Walford v Auckland European Motorworld Limited - Reference No. MVD 339/2016 (Auckland) [2017] NZMVDT 9; [2017] NZMVT Auckland 9 (19 January 2017)

Last Updated: 28 February 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2017] NZMVDT Auckland 9

Reference No. MVD 339/2016

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN WILLIAM JOSEPH CHARLES WALFORD

Purchaser

AND AUCKLAND EUROPEAN MOTORWORLD LIMITED

Trader

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

Mr S D Gregory, Assessor

HEARING at Auckland on 17 January 2017

DATE OF DECISION 19 January 2017
APPEARANCES

Mr W J C Walford, the purchaser

There was no appearance by the trader

DECISION

The trader shall pay the purchaser $4,875.41 immediately.

REASONS

Background

[1] On 13 May 2016, Mr Walford (“the purchaser”) bought a 2005 BMW M5 vehicle registration number HMU635 (“the vehicle”) for $27,500 from Auckland European Motorworld Limited. The vehicle, a Japanese import, had 98,000kms on its odometer at the time of sale.

[2] The purchaser says the vehicle, when it was supplied to him had a fault which prevented it starting when its engine was hot. He required the trader to remedy that fault but the trader has failed to do so within a reasonable time. The purchaser seeks to recover the sum of $3,376.16 he has already paid to have the fault repaired and a further sum of $1,351.25 he has been quoted to complete the repair; a total of $4,727.41 as well as his costs of travelling to the hearing of $148; a total of $4,875.41.

[3] The trader, after being sent notice of the hearing, failed to attend without any explanation.

[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) Whether the vehicle complied with the guarantee of acceptable quality in s 6 of the Consumer Guarantees Act 1993 (“the Act”)?
(b) If not, did the purchaser require the trader to remedy the vehicle’s faults and if so did he give the trader a reasonable time within which to do so? If so, is the purchaser entitled to recover his repair costs from the trader?

Issue [a]: Whether the vehicle complied with the guarantee of acceptable quality in s 6 of the Act?

Relevant law

[6] 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”.
[7] 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.”

[8] 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.

[9] 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/her right to reject the vehicle within a reasonable time.

Application of law to facts

[10] The purchaser who lives in Christchurch agreed to buy the vehicle from the trader in Auckland for $27,500 on 13 May 2016, following an inspection and test drive at the trader’s premises. The purchaser was directed by Mr Hitchcock, the trader’s manager to make payment of the full purchase price of $27,500 to the bank account of Hitchcock Wholesale, which the purchaser did on 13 May 2016.

[11] After buying the vehicle the purchaser drove it from Auckland to Christchurch. Within a day of doing so the purchaser found the vehicle’s engine had a fault which prevented it from starting when its engine was hot. The purchaser had the fault assessed by Jeff Gray BMW as a faulty air pump and Jeff Gray BMW quoted $1,229.22 to repair it. The purchaser asked the trader to authorise the repair at the trader’s cost, but the trader failed to do so and eventually, on 23 June 2016, the purchaser authorised Jeff Gray BMW to do the repair and paid the cost of $1,229.22. The purchaser then requested the trader to reimburse it with this amount but the trader has failed to do so.

[12] The vehicle’s hot start issues continued and on 4 July 2016, the purchaser took the vehicle back to Jeff Gray BMW who diagnosed the fault as either a VANOS oil pressure fault or a faulty oil pump and estimated the costs of repair would be $11,596.98. The purchaser referred that estimate to the trader who asked him to take the vehicle to Magnum Compliance Services Ltd (“Magnum Services”). Magnum Services found the fault was caused by a faulty idle control valve and a blocked charcoal canister which they estimated would cost $2,146.94 to replace. The purchaser asked the trader to authorise Magnum Services to proceed with that repair but once again the trader did not do so and the purchaser eventually had the work done on 26 September 2016, and paid Magnum Services $2,146.94 to replace the charcoal canister and an idle control valve. Magnum Services have advised the purchaser that the vehicle still needs to have its fuel pump replaced at a cost of $1,175 plus GST for parts and labour, or $1,351.25. The trader has failed to respond to the purchaser’s attempts to make contact with it.

[13] 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 an 11-year-old Japanese imported BMW M5 which had travelled 98,000kms. Second to the purchase price of $27,500. The vehicle’s engine was faulty at the time of supply in failing to hot start properly. I do not consider that a reasonable consumer paying $27,500 even for an 11-year-old moderately high mileage vehicle would regard that as acceptable.

Conclusion on issue [a]

[14] I therefore find as a fact that this vehicle did not comply with the guarantee of acceptable quality in s 6 of the Act because its engine was not free of faults at the time of supply and was not as durable as a reasonable consumer would regard as acceptable.

Issue [b]: Did the purchaser require the trader to remedy the vehicle’s faults and if so did he give the trader a reasonable time within which to do so?

[15] 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.”

Application of law to facts

[16] The purchaser provided copies of emails and text messages he had sent to the trader requiring it to remedy the vehicle’s faults. The trader does not appear to have responded to them and I think that the trader was given a reasonable time in which to remedy the faults but has failed to do so.

Conclusion on issue [b]

[17] I consider that the trader was given a reasonable time and opportunity in which to rectify the vehicle’s engine faults but failed to do so. As a result the purchaser became entitled to exercise his option under s 18(2)(b) of the Act. Instead of rejecting the vehicle, as he might have chosen to do under s 18(2)(b)(i), he elected, under s 18(2)(b)(ii), to have the vehicle’s faults remedied by having the vehicle repaired and I consider the costs he has incurred and will incur, which total $4,875.41 are reasonable. I will therefore order the trader to reimburse the purchaser with that amount immediately.

DATED at AUCKLAND this 19th day of January 2017

C. H. Cornwell
Adjudicator