Bergh v U-Sell Manukau Limited - Reference No. MVD 15/2013 (Auckland) [2013] NZMVDT 55 (22 May 2013)

Last Updated: 20 June 2013

Decision No: AK 50/2013
Reference No. MVD 15/2013

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN CINDY MICHELLE BERGH

Purchaser

AND U-SELL MANUKAU LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARINGS at Auckland on 12 March and 20 May 2013

APPEARANCES

Mrs C M Bergh, the purchaser

Mr J J Bergh, husband and witness for the purchaser- at 20 May hearing only
Miss M L Hay, director representing the trader at 12 March hearing only
Mr B Boskovic, director representing the trader at 20 May hearing only

DECISION

Background

[1] On 5 October 2012 Mrs Bergh bought a 2002 Alfa Romeo 147 car from a Mr Greg Barber through U-Sell Manukau Limited for $5,995. Mrs Bergh also obtained a Janssen mechanical breakdown cover for the car. In late November 2012 the car’s clutch started to shudder and it eventually failed on 30 December 2012. The car was towed to a repairer but Mrs Bergh would not agree to authorise the transmission to be stripped or to pay the cost of repair if Janssen would not cover the repair costs. A stand-off developed between Mrs Bergh, the repairer, Janssen and U-Sell.

[2] On 4 February 2013 Mrs Bergh filed an application with the Tribunal in which she wrote that she believed the car to be defective but she did not state what remedy she was seeking. At the hearing on 20 May Mrs Bergh said she wanted to reject the car.

[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 cl 10(2) of Schedule 1 to that Act. As an assessor Mr Gregory assisted the adjudicator but the application was determined by the adjudicator alone.

Issues

[4] The issues in this application are:
[a] Whether the car sold to Mrs Bergh was of acceptable quality?
[b] If not, did Mrs Bergh require U-Sell to remedy the failure and, if so, did it do so within a reasonable time?
[c] If not is Mrs Bergh entitled to reject the car?

Issue [a]: Whether the car sold to Mrs Bergh was of acceptable quality?

Legal Principles

[5] Section 6 of the Act provides a guarantee that goods supplied to a consumer must be of acceptable quality. Section 6 provides:
“6 Guarantee as to acceptable quality
(1) Subject to section 41, 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 may give the consumer a right of redress against the supplier; and

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

[6] The expression "acceptable quality" is defined in s 7(1) 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 is 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] Mr and Mrs Bergh apparently viewed the car, a 2002 imported Alfa Romeo 147 which had travelled 123,000kms, on U-Sell’s premises in October 2012. On 5 October 2012 Mrs Bergh agreed to buy it for $5,995. She says that the salesman assured her the car was in good condition. Mr Bergh gave evidence to the Tribunal at the second hearing that he did not understand that U-Sell operated as a display for sale operator. Mrs Bergh appeared to understand that she had agreed to buy the car from a Mr Greg Barber, the seller named in the private vehicle offer and sale agreement she signed because on 18 and 22 January 2013 she sent emails to the Italian Auto Centre saying she had spoken to Mr Barber and he was trying to resolve the issue with U-Sell.

[9] A week or so after buying the car Mrs Bergh went back to U-Sell to tell them it had “rolled back” while sitting still without the brake on. Mr Forian, U-Sell’s finance manager states in an undated letter sent to the Tribunal that it was explained to Mrs Bergh that all Selespeed Alfa Romeo transmissions work that way and “with it being a robotized manual gearbox with electronic clutch, the clutch does not engage until the accelerator has been pressed”.

[10] On 29 November 2012 Mrs Bergh took the car to Mt Eden Tyre and Mechanical because a check light had come on in the car’s instrument panel. Mt Eden Tyre’s invoice shows the car’s odometer was then 124,412kms. The car was scanned for codes. There were no codes relating to traction control or gear box in the system, all codes were cleared. The invoice contains the following note:
“Clutch has a shudder will need attention at some stage.”

