Hooton v Euro Vehicles Limited Reference No. MVD 185/2014 (Auckland) [2014] NZMVDT 132 (13 November 2014)

Last Updated: 18 December 2014

Decision No. AK 115 /2014

Reference No. MVD 185/2014

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN GRAHAM THOMAS HOOTON

Purchaser

AND EURO VEHICLES 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 G T Hooton, the purchaser

There was no appearance on behalf of the trader

DECISION

Background

[1] On 11 July 2014 Mr Hooton (“the purchaser”) bought a 2010 BMW M3 registration GSL340 (“the vehicle”) from Euro Vehicles Limited (“the trader”) for $65,000. Within three days of buying the vehicle an engine warning lamp lit up on the vehicle’s instrument panel. The warning light was due to faults with the vehicle’s throttle actuator and its PDC control unit. The trader was requested to remedy these faults and failed to do so. The purchaser has had the faults repaired at a cost of $3,197.59 and he seeks the Tribunal’s order that the trader reimburse him with that amount.

[2] On 20 October 2014 the trader was sent notice of the time, date and place of the hearing and asked it to provide the Tribunal with a copy of the Consumer Information Notice and a statement of its defence. The trader did not do so. The Tribunal’s Case Manager also telephoned the trader on 6 November to remind the trader of the date and time of the hearing and Mr Meno the trader’s sales manager said that he would not need to attend because the trader was putting funds into the purchaser’s account that day and the matter would be resolved. The Tribunal decided to proceed to hear the purchaser’s application in the trader’s absence because it was satisfied the trader had adequate notice of the time, place and date of the hearing but had decided not to attend.

[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.

The issues
[4] The issues requiring consideration are:
[a] Whether the vehicle complied with the guarantee of acceptable quality in s.6 of the Consumer Guarantees Act 1993?
[b] If it did not, did the purchaser require the trader to fix the faults and, if so, did the trader repair the faults within a reasonable time? If not, what is the reasonable cost of the repairs?

Issue [a]: Whether the vehicle complied with the guarantee of acceptable quality in s.6 of the Consumer Guarantees Act 1993

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 (“the Act”), as applicable to the circumstances of the case. In this application 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 Section 7 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 to¾
(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 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 the Tribunal must consider the quality elements as set out in section 7(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.

[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 11 July 2014 after taking it for a test drive. He did not have the vehicle inspected by a BMW specialist mechanic before doing so. The purchase price was $65,000 of which the purchaser provided $32,000 in the form of a 2008 BMW 335i which the trader accepted as a trade-in. The vehicle had 38,000kms on its odometer at the date of sale according to the Vehicle Offer and Sale Agreement. The purchaser says that the trader did not display a Consumer Information Notice (“CIN”) on the vehicle as it is required to do by r 6(3) of the Consumer Information Standards (Used Motor Vehicles) Regulations 2003 and the trader did not obtain his written acknowledgement that he had received a copy of the CIN as required by r 8(2) of those regulations. The Vehicle Offer and Sale Agreement recorded that the trader had supplied a copy of the CIN to the purchaser but the purchaser says this was not true; the trader did not supply him with a copy of the CIN.

[11] On 14 July an engine warning lamp in the vehicle’s instrument panel lit up. The purchaser contacted Mr Meno the trader’s sales manager about the warning light. He says Mr Meno told him to ignore it. The purchaser says the light came on periodically over the next few weeks and that he made numerous unanswered calls and left telephone messages for Mr Meno regarding his concern about the warning light but Mr Meno did not return his calls. The purchaser produced a log of the times and dates he had telephoned the trader to try and contact Mr Meno.

[12] On 5 August 2014 the purchaser took the vehicle to Jerry Clayton BMW (“JCBMW”) who, in a report dated 12 August stated that the PDC (parking distance control) unit and the throttle actuator were faulty. JCBMW gave the purchaser an estimate of $3,577.18 to replace the PDC control unit and throttle actuator. The purchaser provided a copy of the JCBMW estimate to the trader but Mr Meno told the purchaser that the replacement of the throttle actuator was not necessary and that it merely required re-programming. The trader asked the purchaser to return the vehicle so that it could have done.

