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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 15 November 2018
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BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
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Reference No. MVD 366/2018
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IN THE MATTER
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of the Motor Vehicle Sales Act 2003
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AND
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IN THE MATTER
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of a dispute
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BETWEEN
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MAX RICHARD HENDRIKS
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Purchaser
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AND
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TURNERS GROUP NZ LTD T/A TURNERS
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Trader
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MEMBERS OF TRIBUNAL
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B R Carter, Barrister – Adjudicator
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S Gregory, Assessor
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HEARING at Hamilton on 27 September 2018
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DATE OF DECISION 8 October 2018
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APPEARANCES
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M R Hendriks, Purchaser
R Hendriks, Witness for the Purchaser
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A Long, for the Trader
M Moran, Witness for the Trader
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ORDERS
DECISION
[1] The vehicle had pre-existing damage to its engine mounts and pre-existing oil leaks that breached the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the Act). Mr Hendriks has not proven that the vehicle has any other faults that breach the acceptable quality guarantee or that Turners promised to replace the vehicle’s front tyres before purchase.
[2] Mr Hendriks is not entitled to reject the vehicle, because the vehicle’s faults are not a failure of a substantial character. However, Mr Hendrix is entitled to have the broken engine mounts and oil leaks rectified. He is also entitled to recover the cost of having the vehicle’s faults assessed.
REASONS
Introduction
[3] On 16 October 2017, Mr Hendriks purchased a 2003 BMW Mini One, registration number FQK132 from Turners for $6,880. The vehicle had an odometer reading of 146,575 km at the time of sale.
[4] Before purchase, Mr Hendriks discovered that the vehicle had broken engine mounts, oil leaks and low tread on its front tyres. He says that Turners agreed to replace the broken engine mounts, rectify the oil leaks and replace the front tyres. In reliance on Turners representations, Mr Hendriks agreed to purchase the vehicle and paid a deposit of $500 for the vehicle.
[5] Turners did not replace the front tyres or rectify the broken engine mounts and oil leaks. Mr Hendriks also alleges that the radiator is now faulty and the engine consumes excessive amounts of oil. He has now rejected the vehicle and seeks to recover the purchase price from Turners.
[6] Turners says that it did not agree to perform the pre-purchase work alleged by Mr Hendriks and submits that the vehicle does not breach the acceptable quality guarantee because it has been as durable as a reasonable consumer would consider acceptable.
The Issues
[7] 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) Are the faults a failure of a substantial character?
- (c) What remedy is Mr Hendriks 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 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 Hendriks’ subjective perspective.
The damaged engine mounts and oil leaks
[11] I am satisfied that the vehicle had broken engine mounts and oil leaks when Mr Hendriks purchased the vehicle.
[12] Mr Hendriks test drove the vehicle on 12 October 2017. As part of that test drive, he took the vehicle to his brother-in-law Shaun Harper, a qualified mechanic. Mr Hendriks says that Mr Harper noticed that the top engine mount was cracked. Mr Hendriks then took the vehicle to Avalon Tyre and Suspension, who put the vehicle on a hoist and found that the bottom engine mount was also broken and that the vehicle had oil leaks. Shane Williams, of Avalon Tyre and Suspension, recommended to Mr Hendriks that the purchase of the vehicle should be conditional on these faults being repaired.
[13] Those faults remain. On 18 September 2018, Mr Hendriks had the vehicle assessed by Coombes Johnston European Ltd, who found that the vehicle had damaged engine mounts and oil leaks from the engine sump and output shaft seals.
[14] This evidence satisfies me that the vehicle had cracked engine mounts and oil leaks at the time of sale, which remain.
[15] In then considering whether those faults breach the acceptable quality guarantee, I must determine whether they are the types of faults that a reasonable consumer would consider acceptable in a vehicle of this price, age and mileage.
[16] Mr Gregory, the Tribunal’s Assessor, advises that the damaged engine mounts and oil leaks are consistent with the faults that a reasonable consumer might expect to find in a BMW Mini One of this price, age and mileage. I accept Mr Gregory’s advice, but am nonetheless satisfied that a reasonable consumer, in the circumstances of this case, would not have expected this vehicle to have been supplied with those pre-existing faults. That is because I am satisfied that Turners told Mr Hendriks that it would rectify those faults before the vehicle was delivered to him.
