Payraudeau v New Zealand Car Limited - Reference No. MVD 5/16 (Auckland) [2016] NZMVDT 23; [2016] NZMVT Auckland 23 (1 March 2016)

Last Updated: 19 April 2016

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2016] NZMVT Auckland 23

Reference No. MVD 5/16

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN LUCILE JULIE NATHALIE PAYRAUDEAU

Purchaser

AND NEW ZEALAND CAR LIMITED

Trader

MEMBERS OF TRIBUNAL
Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr S D Gregory, Assessor

HEARING at Auckland on 1 March 2016

DATE OF DECISION 1 March 2016

APPEARANCES

Ms LJ N Payraudeau, the purchaser

Mr G Fillard, partner and witness for the purchaser
Mr M Clark, witness for the purchaser
Mr G Sidorovski, General Manager for the trader

DECISION

1. New Zealand Car Limited shall pay Ms Payraudeau $845-55. immediately
   
2. New Zealand Car Limited shall pay the reasonable costs of the Tribunal’s hearing of $500, within 14 days of the date of this decision, to the Ministry of Justice Tribunals Unit, Chorus House, Level 1, 41 Federal Street Auckland City 1010.
   

REASONS
Background

[1] On 11 October 2015, Ms Payraudeau (“the purchaser”) bought a 2005 Holden Astra registration CTH852 (“the vehicle”) from New Zealand Car Limited (“the trader”) for $5,990. The purchaser claims the vehicle was not of acceptable quality and seeks to recover $845-55 from the trader for repairs she has carried out to the vehicle’s transmission after the trader refused to remedy the fault.
[2] The trader’s defence is that it sold the vehicle “as is where is” to the purchaser and recorded that as a term of sale in the Vehicle Offer and Sale Agreement (“VOSA”) signed by the purchaser and it believes that condition relieves it of any responsibility to the purchaser for the vehicle’s condition.
[3] Pursuant to clause 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 clause 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

[4] 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 remedy the defect before she had it repaired?

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

Relevant law

[5] 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.
[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) to (e) of the Act as modified by the factors set out in s 7(1)(f) to (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 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 her right to reject the vehicle within a reasonable time.
[10] Section 43(1) of the Act provides that subject to some sections which do not apply in this application, the provisions of the Act shall have effect notwithstanding any provision to the contrary in any agreement. In short, it is not lawful for a supplier to contract out of the provisions in the Act unless the supplier is selling to a consumer who is in trade and the provisions of s43 (2) off the Act are satisfied.
[11] Section 43(4) of the Act makes it an offence against s 13(i) of the Fair Trading Act 1986 for a supplier to purport to contract out of any provision of the Act other than in accordance with s43(2) or s 43A, neither of which apply in this application.

Application of law to facts

[12] The purchaser bought the vehicle on 11 October 2015 from the trader for $5,990. The vehicle had travelled 128,000km at the time of sale. The trader inserted two special conditions in the VOSA:

“1.Three months registration 2. As is where is condition”

[13] On 3 December 2015, the purchaser was unable to get the vehicle’s gear shift lever to engage a gear. She had the vehicle towed to her home and on 8 December the purchaser emailed Gorjan Sidorovski of the trader informing him of the problem and asked the trader to look at the vehicle. The trader replied advising the purchaser that she had bought the vehicle “as is where is” and it would not repair the transmission.

[14] The purchaser had a friend, Mr Clark, send an email to the trader on 12 December 2015 reminding the trader that it could not contract out of its obligations under the Act and to check the Citizens Advice Bureau website. The trader replied on 14 December by email to Mr Clark and the purchaser saying the vehicle was a trade in special and the purchaser had signed the VOSA containing the “as is where is” condition.

