Home Designs Limited v Great Lake Motor Distributors Limited t/a Ssangyong New Zealand - Reference No. MVD 133/2016 (Auckland) [2016] NZMVDT 94; [2016] NZMVT Auckland 94 (12 July 2016)

Last Updated: 28 August 2016

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2016] NZMVT Auckland 94

Reference No. MVD 133/2016

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN HOME DESIGNS LIMITED

Purchaser

AND GREAT LAKE MOTOR DISTRIBUTORS LIMITED T/A SSANGYONG NEW ZEALAND

Trader

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

HEARING at Auckland on 11 July 2016

DATE OF DECISION 12 July 2016

APPEARANCES

Mr D A Hopper, for the purchaser company

Mr B Hopper, witness for the purchaser
Mr W Willmot, Sales & Marketing Manager for the trader
Mr N Hodgson, National Service Manager for the trader

DECISION

The purchaser’s application is dismissed.

REASONS

Background

[1] On or about 26 March 2015, Home Designs Limited (“the purchaser”) agreed to buy a new 2015 LDV V80 Biggest AMT van registration JDC849 (“the vehicle”) for $48,113 from Great Lake Motor Distributors Limited trading as SsangYong New Zealand (“the trader”).
[2] The purchaser was dissatisfied with the vehicle’s transmission operation and claims it was not fit for purpose or of acceptable quality. On 25 April 2016, the purchaser agreed to sell the vehicle to Vehicle Logistics Limited for $37,500. The purchaser claims to recover from the trader the difference between its purchase price and its sale price of $10,613.
[3] The trader denies that the vehicle failed to comply with the guarantee of acceptable quality and says that its agreement to arrange for Vehicle Logistics Limited to buy the vehicle from the purchaser was agreed to be “in full satisfaction” of any claims the purchaser had against 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 agree to sell the vehicle to Vehicle Logistics Limited in full satisfaction of its dispute with the trader?
• (c) If it was not of acceptable quality did the trader remedy any defect within a reasonable time?
• (d) Is the purchaser entitled to recover damages from the trader and if so how much?

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

[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 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 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 its right to reject the vehicle within a reasonable time.

Application of law to facts

[11] The purchaser bought the vehicle for its building business and for the private use of its director, Mr Hopper, and Mrs Hopper. The vehicle which Mr Hopper test drove had a manual transmission but LDV also manufacture a 2.5 Diesel LWB high roof cargo van with what is described as an “automatic manual transmission” and it was that model that the purchaser agreed on 26 March 2015 to buy from the trader. The vehicle was supplied to the purchaser on 22 June 2015.

[12] Mr Hopper says he found the vehicle’s transmission was very difficult to operate in reverse with a trailer on the vehicle, and particularly so on building sites with difficult access. He also says the vehicle would lose forward momentum when crossing intersections which made it unsafe to drive. He also says its hand brake would not hold the vehicle if a loaded trailer was attached to it and the vehicle was parked on a hill. Mr Hopper says he returned the vehicle to the trader five times although neither he nor the trader supplied the Tribunal with the dates the vehicle was returned and what if any faults were found with the transmission during those return inspections.

[13] After the purchaser had used the vehicle for about nine months Mr Hopper sent an email to the trader on 18 March 2016 saying that whilst Western SsangYong had found nothing wrong with the vehicle, however it did not perform as promised, or it was faulty, and was a risk to whoever drove it. The purchaser’s email stated that it would not receive the vehicle back and had returned it as faulty and that the purchaser wanted its purchase price returned in full under the Act.

[14] Mr Willmot replied by email on 22 March 2016, saying that as the transmission was working correctly according to the trader’s technicians and head office service managers, and was not faulty, there would be no refund. Mr Willmot offered four options to the purchaser:

“1. Further driver training

2. 2. To trade the vehicle against any vehicle in our LDV or SsangYong range
3. 3. Sell your van on behalf
4. 4. Help broker a trade with another dealer.”

[15] On 20 April 2016, Mr Thornton of Western SsangYong sent an email to the purchaser referring to a discussion with Mr Hopper and saying it had been successful in selling the vehicle and would be “forwarding $37,500 to you in a few days as full and final settlement once we have been paid for the vehicle by the new owner.” The email asked the purchaser for its bank account details, which the purchaser supplied by email on 21 April 2016. The purchaser subsequently signed a vehicle offer and sale agreement (“VOSA”) selling the vehicle to Western SsangYong for $37,500 with 10,871kms on its odometer. The VOSA was erroneously dated “25-4-15”.

[16] The purchaser lodged a claim in the Motor Vehicle Disputes Tribunal (“MVDT”) on 6 May 2016 claiming the difference between its purchase price of $48,113 and its sale price of $37,500 or $10,613.

[17] The trader, represented by its Sales and Marketing Manager Mr Willmot denies that there was anything wrong with the vehicle but says he believes the vehicle was driven by Mr Hopper using his right foot on the accelerator and his left foot on the brake (rather than use his right foot for both operations) as a result of which the vehicle’s transmission did not perform as it is designed to do. He denies that there was any fault with the vehicle’s transmission and produced a letter from the new owner of the vehicle, Sunrise Distributors Limited (Mr Gopi Mehta) dated 5 July 2016 which confirms that. Mr Willmot says that in any event the purchaser accepted the $37,500 sale price in full and final settlement of any dispute he had with the trader.

[18] The trader’s National Service Manager, Mr Hodgson, gave evidence at the hearing that he had road tested the vehicle in October 2015 as had two of the trader’s AMT technicians. He says they tested the vehicle for fault codes and none were found. He says he did find the adaptive learn side of the AMT was confused as it did not know what it was doing. He says this was caused by left foot braking when driving, especially when starting off, as to do so taught the transmission to disengage after engaging resulting in a loss of the “kiss point” of the clutch. The trader removed the transmission and found the transmission and clutch to be in very good condition. The transmission control unit was reset and a hard learn was performed - driving the vehicle normally without using the throttle and brake at the same time. Mr Hodgson says he found the hand brake was over adjusted. No fault was found with the cruise control but that if the brake pedal is pushed that will disengage the cruise control.

[19] The Tribunal, in the absence of any technical report from the purchaser to confirm the existence of a fault in the transmission at the time he owned the vehicle, prefers the evidence given by the trader’s technical witness, Mr Hodgson, that there were no fault codes stored, that there was no fault with the transmission and clutch and any issues the purchaser had experienced with the vehicle’s transmission were probably as a result of his using his left foot to apply the brake at the same time as using the accelerator. Finally, the Tribunal has had regard to the statement of the current owner of the vehicle that the vehicle has been faultless.

Conclusion on issue [a]

[20] The Tribunal accepts Mr Hopper’s evidence that under the circumstances he used the vehicle he found it difficult to use but there is no evidence that the vehicle’s transmission was faulty or defective. The Tribunal must therefore dismiss the purchaser’s application.

DATED at AUCKLAND this 12th day of July 2016

C. H. Cornwell
Adjudicator