De Wit v Central Car Company Limited t/a Cornwall Motors - Reference No. MVD 367/2016 (Auckland) [2017] NZMVDT 27; [2017] NZMVT Auckland 27 (28 February 2017)

Last Updated: 22 March 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2017] NZMVT Auckland 27

Reference No. MVD 367/2016

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN PIETER JACQUES MARCEL DE WIT

Purchaser

AND CENTRAL CAR COMPANY LIMITED T/A CORNWALL MOTORS

Trader

MEMBERS OF TRIBUNAL
B R Carter, Barrister - Adjudicator

S D Gregory, Assessor

HEARING at Auckland on 15 February 2017

DATE OF DECISION 28 February 2017
APPEARANCES

Mr P J M De Wit, the purchaser

Mr J P Murphy, Chief Executive Officer, representing the trader

DECISION

The Tribunal makes the following orders:

1. The trader shall pay the purchaser:
   • (a) $92.00, being the cost of the assessment of the faulty air conditioning unit; and
   • (b) $195.80, being the cost of towing the vehicle to AA Auto Centre for assessment.
2. The purchaser’s application for $997.00 for the cost of an AA service and repairs to the vehicle is dismissed.

100. The trader shall arrange with the purchaser to uplift the vehicle from the purchaser within five working days of this decision.

4. The trader shall, within 10 working days of the date it uplifts the vehicle from the purchaser, have the following work done on the vehicle at the trader’s cost:
   • (a) Assess and, if found, rectify the cause of the damp driver side carpet;
     
   • (b) Connect the front fog lights and ensure they are operational;
     
   • (c) Rectify the cause of the hard starting and engine misfiring; and
     

(d) Check all suspension bushes and replace to a warrant of fitness standard.

5. The trader shall, within 20 working days of the date it uplifts the vehicle from the purchaser, at its cost, obtain a fresh VTNZ warrant of fitness for the vehicle before returning it to the purchaser.
6. The purchaser’s application to reject the vehicle is adjourned.
7. The purchaser may request a telephone conference prior to 20 April 2017 if the trader does not comply with these orders within the timeframes specified for the Tribunal to make further orders in relation to those matters.
8. Unless the purchaser requests a telephone conference prior to 20 April 2017, his application to reject the vehicle will be dismissed.

REASONS

Introduction

[1] The purchaser has encountered a series of problems with his 2001 Audi A4 since purchase in November 2016. The vehicle did not last a day before the purchaser noticed defects. The trader remedied those defects, but the purchaser continued to identify further defects over the following month, at least some of which existed at the time the vehicle was purchased and are sufficiently serious to prevent the vehicle passing a warrant of fitness test.

[2] The purchaser now seeks to reject the vehicle.

[3] The following issues arise:

(a) Whether the vehicle complied with the guarantee of acceptable quality in s 6 of the Consumer Guarantees Act 1993 (“the Act”)?
(b) If not, was the failure to comply of substantial character entitling the purchaser to reject the vehicle?
(c) If the purchaser is not entitled to reject the vehicle, what remedy, if any is available to him?

Background

[4] On 6 November 2016, Mr De Wit (“the purchaser”) bought a 2001 Audi A4 registration number DRY678 (“the vehicle”) for $5,000 from Central Car Company Limited trading as Cornwall Motors (“the trader”). The vehicle, imported from Singapore in 2007, had travelled 141,271 kms at the time of sale.

[5] When the purchaser inspected the vehicle prior to purchase, he noticed that the vehicle was overdue for a service. He raised this with the trader and agreed to pay for the service himself. He reduced the amount he was prepared to offer for the vehicle to take account of the cost of a service.

[6] The vehicle also did not have a warrant of fitness issued within the previous month at the time of purchase. The purchaser also claims that there was no Consumer Information Notice (“CIN”) displayed on the vehicle. The trader disputes this and says a CIN was displayed. Both parties agree a valid CIN was provided to the purchaser before the sale was completed.

[7] While driving home on 6 November 2016 the purchaser noticed problems with the vehicle, particularly:

(a) The brakes were making a “clunking” noise.

(b) The air conditioning was not working.

(c) The right brake light was faulty.

