Davenport v MotorCo Limited - Reference No. MVD 163/2017 [2017] NZMVDT 115 (8 August 2017)

Last Updated: 15 September 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 115 Reference No. MVD 163/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	AMBER DAVENPORT
		Purchaser
	AND	MOTORCO LIMITED
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 1 August 2017
DATE OF DECISION 8 August 2017
APPEARANCES
Ms A Davenport, Purchaser
Mr S Browning for the Trader

ORDERS

1. Motorco Limited shall, at its own expense and within 10 working days of the date of this decision, repair the faults with the vehicle’s key.
2. Motorco Limited shall, within five working days of the date of this decision, pay Ms Davenport $366.73.

DECISION

[1] The vehicle has had faults with its mechatronic control unit, crankcase breather system and key that breach the acceptable quality guarantee in s 6 of the Act. The other faults complained of by Ms Davenport have either not been proven to exist, or do not breach the acceptable quality guarantee.
[2] The mechatronic control unit fault is a failure of a substantial character for the purposes of s 21 of the Act. Given the age and mileage of this vehicle, a reasonable consumer would not have purchased this vehicle if it had known of the nature and extent of the fault. However, Ms Davenport is not entitled to reject the vehicle. Ms Davenport elected to have the mechatronic control unit repaired by Motorco and Motorco complied with this requirement. Ms Davenport did not clearly communicate her rejection of the vehicle until after Motorco had repaired the fault.
[3] The mechatronic control unit and crankcase breather system faults have been repaired. Ms Davenport is entitled to have the fault with the vehicle’s key repaired under s 18(2) of the Act and to be reimbursed for the cost of the crankcase breather system repair.

REASONS

Introduction

[4] On 17 October 2016, Amber Davenport purchased a 2010 Audi A4 2.0 TFSI Quattro S-Line for $25,835. The vehicle had an odometer reading of 83,000kms at the time of sale. Ms Davenport also purchased a 36 month Mechanical Breakdown Insurance policy from Provident Insurance for $1,895.
[5] Two weeks after purchasing the vehicle Ms Davenport began experiencing problems with the vehicle’s transmission. She advised that the vehicle was “slamming” into gear, and jerking and jolting while changing gears.
[6] After two attempts at repair, Motorco replaced the vehicle’s airflow meter in December 2016.
[7] Ms Davenport continued to experience problems with the vehicle:

• (a) The vehicle’s key was not being recognised by the vehicle, meaning the vehicle’s keyless ignition only worked intermittently.
• (b) A warning light intermittently illuminated, suggesting a fault with the vehicle’s rear lights.
• (c) The vehicle intermittently made a “clunking” sound under acceleration.
• (d) The vehicle began to have trouble selecting gear.
• (e) The vehicle was consuming excessive amount of oil. Ms Davenport says she topped the vehicle up with one litre of oil per week.

[8] In late February 2017, Ms Davenport returned the vehicle to Motorco and asked it to diagnose and fix the vehicle’s faults. The only fault diagnosed by Motorco was a fault with the vehicle’s mechatronic control unit, which caused the vehicle to have trouble selecting gears. Motorco advised Ms Davenport of the nature of the mechatronic control unit fault and advised her that it would fix the fault.
[9] Ms Davenport says she rejected the vehicle before the repairs were performed. Motorco disputes this and says Ms Davenport asked for the fault to be repaired, and only then rejected the vehicle after the repair had been performed. Ms Davenport has now applied to the Tribunal seeking to have her rejection of the vehicle upheld.
[10] Since filing her application, Ms Davenport has had the oil consumption fault repaired. Audi Giltrap found that the vehicle had a fault with its crankcase breather system that was causing it to consume oil. Ms Davenport has also found a fault with the vehicle’s rear door, which only locks intermittently.

The Issues

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

• (a) Does the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the Act?
• (b) Were the vehicle’s failures of a substantial character under s 21 of the Act?
• (c) Is Ms Davenport entitled to reject the vehicle?
• (d) What remedy is Ms Davenport entitled to under the Act?

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

[12] 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.
[13] 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.”

[14] 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 Ms Davenport’s subjective perspective.

