Hawthorn v Tasman Bay Motors Limited - Reference No. MVD 27/14 (Wellington) [2014] NZMVDT 74 (2 July 2014)

Last Updated: 20 August 2014

Decision No. WN 9 /2014

Reference No. MVD 27/14

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN SHANE HAWTHORN

Purchaser

AND TASMAN BAY MOTORS LIMITED

Trader

BEFORE THE WELLINGTON MOTOR VEHICLE DISPUTES TRIBUNAL

N J Wills - Barrister, Adjudicator
S Johnson - Assessor

HEARING at NELSON on 22 May 2014

APPEARANCES

Shane Hawthorn, purchaser
Shontelle Cooper, witness for the purchaser
Steve Older, witness for the purchaser (by telephone)
Michael Heath, director, for the trader

DECISION

Background

[1] On 13 January 2014, Shane Hawthorn (the purchaser) purchased a 2004 Holden Commodore GGZ 522 (the car) for $11,999 from the Tasman Bay Motors Limited (the trader). Mr Hawthorn alleges that a number of problems with the car that the trader agreed to fix before he bought the car, have not been fixed. He is seeking reimbursement for the cost of repairs.

[2] The trader’s position is that the trader is not responsible for the repair costs claimed by the purchaser.

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

Facts

[4] Mr Hawthorn bought the car from the trader on 13 January 2014. When he bought the car it had an odometer reading of 218,409 kilometres.

[5] The tribunal notes that the vehicle offer and sale agreement contains a stamped condition in the purchase price and payment column stating: “THE PURCHASER ACKNOWLEDGES THAT THERE IS NO WARRANTY IN REGARD TO AUDIO EQUIPMENT & AIR CONDITIONING”. There is no issue with either the audio equipment or air conditioning in this case but the tribunal observes that this clause is a purported contracting out of the Consumer Guarantees Act (CGA). As such it is a breach of the Fair Trading Act that if prosecuted would most likely result in a criminal conviction for the trader. The clause is unenforceable.

[6] Before purchasing the car, Mr Hawthorn discussed a couple of minor issues he had noticed when inspecting the car. The driver’s seat trim was detaching, the glove box did not close and the fog lights were not working.

[7] In addition to these items, the trader had agreed to fix a grinding or creaking sound Mr Hawthorn had noticed when cornering on his test drive. Mr Hawthorn was concerned that this was a suspension issue.

[8] After Mr Hawthorn collected the car from the trader, he took it to Midas Nelson (Midas) for a mechanical check. The Midas invoice records the car’s odometer reading at the time of this check as 218,440 kilometres.

[9] Midas found a number of problems with the car. The brakes were shuddering – Midas recommended replacement of the front disc rotors and brake pads and replacement of the brake fluid. Midas also noted excessive noise and play in the front sway bar links and recommended replacement. Midas provided an estimate for the repairs that totalled $838.17. The purchaser told the tribunal that he now accepted that some of the items in the estimate were consumables and that he wanted reimbursement for the brake disc rotor assembly and the labour costs associated with fitting that, the front sway bar kit and the labour associated with fitting that, in total $568.80.

[10] The tribunal heard from Steve Older, the owner of Midas. Mr Older confirmed the diagnosis recorded in the Midas estimate for repair. He said that the components he had priced in his estimate were after-market parts. He acknowledged that parts prices could vary widely.

[11] Mr Hawthorn also provided the tribunal with additional quotes from two other mechanics for this work. Audidoctor Ltd’s quote was $503.93 and Muritai Motordrome was $567.55.

[12] After Mr Hawthorn had the check carried out at Midas, he went back to the trader with the results. The car was taken back to the mechanic that issued the warrant of fitness prior to sale – Waimea Service Centre (Waimea). Mr Heath says he spoke to the mechanic who inspected the car. He was told that there were no issues with the car that would cause it to fail a warrant of fitness. On that basis, the trader declined to carry out the repairs. The trader did however provide Mr Hawthorn with the opportunity to unwind the deal.

[13] Mr Hawthorn decided to keep the car, in part because he had already entered into finance arrangements. He took advice from the local Community Law Centre and made this application to the tribunal.

[14] After Mr Hawthorn commenced proceedings in the tribunal, the trader offered to repair the sway bar bushes and brakes. Mr Hawthorn told the tribunal that he told the salesperson he spoke to that he was happy for this to occur but that he wanted to know that it would be done properly. The salesperson had to end the conversation to attend a meeting and nothing was agreed before the conversation concluded.

[15] As well as the sway bar bushes and brakes, the other minor repairs set out in paragraph 6 above have also not been carried out.

[16] Mr Heath appeared for the trader. He told the tribunal that the trader’s position was that if it was determined that the car did not meet warrant of fitness standards then the trader would fix it. Mr Heath told the tribunal that when the car came back from Waimea, the purchaser was advised that the trader was not prepared to carry out service related work and that it did not appear that the brake rotors or the sway bar bushes needed to be fixed.

[17] Mr Heath told the tribunal that his mechanic had looked at the car prior to Mr Hawthorn taking delivery of the car. He said that his mechanic’s opinion was that there were no problems with the car that needed repair. Mr Heath did not make his mechanic available to the tribunal to give evidence or provide a report from him.

