Wetere v Premium Motor Group Limited Reference No. MVD 171/2014 (Auckland) [2014] NZMVDT 120 (15 October 2014)

Last Updated: 28 November 2014

Decision No: AK 103/2014
Reference No. MVD 171/2014

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN TAMARA TE AORANGI WETERE

Purchaser

AND PREMIUM MOTOR GROUP LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr S M Johnson, Assessor

HEARING at Wellington on 13 October 2014

APPEARANCES

Ms T Wetere, the purchaser

Mr B Garrett, partner and support person for the purchaser
Mr R Anset, step-father and witness for the purchaser
There was no appearance by the trader

DECISION

Background

[1] On 6 October 2013 Ms Wetere (“the purchaser”) bought a 2006 Toyota Auris registration HCA380 (“the vehicle”) from Premium Motor Group Limited( “the trader”) for $11,000. The purchaser filed an application to reject the vehicle but has subsequently informed the Tribunal she wishes to have the vehicle repaired at an estimated cost of up to $2,000.

[2] The trader was sent notice of the time, place and date of the hearing but did not appear and the Tribunal was unsuccessful in its attempts to contact the trader by telephone. The trader did not respond to the Tribunal’s written request for a statement of its defence.

[3] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal has appointed Mr Johnson as expert assessor to assist in the determination of the complaint. Mr Johnson took the oath required by cl 10(2) of Schedule 1 to that Act. As an assessor Mr Johnson 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 complied with the guarantee of acceptable quality in the Consumer Guarantees Act 1993 (“the Act”)?
[b] If not, did the purchaser require the trader to remedy the faults and if so did the trader do so within a reasonable time?
[c] If not, what amount is the purchaser entitled to obtain from the trader for the vehicle’s repair costs.?

Issue [a]: Whether the vehicle sold to the purchaser complied with the guarantee of acceptable quality in the Act?

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" was, at the time this vehicle was sold to the purchaser, 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 saw the vehicle displayed on the trader’s premises in Porirua and agreed to buy it for $11,000 on 6 October 2013. The vehicle is the first vehicle the purchaser has owned. The purchaser says she was aware the vehicle had been imported damaged and was also aware that the liners in the front guards were missing, an indicator the vehicle had been poorly repaired, and yet she still bought it. The vehicle had travelled 9,000kms at the time of sale according to the Vehicle Offer and Sale Agreement prepared by the trader and signed by the parties. There was no CIN provided to the purchaser and there does not appear to have been any independent verification that the odometer reading was accurate. The purchaser collected the vehicle on 17 October 2013 by which time the trader had obtained a fresh VTNZ warrant of fitness and had the vehicle inspected and certified by an LTSA repair certifier, Mr D Palmer of Prior & Palmer Ltd of Levin.

[9] On 23 December 2013 the purchaser noticed that the paint was starting to flake off the vehicle’s front bumper and when the purchaser contacted the trader it asked her to come back in the New Year to have that fixed. The purchaser returned the vehicle to the trader in early January and the trader had the vehicle for a month without repainting the bumper as it had promised it would.

[10] On 31 March 2014 the purchaser took the vehicle to Rutherford & Bond Toyota to have them replace both front inner guards and secure them and in the course of doing that work they discovered that the engine under cover tray was missing and that the purchaser should have the vehicle checked by a panel beater because the vehicle looked to be out of alignment.

[11] The purchaser took the vehicle to Porirua Motor Body Repairs Ltd (“PMBR”) who quoted a total of $5,023.49 to remove, repair, replace the headlamps and paint the poorly repaired front bumper, bonnet, front guards and front doors of the vehicle. PMBR informed the purchaser there was a hole in the right headlamp, that the headlamps had been glued in place and were not secure or properly attached to the vehicle, and there were many screws and clips missing.

[12] In May 2014 the trader repainted the vehicle’s bumper but the paint colour did not match the rest of the vehicle. The purchaser sent the trader a letter dated 18 May expressing her concerns with the work and the vehicle’s faults and giving the trader seven days in which to fix the faults. The trader did not repair the faults within the stipulated time and the purchaser took the vehicle back to the trader by arrangement on 6 June for the trader to have the vehicle painted and this took most of June to complete. On 30 July 2014 the purchaser took the vehicle back to the trader to have the headlights replaced. The work was not done and the purchaser collected the car on 8 August and returned it on 11 August. Finally, after a number of phone calls to the trader, the trader told the purchaser on 18 September that the vehicle was ready to be collected. On 19 September the purchaser took the vehicle to PMBR to be inspected to ensure the trader had replaced the headlamps and done the other work it had promised to do but PMBR advised that no work had been done on the vehicle and the front chassis remained bent, the engine mounts were bent and they told the purchaser the vehicle should not have been given a WOF by VTNZ.

