Casey v Entrance Holdings Limited t/a I C Motor Group - Reference No. MVD 141/2014 (Auckland) [2014] NZMVDT 99 (22 September 2014)

Last Updated: 19 October 2014

UNDER APPEAL
Decision No. AK 83/2014

Reference No. MVD 141/2014

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN SARAH CASEY

Purchaser

AND ENTRANCE HOLDINGS LIMITED T/A I C MOTOR GROUP

Trader

AND NISSAN NEW ZEALAND LIMITED

Manfacturer

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Whangarei on 16 September 2014

APPEARANCES
Ms S Casey, the purchaser
Ms D Herbert, support person

Mr K C Illerbrun, Managing Director of the trader

Mr S Bavin, Technical Services Specialist, for the manufacturer,
Nissan New Zealand

DECISION

Background

[1] On 7 October 2013 Ms Casey (formerly Ms Morris) (“the purchaser”) bought a new 2013 Nissan Micra registration number GYT657 (“the vehicle”) for $19,990 from Entrance Holdings Limited trading as I C Motor Group. The vehicle was manufactured by Nissan Motor Company represented in New Zealand by Nissan New Zealand Limited (“the manufacturer”). The purchaser has rejected the vehicle because she says it has an intermittent electrical fault which the trader and the manufacturer have failed to remedy within a reasonable time. The purchaser wants the Tribunal to uphold her rejection and order the trader to refund her purchase price.

[2] The trader and the manufacturer deny that the purchaser is entitled to reject the vehicle. They say that there is nothing wrong with the vehicle (apart from damage to a wheel bearing which they say has been caused by the purchaser or a driver with her authority). They say they have fixed any subsequent faults the vehicle had and the purchaser has failed to establish that the vehicle has any faults.

[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 cl 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 raised by this application are:
[a] Whether the vehicle complied with the guarantee of acceptable quality in s.6 of the Consumer Guarantees Act 1993?
[b] If not, whether the trader and/or the manufacturer remedied the vehicle’s faults within a reasonable time?
[c] If not, 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 (“the Act”)?

Relevant law
[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 or the Consumer Guarantees Act 1993, 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" was defined in s 7 of the Act at the time of supply 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 s 21, 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 says the first issue she had with the vehicle on October or November 2013 was that the fuel gauge was unreliable. She claims she spoke to the trader about the fuel gauge however the trader says there is no record of the purchaser having returned the vehicle to the trader for this matter.

[11] The purchaser told the Tribunal that, despite a written request to the purchaser’s legal advisor, Tai Tokerau Community Law Centre to have the purchaser prepare a chronology of events which was sent to them on 29 August 2014 she had not come to the hearing with a statement setting out the events in chronological order. She produced a medical certificate which stated she had suffered blunt trauma from a facial punch on 16 August 2014 and she told the Tribunal this had affected her memory and prevented her from being able to recall the events relating to the vehicle. She told the Tribunal that the trader had all the information as to the dates, reasons and odometer recordings on which she had returned the vehicle to the trader and Giltrap Nissan. The following facts are therefore based on the evidence given by the trader and the manufacturer supported by copies of invoices produced by the trader.

[12] On 7 January 2014 the purchaser returned the vehicle to the trader for the first time claiming that the vehicle had no acceleration uphill and was shuddering at idle. The odometer reading was then 11,029kms. The trader had the vehicle for three days during which it road tested the vehicle but was unable to reproduce the fault. The spark plugs were removed and inspected by the trader. A free loan car was provided to the purchaser.

[13] On 17 February 2014 the vehicle went into limp home mode in Auckland. Its odometer was then 13,803km. The vehicle was towed to Giltrap Nissan who diagnosed the fault as a cracked spark plug, which they replaced. The trader arranged a rental vehicle to enable the purchaser to get back to Whangarei and had the vehicle transported back to Whangarei. The purchaser was without the use of the vehicle for ten days.

