Li v Storer Motors Limited - Reference No. MVD 91/2016 (Wellington) [2016] NZMVDT 1049; [2016] NZMVT Wellington 49 (1 August 2016)

Last Updated: 20 September 2016

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Reference No. MVD 91/2016 (WN) 49

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN JIAN LI

Purchaser

AND STORER MOTORS LIMITED

Trader

MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

R Dixon – Assessor

HEARING at Christchurch on 13 July 2016

DATE OF DECISION 1 August 2016
APPEARANCES

J Li, Purchaser
J Stocker, Manager of Trader
Jupiter, Employee of Trader
A Blaikie, Witness for Trader
B Caffell, Witness for Trader

DECISION

Mr Li's rejection of the vehicle is not upheld and his application is dismissed.

REASONS

Introduction

[1] Mr Jian Li has experienced various problems with a vehicle he purchased two years ago. He has applied to reject the vehicle. I have decided he is not entitled to do so because the vehicle did not fail to comply with the guarantee of acceptable quality in s 6 of the Consumer Guarantees Act 1993 ("the Act"). My reasons follow.

Background

[2] On 28 July 2014, Mr Li purchased a 2007 BMW Mini Cooper with 36,101 kms on the odometer for $19,000 from Storer Motors Limited.
[3] Subsequent to taking delivery of the vehicle, Mr Li discovered that its air conditioning system was not working. He contacted Storer Motors about that issue some time in November 2014. Mr Li had a contractual warranty with Autosure and Storer Motors coordinated the process of repairing the vehicle, together with Autosure.
[4] The repair took several months, during which the vehicle was out of Mr Li’s possession. The delay was due to the fact that parts had to be obtained, the repairers were busy over the Christmas period, and the vehicle had to be seen by two different repairers, Unicool Automotive Air Conditioning and Vantage Automotive Auto Electrical.
[5] During the period Mr Li was left without his vehicle, he was provided with a loan vehicle by Storer Motors. Storer Motors paid for the repairs (to the extent they were not covered by Autosure). Mr Stocker, Storer Motors’ manager, produced an invoice from Unicool dated 30 March 2015 for $645.50, which Storer Motors had paid.
[6] On 12 April 2015, Mr Li was advised that the repairs had been completed and the vehicle was ready to be picked up. He travelled to Storer Motors’ yard with the intention of taking delivery of the repaired vehicle. However, upon inspection of the vehicle, Mr Li observed that its paintwork was damaged.
[7] Storer Motors did not accept the paintwork had been damaged while the vehicle's air conditioning was being repaired. Indeed, Storer Motors argued that Mr Li had negotiated a lower purchase price for the vehicle, taking into account some perceived paint imperfections at the time of sale. This was not documented on the vehicle offer and sale agreement, however, and there was no evidence that Storer Motors had specifically drawn paint imperfections to Mr Li's attention for the purposes of s 7(2) of the Act.[1]
[8] Storer Motors agreed, as a matter of goodwill, to send the vehicle to Smart Repairs (NZ) Limited for paintwork repairs. Storer Motors produced an invoice dated 20 April 2015 from Smart Repairs for $517.50 for paint repairs to the left door, the rear bar, and tailgate. This invoice has been paid by Storer Motors.
[9] Mr Li was initially satisfied with Storer Motors’ offer to have the paintwork repaired. However, when he returned to Storer Motors on 23 April 2015 to collect the vehicle, he was dissatisfied with the quality of the repairs. Mr Li told the Tribunal that some of the scratches and other damage to the paintwork had not been repaired and that the quality of the paintwork that had been repaired was unacceptable. He therefore refused to uplift the vehicle and insisted that it be properly repaired and repainted to a proper tradesperson-like standard.
[10] Storer Motors disputed that the paintwork had not been properly repaired and delivered the vehicle to Mr Li’s address on 28 April 2015. Mr Li claimed that the address to which the vehicle had been delivered was incorrect, but at the Tribunal’s hearing he confirmed that the address to which it was delivered was in fact his residence. A vehicle inspection report Mr Li obtained from the AA Christchurch Inspection Centre on 8 May 2015 also records Mr Li’s address as the same address to which Storer Motors delivered the vehicle on 28 April.
[11] The AA vehicle inspection report lists three defects requiring further investigation or repair. The first two defects were that the coolant and oil levels were low. The third defect was that there was no heat coming from the heater. The report also records that general paint and panel repairs were evident, including scuff marks on the bumper, a minor dent in a body panel above the right wheel arch and minor dents in the right door. In summary, the AA inspection report concluded the vehicle was in good condition consistent with its age and mileage, and was unlikely to require unplanned maintenance or repair. The AA report mentioned nothing about a cooling system fault causing the engine to overheat.
[12] On 12 May 2015, Mr Li, through his lawyer, wrote to Storer Motors. Mr Li complained that the paint quality of the vehicle was unacceptable and the body work was still in a damaged condition. Mr Li referred to the AA report and its references to damage to the bodywork and paint and that the heater did not work. Mr Li stated he required Storer Motors to remedy the following faults in the vehicle within 15 working days:

