Piao v Capital City Motors Limited - Reference No. MVD 95/14 (Wellington) [2014] NZMVDT 82 (6 August 2014)

Last Updated: 24 September 2014

Decision No. WN 15 /2014

Reference No. MVD 95/14

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN JINMEI PIAO

Purchaser

AND CAPITAL CITY MOTORS LIMITED

Trader

BEFORE THE WELLINGTON MOTOR VEHICLE DISPUTES TRIBUNAL

N J Wills - Barrister, Adjudicator
S Johnson - Assessor

HEARING at WELLINGTON on 15 July 2014

APPEARANCES

Jinmei Piao, purchaser
Eng Gee Lim, for the purchaser
Peter Lin, witness for the purchaser (by telephone)
Mike Cave, support person
David Lavington, service manager, for the trader
Mathew Noon, technician, witness for the trader
Daniel Wynyard, service advisor, witness for the trader

DECISION

Background

[1] On 22 June 2013, Jinmei Piao (the purchaser) purchased a 2007 Mazda Premacy (registration GYC 327), (the car) for $15,400 from Capital City Motors Limited (the trader). Ms Piao has rejected the car following a significant mechanical failure.

[2] The trader does not accept that Ms Piao is entitled to reject the vehicle. The trader’s position is that the mechanical failure was caused by the purchaser failing to maintain the car adequately so that it had appropriate levels of oil.

[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] Ms Piao purchased the car from the trader on 22 June 2013 for $15,500. At the time of sale the car had an odometer reading of 48,000 kilometres.

[5] The car is a Japanese import and the records show that the car had an oil and filter change as part of the compliance checks carried out when the car was imported. The odometer reading at that time was 47,942 kilometres. This is consistent with the service sticker on the car which indicates that a service was due on 6 December 2013 or 57,945 kilometres whichever comes first.

[6] The car went to the trader for a warrant of fitness inspection in late November and passed without any problems. The trader advised the purchaser that the car was due a service but the purchaser chose not to have the service undertaken at that time. The car had travelled 52,844 kilometres at the time of the inspection on 26 November 2013, so although the service was not technically overdue, it was due within a week or so.

[7] On the 11th April 2014 the car suffered a catastrophic failure. Both parties are agreed that the car’s engine needs replacing and that this is the most cost effective repair. There is no dispute that the cam chain tensioner failed. It failed because it did not receive the requisite uninterrupted supply of pressurized engine oil in order to achieve a hydraulic lock thereby maintaining tension on the cam chain. The lack of tension on the chain allowed it to oscillate and ultimately fail. The failure of the chain in turn caused a loss in valve timing resulting in severe engine damage. The purchaser says the problem was caused by a blocked oil pick up. The trader says that the problem was caused by a lack of oil and that it would not have happened if the purchaser had topped up the oil or had the a service carried out and then maintained the correct level of oil.

[8] When the failure occurred the car’s odometer reading was 59,542 kilometres i.e around ten months and 11,500 kilometres after Ms Piao purchased it. It is common ground that the car had not had any oil added to the engine since Ms Piao bought it. Nor had Ms Piao had the car serviced. There was a difference of opinion between the parties as to the appropriate service intervals. For the reasons set out in more detail below, the tribunal does not need to form a view on this. In essence, the fact that the car had not had any oil added to the engine since purchase, is the key factor.

[9] After the engine failure, the car went back to the trader. Having looked at the car, Mr Lavington contacted Mr Lim (Ms Piao’s husband) and told him that the failure had occurred due to a lack of oil – which could have been prevented had the car been serviced and the correct oil level maintained. Mr Lavington offered to contribute half of the costs of repair which he had estimated at roughly $5,500. Mr Lim told Mr Lavington that he would not accept that offer and that he would go to the Motor Trade Association (MTA) for advice.

[10] The parties held further discussions but could not reach any settlement. Ms Piao and Mr Lim decided to take the vehicle to another garage for an independent assessment. They were disturbed to find that the car’s engine had been dismantled by the trader. The trader told the tribunal that the engine was dismantled because the trader wanted to make sure that the engine did require replacement. Mr Lavington told the tribunal that in some cases valve damage may be avoided and their advice from Mazda was that the only way to be sure about this was to remove the cylinder head.

[11] The tribunal can understand the purchaser’s concerns that they were not kept informed about the dismantling of the engine. However, it is clear that the purchaser had asked the trader to take responsibility for repairs and in those circumstances it is not unreasonable for the trader to take the necessary steps to carry out a thorough diagnosis of the problem.

