Barkley v Tyson Peter Griffin Adams t/a Wholesale Motors Christchurch Reference No. MVD 055/2018 [2018] NZMVDT 63 (23 March 2018)

Last Updated: 4 May 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2018] NZMVDT 063
Reference No. MVD 055/2018

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN ROBIN DONALD BARKLEY

Purchaser

AND TYSON PETER GRIFFIN ADAMS T/A WHOLESALE MOTORS CHRISTCHURCH

Trader

MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

R C Dixon – Assessor

HEARING at Christchurch on 8 March 2018

DATE OF DECISION 23 March 2018
APPEARANCES

R D Barkley, Purchaser (by AVL)
T P G Adams, Trader

DECISION

Tyson Adams must pay Robin Barkley $2,400 no later than 3 April 2018.

REASONS

Introduction

[1] Robin Barkley’s Toyota Caldina broke down 17 days after it was delivered to him in Auckland. Tyson Adams, the trader, agreed to pay for repairs, but there was a catch. The repairs would need to be carried out in Christchurch and Mr Barkley would have to pay for the vehicle to be transported there and back. Alternatively, Mr Adams agreed to pay Mr Barkley the amount he would have to pay to have the vehicle repaired in Christchurch, $1,500 which is less than the quote Mr Barkley obtained for repairs in Auckland, $2,400.
[2] Mr Barkley wants to have the car repaired in Auckland as it is more convenient for him, and he does not want to have to pay to have to transport the vehicle to and from Christchurch.
[3] From this background the following issues arise:

• (a) Did the vehicle fail to comply with the guarantee of acceptable quality?
• (b) If so, what is the appropriate remedy? Should Mr Barkley receive the cost of repairs in Auckland, or only the lesser amount for which repairs can be done in Christchurch?

Issue one: Did the vehicle fail to comply with the guarantee of acceptable quality?

[4] Section 6(1) of the Consumer Guarantees Act 1993 (the Act) provides that where goods are supplied to a consumer there is a guarantee “that the goods are of acceptable quality”. According to s 2 of the Act, “goods” includes vehicles.
[5] "Acceptable quality" is defined in s 7 of the Act (as far as is relevant) 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.

[6] The question whether a vehicle is of acceptable quality is considered from the point of view of a reasonable consumer who is fully acquainted with the state and condition of the vehicle, including any hidden defects.
[7] There is no real dispute between the parties concerning whether the vehicle failed to comply with the guarantee of acceptable quality. The vehicle overheated on the Auckland southern motorway 17 days after delivery. Mr Barkley told Mr Adams that the vehicle had broken down. Mr Adams asked Mr Barkley to take the vehicle to the nearest workshop. Mr Barkley took the vehicle to One Stop Mechanical Servicing in Ellerslie.
[8] The technician at One Stop Mechanical Servicing, Dave Parton, produced a detailed and helpful report and diagnosis. Mr Parton recorded that the vehicle had been towed to his workshop after overheating. He found the cooling system to be “quite dirty and contaminated (possibly blocked radiator)". Mr Parton noted that the vehicle was only running on three cylinders. His initial diagnosis was a blown head gasket into the water jacket area on the number 2 cylinder.
[9] Mr Parton also noted that the spark plug in number 4 cylinder was very “carboned up” compared to the other cylinders, an indication that the oil ring on that cylinder was struggling to control the oil. Mr Parton helpfully set out three possible ways to remedy the situation:

• (a) The first option was for Mr Barkley to seek a refund from the dealer.
• (b) The second option was to replace the engine with a secondhand engine, along with a radiator clean and flush. Mr Parton said this was probably the most economic option if Mr Barkley wanted to keep the car.
• (c) Third, Mr Parton suggested the dealer could have the engine reconditioned and the radiator cleaned. However, Mr Parton said that this option was probably not the most favourable due to the cost being about twice the car's value.

[10] Mr Parton also advised against repairing the possible blown head gasket as the engine was "not in the best of condition". Mr Parton noticed the breather hose (PCV valve) was blocked off in the rocker cover and there were signs of fresh sealant around the rocker cover gasket area, pointing to it having been removed recently. For this reason, Mr Parton said that if the head gasket was replaced the engine would probably end up using more oil than before.
[11] I have no doubt that this vehicle failed to comply with the guarantee of acceptable quality in terms of the definition in s 7 of the Act (above). In particular, the vehicle was insufficiently durable compared with what a reasonable consumer would expect. It was only driven for 17 days and 882 km after being delivered to Mr Barkley. The failure occurred within the 30 day engine and transmission warranty which Mr Adams expressly provided in the vehicle offer and sale agreement. I treat the existence of this warranty as a representation by Mr Adams that the vehicle would last at least that long without requiring major repairs.[1]
[12] As I indicated at the outset, there was no real issue between the parties as to whether the vehicle failed to comply with the guarantee of acceptable quality and Mr Adams did not make any effort to resist a finding that it failed to comply.
[13] Accordingly, I conclude that the vehicle failed to comply with the guarantee of acceptable quality in s 6 of the Act.

