Sadler v Justus Holdings Limited t/a Just Autos - Reference No. MVD 84/13 (Auckland) [2013] NZMVDT 96 (16 September 2013)

Last Updated: 16 October 2013

Decision No: AK 80/2013
Reference No. MVD 84/13

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN HONE JOHN BLAKE PEREKI SADLER

Purchaser

AND JUSTUS HOLDINGS LIMITED T/A JUST AUTOS

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Whangarei on 12 September 2013

APPEARANCES

Mr H J B P Sadler, the purchaser

Mrs J Thomasson, witness for the purchaser
Mr A Thomasson, witness for the purchaser
Mr B C Murray, director for the trader
Mr H Clyde, witness for the trader

DECISION

Background

[1] On 30 March 2012 Mr Sadler (“the purchaser”) bought a 1990 Toyota Hiace van registration number PJ3712 (“the vehicle”) from Justus Holdings Limited trading as Just Autos (“the trader”) for $5,500. The purchaser has rejected the vehicle because he says it has structural rust that pre-dates the date of purchase. He seeks the Tribunal’s order upholding his rejection and ordering the trader to refund the purchase price.

[2] The trader denies that the vehicle was affected by rust at the time of sale and says that the vehicle was sold with a new warrant of fitness. It also says that it was not informed the vehicle had rust until 5 April 2013, when the purchaser’s niece returned the vehicle to the trader’s premises with a quote from a panel repairer and demanded the trader fix rust that was in the vehicle. The trader says that the vehicle’s odometer is now 251,193km showing the vehicle has travelled 27,137kms in the 18 months the purchaser has owned and used it and the trader ought not to be responsible for the vehicle’s condition now given its age and high mileage.

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

Issues
[4] The following issues require consideration:
[a] Whether the vehicle sold to the purchaser was of acceptable quality?
[b] If it is not, is the failure one of substantial character?
[c] Whether the purchaser is entitled to reject the vehicle?

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

Relevant law

[5] In terms of s.89 of the Motor Vehicle Sales Act 2003 the Tribunal has jurisdiction to inquire into and determine applications or claims between a Motor Vehicle Trader and the purchaser of a motor vehicle. In doing so, it may apply the provisions of the Sale of Goods Act 1908, the Fair Trading Act 1986, the Contractual Remedies Act 1979 or the Consumer Guarantees Act 1993, as applicable to the circumstances of the case. In this application the Consumer Guarantees Act 1993 (“the Act”) is applicable.

[6] Section 6 of 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.”

[7] 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.”

[8] In considering whether or not goods meet the guarantee of acceptable quality in s6 of the Act, the Tribunal must consider the quality elements as set out in s7(1)(a) to (e) of the Act as modified by the factors set out in s7(1)(f) to (j) from the perspective of a “reasonable consumer”. The test is an objective one; it is not a view of those factors from the purchaser’s subjective perspective.

[9] 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 right to reject the vehicle within a reasonable time.

Application of law to facts

[10] The purchaser bought the vehicle on 30 March 2012 as a gift for his niece and her husband, Mr & Mrs Thomasson. Its odometer at the time of sale recorded on the Vehicle Offer and Sale Agreement was 234,103kms. The vehicle was supplied with a current warrant of fitness which had been issued on 19 March 2012 by Whangarei Vehicle Testing. The only warning which appears on that WOF check sheet is that the front brakes appear low. That WOF check sheet does not contain any reference to rust being present in the vehicle.

[11] Mrs Thomasson says she noticed rust in the vehicle’s ‘A’ pillar a few days after she received the vehicle but did not raise it as an issue with the trader at the time because it did not appear to be significant. On 13 May 2012 Mrs Thomasson sent an email to the trader, a copy of which she produces, informing it that she was “rather happy with the vehicle” but there were a few things she wished to bring to the trader’s attention. The email refers to a “small dent” in the front of the vehicle and a leak coming onto the floor of the vehicle between the passenger and driver. Her email says she also recalled the trader quoting fuel consumption of 10 litres per 100kms but said she was getting closer to 70km per 10 litres and the warning light for the fuel tank was not operating. Her email asked the trader if it was willing to look at those small issues and find a way to fix them. The email makes no reference to rust in the vehicle. Mr Murray for the trader denies having received that email and says the email address to which it was sent was incorrect although Mrs Thomasson says it was the email address printed on the trader’s business card. Mr Murray also denies that he made any representation as to what fuel economy the vehicle would give the purchaser because he says that he is a very experienced trader and would not be so unwise as to make such a claim, and secondly, because a vehicle’s fuel consumption depends greatly on the manner in which the vehicle is driven. Although Mrs Thomasson said she had made a follow up telephone call to Mr Murray she was unable to recall when this occurred. Nothing was done by Mrs Thomasson to persue those claimed faults with the trader.