[14] On 29 March 2014 the purchaser advised the trader that a warning light had come on again in the vehicle’s instrument panel and the engine was idling rough. Cylinder #2 was found to be misfiring. The vehicle’s odometer was then 17,138kms. The trader replaced two coils as a precaution and, with technical support from the manufacturer, diagnosed the cause of the fault as a very slight change in the required clearance between one of the vehicle’s flexplate fingers and sensor which only became evident when the vehicle was driven a considerable distance under moderate load and when the engine was operating within the higher acceptable temperature range. The flexplate was worth $157.50 and its replacement involved about eight hours of labour at $90 an hour. It was also necessary to replace the vehicle’s transmission fluid at a cost of $65.60 so that the total cost of the repair was $943. The trader, by way of compensation gave the purchaser a free 15,000km service worth $330 and several tanks of petrol. The vehicle was returned to the purchaser on 17 April 2014.

[15] Mr Bavin for the manufacturer told the Tribunal that the manufacturer is aware of two incidents, of which this is one, involving faulty flexplates in Nissan Micra vehicles and in both cases the replacement of the flexplate cured the issues. Several hundred Nissan Micra vehicles have been sold in New Zealand.

[16] The purchaser had discussed with the trader in April her wish to sell the vehicle and on 9 April she had sent an email to Mr Illerbrun of the trader saying she did not want to keep the vehicle because it had been “a nightmare and I have no faith in it.” In that email the purchaser asked the trader what her options were. The trader offered to sell the vehicle on the purchaser’s behalf but indicated that the net amount the purchaser would receive from the trader selling it on her behalf would be about $14,000.

[17] On 28 June 2014 the purchaser returned the vehicle to Giltrap Nissan to have them check for what she claimed was a rumbling noise and engine noise but Giltrap Nissan were unable to fault the vehicle at that time. The vehicle’s odometer was then 26,346kms.

[18] On 21 July 2014 the vehicle was taken back to Giltrap Nissan by the purchaser to have Giltrap check a warning light that had lit up in the vehicle’s instrument panel. The purchaser also claimed that the vehicle’s intelligent key would not unlock the vehicle. Giltrap found the warning light was an ice warning light which lights up at 3 degree Celsius to warn the driver of the possibility of ice on the road at that temperature and that this is a normal operation and does not indicate any fault. Giltraps were unable to find any fault with the intelligent key. They found that the wheel bearing was noisy due to impact damage.

[19] Mr Bavin gave evidence that on 23 July 2014 he went to Giltrap Nissan to inspect the vehicle and road tested the vehicle for a little more than 1.5 hours in an attempt to replicate any issues reported by the purchaser. He says he monitored the warning lights, instrument operation and vehicle performance with diagnostic monitoring equipment Consult III which was installed at all times. He says he found no abnormalities and the vehicle’s fuel gauge was observed to be operating normally on that occasion.

[20] On 29 July 2014 Mr Bavin says he went to Giltrap Nissan and collected the left front wheel bearing, disassembled it and inspected the part. He says the bearing has been damaged due to shock loading from an impact where external force has been transmitted through the race and ball bearing creating an indentation in the external race. The noise is the end result of the damaged race. Mr Bavin says that this type of impact damage can be caused by impact with a kerb, pot hole or similar. Mr Bavin says that in the absence of any accident damage he would not expect to see a wheel bearing fault occur until a vehicle had travelled at least 100,000kms.

[21] On 29 July 2014 Mr Bavin sent a report by email to the purchaser covering the warning display functions and noise from the wheel bearing and informed the purchaser that the wheel bearing had been repaired and the vehicle was ready for her to collect from Giltrap Nissan. The purchaser has not collected the vehicle from Giltrap Nissan and has not returned it to the trader.

[22] Mr Bavin produced the left front wheel bearing from the vehicle to the Tribunal for inspection by the Tribunal’s Assessor together with photographs of the left front wheel showing severe “curbing” damage to the wheel cover caused by the wheel coming into contact with the curb. The Assessor carefully inspected the wheel bearing and agreed that the single indentation to the bearing race is likely to have been caused by impact damage. There was no evidence that the bearing has suffered any other faults related to overloading, lubrication failure or water ingress.

