Baird v Giles t/a CMG Wholesale and Giles Wholesale - Reference No. MVD 55/15 (Auckland) [2015] NZMVDT 46 (22 April 2015)

Last Updated: 2 June 2015

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Decision No: AK 46/2015
Reference No. MVD 55/15

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN LYALL ANNE BAIRD

Purchaser

AND GRAEME THOMAS GILES T/A CMG WHOLESALE AND GILES WHOLESALE

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr S D Gregory, Assessor

HEARING at Auckland on 20 April 2015

APPEARANCES

Mrs L A Baird, the purchaser

Mr C Young, witness for the purchaser
Mr G T Giles, the trader.

DECISION

Background
[1] On 26 November 2014 Mrs Baird (“the purchaser”) bought a 2003 Saab 9-3 vehicle registration number BMF931 (“the vehicle”) from Graeme Thomas Giles who trades as CMG Wholesale and Giles Wholesale (“the trader”) for $4,400. The vehicle’s engine stopped on 6 January 2015. The trader salvaged the vehicle and attempted to repair it but when he failed to return the repaired vehicle to the purchaser by 27 February 2015, the purchaser rejected the vehicle. The purchaser has applied to have the Tribunal uphold her rejection and the trader ordered to refund her purchase price as well as the cost of hiring a vehicle to tow her caravan of $429.32.

[2] The trader says the repairer of the vehicle let him down and did not repair the vehicle as quickly as it should have.

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

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 fault and if so did the trader repair the vehicle 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 Act?

Relevant law
[5] 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.”

[6] The expression "acceptable quality" was, at the time of the sale of this vehicle, was defined in s7 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.”

[7] 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.

[8] 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
[9] The purchaser bought the vehicle from the trader for $4,400 after taking it for a test drive and obtaining a pre-purchase inspection of the vehicle which identified several minor faults to be expected of a vehicle of this age and high mileage. The receipt for the purchase price signed by the trader provided that the vehicle was “sold with a 3 month mechanical warranty”. The trader did not have the purchaser sign a Vehicle Offer and Sale Agreement and did not supply the purchaser with a signed copy of a Consumer Information Notice in breach of the Consumer Information Standards (Used Motor Vehicles) Regulations 2008. It is an offence, punishable on summary conviction to a fine not exceeding $60,000 under s40 of the Fair Trading Act 1986 for a person to supply, offer to supply, or advertise to supply goods in respect of which a consumer information standard has been prescribed unless that person has complied with the standard. The regulations are enforced by the Commerce Commission to whom a copy of this decision will be sent for its action.
[10] The purchaser’s son, Mr Young, gave evidence at the hearing that he was driving the vehicle near Pokeno on 6 January 2015 when the vehicle’s engine suddenly cut out. The purchaser telephoned the trader. The trader, who was on holiday at the time, came and towed the vehicle to his workshop in Tuakau and promised to repair the vehicle after the holiday period. The trader apparently tried to repair the vehicle but failed to do so and had it transported to Pukekohe Auto Air and Electrical (“Pukekohe Air”) on 2 February 2015.

[11] The purchaser produced copies of two invoices from Pukekohe Air to the trader dated 2 February and 9 March 2015 and a letter from Mr Roberts of Pukekohe Air which states that on 2 February 2015 the trader brought the vehicle to their workshop with the vehicle not starting. It had no ignition and would not turn over. Pukekohe Air repaired the ignition system but then found the fuel pump had failed. The trader was advised and took the pump away saying he would repair it. When the trader returned to Pukekohe Air he provided an aftermarket pump which Pukekohe Air installed but which would not start the vehicle. Mr Roberts’ letter states he suspects the fuel pump is not putting out the correct fuel pressure or the fuel pressure regulator is faulty. The trader was advised and took the vehicle away unrepaired.

[12] The purchaser says she repeatedly attempted to contact the trader but he would not answer her phone calls or text messages. Finally Mr Young made contact with the trader, met and delivered a letter of rejection to him after the trader refused to pay to have the vehicle repaired.

[13] The purchaser produced copies of letters of rejection which Mr Young had handed to the trader on 27 February 2015 and 12 March 2015 claiming as grounds for rejection that the vehicle had not been repaired within a reasonable time of its breakdown on 6 January 2015. The trader did not respond to the purchaser’s letters of rejection. The purchaser filed an application with the Tribunal on 16 March 2015 and a copy was sent by the Tribunal to the trader asking him to engage in mediation with the purchaser. The trader did not do so.

[14] The trader told the Tribunal he was disappointed in the work done by Pukekohe Air in repairing the vehicle and that he believed, (incorrectly) that the Act did not cover electrical faults in vehicles and that is why he had refused to repair the vehicle.

