Mather v Eskerie t/a Cheap Reliable Cars - Reference No. MVD 134/2017 (Auckland) [2017] NZMVDT 93 (20 July 2017)

Last Updated: 16 August 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 93 Reference No. MVD 134/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	JAMES LUKE MATHER
		Purchaser
	AND	CORAW ALI ESKERIE TRADING AS CHEAP RELIABLE CARS
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 7 July 2017
DATE OF DECISION 20 July 2017
APPEARANCES
Mr J K Mather, Purchaser
Mr C Eskerie, Trader
Mr R Eskerie, Witness for the Trader

ORDERS

1. Mr Eskerie shall, within five working days of the date of this decision, pay $668.97 to Mr Mather.

DECISION

[1] The vehicle had a fault with its fuel pump that breached the acceptable quality guarantee is s 6 of the Consumer Guarantees Act 1993 (“the CGA”).
[2] Mr Mather had the fuel pump repaired but is not entitled to recover the cost of that repair under the CGA because he did not first give Cheap Reliable Cars an opportunity to perform the repair. Mr Mather is, however, entitled to recover the reasonable costs he incurred in travelling back to Auckland after the fuel pump failed and of having the fuel pump fault assessed under the CGA.
[3] Mr Mather was also misled into believing that the vehicle had a current Warrant of Fitness (“WOF”) in breach of s 9 of the Fair Trading Act 1986 (“the FTA”). Mr Mather is entitled to recover the cost of performing the repairs required to obtain a WOF for the vehicle.

REASONS

Introduction

[4] On 29 January 2017, James Mather purchased a 1995 Subaru Impreza from Coraw Eskerie, Trading as Cheap Reliable Cars for $2,800. The vehicle had travelled 213,692 kms at the time of purchase.
[5] The vehicle’s fuel pump failed less than one month later, while Mr Mather was holidaying in Coopers Beach, Northland.
[6] Mr Mather arranged for the vehicle to be transported to Auckland and then to have the fuel pump replaced. Mr Mather also arranged alternative transportation for himself and his companion to return to his home in Auckland.
[7] Following the fuel pump repair, Mr Mather discovered that, despite being told that the vehicle had a WOF, the vehicle did not have a current WOF when it was supplied to him. Mr Mather then performed all the repairs required to obtain a WOF.
[8] Mr Mather now applies to the Tribunal seeking to recover the cost of the fuel pump repairs and all of the repairs required for the vehicle to pass a WOF inspection. Mr Mather also seeks to recover the costs he incurred in arranging alternative transportation to return to Auckland and in having the fuel pump fault assessed.
[9] Mr Eskerie accepts that he should pay for the repairs required to obtain a WOF. Mr Eskerie says that he is not liable for the cost of the fuel pump repair because Mr Mather did not give him an opportunity to repair that fault. Further, Mr Eskerie says that the costs incurred by Mr Mather in returning to Auckland were not reasonable.

The Issues

[10] The issues that require consideration in this case are:

• (a) Did the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the CGA?
• (b) What remedy is Mr Mather entitled to under the CGA?
• (c) Did Mr Eskerie mislead Mr Mather about the vehicle’s WOF in breach of s 9 of the FTA?
• (d) What remedy is Mr Mather entitled to under the FTA?

Did the vehicle comply with the guarantee of acceptable quality?

Relevant law

[11] Section 6 of the CGA imposes on suppliers and manufacturers of consumer goods "a guarantee that the goods are of acceptable quality." Section 2 of the CGA defines "goods" as including vehicles.
[12] 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.”

