Kathnaur v Auto Biz Limited - Reference No. MVD 360/2017 [2018] NZMVDT 11 (23 January 2018)

Last Updated: 20 February 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2018] NZMVDT 011 Reference No. MVD 360/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	ANIRUDH KATHNAUR
		Purchaser
	AND	AUTO BIZ LIMITED
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 21 December 2017
DATE OF DECISION 23 January 2018
APPEARANCES
Mr A Kathnaur, Purchaser Mr P Collins, for the Trader

ORDERS

1. Anirudh Kathnaur’s application to reject the vehicle is upheld.
2. Auto Biz Limited shall, within 10 working days of the date of this decision, pay $7,610.50 to Mr Kathnaur.

100. Mr Kathnaur must make the vehicle available to be uplifted by Auto Biz Limited.

DECISION

[1] The vehicle has a fault with its number two fuel injector (“the injector fault”) that breaches the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the Act”).
[2] Auto Biz Limited has refused to repair the injector fault, despite being given an opportunity to do so. Accordingly, under s 18(2)(b)(ii) of the Act, Mr Kathnaur is entitled to reject the vehicle and obtain a refund of all money paid in respect of the vehicle.

REASONS

Introduction

[3] On 13 September 2017, Anirudh Kathnaur purchased a 2011 Skoda Octavia, registration number FWP14 for $6,800 from Auto Biz Limited. The vehicle had an odometer reading of 170,469 kms at the time of sale.
[4] Mr Kathnaur began experiencing problems with the vehicle within ten days of purchasing the vehicle. In particular, the vehicle would intermittently lose power. Mr Kathnaur has since discovered that the vehicle has a fault with its number two fuel injector.
[5] Mr Kathnaur has asked Auto Biz to repair the fault. It refused to do so. Mr Kathnaur has now applied to the Tribunal seeking to reject the vehicle and obtain a refund of all amounts paid in respect of the vehicle.
[6] Autobiz says that Mr Kathnaur is not entitled to reject the vehicle, and that it should be given an opportunity to repair the fault.

The Issues

[7] The issues requiring consideration in this case are:

• (a) Does the vehicle have a fault that breaches the acceptable quality guarantee in s 6 of the Act?
• (b) Did Auto Biz refuse to repair the fault?
• (c) What remedy is Mr Kathnaur entitled to under s 18 of the Act?

Does the vehicle have a fault that breaches the acceptable quality guarantee?

[8] 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.
[9] 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.

[10] 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 Mr Kathnaur’s subjective perspective.
[11] Ten days after purchasing the vehicle, Mr Kathnaur had difficulty reversing out of his driveway. He says it took two hours to do so, with the vehicle jerking as it reversed. The vehicle has lost power on several occasions since, including while driving on the motorway.
[12] Mr Kathnaur has had the vehicle assessed by GMB Automotive Services and Giltrap Skoda, both of whom found that the vehicle has a fault with its number two fuel injector. Giltrap Skoda estimated that repairs would cost $1,900.
[13] Mr Gregory, the Tribunal’s Assessor, advises that the fault identified by GMB Automotive Services and Giltrap Skoda is consistent with the symptoms described by Mr Kathnaur. Mr Gregory says that the faulty fuel injector causes the engine to use three cylinders only, causing the engine to become unbalanced, which makes the vehicle jerk, vibrate and cut out.
[14] I am therefore satisfied that the vehicle has a fault with its number two fuel injector. I am also satisfied that this fault breaches the acceptable quality guarantee in s 6 of the Act.
[15] Mr Kathnaur paid $6,800 for a six-year-old Skoda that had travelled 176,438 kms at the time of sale. A reasonable consumer, fully acquainted with the state and condition of the vehicle, would not find this vehicle to be of acceptable quality. I am satisfied that a reasonable consumer would not expect a vehicle of this price, age and mileage to have a faulty number two fuel injector, which will cost $1,900 to repair, so shortly after purchase.

Did Auto Biz refuse to repair the injector fault?

[16] Section 18 of the Act provides:

“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.”

[17] Under s 18(2)(b)(ii) of the Act, Mr Kathnaur is entitled to reject the vehicle if, having been required to remedy the fault, Auto Biz refused to do so.
[18] Mr Kathnaur claims that he is entitled to reject the vehicle under s 18(2)(b)(ii) of the Act because Auto Biz has refused to repair the injector fault. He says that he advised Auto Biz on several occasions that the vehicle was losing power. He then advised Auto Biz that GMB Automotive Services had diagnosed the number two fuel injector fault. Mr Kathnaur says that Auto Biz refused to repair the fault.
[19] Auto Biz says that Mr Kathnaur is not entitled to reject the vehicle. Auto Biz says that there has been a communication breakdown between the company and Mr Kathnaur, but that it is prepared to repair the vehicle.
[20] I do not consider there to have been a communication breakdown between Auto Biz and Mr Kathnaur. I consider that Mr Kathnaur approached Auto Biz on several occasions with concerns about the vehicle, and at no time did Auto Biz repair the fault. Further, I am satisfied that when Mr Kathnaur advised Auto Biz that GMB Automotive had diagnosed the fault with the number two injector, Cirilo Drummond – the Manager of Auto Biz’s Papatoetoe branch - told Mr Kathnaur that it would not repair the fault because Auto Biz considered that Mr Kathnaur had been rude and offensive in his dealings with Peter Collins, a Director of Auto Biz.
[21] Mr Collins denied that Auto Biz refused to repair the vehicle because Mr Kathnaur had been rude and offensive. However, Mr Collins was not involved in the relevant discussion with Mr Kathnaur, and Mr Drummond did not appear at the hearing to give evidence. Accordingly, I prefer the evidence of Mr Kathnaur, who I found to be a reliable and credible witness, with a clear recollection of events and discussions. I am satisfied that he was told by Mr Drummond that the company would not repair the fault because it considered that he had been rude in his dealings with Mr Collins.
[22] The fact that Auto Biz may have thought that Mr Kathnaur was rude in his dealings with it does not provide a defence to Mr Kathnaur’s claim. Auto Biz had an obligation to remedy the injector fault. It refused to do so. Mr Kathnaur is therefore entitled to reject the vehicle under s 18(2)(b)(ii) of the Act.
[23] Under s 23(1) of the Act, having rejected the vehicle, Mr Kathnaur is entitled to recover all amounts paid in respect of the vehicle. Further, under s 18(4) of the Act, Mr Kathnaur is also entitled to recover any loss he has suffered as a result of the injector fault. In that regard, Mr Kathnaur paid $310.50 to have the fault assessed by Giltrap Skoda on 19 December 2017. He is entitled to recover that amount.
[24] Mr Kathnaur also seeks to recover $230, being the cost of a service performed by GMB Automotive, and $83.09, being the cost of registering the vehicle. Mr Kathnaur is not entitled to recover either cost, as neither cost relates to the injector fault.

Conclusion

[25] The vehicle has a fault with its number two fuel injector that breaches the acceptable quality in s 6 of the Act.
[26] Auto Biz has refused to repair that fault. Accordingly, Mr Kathnaur is entitled to reject the vehicle and obtain a refund of all amounts paid in respect of the vehicle. He is also entitled to recover all costs and losses that arise from the fault.
[27] Accordingly, the Tribunal orders that Auto Biz shall, within 10 working days of the date of this decision, pay $7,610.50 to Mr Kathnaur.

DATED at AUCKLAND this 23rd day of January 2018

B.R. Carter
Adjudicator