Pukeroa v Trade In Clearance Limited - Reference No. MVD 219/2017 [2017] NZMVDT 141 (29 September 2017)

Last Updated: 17 October 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 141 Reference No. MVD 219/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	MICHAEL MIHA PUKEROA
		Purchaser
	AND	TRADE IN CLEARANCE LIMITED
		Trader
MEMBERS OF TRIBUNAL
J S McHerron, Barrister – Adjudicator
D Binding, Assessor
HEARING at Wellington on 21 August 2017 FURTHER SUBMISSIONS AND TELEPHONE CONFERENCE on 14 September 2017
DATE OF DECISION 29 September 2017
APPEARANCES
M M Pukeroa, Purchaser D Smiler, Purchaser's partner N Van der Velde, Manager of Trader

DECISION

Trade In Clearance Limited must pay Mr Pukeroa $1,028.58 no later than 6 October 2017.

REASONS

Introduction

[1] Three months after Mr Michael Pukeroa purchased a 1999 Mercedes-Benz ML430 from Trade In Clearance Limited, its engine came to a dead stop and would not restart. The vehicle has now been repaired, but it took a long time to diagnose what the problem was and the parties disagree on who should pay for some of the repairs. Mr Pukeroa wants to reject the vehicle.
[2] The following issues arise:

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

(b) If so, did Mr Pukeroa require Trade In Clearance to remedy the failure?

(c) Did Trade In Clearance refuse or neglect to remedy, or not succeed in remedying, the failure?

(d) If so, is Mr Pukeroa entitled to reject the vehicle?

(e) If not, what remedy is Mr Pukeroa entitled to?

Issue 1: Did the vehicle fail to comply with the guarantee of acceptable quality?

[3] Section 6(1) of the Consumer Guarantees Act 1993 (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.
[4] The meaning of acceptable quality is defined in s 7 of the Act (as far as is relevant) 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.

[5] 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.
[6] Three months after Mr Pukeroa purchased the vehicle, its engine cut out while he was driving it, causing it to come to an unexpected stop. Mr Pukeroa attempted to restart the engine but was unable to do so. He had the vehicle towed back to his house.
[7] The problem that caused the engine to cut out has been difficult to diagnose, but was ultimately straightforward to repair.
[8] Wainuiomata Workshop initially attempted to diagnose and repair the vehicle in January 2017. It removed the spark plugs and found they were covered in fuel. It concluded the spark plugs were worn and needed replacing. After finding no faults in the engine control unit, it called in an auto electrician. The electrician found the airflow meter was faulty and so it was replaced. Wainuiomata Workshop de-flooded the motor and started it. But the motor would not start again after it was left overnight. The auto electrician then advised checking the catalytic converters were not blocked, but these were found to be satisfactory. A compression test recorded compressions were acceptable. Two of the high tension leads were found to be corroded into the coil packs. The electrician advised that these should be replaced before he carried out further diagnosis.
[9] Trade In Clearance then supplied new coils, high tension leads and spark plugs at its cost, all of which were fitted by Wainuiomata Workshop.
[10] However, even after these repairs, the vehicle was still over-fuelling and would not start.
[11] Some of the cost of this work was met through Mr Pukeroa's Protecta insurance policy, but he was left with an invoice for $1,006.07 which included the insurance excess, the auto electrician's fee and labour costs that were not covered by insurance.
[12] Trade In Clearance arranged for an auto electrician from AJ Auto Electrical to re-assess the vehicle. The electrician was unable to determine what the fault was, but appears to have suspected a problem with the engine control unit. The electrician wanted to assess the vehicle at his own premises but, as explained in Wainuiomata Workshop's invoice:

Further testing on the ECU is required at a cost and vehicle insurance is not willing to come to the party until they are assured what the problem is and it is strip [sic] on owners authority. So at this stage no further work can be done on the vehicle until owner or car dealer put there [sic] hand up to say they will pay the bill if the insurance company does not cover it.

