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Swinden v Ko Cars and Commercials Limited Reference No. MVD 332/2017 [2018] NZMVDT 34 (1 March 2018)

Last Updated: 4 May 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL



Reference No. MVD 332/2017


IN THE MATTER
of the Motor Vehicle Sales Act 2003


AND


IN THE MATTER
of a dispute


BETWEEN
DANIEL PAUL SWINDEN


Purchaser


AND
KO CARS AND COMMERCIALS LIMITED


Trader


MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory Assessor

HEARING at Auckland on 7 February 2018

DATE OF DECISION 1 March 2018

APPEARANCES
D P Swinden, Purchaser
B Worsley, for the Trader


ORDERS

  1. Daniel Swinden’s application to reject the vehicle is dismissed.
  2. KO Cars and Commercials Limited shall, within 15 working days of the date of this decision:
    1. Rectify the vibration in the engine/driveline.
    2. Replace the missing bolt from the slave cylinder/clutch fork cover.
    1. Rectify the fault that causes the intercooler pipe to hit the right swaybar mount.
    1. Secure the airflow meter and rectify the fault causing the wiring plug to rub on the manifold.
    2. Rectify the fault causing the blow off valve hose to rub on the bracket.
    3. Remove the rear window tints.

DECISION

[1] The vehicle has several faults that mean the vehicle is not of acceptable quality, in breach of the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (“the Act”). Daniel Swinden alleges numerous other faults with the vehicle, but he has not proven the existence of those faults.
[2] The proven faults do not amount to a failure of a substantial character, sufficient to justify rejection of the vehicle. Instead, Mr Swinden is entitled to have the proven faults rectified by KO Cars and Commercials Limited (“KO Cars”).

REASONS

Introduction

[3] On about 28 May 2017, Daniel Swinden purchased a 1997 Toyota Supra for $38,995 from KO Cars. The vehicle had an odometer reading of 130,925 kms at the time of sale.
[4] Between the date Mr Swinden agreed to purchase the vehicle, and the date he took possession, KO Cars performed significant work on the vehicle, including replacing the engine, clutch and ECU and removing the front passenger airbag.
[5] Mr Swinden took possession of the vehicle on 26 September 2017. He immediately noticed a vibration in the vehicle, so he had it assessed by Anthony Motors Limited. Anthony Motors found several faults. Mr Swinden immediately rejected the vehicle and sought a refund of the purchase price.
[6] KO Cars refused to accept Mr Swinden’s rejection of the vehicle and offered to have the vehicle assessed by VTNZ and have any identified faults rectified.
[7] Mr Swinden has now applied to the Tribunal to have his rejection of the vehicle upheld. He now alleges that, in addition to the matters identified by Anthony Motors, the vehicle has many other faults sufficient to justify rejection.

The Issues

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

What faults does the vehicle have?

[9] Mr Swinden alleges that the vehicle has at least 23 separate faults. As a first step, I must determine which of those alleged faults exist.
[10] When it assessed the vehicle on 26 September 2017, Anthony Motors found the following faults with the vehicle:
[11] I am satisfied that each of these faults exists, although, as explained below, I do not consider the vibration in the driveline to be “major”, in the sense that I do not consider it to be a serious fault.
[12] In addition to the faults identified by Anthony Motors, Mr Swinden also alleges that the vehicle has the following faults:
[13] KO Cars accepts that the vehicle has illegal tints that require removal, and has offered to perform that work. The illegal tints are clearly a fault that needs to be rectified.
[14] KO Cars also accepts that the airbags have been removed, but says that Mr Swinden knew of this. The evidence supports KO Cars on this point. I have seen an email between Mr Swinden and Mr Worsley of KO Cars dated 25 July 2017, where KO Cars advised Mr Swinden that the driver’s airbag was removed and the passenger airbag was being removed as part of the Low Volume Vehicle (“LVV”) certification required for the vehicle. Mr Swinden made no protest. Indeed, his response to that email was positive. I am therefore satisfied that Mr Swinden knew that the airbags had been removed as part of the LVV certification of the vehicle. Accordingly, I do not consider the removed airbags to be a fault with the vehicle.
[15] Mr Swinden also pointed to photographs of the vehicle’s chassis as evidence that the chassis was twisted. Mr Gregory, the Tribunal’s Assessor, advises that those photographs do not show that the chassis is twisted. Accordingly, I am satisfied that Mr Swinden has not proven that the vehicle has a twisted chassis.
[16] In relation to the remaining alleged faults, Mr Swinden has simply provided no evidence, other than his unsubstantiated testimony, to prove the existence of the faults. Before the hearing, the Tribunal issued a Direction asking Mr Swinden to supply photographs of the front cross member damage and corrosion and to have all the vehicle’s faults diagnosed and quoted for repair. Mr Swinden failed to provide any of the requested information and has provided no further evidence, other than his testimony, as to the existence of these further alleged faults.
[17] I am not prepared to accept Mr Swinden’s unsubstantiated testimony as evidence of the existence of faults with this vehicle. Mr Swinden made some unusual and unsupported allegations about this vehicle – including that the vehicle had been impounded because of boy racing offences while in KO Cars’ possession and that the vehicle had been used to transport drugs – which cause me to query the veracity of his evidence. Accordingly, Mr Swinden’s failure to provide any supporting information to prove the existence of the alleged further faults is fatal to large parts of his claim. That is because Mr Swinden has failed to provide any reliable evidence to show that these faults exist.

