Brooker v Central Motor Holdings Limited Trading As Wholesale Vehicles Taupo Reference No. MVD 050/2017 [2017] NZMVDT 148 (6 October 2017)

Last Updated: 16 November 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 148 Reference No. MVD 050/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	RICHARD PHILIP HARRY BROOKER
		Purchaser
	AND	CENTRAL MOTOR HOLDINGS LIMITED TRADING AS WHOLESALE VEHICLES TAUPO
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Taupo on 22 September 2017
DATE OF DECISION 6 October 2017
APPEARANCES
Mr R P H Brooker, Purchaser
Mr L Huntley, for the Trader

ORDERS

A. Central Motor Holdings Limited shall, within five working days of the date of this decision, pay $442.60 to Richard Brooker.

DECISION

[1] The Mazda MPV purchased by Mr Brooker in September 2014 had a fault with its Electronic Control Unit (“ECU”) that breached the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the Act”).
[2] Mr Brooker is entitled to recover the reasonable costs he incurred in repairing the ECU fault under s 18(2)(b)(i) of the Act.
[3] The Honda Airwave purchased in March 2016 does not have any faults that breach the acceptable quality guarantee in s 6 of the Act. Accordingly, Mr Brooker is not entitled to any remedy for that vehicle under the Act.

REASONS

Introduction

[4] On 23 September 2014, Richard Brooker purchased a 2001 Mazda MPV Wagon for $7,980 from Central Motor Holdings Limited. The vehicle had an odometer reading of 155,618 kms at the date of purchase. Central Motor Holdings provided mechanical breakdown insurance with the vehicle.
[5] Mr Brooker began experiencing problems with the vehicle in October or November 2014. Mr Brooker says the vehicle began to intermittently stall, although the vehicle would then restart if left to rest for a short period.
[6] In January 2015, the vehicle stalled and Mr Brooker was unable to restart it. Mr Brooker contacted Central Motor Holdings who advised him to make a claim against his mechanical breakdown insurance policy. Mr Brooker then had the vehicle assessed by Engines and Spares Limited in Taupo, who diagnosed the vehicle as having a fault with its ECU.
[7] Mr Brooker’s insurer refused to replace the ECU, and instead had the ECU repaired. Mr Brooker paid an excess of $300 for that repair.
[8] In May 2015, the ECU failed again and was repaired at no cost to Mr Brooker. In February 2016, the ECU failed for a third time. Mr Brooker had the ECU repaired at a cost of $357.65. Much of that cost ($215.05) relates to an unnecessary replacement of the vehicle’s sparkplugs.
[9] After this repair, Mr Brooker decided to purchase another vehicle from Central Motor Holdings and to trade the Mazda MPV in for that replacement vehicle.
[10] On 1 March 2016, Mr Brooker purchased a 2005 Honda Airwave from Central Motor Holdings for $8,490. The vehicle had an odometer reading of 76,513 kms at the time of sale. This vehicle was also supplied with a mechanical breakdown insurance policy.
[11] In about May 2016 Mr Brooker noticed a puddle of oil beneath the vehicle. Mr Brooker said the puddle of oil was approximately the size of a dinner plate.
[12] Mr Brooker contacted Central Motor Holdings who advised him to make a claim against his insurance policy. Mr Brooker then took the vehicle to Engine and Spares who diagnosed an oil leak coming from a crack in the vehicle’s sump. Mr Brooker paid $335.80 to replace the leaking sump.
[13] In November 2016, Mr Brooker discovered that the vehicle had developed a gearbox leak. He paid $149.50 to have that leak repaired.
[14] Mr Brooker has applied to the Tribunal for orders that Central Motor Holdings should refund him the cost of all repairs to the two vehicles. Central Motor Holdings denies that it is liable for the cost of any repairs.

The Issues

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

• (a) Did the Mazda MPV have any faults that breach the guarantee of acceptable quality in s 6 of the Act?
• (b) Did the Honda Airwave have any faults that breach the guarantee of acceptable quality in s 6 of the Act?
• (c) What remedy is Mr Brooker entitled to under s 18 of the Act?

Did the Mazda MPV have any faults that breach the guarantee of acceptable quality in s 6 of the Act?

[16] 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.
[17] 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.”

[18] 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 Brooker’s subjective perspective.

