Liu v Mr Motors Group Limited - Reference No. MVD 154/2017 [2017] NZMVDT 137 (22 September 2017)

Last Updated: 17 October 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 137 Reference No. MVD 154/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	XIANG LIU
		Purchaser
	AND	MR MOTORS GROUP LIMITED
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 26 July 2017 and 18 September 2017
DATE OF DECISION 22 September 2017
APPEARANCES
Ms X Liu, Purchaser
Mr W Taylor, Witness for the Purchaser Mr H Wang, for the Trader Mr C Rutherford, for the Trader

ORDERS

A. Mr Motors Group Limited shall, within 15 working days of the date of this decision, replace the vehicle’s engine with a suitable replacement with similar mileage to the current engine.

DECISION

[1] The vehicle has a fault with its engine that breaches the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the Act”).
[2] The engine fault amounts to a failure of a substantial character for the purposes of s 21 of the Act.
[3] However, the vehicle has been damaged while in Ms Liu’s possession, meaning that under s 20(1)(c) of the Act, Ms Liu has now lost the right to reject the vehicle. Ms Liu’s remedy under the Act is to have the engine replaced by Mr Motors under s 18(2)(a) of the Act.

REASONS

Introduction

[4] On 14 January 2017, Xiang Liu purchased a 2008 Toyota Mark X ZiO, registration number KHQ599 from Mr Motors Group Limited for $11,500. The vehicle had an odometer reading of 63,221 kms at the time of sale.
[5] Ms Liu first experienced engine problems with the vehicle in early March 2017. Mr Motors performed repairs and returned the vehicle to Ms Liu on 11 March 2017.
[6] Ms Liu experienced further problems with the vehicle’s engine in mid-April 2017. She returned the vehicle to Mr Motors, who diagnosed a significant fault with the vehicle’s engine, and advised Ms Liu that the vehicle’s engine requires replacement or a rebuild.
[7] Ms Liu then rejected the vehicle. Mr Motors accepted that the vehicle has a significant engine fault and offered to replace the engine. However, Mr Motors refused to accept Ms Liu’s rejection of the vehicle.
[8] Ms Liu then applied to the Tribunal to have her rejection upheld.
[9] During the first Tribunal hearing on 26 July 2017, I heard evidence that satisfied me that the vehicle has an engine fault that breaches the acceptable quality guarantee in s 6 of the Act and amounts to a failure of a substantial character for the purposes of s 21 of the Act. I do not understand this finding to be disputed by Mr Motors. During the hearing Mr Motors accepted that the engine needs replacement and has offered to perform that replacement at its cost.
[10] Ordinarily, Ms Liu would be entitled to reject the vehicle because of this fault. However, at the conclusion of the first Tribunal hearing, Mr Wang for Mr Motors advised the Tribunal that the vehicle had been damaged while it was in Ms Liu’s possession. This is a significant point, as under s 20(1)(c) of the Act a consumer can lose the right to reject goods if the goods are damaged after the consumer has taken possession of them.
[11] I then adjourned the hearing and issued Directions to the parties, asking them to provide photographs of the damage to the vehicle and requesting that Ms Liu bring the vehicle to the next Tribunal hearing for inspection.

The Issues

[12] In light of Mr Motors’ acceptance that the vehicle has a significant engine fault, there is only one issue in this case - has Ms Liu lost the right to reject the vehicle because the vehicle has been damaged while in her possession?

Has Ms Liu lost the right to reject the vehicle?

[13] Section 20(1)(c) of the Act states:

20 Loss of right to reject goods

(1) The right to reject goods conferred by this Act shall not apply if—

...

(c) the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply.

The vehicle was damaged after it was sold to Ms Liu

[14] Mr Motors says that Ms Liu has lost the right to reject the vehicle because the vehicle has suffered panel damage to the left rear wheel arch, left rear passenger door and front right sill while in her possession. Craig Rutherford, an employee of Mr Motors, gave evidence that he had seen this damage on a number of occasions when Ms Liu brought the vehicle into the dealership for repairs.
[15] Mr Rutherford also provided the Tribunal with photographs of the vehicle taken shortly after the first Tribunal hearing in response to the Tribunal’s Directions. The photographs show damage to the left rear wheel arch and left rear passenger door. The photographs also show ripples in the front right sill consistent with Mr Rutherford’s evidence as to the damage to those panels.
[16] I inspected the vehicle with Mr Gregory, the Tribunal’s Assessor, on 18 September 2017. The damage described by Mr Rutherford and shown in the photographs provided by Mr Rutherford was not present.
[17] I questioned Ms Liu as to the discrepancy between Mr Rutherford’s evidence and the condition of the vehicle when I inspected it. In response, Ms Liu stated that the vehicle has never had the panel damage described by Mr Rutherford and shown in Mr Motors’ photographs. She admitted that the vehicle had some scratches, but she says she cleaned the scratches and they disappeared. Ms Liu described the disappearance of these scratches as a “miracle”. Ms Liu also denies having performed any repairs to vehicle’s panels.
[18] In support of her claim that the vehicle had suffered no panel damage, Ms Liu also provided photographs of the vehicle, which show no panel damage to the vehicle. However, those photographs do not support Ms Liu’s case as they appear to have been taken when Ms Liu purchased the vehicle, when the vehicle was undamaged. Despite the Tribunal’s Directions, Ms Liu has provided no photographs of the vehicle taken after she purchased the vehicle.
[19] I do not accept Ms Liu’s evidence that the vehicle was not damaged while in her possession. Instead, I prefer the evidence of Mr Rutherford. He was clear and consistent in his evidence as to the panel damage to the vehicle. His evidence is supported by the photographs provided to the Tribunal by Mr Motors. The photographs clearly show damage to the left rear wheel arch and left rear passenger door. The photographs also show ripples in the front right sill consistent with Mr Rutherford’s evidence as to the damage to the front right sill.
[20] I am therefore satisfied that the vehicle had panel damage to its left rear wheel arch, left rear passenger door and front right sill that occurred while the vehicle was in Ms Liu’s ownership.
[21] Mr Gregory advises that the panel damage described by Mr Rutherford and evident in the photographs was not minor and would cost at least $1,000 to repair. That panel damage is therefore sufficient for Ms Liu to lose the right to reject the vehicle under s 20(1)(c) of the Act.
[22] I am also satisfied that after the first hearing, when she became aware that the panel damage could lead to the loss of her right to reject the vehicle, Ms Liu has had the panel damage repaired. The subsequent repair of the panel damage by Ms Liu does not re-establish her right to reject the vehicle. I consider that s 20(1)(c) of the Act is clear that the right to reject the vehicle is irretrievably lost when the damage occurs, and there is no suggestion in the Act that the right to reject can then be resurrected if the damage is repaired. Accordingly, applying s 20(c) of the Act, Ms Liu has lost the right to reject the vehicle.

What remedy is Ms Liu entitled to under the Act?

[23] Under s 18(2)(a) of the Act, Ms Liu is entitled to have the engine fault remedied. Mr Motors has offered to do this by replacing the vehicle’s engine.
[24] I therefore order that Mr Motors must, within 15 working days of the date of this decision, replace the vehicle’s engine with a suitable replacement engine with similar mileage to the current engine.

DATED at AUCKLAND this 22nd day of September 2017

B.R. Carter
Adjudicator