[8] The purchaser at first assumed the air conditioning problem would be fixed by re-gassing the air conditioning unit. On about 9 November 2016, he instructed Advanced Auto Air to perform that work. Advanced Auto Air subsequently discovered that the air conditioning compressor was cracked and leaking and required replacement. Advanced Auto Air charged the purchaser $92.00 for performing this assessment.

[9] On 10 November 2016, the purchaser advised the trader of the problems he had identified. He returned the car to the trader to conduct repairs. The trader replaced the right brake light bulb.

[10] On about 13 November 2016, the purchaser performed a Super Cheap Auto diagnostic test (“the diagnostic test”) on the vehicle. The diagnostic test identified a number of potential faults with the vehicle. By this time the purchaser had also noticed the floor carpet on the driver’s side was wet.

[11] On 16 November 2016, the purchaser returned the vehicle to the trader. Between 16 and 25 November 2016, the trader conducted further repairs to the vehicle, including replacing brake pads and installing a second hand air conditioning unit. The repairs cost the trader at least $840.

[12] On 16 November 2016, the purchaser rejected the vehicle under the Act on the grounds that the vehicle’s failure to comply with the guarantee of acceptable quality in the Act is of substantial character. The trader refused to accept the purchaser’s rejection.

[13] Despite rejecting the vehicle on 16 November 2016, the purchaser uplifted the vehicle from the trader on 25 November 2016.

[14] On 28 November 2016, the purchaser took the vehicle to AA Auto Service and Repair in Wairau Park, Auckland (“AA”) for a full service. By this time he had also identified that the car was becoming hard to start.

[15] AA conducted an assessment and identified the following faults:

(a) Engine mounts needed replacing;

(b) Front brake hoses needed replacing;

(c) Front lower control arm bushes were soft and needed replacing;

(d) The coil pack loom was broken;

(e) The engine was misfiring;

(f) A right rear wheel stud was missing; and

(g) Front fog lights were not operational.

[16] AA also believed that the vehicle would not obtain a warrant of fitness given its defects. In a letter provided to the Tribunal on the day of the hearing, AA noted that faults with the front lower control arm bushes and coil pack loom were, in its opinion, long standing faults and would have been apparent to inspection prior to the vehicle being sold in October 2016.

[17] The purchaser did not give the trader the opportunity to assess the vehicle or to remedy the faults identified by AA. The purchaser instead instructed AA to replace the engine mounts and front brake hoses. AA invoiced the purchaser a total of $997.00 for the service and repairs. The purchaser seeks to recover those costs from the trader.

[18] AA quoted the purchaser a further $5,380 to remedy the remaining faults identified. The purchaser has not conducted those repairs. The vehicle remains in the possession of AA. The purchaser has since purchased another vehicle.

[19] On 9 February 2017, at the direction of the Tribunal, the purchaser arranged for the vehicle to be towed to AA for further assessment. The purchaser was invoiced $195.80 by A1 Onehunga Towing Service Ltd for cost of towing.

[20] The trader’s position is that the purchaser is not entitled to any remedy.

[21] The trader emphasised that the vehicle was 15 years old and cost $5,000. The trader says the vehicle was tidy, clean and in good condition and that the vehicle was as durable as any reasonable consumer would consider reasonable, taking account of its age, history and price. The trader noted that the vehicle was an import from Singapore and in his experience Singapore imports are prone to some problems due to the high humidity there.

[22] The trader noted that it has remedied defects initially identified by the purchaser by replacing the air conditioning unit, brake light and brake pads, at a cost of at least $840. The trader says it is not liable for any other defects identified by the purchaser. The trader says that any defects that do exist are consistent with a vehicle of this age, history and price.

[23] The trader advised that it also had spoken to Auto Bro Ltd, the mechanic who had worked on the vehicle for the previous owner. Auto Bro Ltd conducted significant work on the vehicle in October 2016, including replacing front end suspension arms, ball joints and shock absorbers, so the trader is surprised that AA has identified issues with the front suspension.

[24] The trader agreed that, when the vehicle was returned by the purchaser, the driver side carpet was damp. The trader stated that there is no evidence that this dampness was caused by a leak or any other pre-existing cause. The trader suggested that the dampness may have been caused when the air conditioning unit was replaced.