...ensuring that the heater is fully functional, all the dents in the body panels and the door are repaired in a tradesperson like manner and the paintwork is restored to a tradesperson like quality.

[13] Mr Li said that if this work was not carried out within 15 working days he would have the work carried out by a third party tradesperson and would seek to recover the full costs of doing so.
[14] Storer Motors responded to Mr Li’s lawyer on 18 May 2015, but that response was not produced in evidence. Mr Li sent a further letter to Storer Motors on 29 May 2015, again through his lawyer, which indicated that the vehicle had now developed a cooling system fault and that the engine was overheating. Mr Li stated that this fault was detected in the recent AA mechanical check undertaken on the vehicle which was attached. However, as I have mentioned above, the AA report does not state anything about the engine overheating. Nor was any other evidence of this alleged fault provided to the Tribunal. The letter went on to state that Mr Li was now:

... at the point where he has lost complete confidence in the quality and reliability of the vehicle, particularly given that there have been a series of serious faults followed by lengthy periods of time waiting for the vehicle to be repaired. His concerns have been compounded by the fact that there have been a series of attempts to fix faults, only to have more faults appear.

[15] Mr Li notified Storer Motors that he required it to refund the full purchase price and to uplift the vehicle within seven days.
[16] Storer Motors replied through its lawyer on 12 June 2015, denying that Mr Li was entitled to return the vehicle.
[17] Mr Li then took the vehicle to Autotek Automotive Solutions on 6 July 2015. On 14 July 2015 Autotek provided an invoice addressed to an individual who was acting as a translator for Mr Zhao. Only the first page of that invoice was produced in evidence and provided to Storer Motors. Autotek noted on the invoice that the vehicle had been brought in with starting issues. Autotek observed "a rattle noise around [the] timing area". On investigation, Autotek found that a “frost plug has fallen out due to an unknown reason, possibly excessive oil pressure". Autotek’s report continued:

When the frost plug has fallen out, it has caused a loss of oil pressure to the head. This has resulted in multiple hydraulic lifters failing and one falling out into the top of the head. Investigation also found the cam journals to be worn excessively therefore the cylinder head and cams will need to be replaced.

[18] Autotek could not accurately determine the "exact cause of this engines initial failure" but recommended that a replacement used engine be fitted as this would be cheaper and more cost effective than fully stripping down and rebuilding the existing engine. Autotek had not been able to locate a suitable replacement engine as at the date of its invoice but indicated that it would forward costs for this as soon as the information became available. Mr Li forwarded the first page of Autotek’s invoice to Storer Motors’ lawyer. Again, Mr Li indicated that he wished to reject the vehicle in accordance with s 22 of the Act.
[19] Storer Motors responded, again through its lawyer, on 29 July 2015, noting that none of the issues raised in Autotek’s report of 14 July were identified or were apparent in the AA’s report from May that year. Storer Motors’ lawyer noted that:

The car was in your clients possession for a period of months prior to the report being obtained. Given this extended period of possession, the previously favourable report from the AA and the fact that the issues raised in your letter are entirely new, we cast serious doubts on your clients actions with respect to the vehicle.

