Kingi v Greenstone Imports (NZ) Limited - Reference No. MVD 49/15 (Auckland) [2015] NZMVDT 45 (17 April 2015)

Last Updated: 2 June 2015

Decision No: AK 45/2015
Reference No. MVD 49/15

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN RUBINIA MARGARET KINGI

Purchaser

AND GREENSTONE IMPORTS (NZ) LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Tauranga on 15 April 2015

APPEARANCES

Ms R M Kingi, the purchaser

Mr K Kerr, Managing Director of the trader
Mr J Kerr, witness for the trader
Mr L E Lilley, Lilley Automotive Ltd, witness for the trader
Ms C J Holmberg, Lilley Automotive Ltd, witness for the trader.

DECISION

Background
[1] On 25 November 2014 Ms Kingi (“the purchaser”) bought a 2004 Mazda MPV van registration number GMB207 (“the vehicle”) from Greenstone Imports (NZ) Limited (“the trader”) for $9,990. The purchaser rejected the vehicle on 2 March 2015 and she has applied to have the Tribunal uphold her rejection of the vehicle and the trader ordered to refund the purchase price.

[2] The trader says it has been willing to repair any faults with the vehicle but the purchaser did not give it a reasonable opportunity to do so before rejecting the vehicle.

[3] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal has appointed Mr Clough as expert assessor to assist in the determination of the complaint. Mr Clough took the oath required by clause 10(2) of Schedule 1 to that Act. As an assessor Mr Clough assisted the adjudicator but the Tribunal’s decision was made by the adjudicator.

The issues
[4] 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 it did not, did the purchaser require the trader to remedy the vehicle’s faults and allow it a reasonable time in which to do so?
[c] If so, 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 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, the Contractual Remedies Act 1979 or the Consumer Guarantees Act 1993, as applicable to the circumstances of the case. In this application the 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, at the time of the sale of this vehicle, defined in s7 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 to¾
(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.”

[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 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 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 her right to reject the vehicle within a reasonable time.

Application of law to facts
[10] The purchaser told the Tribunal that she bought the vehicle for her work as a caregiver. She did not have the vehicle inspected or assessed by a mechanic before agreeing to buy it from the trader for $9,990 on 25 November 2014. The vehicle’s odometer was 112,754kms at the time of sale according to the Vehicle Offer and Sale Agreement and the Consumer Information Notice. The vehicle is a Japanese import.

[11] The trader did not obtain a new warrant of fitness for the vehicle within one month before delivering the vehicle to the purchaser, as it is required to do by Land Transport Rule 9.12 of the Vehicle Standards Compliance 2002. The last warrant of fitness issued for the vehicle was on 10 April 2014 when the odometer was recorded as 102,691kms; some seven months and 10,063kms prior to the date of supply.

[12] The purchaser experienced difficulty getting the vehicle’s left hand rear door to operate and returned it to the trader to be repaired in December 2014. The trader claims she returned the vehicle on the afternoon of 24 December 2014 but the purchaser says it was earlier than the 24 December but has no recollection of the date. In the event the trader was unable to have the door inspected and repaired before the 2014 Christmas holiday period and asked the purchaser to bring the vehicle back on 13 January 2015, which she did. The vehicle was taken to Lilley Automotive Ltd. Mr Lilley gave evidence that the complaint was that both sliding doors were not operating correctly which he said was true. He found the right side sliding door was not operating simply because the child lock was on, and the left side door required lubrication of the catch and lock components. Mr Lilley says he demonstrated to the purchaser and her companion how the various switches and locks worked and the purchaser appeared to leave satisfied. Both rear doors on the vehicle were working at that time.

