Butler v Drive & Go Limited - Reference No. MVD 267/2017 [2017] NZMVDT 194 (28 November 2017)

Last Updated: 23 March 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 194 Reference No. MVD 267/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	KRISTY- LEIGH BUTLER
		Purchaser
	AND	DRIVE & GO LIMITED
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Hamilton on 16 November 2017
DATE OF DECISION 28 November 2017
APPEARANCES
Ms K-L Butler, Purchaser Mr D M Padman, Witness for the Trader
Mr J Kang, for the Trader Mr D J Toombs, Witness for the Trader

ORDERS

1. Kristy-Leigh Butler’s application to reject the vehicle is upheld.
2. Drive & Go Limited shall, within 10 working days of the date of this decision, pay $27,724.16 to Ms Butler.

DECISION

[1] The vehicle had leaking injector seals and a blocked oil pickup and has damaged camshafts. These faults breach the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the Act”).
[2] The faults amount to a failure of a substantial character for the purposes of s 21 of the Act, and as a result, Ms Butler is entitled to reject the vehicle under s 18(3) of the Act.
[3] Ms Butler is also entitled to recover the cost of the repair to the leaking injector seals. She gave Drive & Go an opportunity to repair that fault, but it refused to do so. She is also entitled to recover the cost of unused road user charges.

REASONS

Introduction

[4] On 10 April 2017, Kristy-Leigh Butler purchased a 2013 Mazda CX5 Diesel for $25,999 from Drive & Go Limited. The vehicle had an odometer reading of 95,000 kms at the time of sale.
[5] A little over two months later, Ms Butler noticed the vehicle’s oil light had illuminated. The vehicle was then assessed by John Dixon Motors who discovered that the oil pickup in the vehicle’s sump was blocked, because diesel had been leaking through the injector seals.
[6] Drive & Go refused to repair the blocked pickup and leaking injector seals, so Ms Butler had those repairs performed at her cost. It was only once those repairs were performed that John Dixon Motors discovered that the vehicle had a more significant fault. John Dixon Motors found that the vehicle’s camshafts were worn, and advised Ms Butler to immediately cease driving the vehicle.
[7] Drive & Go denies that it has responsibility for the damaged camshafts. It says that the damage was caused when Ms Butler had the vehicle serviced shortly after purchase. Drive & Go says the wrong oil and oil filter was used, which has caused the camshaft damage.
[8] Ms Butler has now applied to the Tribunal seeking to reject the vehicle and recover the cost she incurred in repairing the oil pickup and leaking injectors. She also seeks to recover the cost of unused road user charges.

The Issues

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

• (a) Does the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the Act?
• (b) Is the camshaft damage a failure of a substantial character?

(a) What remedy is Ms Butler entitled to under the Act

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

[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 Ms Butler’s subjective perspective.
[13] I am satisfied, based on the evidence of Daniel Padman from John Dixon Motors, that the vehicle had leaking injector seals and blocked oil pickup and has damaged camshafts.
[14] Drive & Go alleges that the faults have been caused by incorrect oil and oil filters being used when the vehicle was serviced by John Dixon Motors on 22 June 2017. Drive & Go says that Mazda recently introduced a new oil filter, which has a drain. Mr Gregory the Tribunal’s Assessor, says the genuine Mazda filter does not have a drain, but houses a relief valve, which is not uncommon. Drive & Go says that John Dixon Motors did not use the oil filter required by Mazda, and the damage to the vehicle has resulted.
[15] Mr Gregory advises that the photographs provided by Ms Butler clearly show the oil pickup blocked with carbon, and worn injector seals. This is consistent with injector seal failure or poor service history. The blocked oil pickup would have caused low oil pressure within the engine, damaging vital components such as the camshafts. Mr Gregory says that this damage was not caused by John Dixon Motors using an incorrect oil filter or oil. Mr Gregory says that the accelerated wear and blocked oil pickup could not have developed in the short period since Ms Butler had the vehicle serviced, even if the incorrect oil or oil filter had been used.
[16] I am therefore satisfied that these are all faults that breach the acceptable quality guarantee in s 6 of the Act. Ms Butler paid $25,999 for a four-year-old vehicle with an odometer reading of 95,000 kms. A serious fault developed a little more than two months after purchase. I am satisfied that the vehicle has been not nearly as durable as a reasonable consumer would expect.

Is the fault a failure of a substantial character?

[17] Under s 18(3) of the Act, Ms Butler may reject the vehicle if it has a fault that amounts to a failure of a substantial character. A failure of a substantial character is defined in s 21 of the Act:

“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; or

(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.”

[18] Section 21(a) of the Act applies to this case. 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.
[19] The camshaft damage is a failure of a substantial character. The vehicle is inoperable until the fault is repaired, because, in the words of Mr Padman, “the motor could go at any time”. Further, any repair is likely to be expensive. Mr Padman was unable to provide an estimate, but Mr Gregory advises that any repair would cost approximately $5,000.
[20] I am satisfied that a reasonable consumer would not have purchased this vehicle if they had known of the nature and extent of camshaft fault.

What remedy is Ms Butler entitled to under the Act?

[21] 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.”

[22] Ms Butler is entitled to reject the vehicle under s18(3) of the Act. The camshaft damage is a failure of a substantial character.
[23] She is also entitled to recover the cost of the repairs to the oil pickup and leaking fuel injectors under s 18(2)(b)(i) of the Act. As set out above, the oil pickup and fuel injector faults breach the acceptable quality guarantee. John Dixon Motors contacted Drive & Go on Ms Butler’s behalf once the faults were discovered. Drive & Go declined to perform the required repairs, so Ms Butler instructed John Dixon Motors to perform the repairs. Ms Butler is now entitled to recover $1,325.16, being the cost of those repairs.
[24] Ms Butler is also entitled to recover loss that has resulted from the vehicle’s faults. Ms Butler purchased 10 units (or 10,000 kms) of road user charges for $627.50 on 29 May 2017, when the vehicle’s odometer reading was 95,307 kms. The vehicle’s odometer reading is now 98,398kms. By my calculation, Ms Butler has used a little more than one third of the units she purchased. She is entitled to be compensated for the unused portion, because she will never have the benefit of those units. Accordingly, I order that Ms Butler is entitled to recover $400, which represents the unused road user charges.

Conclusion

[25] Ms Butler’s application to reject the vehicle is upheld.
[26] The vehicle had leaking injector seals and blocked oil pickup and has damaged camshafts. These faults breach the acceptable quality guarantee in s 6 of the Act.
[27] The camshaft fault amounts to a failure of a substantial character for the purposes of s 21 of the CGA, and as a result, Ms Butler is entitled to reject the vehicle under s 18(3).
[28] Ms Butler is also entitled to recover the cost of the repair to the leaking injector seals. She gave Drive & Go an opportunity to repair that fault, but it refused to do so. She is also entitled to recover the cost of unused road user charges.
[29] Accordingly, I order that Drive & Go Limited shall, within 10 working days of the date of this decision, pay $27,724.16 to Ms Butler.

DATED at AUCKLAND this 28th day of November 2017

B.R. Carter
Adjudicator