Lloyd v Industry Motors Limited - Reference No. MVD 166/2016 (Auckland) [2016] NZMVDT 104; [2016] NZMVT Auckland 104 (29 July 2016)

Last Updated: 28 August 2016

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2016] NZMVT Auckland 104

Reference No. MVD 166/2016

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN STEVEN LLOYD

Purchaser

AND INDUSTRY MOTORS LIMITED

Trader

MEMBERS OF TRIBUNAL
Mr C H Cornwell, Barrister & Solicitor, Adjudicator

Mr S D Gregory, Assessor

HEARING at Auckland on 25 July 2016

DATE OF DECISION 29 July 2016
APPEARANCES

Mr S Lloyd, the purchaser

Mrs J Lloyd, support person for purchaser
Mr T Campbell, Director for the trader

DECISION

The Tribunal makes the following orders:

1. The purchaser’s application to reject the vehicle is dismissed.
2. The purchaser shall, as soon as possible, arrange to return the vehicle to the trader who shall within ten working days of the date it receives the vehicle from the purchaser have its repairer, at the trader’s cost, replace the front, middle and rear roof seals and side windows on the vehicle using genuine BMW parts.
   

REASONS

Background

[1] On 9 April 2016, Mr Lloyd (“the purchaser”) bought a 2008 BMW M3 convertible registration HZY395 (“the vehicle”) for $53,995 from Industry Motors Limited (“the trader”). The vehicle had travelled 74,755kms according to the Vehicle Offer and Sale Agreement signed by the parties.

[2] The purchaser says the vehicle’s roof leaks and it is not of acceptable quality. He says the failure is of substantial character and he has purported to reject it. The purchaser seeks the Tribunal’s order upholding his rejection and a refund of his purchase price.

[3] The trader says it always has been willing to rectify the fault which caused the vehicle’s roof to leak but the purchaser has not given it a reasonable time in which to do so. The trader wants to have the opportunity to have its repairer, BM Workshop, replace the seals in the vehicle. The trader says the fault is not of substantial character and the purchaser is not entitled to reject the vehicle.

[4] Pursuant to cl 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 cl 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.

The issues

[5] The issues requiring consideration are:

(a) Did the vehicle comply with the guarantee of acceptable quality in s 6 of the Act?
(b) If not, did the purchaser require the trader to remedy the vehicle’s leak and give the trader a reasonable time in which to do so?
(c) Is the purchaser entitled to reject the vehicle?

Issue [a]: Did the vehicle comply with the guarantee of acceptable quality in s 6 of the Act?

Relevant law

[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 s 7 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,—

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—

(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) 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 obtain 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) 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)-(e) of the Act as modified by the factors set out in s 7(1)(f)-(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 s 19 of the Act. If the failure to comply with the guarantee of acceptable quality is of a “substantial character” within the meaning of s 21, 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 says that the week after he bought the vehicle he washed it and after doing so noticed a puddle of water on the floor of the vehicle. He says he returned the vehicle to the trader on 19 April 2016. The trader had the vehicle for a day or two and one of the trader’s employees confirmed to him that the vehicle was leaking.

[11] The purchaser took the vehicle back to the trader on 26 April who arranged for it to be seen by Jerry Clayton BMW (“Claytons”). Claytons gave the trader a service estimate dated 28 April 2016 of $8,446.90 to replace the front, middle and rear roof seals, side windows and fastenings. The purchaser says he recovered the vehicle from Claytons on 30 April 2016 and on 1 May 2016 he sent the trader a letter rejecting the vehicle for the water leak.

[12] The purchaser says he has since found a water leak from the front windscreen of the vehicle. He says he is concerned that water entering the vehicle may have damaged the vehicle’s electrical systems and considers the failure to be of substantial character.

