|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Motor Vehicles Disputes Tribunal of New Zealand |
![[AustLII]](/images/tiny-austlii.gif)
Motor Vehicle Disputes Tribunal of New ZealandLast Updated: 17 June 2017
BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
Reference No. MVD 030/2017 (WN109)
IN THE MATTER of the Motor Vehicle Sales Act 2003
AND
IN THE MATTER of a dispute
BETWEEN ANDRE SWARTZ
Purchaser
AND BRENDAN FOOT MOTORS LIMITED
Trader
MEMBERS OF TRIBUNAL
J S McHerron, Barrister – Adjudicator
D Binding – Assessor
HEARING at Wellington on 10 April 2017
DATE OF DECISION 1 May 2017
APPEARANCES
A Swartz, Purchaser
M J Foot, Director of Trader/Dealer Principal
J E
Hill, Group Service Manager of Trader
DECISION
A. Mr Swartz's rejection of the vehicle on 8 December 2016 is upheld.
REASONS
Introduction
[1] Mr Swartz’s Chery J3, which he bought brand new in 2014, has already had major corrosion repairs. Unfortunately, the rust has returned and he wishes to reject the vehicle.
[2] The following issues arise:
- (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 so, did the purchaser require the trader to remedy the failure in accordance with s 18 of the Act?
- (c) If so, did the trader succeed in remedying the failure within a reasonable time?
- (d) Alternatively, is the failure of a substantial character in terms of s 21 of the Act?
- (e) Is the purchaser entitled to reject the vehicle?
Background
[3] On 16 April 2014, Mr Swartz purchased a brand new Chery J3 from Brendan Foot Motors Ltd. The purchase price for the vehicle was listed in the contract for sale as $15,985. However, Mr Swartz entered into a collateral credit agreement with Brendan Foot Motors and UDC Finance Ltd on 17 April 2014 ("the UDC collateral credit agreement"). Fees associated with that agreement brought the total price for the vehicle up to $16,508.
[4] There were some minor problems with the vehicle that have been fixed and are no longer at issue. As well, Mr Swartz has experienced problems with the vehicle’s manual transmission getting stuck in third gear. While Brendan Foot Motors understood that it had fixed this problem, Mr Swartz claimed at the hearing that it is ongoing. However, the main issue underlying Mr Swartz’s claim, and on which much of his submissions focused, concerned rust on the vehicle.
[5] Mr Swartz first noticed the rust approximately two years after purchasing the vehicle, in the first half of 2016. Mr Swartz took the vehicle back to Brendan Foot Motors, which arranged for repair work to be completed over a three week period in June 2016. Brendan Foot Motors outsourced the repair work to a panelbeater.
[6] Brendan Foot Motors' product report dated 24 June 2016 contains the following description of the fault, as reported by a Brendan Foot Motors technician:
rust forming round the fuel filler cap, black vertical appliques on both front doors, upper and lower hinges on both rear doors, left front strut tower, top rails on the left and right inner guards, top inner seam of tailgate.
[7] The cost of the rust repairs in June 2016 was $2,673.88, which was covered under the vehicle’s factory warranty.
[8] Approximately six months later, towards the end of 2016, Mr Swartz noticed that rust was reappearing, including in some of the same places where rust had earlier been located and repaired.
[9] Mr Swartz wrote a letter of rejection to Brendan Foot Motors on 8 December 2016. The rejection letter points out that, in the time Mr Swartz has owned the vehicle, he has experienced a number of issues with it, including the transmission getting stuck in third gear which “continues to plague the car and is so bad at times that we have to pull over, shut the engine off, get the car out of gear, then restart it”. The rejection letter states that the “major issue” with the vehicle is the rust which is continuing to show all over despite the major repairs that were completed over a three week period six months earlier. Mr Swartz requested a full refund of his purchase price.
[10] Brendan Foot Motors requested Mr Swartz to bring the vehicle in for further assessment, which he did on 12 December 2016. After initially stating that it could not reproduce the gearbox sticking in third gear, Brendan Foot Motors then traced the fault to a weeping clutch master cylinder, which it replaced under warranty.
[11] In relation to the rust, Brendan Foot Motors has obtained various quotations for repair work. The repairer Brendan Foot Motors wishes to use has quoted $2,403.89 to carry out the repair work which, Brendan Foot Motors acknowledges, includes some work that is a repeat of the work earlier carried out.
[12] Mr Swartz did not accept Brendan Foot Motors’ offer to repair the vehicle and repeated his request to reject it on 16 December 2016 and 22 December 2016. Mr Swartz obtained his own estimate for the repair work from a different repairer, which estimated the cost of repairs at $3,993.63.