Issue two: What is the appropriate remedy?

[14] Section 18 of the Act provides that if a failure can be remedied, the consumer may require the supplier to remedy the failure within a reasonable time.[2] If the failure cannot be remedied or is of a substantial character then the consumer is entitled to reject the goods.[3]
[15] Mr Barkley’s initially told Mr Adams he wanted a refund of the vehicle's purchase price, presumably relying on an argument that the failure was of a substantial character.[4] In the meantime, however, Mr Adams contacted Mr Parton and asked him for a quote for repairs. Mr Parton replied that replacing the engine with a suitable secondhand engine and cleaning and testing the radiator would cost $2,854.30 including labour and GST. Mr Barkley then changed his position on wanting to reject the vehicle and agreed it could be repaired, if Mr Adams paid the repair costs.
[16] Mr Adams reported that he was shocked at the size of the quote which was much more than he was expecting. Mr Adams asked Mr Parton to “sharpen his pencil” but, at first, he did not. Mr Adams obtained a quote from a workshop he used in Christchurch, Sub Mit, for $1,500 to replace the engine. In the meantime, Mr Barkley persuaded Mr Parton to reduce his quote to $2,400.
[17] Mr Adams told Mr Barkley that he could return the vehicle to him for repairs in Christchurch at Sub Mit but that the freight costs would be payable by Mr Barkley, amounting to $650 each way. Alternatively, Mr Adams offered to contribute $1,500 so that Mr Barkley could get the repairs done in Auckland.
[18] While the law requires a purchaser to give the trader an opportunity to fix a defect before getting it repaired elsewhere,[5] parties need to adopt a practical mindset in determining where repairs are carried out, especially where purchaser and trader are at different ends of the country. If a trader insists on getting repairs done in a different town, it may be open for the purchaser to claim transport costs as consequential losses.[6] So there may be no real advantage to a trader in insisting that a purchaser bring the vehicle back, if that involves the need to transport the vehicle over a long distance.
[19] In his proposal to resolve the claim, Mr Adams was effectively requiring Mr Barkley to waive his right to claim the transportation fee as a consequential loss. The only repair Mr Adams was offering would have involved additional expense for Mr Barkley, either $1,300 for transport or $900 in additional repair costs, if he accepted Mr Adams’ offer of $1,500.
[20] It was understandable that Mr Adams wanted to ensure he was getting a reasonable price for the repairs. But a more practical approach would have been for him to make inquiries with other repairers in Auckland, rather than to insist Mr Barkley brings the vehicle back to Christchurch.
[21] In any event, as the Tribunal’s Assessor Mr Dixon observed, the quotes from Sub Mit and from One Stop Mechanical do not cover the same work. The One Stop Mechanical quote also includes cleaning and testing the radiator which, as noted above, is possibly blocked, and may therefore have contributed to the vehicle overheating in the first place. The Sub Mit quote has no reference to this additional work.
[22] In Mr Dixon’s view, which I adopt, One Stop Mechanical’s quote for $2,400 to repair the vehicle’s defect is reasonable for the purposes of s 18(2)(b)(i) of the Act. The quote includes an estimate of 16 hours for labour, which Mr Dixon considers to be an appropriate time allocation for the repairs that are required.
[23] Accordingly, I conclude that Mr Barkley is entitled to have the failure remedied by One Stop Mechanical and to obtain the reasonable costs he will incur in doing so. It follows that I order Mr Adams to pay Mr Barkley $2,400 no later than 3 April 2018.
[24] I do not intend to make any order for reimbursement of car rental costs that Mr Barkley says he incurred when the vehicle was unavailable, as this part of the claim was not supported by any invoices or receipts.

J S McHerron
Adjudicator

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[1] For the purposes of s 7(1)(i) of the Act (above).

[2] Section 18(2)(a) of the Act.

[3] Section 18(3)(a) of the Act.

[4] Section 21 sets out the circumstances where a failure to comply with a guarantee is of a substantial character.

[5] Acquired Holdings Limited v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 (HC) at [11].
[6] Under s 18(4) of the Act.