Nevin v Hareb Deken Motors Limited - Reference No. MVD 85/2014 (Auckland) [2014] NZMVDT 63 (16 June 2014)

Last Updated: 22 July 2014

Decision No. AK 56 /2014

Reference No. MVD 85/2014

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN CHRISTINE GWENETH NEVIN

Purchaser

AND HAREB DEKEN MOTORS LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at New Plymouth on 12th June 2014

APPEARANCES

Mrs C G Nevin, the purchaser

Mr J P Nevin, purchaser’s husband and support person
Mr M V Lovell, purchaser’s son and support person
Mr P A Deken, Director of the trader
Mr M J Hareb, CEO and Director of the trader

DECISION

Background

[1] On 7 May 2013 Mrs Nevin (“the purchaser”) bought a 2006 Suzuki Grand Vitara registration DPZ912 (“the vehicle”) from Hareb Deken Motors Limited (“the trader”) for $18,990. The purchaser has rejected the vehicle because she says the vehicle has a serious fault with its catalytic converter and the trader failed to remedy the fault within a reasonable time.

[2] The trader acknowledges that the vehicle had a fault with its catalytic converter but says it repaired the fault in November 2013. It says the purchaser did not have any issues with the vehicle for four months after the catalytic converter was replaced and that she has now travelled over 20,000kms in the vehicle since purchasing it. The trader says it is also willing to replace the catalytic converter with a new catalytic converter at its cost.

[3] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal has appointed Mr Gregory as expert assessor to assist in the determination of the complaint. Mr Gregory took the oath required by clause 10(2) of Schedule 1 to that Act. As an assessor Mr Gregory 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 not, did the purchaser require the trader to remedy the fault and give it a reasonable time in which to do so?
[c] Is the purchaser entitled to reject the vehicle and if not what remedy is she entitled to?

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

Legal Principles

[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 Consumer Guarantees 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 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.”

[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 her right to reject the vehicle within a reasonable time.

Application of law to facts

[10] The purchaser bought the vehicle from the trader on 7th May 2013. Its odometer was 106,024kms at the date of sale. Within one week the engine check light lit up and the purchaser returned the vehicle to the trader to be repaired. The trader had its own garage, HDR Automotive Service Centre (“HDR”) scan the vehicle. Their report shows the front brake pads were worn, the front and centre mountings on the exhaust were insecure and split, the transmission oil was dirty and there was a rattle in the engine bay. The vehicle was scanned and the invoice notes:
“CHECK ENGINE LIGHT ON DIAG-B1 CAT THRESHOLD CODE LOGGED, CLEAR C”. HDR replaced the front disc pads, the universal mount, and the transmission fluid but did not, apparently, apart from clearing the fault code for the ECU, to remove the check engine light, repair the fault that caused the check engine light to come on. The trader returned the vehicle to the purchaser.

[11] The purchaser was unable to remember the number of occasions on which the vehicle had been returned to the trader but she was sure that the only issue she had experienced with it which had caused her to take the vehicle back to the trader was the continual reappearance of the check engine light in the vehicle’s instrument cluster. The trader provided the Tribunal with a copy of its Vehicle Costing Report for the vehicle which shows that Garry Wood charged the trader twice for work done on the vehicle on 11th June and 30th July 2013 and that Auto City charged the trader for work done on 21 August, 4 September and 15 October in trying to find what was causing the check engine light to keep coming on.

[12] On 21th October 2013 HDR replaced the oxygen sensors in the vehicle but that did not cure the fault that caused the check engine light to continue to light up. On 14th November when the vehicle’s odometer was 119,398kms (13,374kms after sale) the trader finally had HDR fit a second hand catalytic converter to the vehicle. The vehicle’s check engine light remained off for four months but the purchaser says that on 25th March 2014 it came on again. The purchaser had Stratford Automotive Centre inspect the vehicle on 26th March 2014 and they recorded the vehicle’s odometer as 123,777kms (17,753kms after sale). Their invoice records:
“PO420 code – Cat inefficiency B1
Monitor fuel trims also monitor front air fuel ratio sensors and oxygen sensors.
Note surging/misfire on vehicle.”

[13] In April 2014 the purchaser asked her son Mr Lovell to become involved in resolving the matter for her and on 12th April 2014 he sent the trader an email informing it that the purchaser was rejecting the vehicle under the Act because of a fault (not specified) that had existed since the vehicle was supplied. There was discussion but apparently no agreement between the parties concerning the possible exchange of the vehicle for a Honda CR-V. The trader also advised it was willing to replace the catalytic converter but on 14th April 2014 Mr Lovell reaffirmed in an email to the trader that the purchaser wanted to reject the vehicle.

[14] The purchaser obtained and produced a written quotation dated 6th June 2014 from Graeme Goble Motors of Stratford of $3,586.85 to replace both catalytic converters.

[15] In answer to questions from the Tribunal the purchaser said that the vehicle was still driving satisfactorily with no apparent faults other than the check warning light remaining on. The vehicle has now done in excess of 126,000kms and the purchaser told the Tribunal that the vehicle’s rear guard had been damaged when she reversed into a garage. She has not had the damage repaired.

