Sutton v Just Right Marketing Limited T/A Just Right Cars Reference No. MVD 213/2017 [2017] NZMVDT 157 (12 October 2017)

Last Updated: 16 November 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 157 Reference No. MVD 213/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	BRAND HEATH COLBY SUTTON
		Purchaser
	AND	JUST RIGHT MARKETING LIMITED T/A JUST RIGHT CARS
		Trader
MEMBERS OF TRIBUNAL
J S McHerron, Barrister – Adjudicator
S D Gregory, Assessor
HEARING at Auckland on 8 September 2017 FURTHER SUBMISSIONS on 11 September 2017
DATE OF DECISION 12 October 2017
APPEARANCES
B H C Sutton, Purchaser P A Marshall, Sales Manager of Trader
P S Brooker, Witness for Trader (by telephone)

DECISION

Mr Sutton's application is dismissed.

REASONS

Introduction

[1] Brand Sutton’s 2008 Lexus ISF has suffered a catastrophic engine failure. It is not economic to repair the vehicle. Mr Sutton seeks a full refund of the purchase price, $36,000, from Just Right Marketing Limited trading as Just Right Cars, which sold the vehicle to him. Just Right Cars denies responsibility for the engine failure. It says the sump pan at the base of the engine was damaged while the vehicle was in Mr Sutton’s possession, probably by a jack. This restricted the oil flow, causing the engine damage.
[2] Accordingly, the primary issue in this case is whether the vehicle failed to comply with the guarantee of acceptable quality.

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.

...

(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] 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] Mr Sutton alleges that the cause of the engine failure pre-existed his purchase of the vehicle. That is why he argues he was entitled to reject the vehicle on 26 June 2017.
[7] The engine failure occurred near Ngaruawahia on 7 April 2017. Mr Sutton reported that no warning lights appeared on the dashboard beforehand, and he had observed no oil loss from the engine prior to the journey. Mr Sutton said he did, however, hear a rattle from the engine on the day it failed.
[8] The following day, Mr Sutton telephoned Just Right Cars to ask it to repair the vehicle. Just Right Cars agreed to arrange for the vehicle to be towed to its yard in Auckland for assessment.
[9] Just Right Cars initially noted that the vehicle’s exhaust had been modified since Mr Sutton purchased it. As part of these modifications the catalytic converter had been removed, rendering the vehicle non-compliant with warrant of fitness requirements.[1] In addition, Just Right Cars observed that the vehicle's air intake had been modified and that after-market alloy wheels had been fitted. Just Right Cars also produced photographs of burned rubber under the vehicle's wheel arches, suggesting a sustained loss of traction had occurred. Paul Marshall, Just Right Cars’ sales manager, assured the Tribunal that the vehicle was not sold to Mr Sutton in that condition.
[10] Mr Sutton and Just Right Cars agreed to have the motor removed to investigate the cause of the engine failure.
[11] Mr Marshall (himself an experienced mechanic) put the vehicle on a hoist and removed its sump. He observed that the sump was made of light-weight steel. At first, he did not notice it was dented. The oil in it was thick and burned.
[12] Just Right Cars then sent the vehicle to One Smart Auto to have the engine removed. The motor was dropped out of the bottom of the vehicle with the engine still on the subframe. The engine was then put on a crate and then taken to Taylor Automotive for assessment.
[13] Taylor Automotive reported as follows:

Strip down complete long engine, inspected, checked, measured and advised customer of the following.

Report:-

The sump has been damaged by way of contact with jack or other item. This impact has restricted the oil flow through the engine

The lack of oil has significantly damaged the engine causing complete engine failure.

Please note:- due to the extent of the damage to this engine it would not be cost effective to rebuild.

[14] In his evidence, Mr Marshall elaborated on the precise engine damage that had occurred. He said that the crank main journals had seized due to lack of oil pressure.
[15] The workshop manager of Taylor Automotive, Paul Brooker, gave evidence by telephone at the hearing. He said that the vehicle’s lower sump pan had been crushed and pushed too close to the oil pickup. He said there needs to be a 10 mm gap between the pickup and the bottom of the sump to ensure enough oil gets into the pickup. When asked if a vehicle could travel 15,000 km with that sort of failure, he said “no”. In his opinion, a vehicle would be only capable of travelling around 10-50 km before the engine seized. At the most, Mr Brooker thought such a vehicle would not be capable of travelling more than 1,000 km.
[16] Mr Sutton expressed concerns that the sump may have been damaged when the engine was removed from the vehicle on Just Right Cars' instructions. But Mr Brooker and Mr Marshall confirmed that the sump was removed before the engine was removed from the vehicle, demonstrating that the sump could not have been damaged in the course of removing the engine. Mr Brooker was confident that the damage to the sump was caused by a jack making contact with it, as this was consistent with the shape and formation of the indentations on the sump. He suggested the parties should check the undertray covers for any similar damage. This occurred after the hearing and photographs of the undertray covers were supplied to the Tribunal by Mr Marshall. These photographs indicated that the undertray did not cover the sump, which was left exposed. Therefore, there was no reason to expect that the damage to the sump would be reflected in similar damage to the undertray covers.

