Karunarathne v Prestige Cars NZ Limited Reference No. MVD 038/2018 [2018] NZMVDT 65 (26 March 2018)

Last Updated: 4 May 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2018] NZMVDT 065 Reference No. MVD 038/2018
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	DEWAPPRIYAGE MAHENDRA MANGALANATH KARUNARATHNE
		Purchaser
	AND	PRESTIGE CARS NZ LIMITED
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 14 March 2018
DATE OF DECISION 26 March 2018
APPEARANCES
D M M Karunarathne, Purchaser D A G C C Senarathna, Witness for the Purchaser
A Azizi, for the Trader

ORDERS

1. Prestige Cars NZ Limited shall, within 10 working days of the date of this decision:
   1. connect the infotainment unit to the vehicle’s subwoofer and ensure the subwoofer is operational; and
   2. repair the scratched driver’s door frame

DECISION

[1] The vehicle’s infotainment unit was not installed with reasonable care and skill, in breach of s 28 of the Consumer Guarantees Act 1993 (“the Act”). Prestige Cars NZ Limited also breached s 28 of the Act when it scratched the driver’s door frame while trying to open the vehicle after it had broken down. The appearance of the infotainment unit does not breach s 28 of the Act.
[2] The scratched rear bumper does not breach the acceptable quality guarantee in s 6 of the Act. The scratch is minor and in keeping with the price, age and mileage of the vehicle.
[3] Under s 32 of the Act, Prestige Cars must connect the infotainment unit to the vehicle’s subwoofer and ensure the subwoofer is operational. It must also repair the scratch to the driver side door frame.

REASONS

Introduction

[4] On 27 September 2017, Mahendra Karunarathne purchased a 2006 Mitsubishi Outlander for $11,500 from Prestige Cars. The vehicle had an odometer reading of 100,300 kms at the time of sale.
[5] As a condition of sale, Prestige Cars agreed to install a new infotainment unit, with a reversing camera. Prestige Cars installed the infotainment unit, but did not connect the vehicle’s subwoofer to the unit. Mr Karunarathne is also unhappy at the appearance of the infotainment unit and says that the vehicle has unacceptable scratches on the driver side door frame and the rear bumper.
[6] Mr Karunarathne has applied to the Tribunal, seeking to have all of the alleged faults rectified.
[7] Prestige Cars has offered to repair the vehicle’s scratches, but does not accept responsibility for the alleged faults with the infotainment unit.

The Issues

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

• (a) Has Prestige Cars failed to exercise reasonable care and skill when installing the infotainment unit and scratching the driver’s door frame, in breach of s 28 of the Act?
• (b) Does the vehicle have faults that breach the acceptable quality guarantee in s 6 of the Act?
• (c) What remedy is Mr Karunarathne entitled to under the Act?

Has Prestige Cars failed to exercise reasonable care and skill?

[9] Section 28 of the Act imposes an obligation on the supplier of services that the services will be carried out with reasonable care and skill.
[10] In this case, Prestige Cars has provided two relevant services to Mr Karunarathne. First, it installed the infotainment unit after Mr Karunarathne purchased the vehicle. Second it attempted to jump start the vehicle for Mr Karunarathne after Mr Karunarathne had difficulty starting the vehicle. Accordingly, under s 28 of the Act, it had an obligation to perform those services with reasonable care and skill.

The infotainment unit

[11] I am satisfied that Prestige Cars provided a service by installing the vehicle’s infotainment unit, and that the unit was not installed with reasonable care and skill.
[12] As a condition of sale, Prestige Cars agreed to install a new infotainment unit, with a reversing camera. Mr Azizi, appearing for Prestige Cars, submitted that the infotainment unit was not part of the “deal” between the parties, because Mr Karunarathne paid nothing extra for the unit. I took from this submission that Prestige Cars was arguing that it should have no responsibility for the quality of this unit, or of the installation. I disagree. The infotainment was part of the deal between the parties. Although it was included at no extra cost, I have no doubt that the infotainment unit was key to Mr Karunarathne’s decision to purchase the vehicle. Mr Karunarathne emphasised this in his evidence, saying that he was looking for a vehicle with a reversing camera.
[13] The infotainment unit was not properly installed. Mr Karunarathne likes listening to music. He particularly likes bass. The vehicle has factory speakers and a subwoofer, which were connected to the stereo when Mr Karunarathne purchased the vehicle. The infotainment unit, which replaced the stereo, has been connected to the vehicle’s speakers, but not to the subwoofer, meaning that the bass output of the unit is significantly diminished.
[14] I am satisfied that a reasonable consumer would have expected the replacement infotainment unit to be connected to the vehicle’s speakers and subwoofer in the same manner as the original stereo. It was not connected to the subwoofer, meaning that the infotainment unit does not have the functionality that a reasonable consumer would expect.
[15] Prestige Cars submitted that it was too expensive to connect the infotainment unit to the subwoofer. Prestige Cars gave evidence that it would cost approximately $800 to make the subwoofer work. That may be the case, but by Prestige Cars agreeing to install the infotainment unit, it agreed to perform that job properly. It did not do so, in breach of s 28 of the Act. It now needs to ensure that the infotainment unit is correctly installed and that the subwoofer is functional.
[16] Mr Karunarathne is also unhappy about the appearance of the infotainment unit. He says that there is now a gap in the vehicle’s centre console below the infotainment unit.
[17] I am not satisfied that this gap breaches s 28 of the Act. The photographs of the vehicle show no obvious gap in the centre console. Further, I consider that a reasonable consumer would understand that there may be some imperfections when an aftermarket infotainment unit is installed in a vehicle, because the aftermarket units will almost inevitably have different dimensions to the original component.
[18] In this case the infotainment unit appears to be of acceptable appearance. Accordingly, in relation to the gap in the centre console, I am not satisfied that the unit has been poorly installed.

