Baker v Corporate Cars Limited - Reference No. MVD 202/2016 (Auckland) [2016] NZMVDT 117; [2016] NZMVT Auckland 117 (19 August 2016)

Last Updated: 20 September 2016

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2016] NZMVT Auckland 117

Reference No. MVD 202/2016

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN HAYDEN MICHAEL JOHN BAKER

Purchaser

AND CORPORATE CARS LIMITED

Trader

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

Mr S D Gregory, Assessor

HEARING at Auckland on 15 August 2016

DATE OF DECISION 19 August 2016
APPEARANCES

Mr H M J Baker, the purchaser

Mrs L M Baker, purchaser’s wife and witness
Mr N H Howe, witness for the purchaser
Mr C Browne Manager of the trader

DECISION

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

REASONS

Background

[1] On 27 June 2015, Mr Baker (“the purchaser”) bought a 2001 Mitsubishi Challenger registration AGJ581 which later became JSY516 (“the vehicle”) for $5,990 from Corporate Cars Limited (“the trader”).

[2] The purchaser, after using the vehicle for almost ten months to travel 11,920kms purported to reject it on 14 April 2016. The purchaser seeks the Tribunal’s order upholding his rejection and ordering the trader to refund the purchase price.

[3] The trader says that the vehicle complied with the guarantee of acceptable quality at the time of sale and that its engine failure nine months after it was sold was probably because the cylinder head cracked. The trader says it has had the cylinder head and a bent con rod replaced at its cost and the purchaser should now arrange to collect 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 Consumer Guarantees Act 1993 (“the Act”)?
(b) If not, is the fault(s) of substantial character within the meaning of s 21 of the Act?
(c) If the failure to comply with the guarantee of acceptable quality is of substantial character, 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 bought the vehicle on 27 June 2015. The vehicle’s odometer reading was 280,593kms at the time of sale. About five weeks after he bought the vehicle the purchaser drove it from Whangarei to Auckland. The purchaser says he checked the water in the vehicle’s radiator before he set out from Whangarei and the coolant level was satisfactory. The vehicle’s engine overheated near Warkworth. The purchaser telephoned the trader who asked him to either have the vehicle towed back to Auckland or drive it back, if that could be done without overheating the engine. The purchaser says he allowed the engine to cool, added water to the radiator, and drove it to the trader’s yard where it was, according to the trader, very hot on arrival and the radiator was bubbling.

[11] The trader had Cook European pressure test the cooling system and they report finding the radiator had a worn base where the radiator cap seals, which allowed coolant to escape from the radiator. They removed the faulty radiator for repair, replaced the top tank, refitted the radiator, bled and pressure tested the cooling system and charged the trader $577.97 for their work. The vehicle’s odometer was recorded as “281,385” on Cook European’s invoice dated 18 July 2015 which the trader supplied, at the Tribunal’s request. The purchaser claims the trader promised him a refund if there were any other issues with the vehicle.

[12] The trader says it did not hear anything more from the purchaser for nine months. The purchaser says the vehicle became hard to start in March 2016. A family member, Mr Howe, replaced the vehicle’s battery and starter motor but the purchaser still had difficulty in starting the vehicle. On 21 March 2016, the purchaser says a glow plug was removed and water was found to have been leaking into #4 cylinder. The purchaser contacted the trader and says he offered to buy another vehicle from the trader, but a replacement vehicle could not be sourced.

[13] On 14 April 2016 the purchaser sent the trader an email saying he had decided to reject the vehicle however the email does not state the grounds for rejection. The trader refused to accept the letter of rejection. The purchaser says he was unable to transport the vehicle back to the trader because the vehicle was un-driveable. During April the trader arranged to transport the vehicle back to Auckland from Whangarei at its expense. On its return the vehicle was first examined by Harbour Brakes & Steering who thought the cylinder head had cracked and then by AutoDiesel Ltd who replaced the cracked cylinder head. After the hearing, the trader, as requested by the Tribunal, provided a copy of AutoDiesel Ltd’s tax invoice dated 11 May 2016, which states they replaced the vehicle’s cylinder head after finding the head was cracked. The engine had a bent con rod from the engine hydraulicing. The head gasket was in a poor condition and it and #4 piston were also replaced. AutoDiesel Ltd supplied a new bare cylinder head and antifreeze concentrate and charged the trader a total of $3,432.75 for parts, labour and GST.

[14] The trader asked the purchaser to contribute a half of the repair costs it had paid to AutoDiesel Ltd but the purchaser refused to do so and eventually the trader told the purchaser he could collect the vehicle from it and the trader would bear the repair costs. The purchaser chose not to do so. The vehicle’s odometer is now 292,513kms according to a photograph supplied to the Tribunal by the trader, at the Tribunal’s request.

The Tribunal’s findings

[15] In determining the first issue, I note that the vehicle in this application was 14-years-old at the time of sale and had 280,593kms on its odometer. The purchase price was $5,990. The vehicle was thus an old, high mileage, fairly cheap vehicle. Its engine overheated on a trip from Whangarei to Auckland one month and 792kms after it was supplied. The reason it overheated appears from Cook European’s invoice to be a “worn sealing base in the radiator tank, causing coolant loss”. Mr Browne said that a lug holding the radiator cap in place was broken off and the purchaser may have caused that when he checked the coolant level before setting off from Whangarei but that seems unlikely; the radiator was simply old and worn. However that fault was fixed by the trader’s repairer, at the trader’s cost.

[16] After the trader had the radiator repaired and the top tank replaced the vehicle was used by the purchaser for about nine months to drive 11,128kms, apparently without any issues, until the vehicle became hard to start in March 2016. The purchaser claimed he had serviced the vehicle twice but there was no evidence of that provided to the Tribunal. On 14 April 2016 the purchaser purported to reject the vehicle without returning it to the trader for prior inspection. In May the trader, at its expense, recovered the vehicle and repaired it.

[17] I consider that the vehicle was, apart from the early overheating incident in July 2015, of acceptable quality having regard to its age, mileage and price paid. The vehicle was, in my view, as durable as a reasonable consuming paying only $5,990 for a vehicle of this age and mileage would regard as acceptable. I think the purchaser’s expectations of the trader and the extent and duration of the period of its responsibility for this vehicle are unreasonable. I think the trader has acted very generously in replacing the vehicle’s cylinder head at its expense, which I note was more than 50% of the selling price, after the purchaser had used the vehicle to travel over 11,000kms in a nine month period.

Conclusion on issue [a]

[18] The vehicle supplied to the purchaser complied with the guarantee of acceptable quality. The purchaser’s application to reject it is therefore dismissed. The purchaser should arrange to collect the vehicle from the trader.

DATED at AUCKLAND this 19th day of August 2016

C. H. Cornwell
Adjudicator