Rani v Motorco Limited Reference No. MVD 152/2018 [2018] NZMVDT 145 (26 June 2018)

Last Updated: 16 July 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2018] NZMVDT 145 Reference No. MVD 152/2018
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	MONU RANI
		Purchaser
	AND	MOTORCO LTD
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Haynes, Assessor
HEARING at Auckland on 30 May 2018
DATE OF DECISION 26 June 2018
APPEARANCES
M Rani, Purchaser S S Sidhu, Witness for the Purchaser
S Browning, for the Trader

ORDERS

1. Monu Rani’s application to reject the vehicle is dismissed.

DECISION

[1] The vehicle has, or has had, four faults — a faulty oil level sensor, an oil leak from the cam sensor, an undiagnosed fault that caused the oil level warning light to illuminate and significant engine damage to the vehicle.
[2] The vehicle’s faulty oil level sensor, the oil leak from the cam sensor and the undiagnosed fault that caused the oil level warning light to illuminate breached the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the Act).
[3] The significant engine damage does not breach the acceptable quality guarantee. Ms Rani continued to drive the vehicle for a significant distance after the oil level warning light illuminated, meaning there is a real risk that her continued use of the vehicle caused the damage to the engine.

REASONS

Introduction

[4] On 7 July 2017, Ms Rani purchased a 2008 BMW 320i for $14,500 from Motorco Ltd. The vehicle had an odometer reading of approximately 42,000 km at the time of sale.
[5] Shortly after purchase, the vehicle’s oil level warning light illuminated. Motorco Ltd identified and rectified an oil level sensor fault and an oil leak from the cam sensor. The vehicle’s oil level warning light continued to illuminate and the vehicle has now suffered significant engine damage.
[6] Ms Rani has rejected the vehicle and seeks to recover the purchase price. Motorco Ltd accepts that the vehicle now has significant engine damage. However, it claims that the engine damage was caused by Ms Rani continuing to drive the vehicle for a considerable time after the vehicle’s oil level warning light illuminated, causing the damage to the engine.

The Issues

[7] The issues that arise from this background are:

• (a) Does the vehicle have a fault that breaches the acceptable quality guarantee in s 6 of the Act?
• (b) If so, what remedy is Ms Rani entitled to under 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.

(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.

[10] In considering whether or not goods meet the guarantee of acceptable quality, the Tribunal must consider the quality elements 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 Ms Rani’s subjective perspective.
[11] The evidence shows that the vehicle has, or has had, four faults — a faulty oil level sensor, an oil leak from the cam sensor, an undiagnosed fault that caused the oil level warning light to illuminate and significant engine damage to the vehicle.

The oil level sensor fault and oil leak from the cam sensor

[12] Shortly after purchasing the vehicle, Ms Rani noticed the vehicle’s oil level warning light illuminate. She returned the vehicle twice to Motorco Ltd for it to perform repairs, and in August 2017, to Ebisu.nz Compliance, Motorco Ltd’s mechanic. Ebisu.nz Compliance’s invoice of 28 August 2017 notes that it diagnosed and checked the vehicle for an oil leak, subsequently found no oil leak, but discovered that the oil level sensor was not reading the oil level properly and required replacement.
[13] The statement in the invoice that the vehicle had no oil leak is contradicted by a job card from Ebisu.nz Compliance dated 18 August 2017, which states that the vehicle also had a small oil leak from its cam sensor. Ebisu.nz Compliance replaced the cam sensor oil seals to rectify that leak.
[14] I am satisfied that the faulty oil level sensor and oil leak from the cam sensor means the vehicle was not of acceptable quality for the purposes of s 6 of the Act. A reasonable consumer would not expect a vehicle of this price, age and mileage to develop such faults so shortly after purchase.

The undiagnosed fault that caused the oil level warning light to illuminate

[15] Following the repair conducted by Ebisu.nz Compliance, the vehicle’s oil level warning light continued to illuminate.
[16] Mr Haynes, the Tribunal’s Assessor, advises that the oil level warning light indicates an underlying fault with the vehicle. Mr Haynes says that the oil level warning light does not illuminate for no cause. Mr Haynes says that underlying fault may have been minor and easily repairable (such as a faulty sensor or a minor electrical issue), or it may have been much more serious (such as a significant oil leak or an internal fault with the engine that caused the vehicle to consume excessive amounts of oil). Mr Haynes advises that there is now no way of determining the true nature and extent of the fault that caused the oil level warning light to illuminate because Ms Rani did not have the fault assessed before the engine seized, and now that the engine is seized, the fault cannot be diagnosed.
[17] Although I do not know the true nature and extent of the fault that caused the oil level warning light to illuminate, I am satisfied that it was a fault that breached the acceptable quality guarantee in s 6 of the Act. A reasonable consumer would not expect a fault that causes the vehicle’s oil level warning light to illuminate to be present in a vehicle of this price, age and mileage so shortly after purchase.

