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Motor Vehicles Disputes Tribunal of New Zealand |
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Motor Vehicle Disputes Tribunal of New ZealandLast Updated: 17 June 2017
BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
Reference No. MVD 039/2017 (WN110)
IN THE MATTER of the Motor Vehicle Sales Act 2003
AND
IN THE MATTER of a dispute
BETWEEN PETER ALEXANDER ANDERSON
Purchaser
AND TRADE IN CLEARANCE 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
Peter Anderson, Purchaser
Patrick Anderson, Purchaser's Son
N van der
Velde, Manager of Trader
DECISION
REASONS
Introduction
[1] Mr Anderson’s vehicle broke down twice in the fortnight after he purchased it. The process of getting the vehicle repaired has been prolonged and expensive. Mr Anderson now 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 neglect to remedy the failure within a reasonable time?
- (d) What is the appropriate remedy?
Background
[3] On 29 December 2016, Mr Peter Anderson purchased a 2008 Holden Astra with 195,442 km on the odometer for $6,595 plus $624 for a Protecta warranty, from Trade In Clearance Ltd. Prior to purchasing the vehicle, Mr Anderson took it for a test drive to Wainuiomata. He observed that the vehicle drove well and seemed to have plenty of power. His only concern on the test drive was that the vehicle had a noisy clutch release bearing. After taking advice from a mechanic friend, Mr Anderson concluded that this was not a serious issue so agreed to purchase the vehicle. He did not arrange a pre-purchase inspection.
[4] Mr Anderson's son Patrick drove the vehicle home from Trade In Clearance, while Peter Anderson followed. Peter Anderson noticed puffs of black smoke coming from the vehicle. Evidently, he did not regard them as serious enough to warrant returning the vehicle immediately to the trader.
[5] Over the next two weeks, Peter and Patrick Anderson noticed the vehicle lacked power. This was worse immediately after start-up, when they found they could not reverse up their steep driveway. They took the car on two round trips – from Tawa to Pukerua Bay and from Tawa to Aotea. On the second of these trips, the vehicle lost power completely and they had to coast to a halt. After restarting the vehicle, they were able to continue driving.
[6] Then, on 12 January 2017, Patrick Anderson lost power while driving the vehicle in Tawa and was unable to restart it.
[7] The AA towed the vehicle to Peter Anderson’s usual mechanic, North City Motors in Tawa. He explained that his family were about to leave town on a camping holiday on 15 January 2017 and so he did not have the opportunity to discuss matters in detail with North City Motors. Mr Anderson told the Tribunal that this impending trip was also why he did not discuss the vehicle's problems with Trade In Clearance. Moreover, Mr Anderson confirmed that he was comfortable to incur the cost of the initial repairs undertaken to the vehicle, especially as he trusted the work carried out by North City Motors.
Repairs by North City Motors
[8] North City Motors attempted to diagnose and repair the vehicle. In its report dated 28 February 2017, North City Motors described the work that it carried out on the vehicle in January 2017. In summary, there was an oil pressure switch fault code which would not clear. North City Motors found three glow plugs were faulty and spent a lot of time trying to remove them. The tips of the glow plugs were “carboned-up” in the head. North City Motors managed to get three glow plugs out of the head, but the glow plug in the number two cylinder broke off inside the head. There were significant carbon deposits in the inlet manifold and exhaust gas reticulation (EGR) valve. North City Motors fitted three glow plugs but was unable to remove the fourth. North City Motors removed the front engine covers and timing belt and removed the diesel pump to access the intake manifold. It removed and stripped and cleaned out carbon deposits and removed the sealed up and broken manifold flaps. It fitted frost plugs to cover holes, reassembled the manifold and refitted it to the vehicle. After road testing the vehicle, the engine failed again and went into limp mode. North City Motors suspected there were more issues involved with the engine oil switch fault and a faulty EGR valve and possibly more issues with the general state of the engine.
[9] North City Motors invoiced Peter Anderson $1,637.81 for this work, which Mr Anderson has paid.
Mr Anderson's first contact with Trade In Clearance about problems with the vehicle
[10] Just prior to North City Motors’ completion of this work on 1 February 2017, Mr Anderson contacted Trade In Clearance and spoke to its sales manager. At this stage, Mr Anderson understood that the vehicle was drivable so he agreed to take it to Trade In Clearance after the weekend. In the meantime, however, the vehicle failed its final road test at North City Motors.
[11] Peter Anderson telephoned Trade In Clearance again and spoke to its manager, Mr van der Velde, on 2 February 2017. Mr van der Velde agreed to have a Trade In Clearance mechanic look at the vehicle and he offered to arrange transport. Mr van der Velde undertook to get back to Mr Anderson after making a few phone calls.
