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Minchin v Mainly Cars (2014) Limited Reference No. MVD 164/2017 [2017] NZMVDT 205 (8 December 2017)

Last Updated: 16 January 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL



Reference No. MVD 164/2017


IN THE MATTER
of the Motor Vehicle Sales Act 2003


AND


IN THE MATTER
of a dispute


BETWEEN
JOSHUA MICHAEL GRAY MINCHIN


Purchaser


AND
MAINLY CARS (2014) LIMITED


Trader


MEMBERS OF TRIBUNAL
J S McHerron, Barrister – Adjudicator
D Binding, Assessor

HEARING at Palmerston North on 13 November 2017

DATE OF DECISION 8 December 2017

APPEARANCES
J M G Minchin, Purchaser
D Taranchokov, Purchaser's partner
P M Holmes, Director of Trader
M E King, Director of Trader




DECISION

Mr Minchin's application is dismissed.


REASONS

Introduction

[1] Joshua Minchin has a number of complaints about the Toyota Hiace he purchased from Mainly Cars (2014) Limited. The most serious of these complaints are that the vehicle is overheating and that its odometer has been wound back. Mr Minchin wants to reject the van. Mainly Cars denies he is entitled to do so. It denies having wound back the odometer and says this occurred after Mr Minchin took delivery of the vehicle. In respect of the other complaints, it says Mr Minchin has not given Mainly Cars the chance to assess what defects exist or an adequate opportunity to remedy them.
[2] From this background the following issues arise:

Issue one: 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:
  1. 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.

[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 Minchin presented a reasonably long list of faults indicating, in his view, that his van failed to comply with the guarantee of acceptable quality:
[7] Mr Minchin produced a quotation for repairs to these items, prepared by Main Street Automotive. However, Main Street Automotive has not inspected the vehicle.
[8] I will evaluate each of these alleged faults, one by one.

No seat belts in back seat

[9] The day after purchase, Mr Minchin’s partner Ms Taranchokov complained to Mainly Cars that the van had no seat belts in the back seat. Ms Taranchokov said that, without seat belts, she could not use the van to carry her children.
[10] At this point, Mainly Cars offered, and obtained the finance company’s approval to, reverse the transaction. However, Ms Taranchokov told Mainly Cars that she and Mr Minchin still wanted to keep the vehicle. They wanted Mainly Cars to contribute to the cost of having seat belts installed and any additional compliance costs.
[11] Mainly Cars agreed to pay $800 towards the installation and certification of seat belts. In accepting this contribution, Mr Minchin and Ms Taranchokov undertook to pay the rest of the cost themselves. They expressly agreed not to seek any further contribution from Mainly Cars. This was recorded in a signed agreement dated 11 April 2017.
[12] By this agreement, Mr Minchin has settled or compromised his claim in respect of the seat belts. Accordingly, by his own action, he may not make any further claim against Mainly Cars in relation to the installation of seat belts in the back seat of the van.[1]

Bald tyre

[13] Mr Minchin alleges that one of the tyres is bald on its edge. Mr Minchin produced a picture which he said was taken on the second or third day after purchase. It confirms that the edge of one of the tyres is worn. However, it had enough tread to obtain a new warrant of fitness on the day of purchase. Further, the AA report obtained by Ms Taranchokov on 3 May 2017 does not mention any tyre defects. The report states that all tyres, including the spare, have adequate tread.
[14] Mainly Cars has agreed to supply a replacement tyre for the van at its cost and was trying to find a suitable tyre when Mr Minchin rejected the vehicle. Mainly Cars is still willing to obtain a replacement tyre. Mr Minchin will need to follow this up with Mainly Cars directly.

Vehicle overheating on trip to Whanganui

[15] Mr Minchin said that he and Ms Taranchokov needed to drive the van to Whanganui on 25 April 2017. They checked the oil and water before leaving home. The van overheated about five times on the way. Each time it overheated, Mr Minchin said he stopped, let it cool down, and added water.
[16] Mr Minchin took the vehicle back to Mainly Cars the next day. He asked Mr Holmes to put in writing that if the van had a major fault, such as a blown head gasket, Mainly Cars would refund the purchase price. Mr Holmes offered to have the vehicle assessed and agreed to fix any defects but, before doing so, he was unwilling to put it in writing that he would refund the purchase price if the vehicle had a blown head gasket. Mr Minchin responded that as Mr Holmes was unwilling to “write something up”, the vehicle would have to sit on Mr Minchin's front lawn while he applied to the Tribunal.
[17] Mr Minchin and Ms Taranchokov then obtained a report on the van from Warren Anderson Motors. Mr Anderson reported that a “special t-kay test”[2] was carried out which gave:

