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King v JLD Enterprises Limited - Reference No. MVD 143/2017 (Wellington) [2017] NZMVDT 1123; [2017] NZMVT Wellington 123 (30 June 2017)

[AustLII] Motor Vehicle Disputes Tribunal of New Zealand

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King v JLD Enterprises Limited - Reference No. MVD 143/2017 (Wellington) [2017] NZMVDT 1123 (30 June 2017); [2017] NZMVT Wellington 123

Last Updated: 19 July 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL



Reference No. MVD 143/2017 (WN123)


IN THE MATTER
of the Motor Vehicle Sales Act 2003


AND


IN THE MATTER
of a dispute


BETWEEN
CHEYENNE RODERICK KING


Purchaser


AND
JLD ENTERPRISES LIMITED


Trader


MEMBERS OF TRIBUNAL
J S McHerron, Barrister – Adjudicator
R C Dixon, Assessor

HEARING at Christchurch on 23 June 2017

DATE OF DECISION 30 June 2017

APPEARANCES
C R King, Purchaser
A Neale, Support Person for Purchaser
J L Dodge, Director of Trader
T J Lang, Witness for Trader


DECISION

JLD Enterprises Limited must pay Mr King $1,978 immediately.


REASONS

Introduction

[1] Cheyenne King purchased a seven-seater 2004 Ford Territory from JLD Enterprises Limited. The price was $9,990, plus $650 for delivery to Auckland.
[2] Mr King purchased the vehicle sight unseen based on advertisements he saw online. He did not arrange for any pre-purchase inspection of the vehicle. The vehicle offer and sale agreement states that the odometer reading was 216,000 km but, by the time it was delivered to Mr King, the odometer reading was 217,300 km.
[3] Shortly after the vehicle was delivered to him, Mr King found it had a number of defects. He now wishes to reject the vehicle. In determining whether he is entitled to do so, or whether he is entitled to any other remedy under the Consumer Guarantees Act 1993 (the Act), the following questions must be considered:

Did the vehicle fail to comply with the guarantee of acceptable quality?

[4] 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.
[5] The meaning of acceptable quality is defined in s 7 of the Act (as far as is relevant) as follows:
  1. 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.

[6] 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.
[7] When the vehicle was delivered to Mr King in Auckland on 6 April 2017, he immediately texted JLD Enterprises about a number of defects that he was unhappy about. These included problems with the vehicle’s:
[8] JLD Enterprises requested Mr King to provide further details. No evidence of any further information about these faults appears to have been provided to JLD Enterprises (or the Tribunal). Absent any reports on these defects or estimates for repairs, the Tribunal is unable to make any findings. Mr King will need to raise these matters again with JLD Enterprises if they are still faulty, with better supporting information.
[9] The next day, Mr King texted JLD Enterprises to advise that he had dropped the vehicle off to a tyre shop to replace both rear tyres as one was bald and one had a nail in it. He requested reimbursement of the $400 he incurred to replace the tyres. JLD Enterprises objected, but later seems to have agreed to make a contribution to this expense.
[10] On 11 April 2017, Mr King took the vehicle for a warrant of fitness inspection at VTNZ. This was despite the fact that the vehicle already had a valid warrant of fitness until 17 April 2018. Mr King wanted to get his own warrant of fitness check, for peace of mind, as he was starting to feel uneasy about the vehicle when he discovered that its rear middle seat belt was not retracting properly.
[11] VTNZ failed the vehicle's warrant of fitness check, for the following reasons:
[12] The vehicle did not fail the warrant of fitness check in respect of its brakes. However, VTNZ’s check sheet noted that the brake pads were low and would require attention soon. VTNZ also noted that the front tyres were wearing on the inner edge, but did not fail the vehicle in respect of its tyres.
[13] On 13 April 2017, Mr King obtained an estimate from MA Auto & Tyres, which quoted repairs for the following items:
[14] In addition, Mr King noted that the seals on the rear windows had come away from the body of the vehicle. He did not obtain a quote for repairs to the seals (which should be relatively easy to fix). Nor did Mr King obtain a quote in respect of the faded indicator lamps, which had also caused the vehicle to fail its warrant of fitness check at VTNZ.
[15] In assessing whether the vehicle failed to comply with the guarantee of acceptable quality, it is necessary to be realistic about what a reasonable consumer should expect from a 13-year-old vehicle that has travelled over 200,000 km. A reasonable consumer would not expect the vehicle to be in anywhere near perfect condition. In addition, Mr King took a significant risk in purchasing this old high-mileage vehicle sight unseen from a different city, with no pre-purchase inspection. This is a “relevant circumstance” to take into consideration under s 7(1)(j) of the Act.
[16] Nevertheless, Mr King has paid approximately $10,000 for this vehicle and is entitled to expect it to be in safe working order and (within reason) free from minor defects. Despite the vehicle carrying a valid warrant of fitness up until April 2018, VTNZ has identified a number of areas in which the vehicle was clearly not warrantable. These were the fog lamps, rear middle seat belt, exhaust, and faded indicator lamps. Having regard to the advice of the Tribunal's Assessor Mr Dixon, I conclude that, in respect of these matters, the vehicle was not as free from minor defects as a reasonable consumer would regard as acceptable, even in light of its advanced age and high mileage.
[17] The rear tyres replaced by Mr King (because one was bald and one had a nail in it) may have been an additional failure to comply with the guarantee of acceptable quality. However, there was insufficient evidence of the problems with these tyres. A purchaser seeking a remedy in respect of a defect with a vehicle needs to provide reports or, at the least, photographic evidence to verify the existence of the fault. In any event, as I will explain later, a further problem is that Mr King failed to give JLD Enterprises an opportunity to rectify this defect before having the tyres replaced himself.

