Charteris v Van den Hoek - Reference No. MVD 136/2014 (Auckland) [2014] NZMVDT 98 (22 September 2014)

Last Updated: 19 October 2014

Decision No:82/2014
Reference No. MVD 136/2014

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN MIKAELA TUI CHARTERIS

Purchaser

AND ROBERT TREVOR VAN DEN HOEK

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr D Clough, Assessor

HEARING at Rotorua on 17 September 2014

APPEARANCES

Miss M T Charteris, the purchaser

Mrs M Peleti-Tuilove, support person for the purchaser
Mr R T van den Hoek, the trader

DECISION

Background

[1] On 28 February 2014 Miss Charteris (“the purchaser”) bought a 1997 VW Polo registration EAJ573 (“the vehicle”) from Robert Trevor van den Hoek (“the trader”) for $3,000. The purchaser has rejected the vehicle and she seeks a refund of her purchase price and further sums she claims to have spent in repairing the vehicle.

[2] The trader’s defence was, initially, that the vehicle did not belong to him and that he was selling it on behalf of a friend and not as part of his motor vehicle trading business. However the trader abandoned that defence at the hearing and claimed that the cost of repairs undertaken by the purchaser was excessively high and that he could have repaired the vehicle for about one half of the cost claimed by the purchaser.

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

The Issues

[4] 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, whether the vehicle’s fault constitutes a failure of substantial character within the meaning of s21 of the Act?
(c) Is the purchaser entitled to reject the vehicle and if not what remedy is she entitled to?

Relevant Law

[5] 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.”

[6] 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

[7] The purchaser saw the vehicle advertised on Rangi’s yard in Rotorua which the Tribunal understands is a place at which vehicle owners may, for a fee, display and sell their vehicles. The purchaser contacted the trader from contact details displayed with the vehicle. She and her mother met the trader at a Rotorua shopping centre on 28 February 2014. The trader told the purchaser and her mother that he was a motor vehicle trader and that he would warrant the vehicle but the purchaser cannot recall the warranty period the trader promised. Nevertheless the purchaser has the benefit of the guarantee of acceptable quality in the Act

[8] The purchaser and her mother test drove the vehicle briefly on 28 February 2014. The purchaser noticed that a red brake light was lit up on the vehicle’s instrument panel and the trader promised to fix it and told the purchaser that the vehicle would be safe for her to drive to Auckland and back to Rotorua with the light on. The trader was asking $3,600 for the vehicle but agreed to sell it for $3,000 to the purchaser if she bore the cost of buying and fitting two new tyres on poor quality tyres fitted to the front wheels of the vehicle. The purchaser agreed to buy the vehicle from the trader for $3,000 cash which she deposited as instructed by the trader to a bank account nominated by the trader. She was not provided with a vehicle offer and sale agreement, a consumer information notice, or a GST receipt for the vehicle. The trader also failed to obtain a warrant of fitness for the vehicle within 28 days prior to the date of sale. The purchaser was uncertain as to the vehicle’s odometer at the date of sale or even its present odometer reading but the trader told the Tribunal he thought it was 152,000 or 157,000kms on 28 February 2014; the date of sale.

[9] The purchaser had two new tyres fitted to the vehicle at a cost of $200 on 28 February 2014. On the same day she drove the vehicle to Auckland. On 3 March 2014 the vehicle broke down in Queen Street, Auckland and could not be restarted. The purchaser telephoned the trader and asked for his help in getting the vehicle started and repaired. The trader gave the purchaser the name of two firms of mechanics whom he said would help her but when the purchaser telephoned those firms they did not know of the trader and were unwilling to provide the purchaser with any help in getting the vehicle repaired. The purchaser had the vehicle towed from Queens Street, Auckland to NZ Car Tech, a repairer in O’Rorke Street, Onehunga at a cost of $200 and had it repaired by them on 4 March. Their invoice records that they did a diagnostic check, topped up the engine oil and replaced the coil, the distributor and the spark plugs for which they charged the purchaser $701.50. The purchaser says that NZ Car Tech told her the vehicle was in poor condition and she should get rid of it because it was not a good buy.

[10] On 7 March the purchaser drove the vehicle back to Rotorua and sent a text to the trader asking for a refund of the amount she had spent on repairing and having the vehicle towed to the repairer. The trader told the purchaser he had no money, that he had sold the vehicle on behalf of a friend, and he was unable to help the purchaser. The purchaser says she and her mother took advice and attempted to return the vehicle to the trader at his workplace, LJ Hooker, Rotorua where the trader is a residential salesperson. They left the keys with the trader but the trader returned the vehicle’s keys to the purchaser at her workplace. The dispute escalated to the point that on 13 April the purchaser’s mother attempted to return the keys to the vehicle to the trader’s home and this resulted in the Police becoming involved and a trespass notice being issued against the purchaser’s mother. The vehicle was removed from the trader’s home to the Rotorua Police Station and eventually when the purchaser still refused to collect the vehicle from the Police to the pound where it remains.

