Paaka v Henare t/a C & R Mobile Cars - Reference No. MVD 49/2014 (Auckland) [2014] NZMVDT 44 (30 April 2014)

Last Updated: 25 May 2014

Decision No. AK 40 /2014

Reference No. MVD 49/2014

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN TANE MICHAEL PAAKA

Purchaser

AND RAYLENE HENARE T/A C & R MOBILE CARS

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Auckland on 23rd April 2014

APPEARANCES

Mr T M Paaka, the purchaser
Miss B I Kirikiri, witness for the purchaser

There was no appearance by the trader

DECISION

Background

[1] On 8 January 2014 Mr Paaka (“the purchaser”) bought a 2001 Nissan Skyline registration DKM367 (“the vehicle”) from Raylene Henare trading as C & R Mobile Cars (“the trader”) for $10,000. The purchaser has applied to reject the vehicle because it has a number of faults which the trader has neglected or failed to remedy after being required to do so.

[2] The trader failed to appear at the hearing but the Tribunal is satisfied that she was sent adequate notice of the hearing. The trader has also failed to respond to a direction issued by the Tribunal requiring her to provide certain information to the Tribunal prior to the hearing.

[3] Prior to the commencement of the hearing the Tribunal appointed Mr Middleton as the Tribunal’s assessor and he took the oath required of an assessor by Schedule 1, cl 10(2) of the Motor Vehicle Sales Act 2003. As an assessor Mr Middleton assisted the adjudicator but the application was determined by the adjudicator alone.

The Issues

[4] The issues raised by this application are:
[a] Whether the vehicle was of acceptable quality when it was sold to the purchaser?
[b] If not, did the purchaser require the trader to repair the vehicle’s faults and has the trader done so within a reasonable time?
[c] Is the purchaser entitled to reject the vehicle? If not what remedy is the purchaser entitled to?

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

Relevant Law

[5] Section 6 of the Consumer Guarantees Act 1993 (“the Act”) imposes on a supplier "a guarantee that the goods are of acceptable quality." Section 2 defines "goods" as including "vehicles.”

[6] The expression "acceptable quality" is 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 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.”

Application of law to facts

[7] The purchaser agreed to buy the vehicle from the trader on 8 January 2014 for $10,000. The VOSA records the vehicle’s odometer as “180,000” the CIN as “185,000” and the NZ Transport Agency Motochek shows it was 182,101 kilometres. The purchaser bought the vehicle without viewing it, test driving or taking it for a pre-purchase inspection. The purchaser paid a deposit of $1,500 and financed the balance of $9,195 under a collateral credit agreement with John Davidson Ltd trading as MTF- Waitakere. The vehicle’s odometer was 182,100kms when he bought it. The purchaser signed the collateral credit agreement and registered the vehicle in his name but the vehicle was purchased for use by his daughter Miss Brooke Kirikiri. The Tribunal understands that Miss Kirikiri had her father purchase the vehicle in his name and arrange finance for it because she was unable to obtain finance.

[8] The vehicle was sold with a warrant of fitness which had been issued over three months prior to the date of sale on 23 September 2013 by Kamo Testing Station. Miss Kirikiri noticed the supplementary safety restraint system (“SRS”) warning light was lit up when the vehicle was delivered to her by the trader and after travelling several thousand kilometres in the vehicle in early January she contacted the trader about that and the poor condition of the vehicle’s front tyres.

[9] On 23 January 2014 Miss Kirikiri and the trader met and took the vehicle to a VTNZ testing station for a warrant of fitness inspection. The vehicle’s odometer was 188,768kms or about 6,668kms after it was purchased. The vehicle failed the WOF inspection for the following faults recorded on the WOF check sheet as follows:
“1.L/F tyre worn exposing cords
2. R/F tyre cut to cords
3. Remedy play on both front wheels
4. Airbag warning light flashing
5. Align both headlights”.

[10] The trader and Miss Kirikiri then took the vehicle to AA Auto Service & Repair who gave them an oral quote of $862.75 to repair the vehicle’s faults. This oral quotation was subsequently recorded in a letter from the Auto Service & Repair dated 12 March 2014 which states:

“Front tyres $252.50 each X2 $505.00
Inner rack end $115.92
Labour (1.5 hours) $157.50
Freight $16.00
Misc $12.00
Air bag warning light flashing $50.00*
Align both headlights $20.00
Total $876.42
*$50 to scan the ECU of car to figure out what is wrong with the air bag warning light may occur (sic) further cost from the scan onwards (if parts need replacement)”.

[11] Miss Kirikiri gave evidence that the trader had promised to have the various faults identified in the VTNZ WOF check sheet fixed by AA Auto Service & Repair on 31 January 2014 but Miss Kirikiri says she did not hear anything more from the trader. Miss Kirikiri says she tried on many occasions to telephone the trader but the trader did not answer her telephone calls.

