Fonseca v Mr Motors Group Limited - Reference No. MVD 222/2017 [2017] NZMVDT 138 (26 September 2017)

Last Updated: 17 October 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 138 Reference No. MVD 222/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	CLEON CLETUS FONSECA
		Purchaser
	AND	MR MOTORS GROUP LIMITED
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 18 September 2017
DATE OF DECISION 26 September 2017
APPEARANCES
Mr C C Fonseca, Purchaser
Mr C Rutherford, for the Trader

ORDERS

A. Mr Motors Group Limited shall, within five working days of the date of this decision, pay $121.88 to Cleon Fonseca.

DECISION

[1] The vehicle had faults with its VIN plate and HID lights that breach the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the CGA”). The rear differential leak and worn control arm bushes do not breach s 6 of the CGA.
[2] Mr Fonseca is not entitled to reject the vehicle. The VIN plate and HID faults are not failures of a substantial character sufficient to justify rejection under s 18(3) of the CGA. Mr Fonseca is, however, entitled to recover the $121.88 he spent when replacing the faulty HID lights.
[3] Mr Motors has not engaged in any misleading conduct that breaches s 9 of the Fair Trading Act 1987 (“the FTA”). Mr Fonseca’s belief that he was the first New Zealand owner and that the vehicle had been appraised by AA and VTNZ were caused by his own mistaken assumptions rather than any misleading representation or conduct by Mr Motors.

REASONS

Introduction

[4] On 30 October 2014, Cleon Fonseca purchased a 2006 Mazda Atenza, registration number HHT923, from Mr Motors Group Limited for $17,500. Mr Fonseca also purchased an Autosure warranty for $1,295. The vehicle had an odometer reading of 80,000 kms at the time of sale.
[5] Mr Fonseca assumed that the vehicle had been recently imported into New Zealand and that he would be the first New Zealand owner. Mr Fonseca also thought that the vehicle had been appraised by AA and VTNZ before it was sold to him.
[6] Mr Fonseca has since discovered that he was not the first New Zealand owner of the vehicle and that the vehicle had not been appraised by AA or VTNZ before it was sold to him.
[7] Mr Fonseca has also discovered that the vehicle had illegal High-Intensity Discharge lights and that the vehicle’s VIN plate was incorrect, in that it was missing one digit. Both faults should have caused the vehicle to fail a warrant of fitness inspection before it was sold to Mr Fonseca. The vehicle has also developed two further faults during Mr Fonseca’s ownership - a leak from the rear differential and worn lower control arm bushes.
[8] Mr Fonseca has raised his concerns with Mr Motors. Mr Motors has remedied the fault with the VIN plate and attempted to rectify the fault with the HID lights. Mr Motors declined to provide Mr Fonseca the other remedies he seeks. Accordingly, Mr Fonseca has applied to the Tribunal seeking a refund of the purchase price or, alternatively, for orders requiring Mr Motors to have the vehicle appraised by AA and VTNZ and to pay for the repair of all faults that are identified.

The Issues

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

• (a) Does the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the CGA?
• (b) Are any of the faults a failure of a substantial character for the purposes of s 21 of the CGA?
• (c) What remedy is Mr Fonseca entitled to under s 18 of the CGA?
• (d) Did Mr Motors mislead Mr Fonseca in breach of s 9 of the FTA?

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

[10] Section 6 of the CGA imposes on suppliers and manufacturers of consumer goods "a guarantee that the goods are of acceptable quality." Section 2 of the CGA defines "goods" as including vehicles.
[11] 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.”

[12] 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 CGA 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 Fonseca’s subjective perspective.

The VIN plate and HID faults breach the acceptable quality guarantee

[13] I am satisfied that the fault with the VIN plate and the illegal HID lights are a breach of the acceptable quality guarantee in s 6 of the CGA. Both faults are sufficient to cause the vehicle to fail a warrant of fitness assessment and were present when the vehicle was supplied to Mr Fonseca.
[14] I am satisfied that a reasonable consumer would not regard these faults as acceptable in a vehicle of this age, price and mileage. For reasons unknown, the vehicle has passed three warrant of fitness assessments with these faults present. The faults have now been identified, and because they were present at the time of sale, Mr Motors has an obligation to remedy them.
[15] Mr Motors accepts that these faults should not have been present in the vehicle. Mr Motors has already rectified the fault with the VIN plate. It attempted to repair the illegal HID lights. Those attempts were unsuccessful and Mr Fonseca has incurred costs of $121.88 in remedying the defect.

