Smith v Brent Smith t/a Motor Me - Reference No. MVD 153/2016 (Auckland) [2016] NZMVDT 91; [2016] NZMVT Auckland 91 (6 July 2016)

Last Updated: 28 August 2016

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2016] NZMVT Auckland 91

Reference No. MVD 153/2016

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN ANDREW OLIVER SMITH

Purchaser

AND BRENT SMITH T/A MOTOR ME

Trader

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

Mr S D Gregory, Assessor

HEARING at Auckland on 5 July 2016

DATE OF DECISION 6 July 2016
APPEARANCES

Mr A O Smith, the purchaser

There was no appearance by the trader

DECISION

Brent Smith trading as Motor Me shall pay Andrew Oliver Smith $2,532.50 immediately.

REASONS

Background

[1] On 7 March 2016, Andrew Smith (“the purchaser”) agreed to buy, sight unseen, a 2004 Subaru Outback registration JRS714 (“the vehicle”) for $7,995 from Brent Smith trading as Motor Me (“the trader”).
[2] The trader agreed that he would have an engine oil leak in the vehicle repaired at his cost before sending the vehicle to the purchaser in Taradale. The purchaser says the trader failed to repair the engine oil leak before delivering the vehicle to him. The purchaser seeks the sum of $2,251.40 he has been quoted to fix the engine oil leak and $259.12 he has paid to replace a CV axle assembly.
[3] The trader did not appear after being sent notice of the hearing. No explanation for his nonappearance was or has since been provided by the trader.
[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 (“the Act”)?
• (b) If it did not, did the purchaser require the trader to remedy the vehicle’s faults?
• (c) What repair costs is the purchaser entitled to recover from the trader?

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 right to reject the vehicle within a reasonable time.

Application of law to facts

[10] The purchaser says he obtained an AA pre-purchase inspection of the vehicle on 2 March 2016 before he agreed to buy it. The report, a copy of which he produced, records the vehicle’s odometer as 115,452kms and lists a number of faults one of which was an oil leak from the engine. The AA report states that the AA were unable to road test the vehicle because the dealer plate had expired.

[11] The purchaser agreed to buy the vehicle on 7 March 2016 from the trader for $7,995, on the trader’s agreement to fix the engine oil leak and have scratches in the paintwork cut and polished. On receiving the vehicle some four weeks later the purchaser found that neither of these issues had been rectified as promised.

[12] The purchaser took the vehicle to BR Automotive Limited on 15 April 2016 who checked a noise coming from the RHF and found the axle shaft to be at fault. They removed and replaced the component with a new CV axle assembly at a cost of $225.32 plus GST or $259.12.

[13] The purchaser obtained a quote from BR Automotive Limited dated 29 April 2016, to rectify the engine oil leak at a cost of $2,251.40. The purchaser sent the trader a letter dated 28 April asking him to pay the cost of the oil leak repair and the CV joint as well as $250 for a cut and polish. The trader refused to do so in an email to the purchaser dated 29 April 2016.

[14] In determining whether the vehicle supplied by the trader complied with the guarantee of acceptable quality, the Tribunal has had regard first, to the nature of the goods; in this case a 12 year old imported Subaru legacy with 115,452kms on its odometer. Second to its price of $7,995. Third, to the pre-contractual representation made by the trader that it would repair the engine oil leak and cut and polish the scratches before sending the vehicle to the purchaser.

[15] The Tribunal considers the vehicle should have been free of engine oil leaks and have a serviceable CV axle joint. However, it considers that it is probably to be expected that the paintwork on an old moderately high mileage vehicle like this would have scratches. The Tribunal considers the vehicle was not free of minor faults at the time of sale (the engine oil leak and CV axle) and hence, even allowing for the age, mileage and modest sale price, the vehicle did not comply with the guarantee of acceptable quality in s 6 of the Act.

Issue [b]: Did the purchaser require the trader to remedy the vehicle’s faults?

Relevant law

[16] 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.”

[17] 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) of the Act).

Application of law to facts

[18] The Tribunal has seen from the invoice of BR Automotive Limited that the replacement of the CV axle assembly was invoiced to the purchaser on 15 April 2016 so that the work had already been done before the purchaser wrote to the trader on 28 April 2016 and asked him to pay $225.32 for the new CV axle. Accordingly that cost is irrecoverable under the Act by the purchaser.

[19] The position is different in respect of the engine oil leak. That has not yet been rectified. The purchaser complied with his obligations under s 18(2)(a) of the Act and required the trader to remedy that fault. The trader refused to do so and the purchaser is thus now entitled to have the engine oil leak repaired and recover the quoted cost of $2,251.40 from the trader.

Conclusion

[20] The purchaser is not entitled to recover the cost of the CV axle of $225.32 plus GST from the trader because he did not require the trader to repair the CV axle before having the work done himself. The purchaser is, however, entitled to recover the estimated cost of the engine oil leak repair of $2,251.40 from the trader.

Costs

[21] The Tribunal has authority under cl 14(1)(b) of the Schedule to the Motor Vehicle Sales Act 2003 to order costs be paid by a party who, after receiving notice of the hearing, fails to attend the hearing without good cause. The trader failed to attend the hearing without good cause. The Tribunal will order the trader to pay, in addition to the sum of $2,251.40, the costs of the purchaser in attending the hearing of $281.10 so that the total payable by the trader is $2,532.50.

DATED at AUCKLAND this 6th day of July 2016

C. H. Cornwell
Adjudicator