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Fernandes v Bird t/a Coast Cars - Reference No. MVD 035/2017 (Auckland) [2017] NZMVDT 83 (7 July 2017)

Last Updated: 16 August 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL



Reference No. MVD 035/2017


IN THE MATTER
of the Motor Vehicle Sales Act 2003


AND


IN THE MATTER
of a dispute


BETWEEN
WARREN CHRISTOPHER FERNANDES


Purchaser


AND
ANDREW BIRD TRADING AS COAST CARS


Trader

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

HEARING at Auckland on 6 June 2017

DATE OF DECISION 7 July 2017

APPEARANCES
Mr W C Fernandes, Purchaser
Mr K Coelho, Witness for the Purchaser
Mr A Bird, Trader
Mr L Cozette, Witness for the Trader

ORDERS

  1. Andrew Bird shall, within 10 working days of the date of this decision:

DECISION

[1] The vehicle did not comply with the guarantee as to acceptable quality in s 6 of the Consumer Guarantees Act 1993 (“the Act”). The vehicle had a number of faults that were present when the vehicle was supplied to Mr Fernandes, or that arose shortly after sale. See paragraphs [12] to [30].
[2] Mr Fernandes is not entitled to reject the vehicle. The faults with the vehicle are not as serious as Mr Fernandes believes. The faults do not, separately or when combined, amount to a failure of a substantial character sufficient to justify rejection. See paragraphs [31] to [39].
[3] Repairs to the vehicle breached the guarantee in s 28 of the Act that services provided to Mr Fernandes will be provided with reasonable care and skill. The vehicle’s left rear wheel came loose after being inadequately tightened following repairs performed by Coast Cars. See paragraphs [40] to [44].
[4] The Act does not allow Mr Fernandes to reject the vehicle due to the substandard repair. See paragraphs [45] to [47].
[5] Although Mr Fernandes is not entitled to reject the vehicle, he is entitled to have the vehicle repaired. Coast Cars must repair the faults with the vehicle as set out in the orders above. Mr Fernandes is also entitled to recover the cost of having the vehicle’s faults assessed and repaired. See paragraphs [48] to [51].

REASONS

Introduction

[6] On 27 November 2016, Warren Fernandes purchased a 2003 Jeep Cherokee Renegade from Andrew Bird trading as Coast Cars for $9,700. The vehicle had an odometer reading of 189,200 kms at the time of sale.
[7] Mr Fernandes had the vehicle inspected before purchase. That inspection identified four faults, which Coast Cars agreed to remedy. Mr Fernandes has since identified further faults with the vehicle, and in February 2017 the vehicle’s left rear wheel came loose while Mr Fernandes was driving with his family.
[8] Mr Fernandes has now rejected the vehicle, claiming that the vehicle’s faults amount to a failure of a substantial character. Mr Fernandes has applied to the Tribunal for orders upholding his rejection.
[9] Mr Fernandes also says that Coast Cars have breached the guarantee in s 12 of the Act that spare parts will be reasonably available for the vehicle because spare parts for the vehicle are not readily available.
[10] Mr Fernandes’ claim on this point must fail. The obligation under s 12 of the Act to ensure that spare parts are readily available rests with the manufacturer, and only when the vehicle is first supplied to a consumer in New Zealand. Coast Cars is not the manufacturer and Mr Fernandes is not the first New Zealand owner of this vehicle. Accordingly, Mr Fernandes can have no claim under s 12 of the Act.

The Issues

[11] The issues that therefore require consideration are:

Did the vehicle fail to comply with the acceptable quality guarantee?

[12] 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.
[13] 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.”

[14] 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.

The vehicle had faults when it was supplied to Mr Fernandes

[15] Mr Fernandes agreed to buy the vehicle on 27 November 2016. On that day Mr Fernandes identified the following faults:
[16] Coast Cars, or more specifically Cozworth Auto Services Limited, repaired the disc brakes and number plate and park lights before Mr Fernandes took possession of the vehicle.
[17] Cozworth Auto Services also diagnosed the oil leak as coming from the rear crank seal housing. After sourcing replacement parts from overseas, it repaired the oil leak in late December 2016 and early January 2017. It also replaced the front wiper blades after Mr Fernandes complained that these were failing.
[18] I am satisfied that each of the faults in paragraph [15] was a breach of the acceptable quality guarantee, in that a reasonable consumer would not expect these faults to be present at the date of purchase.

The vehicle developed further faults

[19] In February 2017, Mr Fernandes had the vehicle assessed by Lyndale Motor Services who identified 13 actual or potential faults with the vehicle.
[20] Cozworth Auto Services then assessed the vehicle in March 2017 to determine whether those faults existed. Cozworth Auto Services concluded that only five of the faults identified by Lyndale Motor Services required repair. These faults were:
[21] Mr Cozette of Cozworth Auto Services appeared at the hearing. I found Mr Cozette to be a reliable and straightforward witness. Other than providing a copy of an estimate from Lyndale Motor Services, Mr Fernandes presented no further evidence as to the nature and extent of the alleged faults with the vehicle. Consequently, I prefer Mr Cozette’s evidence as to the nature and extent of the faults over the evidence provided by Mr Fernandes. I accept that the vehicle had only those faults identified by Cozworth Auto Services.
[22] Each of the faults identified by Cozworth Auto Services has now been repaired, except for the oil leak from the PCV Valve. Cozworth Auto Services has ordered the necessary parts and is waiting for the opportunity to perform that repair.