[13] 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 CGA 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 fuel pump fault is a breach of the acceptable quality guarantee

[14] The vehicle’s fuel pump failed within a month of purchase. I acknowledge that this is an inexpensive vehicle with high mileage. I am nonetheless satisfied that a reasonable consumer would not expect the fuel pump on a vehicle of this age, price and mileage to fail within one month of purchase. The fuel pump fault is therefore a breach of s 6 of the Act, as the vehicle was not as durable as a reasonable consumer would expect.
[15] Mr Eskerie suggested that the fuel pump fault may have been caused by Mr Mather using the wrong fuel. The vehicle requires 98 octane fuel and Mr Mather gave evidence that he used 95 octane fuel, together with an additive, when he refueled on his journey to Coopers Beach.
[16] The use of 95 octane has not contributed to the fuel pump fault. Mr Gregory, the Tribunal’s Assessor, advises that the use of 95 octane fuel could not have caused the fuel pump to fail.

What remedy is Mr Mather entitled to under the CGA?

[17] Section 18 of the CGA sets out the remedies available to Mr Mather 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.”

Mr Mather cannot recover the cost of the fuel pump repair

[18] Mr Mather seeks to recover the cost of the fuel pump repair.
[19] In Acquired Holdings Ltd v Turvey,[1] the High Court found that under s 18(2) of the Act, where goods have failed to comply with the acceptable quality guarantee in s 6 of the Act, the consumer must give the supplier an opportunity to remedy the failure before they can have the fault repaired elsewhere and recover the cost. Under s 18(2)(b) of the Act, a consumer can only recover the cost of repairing the vehicle elsewhere if the trader then refuses or neglects to do so, or does not succeed in doing so.
[20] Mr Mather accepts that he did not give Mr Eskerie the opportunity to repair the fuel pump fault. Instead, he sent the vehicle to Cartronics who performed the repair and invoiced Mr Mather $555.45.
[21] Applying Acquired Holdings, Mr Mather is not entitled to now recover those costs from Mr Eskerie. Mr Mather did not give Mr Eskerie the opportunity to first repair the faults.

Mr Mather can recover his reasonable transport and assessment costs

[22] Under s 18(4) of the Act, Mr Mather is entitled to recover any loss or damage resulting from the fuel pump fault, which was reasonably foreseeable as liable to result from the failure.
[23] I am satisfied that it was a reasonably foreseeable consequence of the fuel pump fault that Mr Mather would need to arrange alternative transportation from Coopers Beach to Auckland. The question I must then consider is whether it is reasonable for Mr Mather to recover the costs he claims to have incurred.
[24] Mr Mather says he spent $100 catching a taxi from Coopers Beach to Kaitaia, where he hired a rental car. Mr Mather has provided no receipts or other documentary evidence to prove the cost of this taxi fare. As a result, I have insufficient evidence from which to be satisfied that this cost was incurred, so I decline to make any order that Mr Mather should be compensated for that amount.
[25] I am satisfied that Mr Mather incurred cost in hiring a rental car to drive to Auckland on 23 February 2017. Mr Mather provided a receipt to show he paid Northland Rentals $374 for that rental car. Mr Mather is entitled to recover that cost.
[26] Mr Eskerie submitted that there were other, potentially cheaper alternatives available to Mr Mather, such as catching a bus or returning to Auckland in the vehicle transporter that carried the broken down vehicle. That may well be the case, but I am satisfied the Mr Mather’s choice to use a rental car was a reasonable one in the circumstances, given he was travelling with a companion and had five or six pieces of luggage to transport back to Auckland. Mr Mather is entitled to recover the cost of hiring the rental car.
[27] Mr Mather is also entitled to recover the cost of having the fault with the fuel pump assessed by Cartronics on 3 March 2017. The $172.50 Mr Mather spent to have the fault assessed is an amount recoverable under s 18(4) of the CGA – it is cost that is a reasonably foreseeable consequence of the fuel pump fault.

Did Mr Eskerie mislead Mr Mather about the vehicle’s WOF?