[12] On 24 February 2014 Miss Kirikiri says she went to the trader’s partner’s car sales firm and had him telephone the trader. She then asked the trader what she proposed to do to fix the vehicle’s faults and the trader said she still intended to do so but she was unable to afford the repairs. The trader had promised to pay Miss Kirikiri the cost of repairs within a few days however the trader failed to do so and she has not contacted Miss Kirikiri or answered her telephone calls since then.

[13] On 24 March 2014 Miss Kirikiri got a written quote from Panmure Automotive & Tyres of $296.70 to replace both of the front steering rack ends, scan the SRS and align the headlights. The following day she paid $55 to have the SRS scanned. She says the airbag warning light disappeared for a while but is now lit again showing there is still a fault in the SRS.

[14] In deciding whether this vehicle complies with the guarantee of acceptable quality the Tribunal has had regard to the fact that the vehicle was at the time of sale a Japanese imported 12 year old Nissan Skyline with 182,101kms on its odometer. It was sold without a warrant of fitness issued within 28 days prior to the date of sale for $10,000. The vehicle’s SRS was, according to Miss Kirikiri, showing a fault warning light at the time of sale. The vehicle was used by Miss Kirikiri to travel about 6,000kms during January 2014 and on 23 January 2014 it failed to pass a WOF inspection. The Tribunal considers that even allowing for the vehicle’s age, high mileage and distance travelled by Miss Kirikiri in the vehicle from the time she had it delivered to her by the trader and it failing a warrant of fitness on 23 January 2014 the vehicle was very probably not of acceptable quality at the time of sale because its front tyres were dangerously worn, its SRS was faulty, its headlights were misaligned and there was excessive play in both front wheels.

Conclusion on issue [a]:

[15] The vehicle did not comply with the guarantee of acceptable quality in s6 of the Act at the time of sale because it was not free of minor or durable (the SRS system, worn tyres, misaligned lights and both worn steering rack ends). The Tribunal therefore finds that the vehicle did not comply with the guarantee of acceptable quality at the time of sale.

Issue [b]: Did the purchaser require the trader to repair the vehicle’s faults and has the trader done so within a reasonable time?

Relevant law

[16] Section 18 of the Act provides that where a failure to comply with a guarantee can be remedied the consumer must require the supplier to do so within a reasonable time. If the supplier refuses or neglects or fails to do so the consumer may then have the failure remedied elsewhere and obtain from the supplier all reasonable costs incurred in having the failure remedied, or the consumer may reject the goods. The relevant section is 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

[17] The trader promised Miss Kirikiri when she bought the vehicle to have VTNZ do a WOF inspection on it that she would repair the various faults on 31 January 2014. After three months the trader had still not done so despite Miss Kirikiri’s requests to the trader to repair the faults.

Conclusion on issue [b]:

[18] Miss Kirikiri has complied with her obligations under s18(2)(a) of the Act and required the trader to repair the vehicle’s faults but the trader has neglected to comply with its obligation to do so within a reasonable time.

Issue [c]: Is the purchaser entitled to reject the vehicle? If not what remedy is the purchaser entitled to?

Relevant law

[19] Section 18(2)(b) of the Act (reproduced in paragraph 16 above) provides that where a supplier who has been required to remedy a fault fails or neglects to do so 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 of the Act.

[20] Section 20(1)(b) of the Act provides as follows:

“20 Loss of right to reject goods
(1) The right to reject goods conferred by this Act shall not apply if-
.....
(b) the goods have been disposed of by the consumer, or have been lost or destroyed while in the possession of a person other than the supplier or an agent of the supplier;”

Application of law to facts

[21] In this application Miss Kirikiri transferred the ownership of the vehicle into her name on 29 January 2014. The consequence of that transfer of ownership is that the purchaser (in this case “the consumer” who acquired the vehicle from the trader) has, in the Tribunal’s view, disposed of his interest in the vehicle. The result is that the purchaser has lost the right to reject the vehicle.

[22] The Tribunal considers that the purchaser is still entitled to the reasonable costs of repairing the vehicle’s faults which the Tribunal, with assistance from its Assessor and based on prices quoted to Miss Kirikiri by Panmure Automotive & Tyres has calculated to be $625.03 calculated as follows:
Two second hand tyres @ $150 each $300.00
Two steering rack ends $78.00
Labour $103.50
Alignment of headlights $15.00
Scan airbag $47.00
GST $81.53
Total $625.03

Costs

[23] 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.”

[24] 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 pay the purchaser $625.03 immediately.

2. The trader shall pay to the Crown within 14 days of the date of this order the sum of $500 as the Tribunal’s hearing costs. Payment shall be made to The Crown at the Ministry of Justice Tribunal’s Unit, Level 1 Chorus House, 41 Federal Street, Auckland.

DATED at Auckland this 30th day of April 2014.

C.H.Cornwell
Adjudicator