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Hewson v Robert Allen Wholesale Limited t/a Raw Motors - Reference No. MVD 179/2017 [2017] NZMVDT 126 (14 August 2017)

Last Updated: 15 September 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL



Reference No. MVD 179/2017


IN THE MATTER
of the Motor Vehicle Sales Act 2003


AND


IN THE MATTER
of a dispute


BETWEEN
RODNEY HEWSON


Purchaser


AND
ROBERT ALLEN WHOLESALE LIMITED TRADING AS RAW MOTORS


Trader


MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor

HEARING at Auckland on 7 August 2017

DATE OF DECISION 14 August 2017

APPEARANCES
Mr R Hewson, Purchaser
Ms P Stevens, Witness for the Purchaser
Mr R Allen, for the Trader
Ms S Goldingham, Witness for the Trader


ORDERS

  1. Robert Allen Wholesale shall, at its own expense and within 10 working days of this decision, diagnose and repair the oxygen sensor/lean fuel fault.
  2. Robert Allen Wholesale shall, within five working days of the date of this decision, pay $380.80 to Mr Hewson.

DECISION

[1] The vehicle had a fault with its timing chain and has an undiagnosed fault that is likely to be caused by a faulty oxygen sensor or lean fuel (“the oxygen sensor/lean fuel fault”) that breach the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the Act”). The other faults with the vehicle do not breach the acceptable quality guarantee.
[2] Mr Hewson is not entitled to reject the vehicle. The oxygen sensor/lean fuel fault is not a failure of a substantial character, and Robert Allen Wholesale has not failed or neglected to repair the fault. Further, the timing chain repair was performed within a reasonable time.
[3] Mr Hewson is entitled to have the oxygen sensor/lean fuel fault repaired and to recover costs associated with the timing chain fault.

REASONS

Introduction

[4] On 16 February 2017, Rodney Hewson purchased a 2006 Holden Captiva for $11,900 from Robert Allen Wholesale Limited, trading as RAW Motors. The vehicle had an odometer reading of 124,600kms at the time of sale.
[5] Mr Hewson had almost immediate problems with the vehicle. On 13 March 2017 he had the vehicle assessed by Auto One 1 Limited in Kerikeri, who diagnosed a fault with the vehicle’s timing chain. Mr Hewson was charged $15 for this assessment.
[6] Mark Cromie Holden then assessed the vehicle and confirmed the vehicle had stretched timing chains. Mark Cromie Holden also found other fault codes. These codes indicate a possible fault with the vehicle’s mass airflow sensor which is causing the vehicle to run a lean air fuel mixture. Mr Hewson was charged $136.80 for that assessment.
[7] Mr Hewson then contacted Robert Allen Wholesale who asked for the vehicle to be returned to Auckland for repairs. The vehicle was transported to Auckland on 24 March 2017, and the timing chain fault was repaired at the company’s expense. That repair was completed on 21 April 2017. Robert Allen Wholesale did not repair any of the other faults identified by Mark Cromie Holden.
[8] Ms Stevens then flew to Auckland to uplift the vehicle. That flight cost $229. While returning home the engine warning light illuminated. On 4 May 2017, Mr Hewson again had the vehicle assessed by Mark Cromie Holden who identified the following faults:
[9] On 24 May 2017, Mr Hewson again had the vehicle assessed by Mark Cromie Holden, who identified faults with the vehicle’s rear suspension bushes, control arm bushes and park brake. The vehicle’s ECU again contained codes indicating a possible fault with the mass airflow sensor. Further, Mark Cromie Holden found the fuel pressure to be low and suspected a faulty fuel pump. Mr Hewson has also replaced three of the vehicle’s tyres.
[10] Mr Hewson has now applied to the Tribunal seeking to reject the vehicle. Mr Hewson claims that he is entitled to reject the vehicle on three grounds:

The Issues

[11] The issues that require consideration in this case are:

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 Mr Hewson’s subjective perspective.

The timing chain and oxygen sensor/lean fuel fault breach the acceptable quality guarantee

[15] The timing chain fault breaches the acceptable quality guarantee. The timing chain fault caused the vehicle to be low on power and perform erratically, and cost approximately $2,000 to repair. I am satisfied that a reasonable consumer would not expect a fault of this nature to be present in a vehicle of this age, price and mileage at the date of purchase.
[16] Likewise, the oxygen sensor/lean fuel fault is likely to be a breach of the acceptable quality guarantee. The fault has not yet been properly diagnosed, but Mr Gregory, the Tribunal’s Assessor, advises that the vehicle has a fault that is affecting the vehicle’s air/fuel mixture. This fault is likely to be within the vehicle's fuel pump fuel filter or mass airflow sensor.
[17] This fault was present when the vehicle was sold to Mr Hewson and causes the vehicle to run lean and cause the check engine light to illuminate. If left for too long engine damage can occur. A reasonable consumer would not expect a fault of this nature to be present in a vehicle of this age, price and mileage at the date of purchase.

The other faults do not breach the acceptable quality guarantee

[18] The faults with the rear suspension bushes, the control arm bushes or the park brake do not breach the acceptable quality guarantee. These faults were first diagnosed in May 2017, when the vehicle had travelled nearly 8,000kms since purchase. Mr Gregory advises that these faults are due to the wear and tear associated with normal usage of a vehicle of this nature, and are the types of faults a reasonable consumer could expect to develop in a vehicle of this age and mileage.
[19] I also consider that the alleged fault with the vehicle’s tyres does not breach the acceptable quality guarantee. Mr Gregory advises that the wear exhibited on the tyres indicates that the vehicle has a problem with its wheel alignment, as the tyres were wearing on the inner. I am not satisfied that the problem with the wheel alignment is a fault with the vehicle. It is entirely possible that the wheels have become misaligned due to the use to which the vehicle has been put by Mr Hewson.
[20] Finally, Mr Hewson has not proven the existence of the remaining faults identified in diagnostic scans performed by Mark Cromie Holden. The results of such scans are not necessarily evidence of the existence of any fault, and in the absence of any other evidence, I am not satisfied that a fault exists. Certainly, if Mr Hewson was to prove the existence of those faults he may be entitled to a remedy under the Act, but to date he has not done so.