[25] The trader also acknowledged that the vehicle did not have a warrant of fitness issued within one month of sale. The trader acknowledged that it should have provided a vehicle with a recent warrant of fitness. The trader says it did not do so because the purchaser was in such a hurry to leave that the trader did not have time to arrange the warrant of fitness.

[26] Finally, the trader noted that it has not been given an opportunity to assess or remedy the faults identified by AA.

[27] Pursuant to cl 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal has appointed Mr Gregory as expert assessor to assist in the determination of the complaint. Mr Gregory took the oath required by cl 10(2) of Schedule 1 to that Act. As an assessor Mr Gregory assisted the adjudicator but the Tribunal’s decision was made by the adjudicator.

Did the vehicle comply with the guarantee of acceptable quality in s 6 of the Act?

Relevant law

[28] Section 6 of the Act imposes on a supplier and the manufacturer of consumer goods "a guarantee that the goods are of acceptable quality." Section 2 of the Act defines "goods" as including vehicles.
[29] 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.

[30] 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 the purchaser’s subjective perspective.

[31] In Stephens v Chevron Motor Court Limited [1996] DCR1, the District Court held that the correct approach to the Act was first to consider whether the vehicle was of “acceptable quality”. If the vehicle was not of acceptable quality, the next point to consider was whether the purchaser required the trader to remedy any faults within a reasonable time in accordance with s 19 of the Act. If the failure to comply with the guarantee of acceptable quality is of a “substantial character” within the meaning of s 21, or if the faults cannot be remedied, the Tribunal is directed to ask whether the purchaser exercised his right to reject the vehicle within a reasonable time.

Application of law to facts

[32] I have no hesitation in finding as a fact that this vehicle did not comply with the guarantee of acceptable quality in s 6 of the Act because it was not free of defects at the time of sale.

[33] In determining whether the vehicle supplied by the trader complied with the guarantee of acceptable quality, I have had regard first, to the nature of the goods; in this case a 15-year-old Audi A4, imported from Singapore in 2007 with 141,271 kms on its odometer. Second, to the sale price of $5,000. Clearly the vehicle was an inexpensive, old, moderately high mileage vehicle which no reasonable consumer would have bought with high expectations as to quality or durability.

[34] I consider that, notwithstanding its price, age and mileage, the faults identified in the vehicle are more serious than a reasonable consumer would reasonably expect to exist in a vehicle of this nature and price.

[35] I set out my reasoning below.

[36] The purchaser first noticed defects with the vehicle almost on the same day as taking possession of it.

[37] These are defects that a reasonable consumer would not expect to exist in a vehicle of this nature and price. Between 10 and 25 November 2016, the trader remedied those defects by replacing the right brake light bulb, replacing brake pads and installing a second hand air conditioning unit.

[38] The purchaser then began to discover more defects with the vehicle, including those identified by AA set out at [15] above.

[39] The defects identified by AA further demonstrate that the vehicle was not of an acceptable quality at the time it was supplied to the purchaser. AA noted that at least some of the defects are long standing faults and would have been apparent to inspection prior to the vehicle being sold in November 2016.

[40] There are other defects that mean the vehicle is not of an acceptable quality. The carpet in the driver side foot well is damp, and that this dampness was not caused by the purchaser. The evidence of the parties is that the dampness was either caused by a pre-existing leak or when the air conditioning unit was replaced. As at the date of the hearing the purchaser had not been able to identify the precise cause of the dampness in the driver side foot well. Either way, I am satisfied that the purchaser has not caused the dampness.

[41] I am also satisfied that the vehicle can be hard to start – a fault that should not exist in any vehicle recently purchased from a motor vehicle dealer.

[42] I am not satisfied that the faults identified in the diagnostic test give rise to a failure as to acceptable quality. I am advised by the Tribunal’s assessor that the diagnostic test was a basic scan that will bring up historic codes that are not related to the current faults.

Was the vehicle’s failure of substantial character entitling the purchaser to reject the vehicle?