[28] Mr Eskerie represented that the vehicle had a current WOF when it was sold to Mr Mather. The Consumer Information Notice provided to Mr Mather at purchase stated that the vehicle had a current WOF. The vehicle also had a WOF sticker on its windscreen, which stated that the WOF did not expire until 12 May 2017.
[29] I am satisfied that the vehicle did not have a current WOF when it was sold to Mr Mather. The WOF sticker on the vehicle had been issued for a different vehicle altogether, and placed on the vehicle’s windscreen. Mr Eskerie denied placing the WOF sticker on the vehicle, and says that the sticker was there when he acquired the vehicle. Mr Eskerie says that he thought the vehicle had a valid WOF when he sold it to Mr Mather.
[30] The question I must then consider is whether Mr Eskerie’s conduct in representing that the vehicle had a WOF breaches s 9 of the FTA, which states:

“9 Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

[31] The appropriate approach to determining whether conduct is misleading and deceptive has been considered by the Supreme Court in Red Eagle Corporation Ltd v Ellis.[2] The judgment of the Court was delivered by Blanchard J:

“It is, to begin with, necessary to decide whether the claimant has proved a breach of s 9. That section is directed to promoting fair dealing in trade by proscribing conduct which, examined objectively, is deceptive or misleading in the particular circumstances. Naturally that will depend upon the context, including the characteristics of the person or persons likely to be affected. Conduct towards a sophisticated businessman may, for instance be less likely to be objectively regarded as capable of misleading or deceiving such a person than similar conduct directed towards a consumer or, to take an extreme case, towards an individual known by the defendant to have intellectual difficulties ... The question to be answered in relation to s 9 in a case of this kind is accordingly whether a reasonable person in the claimant’s situation – that is, with the characteristics known to the defendant or of which the defendant ought to have been aware – would likely have been misled or deceived. If so, a breach of s 9 has been established. It is not necessary under s 9 to prove that the defendant’s conduct actually misled or deceived the particular plaintiff or anyone else. If the conduct objectively had the capacity to mislead or deceive the hypothetical reasonable person, there has been a breach of s 9. If it is likely to do so, it has the capacity to do so. Of course the fact that someone was actually misled or deceived may well be enough to show that the requisite capacity existed.”

[32] Mr Eskerie’s conduct in representing that the vehicle had a current WOF is misleading in breach of s 9 of the FTA. The vehicle did not have a current WOF.

What remedy is Mr Mather entitled to under the FTA

[33] Under s 43(3)(f) of the FTA, Mr Mather is entitled to recover the amount of any loss or damage suffered as a result of Mr Eskerie’s misleading conduct.

What costs did Mr Mather incur?

[34] On 21 April 2017 the vehicle failed a WOF inspection, due to the following faults:

• (a) Broken taillight.
• (b) Insecure spare wheel.
• (c) Leaking power steering pump.
• (d) All brake pads were worn.
• (e) Missing bonnet hinges.
• (f) The aim of the headlamps was not straight.

[35] Mr Mather had these faults repaired by an associate, who did not charge Mr Mather for his services. Mr Mather incurred $122.47 in purchasing parts from Supercheap Auto, Repco and Pick-a-Part to perform those repairs. Mr Mather is entitled to recover those costs under s 43(3)(f) of the FTA.

Conclusion

[36] The vehicle had a fault with its fuel pump that breached the acceptable quality guarantee in s 6 of the CGA. However, Mr Mather repaired that fault without first giving Mr Eskerie an opportunity to do so. As a result Mr Mather is not entitled to recover the cost of that repair.
[37] Mr Mather is however entitled to recover the cost of hiring a rental car to travel to Auckland from Coopers Beach, and the cost of having the fuel pump fault assessed.
[38] Further, Mr Mather was misled into believing that the vehicle had a current WOF when it did not. Mr Mather is entitled to recover the cost of performing all repairs necessary for the vehicle to then obtain a WOF.
[39] The Tribunal therefore orders that Mr Eskerie must, within five working days of the date of this decision, pay $668.97 to Mr Mather.

DATED at AUCKLAND this 20th day of July 2017

B.R. Carter
Adjudicator

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[1] Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2007) 8 NZBLC 102,107.

[2] Red Eagle Corporation Ltd v Ellis [2010] NZLR 492.