[11] On 30 December 2012 when Mr Bergh was driving the car its transmission failed. He contacted Janssen who had the car towed to Italian Auto Centre Ltd. On 7 January 2013 Italian Auto Centre gave Mrs Bergh an estimate of $2,297.70 to replace the car’s clutch. Mrs Bergh sent an email the same day to U-Sell asking it to authorise the car’s repair. Later on 7 January Mr Gary Haar of Italian Auto Centre sent Mrs Bergh an email saying that as he had tried to explain to her earlier, her mechanical insurance only covered component failures. His email said that if, when he got the gearbox out of the car he found no failed components and only worn out components, the insurer would not cover the cost of repairs. If however he found a failed part there were items such as fluids and diagnostic computer charges and the insurance excess totaling $500 to $600 which would be charged to her. His email ended by saying he suspected the failure was caused by wear and tear and not a failure. Mrs Bergh did not reply to Mr Haar giving him authority to strip the transmission to find out what had caused the failure and Mr Haar sent her another email on 16 January suggesting she talk to Janssen’s claims manager whose telephone number he provided.

[12] On 22 January 2013 Mrs Bergh sent an email to Mr Haar and copy to Janssen saying:
“Hi everybody,
I am still without a car and no courtesy car. I just spoke to Greg Barber and he is trying to resolve the issue with U-Sell and he has a dealer friend that is also helping him.
I am going to ask for help today. I need a car, because I have been paying for a car, that I cannot drive.
Please fix, replace or refund me. I am starting work soon and my kids are starting school next week.
Thank you in advance for your help and I will be waiting in anticipation for your positive reply.
Kind regards
Cindy”

[13] On 4 February 2013 Mrs Bergh filed her application with the Tribunal and a copy was sent to U-Sell. In an email dated 15 February U-Sell’s director Miss Hay sent to Mrs Bergh, Miss Hay denied that U-Sell were liable for the car’s condition because it was a car market operator and the car had been sold by Mr Barber. However, Miss Hay’s email contained an offer to pay for the costs to get the car assessed by the mechanic and also to provide Mrs Bergh with a loan car for her use until the matter was sorted. Mrs Bergh did not respond to that offer so Miss Hay sent her another email on 18 February after trying to contact Mrs Bergh on the landline and cellphone numbers provided in her application, repeating the offer.

[14] The Tribunal heard Mrs Bergh’s application on 12 March 2013. It was unable to determine, because of the paucity of information provided by Mrs Bergh, whether the problem with the car was due to the condition of the transmission or clutch assembly. The Tribunal adjourned the hearing and issued a Minute saying it required a report from a transmission specialist as to the current condition of the transmission and clutch assembly, the estimated cost to remedy any faults found and the current odometer of the car. U-Sell undertook to pay the cost of obtaining that report.

[15] On 21 March 2013 the Tribunal were sent copies of invoices from Italian Auto Centre for the repair of the car’s transmission, caused by a thrust bearing failure resulting in damage to the pressure plate. The clutch and flywheel had been removed, the flywheel resurfaced and a new clutch fitted. The cost of repairs carried out by Italian Auto Centre was $2,295.85 which was paid as to $1,882.85 by Janssen Holdings Ltd and as to $413.30 by U-Sell.

[16] The Tribunal sent Mrs Bergh a copy of the invoices for the repairs to her car and advised her that she could collect the car from U-Sell and asked her to confirm that the matter was now settled and the Tribunal could close its file. Mrs Bergh replied on 26 March saying that she could not accept the car and would email Miss Hay to collect the loan car that U-Sell had provided for her use.

[17] At the hearing on 20 May Mrs Bergh told the Tribunal that she had still not collected the car from the repairer because she had decided that she did not want it. She says she felt that U-Sell had lied to her about the condition of the car when she bought it and she was concerned that it might break down again in the future.

[18] The Tribunal in deciding whether the car supplied to Mrs Bergh was of acceptable quality has had regard to the fact that the car is a 2002 Japanese imported Alfa Romeo 147 which had travelled 123,100kms and was sold for $5,995. The car was probably free of faults at the time of sale but within two months and 2,190kms of use had developed a clutch shudder which Mt Eden Tyre and Mechanical warned Mrs Bergh of on 29 November 2012. Unfortunately Mrs Bergh chose to ignore that warning and did not take the car back to U-Sell to have it repaired. Instead she and her husband continued to drive the car until the clutch failed on 30 December 2012 at 125,290kms. The Tribunal does not consider it unusual for a thrust bearing failure to occur in a 10 year old European car at around 125,000kms. Mr and Mrs Bergh were probably unduly optimistic when they bought this old European car for $5,995 expecting much in the way of durability of it. However, in considering whether a reasonable consumer would regard this car as acceptable the Tribunal thinks that a reasonable consumer would not regard this car, with a thrust bearing failure occurring less than three months and 2,190 kms after it was bought as being acceptable, because it was not reasonably durable.