[13] At the end of the hearing, the parties agreed to allow Trade In Clearance to collect the vehicle for further assessment. The vehicle was towed to AJ Auto Electrical on 24 August 2017. AJ Auto Electrical found no fuel at the fuel rail and no fuel pressure. On further investigation, AJ Auto Electrical found there was no signal to the fuel pump as a fuel pump relay was missing. After fitting a new relay, fuel was found at the fuel rail, but the vehicle was still not starting. AJ Auto Electrical cleaned the spark plugs, which were fouled, and found an excessive voltage drop to the ignition coils under crank. AJ Auto Electrical fixed the voltage drop by adding a relay. This appeared to fix the problem, allowing the vehicle to start normally.
[14] In assessing whether this vehicle complied with the guarantee of acceptable quality, it is necessary to have regard to the fact that this is an 17-year-old four-wheel-drive V8 European vehicle, with 178,812 km on the odometer at the date of purchase, sold for $7,500. A reasonable consumer would expect that such a vehicle would almost inevitably require some ongoing work and repairs. If Mr Pukeroa wished to acquire a reliable, low-maintenance vehicle, this was not a good choice. Given the time that has now passed since he purchased the vehicle and the distance he has travelled in it, any expectation of ongoing assistance from the trader in respect of any further issues with the vehicle cannot be high.
[15] However, I consider that a reasonable consumer would expect the vehicle still to be operable after only three months and approximately 5,000 km of use following purchase. That is the time and distance that had elapsed when Mr Pukeroa first experienced the vehicle cutting out and not being able to be restarted. I conclude that a reasonable consumer would expect Mr Pukeroa's vehicle to be durable and fit for the purpose of being driven for at least three months after purchase.
[16] Accordingly, I find that the vehicle failed to comply with the guarantee of acceptable quality because its engine cut out and became unusable a matter of three months after purchase.

Issue 2: Did Mr Pukeroa require Trade In Clearance to remedy the failure?

[17] Where a vehicle has failed to comply with a guarantee in the Act, and the failure can be remedied, the first step for the purchaser is to "require the supplier to remedy the failure within a reasonable time...". Trade In Clearance argues that Mr Pukeroa did not give it an opportunity to remedy the failure, contrary to his obligations in s 18(2)(a) of the Act.
[18] Mr Pukeroa says he visited Trade In Clearance the day after the vehicle broke down, with two follow up visits over the next fortnight. On each occasion he was accompanied by his partner, Ms Smiler, who also gave evidence at the hearing.
[19] Mr Pukeroa says he spoke to two different employees at Trade In Clearance, Linda on the first two visits and Sarah on the third. Mr Pukeroa claims that Linda told him she would contact the manager, Mr Van der Velde, to alert him to the problem so he could assist Mr Pukeroa. Mr Pukeroa claims that on each occasion he visited Trade In Clearance, Linda and Sarah told him that he should make a claim to Protecta.[1] Mr Pukeroa's evidence was that, on the third visit, Sarah told him that Trade In Clearance was not obliged to assist him to remedy the vehicle’s problems. Ms Smiler confirmed Mr Pukeroa's evidence of what he was told by Linda and Sarah.
[20] Following this response from Trade In Clearance, Mr Pukeroa then contacted Protecta. Protecta advised him to take the vehicle to a repairer of his choice. His chosen repairer was Wainuiomata Workshop. It attempted to repair the vehicle, as described in the previous section, but was unable to. Mr Pukeroa then contacted Trade In Clearance again and this time spoke to Mr Van der Velde.
[21] Mr Van der Velde denied that Linda and Sarah had previously informed him about the problems with Mr Pukeroa's vehicle. Trade In Clearance’s position, in its written material supplied to the Tribunal and in Mr Van der Velde’s evidence and submissions, was that Mr Pukeroa had failed to give it the first opportunity to assess and repair the vehicle’s problems. As the above narrative indicates, this was in direct conflict with Mr Pukeroa's and Ms Smiler’s evidence.
[22] I prefer Mr Pukeroa’s evidence on this question. Not only was his evidence corroborated by Ms Smiler, but Mr Van der Velde was not in a position to give evidence relating to Mr Pukeroa’s three visits to Trade In Clearance as he was not present at the time of those visits. Mr Van der Velde did not produce any statements from his colleagues, Linda and Sarah, neither of whom attended the Tribunal hearing to give evidence in person.
[23] Moreover, Trade In Clearance’s position, that Mr Pukeroa had not requested Trade In Clearance to remedy the vehicle's defect, is seemingly contradicted by an email that Mr Van der Velde wrote to Mr Pukeroa on 23 June 2017, in which he stated:

