Webb v Bill Russ Motors Limited Reference No. MVD 281/2017 [2017] NZMVDT 179 (16 November 2017)

Last Updated: 20 December 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 179 Reference No. MVD 281/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	SIMON WEBB
		Purchaser
	AND	BILL RUSS MOTORS LIMITED
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 26 October 2017
DATE OF DECISION 16 November 2017
APPEARANCES
Mr S Webb, Purchaser
Mr W P Russ, for the Trader

ORDERS

1. Bill Russ Motors Limited shall, within 15 working days of the date of this decision:
   1. Replace the vehicle’s clutch.
   2. Inspect, and if required, repair the vehicle’s steering universal joint.
   100. Pay $97.75 to Simon Webb.

DECISION

[1] The vehicle has a fault with its clutch and is likely to have a fault with the steering universal joint, which breach the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the Act”).
[2] Mr Webb is not entitled to reject the vehicle because of these faults. Bill Russ Motors has not failed to repair the fault within a reasonable time for the purposes of s 18(2)(b)(ii) of the Act and Mr Webb has not proven that the faults amount to a failure of a substantial character within the meaning of s 21 of the Act.
[3] Under s 18(2)(a) of the Act, Mr Webb is entitled to have the faulty clutch repaired and the steering universal joint assessed, and if a fault is found, repaired by Bill Russ Motors.

REASONS

Introduction

[4] On 11 May 2017, Simon Webb purchased a 2005 Daihatsu Sirion, for $4,300 from Bill Russ Motors Limited. The vehicle had an odometer reading of 162,400 kms at the time of sale.
[5] Shortly after purchase, Mr Webb became concerned about the vehicle’s performance. Mr Webb had concerns that:

• (a) The vehicle’s clutch was “crunchy” and difficult to depress once the vehicle has warmed up.
• (b) The vehicle had a fault with its gearbox. Mr Webb says that he would sometimes have difficulty changing gears.
• (c) On uneven roads, the vehicle’s steering wheel rattled.
• (d) The vehicle was intermittently difficult to start when the engine was hot.
• (e) The vehicle has a weak battery.

[6] Mr Webb asked Bill Russ Motors to repair these alleged defects. Bill Russ Motors has replaced the vehicle’s gearbox oil and has made one, unsuccessful, attempt to repair the clutch fault. Mr Webb says the faults have continued and he returned the vehicle and now seeks to reject it and obtain a refund of the purchase price. Mr Webb also says that the vehicle did not have a recent warrant of fitness when it was supplied to him, and that he is entitled to reject the vehicle because of this oversight by Bill Russ Motors.
[7] Bill Russ Motors says that the vehicle does not have the faults complained of, and if the vehicle does have faults, it should be given another opportunity to assess and repair the vehicle’s faults. Bill Russ Motors also says that the failure to have a recent warrant of fitness does not justify rejection.

The Issues

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

• (a) Does the vehicle have faults that breach the acceptable quality guarantee in s 6 of the Act?
• (b) Did Bill Russ Motors fail to repair the faults within a reasonable time as required by s 18(2)(b)(ii) of the Act?
• (c) Do the faults amount to a failure of a substantial character within the meaning of s 21 of the Act?
• (d) What remedy is Mr Webb entitled to under the Act?
  

Does the vehicle have a fault that breaches the acceptable quality guarantee?

[9] 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.
[10] The expression "acceptable quality" is defined in s 7(1) of the Act 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.

[11] 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 Webb’s subjective perspective.