[12] Mr Anderson unsuccessfully attempted to contact Mr van der Velde again later that day. He next spoke to Mr van der Velde after the holiday weekend on 7 February 2017. Mr van der Velde told Mr Anderson he had spoken to Midas Lower Hutt. Mr Anderson agreed that Trade In Clearance could arrange for its mechanic to assess the vehicle and make necessary repairs. Later that day, the vehicle was collected from North City Motors by a tow truck arranged by Trade In Clearance, and taken to Midas Lower Hutt. Over the next week, Mr Anderson attempted to contact Mr van der Velde on four separate occasions, but Mr van der Velde did not respond. On 17 February, Mr Anderson telephoned Midas Lower Hutt, which told him that it was still working on the vehicle but could not provide more detail at that stage.
[13] On 20 February 2017, Mr Anderson telephoned Midas Lower Hutt again. Midas told him it had found evidence of carbon build-up in the vehicle's intake manifold.
Mr Anderson's letter of rejection
[14] As the vehicle was still not running after almost two months since purchase, Peter Anderson emailed a letter of rejection to Trade In Clearance on 20 February 2017. He requested a refund of his purchase costs. Mr Anderson's letter stated that the vehicle was not of acceptable quality at the time of the sale. He described the two breakdowns that had occurred in the first fortnight of ownership. He also mentioned an unsuccessful warranty claim he made on 1 February 2017.
[15] Mr Anderson concluded his letter by stating that, since purchasing the vehicle, he had two weeks’ unreliable use of it. It had then spent almost six weeks at two garages, neither of which had been able to resolve the problem of sudden loss of power.
Contact with the trader after the letter of rejection
[16] Following his letter of rejection, Peter Anderson made many attempts to contact Mr van der Velde over the next month, without success. Indeed, it was not until well after Mr Anderson brought his application in the Tribunal that Mr van der Velde got back into contact with him. That was on 21 March 2017, when Mr van der Velde said the issue with the vehicle was nearly resolved. Mr van der Velde said it was beyond the ability of Midas Lower Hutt to fix the vehicle so Trade In Clearance had engaged Custom Works. Custom Works had removed the head and replaced the broken glow plug. Mr van der Velde offered Mr Anderson a replacement vehicle from Trade In Clearance’s yard, but would not refund the purchase price.
[17] In his report to the Tribunal, Mr van der Velde explained that Midas did not have the right tools for the job and there was a delay in Custom Works completing the repairs because it needed to order parts. Mr van der Velde said Trade In Clearance was happy to offer Mr Anderson a loan car or even a replacement vehicle.
[18] The Tribunal requested Trade In Clearance to provide a detailed report from Custom Works as to the problem with the vehicle and the repairs that were being carried out. A short report was provided, but it was not as detailed as the Tribunal's Assessor Mr Binding would have found helpful. No one from Custom Works appeared at the hearing to give evidence.
[19] Custom Works’ report dated 5 April 2017 states as follows:
Received the car 22/3/17 from Midas in Lower Hutt. Engine had a broken glow plug stuck in head, repaired broken glow plug issue. Could not get car to start after repair, contact previous garages, Midas never had it running as it had a broken glow plug, contacted North City Motors in Tawa. Found car was not running when left there.
Find fuel pump not creating correct pressure at fuel rail. Removed and had pump resealed and set up on test bench. Engine starts and runs, but had white smoke from the EGR being stuck open. Removed and cleaned. Test drive car OK.
Issue 1: Did the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the Act?
[20] 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.
[21] 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:
...
[22] 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.
[23] It was not in dispute that this vehicle had serious engine problems that probably dated back to the time at which it was purchased. The problems seem to have stemmed from faulty glow plugs which have led to carbon build-up in the engine that has caused various blockages. In addition, Custom Works found the fuel pump was not creating the correct pressure and this was another defect that needed to be repaired.
[24] Even though this vehicle was high mileage, it appears to the Tribunal’s Assessor Mr Binding that its engine has not been adequately maintained. The lack of power experienced by Peter and Patrick Anderson and the periodic shut-downs of the engine so soon after purchase demonstrate that the vehicle was not as fit for the purpose of being driven, nor sufficiently durable, as a reasonable consumer would regard as acceptable, having regard to its age, high mileage and price.
[25] Accordingly, I conclude that the vehicle failed to comply with the guarantee of acceptable quality in s 6 of the Act.
Issue 2: Did the purchaser require the trader to remedy the failure in accordance with s 18 of the Act?
[26] It was not until 1 February 2017 that Peter Anderson contacted Trade In Clearance for the first time about the problems with the vehicle. This was about a month after Mr Anderson first noticed the problems. By then, Mr Anderson had already engaged North City Motors to carry out repairs.
[27] As Trade In Clearance points out, s 18 of the Act requires a purchaser with a defective vehicle to give the trader an opportunity to remedy the vehicle’s failure within a reasonable time, before the purchaser is entitled to have the failure remedied elsewhere at the trader’s expense.[1]
[28] Accordingly, I conclude that Mr Anderson did not comply with the obligation in s 18(2)(a) of the Act to "require the supplier to remedy the failure within a reasonable time" before attempting to have the failure remedied elsewhere. For that reason, Mr Anderson is not entitled to recover any of the costs incurred at North City Motors, from Trade In Clearance. Mr Anderson accepted this to be the case.