Conclusion on issue [a]

[19] The Tribunal finds the car was not of acceptable quality at the time of sale because it was not as durable as a reasonable consumer would regard as acceptable, even for a 10 year old, 123,000km European imported car sold for $5,995.

Issue [b]: Did Mrs Bergh require U-Sell to remedy the failure and, if so, did it do so within a reasonable time?

Legal Principles

[20] 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."

Application of law to facts

[21] Mrs Bergh required U-Sell to repair the car when she sent them her email on 7 January 2013. Mrs Bergh also sought to have the car repaired using her Janssen mechanical insurance warranty but she was reluctant to authorise Janssen to strip the car’s transmission to assess the fault because she was concerned at the cost she might face if the car’s failure was not a mechanical component failure. The Tribunal accepts, however that her email of 22 January 2013 sent to Mr Haar at Italian Auto Centre and to Janssen was probably intended as an authority to proceed to strip the car.

[22] The Tribunal accepts that U-Sell were prepared, as Miss Hay’s emails to Mrs Bergh of 15 and 18 February record, its willingness to get involved and pay to have the car’s fault assessed. Unfortunately Mrs Bergh appears to have ignored that offer and the delay in getting the car repaired that followed was because of that.

[23] At the hearing on 12 March Miss Hay repeated U-Sell’s offer to assist in getting the car repaired by paying for Italian Auto Centre to strip the transmission and find the cause of the failure. Mrs Bergh did not object to this and accepted a loan car from U-Sell whilst the car was being stripped, assessed and repaired. Accordingly, the Tribunal considers that Mrs Bergh certainly required U-Sell to repair the car and allowed them a reasonable time within which to do so. The repairs were delayed for two months by a combination of Mrs Bergh not giving Italian Auto Centre and Janssens authority to strip the car and by delay in Mrs Bergh attempting to get Mr Barber to pay for the repairs. The Tribunal also considers that U-Sell did not get involved and treat the matter as urgent until Mrs Bergh filed her application in early February.

Conclusion on issue [b]

[24] Although there was some delay in having the car’s transmission repaired from 7 January when it was first seen by Italian Auto Centre and Mrs Bergh required U-Sell to repair it and 20 March when the car was repaired, the Tribunal thinks that, on balance, the car was repaired within a reasonable time.

Issue [c]: is Mrs Bergh entitled to reject the vehicle?

Legal Principles

[25] Section 18(3) of the Act reproduced in paragraph 20 (above) provides that where the failure cannot be remedied or the failure is of a substantial character within the meaning of section 21 of the Act the consumer may either reject the goods in accordance with s 20 or obtain damages in compensation from the supplier for any reduction in value of the goods below the price paid for them. However s 22 of the Act provides that where a consumer wishes to exercise the right to reject goods they must notify the supplier of their decision and the grounds for rejection.

Application of law to facts

[26] It would probably have been possible for Mrs Bergh to have rejected the car had she done so on or soon after 7 January 2013 when she was informed by Italian Auto Centre of the likely cost to her of repairing the transmission. She did not do so. Instead she required U-Sell to repair the car in her email sent to U-Sell that day. U-sell after some delay have done so. Mrs Bergh’s email to the Tribunal on 26 March 2013 saying that she felt she could not accept the car was too late in time because the car had, by then, been repaired and Mrs Bergh had been informed it had been repaired and was ready for her to collect. Further, the Tribunal notes that Mrs Bergh has never given U-Sell or Mr Barber notice as required by s22(1) of the Act that she wanted to reject the car and her grounds for rejection.

Conclusion on issue [c]

[27] Mrs Bergh is not entitled to reject the car now. She should arrange to uplift it from Italian Auto Centre Ltd, 23 Saleyards Road, Otahuhu, immediately.

Order

Mrs Bergh’s application to reject the car is dismissed

DATED at Auckland 22 May 2013

C.H Cornwell
Adjudicator