Lingham v Car City Christchurch Limited - Reference No. MVD 79/15 (Auckland) [2015] NZMVDT 91 (5 August 2015)

Last Updated: 20 September 2015

Decision No: AK 91/2015 Reference No. MVD 79/15

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN GRAHAM STANLEY LINGHAM

Purchaser

AND CAR CITY CHRISTCHURCH LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr N Barrett, Assessor

HEARING at Christchurch on 30 July 2015

APPEARANCES

Mr G S Lingham, the purchaser

Mrs J Gebbie, the purchaser’s mother and support person
Mr W Maynard, CEO of the trader
Mr C Phillips, Sales & Insurance manager for the trader.

DECISION

Background
[1] On 25 February 2014 Mr Lingham bought a 1996 Honda CRV registration DGE526 (“the vehicle”) for $6,990 from Car City Christchurch Limited (“the trader”). The purchaser has rejected the vehicle on the grounds that the vehicle’s engine is burning oil and he claims that this is a serious fault. He has applied to have the Tribunal uphold his rejection and the trader ordered to refund his purchase price.

[2] The trader says that in January 2015 it offered to replace the vehicle’s rings but the purchaser would not return the vehicle to enable it to do so. The trader says that although the vehicle may be burning oil it is not unusual for an 18 year old imported Honda to do so after 163,000kms of use.
[3] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal has appointed Mr Barrett as expert assessor to assist in the determination of the complaint. Mr Barrett took the oath required by clause 10(2) of Schedule 1 to that Act. As an assessor Mr Barrett 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 not, is the failure of substantial character?
[c] If so is the purchaser entitled to have his rejection upheld?

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" 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.”

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

Application of law to facts
[10] The purchaser bought the vehicle with his mother to enable him to provide transport for his mother. Its odometer at the time of sale in February 2014 was 150,025kms. The vehicle is a Japanese import first registered in New Zealand in 2006.

[11] Soon after he bought the vehicle the CD player faulted and was replaced by the trader at its expense. The purchaser says he had the vehicle serviced about one month after taking delivery of it.

[12] About December 2014 the purchaser says he started having to top up the vehicle’s engine oil. He contacted the trader whom he says promised to fix the vehicle after the Christmas holiday period. However it appears that at some time in late December or early January 2015 the purchaser telephoned Mr Phillips at his home on a Saturday evening and told Mr Phillips he would not be returning the vehicle to be repaired because he did not trust the trader.

[13] The purchaser took the vehicle to Kaiapoi Vehicle Testing Station Ltd who, in a letter dated 19 May 2015, recorded that in April the vehicle’s odometer was 164036 and that it was 1.5 litres down on a previous oil change done in March 2015. The letter also states that in May 2015 the odometer reading of the vehicle was 164566 (530km greater) and the vehicle had used half a litre of oil. The writer of the letter, Mr Jesse Kinzett, wrote that he had checked the oil fortnightly since the end of April to mid-May and it was obvious the engine is using oil. The Tribunal took Mr Kinzett’s sworn evidence by telephone conference call during the hearing. Mr Kinzett said there was no sign the vehicle’s engine was leaking oil and it did not blow smoke when being driven.

[14] The purchaser also confirmed that the vehicle’s engine did not leak oil and he had not noticed it blowing smoke when he drove it. He did not produce any receipts for oil purchases. The purchaser delivered the trader a letter rejecting the vehicle dated 18 March 2015 claiming the vehicle was burning oil, the piston rings were worn and that this was a serious fault.

[15] The purchaser told the Tribunal that a compression test done on the vehicle’s engine recorded pressures of 200psi in three cylinders and 190psi in the fourth and that as a result of this satisfactory cylinder pressure a leak down test had not been done on the vehicle’s engine.

[16] Mr Maynard for the trader said that in December 2014 he had offered to re-ring the vehicle’s engine for the purchaser at the trader’s cost. About one week later the purchaser had telephoned Mr Phillips and told him he expected the vehicle to last 10 years and did not trust the trader to repair it properly. Mr Maynard produced a paper of an opinion he had obtained from some unknown, unnamed person on Google which stated that the “industry standard” for normal engine oil consumption is, for vehicles over 80,000km, one litre for every 1200km driven.

[17] Mr Maynard also produced a letter from Neil Stuart Automotive 2010 Ltd in which Mr James Holvey the manager owner states that he had the vehicle booked in to assess it on 12 January 2015 and he produced a photocopy of his day book to show the booking which he says Mr Maynard arranged in December.

[18] The Tribunal, in deciding if the vehicle complied with the statutory guarantee as to acceptable quality, has had regard to the age of the vehicle at the time of sale of 18 years, its current high mileage of 164,566kms, the nature of the vehicle- a Japanese imported Honda CRV, and its sale price of $6,990. The Tribunal accepts that the vehicle is burning oil. However it was not satisfied, after listening to the evidence of the purchaser or that of Mr Kinzett that the vehicle’s engine is burning any more than a reasonably acceptable quantity of oil having regard to the age and high mileage of this vehicle. The Tribunal is therefore not satisfied that the vehicle fails to comply with the guarantee of acceptable quality and thus it has no alternative but to dismiss the purchaser’s application to reject the vehicle.

Order

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

DATED at Auckland this 5th day of August 2015

C.H Cornwell
Adjudicator