[17] Mr Hendriks says that, before he agreed to purchase the vehicle, he spoke with Michelle Moran, a sales consultant at Turners. Mr Hendriks says that Ms Moran agreed to replace the damaged engine mounts and rectify the oil leaks. Mr Hendriks’ father, Richard Hendriks, was also present during this discussion. He confirmed his son’s version of events, advising that Ms Moran agreed that Turners would replace the broken engine mounts and rectify the oil leaks.
[18] Ms Moran denies agreeing to replace the engine mounts or rectify the oil leaks. Instead, she says that Turners simply agreed to service the vehicle and obtain a new warrant of fitness. Ms Moran says that she would only have agreed to rectify the faults if Mr Hendriks had provided a pre-purchase inspection report detailing the faults, which he did not do.
[19] Having considered the evidence, I consider it likely that Turners led Mr Hendriks to believe that it would replace the broken engine mounts and rectify the oil leaks. I found Mr Hendriks and his father to be credible and reliable witnesses, who were clear and consistent in their evidence. Both were adamant that they asked Turners to rectify those faults and Turners agreed. In preferring their evidence over that of Ms Moran, I note that Ms Moran could not recall the precise details of the relevant discussion. Although she remained confident that she would have followed her usual procedure of simply agreeing to have the vehicle serviced and obtain a new warrant of fitness, I prefer the more specific recollection of the Hendriks’ in concluding that Turners is likely to have agreed to replace the broken engine mounts and rectify the oil leaks.
[20] Accordingly, because Turners agreed to replace the broken engine mounts and rectify the oil leaks, and failed to do so, I am satisfied that the vehicle was not of acceptable quality for the purposes of s 6 of the Act. Given Turner’s agreement to rectify those faults, a reasonable consumer would not have expected this vehicle to be supplied with broken engine mounts and unrectified oil leaks.
The tyres
[21] Mr Hendriks alleges that the vehicle’s front tyres also breach the acceptable quality guarantee. He says the tyres were “almost bald” and required replacement.
[22] I am not satisfied that the condition of the tyres breached the acceptable quality guarantee. Evidence provided by Turners shows that the vehicle’s front tyres had 2 mm of tread at the time of sale. The warrant of fitness requirement is that the tyres must have at least 1.5 mm of tread. I consider the tyres were therefore in acceptable condition.
[23] Mr Hendriks also alleged that Turners agreed to replace the vehicle’s front tyres. His father was not so certain, and in his evidence suggested that, although Turners had agreed to replace the broken engine mounts and rectify the oil leaks, the replacement of the front tyres remained negotiable. Turners denied that it had agreed to replace the tyres.
[24] On the basis of the inconsistency in the evidence between Mr Hendriks and his father, I cannot be satisfied that Turners ever agreed to replace the front tyres. Accordingly, I am not satisfied the vehicle’s front tyres breached the acceptable quality guarantee.
The alleged radiator fault
[25] The vehicle was assessed by Vehicle Testing New Zealand (VTNZ) on 16 July 2018. Mr Hendriks says that the VTNZ inspectors considered that no coolant fluid had been added to the radiator when the vehicle was serviced before sale, and that the radiator water had turned gold. He says that the VTNZ inspector told him that there was something wrong with the radiator because of the lack of coolant.
[26] There is no evidence to show that there is actually a fault with the radiator. I note that the VTNZ report makes no mention of any fault with the vehicle’s radiator or cooling system, and Mr Gregory advises that it is common that a vehicle of this age and mileage will have dirty coolant fluid 15,000 km and 12 months after its last service. Mr Gregory advises that the dirty coolant is not indicative of a fault. Accordingly, I am not satisfied that the vehicle has any fault with its radiator or cooling system that breaches the acceptable quality guarantee.
The alleged oil consumption fault
[27] Mr Hendriks also advises that VTNZ put approximately two litres of oil into the engine. Mr Hendriks suggests that this level of oil consumption shows that the vehicle has a fault.
[28] Mr Gregory advises that used European vehicles of this age and mileage commonly consume oil as part of their normal operation. Mr Gregory advises that, given there are oil leaks in the vehicle which are likely to account for some of the oil consumed, the amount of oil otherwise consumed by this vehicle is consistent with its age and mileage, and is not excessive.