[20] Storer Motors’ lawyer also stated that the vehicle would not be accepted if it were to be transported back to Storer Motors’ yard, as had been threatened by Mr Li.
[21] Storer Motors’ position was repeated in a letter from its lawyers dated 10 August 2015, in which Storer Motors accused Mr Li of manufacturing a serious problem, as reflected in the report of Autotek dated 14 July 2015, by causing intentional damage to the vehicle after it was advised that the severity of the issues complained of would not give grounds for cancellation.
[22] Mr Li’s application to the Tribunal, dated 18 March 2016, is recorded as having been received by the Tribunal on 5 April 2016. No explanation was offered for Mr Li's delay in bringing his claim.
[23] Prior to the hearing Mr Li produced an estimate from Leading Edge Automotive Limited for rebuilding the engine with a new cylinder head. The estimated cost of such work was $19,239.47. At the hearing, Storer Motors took issue with the size of this estimate and indicated that even replacing the engine with a brand new engine would, in its view, be considerably cheaper.
[24] Storer Motors produced a report by Mr Andrew Blaikie director of Cliff Bond Limited, automotive machinists. Mr Blaikie’s report notes that he had inspected the engine at Mr Li’s property in June 2016. He observed that the damaged "frost plug" (referred to in the Autotek invoice) was sitting in the rocker cover.
[25] Mr Blaikie stated that there was no sign of any overheating in the engine of Mr Li’s vehicle. Even though the vehicle had been sitting around for some time, he said that evidence of any overheating would still have been obvious. Mr Blaikie also noted that Autotek had made no mention of overheating in its invoice of 14 July 2015.
[26] Mr Blaikie could not determine where the frost plug had come from. He concluded, however, that the plug had not been used to seal the cooling system as if it had, coolant would have flooded the crank case and contaminated the engine oil. Mr Blaikie produced photographic evidence confirming there was no coolant contamination. Alternatively, Mr Blaikie reasoned, if the plug was used as an internal plug and not used to seal the cooling system it would not have been under pressure, and so would have had no reason to fall out.
[27] Moreover, Mr Blaikie did not consider the damage to the frost plug was consistent with it having fallen out. The frost plug itself was produced at the hearing. It had been squashed unevenly to form a point at one end. In Mr Blaikie’s opinion, if the frost plug had fallen out it would have retained its original disc shape. Mr Blaikie also considered that the damage to the plug was inconsistent with it falling into the timing chain area. Rather, he considered the altered shape of the frost plug was more consistent with it having been deliberately removed from the recess into which it was fitted, using a spike or similar tool.
[28] Mr Blaikie also took issue with Autotek’s report that a hydraulic lifter had fallen out and there was damage to a cam journal. He saw no evidence of any such damage. In conclusion, Mr Blaikie considered that the engine as fitted by the manufacturer was fit for purpose.

The Tribunal's assessment of the evidence relating to engine damage

[29] Prior to the hearing, I directed Mr Li to bring the vehicle to the hearing so that it could be inspected by the Tribunal’s assessor Mr Dixon. Mr Dixon had undertaken some research on the Mini Cooper engine and had identified the location and size of the plug that had fallen out. This can be seen in the diagram below as the item numbered 9. Item 9 is also described in the parts list beneath the diagram as a “cover lid”. Its size, 36 mm, is consistent with the size of the recovered part described by Mr Blaikie and Autotek as a "frost plug", which was also produced at the hearing.