The vehicle did not comply with the acceptable quality guarantee

[23] I acknowledge that the vehicle was 13 years old and had travelled nearly 190,000 kms when it was purchased by Mr Fernandes. However a reasonable consumer would not expect the faults listed at paragraphs [15] and [20], other than the split ball joint boot which is minor wear and tear, to be present in the vehicle at the time of purchase or to develop shortly thereafter.
[24] As a result, the 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 and has not been durable.

The vehicle has no proven fault with its cambelt

[25] Mr Fernandes alleges that the vehicle’s cambelt may not be in good condition and requires replacement.
[26] The evidence presented at the hearing does not establish that there is a fault with the cambelt or that it requires replacement. Again, Mr Fernandes did not present any evidence as to the condition of the cambelt. His case was that Coast Cars could not prove that the cambelt is in good condition.
[27] I am satisfied that the cambelt is in good condition. I accept Mr Cozette’s evidence that he has twice inspected the vehicle’s cambelt and on both occasions concluded that the cambelt is in good condition. He said he could see no signs of any fault with the cambelt, and could still read writing on the cambelt, which suggests it has recently been replaced. Mr Fernandes provided no evidence to rebut Mr Cozette’s evidence, and as a result, he has not proven that the cambelt is not in good condition or that it requires replacement.

The loose rear wheel is not a breach of the acceptable quality guarantee

[28] I am satisfied that the vehicle’s left rear wheel came loose while Mr Fernandes was driving in the vehicle with his family. However, I am not satisfied that the loose wheel is a breach of the acceptable quality guarantee.
[29] The loose wheel did not occur because of any fault with the vehicle. Instead, the wheel came loose because it was not properly tightened when the vehicle was repaired by Cozworth Auto Services in December 2016 and January 2017. During that repair, Cozworth Auto Services removed all of the vehicle’s wheels to clean the brakes. I am satisfied that the rear left wheel was not fully tightened when it was replaced, and that it worked loose over time.
[30] The loose left rear wheel is therefore not a breach of the acceptable quality guarantee – the wheel was not loose when the vehicle was first supplied to Mr Fernandes and did not become loose because of any fault with the vehicle. Instead, the wheel came loose due to Cozworth Auto Services’ failure to adequately tighten it - which is a breach of s 28 of the Act as set out in paragraphs [40] to [44] below.

Are the defects with the vehicle a failure of a substantial character?

Relevant law

[31] Mr Fernandes seeks to reject the vehicle. Section 18(3) of the Act sets out the circumstances in which the purchaser can reject the vehicle where there has been a breach of the acceptable quality guarantee. 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.”

[32] A failure of a substantial character is defined in s 21 of the Act:

“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.”

No single fault is a failure of a substantial character

[33] Although the vehicle had worn front disc brake pads, oil leaks from the rear crank seal and PCV valve and faulty number plate and park lights, none of these faults, in its own right, is sufficient to justify rejection – particularly as the potentially unsafe loose wheel is not a fault that gives rise to the right to reject the vehicle.
[34] Mr Gregory, the Tribunal’s Assessor, advises that each of these faults can be quickly and inexpensively repaired, and indeed most have already been repaired. As at the date of this decision only the oil leak from the PCV valve remains unremedied. Mr Gregory advises that this fault can be quickly and easily repaired.

The accumulated faults are not a failure of a substantial character

[35] Mr Fernandes has also sought to reject the vehicle because the accumulation of defects with the vehicle amount to a failure of a substantial character for the purposes of s 18(3)(a) of the Act.
[36] 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]
[37] I am not satisfied that the vehicle’s faults, in combination, would cause a reasonable consumer to have no confidence in the reliability of the vehicle.
[38] Mr Fernandes purchased a 13 year old vehicle that had travelled nearly 190,000 kms. The vehicle has an accumulation of minor defects, but Mr Gregory advises that a vehicle of this age and mileage will almost always have faults.
[39] I am satisfied that the faults with this vehicle, although a breach of s 6 of the Act, are not so extensive or significant that a reasonable consumer, fully appraised of the true nature and extent of the faults, would have reached the point that it had no confidence in the reliability of the vehicle sufficient to justify rejection.

Have repairs to the vehicle complied with the guarantee of reasonable skill and care in s 28 of the Act?

