Edmonds v AFG NZ Limited t/a Shazad Motors - Reference No. MVD 330/2016 (Auckland) [2017] NZMVDT 4; [2017] NZMVT Auckland 4 (13 January 2017)

Last Updated: 28 February 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2017] NZMVT Auckland 4

Reference No. MVD 330/2016

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN GARY EDMONDS

Purchaser

AND AFG NZ LIMITED T/A SHAZAD MOTORS

Trader

MEMBERS OF TRIBUNAL
Mr C H Cornwell, Barrister & Solicitor, Adjudicator

Mr S D Gregory, Assessor

HEARING at Auckland on 10 January 2017

DATE OF DECISION 13 January 2017
APPEARANCES

Mr G Edmonds, the purchaser

Mrs S Edmonds, purchaser’s wife and witness
Mr R S Jawandha, Sales Manager for the trader

DECISION

The Tribunal makes the following orders:

1. The trader agrees to accept rejection of the vehicle and shall immediately refund the purchaser with his purchase price of $6,880 by direct crediting that amount to the purchaser’s bank account.
2. The Tribunal orders the trader to immediately pay the purchaser the further sum of $325.93 by direct crediting that amount into the purchaser’s bank.
3. As soon as the trader has made full payment to the purchaser of the amounts specified in orders 1 and 2 (above) it shall, at its expense, arrange to collect the vehicle from the purchaser in Wellington.
   

REASONS

Background

[1] On 2 September 2016, Mr Edmonds (“the purchaser”) agreed to buy a 2005 Volkswagen Golf registration number KBJ280 (“the vehicle”) for $6,880 from AFG NZ Limited trading as Shazad Motors.

[2] The vehicle had faults with its transmission and steering rack. The fault with the steering rack was not rectified by the trader and the purchaser rejected the vehicle on 5 October 2016. The trader acknowledged at the hearing that it is willing to accept rejection of the vehicle and to fully refund the purchaser with his full purchase price of $6,880.

[3] The parties remain in dispute over two issues: first regarding consequential costs claimed by the purchaser and second, as to who is responsible for the cost of transporting the vehicle from Wellington back to the trader in Auckland.

[4] 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.

The issues

[5] The issues requiring consideration are:

(a) What amounts claimed by the purchaser as consequential costs are payable by the trader?
(b) Whether the purchaser or the trader is responsible for the cost of transporting the vehicle back to Auckland?

Issue [a]: What amounts claimed by the purchaser as consequential costs are payable by the trader?

Relevant law

[6] Section 18 of the Consumer Guarantees Act 1993 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), 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.”

[7] Section 18(4) is most relevant in considering the issue of consequential costs. Section 18(4) stipulates that the damages which may be claimed by a consumer in addition to the remedies in s 18(2) and (3) must be damages which result from the “the failure” [namely the failure of the goods to comply with the relevant guarantee in the Act] and, also, that such loss or damage must have been reasonably foreseeable as likely to result from the failure.

Application of law to facts

[8] The purchaser claimed $144 for travelling to Auckland on 2 September 2016 to collect the vehicle after buying it sight unseen. That was neither a cost which resulted from the failure of the vehicle to comply with the Act nor was it reasonably foreseeable. I must therefore disallow that sum.

[9] The purchaser claimed $185.93 he paid to obtain a report from Gazley Motors Ltd on the vehicle’s faults. That was a cost which resulted from the failure of the vehicle to comply with the guarantee of acceptable quality. I consider that the cost of obtaining a mechanic’s report would be an entirely foreseeable cost that a consumer would need to incur to confirm if a vehicle was faulty or not. I therefore allow the purchaser $185.93 for the Gazley Motors Ltd report.

[10] The purchaser claimed $100 as a contribution to his airfare in coming to Auckland on 22 September 2016 to collect the vehicle in the expectation that the steering rack had been repaired by the trader, as well as a $40 Wellington Airport parking charge. I think that these costs are both ones which resulted from the failure because the trader elected to have the vehicle transported back to Auckland for repair, and they were foreseeable costs. I allow both.

[11] Regrettably, I do not think the costs of the purchaser and Mrs Edmonds in flying to Auckland on 10 January 2017, paying for a rental car to get them to the hearing and a day’s parking at Wellington Airport totaling $393.65 meet the tests in s 18(4) because those costs do not result from the failure of the vehicle to comply with the Act, but rather from the failure of the parties to agree on who should pay to return the vehicle from Wellington to the trader in Auckland, and I do not think either were reasonably foreseeable. I must therefore disallow them.

Conclusion on issue [a]

[12] I find that the trader should pay the purchaser $325.93 for the costs detailed in paragraphs [9] and [10] above in addition to the purchase price of the vehicle of $6,880; a total of $7,205.93. Payment is to be made by the trader direct crediting the purchaser’s nominated bank account details of which the purchaser should re-supply to the trader by email.

Issue [b]: Whether the purchaser or the trader is responsible for the cost of transporting the vehicle back to Auckland?

Relevant law

[13] Section 22(2) of the Act provides that where a consumer exercises the right to reject goods, the consumer shall return the rejected goods to the supplier. There are however, two exceptions to this. The first is where, because of the nature of the failure to comply with the guarantee, the goods cannot be returned or transported without significant cost to the consumer, in which case the supplier shall collect the goods at the supplier’s expense. The second exception (which is not relevant to this application) is where the size or height or method of attachment means the goods cannot be removed or transported back without significant cost to the consumer.

Application of law to facts

[14] The Tribunal were told by Mr Edmonds that a warning lamp is indicating the fault with the vehicle’s steering rack. The consequence of this is the vehicle would not pass a warrant of fitness inspection with that fault light lit, and hence the vehicle should not be driven on the road. I therefore find that the nature of the vehicle’s fault (its steering rack) is such that the vehicle should not be driven from Wellington to Auckland. I also find that the cost of transporting the vehicle back to Auckland, which the parties told me would be $288, is significant, and hence I believe the trader should be responsible for arranging and paying for the vehicle to be transported back to Auckland.

Conclusion on issue [b]

[15] The trader is responsible for transporting the vehicle from Wellington to Auckland at its cost.

DATED at AUCKLAND this 13th day of January 2017

C. H. Cornwell
Adjudicator