[29] Accordingly, I am not satisfied that the vehicle has any fault that causes it to consume excessive amounts of oil.
Are the faults a failure of a substantial character?
[30] A failure of a substantial character is defined in s 21 of the Act:
- 21 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.
[31] Section 21(a) of the Act applies to this case. The question I must answer is whether the faults that this vehicle has are such that a reasonable consumer, fully acquainted with the true nature and extent of the faults, would not have purchased the vehicle.
[32] Mr Hendriks submitted that the faults amounted to a failure of substantial character. He says that broken engine mounts should cause the vehicle to fail a warrant of fitness inspection and a reasonable consumer would not have purchased this vehicle if it had known that the oil leaks and broken engine mounts had not been rectified.
[33] Mr Gregory advises that the evidence does not show that the vehicle would have failed a warrant of fitness inspection at the time of sale because of the condition of its engine mounts. Mr Gregory says that the assessment for determining whether the engine mounts meet warrant of fitness requirements are set out in the In-service Certification (WoF and CoF) Vehicle Inspections Requirements Manual for general vehicles (the VIRM), which sets the structural requirements a vehicle must meet to pass a warrant of fitness inspection. Section 13.1 of the VIRM says that a vehicle should fail a warrant of fitness inspection if its engine is “insecurely mounted”.
[34] Mr Gregory advises that, although the evidence shows that the engine mounts were cracking, the evidence does not prove that the damage to the engine mounts was such that the engine was insecurely mounted at the time Mr Hendriks bought the vehicle. Indeed, Mr Gregory notes that the vehicle had recently passed a warrant of fitness inspection before it was sold to Mr Hendriks. On that basis, I am not satisfied that Mr Hendriks has proven that vehicle’s engine mounts would have failed a warrant of fitness inspection at the time of sale, and accordingly, I am not satisfied that the fault with the vehicle’s engine mounts is a failure of a substantial character.
[35] Likewise, I am not satisfied that the oil leaks are a failure of a substantial character. Mr Gregory advises that the oil leaks appear relatively minor and should be quickly and inexpensively repaired. They are not the type of fault that would cause a reasonable consumer to refuse to purchase a used European vehicle of this price, age and mileage.
[36] Finally, I am not satisfied that the accumulated faults with this vehicle are sufficient to justify rejection. I consider that the broken engine mounts and oil leaks are the types of faults that are reasonable consumer may expect to arise in a vehicle of this price, age and mileage, and are not the type of faults that would cause a reasonable consumer to refuse to purchase the vehicle.
What remedy is Mr Hendriks entitled to under the Act?
[37] The remedies relevant to this case are set out in s 18 of the Act, which provides:
- 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.
[38] Under s 18(2)(a) of the Act, Mr Hendriks is entitled to have the engine mounts replaced and the oil leaks from the engine sump and left-hand and right-hand shaft outputs rectified. Under s 18(4) of the Act, Mr Hendriks is also entitled to recover $55, being the cost of having the vehicle’s faults assessed by Coombes Johnston.
Conclusion
[39] The vehicle had pre-existing damage to its engine mounts and pre-existing oil leaks that breached the acceptable quality guarantee in s 6 of the Act. Mr Hendriks has not proven that the vehicle has any other fault that breaches the acceptable quality guarantee or that Turners promised to replace the vehicle’s front tyres before purchase.
[40] Mr Hendriks is not entitled to reject the vehicle. However, Mr Hendrix is entitled to have the broken engine mounts and oil leaks rectified. He is also entitled to recover the cost of having the vehicle’s faults assessed.
[41] Accordingly, the Tribunal orders that Turners, shall within 10 working days of the date of this decision:
- (a) replace the vehicle’s engine mounts and rectify the oil leaks from the engine sump gasket and left-hand and right-hand output shaft seals; and
- (b) pay $55 to Mr Hendrix.
[42] Mr Hendriks may request a telephone conference (no later than 20 working days after the date of this decision) if Turners fails to comply with the Tribunal’s orders.
DATED at AUCKLAND this 8th day of October 2018
B.R. Carter
Adjudicator
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2018/229.html