The clutch fault

[12] Mr Webb says that the vehicle has a fault with its clutch, which makes it difficult to depress.
[13] On 12 June 2017, Mr Webb had the vehicle assessed by Mt Eden Vehicle Care Limited, who found a fault with the “release bearing the gearbox”. Mr Gregory, the Tribunal’s Assessor, advises that the release bearing is a component in the vehicle’s clutch.
[14] Mr Webb also had the vehicle assessed by Midas Grey Lynn on 23 June 2017. Midas found a noise from the clutch, but considered that the clutch required disassembly for further investigation.
[15] William Russ, who appeared for Bill Russ Motors, says that he has driven the vehicle and has not noticed any fault with the clutch. Further, Bill Russ Motors had the vehicle assessed by Webster Lane Motors (Papatoetoe) Limited on 20 July 2017. Webster Lane Motors considered that the vehicle drove well and that its clutch was “fine”.
[16] After weighing the evidence from both sides, I am satisfied that the vehicle has a fault with its clutch. Mr Webb was clear in his evidence as to the nature of the fault and Mt Eden Vehicle Care assessed the vehicle and found a faulty release bearing. That evidence persuades me that the vehicle has a faulty clutch.

The vehicle is likely to have a fault with its steering mechanism

[17] Mt Eden Vehicle Care also found that the vehicle’s steering universal joint was noisy. Midas found play in the universal joint and recommended replacement.
[18] A fault of this nature would ordinarily cause a vehicle to fail a warrant of fitness inspection. However, Webster Lane Motors issued a warrant of fitness on 20 July 2017, and in doing so found no fault with the vehicle’s steering mechanism.
[19] Again, after weighing the evidence presented, I consider it most likely that the vehicle has a fault with its steering mechanism. This fault was identified by both Mt Eden Vehicle Care and Midas. I acknowledge that the fault was not found during the warrant of fitness inspection by Webster Lane Motors. However, Mr Webb gave evidence that the fault only became apparent when the steering wheel is fully locked in one direction or when the vehicle is driven over an obstacle. I consider there to be a real prospect that the vehicle has a fault and that Webster Lane Motors did not identify the fault because it manifests itself in limited circumstances only, and is in an area of the vehicle that is difficult to inspect.

The clutch and likely steering faults breach the acceptable quality guarantee

[20] I am satisfied that the clutch fault, and the likely fault with the vehicle’s steering universal joint breach the acceptable quality guarantee in s 6 of the Act. In reaching this conclusion, I acknowledge that Mr Webb paid $4,300 for a 12-year-old vehicle with more than 160,000 kms on its odometer. Notwithstanding the price, age and mileage of this vehicle, s 6 of the Act applies, and the vehicle must be free of minor defects and as durable as a reasonable consumer would expect. I am satisfied that this vehicle has not been durable. A reasonable consumer would not expect faults of this nature to be present in the vehicle so shortly after purchase.

There is insufficient evidence of any other fault

[21] Mr Webb also alleged that the vehicle’s gearbox had a fault, that the vehicle was hard to start when hot and that the vehicle had a weak battery. Mt Eden Vehicle Car assessed the vehicle and found none of these faults. Certainly, the gearbox fluid required replacement, which Bill Russ Motors has done, but aside from Mr Webb’s evidence as to the symptoms he has experienced, there is no other evidence to support his claim that the vehicle has these faults.
[22] Accordingly, Mr Webb has not proven that the vehicle has these faults.

Did Bill Russ Motors fail to repair the faults within a reasonable time?

[23] Mr Webb claims that he is entitled to reject the vehicle under s 18(2)(b)(ii) of the Act because Bill Russ Motors has failed to repair the vehicle’s faults within a reasonable time. He says that he has given Bill Russ Motors a reasonable opportunity to diagnose and repair the faults.
[24] 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), 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.”

[25] Under s 18(2)(b)(ii) of the Act, Mr Webb is entitled to reject the vehicle if, having been required to remedy the fault, Bill Russ Motors has not succeeded in doing so within a reasonable time.
[26] I consider that Bill Russ Motors has not been given a reasonable opportunity to assess or repair the faults. Bill Russ Motors has had one opportunity to perform repairs to the vehicle. At that time, it replaced the gearbox oil and lubricated the clutch cable, to address the issues Mr Webb was experiencing with the clutch. Bill Russ Motors could find no fault with the steering mechanism, so made no attempt at repairing that fault.
[27] Mr Webb then rejected the vehicle without giving Bill Russ Motors another opportunity to repair.
[28] Mr Gregory advises that faults with motor vehicles can often take more than one attempt to diagnose and repair. That is particularly so where the fault is intermittent or not otherwise obvious.
[29] In those circumstances, I am not satisfied that Bill Russ Motors was given sufficient opportunity to diagnose and repair the vehicle’s faults before Mr Webb rejected the vehicle. Mr Webb is not therefore entitled to reject the vehicle on the grounds that Bill Russ Motors has failed to repair the faults.