Do the proven faults breach the acceptable quality guarantee?

[18] 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.
[19] 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.”

[20] 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 Swinden’s subjective perspective.
[21] I am satisfied that the following faults breach the acceptable quality guarantee:
[22] I am satisfied that a reasonable consumer would not expect these faults to be present in a $38,995 vehicle on the date of purchase. In reaching this conclusion, I acknowledge that the vehicle is 20 years old and has travelled more than 130,000 kms. Despite this age and mileage, this vehicle was not in acceptable condition when it was supplied to Mr Swinden.
[23] I am not satisfied that the cracking gearbox mount, dampness between the gearbox housings and surface rust on the rear subframe breach the acceptable quality guarantee. Mr Gregory advises that these are the types of issues that one could expect to find in a vehicle of this age and mileage. Mr Gregory also notes that the vehicle had recently passed compliance testing at VTNZ, and obtained a warrant of fitness at that time. The vehicle had also passed an LVV inspection immediately before it was sold to Mr Swinden, meaning that it is highly likely that these faults do not require immediate repair.

Are the faults a failure of a substantial character?

[24] Under s 18(3) of the Act, Mr Swinden may reject the vehicle if it has a fault that amounts to a failure of a substantial character. A failure of a substantial character is defined in s 21 of the Act:

“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.”

[25] Section 21(a) of the Act applies to this case. The question I must answer is whether the faults that this vehicle has, are such that a reasonable consumer, fully acquainted with the true nature and extent of the faults, would not have purchased the vehicle.
[26] Mr Swinden alleges that the faults are sufficiently serious to justify rejection of the vehicle. In particular, he says that the driveline vibration is a failure of a substantial character, which makes the vehicle undriveable.
[27] I am not satisfied that the vehicle faults do amount to a failure of a substantial character. Although Anthony Motors described the driveline vibration as “major”, Mr Gregory advises that the driveline vibration is likely to be caused by the intercooler pipe hitting the right swaybar mount, which will send a vibration through the driveline. Alternatively, Mr Gregory notes that the vibration may be caused by an imbalanced flywheel in the vehicle’s clutch, as suggested by KO Cars. Either way, Mr Gregory considers that the fault is minor, does not make the vehicle unsafe and should be easily rectified.
[28] Mr Gregory also advises that none of the remaining proven faults make the vehicle unsafe, and all should be quickly and easily rectified.
[29] I am therefore satisfied that none of the faults, individually, amounts to a failure of a substantial character.
[30] I am also satisfied that the vehicle’s faults, when considered together, do not amount to a failure of a substantial character for the purposes of s 21(a) of the Act.
[31] In Cooper v Ashley & Johnson Motors Limited,[1] the District Court stated that a purchaser may reject a vehicle where there had been an accumulation of minor defects, which in themselves could not be described as substantial. The Court noted that a point will eventually be reached where the purchaser could “say convincingly that he or she had no ‘confidence in the reliability of the vehicle’”.[2]
[32] This vehicle is a 20-year-old Toyota Supra that had travelled more than 130,000 kms at the time of sale. It had also recently been the subject of extensive mechanical work, including an engine swap and clutch repairs. I consider that a reasonable consumer would understand that there is a real likelihood that a vehicle of this age and mileage, that has recently been the subject of significant mechanical work, may have minor faults that require repair. That was the case here, and I am not satisfied that this vehicle’s faults are so numerous, or so serious, that a reasonable consumer could believably say that it has lost all confidence in the vehicle.

What remedy is Mr Swinden entitled to under the Act?

[33] 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), 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.”

[34] Under s 18(2)(a) of the Act, Mr Swinden is entitled to have the faults that breach the acceptable quality guarantee remedied. Accordingly, the Tribunal orders that KO Cars shall, within 15 working days of the date of this decision,

DATED at AUCKLAND this 1st day of March 2018

B.R. Carter
Adjudicator


[1] Cooper v Ashley & Johnson Motors Limited (1996) 7 TCLR 407 (DC).

[2] Ibid, at 417.

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