Powell v Dune Dwellers Limited t/a Park View Autos 2013 - Reference No. MVD 255/2016 (Auckland) [2016] NZMVDT 142; [2016] NZMVT Auckland 142 (13 October 2016)

Last Updated: 20 May 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2016] NZMVT Auckland 142

Reference No. MVD 255/2016

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN ELIZABETH FIONA POWELL

Purchaser

AND DUNE DWELLERS LIMITED T/A PARK VIEW AUTOS 2013

Trader

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

Mr S D Gregory, Assessor

HEARING at Tauranga on 11 October 2016

DATE OF DECISION 13 October 2016
APPEARANCES

Mrs E F Powell (nee Edwards), the purchaser

Mr E R Powell, husband and witness for the purchaser
Mr G D Marshall, Director of the trader

DECISION

Dune Dwellers Limited trading as Park View Autos 2013 shall pay Elizabeth Fiona Powell $3,507.50 immediately.

REASONS

Background

[1] On 20 June 2015, Mrs Powell (then Ms Edwards) (“the purchaser”) bought a 2014 Suzuki Swift XG registration JDD514 (“the vehicle”) for $15,250 from Dune Dwellers Limited trading as Park View Autos 2013 (“the trader”). The vehicle, a Japanese import, had travelled 945kms at the time of sale and was sold as being in an “as new” condition.

[2] The purchaser says the vehicle’s transmission became noisy in mid-June 2016, and had to be rebuilt in July 2016 at a cost of $3,507.50, after 23,646kms of use by her over a little more than 12 months. The purchaser says the vehicle failed to comply with the guarantee of acceptable quality in s 6 of the Consumer Guarantees Act 1993 (“the Act”), and that its failure was of substantial character. The purchaser seeks her repair costs of $3,507.50 from the trader.

[3] The trader denies that it is responsible for the condition of the vehicle’s transmission or the purchaser’s repair costs.

[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) Whether the vehicle complied with the guarantee of acceptable quality in s 6 of the Act?
(b) If not, was the failure to comply of substantial character entitling the purchaser to her repair costs?

Issue [a]: Whether the vehicle complied 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/her right to reject the vehicle within a reasonable time.

Application of law to facts

[10] The purchaser says the vehicle performed well from the time she bought it from the trader for $15,250 with 945kms on its odometer on 20 June 2015, until 15 June 2016. The vehicle was serviced by the purchaser’s husband who is a very experienced mechanic at his workplace, Opotiki Mechanical Services Ltd (“Opotiki Mechanical”) on 3 December 2015 at 12,476kms and on 17 June 2016 at 23,484kms. The purchaser used the vehicle daily to travel from her home in Waimana to her work as a bank officer in Whakatane and return, a distance of about 37kms each way.

[11] On 15 June 2016, the purchaser says she noticed an unusual noise on starting the vehicle in “park” which ceased when she put the vehicle in gear. Mr Powell put the vehicle on the hoist at Opotiki Mechanical the following day but could not see any faults or locate the noise. When Mr Powell serviced the vehicle on 17 June 2016 he says he checked the transmission oil which was clean and at the correct level.

[12] On 24 June Mr Powell says he heard the unusual noise being made by the vehicle and confirmed it was coming from its transmission. On 28 June the purchaser says she first made contact with Mr Marshall of the trader to inform him of the noise coming from the transmission. She says Mr Marshall replied that the purchaser had not bought a mechanical breakdown policy when she bought the vehicle, but asked the purchaser to keep him informed of the outcome.

[13] Mr Marshall says he believes he first heard from the purchaser about 15 March 2016 regarding the transmission noise and says he asked the purchaser to take the vehicle to a Suzuki dealer. The purchaser denies that she made contact with Mr Marshall in March 2016, because she says she did not hear the noise until 15 June 2016.

[14] On 1 July 2016, the purchaser took the vehicle to Opotiki Mechanical and Mr Powell, in the presence of another mechanic, Mr Breaker, drained the oil from the transmission, removed the transmission sump and inspected it. Mr Breaker supplied a signed statement to the Tribunal as to what Mr Powell had done and what he had observed. Mr Breaker’s statement says he saw large metal fragments and filings on the magnet in the sump. His statement says that Mr Powell cleaned the magnets, refitted the transmission sump and filled the transmission with new CVT oil.

[15] The purchaser says that the transmission noise remained after the transmission oil was changed by Mr Powell. Mr Powell says he contacted Tauranga Motor Company and Nicholsen Autos of Whakatane, both of whom are Suzuki agents, but neither was able to supply any information about the CVT transmission fitted to the vehicle which Mr Powell says is of a type not fitted to New Zealand new Suzuki vehicles. Mr Powell also contacted Suzuki NZ Ltd who recommended he contact CVT New Zealand 2010 Ltd (“CVTNZ”) a recognised repairer of CVT transmissions.