...a reasonably good indication that the head gasket has gone and suggest that the head has a possible crack or head gasket which is a good reason why vehicle overheats. [Verbatim]

[18] Mr Anderson found an additive had been added to stop the van overheating. He was unable to isolate the exact cause of the overheating but said that if the head gasket needed replacing, the approximate cost of doing so would be $2,500 to $3,200 plus GST.
[19] By contrast, as Mainly Cars noted, the AA vehicle inspection report mentioned nothing about the vehicle overheating and stated that the vehicle passed a head gasket test with no combustion gases detected.
[20] Mr Binding was not surprised by these inconsistent reports. In his experience, tee-kay checks are not always reliable. Mr Binding considers further investigation is required to establish the cause of the overheating. He suggests removing the head to check if it is cracked.
[21] Mainly Cars has not had an adequate opportunity to assess for itself what the cause of any overheating may be and determine the appropriate remedy. It is unfortunate that Mr Minchin did not let Mainly Cars do this. Consumers must give suppliers an opportunity to remedy defective goods. Doing so allows suppliers to assess whether a vehicle has been subjected to unreasonable use and to control the quality of the remedy.[3]
[22] Mr Minchin should now give Mainly Cars an opportunity to get to the bottom of this problem.

Engine and transmission leaks

[23] Both the AA’s and Mr Anderson’s reports refer to an oil leak from the transmission and the AA report also refers to an engine oil leak. As the AA report states, these leaks should be investigated. It is not clear to the Tribunal how serious the leaks are or whether they amount to a failure of the vehicle to comply with the guarantee of acceptable quality. In particular, this is an elderly high mileage vehicle and it is not surprising that it will have various leaks.
[24] Again, Mr Minchin needs to give Mainly Cars an adequate opportunity to assess the nature of any leaks and to consider the appropriate remedy (if any).

Heating controls and air conditioning

[25] Mr Anderson’s report refers to the broken heater control panel on the dashboard, which does not allow hot and cold operation. The AA report refers to broken heating and ventilation controls and that the air conditioning performance is insufficient.
[26] Neither of these items amounts to a warrant of fitness defect. And it is unclear how difficult these problems will be to fix.
[27] Again, the Tribunal is unable to make a finding as to whether these matters are a failure to comply with the guarantee of acceptable quality until Mainly Cars has had an opportunity to inspect the alleged defects and to form its own view on whether it is responsible for them under the Act and, if so, what it can do to help.

Rear bushes

[28] Mr Anderson’s report refers to the rear shackle bushes needing to be partly stripped before he could give the correct pricing of repair costs.
[29] The AA report also refers to worn rear shackle bushes as a potential warrant of fitness defect requiring urgent attention.
[30] Given this evidence, these matters indicate a likely failure to comply with the guarantee of acceptable quality. Again, however, Mr Minchin should allow Mainly Cars the chance to inspect the defective bushes for itself and reach a view as to the extent to which it is prepared to assist him.

Reversing lights

[31] Again, the AA report indicates that the vehicle’s reversing lamps are not working. This is unlikely to be a major issue but it is a potential warrant of fitness defect. Mr Minchin needs to ask Mainly Cars to look into this problem.

Cracked windshield

[32] No evidence was provided to support Mr Minchin’s allegation that the windshield is cracked. That matter does not appear in either Warren Anderson Motors’ report or the AA inspection report.

Wound back odometer

[33] Mr Minchin alleges that the odometer has been “wound back” about 28,000 km and that this justifies him rejecting it. The parties disagreed on the cause of the odometer discrepancy. For the reasons set out below under issue 4, Mainly Cars is not responsible for this "defect".

