Black v FiveFifteen Holdings Limited t/a Grant Ward Nissan - Reference No. MVD 310/2016 (Wellington) [2017] NZMVDT 1085; [2017] NZMVT Wellington 85 (24 January 2017)

Motor Vehicle Disputes Tribunal of New Zealand

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Black v FiveFifteen Holdings Limited t/a Grant Ward Nissan - Reference No. MVD 310/2016 (Wellington) [2017] NZMVDT 1085 (24 January 2017); [2017] NZMVT Wellington 85

Last Updated: 28 February 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

Reference No. MVD 310/2016 (WN85)

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN ETHAN LLOYD BLACK

Purchaser

AND FIVEFIFTEEN HOLDINGS LIMITED T/A GRANT WARD NISSAN

Trader

MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

D Binding – Assessor

HEARING at Christchurch on 17 January 2017

DATE OF DECISION 24 January 2017
APPEARANCES

E L Black, Purchaser
M Black, Purchaser's Wife

G D Constable, Dealer Principal of Trader (by AVL)

DECISION

Fivefifteen Holdings Limited must pay Mr Black $5,951.10 immediately.

REASONS

Introduction

[1] Two weeks after purchase, Ethan Black’s Nissan Navara suffered a loss of coolant as a result of a leaking heater pipe. The pipe was temporarily repaired and Mr Black was advised he could keep driving the vehicle. However, two months later, he discovered the vehicle had a cracked head or blown head gasket. The trader refused to pay for the repairs, arguing Mr Black caused the damage. Mr Black now claims the cost of the repairs.
[2] The issues raised by this claim are as follows:

• (a) Did the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the Consumer Guarantees Act 1993 (“the Act”)?
• (b) If not, did the purchaser require the trader to remedy the failure within a reasonable time?
• (c) If so, did the trader refuse to remedy the failure?
• (d) If so, what remedy is the purchaser entitled to?

Background

[3] On 4 June 2016, Mr Black purchased a 2006 Nissan Navara ST-X with 222,000 km on the odometer for $19,700. The purchase took place online and the trader drove the vehicle to Tekapo where Mr Black collected it on 8 June. Three days later, on 11 June, Mr Black noticed an engine warning light (a red exclamation mark) appear. Mr Black contacted the trader and spoke to a staff member who initially asked Mr Black to drive the vehicle to the trader’s premises in Alexandra. The staff member then agreed that Mr Black could take the vehicle to Cockram Nissan in Christchurch.
[4] On 19 June 2016, while refueling the car at a petrol station, Mr Black noticed that water was leaking out of the bottom of the engine bay. Mr Black had not observed any evidence of the vehicle overheating, such as steam coming from the engine or the temperature gauge rising. However, as a precaution, he arranged for the vehicle to be towed back to his home. There, after about 30 or 40 minutes, Mr Black refilled the cooling system, but it continued to leak.
[5] On 24 June 2016, Mr Black arranged for the vehicle to be transported to Cockram Nissan, which carried out a temporary repair to the heater pipe and bled the cooling system. In addition, Cockram Nissan assessed the engine check light and concluded the vehicle needed further investigations. Cockram Nissan suspected the problem was related to the turbo boost sensor.
[6] An arrangement was made between Cockram Nissan and Grant Ward Nissan for the permanent repair of the heater pipe, in which the latter would obtain a replacement heater pipe to be installed by Vantage Auto Diagnostics. In the meantime, Cockram Nissan advised Mr Black that the vehicle was driveable. At this stage the vehicle had travelled 225,429 km, just under 3,500 km since purchase. Cockram Nissan invoiced Mr Black $182.28 for this work. Mr Black said that Grant Ward Nissan agreed to pay half of this sum but did not do so.
[7] On 9 August 2016, Mr Black took the vehicle to Vantage Auto Diagnostics for the new heater pipe to be installed. Vantage Auto Diagnostics advised Mr Black that the vehicle’s cooling system had an air lock and that he should not drive it. Mr Black did not drive the vehicle after receiving this advice.
[8] On 15 August 2016, at Grant Ward Nissan's request, the vehicle was towed to Complete Automotive, which confirmed there was a major air lock in the water system and that the vehicle had a cracked head or blown head gasket. Complete Automotive carried out a TK test which revealed there was carbon monoxide in the coolant system. Complete Automotive also advised Mr Black and Grant Ward Nissan that the vehicle should not be driven.
[9] The vehicle was released to Mr Black on 15 August 2016. An email from Complete Automotive indicates it referred Mr Black to Southbrook Autos for further work to be done on the vehicle. Mr Black contacted Grant Ward Nissan by telephone but the trader informed him that it would not pay for the vehicle to be repaired. Instead, Grant Ward Nissan offered to give Mr Black a discount if the repair were carried out by them.
[10] Following that refusal, Mr Black arranged for Southbrook Autos to confirm what was wrong with the vehicle and repair it. Southbrook Autos replaced the cylinder head and parts as required and reinstated the cooling system. In addition, Southbrook Autos checked the diesel injectors and found that two of them needed replacing. Southbrook Autos took the opportunity to replace all four of the diesel injectors. The total cost of the work carried out by Southbrook Autos was $6,768.82, which Mr Black has paid.

