Deng v Grande Motors Limited - Reference No. MVD 095/2017 (Auckland) [2017] NZMVDT 76; [2017] NZMVT Auckland 76 (29 June 2017)

Last Updated: 19 July 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT Auckland 76 Reference No. MVD 095/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	BAORUI DENG
		Purchaser
	AND	GRANDE MOTORS LIMITED
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 31 May 2017
DATE OF DECISION 29 June 2017
APPEARANCES
Mr B Deng, Purchaser
Mr V Tsykin, for the Trader
Ms S Tsykina, Witness for the Trader

ORDERS

1. Mr Deng’s application to reject the vehicle is upheld.
2. Mr Deng shall, within five working days of the date of this decision, return the vehicle to Grande Motors Limited.

100. The collateral credit agreement between Mr Deng and UDC Finance Limited dated 11 January 2017 (“the collateral credit agreement”) shall vest in Grande Motors Limited as from 5 April 2017 and Grande Motors Limited shall, as from that date, discharge all of Mr Deng’s obligations under the collateral credit agreement.

4. Grande Motors Limited shall, within 10 working days of the vehicle being returned, pay Mr Deng the following sums:
   • (i) $5,650, being the deposit paid by Mr Deng towards the purchase price of the vehicle;
   • (ii) $650, being a proportion of the purchase price of the three year mechanical warranty purchased by Mr Deng.
   • (iii) The capital component of all payments made by Mr Deng under the collateral credit agreement as from 11 January 2017 and 5 April 2017; and
   • (iv) All payments of principal and interest made by Mr Deng to UDC Finance under the collateral credit agreement after 5 April 2017.

DECISION

[1] Grande Motors has had a reasonable opportunity to repair the fault that causes the vehicle’s front differential to whine. Its attempts to repair have been unsuccessful.
[2] Mr Deng is entitled to reject the vehicle under s 18(2)(b)(ii) of the Consumer Guarantees Act 1993 (“the Act”) and to other remedies in accordance with s 18(4) of the Act.

REASONS

Introduction

[3] On 11 January 2017, Baorui Deng bought a 2008 Toyota Vanguard registration number KHM416 for $19,650 from Grande Motors Limited. The vehicle had travelled 73,370 kms at the time of sale. Mr Deng also purchased three year mechanical breakdown insurance from Janssen Insurance Limited for $818.15. Mr Deng borrowed $14,677 from UDC Finance to fund the purchase of the vehicle.
[4] This is now the second time the dispute regarding defects with this vehicle has been before the Tribunal. Following the first hearing, the Tribunal found that the vehicle had faults that breached s 6 of the Act and gave Grande Motors an opportunity to repair those faults.[1] In particular, the Tribunal ordered Grande Motors to, within 10 working days and at the trader’s expense, repair:

• (a) The front differential;
• (b) The leaking left rear shock absorber; and
• (c) The leaking rear differential pinion seal.

[5] Mr Deng returned the vehicle to Grande Motors for the ordered repairs to be performed. Grande Motors, through third party repairers, attempted to perform the repairs. The vehicle was returned to Mr Deng, but the vehicle’s front differential continued to make a whining noise at speeds in excess of 40 km/h.
[6] Mr Deng rejected the vehicle on 5 April 2017. Grande Motors has refused to accept the rejection. Mr Deng then filed a further application with the Tribunal seeking to have his rejection upheld and claiming other remedies under the Act.
[7] The following issues arise in this case:

• (a) Has Grande Motors remedied the vehicle’s faults within a reasonable time?
• (b) If not, what remedy is Mr Deng entitled to under the Act?

Has Grande Motors remedied the vehicle’s faults?