The significant engine damage

[18] On 23 November 2017, the vehicle broke down. Ms Rani says the vehicle simply stopped working and when the vehicle was towed away she noticed a significant amount of oil on the ground where the car had come to a stop. The vehicle has since been assessed by Motorco Ltd, who found that the vehicle’s engine has seized and requires replacement.
[19] This is a significant fault that would ordinarily amount to a breach of the acceptable quality guarantee in s 6 of the Act. However, Motorco Ltd alleges that the engine damage does not breach the acceptable quality guarantee because the damage was caused by Ms Rani continuing to drive the vehicle after the oil level warning light had illuminated. It says that the significant engine damage would have been avoided if Ms Rani had not continued to drive the vehicle.

Did Ms Rani cause or contribute to the damage to the vehicle?

[20] Under s 7(4) of the Act, the engine damage will not breach the acceptable quality guarantee if it was caused by the vehicle being 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”. Accordingly, given the allegation that Ms Rani has continued to drive the vehicle while its oil level warning light was illuminated, I must consider whether Ms Rani caused the engine damage by continuing to drive the vehicle after the vehicle’s oil level warning light had illuminated.
[21] Mr Haynes advises that a vehicle’s oil level warning light is intended to warn the driver of a vehicle that the oil levels are low and immediate steps need to be taken to rectify those low oil levels. As noted above, Mr Haynes says that the underlying fault that causes the light to illuminate may be minor, but it should nonetheless be immediately assessed, and if necessary, rectified. Mr Haynes advises that failure to heed an oil level warning light can lead to significant damage to the vehicle.
[22] Taking account of Mr Haynes’ advice, I consider that, if Ms Rani has continued to drive the vehicle for any significant distance after the oil level warning light has illuminated, there is a real risk that her continued use of the vehicle has caused the damage to the engine.
[23] Ms Rani says that she did not drive the vehicle for any considerable distance after the oil level warning light illuminated. She says that after the vehicle was returned to her in August 2017 following the repair by Ebizu.nz Compliance, she did not drive the vehicle again until November 2017 because she had travelled to India for a holiday. She says that the oil level warning light illuminated shortly after she began driving the vehicle again and that she contacted Motorco Ltd, but she continued to drive the vehicle because the oil level warning light went off. She says she did not drive the vehicle for long distances during this time.
[24] Motorco Ltd has quite a different story to tell. It says that Ms Rani drove the vehicle for much longer than she now admits after becoming aware that the oil level warning light was continuing to illuminate. Motorco Ltd says that Ms Rani advised it that she drove the vehicle shortly after it was returned to her in August 2017 and noticed the oil level warning light illuminate. Motorco Ltd says that Ms Rani advised that she then continued to drive the vehicle with the oil level warning light illuminated because she was too busy to bring the vehicle into Motorco Ltd to have the issue diagnosed and repaired. Motorco Ltd says that Ms Rani then continued to drive the vehicle until its engine seized.
[25] I do not accept Ms Rani’s evidence that she has barely driven the vehicle since it was returned to her in August 2017. I note that the vehicle’s odometer reading at the time it broke down was 51,253 km, approximately 9,200 km more than the odometer reading at the date of purchase. On Ms Rani’s evidence, she would have travelled the bulk of that 9,200 km in the first six weeks of her ownership. I find it highly unlikely that Ms Rani travelled that distance in such a short time (the equivalent of approximately 220 km per day). Instead, I consider it much more likely that, as alleged by Motorco Ltd, Ms Rani has continued to use the vehicle extensively after August 2017, which explains the high mileage travelled in the four months between purchasing the vehicle and its engine seizing.
[26] I also consider it likely that Ms Rani has driven the vehicle while the oil level warning light has been illuminated. In her evidence, she admitted that the oil level warning light illuminated in November 2017, some time before the engine seized. Ms Rani says she continued to drive the vehicle because the oil level warning light then turned off. I also note an email from Ms Rani dated 27 December 2017, where Ms Rani advised Motorco Ltd that the “car keep on showing the same light” after the vehicle had been with Motorco Ltd for 10 days (which I understand to be the period between 18 and 28 August 2017 when Ebizu.nz Compliance repaired the vehicle). This email supports Motorco Ltd’s allegation that Ms Rani drove the vehicle for much longer than she now admits after becoming aware that the oil level warning light was continuing to illuminate.
[27] I am therefore satisfied that Ms Rani continued to drive the vehicle for a considerable distance after the oil level warning light illuminated. By continuing to use the vehicle while the oil level warning light was illuminated, a potentially minor fault has become a much more significant fault that has caused the engine to seize. I consider that there is a real likelihood that the significant engine damage could have been avoided if Ms Rani had stopped using the vehicle once the oil level warning light illuminated and had the underlying fault diagnosed and repaired. She did not do that, and instead continued to drive the vehicle until it seized.
[28] Consequently, applying s 7(4) of the Act, I am not satisfied that the significant engine damage is a defect that breaches the acceptable quality guarantee in s 6 of the Act. Instead, I consider it likely that the damage was caused by Ms Rani’s continued driving of the vehicle, and so Ms Rani is not entitled to any remedy under the Act in relation to the engine damage.

What remedy is Ms Rani entitled to under the Act?

[29] Because Motorco Ltd has repaired the oil level sensor fault and the oil leak from the cam sensor, Ms Rani is entitled to no further remedy under the Act. Accordingly, her application is dismissed.

DATED at AUCKLAND this 26th day of June 2018

B.R. Carter
Adjudicator