He v 4S Motors Limited Reference No. MVD 267/2016 (Auckland) [2016] NZMVDT 146; [2016] NZMVT Auckland 146 (17 November 2016)

Last Updated: 19 December 2016

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2016] NZMVT Auckland 146

Reference No. MVD 267/2016

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN TING HE

Purchaser

AND 4S MOTORS LIMITED

Trader

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

Mr S D Gregory, Assessor

HEARING at Auckland on 15 November 2016

DATE OF DECISION 17 November 2016

APPEARANCES

Mr T He, the purchaser

Miss I Jin, support person for purchaser
Mr J Qian, director of the trader
Mr Y Lu, director of the trader
Mr B Yang, sales representative of the trader

DECISION

The Tribunal makes the following orders:

1. By Consent: The trader shall arrange for Cook European Ltd to replace the front shock absorbers on the vehicle at a cost of $2,111.86 (inclusive of GST)
2. The trader shall pay the purchaser $171.35.
3. The purchaser’s other claims are dismissed.

REASONS

Background

[1] On 16 June 2016 Mr He (“the purchaser”) bought a 2013 Mercedes-Benz ML350 vehicle registration JWS188 (“the vehicle”) from 4S Motors Limited (“the trader”) for $69,500.
[2] The purchaser seeks the Tribunal’s orders for the trader to pay the cost of:

• (a) supplying and fitting two front shock absorbers to the vehicle at a cost of $2,111.86; and
• (b) a set of premium front brake pads costing $180 ; and
• (c) the cost of repairing the windscreen washers of $171.35 (including GST); and
• (d) the cost of checking a knocking noise in the vehicle of $171.35 (including GST).

[3] The trader says that it consents to having the two front shock absorbers in the vehicle replaced at a cost of $2,111.86, but it disputes its liability to pay for the other three items claimed by the purchaser.
[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 Consumer Guarantees Act 1993?
• (b) If it did not, did the purchaser require the trader to repair the vehicle’s faults before he had them repaired?
• (c) If so, what amount is the purchaser entitled to obtain from the trader?

Issue [a]: Whether the vehicle complied with the guarantee of acceptable quality in s 6 of the Consumer Guarantees Act 1993?

Relevant law

[6] 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.
[7] 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.”
[8] 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.

[9] 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.
[10] 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 was 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

[11] The purchaser bought the vehicle on 16 June 2016 from the trader for $69,500. The vehicle’s odometer at the time of sale was 69,500kms. The purchaser says the vehicle was sold with a new warrant of fitness.

[12] Soon after taking delivery of the vehicle, the purchaser complained to the trader that the brakes and shock absorbers were noisy. The trader first had the front discs machined at a cost of $146.63 then paid $196.26 to have North Harbour Compliance replace both of the rear brake pads on 10 August. The brake noise persisted and the trader agreed to replace the front brake pads. These were replaced by Zhenghe Auto Electrical Ltd at a cost of $212.75 on 19 August 2016. The purchaser elected to have a premium set of brake pads fitted and paid Zhenghe an additional $180 for these pads; the subject of his claim against the trader.

[13] The trader also paid Cook European Ltd $478.58 on 29 September to replace the front sway bar links. The purchaser was still able to hear a rattling noise under certain conditions and the purchaser had Coutts Newmarket diagnose the noise and the trader agreed to having Cook European Ltd replace the front shock absorbers at a cost of $2,111.86. The purchaser seeks reimbursement from the trader for the cost of the Coutts Newmarket diagnosis of $171-35.

[14] The purchaser also claimed from the trader $171.35 he had incurred in having Coutts Newmarket check and clear the filter to the windshield washers.

[15] In determining 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 a three-year-old Japanese imported Mercedes-Benz ML350 which was sold for $69,500 with 65,000kms on its odometer. The vehicle, although having passed compliance inspection and a warrant of fitness, had minor faults with noisy brakes, its front sway bar, torsion rod links and front shock absorbers.

Conclusion on issue [a]

[16] I consider the vehicle was probably not as free from minor faults or as durable as a reasonable consumer would regard as acceptable for a three year old moderately low mileage, Mercedes-Benz sold for $69,500. Hence I conclude that the vehicle did not comply with the guarantee of acceptable quality in s6 of the Act.

Issue [b]: Did the purchaser require the trader to repair the vehicle’s faults before he had them repaired?

Relevant law

[17] 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.

[18] The regime of the Act requires that where the fault can be remedied and is not of substantial character the consumer must require the supplier to remedy the fault and the trader must do so within a reasonable time (see s 18(2)(a)). The right to reject for a fault which is not of a substantial character only arises if the supplier fails, refuses, neglects or does not succeed in doing so within a reasonable time (see s 18(2)(b)).

Application of law to facts

[19] The purchaser said in giving his evidence that he did not require the trader to remedy the fault with the windscreen washers before he had Coutts Newmarket clear the filter. Accordingly, I am unable to order the trader to pay the cost the purchaser incurred in having that work done of $171.35.

[20] The purchaser’s decision to pay an extra $180 for premium brake pads to have fitted to the vehicle was his decision. The trader was only responsible for fitting brake pads of its choice to the vehicle. Hence the trader should not be responsible for the extra $180 the purchaser chose to spend.

[21] I consider the trader should be responsible for the diagnosis of the knocking noise for which the purchaser was charged $149 plus GST or $171.35 by Coutts Newmarket on 2 September 2016 and I will order the trader to reimburse that amount to the purchaser.

Conclusion on issue [b]

[22] The only amount which I consider is payable by the trader (apart from the cost of the shock absorbers of $2,111.86) is $171.35 for the Coutts Newmarket diagnosis.

The purchaser’s other claims are dismissed.

DATED at AUCKLAND this 17th day of November 2016

C. H. Cornwell
Adjudicator