Singh v Ezy Limited t/a Sik Autos - Reference No. MVD 81/2013 (Auckland) [2013] NZMVDT 70 (28 June 2013)

Last Updated: 16 July 2013

Decision No: AK 61/2013
Reference No. MVD 81/2013

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN GURSANT SINGH

Purchaser

AND EZY LIMITED T/A SIK AUTOS

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Auckland on 24 June 2013

APPEARANCES

Mr G Singh, the purchaser

Ms G Kaur, witness for the purchaser
Mr S Nazif, director for the trader

DECISION

Background

[1] On 15 March 2013 Mr Gursant Singh (“the purchaser”) bought a 1996 Honda Legend (“the vehicle”) from Ezy Limited trading as SIK Autos for $2,850 including a $150 “documentation fee” paid to the trader’s agent, Manukau Park & Sell, from whose premises the trader displayed and sold the vehicle. The purchaser rejected the vehicle on 7 June 2013 because he says the vehicle has a serious fault; its odometer is not working and the trader had failed to fix it. He also claims the vehicle has other faults which make it unsafe namely, the power steering rack is leaking, both front steering rack boots need to be fitted and both rear shock bushes need to be replaced.

[2] The trader in a written submission sent to the Tribunal on 21 June says that the trader offered to have the odometer repaired and possibly to “look at some warrant of fitness items” but at the hearing Mr Nazif the trader’s director denied the trader had ever been asked to repair the odometer. The trader also claimed it was unreasonable for the purchaser to expect the trader to take the vehicle back for $2,500 because the vehicle is in a sound condition and fit for purpose and the purchaser has had buyer’s remorse.

[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 vehicle sold to the purchaser was of acceptable quality?
[b]If not, is the failure to comply with the guarantee of acceptable quality one of substantial character?
[c] If so, was the purchaser entitled to reject the vehicle?

Issue [a]: Whether the vehicle sold to the purchaser was of acceptable quality?

Legal Principles

[5] Section 6 of the Consumer Guarantees Act 1993 (“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] The purchaser agreed to buy the vehicle from the trader on 15 March 2013 for $2,700 and a documentation fee of $150; a total of $2,850. The Vehicle Offer and Sale Agreement and the Consumer Information Notice supplied to the purchaser both recorded the vehicle’s odometer as 180,000kms. The vehicle was not supplied with a new warrant of fitness issued within one month prior to the date of delivery of the vehicle to the purchaser as is required by Vehicle Standards Compliance 2002 Rule 9.12(3).

[9] When the purchaser bought the vehicle he noticed that the odometer, the fuel gauge and the lights in the vehicle’s instrument panel were not functioning and he raised those faults as issues with the trader’s sales agent, Manukau Park & Sell. Daniel the manager of Manukau Park & Sell told the purchaser to put fuel in the vehicle’s tank and the instrument panel would function within a few kilometers of driving the vehicle. The purchaser put fuel in the vehicle’s tank but the faults remained. When the purchaser received the certificate of registration for the vehicle he saw the vehicle’s registered odometer reading on 2 February 2013 was 254,211kms when the vehicle had last been issued with a warrant of fitness.

[10] The purchaser contacted the trader and was told to take the vehicle to a mechanic in Onehunga who would repair the faults. The purchaser says the mechanic he took the vehicle to told him the vehicle’s odometer would cost about $700 to repair and that the purchaser would be expected to pay for the repair of the odometer. The purchaser was not willing to pay to repair the odometer. The purchaser decided to go back to the trader and he arranged to leave the vehicle with the trader to be repaired. The trader told the purchaser he would have to contribute $100 towards the cost of repairing the vehicle. The purchaser says the trader’s mechanic had the vehicle for about 10 days but when the vehicle was returned to him only the instrument lights had been fixed; the odometer was still not working. The purchaser says he tried to telephone the trader between five and ten times but the trader would not accept his calls.

[11] On 7 May 2013 the purchaser took the vehicle to A J Automotive for a warrant of fitness inspection which the vehicle failed for the following reasons listed on the WOF check sheet:
“1. Power steering rack leaking badly
2. Both front steering rack bushes splited (sic)
3. Speedo meter n/w (no reading)
4. L F window washer n/w
5. Rear shocks lower bushes perished
6. SRS light n/w”

[12] The purchaser says he discussed the WOF failure with Daniel the manager at Manukau Park & Sell and then the purchaser sent a text message to the trader asking it to take the vehicle back for $2,200. The trader responded by offering to pay the purchaser $1,500 for the vehicle.

