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Pym v Hazleton Grove Limited T/A The Wheel Deal Reference No. MVD 307/2017 [2017] NZMVDT 208 (11 December 2017)

Last Updated: 16 January 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL



Reference No. MVD 307/2017


IN THE MATTER
of the Motor Vehicle Sales Act 2003


AND


IN THE MATTER
of a dispute


BETWEEN
JOANNE RANGIPOIA PYM


Purchaser


AND
HAZLETON GROVE LIMITED T/A THE WHEEL DEAL


Trader


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

HEARING at Auckland on 30 November 2017

DATE OF DECISION 11 December 2017

APPEARANCES
Ms J R Pym, Purchaser
Mr A Manu, Witness for the Purchaser
Mr M H Hiscock, for the Trader
Mr L Kenny, Witness for the Trader


ORDERS

  1. Joanne Pym’s application to reject the vehicle is upheld.
  2. The collateral credit agreement between Joanne Pym and Finance Now Limited shall vest in Hazleton Grove Limited as from the date of this decision and Hazleton Grove Limited shall, as from that date, discharge all of Joanne Pym’s obligations under the collateral credit agreement.
  1. Hazleton Grove Limited shall, within 10 working days of the date of this decision, pay Joanne Pym:
  1. Upon receipt of the amount in Order C, Joanne Pym shall immediately make the vehicle available for Hazleton Grove Limited to uplift.

DECISION

[1] The vehicle has several faults that breach the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the Act”).
[2] Those faults amount to an accumulation of defects sufficient to justify rejection of the vehicle under s 18(3) of the Act.
[3] Ms Pym is entitled to reject the vehicle and recover all amounts paid in respect of it.
[4] The collateral credit agreement between Ms Pym and Finance Now Limited shall also vest in Hazleton Grove as from the date of this decision and Hazleton Grove Limited shall, as from that date, discharge all of Ms Pym’s obligations under the collateral credit agreement.

REASONS

Introduction

[5] On 2 June 2017, Joanne Pym purchased a 2010 Great Wall V240, registration number FHF922 from Hazleton Grove Limited, trading as the Wheel Deal, for $11,990. The vehicle had an odometer reading of 118,000 kms at the time of sale. Ms Pym also purchased a 24-month extended mechanical warranty for $995 and GAP insurance for $595.
[6] Ms Pym paid a deposit of $4,000 and funded the remainder of the purchase price through a loan from Finance Now Limited, dated 2 June 2017 (“the collateral credit agreement”).
[7] Several faults have become apparent in the short period of Ms Pym’s ownership. Hazleton Grove has repaired some of those faults, but others remain.
[8] Ms Pym says she has now lost confidence with the vehicle, and has applied to the Tribunal to reject the vehicle.
[9] Hazleton Grove denies that the vehicle has many of the faults alleged by Ms Pym, and remains prepared to remedy those faults that do exist.

The Issues

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

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

[11] 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.
[12] 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.”

[13] 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 Pym’s subjective perspective.

What faults does the vehicle have?

[14] On 21 June 2017, Ms Pym had the vehicle assessed by WOF Testing Station in Taupo, who identified the following faults with the vehicle:
[15] Ms Pym, who lives in Taupo, then arranged for the vehicle to be transported to Hazleton Grove in Auckland, at a cost of $240. Hazleton Grove then had the vehicle assessed, and repaired the faults with the window wiper washers, the headlights, park lights and fog lights, the loose driver’s seat, sticky seatbelt and the broken catalytic converter.
[16] In relation to other faults identified by WOF Testing Station, Hazleton Grove considered that:
[17] Unhappy with the repairs performed by Hazleton Grove, Ms Pym had the vehicle assessed by Vehicle Testing New Zealand (“VTNZ”) on 23 August 2017.
[18] VTNZ considered that the vehicle had some structural or corrosion damage that required further investigation. It also found play in both front lower ball joints, an oil leak, that the vehicle’s engine was “slightly noisy”, that an “abnormal” noise could be heard, and that the clutch had “slightly high travel” and was “noisy”.
[19] Ms Pym then had the vehicle assessed by Andrew Simms Botany, the franchise repairer for Great Wall vehicles. Andrew Simms found that the vehicle had the following faults:
[20] Andrew Simms considered that these faults would cost approximately $5,800 to repair. It also considered that the cambelt required replacement.

The vehicle has numerous faults that breach the acceptable quality guarantee

[21] I am satisfied that the vehicle has numerous faults that breach the acceptable quality guarantee in s 6 of the Act because the vehicle was not free of minor defects when the vehicle was sold to Ms Pym, and it has not been as durable as a reasonable consumer would find acceptable.

