Berndt v B & Z Trades Company Limited - Reference No. MVD 394/2017 [2018] NZMVDT 27 (20 February 2018)

Last Updated: 16 March 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2018] NZMVDT 027 Reference No. MVD 394/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	RASHID JURGEN BERNDT
		Purchaser
	AND	B & Z TRADES COMPANY LIMITED
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 8 February 2018
DATE OF DECISION 20 February 2018
APPEARANCES
R J Berndt, Purchaser
J Hu, for the Trader

ORDERS

1. B & Z Trades Company Limited shall, within 10 working days of the date of this decision, pay $3,885.77 to Rashid Berndt.

DECISION

[1] The vehicle had a fault with its transmission that breached the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the Act”).
[2] B & Z Trades Company Limited was required to repair the transmission fault, but declined to do so. Rashid Berndt was therefore entitled to have the fault repaired elsewhere and recover the cost of those repairs from B & Z Trades.

REASONS

Introduction

[3] On 14 October 2017, Rashid Berndt purchased a 2006 Nissan Cube for $5,200 from B & Z Trades Company Limited. The vehicle had an odometer reading of 82,300 kms at the time of sale.
[4] On 31 October 2017, Mr Berndt had the vehicle assessed by Kaspa Transmissions Glenfield Limited, who discovered that the vehicle had a fault with its CVT transmission, and the transmission would require replacement.
[5] B & Z Trades declined to repair the fault, claiming that the fault did not exist and that the information provided by Kaspa Transmissions was not sufficient to prove a fault.
[6] Mr Berndt has had the vehicle repaired, at a cost of $3,885.77. He now seeks to recover that amount from B & Z Trades.

The Issues

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

• (a) Does the vehicle have a fault that breaches the acceptable quality guarantee of s 6 of the Act?
• (b) Has B & Z Trades failed to repair the fault within a reasonable time?
• (c) What remedy is Mr Berndt entitled to under the Act?

Does the vehicle have a fault that breaches 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 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 Berndt’s subjective perspective.
[11] I am satisfied that the vehicle had a significant fault with its CVT transmission.
[12] Shortly after purchasing the vehicle, Mr Berndt had the vehicle serviced by North Shore Auto Service Centre, who recommended that Mr Berndt should have the transmission serviced because it was not working properly.
[13] On about 31 October 2017, Mr Berndt took the vehicle to Kaspa Transmissions who, after servicing the transmission, found it had a noisy bearing, which if it was left too long, could cause more damage to the transmission increasing the repair cost. Kaspa Transmissions considered that the transmission required repair or replacement
[14] A Automotive Limited also assessed the vehicle and found a noise coming from the transmission. It considered that the noise was consistent with bearings in the transmission failing. It dismantled the transmission and found the hardening to have gone off the support bearing. It repaired the transmission on 13 November 2017, at a cost of $3,885.77
[15] B & Z Trades is not satisfied that the vehicle had any fault with its transmission. It says that two company employees drove the vehicle and found no fault with the transmission. Further, it does not accept the Kaspa Transmission diagnosis. It says its company policy is to require an AA or VTNZ diagnosis before it can be satisfied as to the existence of a fault.
[16] B & Z Trades also says that it is not uncommon for an 11-year-old Nissan Cube to have noise from its transmission. It says that the noise is not evidence of a mechanical problem.
[17] Mr Gregory, the Tribunal’s Assessor, advises that the noise from the transmission is made by worn bearings, and if left unattended the transmission would eventually fail.
[18] I am satisfied that the vehicle has a fault with its transmission that breaches the acceptable quality guarantee. I accept Mr Berndt’s evidence as to the existence of the noise from the transmission, and Kaspa Transmission’s opinion that the vehicle has noisy transmission bearings. That fault was evident shortly after Mr Berndt purchased the vehicle.
[19] Although the vehicle was an inexpensive, 11-year-old vehicle that had travelled more than 82,000 kms, I am satisfied that a reasonable consumer would not consider such a fault to be acceptable.

What remedy is Mr Berndt entitled to under the Act?

[20] Mr Berndt seeks to recover the cost of the transmission repair. Section 18 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), he 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.”

[21] Under s 18(2)(b)(i) of the Act, Mr Berndt is entitled to recover the cost of the repair if:

• (a) he required B & Z Trades to repair the fault; and
• (b) B & Z Trades refused or failed to do so within a reasonable time.

Did Mr Berndt require B & Z Trades to repair the transmission fault?

[22] I am satisfied that Mr Berndt required B & Z Trades to repair the transmission fault.
[23] The evidence shows that, in early November 2017, Mr Berndt returned the vehicle to B & Z Trades, complaining of a noise from the transmission. Mr Berndt also sent B & Z Trades a copy of the invoice from Kaspa Transmissions.
[24] Mr Berndt also called B & Z Trades on 6 November 2017. He asked B & Z Trades to repair the vehicle during that discussion.

B & Z Trades refused to repair the fault

[25] The evidence also shows that B & Z Trades refused to repair the fault.
[26] It declined to repair the fault when Mr Berndt returned the vehicle to it in early November, claiming that the vehicle had no fault. It also refused to accept the Kaspa Transmission invoice as evidence of the existence of the fault. Instead, it claimed that Mr Berndt required an assessment from AA or VTNZ before it would accept the existence of a fault.
[27] It also refused to repair the fault during a telephone call with Mr Berndt on 6 November 2017, again insisting on the vehicle being assessed by AA or VTNZ.
[28] I am satisfied that B & Z Trades’ conduct amounts to a refusal to repair the vehicle. In particular, B & Z Trades’ refusal to accept Kaspa Transmission’s advice that the transmission had a fault and required repair is entirely inconsistent with the manner in which a reasonable trader should have approached this fault.
[29] Mr Gregory advises that Kaspa Transmission is a well-known transmission specialist, whose opinion carries some weight in the motor vehicle repair industry. Once it became aware that Kaspa Transmission considered that the vehicle’s transmission had a serious fault and required a costly repair, B & Z Trades had an obligation to assess the vehicle and repair any fault found. It refused to do that, instead requiring Mr Berndt to obtain further evidence, when no further evidence of the existence of the fault was necessary.
[30] By requiring Mr Berndt to obtain further evidence, at his expense, when the evidence he had already presented was sufficient to trigger B & Z Trades’ obligations under the Act, I am satisfied that B & Z Trades refused to rectify the fault.
[31] I therefore consider that Mr Berndt is entitled to recover the cost of the transmission repair. Accordingly, B & Z Trades shall, within 10 working days of the date of this decision, pay $3,885.77 to Mr Berndt.

DATED at AUCKLAND this 20th day of February 2018

B.R. Carter
Adjudicator