[12] The trader re-assembled the engine and the purchaser uplifted the car and took it to another mechanic – Peter’s Auto Services Ltd (Peter’s) for an independent inspection. The tribunal heard from Mr Peter Lin (from Peter’s). Mr Lin told the tribunal that the camshafts had seized because the oil pick-up screen may have been blocked by oil sludge. Mr Lin said that because the oil level indication light had not activated, the oil level was not at a critical level and therefore not implicated in the failure.

[13] Mr Lin drew the tribunal’s attention to a photograph of the cam shafts and said that it showed they had seized. He also said that the build up of sludge on the rocker cover indicated that the car had not been serviced well. Mr Lin was not able to say whether the damage would have occurred if the engine had been topped up with oil.

[14] Mr Lavington appeared for the trader. He is a qualified automotive engineer. He told the tribunal that the engine was drained of oil into a container and measured. He confirmed that there was 1.25 litres of oil in the engine (he had originally provided a conservative figure of 1.5 litres). Normally, the engine would have had 4.3 litres of oil. Mr Lavington disagreed with Mr Lin’s conclusions about the state of the cam shafts. He submitted that the photograph did not show dried out and seized cam shaft bearings nor did it show scarring of the cam lobes, which would have indicated a lack of oil supply due to a blocked oil pick-up screen. He said that the brown staining indicated that the engine had become hot but, the cam shafts had not failed.

[15] Mr Lavington explained that the car has what is called “variable cam timing” which needs hydraulic pressure to operate properly. Oil pressure is utilised to lock the cam shaft at the correct angle while the engine is running. A lack of oil pressure means that insufficient tension is applied to the timing chain which is then able to oscillate rapidly which causes wear and fatigue on the chain. Allowed to continue, the chain will ultimately fail which is what has occurred in this case.

[16] Mr Lavington told the tribunal that the car is fitted with an oil pressure warning light but no oil level warning system. The tripping point for the oil pressure warning system is 3 Psi (pounds per square inch) and it does not differentiate between pressure created by liquid, a mixture of liquid and air or air alone. If the oil levels are low, the oil galleries in the engine are filled not only with oil but also with air. The mixture of oil and air creates a compressible liquid. Because the mixture is compressible the hydraulic lock that maintains tension on the cam chain cannot be achieved. Mr Lavington said that in this case the compressible oil/air mix was being maintained at a pressure higher than 3 pounds per square inch (which is the pressure below which the oil pressure warning light would have activated). This would have been insufficient to trip the oil pressure light.

[17] Mr Lavington submitted that the lack of oil caused the engine failure. He said that vehicle owners have a responsibility to maintain their vehicles. Owner’s manuals generally recommend that engine oil and fluids be checked when refueling. Mr Lavington agreed that this was no doubt a conservative approach adopted by manufacturers but said that it would be prudent for vehicle owners to check oil and fluid levels once a month or more frequently for an older vehicle.

[18] Mr Lim told the tribunal that he did not consider that he ought to have to check the oil in the car – primarily because of its age and low mileage. He said that it had always been his practice to have his cars serviced and that this was when oil levels were maintained.

The Consumer Guarantees Act 1993

The guarantee of acceptable quality

[19] Section 6 of the Consumer Guarantees Act 1993 (CGA) 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."

[20] 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."

[21] 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.

[22] The key issue for the tribunal is the cause of the engine failure. In order to find that there has been a failure in the guarantee of acceptable quality, the failure must relate to the condition of the car at the time of sale, including that it was sufficiently durable.

[23] In this case, having considered all the evidence and relying on the expertise of the tribunal’s assessor, the tribunal finds that the failure occurred because of a lack of oil in the engine. In that regard the tribunal accepts the evidence of Mr Lavington and prefers that to the evidence of Mr Lin.

[24] Purchasers must accept responsibility for maintaining vehicles. It is generally well understood that it is prudent to regularly check a vehicle’s fluid levels. In this case, that was not done. The result was the engine was running with only 1.25 litres of oil. The tribunal has carefully reviewed the photographs and the evidence as to the cam shaft damage. The conclusion reached is that although the car had clearly not been well maintained in the past, the condition of the cam shafts did not support Mr Lin’s theory of the cause of the damage being a blocked oil pick-up screen. Had the oil pick-up screen been blocked, then the classic signs of burnt and seized camshaft bearings and scarring of cam lobes would have been present but were not.

[25] The tribunal is satisfied that the engine failure occurred because the lack of oil directly affected the operation of the variable cam timing resulting in the failure of the cam chain.

[26] For those reasons the tribunal finds that the failure was caused by the actions of the purchaser and her husband and bore no relationship to the quality or otherwise of the car at the time of sale (as contemplated by the guarantee of acceptable quality).

Orders

1. The purchaser’s application is dismissed.
   

DATED at WELLINGTON this 6th day of August 2014

___________________
N Wills
Adjudicator