[16] The trader told the Tribunal that the vehicle was supplied with a fault. HDR found and cleared a fault code on 14th May 2013 and the check engine light continued for come on three times even though the trader had the vehicle assessed by Garry Wood Auto and Auto City the Suzuki Dealer. The trader had the oxygen sensors replaced in October but that did not cure the fault that caused the check engine light to come on. In November 2013 the trader bought a second hand catalytic converter from a Te Puke parts supplier for $586.50 and had it fitted by HDR for a further $298.43 for labour. The trader says the purchaser’s had “five months use” from the vehicle before the check engine light reappeared in late March 2014. The trader says it has offered to replace the catalytic converter with another new one but this offer has been rejected.

[17] The Tribunal in deciding if the vehicle was of acceptable quality at the time of sale has had regard to the nature of the goods- here a seven year old New Zealand new Suzuki Grand Vitara with 106,024kms on its odometer. The price of the vehicle was $18,990. The Tribunal is satisfied from listening to the evidence provided by the trader that the vehicle had a fault with its catalytic converters from the time of supply. The trader’s own workshop, HDR, recorded the fault on its invoice dated 14th May 2013. The Tribunal thinks the trader should have rectified the fault at that time. Instead it chose to clear the fault code. Eventually five months later after the purchaser had returned the vehicle a number of times to the trader it decided to replace the oxygen sensors in October 2013. However that did not cure the fault. The trader eventually replaced a catalytic converter in November 2013 but when it did so it chose to replace the faulty catalytic converter with a second hand unit instead of fitting a new converter. The Tribunal’s Assessor has advised the Tribunal that it is not considered to be good trade practise to fit second hand catalytic converters to a vehicle because like second hand shock absorbers they are unreliable. In this case the catalytic converter fitted to the vehicle was not durable and only lasted four months. In summary the vehicle was not free of minor faults at the time of sale and it was not as durable, because of the faulty catalytic converter, as a reasonable consumer paying $18,990 for a seven year old vehicle would regard as acceptable.

Conclusion on issue [a]

[18] The vehicle did not comply with the guarantee of acceptable quality because it was faulty at the time of sale and lacked durability.

Issue [b]: Did the purchaser require the trader to remedy the fault and give it a reasonable time in which to do so?

Legal Principles

[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 Tribunal considers that the fault with the catalytic converter was one which could have been remedied. The purchaser’s evidence was that she had first returned the vehicle to the trader on 15th May 2013 eight days after buying the vehicle because the engine check light lit up and that she had returned the vehicle on numerous occasions after that for the same fault. The trader’s Vehicle Costing Report shows the trader had the vehicle inspected and worked on by HDR, Garry Wood Auto and Auto City on what appears to be six occasions between May and October 2013. The trader then replaced the oxygen sensors in October and the second hand catalytic converter on 14th November 2013. None of that work, which cost the trader $3,200 and extended over seven months resulted in the vehicle’s faulty catalytic converter being properly rectified because the fault was diagnosed as still present on 26 March 2014, some four months later.
.
Conclusion on issue [b]

[21] Although the Tribunal accepts that the trader attempted to fix the cause of the check warning light coming on it failed to do so within a reasonable time and the purchaser became entitled in April 2014 to exercise her option under s 18(2)(b)(i) or (ii) of the Act and either have the failure remedied elsewhere and obtain from the trader all reasonable costs incurred in doing so, or subject to s20, reject the goods in accordance with s22. The purchaser chose the latter.

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

Legal principles

[22] Section 20 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-
(a) the right is not exercised within a reasonable time within the meaning of subsection (2); or
(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; or
(c) the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply; or
(d) the goods have been attached to or incorporated in any real or personal property and they cannot be detached or isolated without damaging them.”

(2) In subsection (1)(a), the term reasonable time means a period from the time of supply of the goods in which it would be reasonable to expect the defect to become apparent having regard to—
(a) the type of goods:
(b) the use to which a consumer is likely to put them:
(c) the length of time for which it is reasonable for them to be used:
(d) the amount of use to which it is reasonable for them to be put before the defect becomes apparent.
(3) This section applies notwithstanding section 37 of the Sale of Goods Act 1908.”

Application of law to facts

[23] The purchaser told the Tribunal that the vehicle had been damaged when she backed it into a garage. The damage has not been repaired. The Tribunal considers, applying s 20(1)(c) of the Act, that the damage the purchaser caused to the vehicle prevents the Tribunal from upholding the purchaser’s right of rejection. However the purchaser is still entitled to claim her reasonable costs in having the catalytic converter failure remedied. The purchaser produced a quotation from Graeme Goble Motors of $3,586.85 for the replacement of both catalytic converters. The report from Stratford Automotive Centre indicates that only one of the converters is faulty and so the Tribunal considers the reasonable cost of replacing one converter should be $1,800. It will therefore order the trader to pay that sum to the purchaser.

Orders

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

2. The trader shall pay the purchaser the sum of $1,800 towards her repair costs of replacing one catalytic converter.

DATED at Auckland this 16th June 2014.

C H Cornwell
Adjudicator