Shin v Mars Motors Limited - Reference No. MVD 263/15 (Auckland) [2016] NZMVDT 6 (21 January 2016)

Last Updated: 16 February 2016

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2016] NZMVT Auckland 5

Reference No. MVD 263/15

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN SEUNGWON SHIN

Purchaser

AND MARS MOTORS LIMITED

Trader

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

HEARING at Auckland on 19 January 2016

DATE OF DECISION 21 January 2016

APPEARANCES

Mr S Shin, the purchaser

Mr A Ma, director, representing the trader

DECISION

The Tribunal makes the following orders:

(a) Mars Motors Limited shall pay Seungwon Shin $1,842-70 immediately
(b) Mars Motors Limited shall, within seven days of the date of this order, pay the Tribunal’s reasonable hearing costs of $500 to the Crown at the Ministry of Justice Tribunal’s Unit, Level 1 Chorus House, 41 Federal Street Auckland.

REASONS

Background

[1] On 14 November 2015, Mr Shin (“the purchaser”) agreed to buy, sight unseen, by internet auction, a 2006 Lexus GS430 registration JLU353 (“the vehicle”) from Mars Motors Limited (“the trader’) for $15,760. The purchaser claims that when he inspected the vehicle he found it had a number of faults which the trader agreed to rectify. The purchaser claims that the trader has failed to rectify the faults. His application seeks to recover $1,842.70 from the trader for four replacement tyres, a smart key and a warrant of fitness inspection.
[2] The trader says that the purchaser sought to renegotiate the purchase price when he found a fault with the vehicle’s battery and a faulty mirror and would only pay $15,360. After the purchaser filed an application with the Tribunal the trader says it sent an amended vehicle offer and sale agreement to the purchaser for signature on 17 December 2015. That VOSA was not signed by the purchaser, because it did not stipulate that the key was to be a smart key.
[3] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 (“MVSA”), the Tribunal has appointed Mr Middleton as expert assessor to assist in the determination of the complaint. Mr Middleton took the oath required by clause 10(2) of Schedule 1 to that Act. As an assessor, Mr Middleton 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 not, did the purchaser require the trader to remedy the faults and give it a reasonable time in which to do so? Is the purchaser entitled to recover the reasonable cost of the tyres, smart key and warrant of fitness inspection from the trader?

[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 MVSA 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 his right to reject the vehicle within a reasonable time.

Application of law to facts

[10] The purchaser saw the vehicle advertised for sale by the trader on TradeMe. He produced a copy of the advertisement which includes a statement that the vehicle came with “2 X Smart Keys.”

[11] The purchaser did not inspect the vehicle before he bid for it. The purchaser’s bid of $15,760 was the highest when the internet auction closed on 14 November 2015.

[12] The purchaser went to the trader’s premises on 16 November 2015. When he inspected the vehicle he found it was not the same vehicle as the trader had depicted in photographs published with its TradeMe advertisement. The vehicle did not have a rear spoiler and the brand and quality of the tyres were different from those on the vehicle in the photograph. The purchaser also discovered that the vehicle’s battery was flat, its left hand side mirror was not working, all the tyres were cracked and perished, there was only one smart key available for the vehicle, and the vehicle did not have a new warrant of fitness issued within 30 days prior to the date of sale.

[13] The purchaser claims he offered to pay $5,000 of the purchase price to the trader as a deposit with the balance payable after the trader had fixed the vehicle’s faults and obtained a warrant of fitness for it. The trader refused that offer. The parties then agreed that the purchaser would pay the full bid price of $15,760 less $400 to cover the cost of the purchaser replacing the battery and repairing the left hand side mirror. The purchaser also claims the trader promised to replace the tyres, supply another smart key and obtain a warrant of fitness for the vehicle.

[14] The purchaser says he attempted to have the trader replace the tyres and supply the spare smart key but the trader ignored his requests. On 20 November 2015 the purchaser took the vehicle to Green Autos who did a warrant of fitness inspection on the vehicle which it failed because the vehicle’s tyres had perished.

