Staroc v K Autos Limited t/a OK Motors Wholesales Reference No. MVD 50/15 (Auckland) [2015] NZMVDT 43 (9 April 2015)

Last Updated: 2 June 2015

Decision No: AK43/2015
Reference No. MVD 50/15

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN ALEX STARIC

Purchaser

AND K AUTOS LIMITED T/A OK MOTORS WHOLESALES

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Auckland on 7 April 2015

APPEARANCES

Mr A Staric, the purchaser

Mrs A Staric, purchaser’s wife
Mr S K Hwang director for the trader

DECISION

Background

[1] On 3 December 2014 Mr Staric (“the purchaser”) bought a 2001 Opel Astra registration DKH459 (“the vehicle”) from K Motors Limited trading as OK Motors Wholesales (“the trader”) for $2,999. The purchaser has applied to the Tribunal to recover $1,947.87 he has spent on the vehicle.

[2] The trader denies that the purchaser is entitled to recover the sum of $1,947.87 because it says the work the purchaser has had done on the vehicle is maintenance which a reasonable consumer would expect to pay to keep a $2,999, 13 year old vehicle on the road. The trader therefore denies it is liable for the purchaser’s repair costs.

[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 following two issues require consideration:
[a] Whether the vehicle was of acceptable quality at the time of sale?
[b] If it was not, whether the purchaser required the trader to repair the vehicle before having it repaired himself?

Issue [a]: Whether the vehicle was of acceptable quality at the time of sale?

The relevant law
[5] Section 6 of the Consumer Guarantees Act 1993 (“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.”

[6] The expression "acceptable quality" is defined 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, 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:
(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) 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.”

[7] 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 s21, 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.

[8] The purchaser bought the vehicle from the trader for $3,000. The vehicle had a new warrant of fitness issued by the trader on 3 December 2014, the day the vehicle was supplied to the purchaser. The warrant of fitness check sheet appears to record the odometer as 188,000kms but the figures have been badly written and are illegible. The purchaser says the odometer at the time of sale was 153,658kms which the Tribunal accepts as accurate in the absence of either a signed Consumer Information Notice or the mileage being inserted (as it should have been) in the Vehicle Offer and Sale Agreement. The trader gave the purchaser a piece of paper on which it had written: “We can guaranty for engine trans and radiator only Opel Astra 200 DKH459 3 Dec 2014 OK Motor”.

[9] The purchaser and his wife both claim the trader’s director Mr Hwang promised that the vehicle did not leak oil. They also say that the trader refused to obtain a pre-purchase inspection but the Tribunal considers that it is up to a prudent purchaser to obtain an independent pre-purchase inspection at the purchaser’s cost and not the trader’s responsibility to supply one.

[10] The purchaser says that he had trouble starting the vehicle on 29 December and that in early January the vehicle felt sluggish. In February the brakes became noisy. On 24 February the purchaser took the vehicle to New Lynn Motors & Tyre Services (“New Lynn Motors”) who told the purchaser the brakes needed a clean at a cost of $85 and the fan belt needed replacement. The purchaser had the drive belt replaced by New Lynn Motors at his cost of $126.50 on 26 February. The same day New Lynn Motors advised the purchaser that the cam belt needed replacing and gave the purchaser a hand written quote of $1,224.75 to replace the cam belt, the tensioner, three oil seals (the crankshaft and two camshaft) the water pump, and change the oil and filter and coolant. The purchaser says that Mr Keil the technician at New Lynn Motors described an oil weep from the crankshaft and camshaft seals The purchaser telephoned the trader and arranged to meet Mr Hwang on 27 February at which the Tribunal understands he presented the trader with the quote and asked the trader to pay to have the cam belt and associated work done. The trader declined to do so.

[11] The purchaser obtained a second quote from New Lynn Motors on 16 March 2015 for $975.25 to have the cam belt, oil seals, water pump, and gaskets replaced as well as the engine oil and filter changed and the Tribunal understands the purchaser had this work done on 20 March but did not see the final receipted invoice for the work.

[12] On 27 March the purchaser, without first requiring the trader to do the repair, had the EGR valve replaced at a cost of $539.53 by Taylor Auto Electrical and on the same day, again without first requiring the trader to do so he had two second hand tyres supplied and fitted to the vehicle by New Lynn Motors at a cost of $140. The purchaser has also replaced the vehicle’s battery at a cost of $166.59 but again he did not require the trader to do this before having the battery replaced.

[13] The trader’s position is that the replacement of the leaking cam and crank seals were incidental work to the changing of the cam belt which is a maintenance item as is the changing of the water pump and tensioners.
Mr Hwang had no explanation as to why he had not supplied the purchaser with a signed Consumer Information Notice with the vehicle.

[14] The Tribunal in deciding whether the vehicle sold to the purchaser complied with the guarantee of acceptable quality in s6 of the Act has had regard first to the fact that the vehicle was at the time of sale a 13 year old Singaporean import with 153,665kms on its odometer and that it was sold for only $2,999. The Tribunal considers that, apart from the weeping crankshaft seal, the vehicle was probably in the condition that a reasonable consumer would regard as acceptable for a vehicle of this age, high mileage, and cheap price. The only aspect that the vehicle probably failed to meet the guarantee in s6 of the Act is for the weeping crankshaft seal identified by Mr Keil of New Lynn Motors.

Conclusion on issue [a]:
[15] The vehicle did not comply with the guarantee of acceptable quality at the time of sale because it was not free of a minor fault, namely the weeping crankshaft as a reasonable consumer would regard as acceptable for a vehicle of this age, mileage and price.

Issue [b]: Whether the purchaser required the trader to repair the vehicle before having it repaired himself?

Relevant law
[16] 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:
[17] The purchaser gave evidence that he had asked the trader to pay the cost of replacing the crankshaft seal as well as the cam belt and water pump at the meeting on 27 February but that the purchaser had not asked the trader to pay for the replacement of the EGR valve, the battery or the tyres before he had them replaced.

[18] The regime of the Act, contained in s18(2)(a), is that a consumer must require a supplier to remedy any failures in the guarantee of acceptable quality, and allow the supplier a reasonable time in which to do so before the consumer becomes entitled to proceed to have the failure remedied him or herself. The consumer may only recover their reasonable costs when they have followed that procedure. The purchaser in this case did not do so in respect of the EGR valve, the battery or the tyres. Furthermore the Tribunal considers the replacement of the EGR valve, the battery and tyres to be maintenance work which any reasonable purchaser would expect to pay to keep an old, cheap, high mileage car on the road. The purchaser can only recover from the trader the cost of fitting the replacement crankshaft seal which the Tribunal, on the advice of its Assessor considers would cost a total of $220 for parts, labour and GST. Hence all the purchaser’s other claims will be dismissed.

Conclusion on issue [b]:
[19] The purchaser is entitled to recover his reasonable repair cost of replacing the crankshaft oil seal which the Tribunal considers to be $220.

Order

K Autos Limited shall pay Alex Staric $220 immediately.

DATED at AUCKLAND this 9th day of April 2015.

C.H Cornwell
Adjudicator