[23] The trader produced a copy of a report dated 21 August 2014 from the AA on the vehicle. The AA’s report records the vehicle’s odometer is now 28,745kms. The report rates the vehicle as in Grade 1: medium to low risk of unplanned maintenance and repair. However it notes the AA are unable to guarantee that any unforeseen mechanical problems will not occur. The report notes the next service is due at 32,000kms and that Nissan scanned all systems in the Inspector’s presence and no DTC (diagnostic trouble codes) were evident. The WOF expired on 16 August 2014 and registration on 27 June 2014. The engine oil was reported as dirty and the vehicle’s spare wheel is missing. There are miscellaneous scratches in the doors and body panels and dents in body panels and the vehicle was in a dirty state with miscellaneous marks on the upholstery.

[24] The factors to be considered by the Tribunal in deciding if the vehicle was of acceptable quality at the time of sale are that the vehicle supplied to the purchaser was a new vehicle and its purchase price was $19,990. There was no evidence provided by the purchaser to show that the vehicle had any faults at the time it was supplied to her in October 2013. The first occasion the vehicle was returned to the trader was in January 2014 after the vehicle had travelled 11,029kms for lack of acceleration uphill and a shudder at idle. The trader was unable to fault the vehicle. The second time the vehicle was taken to Giltrap Nissan at 13,803kms and an assessment of the vehicle was undertaken a fracture in the spark plug porcelain was thought to be responsible for the vehicle’s loss of power causing it to go into limp home mode and the symptoms were consistent with the purchaser’s complaint. The third time the vehicle faulted it was brought back to the trader who involved the manufacturer in diagnosing the cause of the intermittent power loss and the vehicle going into limp home mode and the faulty flexplate was identified as the cause and replaced. The vehicle had travelled only 17,138kms at that time.

[25] The Tribunal believes a new vehicle should be not only free of minor faults but durable for much longer than the period this vehicle was. On the basis of the record of faults which the trader and Giltrap Nissan identified in the period January to April 2014 the Tribunal finds as a fact that the vehicle was not as durable as a reasonable consumer would regard as acceptable for a new $19,990 vehicle.

Conclusion on issue [a]
[26] The vehicle did not comply with the guarantee of acceptable quality in section 6 of the Act because it was not as durable as a reasonable consumer would regard as acceptable.

Issue [b]: Whether the trader and or the manufacturer remedied the vehicle’s fault within a reasonable time?

Relevant law
[27] 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
[28] Whether a defect is a failure of “substantial character” is a matter of degree in any given case but the Tribunal, on the advice of its Assessor considers that the faulty flexplate which was the cause of the problems the purchaser had with the vehicle was not a failure of “substantial character” because it was a fault which was capable of being remedied and was remedied in April 2014 by the trader and the manufacturer for less than $1,000. The only issue is whether the trader succeeded in repairing it within a reasonable time in accordance with s19 of the Act.

[29] In this case the trader rectified the fault on the second occasion the vehicle was returned it on 29 March 2014. It provided the purchaser with a loan car and free petrol over the ten days the purchaser was without a vehicle whilst hers was being repaired and serviced the vehicle free of charge. Under those circumstances the Tribunal considers the vehicle was repaired within a reasonable time and the purchaser would have suffered no inconvenience whilst her vehicle was being repaired.

Conclusion on issue [b]:
[30] The Tribunal concludes that the trader and the manufacturer remedied the fault with the vehicle within a reasonable time and it follows that the Tribunal does not consider the purchaser had grounds to purport to reject the vehicle. Her application must be dismissed.

Orders

1.The purchaser’s application to reject the vehicle under the Consumer Guarantees Act 1993 is dismissed.

2. The purchaser should arrange to uplift the vehicle from Giltrap Nissan.

DATED at AUCKLAND this 22nd September 2014

C.H Cornwell
Adjudicator