[13] In Brendan Foot Motors' product report dated 14 December 2016, the technician’s description of the fault is as follows:
Inspected vehicle, found rust on right and left lower edge of headlight panel, in engine bay, top edges of both front guards at each side of the windscreen, door hinges and seams on all four doors, under the weather strips on all four doors, chip towards top interior edge of right front door, top interior seam on tailgate, studs and nuts of both tailgate lamps, round left hand bump stop on tail gate, spot weld at left rear door lock striker, paint chips and spider rust at left hand leading edge of bonnet and left side of bonnet towards the windscreen, paint chips and small dent close to the J3 badge on the tailgate, both front seat inner and outer runners have surface rust.
[14] Mr Swartz produced a number of photographs confirming the existence of the rust described in Brendan Foot Motors' product report.
Issue 1: Did the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the Act?
[15] 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.
[16] The meaning of acceptable quality is defined in s 7 of the Act (as far as is relevant) as follows:
- 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:
...
(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.
[17] 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.
[18] While the transmission issue identified clearly needs further investigation, there was a lack of sufficiently clear evidence to reach a firm finding on the cause of this problem and whether it is ongoing. Brendan Foot Motors indicated that it would be willing to look at the issue again to ascertain whether further repair work was needed.
[19] There is clear evidence, both documented and photographic, of rust in numerous places on the vehicle. Brendan Foot Motors did not dispute that the rust is unacceptable. The Tribunal’s Assessor Mr Binding and I agree that a reasonable consumer would not regard the quantity and location of the rust experienced in Mr Swartz’s vehicle to be acceptable. In terms of the definition in s 7 of the Act, the rust present shows the vehicle was not as acceptable in appearance and finish or as durable as a reasonable consumer would expect from a new vehicle after two years of ownership.
[20] There is rust in the hinges of all four doors. Mr Binding advised that the appearance of rust around the door hinges is one of the worst places to find corrosion in a vehicle, and could lead to difficulties in maintaining its warrant of fitness.
[21] At one point in the hearing, Mr Foot suggested that the location of the vehicle in a coastal area of Wellington may have contributed to the corrosion. Mr Foot did not specifically argue that this meant the vehicle would not fail to comply with the guarantee of acceptable quality because s 7(4) of the Act applies. In any event, I note that Mr Swartz's home is not near the coast and Mr Swartz told the Tribunal that the vehicle is usually kept in a garage. Brendan Foot Motors produced no evidence to show (in terms of s 7(4)), that the vehicle has 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 it.
[22] Accordingly, I conclude that the vehicle initially failed to comply with the guarantee of acceptable quality in s 6 of the Act due to the rust which was first noticed by Mr Swartz in or around May or June 2016 and which is the subject of Brendan Foot Motors' product report dated 24 June 2016. This initial failure was compounded by the subsequent corrosion issues as described in Brendan Foot Motors' second product report dated 14 December 2016.
Issue 2: Did the purchaser require the trader to remedy the failure in accordance with s 18 of the Act?
[23] Section 18 of the Act provides a stepped procedure for obtaining a remedy against a trader where a vehicle does not comply with a guarantee in the Act. It provides, as far as is relevant:
- 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.
...
[24] As is set out above, Mr Swartz complied with his obligation in s 18(2)(a) to require Brendan Foot Motors to remedy the failure within a reasonable time. This resulted in the repair work that was arranged by Brendan Foot Motors in June 2016.
Issue 3: Did the trader succeed in remedying the failure within a reasonable time?
[25] Section 18(2)(b) gives a purchaser the right to have a failure remedied elsewhere at the trader's expense, or to reject the vehicle, if the trader refuses or neglects to remedy the failure, or does not succeed in doing so within a reasonable time. Brendan Foot Motors cannot be criticised in terms of its willingness to carry out repairs on Mr Swartz's vehicle. But the question must be asked whether it has succeeded in repairing the vehicle.
[26] The repairs that were carried out in June 2016 have been at least partly unsuccessful in remedying the vehicle’s rust problems. Brendan Foot Motors' second product report confirms that rust has returned in the door hinges and in the tailgate area. Brendan Foot Motors’ email dated 17 March 2017 acknowledges that some of the rust repaired in June 2016 “has returned on the door hinges, fuel flap and rear door”. In addition, the rust has appeared in a number of other areas where rust was not noted in June 2016.
[27] A trader will not always be required to repair a fault on its first attempt. A measure of reasonableness must be applied before the Tribunal will conclude that the trader has not succeeded in terms of s 18(2)(b). That will be the case especially in situations where a fault is difficult to diagnose, such as a complicated electrical fault.
[28] In the present case, the evidence shows not only that rust has returned in some of the areas that were repaired in June 2016, but also in new areas of the vehicle. Brendan Foot Motors acknowledges that the original repair was at least partly unsuccessful. This lack of success has not occurred through difficulty of diagnosis but, it seems, through poor workmanship. In addition, the fact the rust has since spread into new areas suggests the extent of the problem was underestimated. The vehicle does have, it appears, a fairly significant rust problem.