Are the faults a failure of a substantial character?

[30] Under s 18(3) of the Act, Mr Webb may reject the vehicle if its fault amounts to a failure of a substantial character, which is defined in s 21 of the Act. Relevant to this case is s 21(a) of the Act which states:

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;

...

[31] The question I must answer is whether the faults that this vehicle has are such that a reasonable consumer, fully acquainted with the true nature and extent of the faults, would not have purchased the vehicle.
[32] The clutch fault is not a failure of a substantial character in a vehicle of this price, age and mileage. I am not satisfied that a reasonable consumer would have declined to purchase the vehicle if it had known of this fault. Mr Gregory advises that clutches can fail in vehicles of this age that have travelled more than 160,000 kms. The fault should be easily repaired.
[33] Likewise, I am not satisfied that the likely fault with the steering mechanism gives rise to the right to reject the vehicle. Mr Gregory advises that this fault, if present, is likely to be in its infancy and the steering joint is unlikely to fail completely. This is supported by the vehicle passing its warrant of fitness inspection in July 2017.
[34] Mr Webb points to the estimated cost of repairs to justify his rejection. Mr Webb has obtained an estimate of $2,462.73 from Midas to replace the clutch and repair the steering mechanism and to have the vehicle’s wheels aligned. Although the cost of repairs is an important consideration in determining whether a fault is a failure of a substantial character, it is not decisive. That is particularly the case for vehicles of this price and age, where the cost of routine repairs can represent a significant proportion of the value of the vehicle.
[35] In this case, I must look to the nature of the faults, and as set out above, I do not consider the faults to be of a nature that justify rejection. Further, Mr Gregory advises that Midas's quote is at full retail, and it is likely that Bill Russ Motors will be able to repair the vehicle for much less than has been quoted by Midas.
[36] Mr Webb also seeks to reject the vehicle because it did not have a warrant of fitness issued within the 28 days before purchase. There was much debate between Mr Russ and Mr Webb as to how this happened. Mr Russ says that Mr Webb was in a hurry to take possession of the vehicle but agreed to bring the vehicle back later to have a warrant of fitness issued. Mr Webb denies this and says that he was not told of the stale warrant of fitness.
[37] I do not need to resolve this dispute. It is settled that the vehicle did not have a recent warrant of fitness when it was supplied to Mr Webb. What I need to determine is whether that oversight by Bill Russ Motors gives rise to the right to reject the vehicle.
[38] I do not consider that the lack of a recent warrant of fitness gives rise to the right to reject the vehicle in this case. Mr Webb has not produced any evidence to show that the vehicle was unsafe or otherwise in a condition to justify rejection. Further, the vehicle passed a warrant of fitness inspection in July 2017, suggesting that, although Bill Russ Motors did not comply with its obligation to supply a fresh warrant of fitness, the vehicle was nonetheless free of serious faults when it was sold to Mr Webb.

What remedy is Mr Webb entitled to under the Act?

[39] Under s 18(2)(a) of the Act, Mr Webb is entitled to have the vehicle’s clutch repaired. He is also entitled to have any fault with the vehicle’s steering universal joint diagnosed and repaired.
[40] Under s 18(4) of the Act, Mr Webb is also entitled to recover the cost of having the vehicle’s faults assessed. Mr Webb was charged $97.75 by Mt Eden Vehicle Care for the 12 June 2017 assessment. Mr Webb is entitled to recover this amount.
[41] I therefore order that Bill Russ Motors must, within 15 working days of the date of this decision:

• (a) Replace the vehicle’s clutch; and
• (b) Inspect, and if required, repair the vehicle’s steering universal joint.
• (c) Pay $97.75 to Simon Webb.

DATED at AUCKLAND this 16th day of November 2017

B.R. Carter
Adjudicator