[18] Mr Heath said that he offered the purchaser the opportunity to return the car and take back his trade-in but that Mr Hawthorn chose to accept the car as it was. Mr Heath submitted that the car was of merchantable quality because it is fit for purpose relative to its age, mileage and the price paid.

[19] Mr Heath also told the tribunal that after the purchaser had filed his claim with the tribunal, the trader had offered to carry out the repairs now claimed but the purchaser had refused.

[20] Mr Heath disputed the cost of repair and provided alternative quotes for some of the parts required for the repairs. He provided a quote from Repco for the brake rotors and sway bar links. The quote provided both retail and wholesale prices and three different options for the sway bar links (because the trader was unable to determine which of these three options would be the right one without inspecting the car). The retail price for the brake rotors was comparable to the Midas quote, but the wholesale price was significantly cheaper – around half the cost. The sway bar links ranged in retail price from $45 to $208 plus GST (as compared to the Midas quote $168.30 including GST). The wholesale prices for the same items ranged from $20 to $93 plus GST.

[21] Mr Heath said that the labour involved would be no more than two hours. Mr Heath also provided an estimate for the cost of the parts required to fix the glovebox hinge, totalling around $14.

The Consumer Guarantees Act

The guarantee of acceptable quality

[22] Section 6 of the Consumer Guarantees Act 1993 provides a guarantee as to the acceptable quality of goods sold:

"6 Guarantee as to acceptable quality

(1) Subject to section 41 of this Act, where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality.

(2) Where the goods fail to comply with the guarantee in this section,—

(a) Part 2 of this Act may give the consumer a right of redress against the supplier; and

(b) Part 3 of this Act may give the consumer a right of redress against the manufacturer."

[23] Section 7 sets out a definition of the guarantee of acceptable quality:

"7 Meaning of “acceptable quality”
(1) For the purposes of section 6 of this Act, 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,—
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—
(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."

[24] 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) as modified by the factors set out in section 7(1)(f) to (j) from the perspective of a “reasonable consumer”. This test is an objective test. It is not a review of those factors from the purchaser’s subjective perspective.

[25] In this case the goods supplied is a 10 year old second hand car with an odometer reading of 218,409 kilometres sold for a purchase price of $11,990.

[26] Having heard the evidence, and relying on the expertise of the tribunal’s assessor, the tribunal finds that the car requires the repairs to the brakes and sway bar bushes claimed by the purchaser. The tribunal is satisfied that a reasonable purchaser aware of these problems would not consider the car to be of acceptable quality. The car fails the guarantee of acceptable quality in that regard.

[27] For the sake of completeness the tribunal notes that the fact that a car passes a warrant of fitness inspection does not automatically mean that a car is of acceptable quality. The tribunal also notes that whether the car ought to have passed the warrant of fitness inspection in this case is debatable – as a cracked, damaged or perished sway bar link or a sway bar link with excessive play will not meet warrant of fitness requirements.

[28] In this case, the tribunal considers that a reasonable purchaser of this car for $11,990 would not expect to have to pay around $500 in repairs immediately after purchase. The car has failed the guarantee of acceptable quality in that regard. Although not pursued by the purchaser, the tribunal notes that the problems with the glove box, loose trim and fog lights are also failures in the guarantee of acceptable quality. A reasonable consumer would expect to have those type of items remedied before taking possession of the car, particularly given the trader’s promise to do so.

What are the remedies available to the purchaser?

[29] Section 18 of the Consumer Guarantees Act 1993 sets out the remedies available to the purchaser in respect of a failure in the guarantee of acceptable quality. It 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 of this Act 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—
(a) Require the supplier to remedy the failure within a reasonable time in accordance with section 19 of this Act:
(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,—
(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 of this Act, reject the goods in accordance with section 22 of this Act.
(3) Where the failure cannot be remedied or is of a substantial character within the meaning of section 21 of this Act, the consumer may—
(a) Subject to section 20 of this Act, reject the goods in accordance with section 22 of this Act; 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) of this section, 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."

[30] Mr Hawthorn asked the trader to fix the problems as he was entitled to pursuant to section 18(2)(a). The trader refused to carry out the repairs. Because of that refusal, Mr Hawthorn becomes entitled to have the repairs carried out elsewhere and recover the cost of those repairs from the trader. The trader’s subsequent offer to carry out the repairs (once the application had been made to the tribunal) does not affect Mr Hawthorn’s right to this remedy.

[31] Mr Hawthorn has submitted three estimates for the cost of repair to the brakes and the sway bar bushes. He is entitled to recover the reasonable costs of repair. While the tribunal accepts that the trader could most likely have had the repairs carried out at considerably less cost, primarily because the trader is able to access wholesale rates for parts, the tribunal is satisfied that the estimates provided are within the range of reasonable costs of the necessary repairs. The tribunal intends to order reimbursement of the lowest of the three quotes provided by the purchaser.

[32] The tribunal is not in a position to make any orders in regard to the other repairs because there is insufficient evidence before the tribunal as to the cost of those repairs.

Orders

1. The trader shall pay the purchaser $505.93
   

DATED at WELLINGTON this 2nd day of July 2014

___________________
N Wills
Adjudicator