Is the oxygen sensor/lean fuel fault a failure of a substantial character?

[21] Section 18 of the Act sets out the remedies available under the Act where a vehicle has faults that breach the acceptable quality guarantee:

“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.”

[22] Mr Hewson seeks to reject the vehicle under s 18(3) of the Act 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.”

[23] I am satisfied that the timing chain fault was likely to have been a failure of a substantial character. However, Mr Hewson cannot reject the vehicle on this basis as he has already elected to have the vehicle repaired rather than to reject it, and that repair was successful.
[24] The oxygen sensor/lean fuel fault is not a failure of a substantial character. Mr Gregory advises it is a relatively minor fault that should be easily and inexpensively repaired at a cost of approximately $400 and $1,200. The nature and extent of this fault is not such that a reasonable consumer would not have purchased the vehicle. Mr Hewson is therefore not entitled to reject the vehicle under s 18(3) of the Act.

Did Robert Allen Wholesale fail to repair the timing chain fault within a reasonable time?

[25] Under s 18(2)(b) of the Act, Mr Hewson may reject the vehicle if Robert Allen Wholesale has not remedied the timing chain fault within a reasonable time.
[26] Mr Hewson alleges that, by taking 28 days to repair the timing chain fault, Robert Allen Wholesale has failed to repair the fault within a reasonable time.
[27] I do not agree. Although 28 days is longer than one might expect such a repair to take, I am not satisfied that it is an unreasonably long time. That is particularly the case where at least one week of that time was spent having the vehicle’s dashboard repaired due to damage caused by Mark Cromie Holden when it was diagnosing the vehicle’s faults for Mr Hewson. Mr Gregory advises that the timing chain replacement is a major repair and depending upon the availability of parts can regularly take more than two weeks to complete.
[28] Mr Hewson is therefore not entitled to reject the vehicle on the grounds that the timing chain repair took too long.

Did Robert Allen Wholesale refuse or neglect to repair the oxygen sensor/lean fuel fault?

[29] Under s 18(2)(b) of the Act, Mr Hewson may also reject the vehicle if Robert Allen Wholesale has refused or neglected to repair the oxygen sensor/lean fuel fault.
[30] Mr Hewson says that he told Robert Allen Wholesale about the oxygen sensor/lean fuel fault when the vehicle was returned to Auckland for the timing chain repair in March 2017. He says that Robert Allen Wholesale failed to repair the fault at that time. Further, Mr Hewson contacted Robert Allen Wholesale in May 2017 and asked it to repair the undiagnosed oxygen sensor/lean fuel fault. Robert Allen Wholesale suggested that Mr Hewson make a claim against his mechanical breakdown insurance policy.
[31] For two reasons, I consider that Robert Allen Wholesale has not failed or neglected to repair this fault by referring Mr Hewson to his insurer.
[32] Firstly, I am not satisfied that the company was asked to repair the fault in March 2017. Mr Hewson did not provide Robert Allen Wholesale with a copy of the report from Mark Cromie Holden that identified the potential fault, and on the evidence I heard, I am not satisfied that Mr Hewson told Robert Allen Wholesale about the fault, or required the company to repair it.
[33] Secondly, the fault has not yet been properly diagnosed. Mark Cromie Holden has performed diagnostic scans and identified fault codes that indicate the existence of an undiagnosed fault. But the true nature and cause of the fault is not yet known. Robert Allen Wholesale cannot repair a fault that has not yet been diagnosed. In those circumstances, I am prepared to allow Robert Allen Wholesale the benefit of the doubt and allow it one last opportunity to assess the vehicle and repair any fault that is then identified.
[34] On that basis, Mr Hewson is not entitled to reject the vehicle on the grounds that Robert Allen Wholesale has refused or neglected to repair the oxygen sensor/lean fuel fault.

What remedy is Mr Hewson entitled to under the Act

[35] I am satisfied that the vehicle has an, as yet, undiagnosed oxygen sensor or lean fuel fault that requires diagnosis and repair. Mr Hewson is entitled to have that fault assessed and repaired under s 18(2)(a) of the Act.
[36] Under s 18(4) of the Act Mr Hewson is also entitled to recover:
[37] I am satisfied that these costs are a reasonably foreseeable result of the timing chain and oxygen sensor/lean fuel fault and are recoverable under s 18(4) of the Act.

Conclusion

[38] The timing chain and oxygen sensor/lean fuel faults breach the acceptable quality guarantee. The other faults with the vehicle do not breach the acceptable quality guarantee or have not been proven to exist.
[39] The oxygen sensor/lean fuel fault is not a failure of a substantial character and Robert Allen Wholesale has not failed or neglected to repair it. Further, the timing chain repair was performed within a reasonable time. Accordingly, Mr Hewson is not entitled to reject the vehicle.
[40] Mr Hewson is entitled to have the oxygen sensor/lean fuel fault repaired and to recover costs associated with the timing chain fault. Accordingly I order that Robert Allen Wholesale must, at its own expense and within 10 working days of this decision, diagnose and repair the oxygen sensor/lean fuel fault.
[41] Robert Allen Wholesale must also, within five working days of the date of this decision, pay $380.80 to Mr Hewson.

DATED at AUCKLAND this 14th day of August 2017

B.R. Carter
Adjudicator


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