Latimer v Landseer Motor Investments Auckland Limited T/A Andrew Simms Newmarket Reference No. MVD 243/15 (Auckland) [2015] NZMVDT 163 (11 December 2015)

Last Updated: 19 January 2016

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2015] NZMVT Auckland 153

Reference No. MVD 243/15

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN ROBERT LATIMER

Purchaser

LANDSEER MOTOR INVESTMENTS AUCKLAND LIMITED T/A ANDREW SIMMS NEWMARKET

Trader

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

HEARING at Auckland on 8 December 2015

DATE OF DECISION 11 December 2015

APPEARANCES

Mr R Latimer, the purchaser

Mr A Simms, Managing Director of the trader

DECISION

Background

[1] On 19 October 2012, Mr Latimer (“the purchaser”) bought a new Alfa Romeo 159Ti registration GNS795 (“the vehicle”) for $56,289 from Landseer Motor Investments Auckland Limited now trading as Andrew Simms Newmarket (“the trader”).
[2] The purchaser says the vehicle’s air conditioning system failed to operate on 19 January 2015 and was not fully repaired by the trader until 4 May 2015. The purchaser sold the vehicle to the trader for $24,000 on 20 May 2015 but now seeks damages of $3,647 from the trader on the grounds that the failure of the air conditioning was a failure of substantial character.
[3] The trader denies that the fault with the vehicle’s air conditioning system was a failure of substantial character. The trader also says that even if it were, the purchaser has failed to show that there has been any reduction in the value of the vehicle below the price the purchaser paid for it as a consequence of the air conditioning fault.
[4] 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 Tribunal’s decision was made by the adjudicator.

The issues

[5] 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 (“the Act”)?
• (b) If not, was the failure of substantial character within the meaning of s 21 of the Act.
• (c) If so what (if any) damages is the purchaser entitled to obtain from the trader in terms of s 18(3)(b) of the Act?

Issue [a]: Whether the vehicle complied with the guarantee of acceptable quality in s 6 of the Act?

Relevant law

[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 s 7 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,—

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:

(ha) the nature of the supplier and the context in which the supplier supplies 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) 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) 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 purchaser’s 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 s 19 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 his right to reject the vehicle within a reasonable time.

Application of law to facts

[10] The purchaser says that on 19 January 2015 the vehicle’s air conditioning system ceased to work whilst he was driving the vehicle from Whangarei to Auckland. He took the vehicle back to the trader on 22 January. Its service manager told the purchaser that the air conditioning controller needed to be replaced and that it would take ten days to import the part from Italy. On 5 February the trader told the purchaser that the air conditioning controller was not in stock in Italy, and was on back-order from the factory, and could take a further month to source.
[11] On 16 March, the air conditioning controller was fitted to the vehicle but the trader then discovered that the vehicle’s air conditioning compressor was faulty. On 31 March, the purchaser took the vehicle back to have the new air conditioning compressor fitted. On 2 April, the purchaser was told the vehicle was ready to go. The purchaser collected the vehicle on 4 April and the air conditioning system in the vehicle worked well until 19 April when it failed again. The vehicle was booked in with the trader to be repaired on 29 April and was finally repaired on 4 May and collected by the purchaser the following day. The purchaser has calculated that the vehicle’s air conditioning issues from 19 January to 4 May extended over a total of 105 days. The air conditioning in the vehicle worked from 4 to 19 April; a period of 15 days, and the purchaser was provided with loan cars by the trader which had air conditioning over a further 16 days, so that the period he was without air conditioning in either his or a loan vehicle was 74 days.
[12] The purchaser claims that the failure of the air conditioning system in the vehicle was a failure to comply with the guarantee of acceptable quality because the vehicle was not as durable as a reasonable consumer would regard as acceptable having regard to the age of the vehicle of two years and three months, its purchase price of $56,289, its mileage of a little less than 15,000kms, and the nature of the vehicle and its brand.
[13] The trader in reply says the vehicle is an exotic, European car of which low volumes are sold in New Zealand. The New Zealand importer, Ateco, seeks to source parts from within New Zealand or Australia but often parts have to be imported from Italy; a process in which the Italian supplier stipulates that orders must only be submitted once a week before noon Thursday (NZ time) by Ateco so that parts can sent by DHL airfreight the following day. Where a part is on back-order, as occurred with the air conditioning control unit, further delays can occur. The trader also points out that the vehicle needed three discrete parts; the control unit, the compressor and a sensor, and that it was not possible to detect the failure of the compressor until the replacement control unit had been sourced and fitted.

The Tribunal’s finding on issue [a]

[14] The Tribunal considers that most reasonable consumers would expect, even in a vehicle still under a manufacturer’s warranty that faults will occur from time to time, regardless of the cost of the vehicle, its brand, the mileage it had covered and its age. Such consumers will also anticipate that sometimes replacement parts in modern vehicles will need to be sourced from the off-shore manufacturer who in turn may need to source them from its suppliers: other automotive parts manufacturers. Reasonable consumers who purchase vehicles manufactured in Italy, France and even perhaps Germany accept that inevitably there will be delays associated with the sourcing and supply of parts from Europe. Once the parts arrive in New Zealand and clear customs, skilled technicians may not always immediately be available to rectify the faults and fit the parts and recommission the vehicle. However, in the present application, Mr Simms reported that three components of the vehicle’s air conditioning system had failed; the control unit, the compressor and the sensor. Whilst, no doubt that compounded the delays the purchaser experienced in getting his vehicle repaired, the issue remains: was the vehicle as durable as a reasonable consumer would regard as acceptable. The Tribunal’s view is that it most probably was not because the air conditioning system should not have had a failure of three components in a vehicle of this age, mileage and price.

Conclusion on issue [a]

[15] The vehicle failed to comply with the guarantee of acceptable quality in s 6 of the Act because its air conditioning system lacked durability.

Issue [b]: Was the failure of substantial character within the meaning of s 21 of the Act?

Relevant law

[16] 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 s 18(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—

(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.”

Application of law to facts

[17] Whilst the Tribunal accepts the purchaser’s evidence that the 70 days he was without air conditioning in the vehicle were inconvenient and uncomfortable for him on hot days, yet the Tribunal considers the fault falls substantially short of what ought reasonably to be considered to be a failure of substantial character. The Tribunal does not accept that a failure of a vehicle’s air conditioning system can constitute a failure of substantial character. Nor does it accept the purchaser’s submission that the vehicle would not have been purchased by a reasonable consumer acquainted with the air conditioning fault the purchaser experienced.

Conclusion

[18] The Tribunal is not persuaded that the failure of the vehicle’s air conditioning system was a failure of substantial character within the meaning of s 21 of the Act. It follows that the purchaser’s application for damages must be dismissed.

Order

The purchasers’ application is dismissed.
DATED at AUCKLAND this 11th day of December 2015

C. H. Cornwell
Adjudicator