Summary

[34] Mainly Cars submitted that, until it has the chance to inspect the van, it does not accept responsibility for the alleged defects. There is some logic to Mainly Cars’ position. The lack of detail supporting some of the allegations and the lack of opportunity for Mainly Cars to test the evidence by undertaking its own independent inspection of the alleged defects means the Tribunal cannot determine whether any of the matters outlined by Mr Minchin amount to a failure of the guarantee of acceptable quality.
[35] Another complicating factor is the age and high mileage of the vehicle and its relatively low price. These factors mean that a reasonable purchaser could not expect the van to be in anywhere near perfect condition. It must be safe, driveable, have a new warrant of fitness at the date of purchase and be reasonably durable. But it is unrealistic for Mr Minchin to expect a 20-year-old van with quarter of a million kilometres to be anywhere near perfect.
[36] Some of the matters outlined in the evidence certainly point to defects being present. Mainly Cars should respond in good faith if Mr Minchin chooses to give it the opportunity to inspect the vehicle for the defects alleged.
[37] In particular, Mainly Cars should, if requested by Mr Minchin, attend to any matters that compromise the vehicle’s safety or ability to maintain a warrant of fitness. As well, Mainly Cars should attend to the pressing issue of why the vehicle is overheating.

Issue two: Did the vehicle fail to comply with its description?

[38] Mr Minchin refers to the advertisement of the vehicle as a Toyota Hiace Super Custom. The same description of the vehicle model was also included on the consumer information notice (CIN) and the vehicle offer and sale agreement (VOSA). Mainly Cars concedes that the vehicle failed to comply with its description. In fact, the vehicle is not a Super Custom but is instead, according to Mr Holmes, a Super GL. This is, on its face, a breach of s 9 of the Act, which requires vehicles to comply with the description by which they are supplied.
[39] However, there was no evidence produced by Mr Minchin as to what the difference in model name means for him in practical terms. For example, he gave no evidence that there were particular features of the Super Custom that were not present in the Super GL.
[40] This failure cannot be fixed. That means the remedies available are either that the purchaser may reject the vehicle or that the purchaser may “obtain from the supplier damages and compensation for any reduction in value of the goods below the price paid or payable by the consumer for the goods”.[4]
[41] For the reasons set out below under issue four, Mr Minchin is not entitled to reject the vehicle. And his difficulty in respect of a claim for damages is that he has produced no evidence of any difference in value between a Super Custom model and a Super GL model. It follows that Mr Minchin has not proved that he has suffered any losses for which he can be compensated.
[42] His claim for a remedy in respect of the van's failure to comply with its description must therefore be dismissed.

Issue three: Did Mr Minchin require Mainly Cars to remedy the failure?

[43] As already discussed, under s 18(2)(a) of the Act, where a failure can be remedied, a consumer is required in the first instance to ask the supplier to remedy the failure within a reasonable time. Mr Minchin has instead proceeded straight to rejecting the vehicle, about three weeks after purchasing it, after it overheated. He then added to his grounds for rejecting the vehicle the serious allegation that Mainly Cars was responsible for winding the odometer back.
[44] The problem with Mr Minchin’s approach is that Mainly Cars has all along been willing to arrange for its mechanic to inspect the van and assess exactly what, if any, defects exist. Mr Minchin, however, refused to allow Mainly Cars the opportunity to carry out such an inspection.
[45] Mainly Cars has acted correctly, according to what the Act requires in this situation. Mr Minchin may not proceed directly to rejecting the vehicle unless a failure cannot be remedied or is of a substantial character.[5] There is not enough evidence to establish any of the alleged failures is of a substantial character. The only defect that clearly cannot be fixed is the van's misdescription as a Super Custom. But, in any event, for the reasons outlined below under issue four, Mr Minchin is not entitled to reject the van. He should have allowed Mainly Cars the opportunity to assess the van for itself and to consider how best to remedy any failure.
[46] Accordingly, I conclude that Mr Minchin has not complied with his obligations under s 18 of the Act to ask Mainly Cars to remedy the failure. This is now what he will have to do if he wants to make any progress to repair the van.

Issue four: Is Mr Minchin entitled to reject the vehicle?

