Liang v Asset Motors Limited Reference No. MVD 177/14 (Auckland) [2014] NZMVDT 130 (13 November 2014)

Last Updated: 18 December 2014

Decision No: AK 113/2014
Reference No. MVD 177/14

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN FENG LIANG

Purchaser

AND ASSET MOTORS LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Auckland on 10 November 2014

APPEARANCES

Mr F Liang, the purchaser

Mr D A Baldwin, director of the trader
Mr B Connor, manager of the trader.

DECISION

Background
[1] On 26 July 2014 Mr Liang (“the purchaser”) bought a 2005 Nissan Note vehicle registration number HNS265 (“the vehicle”) from Asset Motors Limited (“the trader”) for $6,900. The purchaser claims the vehicle has a fault with its steering which the trader has failed to remedy and he has rejected the vehicle. He seeks a refund of the purchase price and other costs.

[2] The trader’s says that it remains willing to repair the vehicle’s steering fault.

[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 Tribunal’s decision was made by the adjudicator.
The Issues
[4] The issues are:
[a] Was the vehicle of acceptable quality as defined in s7 of the Consumer Guarantees Act 1993 (“the Act”) at the time of sale?
[b] If the vehicle was not of acceptable quality did the purchaser require the trader to remedy the defects within a reasonable time in accordance with s19 of the Act?
[c] If the trader did not remedy the defects within a reasonable time is the purchaser entitled to reject the vehicle and have a refund of the purchase price?

Issue [a]: Was the vehicle of acceptable quality as defined in s7 of the Act at the time of sale?

Relevant legislation
[5] 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.”

[6] The expression "acceptable quality" is defined in s7 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:
(ha) the nature of the supplier and the context in which the supplier supplies 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 considering whether or not goods meet the guarantee of acceptable quality 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 section 7(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 purchasers’ subjective perspective.

[8] 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 facts to relevant law
[9] The purchaser test drove the vehicle before he agreed to buy it from the trader for $6,900. The purchaser had the AA do a pre-purchase inspection of the vehicle on 24 July 2014, although the AA report was issued to the trader. The AA report recorded the distance the vehicle had travelled as 57,549kms although the Consumer Information Notice the trader supplied with the vehicle recorded its odometer as 57,311kms on 26 July. The AA report noted the left rear shock absorber was leaking oil and there was no lubrication sticker on the vehicle. The trader did not supply the vehicle with a warrant of fitness issued within one month prior to the date of sale as required by Land Transport Rule 35001/1 clause 9.12.

[10] The purchaser says that very soon after he took delivery of the vehicle he noticed that its steering was heavy especially at low speed and the fault was particularly noticeable on parking the vehicle in both forward and reverse direction. The purchaser says that he first returned the vehicle to the trader to rectify the heavy steering fault on 17 August 2014 and the trader had the vehicle for three days during which it replaced the vehicle’s battery and did a wheel alignment. The trader’s manager, Mr Connor, drove the vehicle and says he was unable to fault it.

[11] The purchaser continued to experience the heavy steering fault after the vehicle was returned to him by the trader on 22 August and on 23 August the purchaser sent the trader an email rejecting the vehicle. On 25 August the vehicle went back to the trader who sent it back to Godo Workshop. Godo Workshop reported having used a diagnostic scanner to try and locate the fault but the vehicle’s electronic diagnostic system had not recorded any fault codes. They reported having tested the steering for more than 30 minutes and say the steering was working perfectly and did not fail.

[12] On 25 September the purchaser took the vehicle to VTNZ for a mechanical inspection report. The vehicle’s odometer was then 58,617kms or 1,068kms greater than when the vehicle had been supplied to the purchaser. VTNZ reported the vehicle’s handling was “Not at WOF standard; steering wheel is hard when turning full lock.”

[13] On 30 September the purchaser filed his application with the Tribunal for rejection of the vehicle and a refund of the purchase price. The Tribunal, after reading the purchaser’s application sent the purchaser a written request to obtain a report from a Nissan franchised repairer on the vehicle’s steering and cost to rectify any fault found to exist with the steering. The purchaser did not do so promptly. On the Saturday prior to the Tribunal’s Monday morning hearing he took the vehicle to West Auckland Nissan. The Tribunal took sworn evidence by telephone conference call during the hearing from Mr Mike Hailstone the Service Manager of West Auckland Nissan that he had a quick look at the vehicle on Saturday 8 November. He said he had briefly test driven it around the car park of West Auckland Nissan and had not experienced the steering fault complained of by the purchaser. Mr Hailstone said that one of West Auckland Nissan’s technicians had, however experienced the fault when he drove the vehicle. Mr Hailstone said that it was not a common fault and he had not seen it before but that he did not tend to see many Nissan Note vehicles because they are an import. He told the Tribunal that he had not done a full diagnosis of the vehicle because a scan tool was not available but that he thought that the fault could occur from either a faulty battery which powered the electric power steering or through a fault with the electronic steering box. The purchaser also complained of a transmission fault which he thought could be caused by the gear selector and this needed further investigation. The vehicle’s battery appeared to be as old as the vehicle and had a loose terminal connection which he had tightened.