[16] On 18 July 2016, Mr Powell telephoned CVTNZ who told him that the fault was common and caused by an inferior bearing in the transmission. The purchaser says she contacted the trader again on 21 July 2016 to tell him of progress in getting the fault identified and that once again Mr Marshall reminded her that she had not bought a mechanical breakdown warranty. The purchaser says that Mr Marshall made no offer to assist her in getting the transmission repaired and she gained the impression he had no interest in helping her or in having the vehicle repaired.

[17] On 24 July 2016, CVTNZ sent the purchaser a quote of $3,507.50 inclusive of GST to overhaul the CVT transmission and replace various parts, which the purchaser accepted. The vehicle was transported to CVTNZ on 3 August and returned to the purchaser on 16 August 2016. The purchaser produced the receipted invoice of CVTNZ dated 2 August for $3,507.50 which she paid CVTNZ to repair the transmission.

[18] Mr Marshall told the Tribunal that the vehicle had been imported from Japan where it had been sold at auction on behalf of a Japanese car dealer who had the vehicle and another Suzuki Swift (which the trader also bought), as demonstrators. Mr Marshall says he recalled the purchaser telephoning him about 15 March 2016 about the noise from the transmission and he says he had asked her to have it assessed by a Suzuki dealer. Mr Marshall says the cost to repair the CVT transmission is greater than the cost he would have incurred in buying a replacement transmission in Japan and freighting it to New Zealand.

[19] Mr Marshall was unsure when the purchaser had next telephoned him but thought it was five or six weeks after the 15 March call. He was unable to recall a conversation with the purchaser on 21 July 2016. He says the vehicle was in as new condition when sold to the purchaser and when it was complied.

[20] In determining whether the vehicle supplied by the trader complied with the guarantee of acceptable quality, I have had regard to the nature of the goods; in this case a new Japanese imported Suzuki Swift first registered in Japan in 2014 and sold to the purchaser with only 945kms on its odometer in June 2015 for $15,250. The purchaser has since travelled a further 23,484kms in the vehicle before the CVT transmission started to become noisy and required rebuilding at a cost of $3,507.50 in July 2016, 13 months after the vehicle was supplied by the trader.

[21] Mr Marshall acknowledged at the hearing, in answer to a question from the assessor, that he agreed that the vehicle had not been as durable as a reasonable consumer would regard as acceptable. I agree with the trader. The vehicle’s transmission lacked durability because it became faulty after only a total of 24,581kms and 12 months regular use.

Conclusion on issue [a]

[22] I have no hesitation in finding as a fact that this vehicle did not comply with the guarantee of acceptable quality in s 6 of the Act because the vehicle’s transmission lacked durability.

Issue [b]: Was the failure to comply of substantial character entitling the purchaser to her repair costs?

[23] Section 21 of the Act defines the circumstances in which a failure to comply with the guarantee as to acceptable quality will be regarded as being a failure of a substantial character for the purposes of s 18(3) of the Act. Section 21 of the Act provides as follows:

“21 Failure of substantial character

For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where—

(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or

(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.”

Application of law to facts

[24] I do not think that any reasonable consumer aware of the nature and extent of the vehicle’s transmission fault would have acquired this vehicle because of the cost and inconvenience of having the transmission rebuilt. Second, a vehicle with a faulty transmission is substantially unfit for the purpose for which it was supplied. The vehicle thus meets two of the four criteria in s 21 of the Act any one of which is sufficient to deem the vehicle’s failure as being of substantial character.

[25] The trader appeared to be under the mistaken impression that because he had not agreed to the repairs being done he was not liable for their cost. However, where the failure is one of substantial character, as I have found was the case here, the purchaser is entitled, without first requiring the trader to repair the fault, to either reject the vehicle or claim damages from the trader equivalent to the reduction in value of the vehicle below the price paid for it. The purchaser chose the latter option.

Conclusion on issue [b]

[26] The vehicle’s transmission failure is one “of substantial character” as defined in s 21(a) and (c) of the Act and the purchaser was entitled to either reject the vehicle and obtain a full refund of her purchase price (s 18(3)(a) of the Act) or obtain from the trader damages in compensation for any reduction in the value of the vehicle below the price paid for it (see s 18(3)(b) of the Act). I have calculated damages as a sum equivalent to the repair costs the purchaser incurred in having the CVT transmission rebuilt of $3,507.50. I will order the trader to pay the purchaser that amount immediately.

DATED at AUCKLAND this 13th day of October 2016

C. H. Cornwell
Adjudicator