[13] The purchaser produced a copy of an email from Mr Cheemee, a Service Advisor at Claytons dated 4 May 2016 in which Mr Cheemee advises that Claytons had done the basic roof and window adjustment checks and confirmed the centre roof seal requires replacement but the front and rear seals must also be replaced to ensure it seals properly. His email states: “BMW NZ have strongly advised that all seals need to be replaced together to prevent any further water entry.”

[14] The trader claims that when he took the vehicle to Claytons they were unable to get it to leak; a claim denied by the purchaser. The trader says it wants to have the vehicle seen by its repairer, BM Workshop. He also states that Claytons have what he called a “franchise mentality” towards imported BMW vehicles and that it is not unreasonable for the trader to want to obtain a second opinion on having the vehicle repaired.

[15] The purchaser, in reply, says he does not want a substandard job being done on the vehicle which may result in the vehicle leaking within a year and would prefer to have Claytons as a franchised BMW dealer replace the seals.

[16] In determining the first issue: whether the vehicle supplied by the trader complied with the guarantee of acceptable quality, I have had regard first, to the nature of the goods; in this case an eight-year-old United Kingdom imported BMW M3 convertible which had 74,755kms on its odometer at the time of sale and has since been driven a further 3,000kms. Second, to the purchase price of $53,995.

[17] The purchaser gave evidence that he had personally observed the vehicle leaking water. The Tribunal prefers his evidence on that point to that of the trader who sought to claim, without any evidence, that the vehicle did not leak. The Tribunal considers that no reasonable consumer would regard a $53,995 convertible BMW with a water leak as acceptable.

Conclusion on issue [a]

[18] The vehicle supplied to the purchaser was not of acceptable quality in terms of s 6 of the Act because it was neither free from a minor defect (a water leak) at the time of sale, nor as durable as a reasonable consumer would regard as acceptable for a vehicle of this type, age and price.

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

Relevant law

[19] 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—

(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,—

(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—

(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

[20] The purchaser claimed the water leak was a failure of substantial character as defined in s 21 of the Act. The Tribunal does not think that it is because it is a fault which can be remedied and does not otherwise satisfy any of the tests in s 21(a)-(d) of the Act. I therefore consider it was the purchaser’s obligation under s 18(2) of the Act to require the trader to remedy the failure within a reasonable time.

[21] Did the purchaser allow the trader a reasonable time to remedy the fault? I accept the purchaser’s evidence that he told the trader the vehicle was leaking and returned the vehicle to the trader on 19 April 2016. The trader had the vehicle two days before arranging for it to be assessed by Claytons on 26 April 2016. Mr Campbell’s recollection of the dates of various events was unreliable and I prefer the evidence of the purchaser as to the sequence of events. The purchaser says he collected the vehicle from Claytons on 30 April and sent the trader an email rejecting the vehicle the following day. A copy of a letter dated 26 April 2016 from the purchaser to the trader rejecting the vehicle was submitted with the purchaser’s application. The purchaser, in my view, only gave the trader five days after receiving Claytons estimate before he sent the trader a letter of rejection. I do not think this gave the trader a reasonable opportunity to get another price for the work from BM Workshop, whom Mr Campbell said he wished to use to do the repair work.

Conclusion on issue [b]

[22] I find that the trader was willing to repair the vehicle’s leak, which is not a failure of substantial character within the meaning of s 21 of the Act, but the purchaser did not give the trader a reasonable time within which to get an alternative estimate to that provided by Claytons. I can understand that the purchaser did not want a substandard job done but the trader knows (or should know) that if the replacement of the seals is not done in a professional manner using genuine BMW parts and the vehicle continues to leak, the purchaser has a remedy under s 18(2)(b) of the Act. The Tribunal will therefore order the purchaser to deliver the vehicle back to the trader and for the trader to replace the front, middle and rear roof seals and side windows with genuine BMW parts in accordance with best trade practise at the trader’s cost.

DATED at AUCKLAND this 29th day of July 2016

C. H. Cornwell
Adjudicator