Ms Davenport has not proven the alleged faults with the rear lights and clunking noise while accelerating

[15] Ms Davenport claims that the vehicle intermittently displays a warning light that suggests the vehicle has a fault with its rear lights. She also claims that the vehicle has a fault that causes it to make a clunking noise under acceleration.
[16] This vehicle has been assessed on at least four occasions since it was purchased by Ms Davenport – once by Motorco, twice by Alert Automotive Limited and once by Giltrap Audi. None of those have identified or diagnosed any fault with the rear lights or any noise the vehicle makes under acceleration.
[17] Before the hearing the Tribunal issued Directions asking Ms Davenport to have the vehicle’s faults assessed and diagnosed. Ms Davenport has not had these faults diagnosed. This means that there is no evidence, other than her testimony, to show that these faults exist. Although the vehicle may well have these faults, Ms Davenport has not proven that they exist.

The fault with the rear door does not breach the acceptable quality guarantee

[18] In July 2017, Giltrap Audi identified a fault with the vehicle’s left rear door. The door has an intermittent fault with its locking mechanism.
[19] This is a minor fault, which became apparent nine months, and over 15,000kms of driving, after Ms Davenport purchased the vehicle. The protections in the Act are not indefinite and last only for as long as is reasonable in the circumstances, taking account of factors such as the nature of the goods, the price paid and the use to which the goods have been put. In this case, I am satisfied that, in relation to the rear door, the vehicle has been as durable as a reasonable consumer would expect.
[20] I do note that at the hearing Mr Browning, for Motorco, offered to repair the fault with the rear door. I cannot order Motorco to do that, and I leave it to the parties to discuss that potential repair further.

The faults with the mechatronic control unit, crankcase breather system and key breach the acceptable quality guarantee

[21] The mechatronic control unit fault breaches the acceptable quality guarantee because it has not been as durable as a reasonable consumer would expect. Mr Gregory advises that, based on the symptoms described by Ms Davenport, the fault with the mechatronic control unit occurred within two weeks of Ms Davenport purchasing the vehicle.
[22] A vehicle’s transmission is essential to its proper operation and the mechatronic control unit is essential to the proper operation of the transmission. The fault caused the vehicle to have difficulty selecting the appropriate gear, which caused the vehicle to jolt and surge. Further, the mechatronic unit required repair to ensure the correct function of the clutch and gearbox shift, and to avoid damage to the clutch assembly.
[23] Mr Gregory advises that faults with the mechatronic control unit in Audi’s of this age and mileage are not uncommon. However, I am satisfied that a reasonable consumer would not expect a six year old vehicle that cost $25,835 to have this fault within two weeks of purchase.
[24] The vehicle also had a fault with its crankcase breather system that caused it to consume an excessive amount of oil. That fault is a breach of the acceptable quality guarantee because the vehicle has not been as durable as a reasonable consumer would expect. A reasonable consumer would not expect a vehicle of this age, price and mileage to develop a fault that caused it to consume one litre of oil per week.
[25] Finally, the vehicle’s key does not function properly. The vehicle has a push button start function that requires the vehicle to detect the key. The vehicle has intermittent fault that means that the vehicle regularly fails to detect the presence of the key. This fault has been present since Ms Davenport purchased the vehicle. I am satisfied that a reasonable consumer would not expect this fault to be present in a vehicle of this age, price and mileage.

Are any of the faults a failure of a substantial character?

[26] Ms Davenport seeks to reject the vehicle because its faults amount to a failure of a substantial character. A failure of a substantial character is defined in s 21 of the Act:

“21 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.”

[27] The question I must answer is whether the faults that this vehicle has are such that a reasonable consumer, fully acquainted with the true nature and extent of the faults, would not have purchased the vehicle.
[28] I am satisfied that the mechatronic control unit fault is a failure of a substantial character. I consider that a reasonable consumer would not have purchased a six year old Audi, with an odometer reading of 83,000kms if it knew that the mechatronic control unit would require repairs costing $4,800 within two weeks of purchase.
[29] In reaching this conclusion, I note that the cost of repairs, although relevant, is not decisive in determining whether the faults amount to a failure of a substantial character. That is particularly the case with used European vehicles. Those who purchase such vehicles do so understanding that relatively straightforward repairs can be expensive. The cost of repairs cannot therefore be determinative of whether a fault amounts to a failure of a substantial character.
[30] I also acknowledge that the fault did not cause the vehicle to be inoperable. Ms Davenport was able to continue driving the vehicle until it was repaired. I also note that the fault did not make the vehicle unsafe.
[31] However, I am satisfied that the mechatronic control unit fault is a failure of a substantial character because a reasonable consumer simply would not have purchased a vehicle of this price, age and mileage if it had known that a fault with its mechatronic control unit, which caused the vehicle’s transmission to malfunction and cost $4,800 to repair, would occur within two weeks of purchase.
[32] The price, age and mileage of this vehicle are important considerations in reaching this view. The outcome may well have been different if this was an older vehicle with higher mileage, because in making the decision to purchase such a vehicle, a reasonable consumer should understand that there is a greater risk of faults of this nature occurring in older, higher mileage vehicles, and would purchase the vehicle accepting that risk. However, for a vehicle of this price, age and mileage, this fault amounts to a failure of a substantial character.

