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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 17 September 2018
BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
[2018] NZMVDT 192
Reference No. MVD 256/2018
IN THE MATTER of the Motor Vehicle Sales Act 2003
AND
IN THE MATTER of a dispute
BETWEEN SEAN PETER DOLLIMORE AND CHELSEA (HOPE) DOLLIMORE
Purchasers
AND UNDERPRICED CARS LIMITED
Trader
MEMBERS OF TRIBUNAL
J S McHerron, Barrister – Adjudicator
D Binding – Assessor
HEARING at Wellington on 16 August 2018
DATE OF DECISION 21 August
2018
APPEARANCES
S P Dollimore and C H Dollimore, Purchasers (by AVL)
C J Esler, Manager
of Trader
DECISION
REASONS
Introduction
[1] Sean Dollimore and Chelsea (Hope) Dollimore purchased a 2005 Toyota Corolla for their daughter’s 18th birthday. The trader, Underpriced Cars Ltd, arranged for the vehicle to be shipped from Wellington to Picton. When it arrived, the purchasers discovered it was damaged. They rejected the vehicle, but Underpriced Cars has refused to accept their rejection, offering instead to arrange for the vehicle to be repaired.
[2] The following issues arise:
- (a) Did the vehicle fail to comply with the guarantee of acceptable quality?
- (b) Was the failure of a substantial character?
- (c) Are the purchasers entitled to reject the vehicle?
Issue one: Did the vehicle fail to comply with the guarantee of acceptable quality?
[3] 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.
[4] "Acceptable quality" is defined in s 7 of the Act (as far as is relevant) as follows:
- 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.
[5] 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.
[6] On 17 May 2018, Mr and Ms Dollimore contacted Underpriced Cars about a Toyota Corolla from its stock that they were interested in buying for their daughter’s upcoming 18th birthday. They found the vehicle on Trade Me and took screen shots of the Trade Me listing for further reference. They checked the name of the trader to make sure it was a registered motor vehicle trader and a registered company.
[7] Later that day, Mr and Ms Dollimore confirmed to Chris Esler, Underpriced Cars’ Manager, that they wished to buy the car. Mr Esler told Mr and Ms Dollimore that he was away in Auckland but would send the paperwork through to them. In the meantime, Mr Esler confirmed that they should pay the purchase price in full in order to secure the car. Mr Esler advised he would not be back from Auckland until 25 May 2018 and that the vehicle would be sent to them on a ship that day.
[8] On 18 May 2018, Mr and Ms Dollimore paid Underpriced Cars the purchase price in full plus $140 for shipping, making a total of $4,140. Three days later, on 21 May, Mr Dollimore enquired with Mr Esler whether he had booked the car to come over on the ship. Mr Esler replied on 22 May saying the vehicle was “booked on but the ship isn’t confirmed. Planning to have it there Saturday night”. Mr Dollimore made further enquiries with Mr Esler about the expected arrival of the car, which went unanswered. He asked on 26 May whether the vehicle was going to be on the ferry that night. Mr Esler replied “Yes. Just not sure which time it’s going over yet. I’ll get back to you soon when I know”.
[9] However, on 27 May 2018, Mr Esler texted Mr Dollimore to say that, while he had been away, someone had attempted to break into Underpriced Cars’ warehouse and had jammed the warehouse door. Mr Esler said he could not get the door open and was waiting for the building owner to arrive to sort it out.
[10] By this stage, Mr and Ms Dollimore were becoming suspicious. Mr Dollimore texted to say that if the vehicle did not arrive that day (Sunday 27 May 2018), he would like his money back. He stated in his text (verbatim):
... It was meant to come on the Friday boat, then the Saturday boat and now it is Sunday and we have still not received the vehicle or information that it has been booked. I am a pretty understanding guy and if you just communicated with me I would of understood, your lack of communication is frustrating. I would like to receive information about that car being booked within 2 hours or I will start the proceeds in getting my money back, I hope you understand why I am feeling frustrated
[11] On Monday 28 May 2018, Mr Esler apologised for his lack of communication but explained that he had twelve cars that needed to go that, because of the jammed door, were stuck. He promised that, as soon as the issue was sorted, Mr and Ms Dollimore’s vehicle would be “first to go”.
[12] Finally, on Wednesday 30 May 2018, Mr Esler confirmed that the vehicle was on the 8.00 pm ship that night and would be available for collection at Picton from 8.00 am on Thursday, 31 May.
[13] The vehicle duly arrived on 31 May 2018, just in time for Mr and Ms Dollimore’s daughter’s birthday. However, when Mr Dollimore collected the vehicle from the shipping depot in Picton, he immediately realised that it was damaged. Assuming the vehicle had been damaged in transit, Mr Dollimore notified Strait Shipping and filled in a damage report describing damage to the front right headlight and skirt. Just after 9.00 am on 31 May, Mr Dollimore texted Mr Esler, as follows:
I have the car and it's damaged did you know the front right light was smashed and the right front skirt was smashed cause it doesn’t show that in your photo
[14] Mr Esler responded, asking Mr Dollimore to send him a photo. But he did not answer Mr Dollimore's question whether he knew about the damage.