The repaired faults

[22] The blocked wiper washers, the low headlight beam, the dim front park lights, the sticky seat belt, the faulty fog lights, the loose driver’s seat and the broken catalytic converters are all faults that would have caused the vehicle to fail a warrant of fitness inspection. Those faults have all been repaired, but they nonetheless amounted to a breach of the acceptable quality guarantee.

The corrosion on the deck floor and cab mounting points

[23] Mr Gregory, the Tribunal’s Assessor, advises that the corrosion on the deck floor appears minor, but the corrosion around the cab mounting points has started to become intrusive and should be treated immediately to insure the vehicle will not fail a warrant of fitness inspection in the near future.

The oil leak from the head gasket

[24] I am also satisfied that the vehicle has an oil leak from the head gasket. Hazleton Grove submitted that this oil leak was “weepage” from the rocker cover, which did not amount to a fault.
[25] I do not agree. I am satisfied that the oil leak is coming from the head gasket. Mr Gregory advises that the gasket has likely perished or the head has lost its tension on the gasket. He considers that any leak from the head gasket will be costly to repair.

The play in the ball joints

[26] The vehicle has excessive play in its lower front and lower right hand ball joints. Mr Gregory notes that WOF Testing Station, VTNZ and Andrew Simms Botany all mention the vehicle has both front lower ball joint play and he says it is likely that this is outside of the vehicle manufacturer’s tolerances, which are extremely fine. Andrew Simms Botany, the vehicle’s franchise repairer has recommended replacement. It is possible that the vehicle is already outside of warrant of fitness standards and, if not, will be in the very near future.

The noisy release bearing

[27] I am also satisfied that the release bearing in the vehicle’s clutch is noisy. This fault was identified by WOF Testing Station and Andrew Simms Botany. Aaumala Manu, Ms Pym’s partner, also gave clear evidence as to the existence of the fault.
[28] Mr Gregory advises that any noise emanating from the release bearing makes it unserviceable and if left will lead to the release bearing’s complete failure.

The faulty alternator

[29] I am also satisfied, based on the Andrew Simms Botany inspection of the vehicle and Ms Pym’s evidence, that the vehicle would intermittently stall, that the vehicle is likely to have a faulty alternator. Mr Gregory advises that the alternator is vital to the vehicle’s operation as it charges the battery and regulates the voltage within the vehicles electrical system.
[30] I am satisfied that each of these faults breach the acceptable quality guarantee in s 6 of the Act. The vehicle was not free of minor defects when it was sold to Ms Pym and has not been as durable as a reasonable consumer would find acceptable. Ms Pym paid $11,900 for a 10-year-old vehicle that had an odometer reading of 118,000 km. I consider that a reasonable consumer would not expect a vehicle of that price, age and mileage to have these faults at the date of purchase, or to arise so shortly after purchase.

The remaining alleged faults do not breach the acceptable quality guarantee

[31] The remaining alleged faults do not breach the acceptable quality guarantee. The worn rear suspension bushes, and small dents and minor damage to the exterior of the vehicle all arise from the usual use of the vehicle and are all consistent with the age and mileage of the vehicle.
[32] Further, although the vehicle’s cambelt is likely to require replacement, that is not a fault that breaches the acceptable quality guarantee. The vehicle’s cambelt has not failed, and although it is likely to be due for replacement as part of its usual servicing and maintenance, that is entirely consistent with the vehicle’s age and mileage and is not a fault with the vehicle. Ms Pym accepted that replacing the cambelt is ordinarily a service item, however, she alleged that Hazleton Grove agreed to replace the cambelt, an allegation that the trader denied. I accept Hazleton Grove’s evidence on this point. I am satisfied that it did not agree to replace the cambelt.

Is Ms Pym entitled to reject the vehicle?

[33] 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), 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.”

[34] Relevant to the facts of this case, Ms Pym may reject the vehicle if the vehicle has faults that amount to a failure of a substantial character under s 18(3)(a) of the Act.
[35] A failure of a substantial character is defined in s 21 of the Act. Section 21(a) of the Act applies to this case, and 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;”