[8] Grande Motors has remedied the faults with the vehicle’s left rear shock absorber and rear differential. However, Mr Deng alleges that Grande Motors has not repaired the fault with the front differential, which causes the differential to make a whining noise.
[9] Grande Motors says that it has repaired the front differential fault. It sent the vehicle to two external repairers, Total Auto Therapy and Auckland Automatic Transmission, who say they replaced broken bearings and seals in the differential. Grande Motors paid $1,600 for those repairs.
[10] I am not satisfied that the two external repairers have performed the correct repairs to the front differential. As noted in the Tribunal’s earlier decision, the front differential noise is likely to be caused by the front differential crownwheel and pinion gears. The Tribunal’s assessor, Mr Gregory, considered that the front differential fault would likely be rectified by adjustments to the pinion and crownwheel.
[11] Grande Motor’s repairers’ performed a different repair. Instead of making adjustments to the pinion and crownwheel in the front differential they replaced bearings and seals in the transfer box.
[12] Those repairs have not fixed the fault with the front differential. Mr Gregory took the vehicle for a test drive after the hearing on 31 May 2017. The vehicle’s front differential still whines. Armstrongs Auckland Limited, trading as Auckland City Toyota, also assessed the vehicle after repairs were conducted by Grande Motors. Auckland City Toyota also concluded that the incorrect parts had been replaced and the fault had not been fixed.
[13] Consequently, I am satisfied that Grande Motors has not remedied the fault with the vehicle’s front differential and that Mr Deng is entitled to a further remedy under the Act.

What remedy is Mr Deng entitled to under the Act

[14] Section 18 of the Act sets out the remedies available to Mr Deng under the Act:

“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.”

Grande Motors has not remedied the defect in a reasonable time

[15] For the purposes of s 18(2)(a) of the Act, Grande Motors has been required to repair the front differential fault. Mr Deng first asked it to repair the fault to it in January 2017. Grande Motors initially refused to perform any repairs on the front differential. Following the first decision of the Tribunal, Grande Motors has tried to repair the fault. It has not succeeded in doing so - its repairers replaced the wrong parts.

Mr Deng is entitled to reject the vehicle

[16] Mr Deng is therefore entitled, under s 18(2)(b)(ii) of the Act, to reject the goods in accordance with s 22 of the Act. Grande Motors has not succeeded in repairing the front differential fault having been given a reasonable opportunity to do so.

[17] The Tribunal upholds Mr Deng’s rejection of the vehicle.
[18] Under s 23(1)(a) of the Act, Mr Deng is entitled to a refund of any money paid in respect of the vehicle. Further, where Mr Deng has exercised his right to reject the vehicle, under s 23A(2) of the Act, the Tribunal may order that all or any of the rights and obligations of Mr Deng under the collateral credit agreement vest in Grande Motors.
[19] Accordingly, the Tribunal orders that:

• (a) Mr Deng shall, within five working days of the date of this decision, return the vehicle to Grande Motors.
• (b) The collateral credit agreement shall vest in Grande Motors as from 5 April 2017 (the date Mr Deng rejected the vehicle) and Grande Motors shall as from that date discharge all of Mr Deng’s obligations under the collateral credit agreement.
• (c) Grande Motors shall, within 10 working days of the vehicle being returned it, pay the purchaser the following sums:
  • (i) $5,650, being the deposit paid by Mr Deng towards the purchase price of the vehicle;
  • (ii) The capital component of all payments made by Mr Deng under the collateral credit agreement as from 11 January 2017 and 5 April 2017; and
  • (iii) All payments of principal and interest made by Mr Deng to UDC Finance under the collateral credit agreement after 5 April 2017.

[20] Mr Deng also seeks to recover the cost of purchasing mechanical breakdown insurance for the vehicle under s 18(4) of the Act. I am satisfied that Mr Deng is entitled to a refund of a proportion of this insurance. Mr Deng paid $818 for three years of coverage. Mr Deng has received some benefit from the mechanical breakdown insurance, in that the vehicle has been covered by the policy since January 2017.
[21] Taking account of the benefit received by Mr Deng in that period, I am satisfied that a proportionate refund of $650 is appropriate. Accordingly, the Tribunal orders that Grande Motors should pay Mr Deng $650 within 10 working days of this decision.

DATED at AUCKLAND this 29th day of June 2017

B.R. Carter
Adjudicator

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[1] See Deng v Grande Motors Limited [2017] NZMVDT 30.