Relevant law

[43] Section 21 of the Act defines the circumstances in which a failure to comply with the guarantee as to acceptable quality will be regarded as being a failure of a substantial character for the purposes of s 18(3) of the Act. Section 21 of the Act provides as follows:

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.

Application of law to facts

[44] On the evidence currently before the Tribunal, I consider that the vehicle’s defects are not of a substantial character in terms of s 21(a) of the Act.

[45] The purchaser sought to reject the vehicle on 16 November 2016, after the purchaser had asked the trader to remedy defects with the air conditioning unit, brake lights and brake pads, which the trader has done. Those defects were not failures of a substantial character, taking account of the nature and price of the vehicle.

[46] The other defects identified by the purchaser as at 16 November 2016 were not sufficient to justify rejection. I am not satisfied that that the defects identified in the diagnostic test establish a failure of substantial character. Further, I am not satisfied that the dampness to the carpet in the driver side foot well cannot be remedied or that it is of a substantial character.

[47] The purchaser also relies on the defects later identified by AA to justify rejection.

[48] I have considered the information provided by the purchaser and AA and have sought advice from the Tribunal’s assessor. The assessor is of the view that the defects are easily remedied and do not make the vehicle substantially unsafe. I am therefore not satisfied that these further defects cannot be remedied or are of a substantial character, taking account of the nature and price of the vehicle.

[49] The purchaser is not, at this time, entitled to reject the vehicle. However, I have given the purchaser an opportunity to have his application to reject the vehicle brought back to the Tribunal if the trader does not remedy the defects identified within the timeframes specified in the Tribunal’s Orders.

What remedy, if any, under s 18 of the Act is available to the purchaser?

Relevant law

[50] Section 18 of the Act provides as follows:

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.

[51] The regime of the Act requires that where the fault can be remedied and is not of substantial character the consumer must require the supplier to remedy the fault and allow the trader a reasonable time in which to do so (see s 18(2)(a)). The right to reject for a fault which is not of a substantial character only arises if the supplier fails, refuses, neglects or does not succeed in doing so within a reasonable time (see s 18(2)(b)).

Application of law to facts

[52] The purchaser is entitled to a remedy under s 18 of the Act. The vehicle was not of an acceptable quality at the time it was sold to the purchaser, and many of the faults with the vehicle have not yet been remedied.

[53] The trader remedied the faults initially identified by the purchaser within a reasonable time. The trader has not yet been given a reasonable time or opportunity to rectify the faults identified by AA. Consequently, and consistent with s 18(2)(a) of the Act, the trader should be given an opportunity to assess and remedy those faults.
[54] The trader also supplied a vehicle to the purchaser without a recent warrant of fitness. In the opinion of AA, the vehicle would currently fail a warrant of fitness test, and at least some of the identified faults would have been evident at the time the vehicle was sold. I take from this that the faults would have been identified and remedied if the vehicle had been subject to a warrant of fitness assessment in the month prior to sale.

[55] This was not done, but I consider the trader should be given an opportunity to, at its cost, obtain a fresh VTNZ warrant of fitness for the vehicle before returning it to the purchaser.

[56] I also consider that the trader should pay the purchaser $92.00, being the cost of the assessment of the faulty air conditioning unit. I consider the purchaser acted reasonably in engaging Advanced Auto Air to conduct an assessment of the air conditioning unit. At that time the purchaser did not know that the fault was sufficient to trigger the protections of the Act, and in the circumstances it was reasonable for him to engage Advanced Auto Air rather than to require the trader to conduct the assessment.

[57] The trader should also pay the purchaser $195.80 being the cost of towing the vehicle to AA on 9 February 2017.

[58] The purchaser is not entitled to a remedy for remedial work already performed by AA. The purchaser acted prematurely in instructing AA to repair the engine mounts and front brake hoses without giving the trader an opportunity to assess and remedy those defects. I am not satisfied that this work needed to be done urgently without reference to the trader. This work was not necessary to make the vehicle immediately roadworthy - despite this work the purchaser has not been driving the vehicle because he considers the vehicle to be unroadworthy. As a result the purchaser’s application for $997.00 for the cost of the AA service and repairs to the vehicle is dismissed.

DATED at AUCKLAND this 28th day of February 2017

B.R. Carter
Adjudicator