Huisman v Turners Group NZ Limited AK 72/2015 Reference No. MVD 104/15 (Auckland) [2015] NZMVDT 72 (8 June 2015)

Last Updated: 31 July 2015

Decision No: AK 72/2015
Reference No. MVD 104/15

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN SHYLAH MARIE HUISMAN

Purchaser

AND TURNERS GROUP NZ LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr S Johnson, Assessor

HEARING at Palmerston North on 3 June 2015

APPEARANCES

Mrs S M Huisman, the purchaser

Mr D J Tarrant, Branch Manager of the trader

DECISION

Background
[1] On 29 November 2014 Mrs Huisman (“the purchaser”) bought a 2001 Nissan Primera registration FJB594 (“the vehicle”) from Turners Group NZ Limited (“the trader”) for $3,990. The purchaser rejected the vehicle on 1 April 2015 after several faults with the vehicle occurred. The purchaser claims the faults and what her advisers refer to as “the likelihood of future issues with the suspension” amount to a failure of substantial character. She has applied to have the Tribunal uphold her rejection of the vehicle and the trader ordered to refund her purchase price.

[2] The trader denies that the vehicle’s faults amount to anything more than normal wear and tear which any reasonable consumer would expect of a vehicle of the age, mileage, and price paid for the vehicle. It accordingly denies that the purchaser is entitled to reject the vehicle.

[3] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal appointed Mr Johnson as expert assessor to assist in the determination of the complaint. Mr Johnson took the oath required by clause 10(2) of Schedule 1 to that Act. As an assessor Mr Johnson 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?
[b] If it did not, is the failure of substantial character within the meaning of s21 of the Act?
[c] If so, was 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 Consumer Guarantees Act 1993 (“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" is 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 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 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/her right to reject the vehicle within a reasonable time.

Application of facts to law
[10] The purchaser agreed to buy the vehicle from the trader for $3,990 on 29 November 2014 after taking it for a short test drive. The purchaser stopped in the course of the test drive and had the vehicle looked at by a friend with mechanical knowledge. The vehicle was sold with a new warrant of fitness and its odometer reading was 171,701kms. The purchaser financed the full purchase price, the premium of $995 for an Autosure mechanical breakdown policy, and financing establishment fees through Turners Finance Limited.

[11] The purchaser had the vehicle serviced at 172,452kms on 4 December 2014 by her mechanic at Challenge Longburn. Their invoice records they checked all fluid levels and conditions and added as required.

[12] On 9 December 2014 the purchaser, without first contacting the trader, had the battery in the vehicle replaced at her cost of $161.

[13] On 14 December 2014 the purchaser says the vehicle’s temperature gauge rose to ‘hot’ and the vehicle overheated. The purchaser contacted the AA who sent a mechanic to inspect the vehicle. The mechanic checked the cooling system and topped up the coolant level but apparently found no evidence of any leaks in the cooling system.

[14] On 1 January 2015 the vehicle began to over-rev and surge and on 4 January the purchaser contacted the trader about the fault. The trader told her to make a claim on her mechanical insurance policy and they paid the excess to replace the crank angle sensor.

[15] The vehicle drove well until 24 March 2015 when it began to feel sluggish and was over revving. The purchaser took the vehicle to Courtesy Ford. The purchaser contacted Autosure and asked the trader to pay the excess. The trader initially refused to do so but later agreed to pay the excess to have the stepper motor in the transmission replaced. The vehicle’s odometer was by then 177,717kms or 6,000kms more than at the date of sale of the vehicle.

[16] The purchaser says that she was becoming concerned about the reliability of the vehicle and had been told by a mechanic that the rear suspension was “on its way out”. She sought advice from Manawatu Community Law Centre who, in a letter to the trader dated 1 April 2015, purported to reject the vehicle on the grounds of the previous repaired faults (listed above) and “the likelihood of future issues with the suspension”.

[17] The trader proposed, and the purchaser agreed to the vehicle being independently assessed by a mechanic. On 10 April the vehicle was taken by the purchaser to Palmerston North Automotive who wrote a brief report dated 14 April 2015, a copy of which was produced to the Tribunal in which they state they carried out an inspection of the rear suspension, road tested the vehicle and put it on a hoist to inspect the rear suspension for faults. Their report states they inspected all suspension arms and bushes and no fault was found. They also inspected the cooling system condition and did a Tee-Kay test according to Mr Tarrant who was present at the time. Their report states they found the radiator cap fitted incorrectly because the stop tabs for the radiator cap on the filler neck of the radiator were broken and as a result the radiator is faulty.