[29] Accordingly, I find that the initial rust repairs have not been successful. This vehicle has a corrosion problem in several areas of the vehicle including in the door hinges, which may in future jeopardise the ability to renew its warrant of fitness.[1] I conclude that the failure of the June 2016 corrosion repairs means that Brendan Foot Motors has not succeeded in remedying the failure of this vehicle to comply with the guarantee of acceptable quality.
Issue 4: Is the failure of a substantial character in terms of s 21 of the Act?
[30] Section 18(3)(a) of the Act provides an additional basis for rejecting the vehicle if the failure is of a substantial character within the meaning of s 21 of the Act. Relevantly, s 21(a) provides:
- Failure of substantial character
For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where—
(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure;
...
[31] Whether a defect is of a "substantial character" is a matter of degree in any given case.[2] In relation to Mr Swartz's vehicle, I consider the following factors are relevant in considering whether the corrosion amounts to a failure of a substantial character:
- (a) Timing: the corrosion arose between two and three years after purchase of a brand new vehicle.
- (b) Prevalence: the vehicle is rusty in several locations, including in the hinges of all four doors.
- (c) Cost: the initial repairs and the proposed further repairs have a combined cost of just over $5,000, nearly a third of the vehicle's purchase price.
[32] Viewing these factors together, I do not consider that a reasonable purchaser would have acquired the vehicle if acquainted with the knowledge that, as a new vehicle, it would suffer such significant corrosion so soon after purchase.
[33] I conclude that the vehicle's failure to comply with the guarantee of acceptable quality is of a substantial character.
Issue 5: Is the purchaser entitled to reject the vehicle?
[34] Mr Swartz’s major concern is that the rust is continuing to show all over the vehicle despite major repairs that were completed over a three week period just six months earlier. The rust continues to appear in critical elements of the vehicle such as the door hinges. In terms of the Act, I have found that Brendan Foot Motors did not succeed in remedying the vehicle’s failure to comply with the guarantee of acceptable quality within a reasonable time. I have also found that the vehicle's failure was of a substantial character.
[35] Pursuant to s 18(2)(b) of the Act, Mr Swartz has the option to have the vehicle repaired elsewhere and obtain from Brendan Foot Motors all reasonable costs or, alternatively, Mr Swartz is entitled to reject the vehicle under s 18(2)(b)(ii). In addition, Mr Swartz has the right to reject the vehicle under s 18(3)(a) of the Act.
[36] Mr Swartz’s right to reject the vehicle under ss 18(2)(b)(ii) and 18(3)(a) is subject to s 20 of the Act. That section provides (inter alia) that the right to reject goods is lost if not exercised within a reasonable time. The term “reasonable time” is defined in s 20(2) as a period from the time of supply in which it would be reasonable to expect the defect to become apparent having regard to the range of factors set out in paragraphs (a) to (d) of that subsection.
[37] In the present case, Mr Swartz’s right of rejection was exercised approximately 2½ years after the vehicle was supplied to him. In the circumstances, I consider that to be a "reasonable time" in terms of s 20 of the Act. First, Mr Swartz’s vehicle was brand new and it is unlikely that it had any observable rust on it for the first two years after purchase. Second, I accept that Mr Swartz notified the trader that he had found rust on the vehicle as soon as reasonably possible after he noticed it himself, in the first half of 2016. Third, the further delay between June 2016 and 8 December 2016, when Mr Swartz rejected the vehicle, is accounted for by the fact that Mr Swartz gave Brendan Foot Motors a reasonable time to repair the rust on the vehicle. That is the time it took for the rust to reappear after the initial repair. For these reasons, I conclude that Mr Swartz has not lost his right to reject the vehicle, which he exercised within a reasonable time in accordance with s 20 of the Act.
[38] Furthermore, I consider that Mr Swartz has exercised his right to reject the vehicle in the correct manner according to s 22 of the Act by notifying Brendan Foot Motors of his decision to reject the vehicle and of the grounds for his rejection of it.
Conclusion
[39] Accordingly, I conclude that Mr Swartz is entitled to reject the vehicle and obtain a full refund of the purchase price under s 23(1)(a) of the Act. I also consider that he is entitled to have the UDC collateral credit agreement vested in the trader under s 89(2) of the Motor Vehicle Sales Act 2003. This will take place in accordance with the orders as set out at the beginning of this decision.
J S McHerron
Adjudicator
[1] See the In-service certification (WoF and CoF) VIRM, 6-1, Door and hinged panel retention systems, which provides that a reason for rejection is if there is corrosion damage within 150 mm of the hinge of a door or other hinged panel. Available at https://vehicleinspection.nzta.govt.nz/virms/in-service-wof-and-cof/general/entrance-and-exit/door-and-hinged-panel-retention-systems.
[2] Stephens v Chevron Motor Court Ltd [1996] DCR 1 at 5.
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/cases/NZMVDT/2017/1109.html