Basharati v B & Z Traders Company Limited Reference No. MVD 466/2018 [2018] NZMVDT 308 (20 December 2018)

Last Updated: 15 January 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA
		MVD 466/2018 [2018] NZMVDT 308
	BETWEEN	SARHAD BASHARATI
		Purchaser
	AND	B & Z TRADES COMPANY LTD
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Haynes, Assessor
HEARING at Auckland on 14 December 2018
APPEARANCES
S Basharati, Purchaser
Y P Bei, for the Trader DATE OF DECISION 20 December 2018
______________________________________________________________ DECISION OF THE TRIBUNAL ______________________________________________________________ B & Z Trades Company Ltd shall, within 10 working days of the date of this decision: rectify the central locking fault; and pay $50 to Sarhad Basharati. Mr Basharati may request a telephone conference (no later than 20 working days after the date of this decision) if B & Z Trades Company Ltd fails to comply with Order A (above).

REASONS

Introduction

[1] On about 28 May 2018, Mr Basharati purchased a 2005 Nissan Tiida for $4250. The vehicle had an odometer reading of 78,708 km at the time of sale.
[2] About one month later, Mr Basharati noticed that the vehicle’s central locking system was malfunctioning. He contacted B & Z Trades Company Ltd, who refused to rectify the fault. Mr Basharati has now applied to the Tribunal seeking orders requiring B & Z Trades Company Ltd to rectify the fault under the Consumer Guarantees Act 1993 (the Act).
[3] B & Z Trades Company Ltd does not accept that the central locking fault breaches any of the Act’s guarantees. It says that it sold the vehicle at a $500 discount and taking account of the price, age and mileage of the vehicle, the vehicle has been as durable as a reasonable consumer would consider acceptable.

The Issues

[4] Against this background, 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) What remedy is Mr Basharati entitled to under the Act?

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

[5] 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.
[6] 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.

[7] 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 Basharati’s subjective perspective.
[8] About one month after purchase, Mr Basharati noticed the vehicle’s central locking system was not working correctly. He says that the two rear doors and front passenger door will often fail to lock or unlock. He also says that the interior locking switches on the vehicle’s door handles are difficult to operate, meaning that it is hard to manually lock and unlock the vehicle.
[9] Although Mr Basharati provided no evidence from a qualified repairer to prove the existence of the fault, I accept his evidence that the vehicle has developed a fault with its central locking system. I found Mr Basharati to be a credible witness and I accept his evidence as to the existence of the fault. In reaching this conclusion I note that, on the evidence presented, Mr Basharati could well have brought a claim in relation to the vehicle not having the reversing camera and functioning stereo that were advertised in the Trade Me listing for the vehicle, and for the vehicle’s lack of power, which is indicative of a potentially significant fault with its transmission and/or engine. Mr Basharati came across as a decent and undemanding man, and I accept unreservedly his evidence as to the existence of the central locking fault.
[10] Mr Basharati advises that he has received an estimate of $500 to rectify the central locking fault. Mr Haynes, the Tribunal’s Assessor, advises that, depending on the repairs required to rectify the fault, he would expect any repair to cost between $500 and $1,000.
[11] B & Z Trades Company Ltd submits that the fault does not breach the acceptable quality guarantee. It says the fault was not present at the time of sale, and that it is consistent with the vehicle’s price, age and mileage. In support of its position, Yao Peng Bei a director of B & Z Trades Company Ltd, advised that faults with central locking systems are common, advising the Tribunal that his own vehicle developed a fault with its central locking system within two weeks of purchase.
[12] Mr Bei also submitted that B & Z Trades Company Ltd sold the vehicle at a discount of $500 and that I should take account of that discount. Although I do not accept that there is any evidence that the vehicle was sold at a discount (with the Trade Me listing for the vehicle stating that the asking price was $4,250, the amount paid by Mr Basharati), the fact that any discount may have been provided is not relevant to my assessment as to whether the central locking fault breaches the acceptable quality guarantee. Instead, what is relevant is the nature of the fault, and whether a reasonable consumer would consider the fault acceptable.
[13] Although a reasonable consumer purchasing a vehicle of this price, age and mileage must have realistic expectations as to its quality and durability, I am satisfied that the central locking fault breaches the acceptable quality guarantee in s 6 of the Act. A reasonable consumer would not expect the vehicle of this price, age and mileage to develop a fault with its central locking system, which will cost between $500 and $1000 to rectify, so shortly after purchase.

What remedy is Mr Basharati now entitled to under the Act?

[14] The remedies relevant to this claim as 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.

[15] Under s 18(2)(a) of the Act, Mr Basharati is entitled to have central locking fault rectified within a reasonable time. In that regard, the Tribunal orders that B & Z Trades Company Ltd shall, within 10 working days of the date of this decision, rectify the fault with the central locking system.

Costs

[16] Under cl 14(1)(a)(i) of sch 1 to the Motor Vehicle Sales Act 2003 (the MVSA), the Tribunal may award costs against a party where a matter ought reasonably to have been settled before proceeding to a hearing but that party refused, without reasonable excuse, to take part in the discussions referred to the prehearing settlement discussions required by cl 5(1)(b) of the MVSA.
[17] I am satisfied that this matter should have been resolved before proceeding to a hearing. The evidence is clear that vehicle developed a fault with its central locking system shortly after purchase and I consider that a reasonable motor vehicle trader, presented with Mr Basharati’s evidence as to the existence of a fault, should have concluded that it had an obligation to rectify the fault.
[18] I am also satisfied that B & Z Trades Company Ltd refused to participate in the required settlement discussions. On 9 November 2018, the Tribunal issued directions under cl 5(1)(b) of the MVSA requiring B & Z Trades Company Ltd to, in good faith, discuss the application with Mr Basharati and to make a written report to the Tribunal on the outcome. B & Z Trades Company Ltd did not comply with that direction.
[19] I am therefore satisfied that this is a case in which the Tribunal can consider question of costs.
[20] Mr Basharati seeks to recover compensation for the cost he incurred in bringing this application. In that regard, he seeks $200 for the time spent in preparing the application and attending the hearing, $50 for the Tribunal’s filing fee and $30 for print and postage costs.
[21] Other than his oral testimony as to the cost he has incurred, Mr Basharati provided no other evidence to prove the $200 he says he incurred in relation to the time spent in preparing the application and attending the hearing, or the $30 in print and postage costs. Accordingly, I cannot award those costs. However, under cl 14(2)(b) of sch 1 to the MVSA, Mr Basharati is entitled to recover the $50 filing fee for this application.

DATED at AUCKLAND this 20th day of December 2018

B.R. Carter
Adjudicator