Sutcliffe v Buy Right Cars Limited - Reference No. MVD 94/2014 (Auckland) [2014] NZMVDT 66 (19 June 2014)

Last Updated: 23 July 2014

Decision No. AK /2014

Reference No. MVD 94/2014

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN MORGAN MITCHELL SUTCLIFFE

Purchaser

AND BUY RIGHT CARS LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Auckland on 16 June 2014

APPEARANCES

Mr M M Sutcliffe, the purchaser

Mr P Sutcliffe, purchaser’s father and witness
Mr M Greenfield, CEO for the trader

DECISION

Background

[1] On 25 November 2013 Mr Sutcliffe (“the purchaser”) bought a 2004 Volkswagen Touareg registration HDU735 (“the vehicle”) from Buy Right Cars Limited (“the trader”) for $24,380. The purchaser has rejected the vehicle because he says it has a serious fault, namely a vibration in the vehicle’s steering which the trader has failed to remedy. He seeks the Tribunal’s order upholding his rejection and ordering the trader to refund his purchase price.

[2] The trader denies that the vehicle has a serious fault with its steering and denies that the purchaser is entitled to reject the vehicle.

[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 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?

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 s7 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 s
7(1)(a) to (e) of the Act as modified by the factors set out in s 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 test drove the vehicle for about seven kilometres before agreeing to buy it from the trader on 25 November 2013 for $24,380. The purchaser also bought a three year Autosure mechanical breakdown insurance policy through the trader for a further $1,795. The vehicle’s odometer at the time of purchase was 59,823kms.

[11] The purchaser says that immediately after taking delivery of the vehicle he noticed a shudder in its steering at low speed and whenever, in a stationary position, he applied the footbrake and turned the steering wheel. He emailed the trader about that on 26 November 2013. The trader asked the purchaser to take the vehicle to its repairer, I & J Compliance Ltd, which he did on 3 December 2013. I & J Compliance sent the vehicle to PG Hydraulics in East Tamaki who found one of the power steering hoses was leaking. They replaced it with a custom made hose. When the vehicle was returned to the purchaser he found the steering still shuddered when the vehicle was stationary and the steering wheel was turned. He also says the steering made a groaning noise.

[12] On 17 December 2013 the purchaser took the vehicle to his father’s power steering business. A technician found a leak in the power steering hose. The purchaser told the trader about the leak and it was agreed that the vehicle would be returned to I & J Compliance in the New Year. On 15 January 2014 the purchaser took the vehicle back to I & J Compliance who sent it back to PG Hydraulics who removed the hose, re-crimped it, re-fitted it to the vehicle and checked for leaks. The purchaser says the power steering leak was fixed but the vehicle still shuddered when its steering wheel was turned whilst the vehicle was held stationary on the foot brake, and the steering continued to groan.

[13] On 10 February 2014 the trader arranged for the purchaser to take the vehicle to Tristram European Ltd (“Tristram”), a VW franchised dealer on the North Shore. Tristram’s proforma invoice records:
“Check vehicle for shudder when turning steering
Scanned vehicle for fault codes none present, Carried out visual inspection on power steering,
Steering pump noisy and the hoses leaking
Replaced power steering hoses and tested. No further leaks but pump still noisy, fitted second hand steering pump and Rack (sic) tested operation all good
Customer was unhappy with the steering vibration when stationary and foot brake applied
Further investigation was carried out for the vehicle suspension all was ok, Another vehicle tested and confirmed the same result when stationary with foot brake applied.
Mark Greenfield came to check and confirm the customer complaint and tested several other vehicles showing the same symptoms when stationary and the footbrake applied.”
Tristram charged the trader $2,387.60 to replace the power steering hoses with new hoses and replace the power steering pump and steering rack with a second hand pump and steering rack.

[14] The Tribunal took the sworn evidence of Mr Kevin David Rockefort-Rennie, a service adviser at Tristram by telephone conference call during the hearing. He described the work done by Tristram and said that the purchaser had come back with forum information obtained off the internet but he says that related to different vehicles. He also says that he checked to see if the steering vibration when the steering wheel is turned whilst the vehicle is held stationary with the foot brake applied was present in other Touaregs and that of the three or four other Touaregs tested all of them had a steering vibration when the steering wheel is turned with the foot brake applied. He agreed with the Assessor that the steering vibration under those circumstances appeared to be a characteristic of the vehicle. Mr Rockefort-Rennie says that the vehicle’s safety is not compromised and the vehicle will pass a warrant of fitness. He confirmed that no work had been done by Tristram on the stepper motor because it is not engaged when the vehicle is stationary.

[15] The purchaser collected the vehicle from Tristram at the end of March but he says the shudder in the steering was still present and he decided to reject the vehicle because he did not think it was acceptable. The purchaser says he sent the trader an email on 11 April 2014 rejecting the vehicle on the grounds that it has a serious fault; the fault is a shudder in the steering. The trader told the purchaser that it was willing to fix any fault that the purchaser established as present in the vehicle’s steering but Tristram had not found any fault with vibration in the steering.

[16] On 3 June 2014 at the request of the Tribunal the purchaser took the vehicle to have its steering checked and reported on by Giltrap Prestige (“Giltrap”), a VW franchised dealer and repairer. Giltrap wrote a report as follows:
“Check and report only on shudder through steering
Checked all faults and found none in system. Checked all suspension and found ok extensively road tested and finally heard noise and felt vibration. Found power steering hoses require replacing estimate to replace hoses including labour $1488 +GST parts will need to be placed on order from overseas.”