[47] The right to reject goods is lost if “the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply”.[6]
[48] Mainly Cars alleges that this provision applies in relation to Mr Minchin’s van. That is because the odometer reads about 28,000 km less than when Mr Minchin purchased it. Mainly Cars denies that it altered the odometer in this way prior to delivering the van to Mr Minchin. Accordingly, it alleges that the van was “damaged” after its delivery to Mr Minchin, because that is when the odometer was wound back.
[49] Mainly Cars established that the odometer reading was 253,970 km at the time of purchase. This figure is recorded in the VOSA signed by Mr Minchin. It is also recorded on the CIN which was signed by Mr Minchin on 10 April 2017. The van was given a new warrant of fitness on the day of purchase. On the first inspection the odometer reading was 253,968 km. After a minor defect with the left front brake disc calliper was fixed, the van was returned for a recheck, at which the odometer reading was recorded as 253,970 km, the same figure that is on the VOSA and CIN.
[50] In addition, Mainly Cars noted that the previous warrant of fitness for the van recorded an odometer reading of 253,942 km. And the van had a current road user charges label, recording a start distance of 253,910 km and a maximum distance of 254,910 km.
[51] There are several odometer readings after the delivery of the vehicle to Mr Minchin. First, Mr Minchin produced a picture of the odometer showing a reading of 225,482 km. The picture includes part of someone's hand holding a copy of the CIN indicating the higher figure of 253,970 km and has the caption “kms out”. In addition, the AA report dated 3 May 2017 (approximately three weeks after delivery of the vehicle) records the odometer reading as 225,484 km and Mr Anderson’s report dated 5 May 2017 records the odometer reading as 225,524 km.
[52] Mr Minchin accuses Mainly Cars of winding the odometer back in an attempt to "frame" him, and stop him from claiming against it for the vehicle's defects. Mr Holmes was adamant that Mainly Cars had no opportunity to wind back the odometer, after Mr Minchin took possession of the van, nor any motive to do so. I accept that no evidence was produced showing Mainly Cars wound back the odometer.
[53] As an alternative submission, Mr Minchin suggested that the odometer may have malfunctioned. Mr Binding advised that, in his experience, odometers can stop recording distance, but he has never heard of an odometer winding itself back. Indeed, it would be necessary to replace the entire instrument module, with one from a different vehicle, to reduce the odometer reading.
[54] Mainly Cars submitted that, as far as it is concerned, the vehicle is now “valueless”. The fact its odometer distance has reduced will be identified the next time the van is checked for its warrant of fitness, which will trigger alerts on public databases.
[55] In Mr Holmes’ submission this means that the vehicle is “damaged” in terms of the exclusion from the right to reject a vehicle in s 20(1)(c) of the Act.
[56] I agree. The vehicle has been damaged through having its odometer wound back.
[57] I also note that it is an offence under s 99 of the Motor Vehicle Sales Act 2003 to tamper with an odometer, without reasonable excuse. The penalty for such an offence in the case of an individual is a fine of up to $50,000.[7] Moreover, s 100 of the Motor Vehicle Sales Act 2003 contains an evidentiary presumption that a vehicle’s odometer has been tampered with by a person if there is evidence that the odometer reading when a vehicle was in the possession of that person was less than the reading when that person took possession of the vehicle. That presumption would apply in the present case. The odometer reading of the van while in Mr Minchin's possession is less than it was when he took possession of the vehicle.
[58] Although it is not the Tribunal's role to reach any definitive conclusion as to who has tampered with the odometer, it is clear that Mr Minchin has lost any right he may otherwise have had to reject his vehicle. That is because Mainly Cars has established the vehicle has been damaged (its odometer has been wound back) after delivery to Mr Minchin and that damage does not relate to the vehicle’s state or condition at the time of supply.[8]
[59] Accordingly, Mr Minchin is not entitled to reject the vehicle.
[60] A copy of this decision will be forwarded to the Police, to consider whether to take any further steps in relation to this odometer discrepancy.

Result

[61] As Mr Minchin has no right to reject the van, and he has not given Mainly Cars an opportunity to assess what may be wrong with it, it follows that Mr Minchin’s application must be dismissed. If he wishes to have the defects in his vehicle addressed he should cooperate with Mainly Cars to allow it to inspect and assess the vehicle and remedy any defects as required.

J S McHerron
Adjudicator

[1] Section 43(7) of the Act provides that the prohibition on contracting out of the Act (except for business transactions) does not prevent a consumer from agreeing to settle or compromise a claim under the Act.

[2] A tee-kay test checks whether there are exhaust gases in the cooling system, a sign of head gasket failure.

[3] Section 18 of the Act, and see Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 (HC) at [13] citing Gault on Commercial Law at [CG 18.09].

[4] Section 18(3) of the Act.

[5] Section 18(3) of the Act.

[6] Section 20(1)(c) of the Act.

[7] Section 118(1)(a) of the Motor Vehicle Sales Act 2003.

[8] Section 20(1)(d) of the Act.

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