[13] The purchaser says she contacted VTNZ and a manager told her that because the vehicle had been certified VTNZ were able to give it a WOF. The purchaser took the vehicle to Prior & Palmer Ltd who had issued the certificate. Prior & palmer Ltd measured the vehicle and Mr Palmer wrote a report stating that a 3D measurement showed the vehicle was within specifications- but slightly out. It was structurally sound but noted that finishing repairs were “average” and needed to be tidied up, resealed and rust proofed. The report notes that previous repairs have been made to the left front chassis and inner guard forward of the suspension. Alongside a heading “Description of structural damage”: Mr Palmer wrote:
“New radiator panel, bumper & beam, front subframe member, bonnet, LF guard, poorly repaired and fitted headlights, front engine mount damaged.”

[14] On 14 September 2014 the purchaser sent the trader a letter notifying the trader that it had failed to bring the vehicle up to a fit for purpose standard within a reasonable time and she was rejecting the vehicle and requested a full refund.

[15] The Tribunal, in order to decide whether the vehicle complied with the guarantee of acceptable quality in s6 of the Act has had regard to the factors in s7 of the Act. First, to the fact that the vehicle was a seven year old Japanese imported Toyota which had travelled only 9,000kms at the time of sale and second, to the purchase price of $11,000.

[16] The vehicle had been accident damaged and repaired before it was sold to the purchaser. However the vehicle’s repairs have been so poorly done that the vehicle does not comply with the guarantee of acceptable quality because a reasonable consumer would not regard holed and glue-affixed headlamps, bent engine mounts, bent chassis and a missing under tray to be acceptable in a seven year old low mileage vehicle sold for $11,000. Accordingly the Tribunal finds that the vehicle was certainly not as free of minor faults at the time of sale as a reasonable consumer would regard as acceptable for a seven year old $11,000 Toyota with only 9,000kms on its odometer.

Conclusion on issue [a]:
[17] The Tribunal finds that the vehicle did not comply with the guarantee of acceptable quality in s6 of the Act because of the broken engine mount and broken and poorly attached headlamps.

Issue [b]: Did the purchaser require the trader to remedy the faults and if so did it do so within a reasonable time?

Legal Principles
[18] 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
[19] The purchaser, on the basis of the copies of letters sent to the trader and the sworn evidence she gave the Tribunal at the hearing, proved that she had repeatedly required the trader to repair the vehicles faults and that although the bumper was eventually repainted the mechanical faults the vehicle has have not been repaired by the trader. The Tribunal is satisfied that the trader had written notice in a letter dated 18 May 2014 sent to it by the purchaser of the vehicle’sPfaults and the purchaser gave evidence that the trader had the vehicle from July to September 2014 during which it had ample opportunity to fix the vehicle’s faults but it has failed to do so.

Conclusion on issue [b]
[20] The Tribunal finds that the purchaser required the trader to repair the vehicle’s faults but the trader failed to do so within a reasonable time.

Issue [c]: what amount is the purchaser entitled to obtain from the trader for the vehicle’s repair cost?

Legal Principles
[21] Section 18(2)(b)(i) of the Act, reproduced in paragraph 18 (above) provides that where a supplier fails or refuses to repair a failure within a reasonable time the consumer may either have the failure remedied elsewhere and obtain from the supplier all reasonable costs incurred in having the failure remedied. This is the remedy now sought by the purchaser.

Application of law to facts
[22] The purchaser has not had the vehicle repaired and the Tribunal considers the estimate given by PMBR of $5023.49 to be excessive. Mr Palmer of Prior & Palmer Ltd gave sworn evidence to the Tribunal during the hearing that he estimated the vehicle’s faults can be repaired for between $1000 and $1500.

Conclusion on issue [c]:
[23] The Tribunal considers that the vehicle’s broken and faulty headlamps and the damaged engine mount can probably be repaired for less than $1,500 inclusive of GST. Hence the Tribunal will order the trader to reimburse the purchaser with the actual cost of that work up to a maximum of $1,500 on production of a GST invoice by the purchaser.

Costs

[24] 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.”

[25] The trader, after receiving notice of the hearing, failed to attend the hearing without good cause. The Tribunal will therefore order the trader to pay to the Crown the reasonable costs of the Tribunal’s hearings of $500.

Orders

1.The trader shall reimburse the purchaser, on production by the purchaser of the original of a GST invoice from a repairer for the actual costs she incurs in repairing the vehicle’s engine mount and in replacing the broken headlamps up to a maximum sum of $1,500 inclusive of GST.

2. The trader shall pay to the Crown the costs of the Tribunal’s hearing of $500 within 14 days of the date of this decision by making payment to the Ministry of Justice Tribunal’s Division, Level 1, 41 Federal Street, Auckland City 1010

DATED at Auckland this 15th day of October 2014.

C.H Cornwell
Adjudicator