[40] Section 28 of the Act imposes an obligation on the supplier of services that services supplied to consumers will be carried out with reasonable care and skill.
[41] In December 2016 and January 2017, Coast Cars performed repairs on the vehicle. I am satisfied that when it performed those repairs, Coast Cars provided a service to Mr Fernandes.
[42] As part of that service, Cozworth Auto Services (Coast Cars’ repairer) removed and replaced the vehicle’s tyres. Less than a month later, the vehicle’s left rear wheel loosened, causing damage to the wheel’s studs and to the alloy in the wheel.
[43] I consider that the left rear wheel came loose due to Cozworth Auto Services’ failure to adequately tighten it. Mr Cozette denies this and says he always ensures that wheels are adequately tightened. I do not dispute Mr Cozette’s evidence that this is his usual practice. However, in this instance Mr Cozette is likely to have failed to adequately tighten the left rear wheel, causing it to come loose.
[44] Due to Cozworth Auto Services’ failure to adequately tighten the left rear wheel, I am satisfied that Coast Cars has failed perform services with the required care and skill, in breach of s 28 of the Act

Is Mr Fernandes entitled to reject the vehicle due to substandard repairs to the vehicle?

[45] Mr Fernandes says that one of the main reasons for rejecting the vehicle is that the loose wheel made the vehicle unsafe. His view is understandable. Undoubtedly, a serious accident could have occurred because of the loose wheel. However, the Act does not allow Mr Fernandes to reject the vehicle because of a substandard repair.
[46] Section 32 of the Act sets out the remedies that are available to Mr Fernandes for a breach of s 28 of the Act.

Relevant law

32 Options of consumers where services do not comply with guarantees

Where a service supplied to a consumer fails to comply with a guarantee set out in any of sections 28 to 30, the consumer may,—

(a) where the failure can be remedied,—

(i) require the supplier to remedy it within a reasonable time:

(ii) 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,—

(A) have the failure remedied elsewhere and recover from the supplier all reasonable costs incurred in having the failure remedied; or

(B) subject to section 35, cancel the contract for the supply of the service in accordance with section 37:

(b) where the failure cannot be remedied or is of a substantial character within the meaning of section 36,—

(i) subject to section 35, if there is a contract between the supplier and the consumer for the supply of the service, cancel that contract in accordance with section 37; or.

(ii) obtain from the supplier damages in compensation for any reduction in value of the product of a service below the charge paid or payable by the consumer for the service:

(c) in addition to the remedies set out in paragraphs (a) and (b), 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 product of the service) which was reasonably foreseeable as liable to result from the failure.

[47] Section 32 of the Act only allows a consumer to cancel a contract for the supply of services where there has been substandard work. The contract to purchase the vehicle was not a contract for the supply of services; it was a contract for the supply of goods. Therefore, Mr Fernandes cannot cancel the contract to buy the vehicle.

What remedies are available to Mr Fernandes?

[48] Under s 18(2)(a) of the Act, Mr Fernandes is entitled to have all of the faults that cause the vehicle to breach the acceptable quality guarantee repaired by Coast Cars within a reasonable time. As noted above, only the oil leak from the PCV valve remains unremedied. Accordingly, Coast Cars must repair the PCV valve leak.
[49] Mr Fernandes is also entitled to recover the cost of assessing the vehicles faults. Mr Fernandes was charged $182.80 by Lyndale Motors Services for the assessment that identified the PCV valve leak. Mr Fernandes is entitled to recover that cost under s 18(4) of the Act.
[50] Under s 32(a)(ii)(A), Mr Fernandes is also entitled to recover the cost of having the left rear wheel repaired. Coast Cars declined to perform those repairs and Mr Fernandes paid an acquaintance $360 for those repairs. Mr Fernandes did not have a receipt for that work, although he provided a contemporaneous bank account withdrawal receipt to show that he had withdrawn that amount on the day he claims to have paid the acquaintance. I accept Mr Fernandes’ evidence. Coast Cars must pay Mr Fernandes $360 for the repair of the left rear wheel.
[51] Further, under s 32(a)(i), Mr Fernandes is entitled to have the damage to the alloy on the left rear wheel repaired by Coast Cars within a reasonable time.

Conclusion

[52] The vehicle has faults that were present when the vehicle was supplied to Mr Fernandes, or that arose shortly after sale, which meant that the vehicle did not comply with the guarantee as to acceptable quality in s 6 of the Act.
[53] The faults with the vehicle are not as serious as Mr Fernandes believes. The faults do not, separately or when combined, amount to a failure of a substantial character sufficient to justify rejection.
[54] Repairs to the vehicle have been substandard, in breach of the guarantee in s 28 of the Act that services provided to Mr Fernandes will be provided with reasonable care and skill. The Act does not allow Mr Fernandes to reject the vehicle due to the substandard repairs.
[55] Instead, Mr Fernandes is entitled to have the vehicle’s faults repaired. Mr Fernandes is also entitled to recover the cost of having the vehicle’s faults assessed and repaired.
[56] Accordingly, the Tribunal orders that Coast Cars must within 10 working days of the date of this decision:

DATED at AUCKLAND this 7th day of July 2017

B.R. Carter
Adjudicator


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

[2] Ibid, at 417.

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