The scratched door frame

[19] Shortly after the infotainment unit was installed, the vehicle would not start, and Mr Karunarathne could not open it with his key. Prestige Cars offered to assess the vehicle, and attempted to open the door with a metal wire. While attempting to open the driver’s door, it scratched the door frame.
[20] Mr Karunarathne provided photographs of the damage. The vehicle has small, but obvious, scratches on the door frame.
[21] I consider that, by agreeing to assess the vehicle, and then attempting to open it with wire, Prestige Cars provided a service to Mr Karunarathne. That service was not provided with reasonable care and skill, in breach of s 28 of the Act, because Prestige Cars scratched the door frame.

Does the vehicle have faults that breach the acceptable quality guarantee?

[22] Mr Karunarathne alleges that the scratches to the rear bumper breach the acceptable quality guarantee in s 6 of the Act.
[23] 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.
[24] 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.”

[25] 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 Karunarathne’s subjective perspective.
[26] I am not satisfied that the scratch to the rear bumper breaches the acceptable quality guarantee. The Act does not provide a guarantee that vehicles will be perfect, or free of all defects. It simply guarantees that vehicles will be in a condition that is acceptable to a reasonable consumer, taking account of factors such as the price, age and mileage of the vehicle.
[27] Mr Karunarathne paid $11,500 for an 11-year-old vehicle that had travelled more than 100,000 kms at the time of sale. I consider that the rear bumper scratch is in keeping with what a reasonable consumer might expect in a vehicle of this price, age and mileage. It appears minor, and is difficult to see, due to its presence at the bottom of the rear bumper.
[28] Taking account of the price, age and mileage of the vehicle, and the fact that the scratch is minor and not easily visible, I consider that the scratch does not breach the acceptable quality guarantee.
[29] Prestige Cars has offered to rectify the scratch, so although the scratch does not breach the acceptable quality guarantee, it appears that Mr Karunarathne will nonetheless get the remedy he seeks.

What remedy is Mr Karunarathne entitled to under the Act?

[30] As set out above, I have found that Prestige Cars has failed to comply with the guarantee in s 28 of the Act. The remedies for a breach of s 28 are set out in s 32 of the Act, which provides:

32 Options of consumers where services do not comply with guarantees

Where a service supplied to a consumer fails to comply with a guarantee set out in any of sections 28 to 30, the consumer may,—

(a) where the failure can be remedied,—

(i) require the supplier to remedy it within a reasonable time:

(ii) 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,—

(A) have the failure remedied elsewhere and recover from the supplier all reasonable costs incurred in having the failure remedied; or

(B) subject to section 35, cancel the contract for the supply of the service in accordance with section 37:

(b) where the failure cannot be remedied or is of a substantial character within the meaning of section 36,—

(i) subject to section 35, if there is a contract between the supplier and the consumer for the supply of the service, cancel that contract in accordance with section 37; or.

(ii) obtain from the supplier damages in compensation for any reduction in value of the product of a service below the charge paid or payable by the consumer for the service:

(c) in addition to the remedies set out in paragraphs (a) and (b), 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 product of the service) which was reasonably foreseeable as liable to result from the failure.

[31] Under s 32 of the Act, Mr Karunarathne’s remedy for the substandard services provided by Prestige Cars is to require Prestige Cars to remedy the substandard work within a reasonable time.
[32] Accordingly, the Tribunal orders that Prestige Cars shall, within 10 working days of the date of this decision:

• (a) connect the infotainment unit to the vehicle’s subwoofer and ensure the subwoofer is operational; and
• (b) repair the scratched driver’s door frame.
  

DATED at AUCKLAND this 26th day of March 2018

B.R. Carter
Adjudicator