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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 19 January 2016
BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
Reference No. MVD 132/2015 (WN)17
IN THE MATTER of the Motor Vehicle Sales Act 2003
AND
IN THE MATTER of a dispute
BETWEEN FAN YU
Purchaser
AND UNIVERSAL AUTO TRADER MOTUEKA LIMITED
Trader
MEMBERS OF TRIBUNAL
J S McHerron, Barrister – Adjudicator
D Binding – Assessor
HEARING at Nelson on 13 November 2015
DATE OF
DECISION 15 December 2015
APPEARANCES
F Yu, Purchaser
A Mackie, Support Person
No appearance by Trader
DECISION
Mr Yu’s rejection of the vehicle is upheld. Universal Auto Trader Motueka Limited must immediately pay Mr Yu $4,135.20. Once he has received this payment, Mr Yu must return the vehicle to Universal Auto Trader Motueka Limited.
Universal Auto Trader Motueka Limited must, within 10 days of the date of this order, pay the Tribunal’s reasonable hearing costs of $600 to the Crown, in person or by courier, to the Ministry of Justice, Tribunals Unit, Level 1, Chorus House, 41 Federal Street, Auckland.
REASONS
Introduction
[1] Shortly after Mr Yu purchased a Honda Accord for $3,990, its transmission began to fail. He was quoted $1,582.26 for repairs. He wishes to reject the vehicle. Is he entitled to do so?
[2] The following issues arise:
(a) Did the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the Consumer Guarantees Act 1993 (“the Act”)?
(b) Was the failure of a substantial character?
(c) Did the purchaser validly reject the vehicle?
Background
[3] Mr Yu purchased a 1998 Honda Accord on 22 February 2015 from Value Buy Cars Limited (now known as Universal Auto Trader Motueka Limited).
[4] A week or so after purchase, Mr Yu noticed oil leaking in the area of the front wheels. He took a wheel off and saw that the CV boots were split. Mr Yu also noticed that the brakes were noisy and there was a noise coming from one of the back wheels. In addition, Mr Yu thought the automatic transmission was behaving strangely.
[5] Mr Yu took the vehicle to Bowater Toyota who charged him $95.20 to check and report on the oil leak from the automatic transmission and torn CV boots. Bowater Toyota advised Mr Yu that the transmission needed to be repaired and gave him an estimate for that work as well as replacing the outer CV boots on both sides. The estimate was for $1,582.26 including GST.
[6] Mr Yu immediately returned to Value Buy Cars with the vehicle. He spoke to a man who he understands was Graham Ferguson, the trader’s director and the person who sold him the vehicle. Mr Yu told Mr Ferguson that he did not want the car anymore and that he wanted his money back. He explained that the reason was because he had received a report that the vehicle needed expensive repairs to its transmission very soon after he had purchased it.
[7] Mr Ferguson did not agree to take the vehicle back but offered Mr Yu $500. Currently the vehicle is inoperative and Mr Yu told the Tribunal the transmission has failed and he is unable to change its gears. He also told the Tribunal that an oil leak from the transmission looks like it has been covered up. Mr Yu wonders if something has hit the transmission and a poor repair job was carried out before he purchased it. Mr Yu said that it was losing a lot of oil rather quickly.
Did the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the Act?
[8] Section 6 of the Act provides a guarantee that goods are of an acceptable quality. According to s 2 of the Act, “goods” includes vehicles.
[9] The meaning of acceptable quality is defined (as far as is relevant) in s 7 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,—
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.
[10] As is clear from subs (1) of the definition, whether a vehicle is of “acceptable quality” is an objective test. This means the question whether a vehicle is of acceptable quality is considered from the point of view of a reasonable consumer who is fully acquainted with the state and condition of the vehicle, including any hidden defects.
[11] Even though the vehicle was relatively old and high mileage, in my view and that of the Assessor a vehicle of this age, mileage and price ought reasonably to have a transmission that lasts longer than one month after purchase. In addition, there are signs that the transmission has been damaged and not repaired adequately prior to delivery to the purchaser.
[12] Accordingly, I have no hesitation in concluding that the vehicle was not as durable as a reasonable consumer would regard as acceptable. It therefore failed to comply with the guarantee of acceptable quality under s 7(1)(e) of the Act. Moreover, as the transmission is a key component of the vehicle, enabling it to be driven, I conclude that the vehicle was not fit for purpose and was not of acceptable quality according to s 7(1)(a) of the Act either.
Was the failure of a substantial character?
[13] Under s 21 of the Act, a failure to comply with a guarantee is of a substantial character where the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure.[1]
[14] I consider that this vehicle would not have been acquired by a reasonable consumer who was fully acquainted with the defective and damaged transmission. A reasonable consumer would not expect the transmission to fail so soon after purchase, requiring repairs equating to 40% of the vehicle’s purchase price.
[15] In addition, for the reasons outlined above, the vehicle was substantially unfit for the purpose for which it was supplied (namely, to be driven, which was impossible without a working transmission) and therefore s 21(c) of the Act would apply too.
[16] Accordingly, I conclude that the failure of the vehicle to comply with the guarantee of acceptable quality was a failure of a substantial character.
Did the purchaser validly reject the vehicle?
[17] As I have concluded that the failure was of a substantial character, Mr Yu has the option to reject the goods according to s 18(3)(a) of the Act. Even if the failure was not of a substantial character, in this case the purchaser’s evidence was that Value Buy Cars refused to remedy the failure. Accordingly, Mr Yu had the option to reject the vehicle under s 18(2)(b)(ii) of the Act.
[18] Mr Yu’s evidence was that, immediately after receiving Bowater Toyota’s advice that the transmission needed repairing at substantial cost, he returned to Value Buy Cars and told Mr Ferguson he did not want the car and that he wanted his money back. Mr Yu also explained why, by describing the repairs needed to the transmission and the CV boots.
[19] Section 22 of the Act requires a consumer to exercise the right to reject a vehicle by notifying the supplier of the decision to reject it and of the ground or grounds for rejection.
[20] In light of the purchaser’s evidence as described above, I conclude that Mr Yu validly rejected the vehicle in accordance with s 22(1) of the Act.
Conclusion
[21] Accordingly, Mr Yu is entitled to a full refund of the purchase price of $3,990 plus reimbursement for the diagnostic invoice of Bowater Toyota: $95.20.
Costs
[22] In addition, the Tribunal has power to make an award of costs against a party who, after receiving notice of a hearing, fails to attend the hearing without good cause.[2]
[23] The trader, after receiving notice of the hearing, failed to attend the hearing without good cause. The Tribunal will therefore order the trader to pay Mr Yu his filing fee of $50 and the Crown the reasonable costs of the Tribunal’s hearing of $600.
DATED 15 December 2015
J S McHerron
Adjudicator
[1] Section 21(a) of the Act.
[2] Motor Vehicle Sales Act 2003, Schedule 1, clause 14(1)(b).
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2015/171.html