[13] The purchaser gave evidence that on 16 January 2015 (although in view of subsequent evidence given by Mr Lilley the Tribunal doubts that was the correct date) she drove to her mother’s house and heard a clanking sound from underneath the vehicle. She called the trader and spoke to Mr Joshua Kerr who said the trader would fix the problem. The trader did not come to inspect the vehicle that day, but the following day Mr Joshua Kerr came to the purchaser’s home and took the vehicle for a short drive. He heard the noise and thought a tin can had become caught under the vehicle. The trader arranged to have Rowe Motors (TGA) Ltd tow it to Lilley Automotive Ltd. The purchaser says that whilst Mr Joshua Kerr was at her house inspecting the vehicle she told him of other faults with the vehicle. She says the faults she told him of were:
a) it was hard to start;
b) it jumped out of gear once;
c) it was noisy
d) the rear seats were not able to be moved;
e) water was leaking in a door
f) the back bumper was slightly damaged.
Mr Joshua Kerr agrees the purchaser told him about the vehicle jumping out of gear once, that it was noisy, and that the rear seat did not move as it should but he denies the purchaser told him of the other faults.

[14] Mr Joshua Kerr reported to the trader who arranged to have the vehicle towed to Lilley Automotive Ltd. Mr Lilley says the vehicle arrived on a tow truck on 23 January. He says he test drove the vehicle and noticed a noise which was there very briefly and went away. He says it sounded like a stone caught in the braking system. He removed all the wheels and brake callipers and cleaned all brake components. He said the brake pads were worn but not dangerously so. After reassembling the brakes and refitting the wheels he test drove the vehicle and says he did not hear any inappropriate noises. He says he was asked by the trader to check the vehicle for any other issues and says the two front tyres were bald and he carried out an oil change and filter replacement, checked and topped up the fluids, checked and adjusted all belts, checked the battery water level and condition, the wiper blades, exhaust system and mounts and checked the fuel lines. Lilley Automotive Ltd charged the trader $276.74 which included two and a half hours of Mr Lilley’s time as a technician.

[15] After collecting the vehicle on 27 January the purchaser went to the trader and told the trader, according to evidence given by Mr Kerr (Senior) and Mr Joshua Kerr that she did not want a vehicle that got stones in its brakes. The trader attempted to explain that many cars get stones in their brakes and it was not a serious matter but the purchaser said she wanted to reject the vehicle for that reason. The trader says it arranged for Tyre Works NZ Ltd, a supplier in Mount Maunganui to supply and fit two tyres and do a wheel alignment on 24 January but the purchaser refused to take the vehicle there to have the work done. She told the Tribunal that she was “too busy” and she did not want to drive the 5kms back to Mount Maunganui to have the work done.

[16] On 9 February 2015 the purchaser took the vehicle to DM Auto Services for a “pre-purchase inspection”. The vehicle’s odometer was then 114,640kms showing the vehicle had been driven 1,886kms in the 11 weeks the purchaser had owned it. The report identified the following faults with the vehicle:
“Left and right side dash lights N/W
A/c vent damage and not blowing on full
Stone chips in windscreen
Both front tyres worn
Both rear tyres low 2mm
Rear bump stops worn
Drive belt worn
Front brakes low
Rear brakes noisy
Damage to front bumper’
Oil leak on transmission needs to be cleaned and checked
Transmission fluid very dirty & needs replacing
Damage & stains on rear seatbelts
WOF due 10/4/15
Reg due 24/5/15
Service due 124,000”
DM Auto Services quoted the purchaser $1794.58 for parts labour and GST to replace the tyres, machine the discs, and replace the front and rear brake pads, align the wheels, service the transmission and replace the transmission fluid, replace the drive belt and bump stops.

[17] The purchaser did not take or send a copy of the DM Auto Services inspection and quotation to the trader but decided to file an application with the MVDT. She did so on 4 March having sent the trader a letter rejecting the vehicle on 2 March 2015. The purchaser’s reason for rejecting the vehicle was that it has “serious mechanical faults”.
[18] On 10 March 2015 when the vehicle’s odometer was 115,538kms (2,784kms after sale) the purchaser took the vehicle to VTNZ for a warrant of fitness inspection which it failed for the following reasons:
“RF door to open from inside
Rear tyres mismatched- RH asymetrical LH symetrical
Both front tyres too worn”

[19] The purchaser, apparently without first requiring the trader to do so, replaced two front tyres with two used tyres on 4 April 2015 at a total cost of $80. Unfortunately the Tribunal cannot order the trader to reimburse the purchaser with that sum because she did not give the trader the opportunity to do the work itself.

