Henry v Geneva Enterprises Limited t/a Mangere Car Centre - Reference No. MVD 76/2014 (Auckland) [2014] NZMVDT 56 (30 May 2014)

Last Updated: 17 June 2014

Decision No:AK 50/2014
Reference No. MVD76/2014

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN SHERYL MARIE HENRY

Purchaser

AND GENEVA ENTERPRISES LIMITED T/A MANGERE CAR CENTRE

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr S D Gregory, Assessor

HEARING at Auckland on 26 May 2014

APPEARANCES

Miss S M Henry, the purchaser

Mr N Higgs, witness for the purchaser
Mr P Barber, witness for the purchaser
Ms E Cordes-Paki, witness for the purchaser
Mr V Dewan, manager for the trader
Mr P Butler, support person for trader

DECISION

Background

[1] On 7th January 2014 Miss Henry (“the purchaser”) bought a 2000 Nissan Primera registration EFY876 (“the vehicle”) from Geneva Enterprises Limited trading as Mangere Car Centre (“the trader”) for $5,000. The purchaser also bought a 12 month Janssen mechanical breakdown insurance policy for a further $695. The full purchase price and the insurance premium were financed by a collateral loan made to the purchaser by Geneva Finance Limited. .
[2] The purchaser rejected the vehicle on 11th March 2014 because she claims the trader failed to remedy the vehicle’s faults within a reasonable time. The vehicle was repossessed by Geneva Finance Limited on 23rd May 2014 because the purchaser says she had failed to pay the instalments due under the Geneva Finance Ltd collateral loan agreement.

[3] The trader denies that it has failed to remedy the vehicle’s faults and says it was always willing to remedy the vehicle’s faults and asked the purchaser to bring it any reports on the vehicle’s faults and the trader undertook to have the faults fixed. It says the purchaser returned the vehicle three times but after that it did not consider the purchaser had any basis for her claims that the vehicle was faulty.

[4] Prior to the commencement of the hearing the Tribunal appointed Mr Gregory 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 Gregory assisted the adjudicator but the application was determined by the adjudicator alone.

The Issues

[5] The issues are:
(a) Whether the vehicle was of acceptable quality within the meaning of s6 of the Consumer Guarantees Act 1993 (“the Act”) when it was supplied to the purchaser?
(b) If not did the purchaser require the trader to remedy the fault and give it a reasonably opportunity to do so?
(c) What remedy is the purchaser entitled to now that the vehicle has been repossessed?

Relevant Law

[6] Section 6 of the Act imposes on a supplier "a guarantee that the goods are of acceptable quality." Section 2 defines "goods" as including "vehicles.”

[7] 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

[8] The purchaser bought the vehicle from the trader for $5,000 on 7th January 2014 after her partner, Mr Higgs, took the vehicle for a test drive. Mr Higgs told the Tribunal he has many years of mechanical experience with vehicles. The vehicle was supplied with a new warrant of fitness.

[9] The purchaser says she drove the vehicle to New Plymouth on 9th January 2014. The vehicle went well for the first week the purchaser drove it but she says its engine started to surge and lost power and there were problems with the battery. The purchaser says she returned the vehicle to the trader on 22nd January 2014 and the trader provided her with a loan car. The purchaser says the trader had the vehicle for about three weeks.

[10] The vehicle was returned to the purchaser on 13th February 2014 according to the purchaser’s oral evidence but she says that it had not been properly repaired and its engine would over-rev. The purchaser says she returned the vehicle to the trader on 14th February who promised to have it taken to a Nissan dealer to be repaired. On 28th February the vehicle was returned to the purchaser. The trader did not supply the purchaser at that time with any invoices to show what was wrong with the vehicle and what work had been carried out on it.

[11] The purchaser says that in early March she took the vehicle to a friend, Ms Cordes-Paki who is a director of Auto Belts Ltd, a warrant of fitness issuer, seat belt installer, and a firm which does compliance inspections and mechanical repairs. Ms Cordes-Paki attended the hearing and gave evidence. She told the Tribunal that she had her mechanic test drive the vehicle. Ms Cordes- Paki wrote a report dated 26th March 2014, several weeks after the vehicle was inspected by Auto Belts Ltd. It appears to the Tribunal that much of the contents of the report is information about the vehicle that was probably supplied to Ms Cordes-Paki by the purchaser. The Tribunal is unsure what (if any) tests were done on the vehicle by Auto Belts Ltd’s mechanic. The letter states that the engine had excessive petrol usage (but no consumption data was provided), that the engine surged, a vacuum hose to the fuel filter was not attached, the vehicle engine stopped suddenly whilst it was being driven, the engine revved at 1200rpm to 1500rpm at idle, that the transmission was not changing at the right time, the front number plate was illegible and the front tyres on the vehicle were directional on one side and non-directional on the other side. Auto Belts Ltd did not diagnose the fault codes stored in the vehicle’s ECU because it does not have a scanning tool.