[30] Mr Dixon shone a torch into the engine bay and observed that where the cover lid marked 9 in the diagram above was meant to be located, there was a hole of the same size. In Mr Dixon's view, it is likely that the cover lid fell out. Mr Dixon agreed that with Mr Blaikie that this was in an area of the engine which was not under pressure. Thus, when the cover lid fell out, it would not have led to serious damage to the motor. Indeed, following his inspection of the motor, Mr Dixon agreed with Mr Blaikie’s evidence that no hydraulic lifter had fallen out. Nor was there any observable damage to the cam journals.
[31] Accordingly, in Mr Dixon's view, which I adopt, there was no catastrophic engine failure in Mr Li’s vehicle. Mr Li has not demonstrated any justification for replacing or rebuilding the engine.

The Tribunal's assessment of the evidence relating to paintwork defects

[32] Mr Dixon and I also inspected the vehicle’s paintwork, being the original complaint raised by Mr Li. We observed minor defects in the paintwork at various places on the vehicle. In particular, there was a small dent on the right front guard, a small scratch to the boot lid near the vehicle’s badge, a surface scratch on the left rear guard and a surface scratch on the left door. In addition there were some paintwork defects on the right door edge.
[33] As I have indicated above, in my view and that of Mr Dixon, all of these defects are minor. Mr Caffell of Smart Repairs (NZ) Limited provided a report to the Tribunal that the surface scratches would buff out on a full cut and polish of the vehicle and that the other matters could be repaired for approximately $600. Mr Caffell concluded, and the Tribunal agrees, that the overall condition of the vehicle's paintwork is good, having regard to its age, mileage and price.
[34] The difficulty for Mr Li, in respect of the paintwork defects, is that it is difficult for him to prove on the balance of probabilities that these minor defects are attributable to Storer Motors. The witnesses for Storer Motors argued that some of the defects looked very recent (for example the scratch to the boot lid and the surface scratch to the left front guard). They also noted that, when they inspected the vehicle at Mr Li's residence in June 2016, it was being stored outside. Storer Motors' argued that the paint defects had no evidence of surface rust, which Storer Motors submitted would be likely if the defects had been present since April 2015, as Mr Li alleged, especially if the vehicle has been stored outside.
[35] Nor is there any documented or photographic evidence about the condition of the vehicle's paintwork at the time Mr Li purchased it, or the condition of the vehicle in April 2015 after paint defects had been repaired by Smart Repairs. Accordingly, it is impossible to reach any definite conclusion about whether Storer Motors has any responsibility for those defects, or whether they instead occurred while in Mr Li’s possession.
[36] In any event, Mr Dixon and I do not consider the paint defects that we witnessed to be inconsistent with what a reasonable person would regard as acceptable appearance and finish for a nine year old vehicle, in terms of s 7(1)(b) of the Act, especially one which has been stored outside, as Mr Li’s vehicle evidently has been.
[37] It follows, that Mr Li has not demonstrated that there are any defects, either with this vehicle’s engine or its paintwork that are attributable to Storer Motors. I conclude that the vehicle is of acceptable quality for the purposes of s 6 of the Act.
[38] The only matter that I would regard as potentially not acceptable in terms of s 6 was the situation with the heater not producing any heat, as indicated in the AA report. This was a matter that Mr Li could certainly have taken up with Storer Motors and, if Storer Motors had refused to remedy this matter Mr Li could have had the failure remedied elsewhere and obtained all reasonable costs from Storer Motors under s 18(2)(b)(i) of the Act.
[39] I note that this is what Mr Li initially threatened to do in his lawyer’s letter dated 12 May 2015. Unfortunately, too much time has passed for the Tribunal to be in a position to make any orders in relation to the heater. In the meantime, the vehicle has been left, apparently outside, with its engine partially dismantled. There is no evidence that Mr Li obtained any quotes from repairers for remedying the problem with the heater. Nor was there any evidence that the problem with the heater even still exists. For these reasons, I am not prepared to make any orders in relation to the heater.
[40] Accordingly, Mr Li’s rejection of the vehicle is not upheld and his application is dismissed.

J S McHerron
Adjudicator

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[1] Section 7(2) of the Act provides that "[w]here 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."