[15] Mr and Ms Dollimore arranged for the vehicle to be inspected by their local mechanic. The mechanic assessed the damage and told them it would cost a fair amount to fix. Ms Dollimore emailed Mr Esler at just after 10.30 am on 31 May 2018 to say that the vehicle has had a "very good hit", with damage including:
- the whole front skirt;
- the right front light (including brackets);
- the right front tyre, wheel rim and wheel arch;
- a side panel; and
- a chip in the windscreen.
[16] Ms Dollimore informed Mr Esler that there would be two insurance companies looking into this (the shipping company's as well as their own), plus the shipping staff in Picton said there would be other reports lodged as well.
[17] Mr and Ms Dollimore submitted that the mechanic had told them that the vehicle was unsafe because of the damage to the wheel rim and tyre. They were advised not to drive the vehicle until repairs had been carried out. Mr and Ms Dollimore produced photographs of the damage so the Tribunal could see it for itself.
[18] Mr Esler replied promptly that he would “sort it out”. Ms Dollimore asked Mr Esler to confirm whether he knew the vehicle was like this when he sent it. Mr Esler evaded answering that question, simply stating that, as the Dollimores had not taken delivery, it was Underpriced Cars’ responsibility. He said in his email that he would contact Strait Shipping and sort it out.
[19] Indeed, Mr Esler advised Strait Shipping on 31 May 2018 that Underpriced Cars would fix the damage and that no claim would be made against the shipping company. Mr Esler then emailed Ms Dollimore to say that he had already ordered a replacement headlight and that he was waiting to hear back from panel beaters in her area. He asked for information about the tyre size and speed rating and said he would get a wheel sorted too.
[20] Ms Dollimore responded to ask whether it would “just be best to get our money back, we send the car back and then you can fix it at your leisure". She explained that it had been a long process already and that her daughter was moving away to study in two weeks and needed a car. Ms Dollimore said that if Mr Esler had told her and Mr Dollimore that the vehicle had been crashed beforehand they could have arranged to buy something else. They would never have agreed to purchase the vehicle if they had known it had been crashed. Ms Dollimore said that while she was not wanting to “make this hard, I just think it would be fair to return our money and return the car to you and part ways, then you can arrange all the fixing at your end”.
[21] Ms Dollimore sent another email to Mr Esler on Friday 1 June 2018 just before 8 am. She had reflected on the matter overnight and decided that she would give Mr Esler two options. The first was to allow Ms and Mr Dollimore to contact their insurance company and arrange repairs through it. The second option was a refund so she could find her daughter a suitable car in time for her departure to university. Ms Dollimore explained that she would prefer the second option, to get her money back, but she was going to check with Consumer Protection to see whether she was obliged to give Underpriced Cars the right to fix the vehicle. She pleaded with Mr Esler to do the right thing and make it easy for both her and Mr Dollimore.
[22] Undeterred, Mr Esler responded that he had already purchased a brand-new headlight and wheel. He claimed to have told the shipping company that Underpriced Cars would “sort it as insurance takes a long time”.
[23] In the meantime, Ms and Mr Dollimore’s position hardened. They took advice from Trade Me, their insurance company, Consumer Protection, the Registrar of Motor Vehicle Traders, and Citizens Advice. Ms Dollimore explained to Mr Esler that she was getting “absolutely sick of going backwards and forwards to you and we have a deadline that we have to have a car within two weeks”. Ms Dollimore said that “we want our money back and the car will be returned to you”. She asserted that Underpriced Cars had falsely advertised the car by not disclosing it had damage and that it had been in an accident. She indicated that the car could not be driven because of the wheel and that it was a safety risk for an 18-year-old girl to drive. She asked Mr Esler to deposit the money into her and Mr Dollimore’s bank account. Once this had been done she offered to send the vehicle back on the ferry at her and Mr Dollimore's cost.
[24] Mr Esler replied that he was “not going to argue with your accusations”. He agreed that the vehicle should be of acceptable quality, which was why Underpriced Cars was prepared to repair it. He indicated the vehicle would be repaired before the end of the following week.
[25] Ms Dollimore replied that she did not accept Mr Esler's terms and that the advice she had been given that morning was that she did not have to agree to them. Mr Esler responded that his advice was that Underpriced Cars, as the retailer, has the right to repair, replace, or refund the price of, the vehicle.
Assessment
[26] There was no dispute that the vehicle did not comply with the guarantee of acceptable quality. It has reasonably extensive damage to its front right quarter, including a buckled wheel rim, a badly cracked tyre, a scrape along the front right corner, a damaged headlight, damaged wheel surround and headlight surround and a missing vent on the front right of the vehicle.
