasonable cost from U-Sell.

Issue [c]: What sum is Mr Seymour entitled to recover from U-Sell?

[17] The cost Mr Seymour incurred in replacing the wheels with after-market wheels was $649.98 which the Tribunal considers to be a reasonable price for after-market wheels. It will order U-Sell to pay that sum to Mr Seymour.

Costs

[18] 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 party after receiving notice of a 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 all, or any part of 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 all, or any part of the reasonable costs of that other party in connection with the proceedings.”

[19] The Tribunal considers that this matter should reasonably have been settled before proceeding to a hearing and should have done so but for U-Sell’s refusal, without proper excuse, to take part in the discussions referred to in cl 5(1)(b). The Tribunal therefore considers that U-Sell should be required to pay the sum of $500 towards the Tribunal’s hearing costs.

Orders

1. U-Sell North Shore Limited shall pay Mr Seymour $649.98 immediately.

2. U-Sell North Shore Limited shall pay to the Crown at Auckland District Court, Private Bag 92-020, Auckland the sum of $500 as court costs within 21 days of the date of this order.

DATED at AUCKLAND this 16 May 2013

C.H.Cornwell
Adjudicator