Unfortunately no message was passed on to me from Linda or Sarah, the first I knew of the situation was when you made contact with me advising of the situation. I do stand by the advise [sic] that they gave in regards to contacting Protecta. This advice to contact Protecta was based on the fact that it had been three months and 5000kms since purchase of the vehicle. Their understanding of our usual procedure would be as follows; it is best for the customer to contact Protecta, arrange to have the vehicle assessed and then contact be made again with Trade In Clearance on the outcome. Protecta would have the vehicle assessed at a preferred repair agent and then determine if the fault is covered under their warranty which would just leave the excess to be paid. If was not covered then Trade In Clearance would respond to this on a case by case basis. Linda and Sarah were correct in advising you to contact Protecta and have it assessed. ...

[24] This email suggests that Mr Van der Velde accepted that Mr Pukeroa attended Trade In Clearance before having work carried out on the vehicle and was told by Linda and Sarah that he should contact Protecta to arrange repairs. This is consistent with Mr Pukeroa's evidence. I also accept Mr Pukeroa's evidence that when Wainuiomata Workshop concluded that it was unable to repair the problem, Mr Pukeroa contacted Trade In Clearance again to seek its assistance.
[25] Accordingly, I conclude that Mr Pukeroa required Trade In Clearance to remedy the failure, consistent with his obligations under s 18(2)(a) of the Act.

Issue 3: Did Trade In Clearance refuse or neglect to remedy, or not succeed in remedying, the failure?

[26] Trade In Clearance did provide some assistance to Mr Pukeroa. It supplied new coils, leads and spark plugs to Wainuiomata Workshop. However, this did not fix the problem with the vehicle and left Mr Pukeroa with an outstanding bill at Wainuiomata Workshop. Trade In Clearance refused to pay this bill, because it maintained that Mr Pukeroa got this work done by Wainuiomata Workshop without its approval. In the previous section of this decision I have found that Trade In Clearance encouraged Mr Pukeroa to take the steps that resulted in him taking the vehicle to Wainuiomata Workshop for repairs. In frustration with the lack of progress, Mr Pukeroa eventually paid Wainuiomata's invoice for $1,006.07 himself.
[27] Trade In Clearance submitted at the hearing that it remained willing to repair the vehicle.
[28] As explained, by consent, on the day of the hearing, the Tribunal ordered Trade In Clearance to collect the vehicle and have it assessed at its cost and report to the Tribunal on what was wrong with the vehicle and the estimated cost of repairs. In the process of assessing the vehicle, AJ Auto Electrical was able to quickly and economically repair it. The vehicle has now been returned to Mr Pukeroa in working condition with all repair costs having been paid by Trade In Clearance, which also paid for repairs to the exhaust flange and obtained a new warrant of fitness for the vehicle. In a telephone conference with the parties on 14 September 2017, Mr Pukeroa confirmed he had collected the vehicle, and that it was operating satisfactorily.
[29] Accordingly, I conclude that Trade In Clearance refused to remedy the failure, but only to the extent of refusing to carry out an initial assessment and repair of the vehicle back in January 2017. After that, once Mr Van der Velde became involved, Trade In Clearance assisted Mr Pukeroa by supplying parts and then later indicating its willingness to continue to assess and make repairs on the vehicle. However, it maintained its refusal to meet the cost of the first attempt to repair the vehicle carried out by Wainuiomata Workshop in January 2017. This refusal, as discussed above, was based on the mistaken view that Mr Pukeroa had not offered Trade In Clearance an opportunity to assess and repair the vehicle. As I have found, this is incorrect and is contradicted by Mr Van der Velde’s own email to Mr Pukeroa.
[30] Accordingly I conclude that, for the purposes of s 18 of the Act, Trade In Clearance refused to remedy the failure with Mr Pukeroa’s vehicle to the extent of those initial assessments and repairs carried out by Wainuiomata Workshop in January 2017.