[13] On 24 May the purchaser filed an application with the Tribunal. On 7 June the purchaser posted the trader a written letter of rejection. The purchaser’s reasons for rejecting the vehicle were that he claimed it had a serious fault with the wrong speedo meter reading given on the window card which understated the distance the vehicle had travelled by 74,211kms. He also claimed that the trader had failed to fix the odometer after being asked to do so. The purchaser also referred to the faults with the power steering rack leaking, the need for front steering rack boots to be fitted and both rear shock bushes needing replacement. He sent the trader a copy of the mechanic’s report listing the faults.

[14] On 19 June 2013 the purchaser took the vehicle back to AJ Automotive Ltd for another warrant of fitness inspection which the vehicle failed for the following reasons:
“1. Wiper arms need to be replaced
2. Both front steering rack bushes splited (sic)
3. Speedo (counter) n/w
4. High stop light n/w
5. Rear shock bushes perished
6. Power steering rack leaking badly (bushes perished)
7. LF window washer squirter n/w
8. SRS light shows on-off”

[15] On 19 June AJ Automotive Ltd gave the purchaser a written quote of $1,129.30 to fix the vehicle’s WOF faults but noted that the SRS light needed to be fixed by an auto electrician.

[16] The trader did not attempt to contact the purchaser to try and mediate the dispute within the 14 day period provided in Clause 5(2) of Schedule 1 of the Motor Vehicle Sales Act 2003 after it was sent a copy of the purchaser’s application and the matter was set down for a hearing on 24 June 2013. On 21 June Mr Nazif sent the purchaser a text message refusing to acknowledge the trader had sold the vehicle to the purchaser and telling him not to contact the trader again however later the same day the trader telephoned the purchaser and offered to pay him $1,800 in cash or give him a $2,200 trade in allowance on another vehicle; offers which the purchaser refused.

[17] Mr Nazif told the Tribunal the vehicle was a trade-in which the trader had obtained and disposed of through Manukau Park & Sell. He claims the odometer was “dim” but was working when the vehicle was sold. He says that when the purchaser contacted him about the vehicle he asked him to take the vehicle to one of the repairers he uses, a firm named Cartronics. Cartronics quoted $700 to repair the vehicle and Mr Nazif says he asked the purchaser to pay $300 of this which the purchaser refused to pay. Two days later he asked the purchaser to bring the vehicle to the trader’s premises and Mr Nazif says he then took the vehicle to be repaired by Autoworks in Otahuhu. A copy of Autoworks invoice #133 dated 20 March 2013 was sent to the Tribunal after the hearing at the Tribunal’s request because the trader did not have it at the hearing. The invoice shows the customer’s (trader’s) instruction was to “check odometer display” but Autoworks invoice shows they only charged the trader to repair the fuel gauge; a sum of $414 with GST. There is nothing on the invoice to show why the odometer was not fixed, or indeed, if it was working, that Autoworks had checked it and found it to be working. When the Tribunal asked Mr Nazif at the hearing why the odometer was not repaired Mr Nazif said that the purchaser had not asked the trader to do so. The Tribunal finds the trader’s evidence inconsistent with the purchaser’s evidence and also the instruction the trader must have given to Autoworks. Mr Nazif claims the purchaser has had buyer’s remorse on finding the vehicle’s 3500cc engine consumes too much fuel. The purchaser denies this saying that he earns $600 to $700 a week as a baker and can afford to run the vehicle which he says he knew had a 3500cc motor when he bought it.

[18] The Tribunal prefers the purchaser’s evidence to that given by Mr Nazif which it found lacked credibility. The Tribunal finds, on the basis of the purchaser’s evidence that, at the time the vehicle was supplied to him, its odometer was not working. The Tribunal also prefers the purchaser’s evidence which was consistent with that given by Ms Kaur’s, that the trader had been asked to repair the odometer and had asked the purchaser to pay $300 towards the repair costs and after having the vehicle for 10 days returned the vehicle to the purchaser without having repaired the odometer. The Tribunal, on the basis of the two warrant of fitness inspections done by AJ Automotive Ltd on 7 May and 19 June 2013 (check sheets produced as Exhibits 5 and 4 respectively) that the vehicle was unable to pass a warrant of fitness inspection within eight weeks after it was supplied and that the faults found were most likely, by their nature and seriousness, to have been present in the vehicle at the time of sale. The faults were:
a) a badly leaking power steering rack,
b) both front steering rack bushes split,
c) the speedo was not working,
d) the rear shock absorber bushes were perished,
e) the safety restraint system (SRS) warning light was not working and
f) less seriously but still a ground for WOF failure, one of the windscreen washers was not operating.