[29] Mr Anderson is still entitled to seek redress against Trade In Clearance in respect of the repair work required after 1 February 2017, however. Mr Anderson and Mr van der Velde made arrangements for this work to be carried out at Trade In Clearance’s expense, by Midas Lower Hutt. That is where the vehicle was towed on 7 February 2017.
Issue 3: Did the trader neglect to remedy the failure within a reasonable time?
[30] Section 18(2)(b) of the Act provides:
(2) Where the failure can be remedied, the consumer may—
(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.
[31] Mr Anderson’s argument is that he has rejected the vehicle because Trade In Clearance refused or neglected or did not succeed in remedying the failure of the vehicle to comply with the guarantee of acceptable quality within a reasonable time. In ascertaining what a "reasonable time" is, the appropriate period is to be measured from the time when the purchaser and the trader first made arrangements to have the vehicle repaired, until the time when Mr Anderson rejected the vehicle. That is the period from 7 February until 20 February 2017. I accept that Mr Anderson made several attempts between those dates to contact Mr van der Velde without success. I agree with Mr Anderson that Trade In Clearance's lack of communications in that period leave a lot to be desired. However, I do not consider that the time that elapsed between 7 and 20 February 2017, approximately a fortnight, indicates that Trade In Clearance had neglected or failed to remedy the failure within a reasonable time. By comparison, North City Motors had the vehicle for a slightly longer period, from 12 January to 2 February 2017, without having repaired the vehicle in that time.
[32] I do not consider that Mr Anderson is entitled to include all of the time since he purchased the vehicle in the calculation of “reasonable time”. It would be unfair on Trade In Clearance for him to do so as he had not alerted Trade In Clearance to the fact that the vehicle was defective until relatively late in the piece.
[33] Nor is it appropriate to include the period after Mr Anderson purported to reject the vehicle in the calculation of "reasonable time". To do so would be inconsistent with the stepped process inherent in s 18, in which the right of rejection is triggered after the trader's default, unless the failure is of a substantial character or cannot be remedied.
[34] Accordingly, I conclude that, although Trade In Clearance’s lack of communication with Mr Anderson was unsatisfactory, Mr Anderson has not demonstrated that Trade In Clearance refused or neglected or did not succeed to remedy the failure with Mr Anderson’s vehicle, at the point when he sent his letter of rejection. Therefore, Mr Anderson was not, at that point, entitled to reject the vehicle under s 18(2)(b)(ii) of the Act.
[35] Nor do I consider that Mr Anderson currently has any other basis on which he is entitled to reject the vehicle. At present, I do not consider that Mr Anderson has demonstrated that the failure "cannot be remedied or is of a substantial character" in terms of s 18(3) of the Act. In any event, the rights in ss 18(2) and 18(3) are sequential and do not exist so that a purchaser can take advantage of both together.[2] Having agreed to allow Trade In Clearance to repair the vehicle, Mr Anderson was required to let it attempt to do so within a reasonable time.
Issue 4: What is the appropriate remedy?
[36] Mr Anderson still has the right to require Trade In Clearance to remedy the vehicle’s failure within a reasonable time. It was not entirely clear to Mr Binding or me whether this had occurred yet. Custom Works’ report dated 5 April 2017 did not provide sufficient detail for Mr Binding to ascertain whether all of the carbon had been removed from the engine. However, Custom Works' report did indicate that the car drove “ok” on a test drive. Nevertheless, the report's brevity and lack of detail means that Mr Anderson will be given the chance to satisfy himself that the vehicle’s engine is performing adequately.
[37] In addition, I note that the vehicle was sold with a warrant of fitness that expired on 21 October 2017, indicating that the trader had not obtained a new warrant of fitness for the vehicle within one month before delivering it to the purchaser.[3] For this reason, and to reflect the Messrs Anderson's inability to use the vehicle, I will also order Trade In Clearance to obtain a new warrant of fitness for this vehicle, including to carry out at its expense any further repairs that are required as part of renewing the warrant of fitness.
[38] Finally, in light of Mr Binding’s uncertainty as to whether the vehicle’s engine is repaired, I consider it appropriate to allow Mr Anderson the opportunity to return to the Tribunal for further consideration of his application to reject the vehicle within six
weeks if, in that period, the engine is not repaired and all matters required for the vehicle to obtain a new warrant of fitness are not carried out.
J S McHerron
Adjudicator
[1] Section 18(2) of the Act; Acquired Holdings Limited v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 (HC) at [11].
[2] Stephens v Chevron Motor Court Ltd [1996] DCR 1 at 5.
[3] In breach of 9.12 of Land Transport Rule: Vehicle Standards Compliance 2002. Mr Anderson’s vehicle’s warrant of fitness should have expired no later than 29 November 2017.
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2017/1110.html