[18] The purchaser was dissatisfied with the outcome of the Palmerston North Automotive inspection which she thought was not sufficiently thorough although Mr Tarrant said that two technicians worked on the vehicle inspection to speed up the work in his presence. The purchaser then took the vehicle back to Challenge Longburn on 14 April who recorded its odometer as 177,958kms and did what they describe as a “safety and mechanical inspection” on the vehicle. Challenge Longburn’s invoice records the following faults as being present:
“1. Rear shock absorbers of different types, poor performance noted and bump stops worn;
2. Tow bar had contact with road possibly caused by shock absorber fault weakening its structural integrity and longevity;
3. Radiator mount rubbers deteriorated allowing excessive movement of radiator. Radiator filler neck also damaged by incorrect cap use at some stage;
4. Engine oil contaminated by coolant. Experience tells me vehicle cylinder head/head gasket or both have failed but full removal would be necessary to determine exact fault.”
Challenge Longburn gave a repair estimate of $2,500 up to $5000 depending on the condition of the engine when disassembled.

[19] After the purchaser filed her application with the Tribunal, the Tribunal asked her to obtain a report from a Nissan franchised dealer on the vehicle’s engine condition which she did on 21 May 2015. Manawatu Nissan recorded the odometer as 178,583kms and they noted the following:
“Vehicle has miss matching rear shocks
Towbar is aftermarket type and sits lower than normal is safe and will scrape under certain conditions
After market radiator is fitted
Rubbers are worn, pressure tested [no external leaks]
No coolant in cooling system
Head gasket is suspect, pressurising system, coolant level was very lo (sic)”
The Tribunal attempted to speak to the technician in Manawatu Nissan who did the inspection but he was unavailable at the time.

[20] Mr Tarrant for the trader after reviewing the facts stated first, that in his opinion there was no problem in having unmatched rear shock absorbers and the fact that the vehicle did so did not make the vehicle unsafe and was acceptable for a warrant of fitness. Second, the damage to the radiator tabs must have occurred after the vehicle was sold to the purchaser because the vehicle’s cooling system was inspected by Challenge Longburn as part of their service on 4 December 2014 and again by the AA when it responded to the purchaser’s overheating incident in December 2014. If there was a fault with the radiator neck at that time it would have prevented the radiator cap from being properly applied to pressurise the cooling system and this would have been obvious. Mr Tarrant says that Palmerston North Automotive did a Tee-Kay test and found no evidence of combustion gases in the coolant which is an indicator of a blown head gasket. There was no evidence in either the Challenge Longburn invoice/report of 14 April 2015 or in the brief Manawatu Nissan invoice as to whether either firm did any tests to establish a basis for the “experience founded” view of the technician at Challenge Longburn that the head or head gasket or both may have failed, or the comment in the Manawatu Nissan invoice that the head gasket is suspect.

The Tribunal’s findings
[21] 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 13 year old Nissan Primera which had travelled 171,700kms at the time of sale and was sold for only $3,990.

[22] The vehicle, not surprisingly for its age and high mileage had faults in the course of being used by the purchaser to travel some 6,880kms with its battery, crank angle sensor and a transmission stepper motor. The Tribunal considers each of those faults reflects the age and high mileage of the vehicle. The purchaser claimed that the rear shock absorbers were unmatched but the Tribunal’s Assessor agrees with the submission made by Mr Tarrant that mismatched shock absorbers are not a warrant of fitness inspection failure condition. The Tribunal’s Assessor has also advised the Tribunal that if the remaining suspension components are to original equipment (“OE”) specification, the shock absorber operating travel length is to OE specification, and the shock absorbers are of OE or similar absorption ratings, then there are no safety or performance issues in a vehicle having unmatched shock absorbers.

[23] The inspection by Palmerston North Automotive did discover an important fault with the vehicle which was confirmed by Challenge Longburn’s technician in his 14 April 2015 invoice/report; that there is a fault with the radiator neck from which tabs to hold the radiator cap in place have been broken off. The result of this is that the cooling system has not been pressurised and has probably expelled coolant from the top of the radiator and caused the engine to overheat possibly resulting in damage to the cylinder head or head gasket. The Tribunal thinks this is more than likely to have occurred after the vehicle was supplied to the purchaser and has been caused by excessive overtightening of the radiator cap. Its reasons for believing the damage to the radiator neck occurred after sale to the purchaser are first, because if present at the time of sale the fault would have been discovered by Challenge Longburn during its 4 December 2014 service of the vehicle. Second, the faulty radiator neck would have been observed by the AA mechanic when he inspected the cooling system in December when the vehicle overheated a short time after the Challenge Longburn service was done.

Conclusion on issue [a]
[24] The Tribunal finds that the vehicle was for its age, mileage and price of acceptable quality at the time of sale. It has, since it was sold been as durable as a reasonable consumer would regard as satisfactory. Accordingly, the purchaser’s application to reject the must be dismissed.

Order

The purchaser’s application to reject the vehicle is dismissed.

DATED this 8th day of June 2015

C.H Cornwell
Adjudicator