The rear differential leak and worn control arm bushes do not breach the acceptable quality guarantee

[16] I am not satisfied that the rear differential leak breaches the acceptable quality guarantee in s 6 of the CGA.
[17] Mr Gregory, the Tribunal’s Assessor, advises that differential leaks of this nature are caused by the aging and deterioration of rubber seals in the differential. Mr Gregory advises that this type of fault is to be expected in a vehicle of this age.
[18] This fault became evident eight and a half months after purchase. The protections in s 6 of the CGA are not indefinite, and only last for as long as a reasonable consumer would expect. Given the nature of the fault, and particularly the fact that the leak has been caused by typical deterioration of a perishable part eight and a half months after purchase, I am satisfied that the vehicle has been as durable as a reasonable consumer would expect, taking account of its price, age and mileage.
[19] I am also not satisfied that the worn lower control arm bushes breach s 6 of the CGA. Mr Gregory advises that this fault is due to the wear and tear associated with normal usage of the vehicle, and is the type of fault a reasonable consumer could expect to develop in a vehicle of this age and mileage. Taking account of the nature of the fault, and the fact that the fault did not arise for more than two years after purchase, I consider that the vehicle has been as durable as a reasonable consumer would expect.

What remedy is Mr Fonseca entitled to under s 18 of the CGA?

[20] Section 18 of the CGA sets out the remedies available 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.”

[21] Mr Fonseca seeks to reject the vehicle under s 18(3) of the CGA because its faults amount to a failure of a substantial character. A failure of a substantial character is defined in s 21 of the CGA:

“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.”

[22] Mr Fonseca is not entitled to reject the vehicle under s 18(3) of the CGA. The vehicle has two faults that breach the acceptable quality guarantee – the VIN plate and HID lights. Neither fault is sufficiently serious to justify rejection. Both faults have been easy and inexpensive to repair, and I am not satisfied that a reasonable consumer would have declined to purchase the vehicle had they been fully acquainted with the nature and extent of those faults.
[23] Mr Fonseca is however entitled to recover the $121.88 he spent when replacing the HID lights. Mr Fonseca required Mr Motors to repair the fault, but it did not succeed in doing so. Under s 18(2)(b)(i) of the CGA Mr Fonseca was entitled to have the fault repaired elsewhere and recover that cost from Mr Motors.

Did Mr Motors mislead Mr Fonseca?

[24] Mr Fonseca also alleges Mr Motors engaged in misleading conduct in breach of s 9 of the Act. Mr Fonseca says he believed that he was the first New Zealand owner of the vehicle, when he was not. Mr Fonseca also says that Mr Motors claims that all of its vehicles have been appraised by AA and VTNZ appraised, when this vehicle was not.
[25] Section 9 of the FTA states:

“9 Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

Mr Motors has not engaged in misleading conduct

[26] Mr Fonseca’s claim must fail because he was not able to provide evidence to show that Mr Motors engaged in any conduct that could mislead him in the way he alleges.
[27] Mr Fonseca accepted that Mr Motors did not make any representation, or engage in any other conduct, that caused him to believe that he was the first New Zealand owner of the vehicle. Instead Mr Fonseca accepts that he simply assumed that he was the first New Zealand owner of the vehicle because he thought that Mr Motors sold only imported vehicles. Mr Motors cannot be liable for that mistaken assumption when it has not made any representation, or engaged in any conduct, that contributed to the assumption.
[28] Likewise, Mr Fonseca’s mistaken belief that the vehicle had been appraised by AA and VTNZ before it was sold to him was not caused by any conduct by Mr Motors.
[29] Mr Fonseca provided no evidence to show that he was told, at the time of purchase, that the vehicle had been appraised by AA or VTNZ. Instead, Mr Fonseca stated that his belief was based upon representations that he has since seen on Mr Motors’ website. That website did not exist when Mr Motors purchased the vehicle, so it is not possible that Mr Fonseca could have been misled by the representations on the website when he bought the vehicle. I am therefore satisfied that Mr Motors has not engaged in conduct that breaches s 9 of the FTA.

Conclusion

[30] The vehicle had faults with its VIN plate and HID lights that breach s 6 of the CGA. The rear differential leak and worn control arm bushes do not breach s 6 of the CGA.
[31] Mr Fonseca is not entitled to reject the vehicle. The VIN plate and HID faults are not failures of a substantial character sufficient to justify rejection under s 18(3) of the CGA. Mr Fonseca is however entitled to recover the $121.88 he spent when replacing the faulty HID lights.
[32] The Tribunal therefore orders that Mr Motors must, within five working days of the date of this decision, pay Mr Fonseca $121.88.

DATED at AUCKLAND this 26th day of September 2017

B.R. Carter
Adjudicator