[17] Mr Steve Mason a customer service advisor at Giltrap gave sworn evidence by telephone conference call during the hearing. He said of the steering shudder when the vehicle is stationary with the foot brake applied “they all do that”. He says that there were no fault codes stored in the vehicle’s diagnostic system. He also said that a shudder was experienced at about 20kph in the vehicle but this could not be replicated. He says that if there is any fault it is normally because there is a leak in the steering hoses and because it is almost impossible to check the hoses for leaks it is probably best to replace the hoses as the first step and that is why Giltrap recommended doing so without being aware that the power steering hoses had already been replaced by Tristram.

[18] Mr Sutcliffe (Sen) gave evidence that he had been invited to go to Tristram and Mr Rockefort-Rennie had told him about the issue. He says he has a Japanese imported Touareg with 50,000kms on its odometer, the same model as his son’s vehicle. He says his vehicle does not vibrate when the steering is turned with the vehicle held stationary with the foot brake applied. He says he has been in the motor trade for 37 years and owns two workshops and a power steering business and he has never come across the issue his son’s vehicle has. He says that if it was a common issue he would expect to have seen more Touaregs brought in for work on their power steering. He says he does not know how he would fix it.

[19] Mr Greenfield for the trader says he agrees with the purchaser’s summary of the facts. He says the repair on 10 February 2014 was done in a timely manner but the purchaser was not willing to uplift the vehicle from Tristram. He says that ultimately the trader paid Tristram to fix any faults the vehicle had when it was supplied to the purchaser which were not properly repaired by PG Hydraulics. In particular the replacement of the power steering hoses with new hoses, the replacement of the power steering pump and steering rack. Mr Greenfield says that the act of turning the wheels on the vehicle whilst holding it stationary on the foot brake “loads up” the force on the wheels because there is a lot of friction between the wheels and the road surface. He points out that neither of the VW franchised dealers have found the vibration is a fault and neither found any fault codes stored in the vehicle’s ECU. Mr Greenfield says he personally tested 13 Touaregs of various ages and motor sizes and all of them exhibited steering vibration when the steering wheel was turned whilst the car was held stationary with the foot brake applied. He says he retested the vehicles which the purchaser said he had tested at the trader’s premises and found a shudder in all of them.

[20] Mr Greenfield told the Tribunal that the trader, in addition to arranging a loan car for the purchaser whilst his was being repaired, had also paid the purchaser $1,075 on 22 April 2014 as compensation for being deprived of the use of his vehicle. He says the trader has always been willing to repair any faults with the vehicle but neither it, Tristram nor Giltrap consider the vehicle has any faults. He says that Giltrap’s advice that the power steering hoses require replacing was given as an assumptive fix if the hoses had not been replaced, which they had by Tristram.

[21] In deciding if the vehicle was of acceptable quality at the time of sale the Tribunal has had regard first, to the nature of the vehicle- here a nine year old Japanese imported VW Touareg with 59,823kms on its odometer. Second, to the price paid by the purchaser for the vehicle of $24,380. The purchaser proved that at the time of sale the vehicle had a fault with a leaking power steering hose and a noisy power steering pump. The trader had its repairer I & J Compliance Ltd subcontract the repair work to PG Hydraulics. The replacement of a power steering hose by PG Hydraulics was not a durable repair because one of the vehicle’s power steering hoses was found to be leaking and the power steering pump was noisy. The power steering pump and the steering rack were replaced by Tristram in February 2014. In summary, the vehicle was not free of minor faults at the time of sale and it was not as durable, because of the leaking power steering hoses and noisy power steering pump, as a reasonable consumer paying $24,380 for a nine year old vehicle would regard as acceptable.

Conclusion on issue [a]

[22] 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 faults and give it a reasonable time in which to do so?

Legal Principles

[23] 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

[24] The Tribunal considers that the fault with the leaking power steering hoses and the noisy power steering pump were ones which could be remedied and neither amounts to a failure of substantial character. The Tribunal accepts the trader’s submission that after PG Hydraulics attempted to fix the leaking power steering hoses they had the vehicle taken to Tristram who replaced the power steering hoses with new hoses and the noisy power steering pump and steering rack with a second hand part at a total cost of $2,387.60. The Tribunal is therefore satisfied that the trader repaired the faults which were capable of being repaired.

[25] The purchaser however says the trader failed to repair the vehicle’s faults because there is still a vibration in the vehicle’s steering wheel when the steering wheel is turned with the vehicle kept stationary by applying the foot brake. The Tribunal prefers the evidence given by both Tristram and Giltrap which was first, that neither found any stored fault codes recorded by the vehicle’s diagnostic system to show there is a fault with the vehicle’s power steering. Second, that the vibration in the steering when the vehicle is stationary is Mr Rockefort-Rennie said “a characteristic” of the VW Touareg. Mr Mason said in the course of his evidence when describing the vibration in the steering as present in all Touaregs “they all do that.” The Tribunal also accepts Mr Greenfield’s evidence that he personally tested thirteen Touaregs and they all had vibration in the steering when stationary.

Conclusion on issue [b]

[26] The Tribunal is not satisfied that the purchaser proved that the vibration in the steering of his vehicle amounts to a fault. Instead the Tribunal considers the vibration to be a characteristic of the vehicle. It does not have any safety implications. The Tribunal will therefore decline to uphold the purchaser’s rejection of the vehicle.

Order

The purchaser’s application to the Tribunal to uphold his rejection of the vehicle is declined.

DATED at Auckland this 19 June 2014.

C H Cornwell
Adjudicator