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Knight v C & R Motors Limited T/A Just Prestige Reference No. MVD 255/2017 [2017] NZMVDT 180 (16 November 2017)

Last Updated: 20 December 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL



Reference No. MVD 255/2017


IN THE MATTER
of the Motor Vehicle Sales Act 2003


AND


IN THE MATTER
of a dispute


BETWEEN
GLENN KNIGHT


Purchaser


AND
C & R MOTORS LIMITED T/AS JUST PRESTIGE


Trader


MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory Assessor

HEARING at Auckland on 18 October 2017

DATE OF DECISION 16 November 2017

APPEARANCES
G Knight, Purchaser
G Chen, for the Trader
R Yu, Witness for the Trader


ORDERS

  1. C&R Motors Limited shall, within 15 working days of the date of this decision:
    1. Rectify the underbody corrosion
    2. Replace all four of the vehicle’s worn brake discs.
    1. Replace the vehicle’s rear brake pads.
    1. Cut and polish the exterior of the vehicle.
    2. Repair the broken clip in the centre console.

DECISION

[1] The vehicle has numerous faults that breach the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the CGA”).
[2] Under s 18(2)(a) of the CGA, Mr Knight is entitled to have the worn brake discs and pads, the underbody corrosion, the broken clip in the centre console and the unacceptable appearance and finish of the vehicle rectified by C&R Motors.
[3] Mr Knight is not entitled to recover the cost he has incurred in repairing the coolant leak, front suspension and rear main oil seal leak because he did not first give C&R Motors a reasonable opportunity to repair those faults.
[4] Mr Knight’s claim that C&R Motors misled him, in breach of the Fair Trading Act 1986 (“the FTA”) is dismissed. Mr Knight’s belief that the vehicle had Bluetooth music streaming capability was based on his own mistaken assumption and not any misleading conduct by C&R Motors.

REASONS

Introduction

[5] On 10 June 2017, Glenn Knight purchased a 2008 Audi Q7 for $34,995 from C&R Motors Limited, trading as Just Prestige. The vehicle had an odometer reading of 130,000 kms at the time of sale.
[6] Mr Knight alleges that the vehicle has had numerous faults that breach the acceptable quality guarantee in s 6 of the CGA, and that C&R Motors misled him about the vehicle’s Bluetooth music streaming capability. C&R Motors has rectified some of the faults identified by Mr Knight, but has not otherwise provided the remedy Mr Knight seeks.
[7] Mr Knight has now applied to the Tribunal for orders that C&R Motors repair the vehicle’s remaining faults, compensate him for the cost of repairs already performed and pay the cost of having Bluetooth music streaming capability installed into the vehicle.

The Issues

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

Does the vehicle have any faults that breach the acceptable quality guarantee?

The acceptable quality guarantee in s 6 of the CGA

[9] Section 6 of the CGA imposes on suppliers and manufacturers of consumer goods "a guarantee that the goods are of acceptable quality." Section 2 of the CGA defines "goods" as including vehicles.
[10] The expression "acceptable quality" is defined in s 7(1), 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 CGA 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 Knight’s subjective perspective.
[12] In this case, the question I must consider is whether the vehicle was free of minor defects, whether it has been as durable as a reasonable consumer would expect and whether it was acceptable in appearance and finish, taking account of the price, age and mileage of the vehicle, and any representations made by C&R Motors about repairs it would perform before the vehicle was delivered to Mr Knight.

The vehicle has faults that breach the acceptable quality guarantee

[13] Relevant to this claim, Mr Knight alleges that the vehicle has the following faults that breach the acceptable quality guarantee in s 6 of the CGA:
[14] I am satisfied that the vehicle has each of these faults.
[15] Mr Knight produced an estimate from Prestige European Motors Ltd of Gisborne, dated 3 July 2017, in which the company identified faults with all four brake discs, the rear brake pads, faulty front suspension and steering components, a coolant leak and an oil leak from the rear main oil seal.
[16] Mr Knight produced photographs of the corrosion to the underside of the vehicle. Email correspondence between Mr Knight and C&R Motors shows that the Trader had agreed to address the corrosion beneath the vehicle. Mr Gregory, the Tribunal’s Assessor considers that the corrosion repair performed by C&R Motors was sub-standard, the underside of the vehicle had merely been sprayed with black paint.
[17] Mr Knight also produced photographs of blemishes in the appearance and finish of the vehicle. Email correspondence between Mr Knight and C&R Motors shows that Mr Knight was very particular about the appearance and finish of the vehicle and that C&R Motors agreed to perform a “cut and polish” to address his concerns. At the hearing, Mr Chen accepted that the company had only polished the vehicle, and had not performed the “cut” that was promised to Mr Knight.
[18] Finally, C&R Motors accepts that the vehicle’s centre console has a broken clip that requires replacement.
[19] I consider that a reasonable consumer would expect a vehicle of this price, age and mileage, to have been free of these defects and more durable than this vehicle has been, particularly when the representations made by C&R Motors about repairs it would perform before the vehicle was delivered to Mr Knight are considered. In those circumstances, I am satisfied that the vehicle failed to comply with the acceptable quality guarantee in s 6 of the CGA.

What remedy is Mr Knight entitled to under the CGA?

[20] Section 18 of the CGA sets out the remedies under the CGA:

“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.”