[12] On 12th March 2014 the purchaser says she had a meeting with Mr Dewan at the trader’s office. She says she handed Mr Dewan a letter dated 11th March 2014 rejecting the vehicle on three grounds. First, because of a transmission fault, second because it loses power and slows down on hills, and third because the purchaser says the driver’s mirror has been broken and several vacuum pipes have been left off the engine and the engine is running over rich.

[13] On 24th March 2014 the purchaser took the vehicle to Sonic Automotive to have the engine checked. The vehicle’s odometer was recorded as 155,195kms at that date. Sonic Automotive’s report states:
“Check over engine running, check fuel, spark plugs, replace spark plugs (worn) scan ECU. Do a compression test, 150psi, add oil to bores & retest, 210psi. Bore washed with fuel.
Fuel in oil in sump, strong smell. At some stage engine has been replaced, engine numbers don’t match fisrt (sic) reg.”
Sonic Automotive charged the purchaser $40 for the scan, $148.96 for the spark plugs and $65 for labour with GST; a total of $292.05. Unfortunately Sonic Automotive’s report does not state what if any fault codes they found (although a subsequent email to the Tribunal from Sonic says none were found), or why the vehicle’s engine would not go. The purchaser says that she was unable to have any repairs done on the vehicle because Janssen Holdings told her it had no record of her mechanical breakdown insurance policy.

[14] Mr Dewan the trader’s manager says he handed a copy of the VOSA, CIN, the Geneva Finance Agreement, the Janssen warranty booklet and a copy of the policy certificate to the purchaser when she bought the vehicle. He says the Janssen warranty is valid and in force. On 12th February 2014 the purchaser returned the vehicle to the trader saying the transmission was not changing gears properly. Mr Dewan says he had the trader’s mechanic test drive the vehicle with the purchaser’s partner, Mr Higgs, but the mechanic could not find any fault with the transmission and Mr Higgs insisted there was a fault. The vehicle was therefore taken to Kaspa Transmissions who test drove it and wrote a report dated 12 February 2014 which Mr Dewan produced which states:
“Transmission drove very well and no faults found. We have scanned the computer and no codes were found.”

[15] Mr Dewan says that on 17th February the vehicle was returned by the purchaser because she said its engine was surging. A loan car was provided to her and her vehicle was taken to SB Electrical Services Ltd who diagnosed a faulty throttle body and also a fault with the accelerator pedal. The trader bought a second hand throttle body from Jap Parts Station 2007 Ltd for $175 on 17th February which SB Electrical fitted. The accelerator pedal was not available until 28th February and Mr Dewan says he gave Mr Higgs a cheque payable to Jap Parts Station 2007 Ltd for $304.75 for that part which Mr Higgs collected and fitted it to the vehicle.

[16] Mr Dewan says that about two weeks later the purchaser complained to him that the vehicle was misfiring. He says he and his mechanic both test drove the vehicle and were unable to find any fault with it. He says his test drive was over a distance of about 5km with the purchaser. He says he told the purchaser at that time that whilst he was willing to repair any faults with the vehicle he was becoming impatient of her claims that faults were present and that he expected her to get a report from her mechanic showing what was wrong with the vehicle not simply to bring him complaints about faults. When the purchaser came back a week later complaining of the same issue he told her not to come back unless she had a report confirming a fault existed.

[17] In reply to questions from the Assessor, Mr Dewan said the vehicle had never been taken to a Nissan dealer to be checked, that he had not changed the vehicle’s engine and that the purchaser had only brought the vehicle back on three occasions and had been provided with a loan car on each occasion. He says he was never told the engine was not working although the purchaser claims she told the trader in a telephone conversation on 25 March that the vehicle’s engine had stopped.