Did the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the Act?

[11] Section 6(1) of the Act provides that where goods are supplied to a consumer there is a guarantee “that the goods are of acceptable quality”. According to s 2 of the Act, “goods” includes vehicles.
[12] The meaning of acceptable quality is defined in s 7 of the Act (as far as is relevant) 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.

[13] The question whether a vehicle is of acceptable quality is considered from the point of view of a reasonable consumer who is fully acquainted with the state and condition of the vehicle, including any hidden defects.
[14] In considering whether this vehicle failed to comply with the guarantee of acceptable quality it is necessary to have regard to the fact that it is a 10 year old vehicle with a moderately high mileage, which was sold at the relatively high price of $19,700.
[15] Mr Black experienced a major failure of the cooling system, leading to engine damage requiring extensive repairs. These repairs were required within a relatively short time of Mr Black's purchasing the vehicle. In the Tribunal’s Assessor Mr Binding’s view, it is likely that the damage to the engine occurred at the time when the vehicle lost water from the faulty heater pipe on 19 June 2016; a mere 11 days after the purchaser received the vehicle.
[16] The trader’s dealer principal, Mr Constable, who represented the trader at the hearing, complained that he had not been aware that the vehicle had lost water on 19 June 2016. Indeed, this fact was not emphasised in Mr Black’s written documentation. However, Grant Ward Nissan was clearly aware that there had been a leaking heater pipe which had to be bypassed by Cockram Motors to ensure the vehicle could be driven. It is not difficult to infer from the failure of a heater pipe that water had been leaking from the cooling system. Mr Binding’s view was that the failure of the heater pipe and consequent water loss is likely to have led to the head being cracked. Mr Binding considers the crack is likely to have increased in size over time to the point where the vehicle failed the TK test carried out by Complete Automotive on 15 August.
[17] In my view, and that of Mr Binding, the vehicle was not as durable as a reasonable consumer would regard as acceptable having regard to its age, mileage, and price. The failure of the heater pipe that is likely to have led to such catastrophic consequences occurred within a fortnight of purchase. A reasonable purchaser of the present vehicle, having regard to its age, mileage and price, is entitled to expect trouble free motoring for more than a few days after purchase.
[18] There is insufficient evidence to support Mr Constable's submission that Mr Black caused the damage. To the contrary, the available evidence indicates that Mr Black treated the vehicle responsibly and did not continue to drive it after he was aware of the problem with the cooling system.

Did the purchaser require the trader to remedy the failure within a reasonable time?

[19] The purchaser’s evidence, not in dispute, was that he asked Grant Ward Nissan to pay for the costs of repairing the vehicle but that Grant Ward Nissan refused to do so.

What remedy is the purchaser entitled to?

[20] Section 18 of the Act provides that where a supplier who has been required to remedy a failure refuses to do so, then the purchaser is entitled to have that failure remedied elsewhere and obtain from the supplier all reasonable costs incurred in having the failure remedied.
[21] Southbrook Autos’ invoice for replacing the cylinder head and reinstating the cooling system plus the work in assessing and replacing the diesel injectors amounted to $6,768.82. Mr Binding accepts that it was appropriate for Southbrook Autos to take this opportunity to assess the condition of the injectors. However, a degree of betterment exists because only two of the diesel injectors required replacing. Accordingly, I propose to discount the sum that is recoverable by Mr Black by $1,000, which corresponds to the cost of the two injectors that did not require replacement. Otherwise, Mr Binding considered that Southbrook Autos’ invoice was reasonable. The amount corresponds favourably with Mr Constable’s submission that $7,000 to $10,000 would be a reasonable cost for this work. I also consider that Mr Black is entitled to recover the $182.28 that was payable to Cockram Nissan for the temporary repairs that were made to the failed heater pipe.
[22] Accordingly, Grant Ward Nissan must pay Mr Black $5,951.10 immediately.

J S McHerron
Adjudicator