[12] The purchaser says that the vehicle failed a warrant of fitness inspection on 14 December 2012 when its odometer reading was 244,446kms (10,343kms and nine months after it was sold). The reasons why the vehicle failed a warrant of fitness are listed on the WOF check sheet issued by Garnet Motor Services as follows:
a) reduce handbrake travel
b) remedy wiper blades split
c) remedy corrosion hatch area L/H side by drip rail and both front steps
d) remedy corrosion around windscreen inside at top
e) remedy L/F shock leaking
f) remedy R/F tyre worn
g) remedy L/F tyre worn.

[13] Unfortunately Mrs Thomasson did not take the vehicle back to the trader immediately. For family reasons she did not contact the trader until 5 April 2013. On that date she returned the vehicle to the trader and asked it to repair the rust found in the vehicle on the 14 December 2012 warrant of fitness inspection, a copy of which she showed the trader with a written estimate from P J Edlington Panelbeaters Ltd of $3,036.00. The trader denied that there was rust in the vehicle when it sold the vehicle to the purchaser, provided Mrs Thomasson with a copy of the 19 March 2012 warrant of fitness check sheet, and advised her to speak to Mr Clyde, the warrant of fitness inspector who had issued the warrant. If, after speaking to Mr Clyde, she was dissatisfied with Mr Clyde’s explanation Mr Murray told her she should file an application with the Tribunal. Mrs Thomasson took the vehicle back to Mr Clyde who inspected the vehicle and informed Mrs Thomasson that the rust in the vehicle was not structural. Mrs Thomasson says she then went back to P J Edlington Panelbeaters who told her the rust was most certainly structural. Mrs Thomasson continued to drive the vehicle and filed an application with the Tribunal on 4 June 2013. Mrs Thomasson says the vehicle’s alternator now has a fault and the vehicle cannot be started without jump starting it. She says she has not driven the vehicle for the past three months other than to take it to get a VTNZ warrant of fitness report and panel beaters report as requested by the Tribunal.

[14] Mr Thomasson gave evidence that from soon after he and Mrs Thomasson obtained the vehicle they noticed water dripping into it whenever it rained from under the dashboard area causing the carpets to get wet.

[15] Mrs Thomasson had VTNZ do a warrant of fitness inspection of the vehicle on 7 September 2013. The vehicle’s odometer is now 251,193kms. She produced a copy of the check sheet which shows the vehicle has the following faults:
“Corrosion bottom door hinges
Corrosion RH front passenger window
Headlights to operate on high beam
Corrosion at rear door aperture and corners
Corrosion across front windscreen surround & bottom
Fuel cap to comply (pulls out easily)
Rear seat back to be secured, extreme rear seat
Corrosion left front door at guttering and lower hinge
Remedy left front seat belt- frayed webbing
Remedy loose driver’s seat belt buckle cover
Mis-matched rear tyres
LH rear tyre worn
Bolt missing RH lower ball joint unit
Tailpipe exhaust bracket broken
Left hand front inner track arm bush
Corrosion RH front floor seam
Loose front bumper
Check diff pinion flange for security (Nut loose?)
Improve park brake travel
Steering wheel covering missing and moving”

[16] Mrs Thomasson also produced a report dated 11 September 2013 from Murray Tonks Panelbeaters Ltd which lists the corrosion faults the vehicle has and gives a visual assessment of $6,948.88 to repair the vehicle. The Tribunal also took Mr Tonks’ evidence by telephone conference call during the hearing. Mr Tonks told the Tribunal there are now five areas of structural rust in the vehicle:
a) both ‘A’ pillars
b) the floor section of the vehicle
c) the front panel
d) the floor steps (sills) on both sides of the vehicle
e) the rear quarter windows RH side
There is also, he says, rust in the LH rear quarter window area, the roof seams LH side and side panel window drip area, and right around the windscreen. Mr Tonks was asked by both the Assessor and Adjudicator how long he thought the rust had been in the vehicle. He said he was unable to say because it depended on whether the vehicle had been “sheded” or not. He said that he had seen rust in fairly new vehicles and could not be sure. He says the vehicle is not safe to be driven on the road and he had advised Mrs Thomasson to cease driving it.