[15] The Tribunal, in determining whether the goods supplied by the trader complied with the guarantee of acceptable quality, has had regard to the nature of the goods, in this case an 11 year old New Zealand new Saab vehicle with 133,856kms on its odometer which was sold for only $4,400 but with a three month mechanical warranty provided by the trader. The vehicle’s fuel pump failed on 6 January 2015, six weeks after the vehicle was sold to the purchaser. The Tribunal considers that whilst a failure of a fuel pump is not unusual in an 11 year old vehicle after it has travelled over 133,000kms, that the vehicle in this application, because its fuel pump failed after only six weeks of use, was not as durable as a reasonable consumer would regard as acceptable, even for an old high mileage cheap car such as this.

Conclusion on issue [a]
[16] The vehicle did not comply with the guarantee of acceptable quality in s6 of the Act because its fuel pump was not as durable as a reasonable consumer would regard as acceptable for a vehicle of this age, type and price.

Issue [b]: Did the purchaser require the trader to remedy the fault and if so did the trader repair the vehicle within a reasonable time?

Relevant law
[17] 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."

[18] The evidence given by the purchaser and Mr Young confirmed that when the vehicle broke down near Pokeno on 6 January 2015 that the purchaser and Mr Young made contact with the trader and required him to repair the vehicle. The trader told the Tribunal that he collected and towed the vehicle back to his workshop in Tuakau on that day.

[19] Unfortunately for the purchaser it appears that at some time after starting work on having the vehicle’s fuel pump replaced the trader probably caused the ignition to short, took the vehicle to Pukekohe Air to have the ignition repaired and then the trader appears to have decided that it was all getting too hard or too expensive to replace the fuel pump and ceased repairing the vehicle, which is still in his possession.
[20] The Tribunal believes the purchaser gave the trader a reasonable time to replace the fuel pump because the Tribunal’s Assessor thinks a second hand pump could have been obtained and fitted within a few days for five or six hundred dollars or a new pump could have been obtained for $1045 plus GST and fitted for $315 plus GST. The purchaser exercised her right to reject the vehicle under s18(2)(b)(ii) of the Act on 27 February 2015, after giving the trader seven weeks in which to repair the vehicle, by sending the trader a letter of rejection. Her letter of rejection stated her grounds for rejecting the vehicle and thus complied with the requirements of s 22(1) of the Act. It was delivered to the trader within three months of the date of supply of the vehicle which is well within a reasonable time in accordance with s20 of the Act.

Conclusion on issue [c]
[21] The purchaser required the trader to repair the vehicle. The trader failed to do so within a reasonable time. Hence the purchaser became entitled to reject the vehicle and did so within a reasonable time and in accordance with s22(1) of the Act. The Tribunal will therefore uphold the purchaser’s rejection of the vehicle and order the trader to make an immediate full refund of the purchase price of $4,400. The trader will also reimburse the purchaser with her consequential loss; the cost of hiring a van to tow her caravan back to Weymouth of $429.32.

Costs
[22] The Tribunal has limited power to make an award of costs to or against a party to any proceedings under clause 14(1) of Schedule 1 to the Motor Vehicle Sales Act 2003. The relevant provision is as follows:
“14 Disputes Tribunal may award costs in certain circumstances
(1)The Disputes Tribunal may award costs to or against a party to any proceedings before it only if,-
(a) in the opinion of the Disputes Tribunal,-
(i) the proceedings are frivolous or vexatious or ought not to have been brought:
(ii) the matter ought reasonably to have been settled before proceeding to a hearing but that the party against whom an award of costs is to be made refused, without reasonable excuse, to take part in the discussions referred to in clause 5(1)(b) or acted in a contemptuous or improper manner during those discussions; or
(b) any party after receiving notice of a hearing, fails to attend the hearing without good cause.
(2) In any case to which subclause (1) applies, the Disputes Tribunal may order a party to pay---
(a) to the Crown all, or any part of either or both of the following:

(i) the reasonable costs of the Disputes Tribunal hearing:
(ii) the fees and expenses of any witness that have been paid or are payable by the Crown; or

(b) to another party all, or any part of the reasonable costs of that other party in connection with the proceedings.”

[23] The Tribunal believes this matter ought reasonably to have been settled by the trader but the trader, after receiving notice of the hearing, failed to take part in the mediation discussions referred to in clause 5(1)(b) of the Schedule to the Motor Vehicle Sales Act 2003 without reasonable excuse. The Tribunal will therefore order the trader to pay to the Crown the reasonable costs of the Tribunal’s hearing of $500.

Orders

1. The purchaser’s rejection of the vehicle is upheld.

2. The trader shall immediately pay to the purchaser $4,829.32 comprising the following amounts:
[a] the purchase price of $4,400; and
[b] the cost of a van hire of $429.32.

3. The trader shall within ten days of the date of this order pay the Tribunal’s reasonable hearing costs of $500 to the Crown at the Ministry of Justice Tribunal’s Unit, Level 1 Chorus House, 41 Federal Street Auckland.

DATED this 22 April 2015

C.H Cornwell
Adjudicator