[13] The purchaser returned the vehicle to the trader on 26 August for that purpose and the trader had the vehicle for a day and claimed it had repaired the fault. The purchaser requested the trader to provide a copy of the invoice for the work done. The trader failed for some time to send the purchaser an invoice and when it did so it sent the purchaser an invoice from NZ Fast Cars & Euros dated 7 October 2014 for the replacement of the vehicle’s steering rack at a cost of $1,200 without any charge for labour. The invoice claims NZ Fast Cars & Euros checked the vehicle’s electronic diagnostic systems and found no faults. When the purchaser telephoned NZ Fast Cars & Euros Ltd to discuss the invoice they admitted that they had not done any work on the purchaser’s vehicle and that the steering rack had been put in another vehicle.

[14] On 30 September the purchaser had JCBMW replace the PDC control unit at a cost of $976.61. They also replaced the oil in the differential at a cost of $365.66 which the purchaser accepts is his responsibility. On 2 October 2014 the purchaser sent the trader an email requiring it to fix the throttle actuator and when his request was ignored by the trader the purchaser had JCBMW supply and fit the throttle actuator on 7 November 2014 at a cost of $2,220.98. The purchaser seeks reimbursement of the $976.61 paid for the PDC control unit and $2,220.98 for the throttle actuator; a total of $3,197.59.

[15] The Tribunal, in determining whether this vehicle was of acceptable quality at the time of sale has had regard to the fact that the vehicle is a four year old BMW M3 model with only 38,000kms on its odometer at the date of sale which was sold by the trader on 11 July 2014 for $65,000. The Tribunal is satisfied the vehicle was supplied with a faulty PDC control unit and throttle actuator which caused a warning lamp to illuminate in the vehicle’s instrument panel. On the facts the Tribunal does not consider that this vehicle was either as free of minor defects or as durable as a reasonable consumer would regard as acceptable, having regard to its age, make, mileage and purchase price.

Conclusion on issue [a]
[16] The Tribunal finds as a fact that the vehicle did not comply with the guarantee of acceptable quality in s 6 of the Act because it was neither free of minor defects nor as durable as a reasonable consumer would regard as acceptable.

Issue [b]: Did the purchaser require the trader to fix the faults and, if so, did the trader repair the faults within a reasonable time? If not, what is the reasonable cost of the repairs?

Relevant law
[17] 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
[18] The purchaser gave evidence that he had required the trader to remedy the vehicle’s faults on 26 August and had returned the vehicle to the trader for that purpose. The trader returned the vehicle to the purchaser without the faults being fixed and, after being pressed by the purchaser for an invoice, sent the purchaser what appears to be a false invoice from NZ Fast Cars & Euros Ltd for repairs which were not done to the vehicle.

[19] The purchaser after giving the trader a reasonable time to fix the faults had the PDC control unit and the throttle actuator replaced by JCBMW at a cost of $3,197.59.

Conclusion on issue [b]
[20] The Tribunal finds first, that the purchaser required the trader to remedy the faults which caused the vehicle’s warning lamp to light up. Second, that the trader’s nominated repairer failed to fix or replace the faulty parts after being given the opportunity on 26 August to do so and the purchaser was sent what appears to be a bogus invoice for work not done on the vehicle by the trader. Third, that the sum of $3,197.59 is a reasonable repair cost for the work done by JCBMW. The Tribunal will therefore order the trader to pay that sum to the purchaser immediately.

Costs
[21] 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.”

[22] 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 hearing of $600.

Orders
1. The trader shall pay the purchaser the sum of $3,197.59 immediately.

2. The trader shall within ten days of the date of this order pay the Tribunal’s reasonable hearing costs of $600 to the Crown at the Ministry of Justice Tribunal’s Unit, Level 1 Chorus House, 41 Federal Street Auckland.

DATED at Auckland this 13th day of November 2014.

C H Cornwell
Adjudicator