[36] I consider that none of the faults, when considered separately, amounts to a failure of a substantial character. However, s 21(a) of the Act also applies where the vehicle has an accumulation of minor faults that amount to a failure of a substantial character.
[37] In Cooper v Ashley & Johnson Motors Limited,[1] the District Court stated that a purchaser may reject a vehicle where there had been an accumulation of minor defects, which in themselves could not be described as substantial. The Court noted that a point will eventually be reached where the purchaser could “say convincingly that he or she had no confidence in the reliability of the vehicle”.[2] Ms Pym claims to have lost faith in the reliability of this vehicle.
[38] The question I must therefore answer is whether the accumulated defects with the vehicle amount to a failure of a substantial character for the purposes of s 18(3)(a) of the Act.
[39] This vehicle has numerous faults that breach the acceptable quality guarantee, many of which would have caused the vehicle to fail a warrant of fitness inspection. Some of those faults have been repaired, but many remain.
[40] Some of the remaining faults are substantial. The head gasket oil leak is a significant fault, which is estimated to cost $2,450.83 to repair. The noisy release bearing is estimated to cost $1,516.85 to repair and the faulty alternator is estimated to cost $1,083.85 to repair. Further, the vehicle’s corrosion requires immediate repair to ensure the vehicle does not fail its next warrant of fitness inspection. Mr Gregory estimates that repair will cost $800.
[41] Taken together, I am satisfied that the vehicle’s faults amount to an accumulation of faults sufficient to justify rejection under s 18(3)(a) of the Act. I am satisfied that a reasonable consumer would not have purchased this vehicle if it had known of the nature and extent of these faults.

What remedy is Ms Pym entitled to under the Act?

Refund of all amounts paid in respect of the vehicle

[42] Because Ms Pym has validly rejected the vehicle, she is entitled to a refund of any money paid in respect of the vehicle under s 23(1)(a) of the Act. Ms Pym paid a deposit of $4,000 when she purchased the vehicle. She is entitled to recover that deposit.

Collateral credit contract to vest in Hazleton Grove

[43] Ms Pym is also entitled to have her obligations under the collateral credit contract assigned to Hazleton Grove, because for the purposes of s 23A of the Act, I am satisfied that Hazleton Grove arranged or procured the collateral credit agreement and the agreement was entered into to enable Ms Pym to purchase the vehicle.
[44] Accordingly, under s 23A(2) of the Act, the collateral credit agreement shall vest in Hazleton Grove as from the date of this decision.

Damages under s 18(4) of the Act

[45] Further, under s 18(4) of the Act, Ms Pym is entitled to recover damages for any loss resulting from the vehicle’s faults.
[46] Ms Pym incurred $240 in having the vehicle transported from Taupo to Auckland. The vehicle had a number of faults that would have caused it to fail a warrant of fitness inspection. I am satisfied that Ms Pym acted sensibly in having the vehicle transported. Hazleton Grove submitted that Ms Pym should have used her mechanical warranty to cover the cost of this transportation. That may well be the case, but I have not been shown a copy of Ms Pym’s mechanical warranty so Hazleton Grove has not proven that the warranty would have covered that transportation cost. On that basis, I consider that Ms Pym was entitled to privately arrange for the vehicle to be transported to Auckland.
[47] Ms Pym also incurred $138 and $149 having the vehicle’s faults assessed by WOF Testing Station and VTNZ respectively. I am satisfied that Ms Pym is entitled to recover this amount.
[48] Ms Pym also seeks to recover $150, being the cost she says she incurred in having the vehicle assessed by Andrew Simms Botany. Ms Pym has provided no evidence to show that she incurred that cost. Accordingly, I decline to award that amount
[49] Finally, Ms Pym is not entitled to recover the cost of filing this application. Under cl 14 of sch 1 to the Motor Vehicle Sales Act, I can only order Hazleton Grove to pay this amount if the matter ought reasonably to have been settled before the hearing and it refused to take part in settlement discussions, or behaved improperly during those discussions. That is not the situation here. There is no evidence to show that Hazleton Grove refused to participate in settlement discussions or behaved improperly. Accordingly, Ms Pym cannot recover the cost of filing her application.

Conclusion

[50] I am satisfied that the vehicle has a list of faults that breach the acceptable quality guarantee in s 6 of the Act, and that those accumulated faults amount to a failure of a substantial character justifying rejection under s 18(3) of the Act.
[51] I therefore order that the collateral credit agreement between Ms Pym and Finance Now Limited shall vest in Hazleton Grove as from the date of this decision and Hazleton Grove shall, as from that date, discharge all of Ms Pym’s obligations under the collateral credit agreement.
[52] Further, Hazleton Grove Limited shall, within 10 working days of the date of this decision, pay Ms Pym:

DATED at AUCKLAND this 11th day of December 2017

B.R. Carter
Adjudicator


[1] Cooper v Ashley & Johnson Motors Limited [1996] 7 TCLR 407.

[2] Ibid, at 417.

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