[15] On 27 November the purchaser filed his application with the Tribunal and on 16 December the trader offered to have his mechanic, SC Autos in New Lynn replace the tyres and the smart key on 18 December. The purchaser says he was unable to go to SC Autos on 18 December and took the vehicle to them on Saturday 19 December. However SC Autos did not have any tyres to fit to the vehicle and claimed they were unable to obtain the tyres on a Saturday. The purchaser and the trader’s director, Mr Ma, spoke on the telephone and the purchaser says Mr Ma wanted him to sign a VOSA and a form saying the claim had been settled before he had the tyres replaced and the smart key supplied. The purchaser contacted the firm whom Mr Ma said would provide a smart key but he says they told him that they were only able to provide an ordinary key. The purchaser then sent the trader an email asking it to pay him the cash cost of the replacement tyres, smart key and warrant of fitness but the trader did not respond.

The Tribunal’s finding on issue [a]

[16] The Tribunal, in determining whether the vehicle supplied by the trader complied with the guarantee of acceptable quality, has had regard to the nature of the goods, in this case a nine-year-old Japanese imported Lexus GS430, which had 95,611kms on its odometer, and was sold for $15,360. The vehicle had a faulty battery, a defective left mirror and was only supplied with one smart key. The vehicle had not been issued with a fresh warrant of fitness within 30 days prior to the date of sale, and its tyres were perished. The vehicle was clearly not safe, because of the perished tyres, free from minor defects because of the faulty battery and the left side mirror, or as durable as a reasonable consumer paying $15,360 for a nine year old Lexus would regard as acceptable.

Conclusion on issue [a]

[17] The vehicle did not comply with the guarantee of acceptable quality in s 6 of the Act because it was not safe, free of faults, or as durable as a reasonable consumer would regard as acceptable for a vehicle of this age, type and price.

Issue [b]: Did the purchaser require the trader to remedy the faults and give it a reasonable time in which to do so?

Relevant law

[18] Section 18(1) and (2) 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.

Application of law to facts

[19] The purchaser’s evidence was that he attempted to have the trader replace the vehicle’s tyres, provide a smart key and obtain a warrant of fitness for the vehicle but the trader ignored his requests until he filed an application with the Tribunal. The trader then contacted the purchaser on 17 December but still failed to rectify the faults when the purchaser returned the vehicle to the trader’s mechanic on 19 December. The Tribunal considers the purchaser fully met his obligation under s 18(2)(a) of the Act to require the trader to remedy the vehicle’s faults within a reasonable time but the trader failed to do so.

Conclusion on issue [b]

[20] The trader failed to comply with its obligation to replace the tyres, provide a smart key and obtain a warrant of fitness for the vehicle. The purchaser is thus now entitled in terms of s18(2)(b)(i) of the Act to have the faults remedied elsewhere and obtain from the trader all reasonable costs incurred in having the failures remedied.

[21] The purchaser produced quotations of $1,600, $1,400, $1,240 and $920 for replacement tyres depending on the brand of tyres fitted. The Tribunal considers $1,240 for a set of Bridgestone tyres to be a reasonable sum for four replacement tyres as quoted by JP Tyres 2009 Ltd. The cost of the replacement smart key and its coding as quoted by Lexus North Shore is $562.70 which the Tribunal also considers reasonable. The trader will also be ordered to pay $40 for a warrant of fitness inspection. The total payable by the trader to the purchaser is therefore $1,842.70.

Costs
[22] The Tribunal has limited power to award costs under clause 14 of the Schedule to the MVSA 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 the MVSA. The Tribunal considers this matter should have been settled by mediation but the trader refused to take part in the discussions. The trader will be ordered to pay $500 towards the Tribunal’s hearing costs with seven days of the date of this decision.

DATED at AUCKLAND this 21st day of January 2016

C. H. Cornwell
Adjudicator