[17] Mr Murray for the trader says the first he knew of the vehicle’s rust problem was on 5 April 2013 when Mrs Thomasson and a relative came to his premises with the Edlington estimate. He says he looked at the areas where rust was reported, gave Mrs Thomasson a copy of the March 2012 warrant check sheet and suggested she talk to Mr Clyde and if not satisfied to lodge a claim with the Tribunal. He says that he has also spoken to Peter Paget a Low Vehicle Certifier for Whangarei who has seen the vehicle recently and who believes the only area of rust that was likely to have been in the vehicle 18 months ago is in the side steps which, he says, Mr Paget estimates will cost $400 to fix.

[18] Mr Clyde the owner of Whangarei Vehicle Testing gave evidence for the trader that when he inspected the vehicle on 19 March 2012 there was no rust present in it and the only fault was half worn brake pads. He also produces the two previous warrant of fitness landata reports on the vehicle which do not record the vehicle as failing a warrant for rust on either 13 December 2011 or 14 April 2011.

[19] The vehicle the subject of this application was sold to the purchaser on 30 March 2012. At the time of sale it was a 22 year old New Zealand new vehicle, It had travelled 234,103kms and its sale price was $5,500. The vehicle passed a warrant of fitness inspection. The purchaser’s niece Mrs Thomasson was given the vehicle for her use by the purchaser and Mrs Thomasson gave evidence that the vehicle had been used for family transport and not taken on the beach or used for lauching a boat. Mrs Thomasson gave evidence she noticed repaired rust damage to the ‘A’ pillar by the driver’s window a few days after getting the vehicle but surprisingly in a letter she emailed to the trader asking it to fix some other faults with the vehicle, she made no mention of seeing rust in the ‘A’ pillar. The vehicle’s warrant of fitness expired in September 2012. Mrs Thomasson spent $126.50 replacing the front brake pads on the vehicle on 8 October 2012 and also bought a tyre for $125 about the same time. She continued to use the vehicle, without a warrant of fitness, from September 2012 until June 2013 in spite of it failing a warrant on 14 December 2012 for seven reasons including the presence of corrosion in the vehicle and other faults of a wear and tear nature which made it unsafe to be on the road. On the basis of the VTNZ warrant of fitness report dated 9 September 2013 and the evidence of Mr Tonks, the Tribunal is in no doubt that the vehicle is now so badly corroded that it is unsafe to be on the road and that the probable cost of repairing the corrosion is so great that it is uneconomic to repair the vehicle.
[20] The issue the Tribunal has to decide is whether the vehicle was as fit for purpose, acceptable in appearance and finish, free from minor defects, safe and as durable as a reasonable consumer paying $5,500 for a 22 year old vehicle that had travelled 234,103kms would regard as acceptable. The Tribunal is required by s7(1) of the Act to take into account any “hidden defects”. The Tribunal thinks that the vehicle was probably free of any faults at the time it was sold to the purchaser because it passed a warrant of fitness issued by the Whangarei Testing Station 11 days before it was sold to the purchaser. In any event there is no reliable evidence to support the purchaser’s claim that there was rust in the vehicle at the time of sale. Even Mr Tonks in giving evidence to the Tribunal was unable to say how long the rust had been present. The Tribunal thinks, on the basis of the evidence given by Mr and Mrs Thomasson, both of whom appeared to the Tribunal to be truthful witnesses that there was a leak in the vehicle when it was sold. Unfortunately a leak in a 22 year old van is not uncommon and nothing was done by Mr & Mrs Thomasson about that leak at the time and there is nothing to link that leak and the rust which has now destroyed this vehicle.

[21] The conclusion the Tribunal has reached on the issue of whether the vehicle was of acceptable quality, is therefore, first, that at the time of sale the vehicle was probably acceptable in appearance and finish, safe, and as free from minor defects as a reasonable consumer would regard as acceptable for a 22 year old vehicle such as this, sold for $5,500 which had travelled 234,000kms. Second, in deciding if it was as durable as a reasonable consumer would regard as acceptable the Tribunal has decided that although the vehicle has subsequently failed a warrant of fitness inspection and that the Tribunal is also satisfied that it has been established that by September 2013 the vehicle has severe structural rust that, again given the vehicle’s age and mileage it was also probably as durable as a reasonable consumer would regard as acceptable for a vehicle which at the time of sale to the purchaser was near the end of its economic life. The Tribunal has therefore, with real regret for the purchaser and Mrs Thomasson, decided that it is unable to make a finding that the vehicle did not comply with the guarantee of acceptable quality and sadly, for that reason, the purchaser’s application must be dismissed.

Order

The purchaser’s application is dismissed.

DATED this 16 September 2013.

C.H Cornwell
Adjudicator