[18] The Tribunal, in deciding whether the vehicle complied with the guarantee of acceptable quality has had regard to the fact that the vehicle is a 14 year old Nissan Primera which was sold for $5,000 with 152,000kms on its odometer. The parties disagreed as to the number of times and the dates on which the purchaser says she returned the vehicle to the trader to be repaired. The purchaser says she kept a written record of the dates of each visit but she did not produce that record to the Tribunal. The purchaser claims the first occasion the vehicle was returned was on 22nd January 2014. The trader says the vehicle was first returned on 12th February 2014. The purchaser says the trader had the vehicle for three weeks. The trader says it resolved the first complaint: a claim the transmission was faulty by having the vehicle examined by Kaspa Transmissions on 12th February 2014. The trader’s evidence is supported by a dated report from Kaspa Transmissions. The trader says the second time the vehicle was returned by the purchaser was on 17th February. The fault was diagnosed as a worn throttle body. A replacement part was purchased from a parts supplier and fitted by SB Auto Electrical Services Ltd. The trader produced dated invoices from both the part supplier and SB Auto Electrical Services Ltd to support its evidence that work was done on 17th February 2014. The third time the trader says it attended to a fault was the accelerator pedal which it bought from Jap Parts Station 2007 Ltd on 28th February 2014 and was fitted by Mr Higgs. Once again the trader produced the dated invoice for that part. The Tribunal tends to prefer the evidence of the trader as to the number of times and dates on which the vehicle was returned to the trader because it is supported with dated GST invoices from third parties.

[19] After receiving and reading the purchaser’s application the Tribunal had its Case Manager send a written request to the purchaser to obtain and supply the Tribunal with a written report from an MTA repairer on the vehicle’s faults and the cost to repair any faults found. The purchaser did not obtain that report but simply had Mr Griffin of Sonic Automotive send an email to the Tribunal on 25 May. That email repeated, more or less, the contents of Sonic Automotive’s invoice dated 24 March 2014 (reproduced in paragraph 13 above). Although Mr Griffin’s email states the vehicle was towed to his firm on “23/05/14” it is clear from the purchaser’s evidence that the vehicle was repossessed on behalf of Geneva Finance Ltd on 23 May 2014. The vehicle could not have been towed to Sonic Automotive on 23 May 2014 and this occurred on 23 March 2014.

Conclusion on issue [a]

[20] The conclusion the Tribunal has reached on the evidence available to it is first, that the vehicle did not have a faulty transmission because the transmission was checked and found to be working properly by Kaspa Transmissions on 12th February 2014. Second, the vehicle may have needed its worn throttle body and accelerator pedal replaced due to wear and tear having regard to the age and distance the vehicle had travelled when it was sold and that a reasonable purchaser of a $5,000 vehicle would expect those sort of faults to appear. However the presence of fuel in the engine oil in the sump detected by Sonic Automotive on 24th March 2014 probably indicates there is a fault with the vehicle’s fuel system. That fault occurred within three months of the vehicle being supplied to the purchaser and was probably the reason the engine would not start. The presence of that fault indicates the vehicle was probably not as durable as a reasonable purchaser would regard as acceptable for a vehicle of this age, mileage and price and thus the Tribunal concludes the vehicle did not comply with the guarantee of acceptable quality in s6 of the Act.

Issue [b]: Did the purchaser require the trader to remedy the fault and give it a reasonably opportunity to do so?

Relevant law

[21] 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

[22] The Tribunal is satisfied that the purchaser returned the vehicle to the trader and required it to resolve the issues she described with the vehicle’s engine losing power and surging. The trader attempted, using SB Auto Electrical Services Ltd, to diagnose the cause of those issues and the trader spent $617.75 attempting to fix the vehicle’s engine faults. However the Tribunal is not convinced the purchaser gave the trader the opportunity to remedy the issue that Sonic Automotive found on 24 March with fuel in the sump. Instead of having the vehicle towed from Sonic Automotive back to the purchaser’s home on 28 March, the purchaser should have had the vehicle towed back to the trader and given it the opportunity to remedy the fault and get the engine going.

Conclusion

[23] The Tribunal is not satisfied that the purchaser proved that she required the trader to remedy the fault found by Sonic Automotive (fuel in oil) which prevented the engine from starting and hence the purchaser was not entitled to reject the vehicle on 11 March 2014. The Tribunal must therefore dismiss the purchaser’s application,

Order

The purchaser’s application to reject the vehicle is dismissed.

DATED at Auckland this 30th May 2014

C H Cornwell
Adjudicator