[20] On 13 April the purchaser obtained a second quotation of $1,614.98 plus GST from Midas Tauranga for the work quoted by DM Auto Services including $147.78 plus GST for an oil and filter change (which the Tribunal notes from the DM Auto services pre-purchase inspection does not appear to be due until 124,000kms).

[21] The purchaser says the driver’s inner door handle needs to be replaced and she produced a quote of $184 from DM Auto Services to remove and replace the driver’s door handle.

[22] The purchaser also produced a quotation dated 30 March 2015 of $644 from Bailey’s Panelworks Ltd to find and repair the water leak. She also produced an estimate of $400 from Gate Pa Auto Electrical Ltd dated 13 April 2015 to repair the LR door which is not opening from the outside, replace the dash bulbs and diagnose the intermittent starting fault.

[23] The trader, represented by Mr Kerr (Senior) told the Tribunal that the failure to obtain a new warrant of fitness was an oversight by the trader. He says however, that the trader has always been willing to fix any faults with the vehicle and arranged to replace the front tyres on 24 January using its supplier, Tyre Works NZ Ltd. The trader still remains willing to fix any faults present in the vehicle which are not service items or defects caused by the purchaser.

[24] Mr Lilley of Lilley Automotive Ltd gave sworn evidence that the brake pads were not so badly worn that they appeared to need replacing when he inspected them on 23 January and that both sliding doors were working properly after he attended to them on 13 January.

The Tribunal’s findings
[25] The Tribunal, in determining the first issue: whether the vehicle supplied by the trader complied with the guarantee of acceptable quality, has had regard to the nature of the goods, in this case a 10 year old Japanese imported Mazda MPV van with 112,754kms on its odometer at the time of sale, and the price paid for it of $9,990. The Tribunal expects that a reasonable consumer buying a ten year old Japanese imported van with over 100,000kms on its odometer would not expect such a vehicle to be free of minor faults, dents, chips, scratches, and paint and panel imperfections. However, and this is very significantly in trying to determine the condition of the vehicle’s tyres and brakes at the time of sale, the Tribunal had real difficulty in reaching its decision as to what was fair wear and tear in a vehicle of this age and moderately high mileage, and what was an unacceptable fault. The difficulty arose as a consequence of the trader’s failure to obtain a fresh warrant of fitness for the vehicle immediately prior to the date of supply. The Tribunal considers it was unable to rely on the previous warrant of fitness which had been issued on 10 April 2014 some 7 months before the date of supply because the vehicle had travelled a further 10,000kms since that warrant was issued.

[26] Against that background the Tribunal has decided to give the benefit of any doubt regarding the vehicle’s condition to the purchaser. It has accordingly decided (on the basis of the VTNZ WOF check sheet) that certainly all four tyres on the vehicle needed to be replaced. It has also decided (on the basis of the measurements made by DM Auto Services), that the brake pads probably needed replacing at the time of sale. The Tribunal also thinks that the vehicle should not be leaking water within a two month period of supply and that the lights on the dash should be functioning. The Tribunal does however accept the evidence given by Mr Lilley for the trader that both sliding doors were operational on 13 January and the purchaser’s complaint regarding the driver’s door handle appears to be a fault which has occurred after delivery of the vehicle but still within a short period of time so as to indicate that the handle’s attachment was probably not as durable as a reasonable consumer would regard as acceptable, even for a ten year old Mazda van with 112,754kms on its odometer.