Issue 4: Is Mr Pukeroa entitled to reject the vehicle?

[31] Section 18(2) provides that where a supplier who has been required to remedy the failure refuses to do so, the consumer may either have the failure remedied elsewhere and obtain from the supplier all reasonable costs incurred or reject the vehicle. On 4 June 2017, Mr Pukeroa emailed Trade In Clearance to reject the vehicle, and this was the position he maintained in the Tribunal hearing.
[32] The right to reject goods is lost if not exercised within a reasonable time: s 20(1)(a) of the Act. The Act requires, out of fairness to the supplier, that if a consumer wishes to reject goods, the consumer should make up his or her mind promptly. A "reasonable time" is a period from the time of supply of the goods in which it would be reasonable for the defect to become apparent, having regard to the factors in s 20(2)(a)-(d).
[33] The right to reject goods is also lost if a purchaser elects to have repairs done elsewhere and to recover the reasonable costs of those repairs from the supplier under s 18(2)(b)(i) of the Act. This "self-help" option under s 18(2)(b)(i) is expressed as an alternative to the rejection option under s 18(2)(b)(ii). The consumer may only choose one option "or" the other.
[34] Mr Pukeroa could potentially have rejected the vehicle in January 2017, when Trade In Clearance refused to assist him, but insisted that he pursue a claim through his Protecta policy. Instead of rejecting the vehicle at this point, he chose the "self-help" option under s 18(2)(b)(i) to have the vehicle fixed at Wainuiomata Workshop. Having done so, Mr Pukeroa's remedy is limited to recovering the costs he incurred at Wainuiomata Workshop (to the extent they are reasonable and have not already been paid by Protecta). Because of the choice he made at that time, Mr Pukeroa is not entitled to reject the vehicle.

Issue 5: What remedy is Mr Pukeroa entitled to?

[35] Although the repairs carried out by Wainuiomata Workshop were ultimately unsuccessful, the Tribunal’s Assessor Mr Binding did not consider that the costs of those repairs were unreasonable. The solution to the problem with Mr Pukeroa's vehicle was difficult to diagnose. Some allowance will be made for the fact that it took more than one attempt to remedy the problem. Indeed, the repairer which ultimately fixed the problem, AJ Auto Electrical, itself appears to have initially misdiagnosed the problem as being related to a fault with the engine control unit.
[36] Accordingly, having considered Mr Binding’s advice, I include that Mr Pukeroa is entitled to recover from Trade In Clearance the full amount of the outstanding balance of the Wainuiomata Workshop invoice, $1,006.07. In addition, I will allow him $22.51, which was the cost of obtaining a report from AJ Auto Electrical as requested by the Tribunal for the hearing.
[37] I do not consider that Mr Pukeroa is entitled to recover the sum of $207 he paid to Clint’s Auto Electrical. This work did not assist in solving the problem and was contrary to a direction made by the Tribunal, that Mr Pukeroa should have the vehicle assessed by AJ Auto Electrical prior to the hearing.
[38] Mr Pukeroa also seeks "$1,000 for the time consuming effort he put into trying to resolve this issue and the impact of not having a vehicle for 6 months." I make no orders in relation to compensation for Mr Pukeroa’s time wasted in pursuing this matter. While the Tribunal can award damages for reasonably foreseeable loss or damage resulting from the failure of a vehicle to comply with a guarantee under the Act, under s 18(4), it has no jurisdiction to award general damages for time spent in resolving a dispute. Nor can the Tribunal refund Mr Pukeroa the cost of the Tribunal's filing fee.

Result

[39] Accordingly, Trade In Clearance Limited must pay Mr Pukeroa $1,028.58 within seven days of the date of this decision.

J S McHerron
Adjudicator

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[1] When Mr Pukeroa purchased the vehicle, Trade In Clearance also supplied him a three-year Protecta "optimum warranty" for which he paid an additional $1,950.