The ECU fault breaches the acceptable quality guarantee

[19] The Mazda MPV developed a fault with its ECU shortly after purchase. The ECU fault initially caused the vehicle to intermittently stall, but in January 2015 it caused the vehicle to cease working altogether. 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 so shortly after purchase.

Did the Honda Airwave have any faults that breach the guarantee of acceptable quality in s 6 of the Act?

[20] Mr Brooker alleges that the Honda Airwave had a cracked oil sump that breaches the acceptable quality guarantee in s 6 of the Act. Mr Brooker gave evidence that he first noticed the oil leak in May 2016, about three months after purchasing the vehicle. He says he had left the vehicle parked on his driveway the night before, and noticed a dinner plate sized puddle of oil the next day. Mr Brooker says he had not previously noticed any oil leaking from the vehicle, although when he then checked his garage floor he noticed a small amount of damp fluid in the carpet that he thought may have come from a recent oil leak.
[21] I do not consider that the cracked oil sump is a breach of the acceptable quality guarantee.
[22] It is unlikely that the sump was cracked when Mr Brooker purchased the vehicle. Mr Huntley gave evidence that the vehicle sat on his yard before it was sold to Mr Brooker, and he would have noticed if the vehicle was leaking oil from its sump as it would have left puddles of oil such as the one described by Mr Brooker. Mr Huntley says the vehicle left no such puddles.
[23] Mr Gregory, the Tribunal’s Assessor, advises that the crack in the oil sump was most likely caused by impact damage rather than a failure, or lack of durability, of the part. Mr Gregory advises that cracks of this nature are generally caused by the vehicle impacting with a solid object or item such as debris on the road, or roadside kerbs.
[24] Mr Gregory also advises that an oil leak of the size described by Mr Brooker is significant, and that if an oil leak had been present when he purchased the vehicle, the vehicle would quickly have run out of oil. That did not occur. Mr Brooker says that although he put approximately half a litre of oil in the vehicle about a month before he noticed the leak, he saw no other signs that the vehicle was losing oil until May 2016. Mr Gregory considers that this is evidence that the crack in the oil sump was caused shortly before Mr Brooker noticed the oil leak in May 2016 and that it was not present when the vehicle was sold to Mr Brooker.
[25] On the basis of the evidence I heard, and the advice from Mr Gregory, I am satisfied that the vehicle did not have a pre-existing fault with its oil sump and that the crack in the oil sump was most likely caused by the vehicle impacting a solid object while in Mr Brooker’s possession. As a result, I am satisfied that the cracked oil sump does not amount to a breach of the acceptable quality guarantee.
[26] Mr Brooker also claimed that the vehicle developed a leak from its gearbox in November 2016. Mr Gregory advises that this is a minor leak – as evidenced by the inexpensive repair – and is the type of leak that is to be expected in a vehicle of this age and mileage.
[27] This fault became evident eight months after purchase. The protections in s 6 of the Act are not indefinite, and only last for as long as a reasonable consumer would expect. Given the minor nature of the fault and the period of time since purchase, I am satisfied that, in relation to the gearbox leak, the vehicle has been as durable as a reasonable consumer would expect, taking account of its price, age and mileage.

What remedies are available to Mr Brooker

[28] 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), the 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.”

[29] Mr Brooker is not entitled to any remedy in relation to the Honda Airwave. The vehicle has not failed to comply with any of the guarantees in the Act.
[30] Mr Brooker is entitled to recover the reasonable costs he incurred in repairing the Mazda MPV’s ECU fault. Mr Brooker required Central Motor Holdings to repair the fault, but it declined to do so. Under s 18(2)(b)(i) of the CGA Mr Brooker was entitled to have the fault repaired elsewhere and recover that cost from Central Motor Holdings.
[31] Mr Brooker paid a $300 excess for the first ECU repair. He is entitled to recover that amount. In February 2016 Mr Brooker paid a further $357.65 to have the ECU repaired. I consider that Mr Brooker is entitled to recover $142.60 of that amount, as the remaining $215.05 related to the replacement of the vehicle’s sparkplugs. Mr Gregory advises that this was an unnecessary repair, in that the vehicle’s old sparkplugs could not have caused or contributed to the fault with the vehicle’s ECU. I do not consider it appropriate to require Central Motor Holdings to pay the cost of replacing the sparkplugs.

[32] Accordingly, I order that Central Motor Holdings must, within five working days of the date of this decision, pay $442.60 to Mr Brooker.

DATED at AUCKLAND this 6th day of October 2017

B.R. Carter
Adjudicator