[15] The trader’s General Manager claimed that the trader had not had an opportunity to inspect the vehicle’s transmission before the purchaser had it repaired by Schofield Holden on 23 December 2015. However the Tribunal is satisfied after hearing evidence given by the purchaser, her partner Mr Fillard, and Mr Clark that the trader refused to repair the transmission. The trader made it clear it would not do so in its telephone call with the purchaser and her partner on 8 December, and in an email sent to Mr Clark on 14 December. Mr Clark had sent an email to the trader on 12 December reminding the trader that it could not contract out of the its obligations under the Act. The trader replied on 14 December to Mr Clark saying the vehicle was sold “as is” because it was a trade in special, that the purchaser had signed the agreement containing that clause, and the trader was “not in a position to cover the transmission fault.”

The Tribunal’s finding on issue [a]

[16] 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 10-year-old New Zealand new Holden Astra which had probably travelled about 127,000 kms at the time of sale (although the VOSA and CIN both incorrectly record its odometer as 129,000kms). Second, to the vehicle’s sale price of $5,990.

[17] Within eight weeks of the date of supply the vehicle’s transmission failed. The purchaser requested the trader to repair the transmission but it refused to do so.

[18] The purchaser had the fault rectified by Schofield Holden on 23 December 2015 at a cost of $845-55 for supplying and fitting a transmission selector cable and towing the vehicle to Schofields to have that work done. The repair invoice records the vehicle’s odometer as 128,627kms showing the vehicle had only travelled about 1,000km when the fault occurred.

[19] The Tribunal notes that the trader sold the vehicle on an “as is where is condition”. The trader either does not know, or has chosen to deliberately flout New Zealand consumer law. The insertion of the special condition “As is where is condition” amounts to an attempt to contract out of the Consumer Guarantees Act 1993, is unlawful and breaches s43(4) of the Act which provides as follows:

“(4) Every supplier and every manufacturer commits an offence against section 13(i) of the Fair Trading Act 1986 who purports to contract out of any provision of this Act other than in accordance with subsection (2) or section 43A.”

[20] The Tribunal notes that the contracting out did not take place in accordance with either s43(2) or s43A of the Act.

[21] The Tribunal understands from the answer given by Mr Sidorovski to questions from the Tribunal that the trader has used the contracting out clause in five to ten other sales of vehicles it has transacted. The Commerce Commission may wish to investigate the trader’s conduct in detail. A copy of this decision will be sent to the Commission so that it may investigate and decide whether to prosecute the trader.

Conclusion on issue [a]

[22] Clearly, the vehicle did not comply with the guarantee of acceptable quality at the time of sale because the vehicle’s transmission was not as durable as a reasonable consumer would regard as acceptable for a vehicle of this age mileage and price.

Issue [b]: Did the purchaser require the trader to remedy the faults before she had the fault repaired?

Relevant law

[23] Section 18 of the Act provide 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.

[24] 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 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 s18(2)(b)).

Application of law to facts

[25] The purchaser required the trader to remedy the fault with the transmission in an email sent to the trader dated 8 December 2015. The trader refused to do so. Mr Clark in his email to the trader sent on 12 December reminded the trader that its grounds for refusing to repair the transmission were unlawful. The trader ignored that advice and sent its email of 14 December confirming it would not repair the transmission.

[26] Only after the trader refused to repair the transmission did the purchaser have Schofield Holden do the work on 23 December 2015.

Conclusion on issue [c]

[27] The purchaser, after receiving the trader’s refusal to repair was entitled by s18(2)(b) to either reject the vehicle or have the failure remedied elsewhere and obtain all reasonable costs of doing so from the trader. The purchaser elected to have the vehicle repaired. The costs of this were $845-55, which the trader will be ordered to pay the purchaser immediately.

Costs

[28] The Tribunal has limited power to award costs under clause 14 of the Schedule to the Motor Vehicle Sales Act 2003 where it considers the matter ought reasonably to have been settled before proceeding to a hearing but that the party against whom an award of costs is to be made refused, without reasonable excuse, to take part in mediation as mandated by clause 5(1)(b) of the Schedule to that Act. I consider this matter should have been settled by mediation but the trader did not take part in mediation discussions. The trader will therefore be ordered to pay $500 towards the Tribunal’s hearing costs within 14 days of the date of this decision.

DATED at AUCKLAND this 1st day of March 2016

C. H. Cornwell
Adjudicator