Patel v Holdens R Us Limited Reference No. MVD 209/2018 [2018] NZMVDT 176 (30 July 2018)

Last Updated: 17 August 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2018] NZMVDT 176 Reference No. MVD 209/2018
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	ZANKAR PATEL
		Purchaser
	AND	HOLDENS R US LTD
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Haynes, Assessor
HEARING at Auckland on 24 July 2018
DATE OF DECISION 30 July 2018
APPEARANCES
Z Patel, Purchaser
C Haley, for the Trader

ORDERS

1. Holdens R Us Ltd shall, within 10 working days of the date of this decision, pay $600 to Mr Patel.

DECISION

[1] The vehicle had a blown head gasket that breached the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the Act).
[2] Holdens R Us refused to rectify the fault. Under s 18(2)(b)(i) of the Act, Mr Patel is entitled to recover the reasonable cost of rectifying the fault from Holdens R Us.

REASONS

Introduction

[3] On 17 April 2018, Mr Patel purchased a 1995 Mitsubishi Chariot, registration number BLG630, from Holdens R Us for $900. The vehicle had an odometer reading of approximately 260,000 km.
[4] In online marketing, Holdens R Us describe the vehicle as “nice car runs well”. The vehicle overheated immediately. The day after purchase, Mr Patel had the vehicle assessed by Jain Motors Ltd, who determined that the vehicle had a blown head gasket. Holdens R Us refused to rectify the fault, so Mr Patel has repaired the vehicle at his expense. Mr Patel now seeks to recover the cost of that repair.
[5] Holdens R Us says that the vehicle was a cheap, “as is, where is”, end of life vehicle with an unknown service history and a suspect radiator. It says that it recommended that Mr Patel not drive the vehicle long distances because it was not suitable for this use. It also doubts that the vehicle has suffered the head gasket damage alleged by Mr Patel and suspects that Mr Patel is simply trying to obtain cash from it.
[6] Mr Patel also sought to allege that the vehicle has a fault with its steering. That allegation was not included in Mr Patel’s application and he has provided no evidence to support this allegation. Accordingly, I declined to consider that aspect of Mr Patel’s claim and he will have to file a separate application, together with supporting evidence, if he wants the Tribunal to consider those matters.

The Issues

[7] Against this background, the issues requiring consideration in this case are:

• (a) Does the vehicle have faults that breach the acceptable quality guarantee in s 6 of the Act?
• (b) Did Holdens R Us refuse to rectify the head gasket fault?
• (c) If so, what remedy is Mr Patel entitled to under the Act?

Does the vehicle have faults that breach 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 Mr Patel’s subjective perspective.
[11] The vehicle overheated on the day Mr Patel purchased it when driven by his friend Devangkumar Patel, and again on the following day when Mr Patel first drove the vehicle. Mr Patel then had the vehicle inspected by Jain Motors Ltd, who diagnosed a blown head gasket and replaced the head gasket at a cost of $890.
[12] Holdens R Us says that the vehicle did not have a blown head gasket. Clive Haley, a Director of the company, says that the information provided by Jain Motors does not prove a blown head gasket. Mr Haley notes that there is no evidence to show that Jain Motors performed any of the usual testing to diagnose a blown head gasket, such as a TK test or cylinder leak down test. Mr Haley also notes that the vehicle was not running roughly, which is a classic symptom of a blown head gasket.
[13] I am satisfied, based on the evidence of Devangkumar Patel, that the vehicle overheated on the day of purchase. I also accept Mr Patel’s evidence that the vehicle overheated again on the following day. Mr Haynes, the Tribunal’s Assessor, advises that a blown head gasket can cause a vehicle to overheat.
[14] The vehicle was then assessed by Jain Motors, who diagnosed a blown head gasket and replaced the head gasket.
[15] Mr Haley questioned whether Jain Motors performed any repair and considered that Mr Patel was simply looking to extract money from him by alleging a fault that did not exist. Mr Haley says that this type of conduct is becoming increasingly common in the lower end of the motor-vehicle market. He claims traders are being targeted by unscrupulous purchasers who allege non-existent faults with an accompanying threat to take proceedings before the Tribunal, in an attempt to obtain an unwarranted cash settlement from the trader.
[16] Although I acknowledge Mr Haley’s submission, and note that the information from Jain Motors is unhelpfully sparse, I am nonetheless satisfied that the vehicle did have a blown head gasket, and that Jain Motors repaired that fault. I am also satisfied that the blown head gasket means the vehicle has not been of acceptable quality. Although a reasonable consumer would have realistic expectations as to the quality and durability of a $900, 23-year-old vehicle that has travelled approximately 260,000 km, I consider that a reasonable consumer would not expect such a vehicle to come with a pre-existing blown head gasket.

Did Holdens R Us refuse to rectify the blown head gasket?

[17] Mr Patel claims that Holdens R U refused to rectify the blown head gasket. Under s 18(2)(b)(i) of the Act, Mr Patel is entitled to recover the cost of repairing the head gasket if Holdens R Us refused to do so. 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), the 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.

[18] I am satisfied that Holdens R Us refused to rectify the blown head gasket. Mr Patel spoke with Mr Haley, who refused to perform repairs. Mr Haley advises that he was suspicious of whether a fault ever existed and was reluctant to provide any remedy without clear evidence of a fault.

What remedy is Mr Patel now entitled to under the Act?

[19] Under s 18(2)(b)(i) of the Act, Mr Patel is entitled to recover the reasonable cost of repairing the blown head gasket. In that regard, Mr Patel seeks to recover $890, being the cost of repairs performed by Jain Motors.
[20] Mr Haley questioned whether Mr Patel ever paid $890 to Jain Motors. I am also satisfied that Mr Patel paid Jain Motors for the repair. After the hearing, Mr Patel provided bank statements to show that Devangkumar Patel had paid Jain Motors and that Mr Patel paid $890 into his friend’s bank account two days later to reimburse him for that expense and that Mr Patel paid Jain Motors for the repair.
[21] Mr Haley also questioned the lack of detail provided in the invoice from Jain Motors, and submitted that a reasonable repair would have cost much less than $890.
[22] Mr Haynes advises that $890 is much more than the reasonable cost of the repairs performed by Jain Motors. Mr Haynes advises that a more reasonable cost is approximately $600, which reflects the cost of replacement parts and six hours labour.
[23] Accordingly, I am satisfied that Mr Patel is entitled to recover $600 from Holdens R Us.

Costs

[24] Mr Patel also seeks to recover $50, being the filing fee for this claim. Under cl 14(1)(a)(ii) and (b) of sch 1 to the Motor Vehicle Sales Act 2003 (the MVSA), the Tribunal may award costs against a party where that party either fails to participate in pre-hearing settlement discussions or, after receiving notice of the hearing, fails to attend without reasonable cause.
[25] Holdens R Us did not settle this matter because it considered that it had a strong defence, and it attended and participated constructively in the hearing. In the circumstances, I am not satisfied that this is a case where I should exercise my discretion to award costs.

Conclusion

[26] The vehicle had a blown head gasket that breached the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the Act). Mr Patel has not proven that the vehicle has any other faults that breach the acceptable quality guarantee.
[27] Holdens R Us refused to rectify the fault. Under s 18(2)(b)(i) of the Act, Mr Patel is entitled to recover the reasonable cost of rectifying the fault from Holdens R Us.
[28] Accordingly, the Tribunal orders that Holdens R Us shall, within 10 working days of the date of this decision, pay $600 to Mr Patel.

DATED at AUCKLAND this 30th day of July 2018

B.R. Carter
Adjudicator