Brocklebank v Dunedin City Motors Limited Reference No. MVD 098/2018 [2018] NZMVDT 182 (1 August 2018)

Last Updated: 17 September 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2018] NZMVDT 182
Reference No. MVD 098/2018

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN STEPHEN JOHN BROCKLEBANK

Purchaser

AND DUNEDIN CITY MOTORS LIMITED

Trader

MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

R C Dixon – Assessor

HEARING at Christchurch on 12 July 2018

DATE OF DECISION 1 August 2018
APPEARANCES (All by AVL)

S J Brocklebank, Purchaser
S I Brocklebank, Purchaser's Wife
R J Bain, CEO of Trader
M N Greene, Service Manager of Trader

DECISION

Mr Brocklebank's application is dismissed.

REASONS

Introduction

[1] Stephen Brocklebank purchased a new Ford Territory from Dunedin City Motors in 2014. On two occasions, in 2016 and 2017, the vehicle has had engine running problems. The first time this happened, the vehicle required repairs costing more than $10,000, which were fortunately covered under the new car warranty. The second time, Dunedin City Motors recommended repairs estimated at approximately $23,000, although the vehicle has since been repaired elsewhere for much less.
[2] Although the vehicle is currently operating satisfactorily, Mr Brocklebank no longer trusts it and he is concerned that it will have further problems. He wishes to reject it.
[3] Dunedin City Motors says that the second occurrence of engine problems was caused by contaminated diesel, rather than by any defect with the vehicle itself. For this reason, it denies that Mr Brocklebank is entitled to reject the vehicle or that it is liable to Mr Brocklebank for the cost of any further repairs needed.
[4] The issue that arises in this application is whether the vehicle failed to comply with the guarantee of acceptable quality.

Did the vehicle fail to comply with the guarantee of acceptable quality?

[5] Section 6(1) of the Consumer Guarantees Act 1993 (the Act) provides that "where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality”. According to s 2 of the Act, “goods” includes vehicles.
[6] "Acceptable quality" is defined in s 7 of the Act (as far as is relevant) 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.

[7] Whether a vehicle is of acceptable quality is considered from the point of view of a reasonable consumer who is fully acquainted with the state and condition of the vehicle, including any hidden defects.

The first failure

[8] Mr Brocklebank reported no significant problems with the vehicle in its first two years. In 2016, while the vehicle was still covered by its new car warranty, Mr Brocklebank noticed it was cutting out, idling rough, and would not start. At this stage, the vehicle had travelled 34,527 km.
[9] In October 2016, Mr Brocklebank took the vehicle to Dunedin City Motors, which carried out extensive investigations to find out what was wrong with it.
[10] Dunedin City Motors also observed the vehicle was cutting out and idling rough. It turned the engine off and went to restart it, but the engine would not start. The fault was eventually traced to an internal failure of the fuel pump. Dunedin City Motors does not appear to have reached a definite conclusion as to the cause of the failure. It took a fuel sample and checked for separation and contamination, but found no bubbles at the injector, no diesel in the oil, and no water in the diesel. It appears that, on this occasion, the fuel sample was not sent away for any further analysis.
[11] Dunedin City Motors replaced the fuel pressure sensor, the fuel pump and fuel filter, the exhaust gas recirculation (EGR) valve gaskets, injectors, fuel rail and supply lines. The total cost of these repairs was $10,749.28, which was covered under Mr Brocklebank’s new car warranty.
[12] Further checks on the vehicle were carried out by Dunedin City Motors on 9 December 2016 for blowing excessive smoke, on 22 December 2016 and 17 January 2017 for lights on the dashboard and on 28 June 2017 because the vehicle was going into limp mode. On this last occasion, Dunedin City Motors did not find a fault, but it asked Mr Brocklebank to bring the vehicle back in if it went into limp mode again. After he received the vehicle back, Mr Brocklebank drove it from Dunedin to Wanaka. Before leaving on this journey, Mr Brocklebank filled the vehicle up with diesel at Mobil Forbury on 6 July 2017. He refuelled in Wanaka at Allied Upper Clutha on 8 July 2017 and then travelled back to Dunedin.

