Horan v Destiny Auto Group Limited Reference No. MVD 442/2018 [2018] NZMVDT 292 (12 December 2018)

Last Updated: 15 January 2019

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2018] NZMVDT 292 Reference No. MVD 442/2018
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	KENT PHILIP HORAN
		Purchaser
	AND	DESTINY AUTO GROUP LTD
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Haynes, Assessor
HEARING at Auckland on 7 December 2018
DATE OF DECISION 12 December 2018
APPEARANCES
K P Horan, Purchaser L M Horan, Witness for the Purchaser
J Lin, for the Trader L Lu, Witness for the Trader

ORDERS

1. Destiny Auto Group Ltd shall, within 10 working days of the date of this decision, page $968.60 to Kent Horan.

DECISION

[1] The vehicle had worn tensioner pulley and deflection pulley bearings that breached the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the Act). Mr Horan has not proven that the vehicle has a fault with its rear differential pinion bearing that breaches the acceptable quality guarantee.
[2] Destiny Auto Group Ltd (Destiny Auto) refused to pay the full cost of replacing the tensioner pulley and deflection pulley bearings, and under s 18(2)(b)(i) of the Act, Mr Horan is entitled to recover the full cost of having that fault rectified.

REASONS

Introduction

[3] On 23 September 2018, Mr Horan purchased a 2009 BMW 120i for $10,000 from Destiny Auto. The vehicle had an odometer reading of 65,587 km at the time of sale.
[4] Almost immediately, the vehicle began making squealing noise from its engine bay. Mr Horan had the vehicle assessed by Winger BMW in Wellington, who determined that the drive belt tensioner pulley and deflection pulley bearings were worn. Destiny Auto refused to pay the full cost of rectifying the drive belt tensioner pulley and deflection pulley fault, so Mr Horan had the faulty components replaced by Winger BMW at a cost of $968.60. Mr Horan also alleges that the vehicle now has a noisy rear differential pinion bearing. Mr Horan has applied to the Tribunal seeking to recover the cost of the drive belt tensioner pulley and deflection pulley repairs and seeking orders that Destiny Auto rectifies the noisy rear differential pinion bearing.
[5] Destiny Auto says that it is not liable for the full cost of the tensioner pulley and deflection pulley repairs. Destiny Auto has also declined to rectify the noisy differential pinion bearing.

The Issues

[6] Against this background, 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) What remedy is Mr Horan 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 Horan’s subjective perspective.

The worn tensioner pulley and deflection pulley bearings

[10] Mr Horan lives in Wellington and Destiny Auto is based in Auckland. While returning from Auckland after purchasing the vehicle, Mr Horan noticed an excessive screaming noise from the engine bay. He contacted Destiny Auto, who advised him to have the vehicle assessed.
[11] Mr Horan took the vehicle to Winger BMW, in Wellington, who found a whining noise from the vehicle when accelerating, caused by worn bearings in the tensioner pulley and deflection pulley.
[12] Mr Haynes, the Tribunal’s Assessor, advises that the Winger BMW assessment is consistent with the symptoms experienced by Mr Horan. Mr Haynes advises that worn tensioner pulley and deflection pulley bearings will cause a squealing noise as the components degrade. Mr Haynes says that worn bearings require replacement, otherwise the bearings will seize, causing the drive belt, which is responsible for the operation of components such the alternator, water pump and air-conditioning, to fail
[13] On the basis of Mr Horan’s evidence, the report from Winger BMW and Mr Haynes’ advice, I am satisfied that the vehicle had worn tensioner pulley and deflection pulley bearings that breached the acceptable quality guarantee in s 6 of the Act. A reasonable consumer would not expect a vehicle of this price, age and mileage to have a pre-existing fault that would require its tensioner pulley and deflection pulley bearings to be replaced, at a cost of $968.60, so shortly after purchase.

The noisy differential pinion bearing

[14] Mr Horan also alleges that the vehicle has a noisy differential pinion bearing. He says that he took the vehicle to Hutt Automatics Ltd for a transmission service. While Hutt Automatics was servicing the transmission, it noticed a noise from the rear differential. It raised the vehicle on a hoist and found that the rear differential pinion bearings were noisy.
[15] I am not satisfied that Mr Horan has proven that the vehicle has a fault with its rear differential pinion bearing that requires repair. Mr Haynes advises that, if the rear differential pinion bearing had degraded to the extent that it required replacement, the vehicle would make a noise that would be audible to anyone who drove it. In that regard, I note that shortly before the vehicle was assessed by Hutt Automatics, Winger BMW diagnosed the noisy pulley bearings, but there is no evidence to show that Winger BMW noticed any audible noise from the differential pinion bearing. Likewise, Mr and Mrs Horan gave evidence that neither had noticed any unusual noise emanating from the rear differential.
[16] On that basis, and relying on Mr Haynes’s advice that a worn differential pinion bearing would cause a noise audible to anyone who drove the vehicle, I am not satisfied that the report from Hutt Automatics is sufficient to prove that the vehicle has a fault with its rear differential pinion that would breach the acceptable quality guarantee.

What remedy is Mr Horan entitled to under the Act?

[17] The remedies relevant to this claim 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.

[18] Under s 18(2)(b)(i) of the Act, Mr Horan is entitled to recover the cost of repairing the fault with the tensioner pulley and deflection pulley bearings. Mr Horan asked Destiny Auto to perform the repair, but Destiny Auto refused to pay the full cost of the repair.
[19] Destiny Auto says that that was reluctant to pay the whole cost of the repair because it provided $990 discount off the purchase price. It also says that it was told by its mechanic that it should not have to pay for the cost of replacing the tensioner because it did not need to be replaced as part of any repair.
[20] The fact that Destiny Auto gave a $990 discount off the purchase price is irrelevant to its obligation to provide a remedy under the Act. Further, Mr Haynes advises that the tensioner required replacement as part of any repair, because the tensioner and the tensioner pulley bearing are part of the same unit, and both must be replaced to rectify a worn bearing.
[21] Accordingly, I consider that Destiny Auto had no reasonable excuse to decline to pay the full cost of rectifying the fault, and Mr Horan is entitled to recover the full cost of the repair. The Tribunal therefore orders that Destiny Auto shall, within 10 working days of the date of this decision, pay $968.60 to Mr Horan.

DATED at AUCKLAND this 12th day of December 2018

B.R. Carter
Adjudicator