Conclusion on issue [a]
[27] The vehicle did not comply with the guarantee of acceptable quality in s6 of the Act because it was neither free of fault at the time of sale (the tyres and brakes) nor was it as durable (the water leak, the dash lights and the driver’s door handle) as a reasonable consumer would regard as acceptable for a vehicle of this age, type, mileage and price.

Issue [b]: Did the purchaser require the trader to remedy the vehicle’s faults and allow it a reasonable time in which to do so?

Relevant law
[28] 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."

[29] The case of Acquired Holdings v Turvey HC Auckland, CIV-2006-404-7284, 14 November 2007 [2007] NZHC 1251; (2008) 8 NZBLC 102,107 is authority for manner of interpreting a consumer’s obligations in terms of s18 of the Act. In that case Winkelmann J said:
“I consider that on a plain reading of s18 in circumstances where the defect can be remedied and is not of substantial character, the purchaser must follow the requirement in s 18(2) to allow the supplier an opportunity to remedy the failure within a reasonable time in accordance with the provisions of s19.”
......
“There are as set out in Gault on Commercial Law, good reasons why s18(2) should be interpreted to require a consumer to provide the supplier with an opportunity to repair or replace before commissioning such repairs him or herself :

Where a consumer exercises rights under s18(2), he or she is required to first give the supplier the opportunity to remedy the defect in the goods. As well as the practicality of this remedy, the supplier is able to assess whether the goods have been subjected to unreasonable use, whether the defect has caused the problem, and, in particular, to control the quality of the remedy, which would not necessarily be the case if repairs are carried out by an unauthorised repairer. The supplier is also in a better position than a third party repairer to negotiate its own remedy with the manufacturer. Section 19 sets out options for suppliers as to how defects are to be remedied.”

Application of law to facts
[30] The Tribunal considers first, that none of the faults that the purchaser identified the vehicle as having can reasonably be considered to be a failure of substantial character within the meaning of those words in s21 of the Act. Each could reasonably have been fixed by the trader at relatively minor cost and within a day.

[31] Second, the purchaser’s evidence and in particular her answers to questions from the Tribunal as to whether she had required the trader to remedy any of the vehicle’s faults listed in the DM Auto Services pre purchase inspection report showed that she had not sent a copy of the report to the trader and that she had not required it to fix the vehicle’s faults as she should have done in accordance with s18(2)(a) of the Act.

[32] Third, the purchaser admitted that she had declined the trader’s offer made on 23 January 2015 to replace the two front tyres and have a wheel alignment done at the trader’s expense because she was too busy to drive 5km to the trader’s supplier to have that work done.

Conclusion on issue [b]
[33] The Tribunal has come to the conclusion that the purchaser (probably through ignorance of her obligations as a consumer under the Act) did not require the trader to remedy the vehicle’s faults within a reasonable time as she was required to do by s18(2)(a) of the Act . As a result the purchaser was not entitled to reject the vehicle on 2 March 2015 and the Tribunal cannot uphold her rejection.

[34] However the purchaser is entitled to have the trader remedy the vehicle’s defects. The Tribunal considers that in the interests of having this matter resolved without further dispute between the parties, or the need for the purchaser to refile an application with the Tribunal for a specific monetary order to cover her repair costs, the following actions should be taken by each party.

1. The purchaser should telephone the trader and arrange with the trader a time as soon as possible to return the vehicle to the trader.

2. Promptly on receipt of the purchaser’s vehicle the trader should carry out the following repairs at the trader’s cost:
(a) replace both of the rear tyres on the vehicle and have a wheel alignment done.
(b) replace the front and rear brake pads on the vehicle.
(c) have the vehicle’s water leak identified and repaired.
(d) replace the faulty dash lights
(e) any other work necessary to obtain a new VTNZ warrant of fitness for the vehicle and supply the purchaser with the WOF check sheet.

3. The trader to provide the purchaser with a loan car for the duration of the repairs.

Order

The purchaser’s rejection of the vehicle is dismissed

DATED this 17th day of April 2015

C.H Cornwell
Adjudicator