The second failure

[13] On 14 July 2017, the vehicle went into limp mode. Mr Brocklebank took it straight back to Dunedin City Motors, where the vehicle remained until January 2018. During this period, Mr Brocklebank was supplied with a loan vehicle.
[14] Again, Dunedin City Motors undertook extensive investigations to find out what had caused the vehicle to go into limp mode. Dunedin City Motors was supported throughout this period by Ford Motor Company of Australia (Ford Australia) through its technical hotline service.
[15] And again, the immediate cause of the problem was diagnosed as an internal failure in the high pressure fuel pump. This time, however, Dunedin City Motors suspected that fuel contamination was the underlying cause of the pump’s failure. It obtained a fuel sample from the filter housing of the pump and found it was contaminated by water. A photograph of the fuel, clearly showing the presence of water, was produced to the Tribunal. Dunedin City Motors showed Mr Brocklebank the contaminated fuel before it was sent away for laboratory testing. J E Paisley and Co tested the fuel sample on 5 October 2017 and concluded that it “failed”, with 1,378 ppm of water in the sample, exceeding the industry standard specification of 200 ppm (maximum) for diesel fuel.
[16] Mr Brocklebank is suspicious about the testing methodology employed by Dunedin City Motors. He questions why it took so long before the fuel sample was tested. He has doubts about how the vehicle was stored, particularly whether there was some way of water getting into the vehicle while it was on Dunedin City Motors’ premises. Dunedin City Motors rejects these criticisms. It produced statements by two of its employees:

• (a) Lindsay Phillips, a senior technician, who described how he drained a sample of fuel from the fuel filter housing to inspect for water in the fuel system. After allowing the sample to settle for the recommended two hours, Mr Phillips said it was very apparent that water was present. This sample was then drained from the vehicle into a new container and was stored until it was sent for independent analysis.
• (b) Wayne Woodward, a service consultant, who stated that the fuel sample was stored in a sealed container at room temperature in a cupboard behind the service reception. Mr Woodward said that the sample was stored there from the time it was drained from the vehicle until it was sent for analysis.

