Patchett v Hauschild t/a SS Enterprises - Reference No. MVD 79/13 (Wellington) [2013] NZMVDT 84 (19 July 2013)

Last Updated: 17 August 2013

Decision No. WN 14/2013

Reference No. MVD 79/13

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN SIMON PATCHETT

Purchaser

AND JEFFREY HAUSCHILD trading as SS ENTERPRISES

Trader

BEFORE THE WELLINGTON MOTOR VEHICLE DISPUTES TRIBUNAL

N J Wills - Barrister, Adjudicator
N Barrett - Assessor

HEARING at Blenheim on 10 July 2013

APPEARANCES

Simon Patchett, purchaser
Graham Patchett, witness for the purchaser
Peter Burbidge, witness for the purchaser (by telephone)
Jeffrey Hauschild, trader

DECISION

Background

[1] On 2 February 2013, Simon Patchett (the purchaser) purchased a 1998 Volvo S40 (the car) for $4,990 from Jeffrey Hauschild trading as SS Enterprises (the trader). Mr Patchett is seeking to recover the cost of significant repairs to the car’s engine. Mr Patchett also wishes to reject the car.

[2] The trader's position is that the purchaser is not entitled to the compensation claimed or to reject the car.

[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
Background

[4] On 2 February 2013 the parties entered into a vehicle offer and sale agreement (VOSA) for the purchaser to buy the car from the trader for $4,990. The VOSA records the car’s odometer reading as 101,000 kilometres at the time of sale but this is clearly an under-estimate given that the registration invoice records an odometer reading of 102,554 kilometres at a warrant of fitness inspection undertaken on 13 January 2013.

[5] On 24 April 2013 the car’s cambelt tensioner bearing failed, damaging the cambelt which in turn damaged the valves and the top of the pistons necessitating major repairs to the car’s engine. The most economical repair was to fit a replacement second hand engine at a cost of $4,996.97. (Mr Patchett provided the tribunal with an estimate for repair of the head damage (ie not including any repair to the damaged pistons) of $4,403.10).

[6] The same day the engine failed, Mr Patchett tried to contact Mr Hauschild. After a few failed attempts his father Mr Graham Patchett went to see Mr Hauschild about the failure. Mr Hauschild was not prepared to help.

[7] Mr Patchett sent a letter rejecting the car on 29 April 2013. Mr Hauschild did not accept that Mr Patchett was entitled to reject the car so Mr Patchett went ahead with the repairs. The repairs were completed at a cost to Mr Patchett of $4996.97.

[8] Mr Patchett told the tribunal that prior to buying the car he had been told by Mr Hauschild that the cambelt had been replaced. Mr Hauschild also told Mr Patchett that Topp Motors had worked on the car. Both of these statements were correct however the cambelt was not replaced by Topp Motors. Records indicate that it appears that it was replaced by someone named “Owen” and it seems likely that only the cambelt was replaced and not the idler or tensioner bearings. It is usual for idler and tensioner bearings to be replaced at the same time as the cambelt. Mr Burbridge (the automotive diesel engineer with 35 years experience who carried out the repairs to Mr Patchett’s car) told the tribunal that it was normal practice to replace the bearings when a cambelt is replaced. He said that if a customer did not wish this to happen, he would require them to sign a disclaimer. Mr Burbridge told the tribunal that in his opinion the cambelt that had broken was relatively new but that the idler and tensioner bearings were the original bearings.

[9] Mr Patchett was concerned that he had been misled about the cambelt. He submitted that he was given the impression that the replacement had been carried out by Topp Motors and so he concluded that the idler and tensioner bearings had also been replaced. He said that had he known that the cambelt had not been replaced by a professional mechanic, he would not have bought the car.

[10] At the hearing Mr Patchett also submitted that he had been misled by the trader into believing that the car was economical. Mr Patchett described a statement by Mr Hauschild about travelling a considerable distance without having to fill the car up with fuel and stated that he had not been able to achieve that degree of fuel economy since he had possession of the car. Mr Patchett had not raised this issue previously (it was not referred to in his application) and was of some surprise to Mr Hauschild. Mr Patchett did not have any formal evidence of fuel consumption to support this claim.

[11] Mr Patchett wishes to both reject the car and obtain a refund and be reimbursed for the repair costs.

[12] Mr Hauschild did not dispute the facts. He agreed that he had told Mr Patchett that the cambelt had been replaced and that he had told him that Topp Motors had worked on the car. Mr Hauschild confirmed that it was also his assumption that the idler and tensioner bearings had been replaced at the same time as the cambelt but that he and Mr Patchett did not discuss that.

[13] Mr Hauschild’s key submission was that the car was of acceptable quality when he sold it to Mr Patchett. He did not regard it unacceptable for a purchaser to have to spent $5,000 on a car 12 weeks after purchasing it.

The Consumer Guarantees Act 1993

The guarantee of acceptable quality

[14] 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."

[15] 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."

[16] 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.

[17] In this case the goods supplied are a 15 year old second hand car with an odometer reading of around 103,000 kilometres sold for a purchase price of $4,990. When it was sold to Mr Patchett, the car had a relatively new cambelt but the idler and tensioner bearings had not been replaced as would have been expected during routine maintenance. The idler and tensioner bearings failed just 7 weeks later after around 1,500 kilometres of use. Leaving aside the question of whether or not Mr Patchett was misled, the tribunal finds that the car failed the guarantee of acceptable quality. No reasonable purchaser would buy a car knowing that he or she would have to spend the purchase price again in just 7 weeks replacing the engine.

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

[18] 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.

[19] 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.”

[20] 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 true condition of the car would not have purchased it for $4,990.

What are the remedies available to the purchaser?

[21] 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."

[22] Mr Patchett is not entitled to both recover the costs of repair and then reject the vehicle. The rights set out in section 18(2) and (3) cannot be exercised sequentially (see Cooper v Ashley & Johnson Motors Ltd [1997] DCR 170). In this case the appropriate remedy is to order Mr Patchett be compensated for the cost of repairs pursuant to section 18(2)(b)(i).

[23] The tribunal is satisfied that the costs incurred are reasonable. Mr Patchett is therefore entitled to recover $4,996.97 from the trader.

Orders

1. The trader shall pay the purchaser $4,996.97.
   

DATED at WELLINGTON this 19th day of July 2013

___________________
N Wills
Adjudicator