[11] The trader told the Tribunal that the purchaser asked him to pay one half of the cost of repairing the vehicle but he believed the purchaser had been overcharged by NZ Car Tech and the vehicle could have been fixed for $400 to $450 plus GST. The trader produced copies of emailed quotes from Qualitat European of $150 plus GST for a distributor and $149 plus GST for an ignition coil and $10.80 plus GST for each spark plug.

[12] The trader also produced a set of photographs which he said he had taken at the pound showing damage to the off-side front indicator lamp and the RH bumper.

[13] The first issue the Tribunal is required to determine is whether the vehicle complied with the guarantee of acceptable quality in s6 of the Act at the time of sale to the purchaser. The Tribunal notes the age of the vehicle which was 17 years at the date of sale, the distance the vehicle had been driven of 157,000kms, the price paid of $3,000 and the fact that the vehicle was sold without a new warrant of fitness. Within three days and about 300kms of use the vehicle’s engine broke down and required repairs costing $701.50 to get it mobile. Quite clearly the vehicle lacked the durability which a reasonable consumer paying $3,000 for a VW Polo, even a 17 year old one with 157,000kms on its odometer would regard as acceptable.

Conclusion on issue [a]

[14] The vehicle does not comply with the guarantee of acceptable quality in s6 of the Act because it was not as durable as a reasonable consumer would regard as acceptable for a vehicle of this nature and price.

Issue [b]: Is the failure one of “substantial character” within the meaning of s21 of the Act?

Relevant law

[15] Section 21 of the Act defines the circumstances in which a failure to comply with the guarantee as to acceptable quality will be regarded as being a failure of a substantial character for the purposes of s18(3) of the Act. Section 21 of the Act provides as follows:
“ 21 Failure of substantial character
For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where ¾
(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or

(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) the goods are not of acceptable quality within the meaning of section 7

because they are unsafe."

[16] In Stephens v Chevron Motor Court Ltd [1996] DCR 1 Judge J E MacDonald held that whether a defect is of “substantial character” is obviously a matter of degree. On a monetary level, being required to spend $1000 on repairs in respect of a vehicle purchased for $5,000 might indicate a failure of a “substantial character” but that would not necessarily hold true for the same repairs on a vehicle of significantly greater value.

Application of law to facts

[17] The Tribunal notes that in this application the purchaser paid $3,000 for the vehicle and the facts establish that the vehicles engine failed and required repairs costing $701.50 to be spent within four days of its sale in order to get the vehicle back on the road. The Tribunal takes the view that it is unlikely that a reasonable consumer would have bought this vehicle had they been aware that within four days the vehicle’s engine would break down and require repairs costing $701.50 equivalent to 23% of the cost price of the vehicle. The Tribunal therefore considers that the failure to comply with the guarantee in s6 of the Act was, in this application, a failure of substantial character as defined by s21 (a) of the Act,

Conclusion on issue [b]:

[18] The vehicle’s failure to comply with s6 of the Act is one of “substantial character”.

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

Relevant law

[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."

[20] Section 20(1)(c) of the Act is relevant in this application. It provides that the right to reject goods conferred by the Act shall not apply if:
“(c) the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply;”

[21] In Stephens v Chevron Motor Court Ltd (supra) Judge J E MacDonald held that:
“For reasons of commercial practicality and for the reasons advanced by the respondent I consider that the rights in s 18(2) and (3) are sequential and do not exist so that the consumer can take advantage of both.”

Application of law to facts

[22] When the vehicle broke down in Queen Street, Auckland on 3 March 2014 the purchaser had an option after she had asked the trader to help her get the vehicle fixed and he failed to do so; her option was she could either have the vehicle repaired and claim the reasonable costs of getting it fixed from the trader under s18(2)(b)(i) of the Act, or she could have, subject to s20, rejected the vehicle in terms of s18(2)(b)(ii). The purchaser in this case is a young, vulnerable and unsophisticated consumer. The Tribunal appreciates that even though she works in a retail outlet the purchaser very probably had no understanding of the implications of the options she had under s18(2) and (3) of the Act when the vehicle broke down. The purchaser did what most consumers faced with an old broken down car would do in Auckland, she had it towed to a repairer and fixed. Unfortunately for the purchaser, having elected to have the vehicle fixed she cannot now claim to reject the vehicle. That is made clear by Judge MacDonald in the case I have cited in the previous paragraph.

[23] There is a further reason, which came to light at the hearing, as to why the Tribunal would not have been able to uphold the purchaser’s rejection of the vehicle. The photographs of the vehicle produced by the trader show it was damaged and the purchaser confirmed that the vehicle had a broken indicator and side light. It also had a damaged right hand front skirt but the purchaser was unable to recall that damage. The Tribunal, as provided in s20(1)(c) of the Act cannot order rejection if, as appears to be the case here, the vehicle has been damaged after it has been supplied to the consumer.

[24] The Tribunal is however able to order the trader to refund the purchaser with the sum of $701.50 she incurred in having the vehicle repaired and the towing charges of $200; a total of $901.50.

Orders

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

2. The trader shall pay the purchaser $901.50 immediately.

DATED at Auckland this 22nd September 2014

C H Cornwell
Adjudicator