[17] Dunedin City Motors rejects Mr Brocklebank’s suggestion that there was further water ingress into the vehicle's fuel system after he had brought it in for investigation. I agree that, without more evidence, Mr Brocklebank has not been able to establish any basis for his suspicions to be confirmed.
[18] On the basis of its investigations and the analysis completed by J E Paisley and Co, Dunedin City Motors concluded that the vehicle’s problems were caused by fuel contamination. It prepared a service estimate, for replacing components that could be affected, in the sum of $22,972.63. This was prepared to support Mr Brocklebank's insurance claim or a claim against the fuel company from which he had purchased the diesel.
[19] Subsequently, Mr Brocklebank uplifted his vehicle from Dunedin City Motors and took it to John R Milburn Ltd, a diesel engine specialist. John R Milburn scanned the vehicle’s engine control unit and recovered codes P008800 “fuel rail pressure sensor too high” and P226968 which it described on its invoice as “water in fuel sensor malfunction”.
[20] Mr Brocklebank submitted that “water in fuel sensor malfunction” indicates a fault with the fuel sensor rather than any indication of water in the fuel. On this basis, Mr Brocklebank asserted that John R Milburn had not found any evidence of fuel contamination. This assertion was rebutted by Dunedin City Motors. It confirmed that the fault code P226968 refers to “water in fuel condition”, for which the recommended repair is to drain the water from the fuel filter.
[21] John R Milburn reported that it removed the fuel filter, drained fuel from it into a container, finding no signs of water. It refitted the fuel filter and started the engine. The engine started and ran normally but the codes returned after a short idling period. John R Milburn removed and drained the filter again and still found no water present. It checked the fuel supply pressures and found there were some anomalies. John R Milburn purchased a new fuel filter and fitted it. When it started and ran the engine again the common rail pressure stabilised, the vehicle performed satisfactorily on a test drive and there were no further codes. On the basis of these investigations, John R Milburn concluded that the faults had been caused by a blocked fuel filter. It invoiced Mr Brocklebank for these investigations and repairs in the sum of $852.38.
[22] Mr Brocklebank also criticised Dunedin City Motors for failing to implement the instructions given to it by Ford Australia over the technical hotline that it should check the fuel for contamination both before and after the fuel filter. Mr Brocklebank said it appeared that Dunedin City Motors only analysed the fuel after it had passed through the fuel filter.
[23] Dunedin City Motors defended its testing practice on the basis that it is only the fuel after the fuel filter that is likely to cause problems in respect of the operation of the engine. The Tribunal’s Assessor, Mr Dixon, agrees that after the filter is the correct location from which to sample fuel.
[24] Dunedin City Motors is pleased that the relatively simple repairs carried out by John R Milburn appear to have addressed the immediate problem. Indeed, Mr Brocklebank has continued to use the vehicle and has now travelled approximately 50,000 km in it since new. However, Dunedin City Motors’ recommendation is that the injectors, fuel rail and supply lines should be replaced again, in a repeat of the repairs carried out in 2016. This suggests that further expensive repairs are required, although not of the magnitude of the $23,000 estimate that Dunedin City Motors prepared for Mr Brocklebank's possible claim against his insurer or the fuel company.
[25] In its oral submissions, Dunedin City Motors said it now considers that the original fault back in 2016 may also have been the result of water contamination of the diesel as well, although its investigations at the time did not reveal that there was any water present in the diesel that was extracted from the vehicle. However, on that occasion, the fuel sample was not sent away for laboratory testing.
[26] As discussed, the repairs carried out in 2016 were covered under Mr Brocklebank’s new car warranty. However, Dunedin City Motors pointed out that if fuel contamination had been established in respect of the first failure, Mr Brocklebank would not have been covered under his new car warranty. Dunedin City Motors submitted that it was not aware of any other similar problems in relation to other Ford Territory vehicles it had sold or serviced. It maintains its conclusion that the problems in Mr Brocklebank’s vehicle have been caused by diesel contamination, rather than by any fault with the vehicle.
[27] Mr Brocklebank has attempted to recover his losses from the fuel company from which he had purchased fuel immediately before the vehicle went into limp mode in July 2017. A letter from Allied Petroleum Limited, which supplied the fuel at the Wanaka petrol station from which Mr Brocklebank purchased fuel on 8 July 2017, denied that there was any contamination issue at its site and denied any liability in respect of Mr Brocklebank’s claim. It is unclear whether Mr Brocklebank intends to pursue this claim any further.

Assessment

[28] Mr Dixon advised that the most likely cause of the failure that has led to the vehicle going into limp mode and requiring expensive repairs is diesel that has been contaminated with water. Mr Dixon explained that the fuel filter absorbs moisture and it is only when the filter becomes full or blocked that a problem will become apparent. This can lead to a delay between filling the car with fuel and the problem being recognised. Mr Dixon considers that this delay can also make it difficult to pinpoint the source of the contaminated fuel. In other words, it may not have been Mr Brocklebank's most recent refuelling that led to the problem. Mr Dixon considers that the fuel filter in Mr Brocklebank’s vehicle would initially have done its job in protecting the engine from the water-contaminated fuel. However, the filter has eventually become blocked with water, preventing the diesel from getting through. Mr Dixon therefore considers that fuel contamination is the most likely scenario rather than a fault with the vehicle itself. I accept Mr Dixon's analysis.

Conclusion

[29] It follows that there has been no breach of the guarantee of acceptable quality in respect of Mr Brocklebank’s vehicle and his application must therefore be dismissed.

J S McHerron
Adjudicator