Kotze v Wood de RTIB Ltd t/a AMC Motors - Reference No. MVD 315/2018 [2018] NZMVDT 231 (10 October 2018)

Last Updated: 15 November 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2018] NZMVDT 231 Reference No. MVD 315/2018
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	HYMNE KOTZE
		Purchaser
	AND	WOOD DE RTIB LTD T/A AMC MOTORS
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S D Gregory, Assessor
HEARING at Auckland on 1 October 2018
DATE OF DECISION 10 October 2018
APPEARANCES
H Kotze, Purchaser
No appearance by the Trader

ORDERS

1. Wood De RTIB Ltd, trading as AMC Motors (AMC Motors) shall, within 10 working days of the date of this decision:
   1. pay $740 to Hymne Kotze.
   2. pay costs of $500 to the Crown (payable to Ministry of Justice, Tribunals Unit, Level 1, Chorus House, 41 Federal Street, Auckland 1010).

DECISION

[1] The vehicle has unsafe tyres that breach the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the Act). The unsafe tyres are a failure of a substantial character for the purposes of s 21(d) of the Act. Under s 18(3)(b) of the Act, Ms Kotze is entitled to recover the cost of replacing the tyres.

REASONS

Introduction

[2] On 16 April 2018, Ms Kotze purchased a 2004 Toyota IST, registration number LHY390, for $5,670 from AMC Motors. The vehicle had an odometer reading of 45,748 km at the time of sale.
[3] In June 2018, one of the vehicle’s tyres blew. Ms Kotze then had the vehicle assessed by Herbie Morgan Tyres, who considered that the tyres were dangerous and should not have passed compliance or a warrant of fitness inspection. It found that the tyres were 14 years old, had major cracking and were “way past their use by date”.
[4] Ms Kotze has now applied to the Tribunal, alleging that the vehicle’s tyres breached the acceptable quality guarantee in s 6 of the Act. She seeks to recover the cost of replacing the tyres.
[5] AMC Motors, despite receiving a Notice of Hearing setting out the time and place of the hearing, failed to attend. The hearing proceeded without AMC Motors.

The Issues

[6] The issues requiring consideration in this case are:

• (a) Does the vehicle have a fault that breaches the acceptable quality guarantee in s 6 of the Act?
• (b) Is the fault a failure of a substantial character?
• (c) What remedy is Ms Kotze entitled to under the Act?

Does the vehicle have a fault that breaches the acceptable quality guarantee?

[7] 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.
[8] 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.

[9] In considering whether or not 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 Ms Kotze’s subjective perspective.
[10] Ms Kotze advises that one of the vehicles tyres blew on about 16 June 2018. She then had the tyres assessed by Herb Morgan Tyres, who considered that the vehicles tyres had perished and were unsafe. Herb Morgan Tyres replaced the blown tyre at a cost of $165 and recommend that Ms Kotze replace the remaining tyres.
[11] Mr Gregory, the Tribunal’s Assessor, says that photographs provided by Ms Kotze show significant perishing of the tread surface of the vehicle’s tyres and advises that the tyres are in such poor condition that they should have failed a warrant of fitness inspection. Mr Gregory says that the warrant of fitness requirements for tyres are set out in s 10-1 of the In-service Certification (WoF and CoF) Vehicle Inspections Requirements Manual for general vehicles (the VIRM). Mr Gregory says that, under s 10-10-12 of the VIRM, tyres will fail a warrant of fitness assessment where they have damage that is likely to compromise their ability to operate in a safe manner or lead to premature tyre failure, such as significant perishing, e.g. due to age, moisture or exposure. Mr Gregory advises that the tyres on this vehicle have significant perishing, most likely due to age, that is likely to compromise the ability to operate the vehicle in a safe manner.
[12] The evidence provided by Ms Kotze, together with Mr Gregory’s advice, satisfies me that the vehicle’s tyres were not of acceptable quality is required by s 6 of the Act because they were unsafe.

Is the fault a failure of a substantial character?

[13] A failure of a substantial character is defined in s 21 of the Act:

21. 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.

[14] Section 21(d) of the Act applies to this case. I am satisfied that the condition of the vehicles tyres made the vehicle unsafe. That is evident in the fact that one of the tyres blew while Ms Kotze was driving the vehicle on about 16 June 2018 and that the remaining tyres have perished and require immediate replacement.

What remedy is Ms Kotze entitled to under the Act?

[15] The remedies relevant to this case are set out in s 18 of the Act, which 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.

[16] As set out above, the vehicles tyres are a failure of a substantial character because they make the vehicle unsafe.
[17] Under s 18(3)(b) of the Act, Ms Kotze is entitled to recover the cost of replacing the vehicle’s tyres. I am satisfied that the condition of the tyres caused a significant reduction in value of the vehicle below the price paid by Ms Kotze. If Ms Kotze had tried to sell the vehicle without replacing the vehicle’s tyres, the cost of replacing those tyres would have been taken into account by any prospective purchaser. I consider that the reasonable cost of replacing the tyres is therefore an indication of the reduction in value.
[18] Ms Kotze replaced the blown tyre at a cost of $165 and has provided an estimate from Herb Morgan Tyres of $525 for the replacement of the remaining tyres. I am satisfied that she is entitled to recover those amounts under s 18(3)(b) of the Act.

Costs

[19] Under cl 14(1)(a)(i) 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.
[20] AMC Motors, after receiving notice of the hearing, failed to attend without reasonable cause. Indeed, AMC Motors provided no excuse for non-attendance. Accordingly, under cl 14(2)(b) of sch 1 to the MVSA, Ms Kotze is entitled to recover $50, being the filing fee for this application.
[21] Further, under cl 14(2)(a)(i) of sch 1 to the MVSA, I also order that AMC Motors pay $500, being the reasonable costs of the Tribunal hearing.

Conclusion

[22] The vehicle has unsafe tyres that breach the acceptable quality guarantee in s 6 of the Act. The unsafe tyres are a failure of substantial character for the purposes of s 21(d) of the Act. Under s 18(3)(b) of the Act, Ms Kotze is entitled to recover the cost of replacing the tyres.
[23] Accordingly, the Tribunal orders that AMC Motors shall, within 10 working days of the date of this decision:

• (a) pay $740 to Hymne Kotze.
• (b) pay costs of $500 to the Crown (payable to Ministry of Justice, Tribunals Unit, Level 1, Chorus House, 41 Federal Street, Auckland 1010).
  

DATED at AUCKLAND this 10th day of October 2018

B.R. Carter
Adjudicator