[19] In deciding whether the vehicle complied with the guarantee of acceptable quality the Tribunal acknowledges that the vehicle is a 17 year old imported Honda Legend which had travelled in excess of 254,000kms when it was sold to the purchaser for $2,850. However, the Tribunal thinks the vehicle should still have been safe and roadworthy. This vehicle was neither safe nor roadworthy. Therefore the Tribunal has no hesitation in finding that the vehicle failed to comply with the guarantee of acceptable quality at the time of sale because it was not free from minor defects, was not safe and was not as durable as a reasonable consumer paying $2,850 would regard as acceptable even for an old high mileage vehicle.

Conclusion on issue [a]:

[20] The Tribunal finds that the vehicle supplied to the purchaser by the trader to the purchaser did not comply with the guarantee of acceptable quality at the time of sale.

Issue [b]: Is the failure to comply with the guarantee of acceptable quality one of substantial character?

Legal principles

[21] Section 21 of the Act defines the circumstances in which a failure to comply with the guarantee as to acceptable quality will be regarded as being a failure of a substantial character for the purposes of s18(3). Section 21 provides as follows:

“ 21 Failure of substantial character
For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where ¾
(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 1 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) 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

because they are unsafe."

Application of law to facts

[22] The vehicle was found to have six faults which prevented it getting a warrant of fitness on 7 May 2013. Of those six faults the Tribunal considers the badly leaking power steering rack, the split front steering rack bushes, the perished rear lower shock bushes and the inoperative SRS light made the vehicle unsafe. The Tribunal therefore finds the vehicle’s failure to comply with the guarantee of acceptable quality was one of substantial failure in terms of s21(d) of the Act.

[23] The Tribunal also considers that no reasonable purchaser would have acquired the vehicle if he/she were aware of the nature and extent of the vehicle’s failures to comply with the requirements necessary to obtain a warrant of fitness and in particular that it would require at least a further $1,129, equivalent to almost 40% of the vehicle’s purchase price to be spent on the vehicle to bring it up to warrant of fitness standard within two months of the date of purchase.

Conclusion on issue [b]:

[24] The vehicle’s failures to comply with the guarantee of acceptable quality are each of substantial character because the vehicle is not only unsafe but the Tribunal does not think that it would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure.

Issue [c]: was the purchaser entitled to reject the vehicle?

Legal principles

[25] Section 18 of the Act provides as follows:
(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

[26] In this application the Tribunal has found that the failure to comply with the guarantee of acceptable quality is one of substantial character within the meaning of s21 of the Act. Section 18(3)(a) therefore permits the purchaser, subject to s20, to reject the vehicle in accordance with s22.

[27] The purchaser rejected the vehicle in accordance with s22 by notifying the trader in writing by post on 7 June 2013 that he was rejecting the vehicle and the purchaser exercised his right to reject within 12 weeks of the time of supply which is within a reasonable time as is required by s20 of the Act.

Conclusion on issue [c]

[28] The purchaser was entitled to reject the vehicle and did so validly on 7 June 2013. The vehicle does not have a current warrant of fitness and is unsafe to be driven on the road. The vehicle cannot be transported back to the trader without significant cost to the purchaser so the trader will be ordered to collect the vehicle from the purchaser at its cost after paying him the sum of $2,850 by bank cheque.

Orders

1. The purchaser’s rejection of the 1996 Honda Legend registration CYK664 on 7 June 2013 is upheld with effect from 7 June 2013.

2. Ezy Limited shall pay Gursant Singh $2,850 by bank cheque immediately.

3. When Ezy Limited has paid Gursant Singh $2,850 it shall at its expense collect the vehicle from the purchaser.

DATED at Auckland 28 June 2013

C.H Cornwell
Adjudicator