Is Ms Davenport entitled to reject the vehicle?

[33] Section 18 of the Act sets out the remedies under the Act. Section 18 of the Act 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), he 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.”

[34] Under s 18 of the Act, where the vehicle has a fault that breaches the acceptable quality guarantee that amounts to a failure of a substantial character, the purchaser has an election as to the remedy it seeks. The purchaser may either have the vehicle’s faults repaired under s 18(2)(a) or reject the vehicle under s 18(3) of the Act.
[35] Where a purchaser has elected to allow the trader to repair faults with the vehicle, it must give the trader a reasonable opportunity to do so before it can reject the vehicle. The purchaser cannot then reject the vehicle if those repairs are successfully conducted.
[36] The issue I must consider in this case is whether Ms Davenport elected to have the mechatronic control unit repaired by Motorco, or whether she elected to reject the vehicle before those repairs were conducted.

Ms Davenport elected to repair the vehicle

[37] Ms Davenport says she initially asked Motorco to assess the faults with the vehicle and to fix any faults identified. Ms Davenport says she changed her instructions and rejected the vehicle by telephone once she found out that the vehicle had a fault with its mechatronic control unit.
[38] Mr Browning disputes this evidence. He says that Ms Davenport instructed Motorco to repair the mechatronic control unit, and only communicated her rejection of the vehicle after those repairs were complete. Because Ms Davenport did not communicate her purported rejection in writing, I must rely on the witnesses’ oral evidence as to when rejection of the vehicle was communicated to Motorco.
[39] I prefer Mr Browning’s evidence in deciding whether Ms Davenport rejected the vehicle before the repairs were performed. He was clear and consistent in his recollection of events. On the other hand Ms Davenport was, by her own admission, quite vague in her recollection of dates and details of discussions. On the basis of Mr Browning’s evidence I am satisfied that Ms Davenport asked Motorco to repair the mechatronic control unit and did not clearly communicate an intention to reject the vehicle until after those repairs were complete.
[40] Further, I note that the mechatronic control unit fault was repaired using Ms Davenport’s mechanical breakdown insurance. I heard no evidence to suggest that the claim against her mechanical breakdown insurance was done without Ms Davenport’s consent or authority. I consider this to be further evidence to show that Ms Davenport agreed to repair the mechatronic control unit.
[41] Motorco has successfully repaired the mechatronic control unit fault. Consequently, Ms Davenport cannot now reject the vehicle due to the mechatronic control unit fault.

What remedy is Ms Davenport then entitled to under the Act?

[42] Ms Davenport is entitled to have the fault with the vehicle’s key repaired under s 18(2)(a) of the Act. The evidence was not clear as to whether Motorco has been given a reasonable opportunity to repair that fault. It now has that opportunity.
[43] I am satisfied that Motorco was given a reasonable opportunity to repair the crankcase breather system fault. Ms Davenport advised Motorco that the vehicle was consuming excessive amounts of oil. Motorco does not appear to have taken any steps to diagnose or repair that fault. Ms Davenport then had the fault repaired by Giltrap Audi, at a cost of $366.73. Under s 18(2)(b)(i) of the Act she is now entitled to recover that cost from Motorco.

Conclusion

[44] Motorco must, at its own expense and within 10 working days of the date of this decision, repair the faults with the vehicles key.
[45] Motorco Limited must also, within five working days of the date of this decision, pay Ms Davenport $366.73.

DATED at AUCKLAND this 8th day of August 2017

B.R. Carter
Adjudicator