Choi v New World Cars Limited - Reference No. MVD 167/2017 (Auckland) [2017] NZMVDT 109 (31 July 2017)

Last Updated: 16 August 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 109 Reference No. MVD 167/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	HON YEONG CHOI
		Purchaser
	AND	NEW WORLD CARS LIMITED
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 25 July 2017
DATE OF DECISION 31 July 2017
APPEARANCES
Mr H Choi, Purchaser
Mr J T Huang, for the Trader

ORDERS

A. New World Cars Limited shall, within five working days of the date of this decision, pay $303 to Mr Choi.

DECISION

[1] The vehicle had a fault with its ignition that breached the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the Act”).
[2] Mr Choi is entitled to recover the reasonable cost of having the ignition fault assessed and diagnosed.

REASONS

Introduction

[3] On 18 November 2016, Hon Yeong Choi purchased a 2007 Toyota Auris, registration number KFD123 from New World Cars for $8,000. The vehicle had an odometer reading of approximately 96,000 kms at the time of sale.
[4] Within two weeks of purchase the vehicle developed an intermittent fault with its ignition that made the vehicle difficult to start. Mr Choi returned the vehicle to New World Cars on at least two occasions, but New World Cars could not replicate or diagnose the fault.
[5] Mr Choi asked New World Cars to repair the ignition fault. New World Cars’ position was that Mr Choi needed to prove the existence of the fault before it could be repaired.
[6] On 23 December 2016, Mr Choi had the vehicle assessed and serviced by AA Service and Repair in Greenmount, Auckland. The vehicle did not need to be serviced – it had been serviced just before sale. However, Mr Choi chose to purchase this service because he thought the diagnostic scan performed as part of the assessment and service would detect any fault with the vehicle’s ignition. The diagnostic scan found no fault with the ignition. Mr Choi was charged $259 for this assessment and service.
[7] The intermittent ignition fault continued and, on 16 February 2017, Mr Choi had the vehicle assessed by Manukau Toyota Botany, who found a fault with the vehicle’s steering lock/unlock actuator and steering ECU. Manukau Toyota Botany provided an estimate of $2,160 for the necessary repairs. Mr Choi was charged $253 for this assessment.
[8] New World Cars then asked for the vehicle to be returned to it for repairs to be performed. Those repairs have now been performed and Mr Choi reports that the fault has been remedied.
[9] Mr Choi has sought to recover the cost of the AA Service and Repair and Manukau Toyota Botany assessments from New World Cars. New World Cars says it should not be responsible for those costs as they were incurred by Mr Choi in proving the fault with the vehicle.
[10] Mr Choi then applied to the Tribunal seeking to recover the costs incurred in having the vehicle‘s faults assessed.
[11] Although Mr Choi is the applicant before the Tribunal, he is no longer the registered owner of the vehicle. Mr Choi advises that he purchased the vehicle for his family and has since transferred ownership into his mother’s name. Mr Choi says the vehicle is used as the family vehicle and that he has paid for all of the assessments performed on the vehicle.

The Issues

[12] The issues requiring consideration in this case are:

• (a) Did the ignition fault cause the vehicle to breach the acceptable quality guarantee in s 6 of the Act?
• (b) Can Mr Choi apply for a remedy under the Act if he is not the current registered owner of the vehicle?
• (c) If so, what remedy is Mr Choi entitled to under the Act?

Did the ignition fault cause the vehicle to breach the acceptable quality guarantee?

[13] Section 6 of the Act imposes on suppliers and manufacturers of consumer goods "a guarantee that the goods are of acceptable quality." Section 2 of the Act defines "goods" as including vehicles.

[14] 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.”

[15] 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 Mr Choi’s subjective perspective.

The ignition fault is a breach of the acceptable quality guarantee

[16] The vehicle developed an intermittent fault with its ignition within two weeks of purchase that made the vehicle difficult to start. This fault is more than minor. Manukau Toyota Botany estimated that the necessary repairs would cost $2,160.
[17] I acknowledge that the vehicle was 9 years old, relatively inexpensive and had travelled nearly 100,000 kms at the date of purchase. However, I am satisfied that a reasonable consumer would not expect a vehicle of this age, price and mileage to developed a costly fault with its ignition within two weeks of purchase.
[18] Accordingly, I consider that the ignition fault means the vehicle did not comply with the guarantee of acceptable quality in s 6 of the Act. The vehicle has not been nearly as durable as a reasonable consumer would expect.

Can Mr Choi apply for a remedy if he is not the current registered owner of the vehicle?

[19] Mr Choi can only bring a claim under the Act if he is a consumer. Under s 2 of the Act, a consumer is a person who acquires from a supplier goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption.
[20] Mr Choi is a consumer under the Act. He acquired a motor vehicle of a kind ordinarily acquired for personal, domestic or household use from New World Cars.
[21] Under s 16 of the Act, Mr Choi will then have a right of redress against New World Cars if the vehicle fails to comply with any of the guarantees in ss 5 to 10 of the Act. As noted above, the vehicle has an ignition fault that caused it to breach s 6 of the Act. As a result, I am satisfied that, although Mr Choi is not the current registered owner of the vehicle, he is nonetheless entitled to bring a claim against New World Cars because he acquired the vehicle from New World Cars.

What remedy is Mr Choi entitled to under the Act?

Relevant law

[22] Section 18 of the Act sets out the remedies available under the Act and provides 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.”

[23] New World Cars has repaired the ignition fault, so Mr Choi is not entitled to any remedy under s 18(2) of the Act.
[24] However, Mr Choi is entitled to recover his reasonable costs in having the fault assessed under s 18(4) of the Act. Section 18(4) of the Act allows consumers to recover reasonably foreseeable loss or damage to the consumer resulting from the vehicle’s failure to comply with the acceptable quality guarantee. I am satisfied that Mr Choi has suffered loss by paying for the vehicle’s faults to be assessed and diagnosed. Although Mr Choi was not the registered owner of the vehicle when he incurred those costs, Mr Choi incurred that cost on behalf of his mother and I am satisfied that is the type of reasonably foreseeable loss or damage that is recoverable under s 18(4) of the Act.
[25] I consider that Mr Choi is entitled to recover the entire cost of the Manukau Toyota Botany assessment. However, I do not consider that he should recover the entire cost of the AA Service and Repair service and assessment. That is because most of the cost of the AA service and assessment did not relate to assessing the vehicle’s ignition fault. Instead, most of the cost related to a service performed on the vehicle, a cost that Mr Choi cannot recover from New World Cars.
[26] Mr Gregory, the Tribunal’s Assessor, advises that only the diagnostic scan relates to the assessment of the ignition fault. Unfortunately, AA has not separately itemised the cost of the diagnostic scan on its invoice. Mr Gregory advises that a diagnostic scan would usually cost approximately $50. That is the amount I intend to award to Mr Choi.
[27] Accordingly, New World Cars must, within five working days of the date of this decision, pay Mr Choi $303.

DATED at AUCKLAND this 31st day of July 2017

B.R. Carter
Adjudicator