Heinzelmann v Hello Cars Limited Reference No. MVD 363/2018 [2018] NZMVDT 251 (2 November 2018)

Last Updated: 17 December 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2018] NZMVDT 251 Reference No. MVD 363/2018
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	RUDOLF HEINZELMANN
		Purchaser
	AND	HELLO CARS LTD
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S D Gregory, Assessor
HEARING at Auckland on 30 October 2018
DATE OF DECISION 2 November 2018
APPEARANCES
R Heinzelmann, Purchaser
A Sun, for the Trader I Pahuja, Witness for the Trader

ORDERS

1. Hello Cars Ltd shall, within 10 working days of the date of this decision, replace the vehicle’s battery.

DECISION

[1] The vehicle has not been of acceptable quality as required by s 6 of the Consumer Guarantees Act 1993 (the Act). The vehicle was supplied with a substandard battery and the batteries in the key remote were flat at the time of sale.
[2] Hello Cars must replace the vehicle’s battery, but Mr Heinzelmann is not entitled to any remedy in relation to the key remote batteries because he replaced those batteries without first giving Hello Cars the opportunity to do so. Further, Mr Heinzelmann is not entitled to recover the losses he says he incurred by being unable to use the vehicle because of the flat battery.

REASONS

Introduction

[3] On 20 July 2018, Mr Heinzelmann purchased a 2005 Nissan Lafesta for $5,300 from Hello Cars. The vehicle had an odometer reading of approximately 47,000 km at the time of sale.
[4] The vehicle was supplied with a substandard battery, which requires replacement. Further, the batteries in the vehicle’s key remote were flat at the time of sale. Mr Heinzelmann has applied to the Tribunal to recover the cost of replacing the vehicle’s battery and the batteries in the key remote. He also seeks compensation for being unable to use the vehicle while waiting for a replacement battery.
[5] Hello Cars says that it offered to replace the battery at its premises. Mr Heinzelmann lives near Kaitaia and Hello Cars is based in Auckland. It says that Mr Heinzelmann declined to bring the vehicle to Auckland for the repair to be performed. It says that it then offered to compensate Mr Heinzelmann for the cost of a replacement battery. Hello Cars also submits that Mr Heinzelmann is not entitled to recover any compensation for being unable to use the vehicle because he should have purchased a replacement battery and sent an invoice to Hello Cars if he was unhappy with its offer to replace the battery in Auckland.

The Issues

[6] 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) If so, what remedy is Mr Heinzelmann entitled to under the Act?

Does the vehicle have faults that breach 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 Mr Heinzelmann’s subjective perspective.
[10] I am satisfied that the vehicle’s battery was substandard and requires replacement. I am also satisfied that the batteries in the vehicle’s key remote required replacement on the day of purchase. Hello Cars appeared to accept that these faults existed.
[11] I consider that both faults mean the vehicle was not of acceptable quality for the purposes of s 6 of the Act when it was supplied to Mr Heinzelmann. A reasonable consumer would not have expected the vehicle to be supplied with a battery that was in such poor condition that the vehicle would not start the day after purchase. Likewise, a reasonable consumer would have expected the vehicle’s key remote to function properly, particularly when the vehicle will not lock without a functioning key remote.

What remedy is Mr Heinzelmann entitled to?

[12] 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.

[13] Mr Heinzelmann seeks $175, being his estimate of the cost of replacing the battery. I am unable to award this amount under s 18 of the Act because Mr Heinzelmann has not incurred the cost and has provided no evidence to show that this is the actual cost of replacing the battery. Instead, the appropriate remedy under s 18(2)(a) of the Act is to order Hello Cars to replace the vehicle’s battery within a reasonable time. How the parties agree to do this is up to them, but I note that if Hello Cars requires the vehicle to be returned to Auckland, it must cover the cost of transporting the vehicle to and from Mr Heinzelmann’s residence. Given the geographical distance between the two parties, it may well be that the easiest way to resolve this matter is for the parties to agree on a reasonable price for a replacement battery and for Hello Cars to pay that amount to Mr Heinzelmann. That is, however, a matter that the parties will need to resolve between themselves, as I do not have the power to make such an order.
[14] Mr Heinzelmann is not entitled to any remedy in relation to the key remote batteries. Mr Heinzelmann says he purchased two replacement batteries for the key remote, but he provided no evidence to prove the cost that he incurred. Further, Mr Heinzelmann did not first give Hello Cars the opportunity to rectify that fault before incurring the cost of the replacement batteries. In Acquired Holdings Ltd v Turvey, the High Court found that, under s 18(2) of the Act, where goods have failed to comply with the acceptable quality guarantee in s 6 of the Act (as the key remote batteries did in this case), the consumer must first give the supplier an opportunity to remedy the failure before they can have the fault repaired elsewhere and recover the cost.[1] In this case, Mr Heinzelmann did not give Hello Cars that opportunity, meaning he is not entitled to recover any cost incurred in replacing the key remote batteries.
[15] Mr Heinzelmann also seeks to recover “car idle costs”, which are the losses he says he has incurred because he has not been able to use the vehicle due to the flat battery. Mr Heinzelmann’s application to recover this amount must fail for two reasons.
[16] First, Mr Heinzelmann has not proven that he has suffered any loss as a result of being unable to use the vehicle. He mentioned that he intended to use the vehicle in a business that he was establishing, but he provided no evidence to prove that he has lost any revenue as a result of being unable to use the vehicle. Further, Mr Heinzelmann led no evidence to show that he had suffered any significant inconvenience by not using the vehicle, and in that regard, I note that Mr Heinzelmann had use of another vehicle throughout the relevant period.
[17] Second, Mr Heinzelmann took no steps to mitigate his loss. Instead, in his own words, Mr Heinzelmann “lost interest” in the vehicle. Once he discovered the vehicle would not start and that Hello Cars required him to return the vehicle to Auckland for repairs, he took no proactive steps to avoid the loss that he says he has now suffered. He could, for example, have replaced the battery at his own expense and sought to recover that expense from Hello Cars. He did not do so.
[18] In those circumstances, I consider that Mr Heinzelmann is not entitled to recover any losses for being unable to use the vehicle.

Conclusion

[19] The vehicle has not been of acceptable quality as required by s 6 of the Act. The vehicle was supplied with a substandard battery and the batteries in the key remote were flat at the time of sale.
[20] Hello Cars must replace the vehicle’s battery, but Mr Heinzelmann is not entitled to any remedy in relation to the key remote batteries because he replaced those batteries without first giving Hello Cars the opportunity to do so. Further, Mr Heinzelmann is not entitled to recover the losses he says he incurred by being unable to use the vehicle because of the flat battery.

[21] The Tribunal therefore orders that Hello Cars shall, within 10 working days of the date of this decision, replace the vehicle’s battery.

DATED at AUCKLAND this 2nd day of November 2018

B.R. Carter
Adjudicator

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[1] Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 at [11].