[27] Mr and Ms Dollimore observed that the hub caps on the vehicle they received were different from those shown in the Trade Me photo. They had noticed that the Trade me photo showed that the right front hubcap had ten spokes. However, the right front hub cap on the vehicle as it arrived has only 7 spokes. The new hub cap is undamaged, despite the wheel rim being severely dented, suggesting the hub cap was replaced after the damage occurred. The switched hub cap, and Mr Esler’s evasive responsive to their direct questions as to whether he knew about the damage before sending the vehicle to them, made them extremely suspicious that he knowingly sent a vehicle to them that had been badly damaged in an accident without disclosing that to them.
[28] In the hearing, I asked Mr Esler to confirm whether the vehicle had been damaged before it was sent to Mr and Ms Dollimore. He maintained his position that the vehicle was damaged while in transit to them. However, he was unable to provide a satisfactory explanation for why the hub caps on the vehicle had been changed. This led him to admit in the hearing that the vehicle’s wheel and tyre had probably been damaged prior to the vehicle being sent to the Dollimores.
[29] I consider that Mr and Ms Dollimore were right to be highly suspicious of Mr Esler’s representations about this vehicle. In my view, it was likely that the vehicle was badly damaged before he sent it to them. Mr Esler admitted the wheel and tyre were damaged beforehand. I think it is likely that all of the damage was present before the vehicle was put on the ship. Mr Esler appears to have intended to mislead Mr and Ms Dollimore into thinking the damage had occurred while the vehicle was in transit. Mr Esler's failure to disclose the pre-existing damage to the vehicle fundamentally betrayed the trust that they expected to have in a registered motor vehicle trader. I accept their submission that they would never have proceeded with the transaction if they had known that the vehicle was damaged prior to it being sent to them.
[30] Mr Binding, the Tribunal’s Assessor, and I both accept that Mr and Ms Dollimore have shown that the vehicle was not as safe, nor as free from minor defects, nor as acceptable in appearance and finish, nor as fit for purpose, as a reasonable consumer would regard as acceptable, even in light of its relatively low price. As mentioned, I did not take Mr Esler to contest this finding. Underpriced Cars did not dispute that the vehicle is not of acceptable quality.
Conclusion on issue one
[31] I conclude that the vehicle failed to comply with the guarantee of acceptable quality in s 6 of the Act.
Issue two: Was the failure of a substantial character?
[32] A failure to comply with the guarantee of acceptable quality will be considered to be of a “substantial character” if it meets any one of the criteria set out in s 21 of the Act, which provides:
- Failure of substantial character
For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where—
(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or
(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or
(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.
[33] Mr and Ms Dollimore submitted that they were told by their mechanic that they should not give the vehicle to their daughter because, in its present condition, it was unsafe, particularly due to the damage to the wheel rim and tyre. Mr Binding agreed with this assessment. The vehicle needs immediate repairs before it could be regarded as being roadworthy. When I put it to Mr Esler that the vehicle was unsafe in its present condition he did not disagree.
[34] Accordingly, I conclude that the failure of this vehicle to comply with the guarantee of acceptable quality was of a substantial character in accordance with s 21(d) of the Act because the vehicle is unsafe. In addition, I consider that Mr and Ms Dollimore have established that s 21(a) of the Act applies. They have persuaded me that this vehicle would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the damage present on delivery.
Conclusion on issue two
[35] I conclude that the vehicle’s failure to comply with the guarantee of acceptable quality was of a substantial character.
Issue three: Are the purchasers entitled to reject the vehicle?
[36] If a failure can be remedied, the consumer must require the supplier to remedy the failure within a reasonable time.[1] However, where a failure is of a substantial character within the meaning of s 21, the consumer is entitled to reject the vehicle.[2] As I have found that the failure is of a substantial character, the option to reject the vehicle is available to Mr and Ms Dollimore. That option must be exercised in the manner provided in s 22 of the Act which requires the consumer to notify the supplier of the decision to reject the vehicle and the grounds for rejection. This requirement was met by Ms Dollimore emailing Mr Esler on 1 June 2018 to notify Underpriced Cars of her decision to reject the vehicle and the reasons why.
Conclusion on issue three
[37] I reject Mr Esler’s submission that he is entitled to repair the vehicle. Instead, I uphold Mr and Ms Dollimore's rejection of the vehicle.
Conclusion
[38] I order Underpriced Cars Ltd to refund Mr and Ms Dollimore the full purchase price, including freight, $4,140, within 14 days of the date of this decision. They are not entitled to recover their costs of insuring the vehicle as that is not an expense "resulting from the failure" of the vehicle.[3] Once it has paid this amount in full, Underpriced Cars Ltd must promptly collect the vehicle at its expense.
[39] If Underpriced Cars Ltd fails to comply with this decision, Mr and Ms Dollimore may request a telephone conference for the Tribunal to consider whether any further steps are required.
J S McHerron
Adjudicator
[1] Consumer Guarantees Act 1993, s 18(2)(a).
[2] Section 18(3)(a).
[3] Section 18(4).
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