[21] Under s 18(2) of the CGA, I am satisfied that Mr Knight is entitled to have the faults with the brake discs, rear brake pads, underbody corrosion, centre console clip and the unacceptable appearance and finish rectified by C&R Motors.
[22] Mr Knight also seeks to recover the cost he incurred in repairing the faults with the front suspension, the coolant leaks and the rear main oil seal leak. Those faults were repaired under Mr Knight’s Autosure warranty, with Mr Knight contributing $1,584.34, being the cost of the excesses and of various sundries not covered by the warranty.
[23] Ordinarily, Mr Knight would be entitled to recover these amounts, as they relate to the repair of faults that breach the acceptable quality guarantee. However, I consider that Mr Knight is not entitled to recover these amounts because he did not give C&R Motors a reasonable opportunity to assess and repair those faults.
[24] In Acquired Holdings Ltd v Turvey,[1] the High Court found that under s 18(2) of the CGA, where goods have failed to comply with the acceptable quality guarantee in s 6 of the CGA, the consumer must give the supplier an opportunity to remedy the failure before it can have the fault repaired elsewhere and recover the cost. A consumer can only recover the cost of repairing the vehicle elsewhere if the trader refuses or neglects to do so, or does not succeed in doing so.
[25] In this case, Mr Knight advised C&R Motors of the faults on 3 July 2017. C&R Motors asked to see a report from the repairer before deciding whether it would bear any responsibility for those faults. Despite agreeing to do so, Mr Knight never provided a copy of any report to the company. Instead, Mr Knight preceded to have the work repaired through his Autosure warranty.
[26] Applying Acquired Holdings, I consider that Mr Knight is not now entitled to recover those costs from C&R Motors. He did not first give C&R Motors a reasonable opportunity to first repair the faults.

Did C&R Motors mislead Mr Knight in breach of s 9 of the FTA?

[27] Mr Knight also alleges that C&R Motors misled him by representing that the vehicle had Bluetooth music streaming capability. Mr Knight says the representation is misleading because the vehicle does not have Bluetooth music streaming capability. C&R Motors denies making any such representation that the vehicle had Bluetooth music streaming capability.
[28] Section 9 of the Fair Trading Act provides;

“9 Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

[29] The primary issue in this case is to determine whether Mr Knight has proved the trader breached s 9 of the FTA. The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corporation v Ellis:[2]

“The question to be answered in relation to s 9 ... is ... whether a reasonable person in the claimant’s situation – that is, with the characteristics known to the defendant or of which the defendant ought to have been aware – would likely have been misled or deceived. If so, a breach of s 9 has been established. It is not necessary under s 9 to prove that the defendant’s conduct actually misled or deceived the particular plaintiff or anyone else. If the conduct objectively had the capacity to mislead or deceive a hypothetical reasonable person, there has been a breach of s 9. If it is likely to do so, it has the capacity to do so. Of course the fact that someone was actually misled or deceived may well be enough to show that the requisite capacity existed.”

[30] Mr Knight points to two pieces of evidence to support his allegation – a question on the Trade Me listing for the vehicle and subsequent discussions with Mr Chen.
[31] The Trade Me listing does not support Mr Knight’s claim. Mr Knight points to a question he posted on that listing, where Mr Knight asked “Do all the electrics, Bluetooth and nav work as expected?” There is no evidence of a response to this question by C&R Motors. Mr Knight says that this question, together with C&R Motor’s response, or lack of response, is evidence that he was led to believe that the vehicle had a Bluetooth music stream function.
[32] I do not agree with Mr Knight’s interpretation of the Trade Me question. The question is a vague one – and certainly does not expressly ask whether the vehicle had a Bluetooth music streaming function. Indeed, I am satisfied that the question was couched so broadly that it was entirely reasonable for C&R Motors to have not understood that Mr Knight was asking about a Bluetooth music streaming function at all, but rather whether the Bluetooth functionality that was in the vehicle worked as expected. This vehicle does have limited Bluetooth functionality, which does work as expected. I do not therefore consider that C&R Motors’ failure to advise Mr Knight that the vehicle did not have Bluetooth music streaming capability is misleading conduct.
[33] Mr Knight also points to phone calls with C&R Motors, in which he alleges he was told that the vehicle had Bluetooth music streaming capability. Mr Knight was unable to provide precise detail of those discussions and Mr Chen denied ever telling Mr Knight that the vehicle had Bluetooth music streaming capability.
[34] I consider, after listening to Mr Knight’s evidence and reading his email correspondence with Mr Chen, that Mr Knight did not ask a clear and direct question about whether the vehicle had Bluetooth music streaming capability. Instead, as with the Trade Me listing, it appears that Mr Knight asked vague and indirect questions about Bluetooth functionality in the vehicle that the trader did not understand to be aimed at determining whether the vehicle had Bluetooth music streaming capability.
[35] I consider it likely that Mr Knight has made an erroneous assumption about the presence of Bluetooth music streaming capability. C&R Motors did not contribute to that erroneous assumption because it did not know that Mr Knight was asking about that functionality. In the circumstances, I cannot be satisfied that C&R Motors has engaged in misleading conduct by failing to answer a question it did not know was being asked. Accordingly, Mr Knight’s claim for compensation under the FTA must be dismissed.

Conclusion

[36] The vehicle has numerous faults that breach the acceptable quality guarantee in s 6 of the CGA.
[37] Under s 18(2)(a) of the CGA, Mr Knight is entitled to have the worn brake discs and pads, the underbody corrosion, the broken clip in the centre console and the unacceptable appearance and finish of the vehicle rectified by C&R Motors.
[38] Mr Knight is not entitled to recover the cost he has incurred in repairing the coolant leak, front suspension and rear main oil seal leak because he did not first give C&R Motors a reasonable opportunity to repair those faults.
[39] Accordingly, I order that C&R Motors must, within 15 working days of the date of this decision:

DATED at AUCKLAND this 16th day of November 2017

B.R. Carter
Adjudicator


[1] Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2007) 8 NZBLC 102,107.

[2] Red Eagle Corporation v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].

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