[14] Mr Baldwin for the trader said that the fault had been difficult to detect but the trader was willing to fix it. Mr Connor the trader’s manger said that he could not get the vehicle to fault when he drove it and had sent the vehicle to Godo Workshop twice and they had been unable to identify the fault using a diagnostic scanner. Mr Connor said that when in late August the purchaser telephoned him to say that the steering was still heavy he went and drove the vehicle with the purchaser and after driving the vehicle on tight lock for about 20 to 30 minutes the steering became heavy. However the purchaser would not allow the trader to take the vehicle away and fix the fault at that time.

The Tribunal’s findings on issue [a]
[15] The first issue the Tribunal has to decide is whether the vehicle complied with the guarantee of acceptable quality in s6 of the Act at the time of sale. In order to decide that, the Tribunal has had regard to the factors in s7 of the Act. First, to the nature of the goods; in this case a nine year old Nissan Note a Japanese import which had 57,552kms on its odometer at the time of sale. Second, to the price of $6,900 which included the cost of the AA report of $149 for which the purchaser accepts responsibility.

[16] The Tribunal thinks the vehicle probably has a fault with its steering which causes its steering to become heavy, on being driven at hard lock and routine parking at low speeds. The fault was probably present in the vehicle at the time of sale and its existence has been confirmed by the oral evidence given by Mr Hailstone of West Auckland Nissan.

[17] The Tribunal considers that a reasonable consumer paying $6,900 for a nine year old moderately low mileage Nissan import vehicle would probably not regard the vehicle as being of acceptable quality with this defect.

Conclusion on issue [a]
[18] The vehicle did not, at the time of sale, comply with the guarantee of acceptable quality in the Act.

Issue [b]: Did the purchaser require the trader to remedy the defect within a reasonable time in accordance with s19 of the Act?

Relevant legislation
[19] 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
[20] The copies of the emails sent by the purchaser to the trader produced by the purchaser show that he required the trader to remedy the vehicle’s faults on 17 August and the Tribunal accepts that the trader attempted to do so. However after Godo Workshop replaced the battery on 20 August and the purchaser complained that the heavy steering fault was still present the Tribunal thinks the trader needed to send the vehicle to a Nissan franchised dealer who might have been expected to diagnose the cause of the fault quickly, as indeed West Auckland Nissan did, rather than, as the trader did, send the vehicle back to Godo Workshop who were still unable to diagnose the fault. The Tribunal therefore does not consider that the trader succeeded in remedying the fault within a reasonable time as it is required to do by s18(2)(a) of the Act.

Conclusion on issue [b]:
[21] The purchaser required the trader to remedy the vehicle’s heavy steering fault and the trader attempted to do so. However the Tribunal finds that the trader did not remedy the fault within a reasonable time.

Issue [c]: is the purchaser entitled to reject the vehicle and have a refund of the purchase price?

Relevant law
[22] Section 18(2)(b) of the Act (reproduced in paragraph 19 ) provides there where a supplier does not succeed in remedying 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, or subject to s20, reject the goods in accordance with s22.

Application of law to facts
[23] In this application the Tribunal has found that the trader did not succeed in remedying the failure of the vehicle’s steering to comply with the guarantee of acceptable quality within a reasonable time. The purchaser elected to reject the vehicle and did so by email to the trader on 23 August 2014, within one month of the date of sale. The Tribunal considers that the purchaser complied with s22(1) of the Act and did so within a reasonable time as defined in s20 of the Act.

Conclusion on issue [c]
[24] The Tribunal finds that the purchaser is entitled to reject the vehicle and have a full refund of the purchase price (less the cost of the AA pre-purchase inspection report). The Tribunal also considers the purchaser is entitled to be reimbursed for the cost of the VTNZ report of $110 but not the cost of the report he obtained from Takapuna Brake & Automotive of $92 because that report was not requested by the Tribunal and the report is qualified.

Orders

1.The purchaser’s rejection of the vehicle is upheld.

2. The trader shall immediately pay to the purchaser $6,861 comprising the following amounts:
[a] the purchase price of $6,900 less the cost of the AA report of $149 or $6751 and
[b] the cost of the VTNZ report of $110.

3. The purchaser shall, on receipt of $6,861 from the trader, return the vehicle to the trader.

DATED this 13th day of November 2014

C.H Cornwell
Adjudicator