Sharp v Schofield & Co Limited t/a Schofields of Newmarket - Reference No. MVD 260/2017 [2017] NZMVDT 171 (8 November 2017)

Last Updated: 23 March 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 171 Reference No. MVD 260/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	ANDREW NEVILLE SHARP
		Purchaser
	AND	SCHOFIELD & CO LIMITED T/AS SCHOFIELDS OF NEWMARKET
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Haynes, Assessor
HEARING at Auckland on 17 October 2017
DATE OF DECISION 8 November 2017
APPEARANCES
A N Sharp, Purchaser
C Turnbull, Witness for the Purchaser P Glenn, for the Trader P Loftus, Witness for the Trader

ORDERS

1. Schofield & Co Limited shall, within 10 working days of the date of this decision, pay $4,000 to Andrew Sharp.

DECISION

[1] The vehicle had a significant engine fault that breached the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1986 (“the Act”).
[2] Schofield & Co Limited declined to repair the fault and under s 18(2)(b)(i) of the Act, Mr Sharp was entitled to have the fault repaired elsewhere recover the reasonable cost of those repairs.
[3] Mr Sharp is not entitled to recover all of the cost he incurred in having the vehicle repaired. Mr Sharp incurred more cost than was reasonable in the circumstances of this case. The fault could reasonably have been rectified by replacing the damaged camshaft and lifters at a cost of approximately $4,000.

REASONS

Introduction

[4] On 23 September 2015, Andrew Sharp purchased a 2009 Holden HSV Clubsport from Schofield & Co Limited, trading as Schofields of Newmarket, for $49,990. The vehicle had an odometer reading of 65,806 kms at the time of sale.
[5] In June 2017, the vehicle suffered significant engine damage. Mr Sharp asked Schofields to rectify the fault but Schofields has denied liability for the damage, claiming that the length of Mr Sharp’s ownership, together with the distance he has travelled in the vehicle, means that the protections in the Act no longer apply.
[6] Mr Sharp then had the vehicle repaired at a cost of more than $13,000 and has applied to the Tribunal seeking an order that Schofields compensate him for the cost of those repairs.

The Issues

[7] The issues requiring consideration in this case are:

• (a) Does the engine fault amount to a breach of the acceptable quality guarantee in s 6 of the Act?
• (b) If so, what remedy is Mr Sharp entitled to under the Act?

Does the engine fault breach the acceptable quality guarantee?

[8] In early June 2017, Mr Sharp noticed a ticking noise coming from the vehicle’s engine. He had the vehicle assessed by David Stevenson Auto Ltd, who determined that the vehicle had a damaged camshaft lobe, caused by a collapsed roller ball in the middle lifter. David Stevenson Auto considered that the vehicle’s engine required reconditioning or replacement. The damaged camshaft and lifter was also examined by Probuilt Engines Limited, who advised that the camshaft was not repairable.
[9] Mr Sharp gave evidence that he was surprised that the vehicle suffered this damage. Mr Sharp says that he was advised by Schofields that the vehicle had been well-maintained and serviced throughout its lifetime. Mr Sharp considered that a well-maintained and serviced Holden HSV Clubsport of this age and mileage should not suffer engine damage of this nature.

The acceptable quality guarantee in s 6 of the Act

[10] 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.
[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 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 Sharp’s subjective perspective.
[13] In this case, the question I must consider is whether the vehicle’s engine has been as durable as a reasonable consumer would expect, taking account of the price, age and mileage of the vehicle, and any representations made about the maintenance and service history of the vehicle.

Has the engine been as durable as a reasonable consumer would expect?

[14] Mr Sharp paid $49,990 for a six-year-old Holden HSV Clubsport that had travelled 65,806 kms at the date of purchase. Twenty and a half months, and a little more than 27,000 kms of driving later, the vehicle suffered significant engine damage, which cost more than $13,000 to repair.
[15] In determining whether the engine fault breaches the acceptable quality guarantee, I must take account of representations made by Schofields when the vehicle was sold to Mr Sharp when considering whether this vehicle has been as durable as might be expected. Mr Sharp and his partner Ms Turnbull were both adamant that Paul Loftus, a salesman employed by Schofields advised them that the vehicle had been well-maintained and fully serviced throughout its lifetime. Mr Loftus does not recall the discussion with Mr Sharp and Ms Turnbull, but advises that he would never have said that the vehicle had been fully serviced. Instead, he said he would have referred to the vehicle’s service booklet.
[16] I consider it likely that Mr Loftus did make representations sufficient to lead Mr Sharp and Ms Turnbull to believe that the vehicle had been well maintained and serviced throughout its lifetime. I accept the evidence of Mr Sharp and Ms Turnbull on this point. Both had a clear recollection of the discussion and both gave evidence consistent with the other as to what they were told about the service and maintenance history of the vehicle. On the other hand, Mr Loftus did not recall precisely what was said, and instead gave evidence as to what he thought he would have said.
[17] Mr Haynes, the Tribunal’s Assessor, advises that although it is not unusual for a Holden HSV Clubsport with a LS3 engine to have a lifter fault, a well-maintained and serviced vehicle of this age and mileage should not suffer significant engine damage of this nature. I therefore conclude that this vehicle has not been as durable as a reasonable consumer would expect.
[18] In reaching this conclusion, I acknowledge that the protections in s 6 of the Act are not indefinite and that this vehicle was driven by Mr Sharp for twenty and a half months and 27,000 kms before the engine fault became apparent. I can certainly understand why Schofields argues that the Act’s protections no longer apply in this case. However, I am satisfied that a reasonable consumer would expect the engine of a Holden HSV Clubsport of this price, age and mileage, which has been represented as being well-maintained and serviced, to be more durable than this vehicle’s engine has been. In those circumstances, I am satisfied that the engine fault means that the vehicle failed to comply with the acceptable quality guarantee in s 6 of the Act.

What remedy is Mr Sharp entitled to under the Act?

[19] Section 18 of the Act sets out the remedies under the Act. Section 18 provides:

“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.”

[20] Under s 18(2)(b)(i) of the Act, Mr Sharp is entitled to recover the reasonable cost of repairing the engine fault, because Schofields declined to perform the repair.
[21] Mr Sharp seeks to recover the following amounts:

• (a) $11,729.37, being the cost of work performed by David Stevenson Auto in repairing the engine fault; and
• (b) $1,767.44, being the cost of custom tuning performed by Harman Motors Limited after the engine repairs.

[22] I am not satisfied that Mr Sharp is entitled to recover this whole amount. Mr Haynes considers the cost to be higher than one would reasonably expect to pay to rectify engine damage of this nature. Mr Haynes considers that the high cost is a consequence of Mr Sharp choosing an expensive repair option when a reasonable, and much less expensive, alternative was available.
[23] Mr Haynes considers that the engine did not require a complete overhaul or replacement. Mr Haynes advises that the engine damage was limited to a damaged camshaft and lifters and could reasonably have been rectified by replacing the damaged camshaft and lifters, and flushing all metal filings out of the engine.
[24] Mr Haynes says this repair would have cost about $4,000.
[25] I acknowledge that Mr Sharp appears to have relied on advice from his mechanics when deciding on what repairs would be performed on the vehicle. However, in the circumstances of this case, I consider that Mr Sharp has incurred more cost than was reasonable and that Mr Sharp should only be entitled to recover the cost and installation of a replacement camshaft and lifters.
[26] Accordingly, I order that Schofields must, within 10 working days of the date of this decision, pay $4,000 to Mr Sharp.

DATED at AUCKLAND this 8th day of November 2017

B.R. Carter
Adjudicator