Mr Sutton's submissions in reply

[17] Mr Sutton made three primary submissions in response to the submissions and evidence on behalf of Just Right Cars.
[18] First, he submitted that the design of the sump was such that, in his view, it allows oil to be scavenged even if the gap between the pickup and the bottom of the sump is for some reason restricted or compressed. Mr Sutton pointed out that the volume of the sump was nine litres which was much more than the engine needed at any one time. In making this submission, I understood Mr Sutton to be saying that considerable capacity for over-supply of the oil was provided for in the sump such that physical damage to it, as occurred in the present case, would be unlikely to result in catastrophic engine damage.
[19] The difficulty with this submission is that the cause of the engine failure is attributed by Just Right Cars and its expert witness Mr Brooker as being directly related to the damage sustained by the engine sump. Mr Sutton has not provided evidence of any other matter that could have caused this engine failure. Mr Sutton has not persuaded the Tribunal that there was any pre-existing fault with the vehicle, causing the engine to fail.
[20] The second submission Mr Sutton made, as already mentioned above, was that he was concerned about the way in which Just Right Cars removed the sump and then forwarded the vehicle to One Smart Auto, minus its sump, to have its engine removed. Mr Sutton argued this raised a suspicion that the sump had been damaged in the process of removing and transferring both the sump and the engine for analysis by Taylor Automotive.
[21] I do not consider that Mr Sutton has given any valid cause for concern about the manner in which the sump or engine were removed. Mr Marshall explained how this was done and that it was done carefully. There is no basis to find that he removed the sump or engine in an unprofessional manner or that damage occurred in the process.
[22] Third, Mr Sutton submitted that he has only ever used a qualified Lexus mechanic to work on the vehicle who has at all times carried out work and procedures as trained and as specified in the manufacturer’s instructions. Mr Sutton said he had the vehicle serviced shortly after he purchased it. The Tribunal asked to see evidence of that service, but none was available. Mr Sutton said he was not given an invoice for the servicing work done on the vehicle.
[23] Mr Sutton denied that he had modified the vehicle in any way that was inappropriate or that might have led to this damage occurring. He denied that he had done burnouts in the vehicle or that he had raced it (although he said he would have liked to race it). His explanation for the burned rubber Just Right Cars found under the wheel arches was either that it had been supplied to him in that condition or alternatively that it was a result of the "ex import poor, brittle rubber quality tires that posed a safety hazard when purchased". That was also Mr Sutton's explanation for why he had replaced the wheels and tyres.
[24] Mr Gregory carefully evaluated Mr Sutton’s submissions, the photographic evidence supplied and the expert report by Taylor Automotive, as well as Mr Brooker’s oral evidence in the Tribunal hearing.
[25] Mr Gregory doubts the vehicle’s engine could have survived for 500 km after the sump was damaged, let alone the 15,000 km that Mr Sutton travelled in the vehicle before its engine failed. In Mr Gregory’s experience, vehicles do not run for this long with such a significant restriction to the capacity of the oil pickup.
[26] Mr Gregory also pointed out that he would have expected a pre-existing fault with the engine to have been noticed when the vehicle was serviced. However there were no reports of any damage noted at that time.
[27] In Mr Gregory’s opinion, the photographic evidence is consistent with either a jack hitting the underside of the vehicle (as Mr Brooker concluded) or alternatively that the vehicle's sump came into contact with another object, such as a kerb.
[28] Mr Gregory advised that oil sumps do not take much to become dented, especially a light-weight sump such as this one. Mr Gregory observed, based on the photographs supplied by Mr Marshall after the hearing, that the sump looks very exposed and lacks any plastic undertray covering. Therefore, in his view, it was unsurprising that it was possible for it to come into direct contact with an object, for example a jack, and be damaged by it.

The Tribunal’s conclusion

[29] In my view, Mr Sutton has not established that the vehicle failed to comply with the guarantee of acceptable quality. To the contrary, I consider that Just Right Cars has established that the vehicle is likely to have been damaged while in Mr Sutton’s possession. Then, fairly shortly after the damage occurred, the oil supply to the engine has been restricted and catastrophic engine failure has resulted.
[30] Accordingly, in my view, s 7(4) of the Act (above) applies to preclude an argument that the vehicle failed to comply with the guarantee of acceptable quality, as:

• (a) the presence of damage to the sump indicates the vehicle has been used in a manner that was inconsistent with the use that a reasonable consumer would expect to be able obtain from the vehicle; and
• (b) the vehicle would have complied with the guarantee of acceptable quality if it had not been used in the manner that caused the sump to become damaged.

[31] I note also, that this vehicle is far from new and that Mr Sutton has travelled approximately 15,000 km in it since he purchased it approximately five months before the engine failure occurred. While that amount of time and distance does not prevent the guarantee of acceptable quality from applying in this case, it certainly makes it more difficult for Mr Sutton to establish any pre-existing fault in the vehicle, given that it has lasted a considerable distance without concern before this engine failure occurred. In the absence of any independent evidence produced by Mr Sutton establishing any other likely cause for the engine failure, I merely state that, even if the failure had not been attributable to the damaged sump, he would have considerable difficulty establishing a pre-existing fault led to this engine failure.
[32] It follows that the Tribunal does not uphold Mr Sutton’s rejection of the vehicle and his application is dismissed.

J S McHerron
Adjudicator

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[1] See VIRM, In-service certification (WoF and CoF), General vehicles, 11-2 Exhaust emissions, reasons for rejection: available at https://vehicleinspection.nzta.govt.nz/virms/in-service-wof-and-cof/general/exhaust/exhaust-emissions (accessed 10 October 2017).