Was the failure of a substantial character?

[18] If a failure cannot be remedied or is of a substantial character then a purchaser is entitled to reject a vehicle or obtain damages and compensation for its reduction in value.[1] The definition of “substantial character” is in s 21 of the Act, which provides:
  1. 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; or
(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or
(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or
(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.
[19] None of the defects identified amount to a failure of substantial character within the meaning of s 21. Each of these matters is relatively straightforward and inexpensive to fix relative to the overall price of the vehicle. Moreover, I do not agree with Mr King’s submission that the vehicle is not of acceptable quality because it is unsafe, in terms of s 21(d). None of the defects that caused the vehicle to fail its warrant of fitness check at VTNZ render the vehicle unsafe. Mr King confirmed that the problem with the rear middle seat belt is a retraction issue. That renders the seatbelt unusable. It should be repaired promptly. But the defect itself is easily fixable and does not render the vehicle, as a whole, unsafe.
[20] Accordingly, I conclude that the failure of the vehicle to comply with the guarantee of acceptable quality is not of a substantial character in terms of s 21. As a result, Mr King is not entitled to reject the vehicle before giving JLD Enterprises an opportunity to remedy the vehicle's defects.

Did Mr King require JLD Enterprises to remedy the failure?

[21] According to s 18(2)(a) of the Act, Mr King is only entitled to a remedy if he has first required JLD Enterprises to remedy the failure, by asking for it to repair the defects identified or pay for the costs of another repairer to do so.[2]
[22] In respect of the rear tyres, Mr King simply went ahead and had those replaced by MA Auto & Tyres before asking JLD Enterprises to replace them. Mr King should have obtained a quote from MA Auto & Tyres first and provided it to JLD Enterprises, with photographic evidence of the defects, before going ahead and having the rear tyres replaced. Because he did not do so, he is not entitled to an order requiring JLD Enterprises to reimburse him. However, as previously noted, it may be possible for the parties to agree on a suitable contribution by JLD Enterprises. In respect of the other repairs required, Mr King has supplied JLD Enterprises with the quotation described above from MA Auto & Tyres and has not gone ahead and got that work done. Accordingly, in respect of those matters, he has satisfied the requirement in s 18(2)(a) of the Act.

Did JLD Enterprises refuse or neglect to remedy the failure?

[23] JLD Enterprises did not want to pay for the two rear tyres that Mr King went ahead and got replaced, because he did not contact JLD Enterprises first. It argued it could have arranged cheaper tyres and sent them up for Mr King. JLD Enterprises later offered to contribute to the costs. In respect of the rear tyres, JLD Enterprises was not asked to remedy the failure first, so its initial refusal to do so was justified.
[24] In respect of the other matters, JLD Enterprises told Mr King to take the vehicle to a local mechanic for a quote and for the mechanic to get in touch with it before doing any work. This Mr King did, obtaining the quote discussed above from MA Auto & Tyres. JLD Enterprises then attempted to arrange to send up parts for the repairs so that the overall cost would be less than quoted by MA Autos. However, Mr King refused to negotiate on that basis and insisted that JLD Enterprises pay the full amount of MA Auto’s quote. The parties’ negotiations broke down. JLD Enterprises did not refuse or neglect to remedy the vehicle’s failures in terms of s 18(2)(b) of the Act. Rather, the parties' difficulties in resolving this matter arose from the fact that they are located in different cities, both have adopted somewhat inflexible negotiating positions, and Mr King had made his mind up that he wished to reject the vehicle.
[25] Accordingly, as the defects do not amount to a failure of a substantial character and JLD Enterprises has not refused or neglected to remedy the failure, Mr King is not entitled to reject the vehicle.

What remedy is Mr King entitled to?

[26] Even though Mr King is not entitled to reject the vehicle, he is still entitled to have the defects fixed at JLD Enterprises' expense, to the extent they involve breaches of the guarantee of acceptable quality. The Tribunal’s Assessor Mr Dixon has reviewed MA Auto & Tyres’ estimate for the warrant of fitness related repairs and advises that it is reasonable. While JLD Enterprises may well have been able to secure parts for a cheaper price, it has failed to provide any evidence of that to the Tribunal. Indeed JLD Enterprises failed to provide a report to the Tribunal with its response to Mr King's claim, despite being requested to do so.
[27] In the absence of any helpful material from JLD Enterprises and in the interests of getting the matter resolved promptly, I will require JLD Enterprises to pay Mr King for the costs of the repairs that are necessary to bring the vehicle up to a standard of acceptable quality. As set out above, this involves repairing the matters identified by VTNZ as causing the vehicle to fail its warrant of fitness. These matters comprise the fog lamps at $680, the rear middle seat belt at $695 and the exhaust at $395. I will also order JLD Enterprises to reimburse Mr King for the cost of the inspection at VTNZ, in the sum of $208, under s 18(4) of the Act.

Result

[28] Mr King's rejection of the vehicle is not upheld. JLD Enterprises Limited must pay Mr King $1,978 immediately.

2017_112300.jpg
J S McHerron
Adjudicator

[1] Section 18(3) of the Act.

[2] Section 18(2)(a) of the Act; Acquired Holdings Limited v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 (HC) at [11].

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