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Wan v Buy Right Cars (2016) Ltd - Reference No. MVD 094/2019 [2019] NZMVDT 106 (24 May 2019)

Last Updated: 20 June 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 094/2019
[2019] NZMVDT 106

BETWEEN YEFEI WAN

Purchaser

AND BUY RIGHT CARS (2016) LTD
Trader





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

HEARING at Auckland on 14 May 2019



APPEARANCES
Y Wan, Purchaser
T Roberts, Witness for the Purchaser
L Roslin, for the Trader

DATE OF DECISION 24 May 2019

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

  1. Yefei Wan’s application to reject the vehicle is dismissed.
  2. Buy Right Cars (2016) Ltd shall, within 10 working days of the date of this decision:

_________________________________________________________________

REASONS

Introduction

[1] On 4 March 2017, Yefei Wan purchased a 2006 BMW 118i for $9,624 from Buy Right Cars (2016) Ltd. The vehicle had an odometer reading of 159,118 km at the time of sale.
[2] Mr Wan now seeks to reject the vehicle, claiming that the vehicle has had several faults since purchase that amount to a failure of a substantial character for the purposes of the Consumer Guarantees Act 1993 (the Act). Mr Wan seeks to return the vehicle to Buy Right Cars and recover the purchase price, the cost of purchasing an extended mechanical warranty and the cost of repairs performed on the vehicle.
[3] Buy Right Cars says that Mr Wan is not entitled to reject the vehicle. Although it accepts that the vehicle has had some defects that breach the acceptable quality guarantee in s 6 of the Act, it considers that those defects are not sufficiently serious to justify rejection. Further, it considers that many of the defects alleged by Mr Wan do not breach any of the Act’s guarantees.

The Issues

[4] Against this background, the issues requiring consideration in this case are:

Does the vehicle have, or has it had, faults that breach 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(1) 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.

[7] Mr Wan alleges that the vehicle has had the following faults since purchase:
[8] In considering whether or not the vehicle meets 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 Wan’s subjective perspective.

Mr Wan has not proven that Buy Right Cars failed to rectify the pre-existing oil leak

[9] Mr Wan alleges that the vehicle had an oil leak at the time of sale that was not rectified by Buy Right Cars. He says the oil leak was identified in a pre-purchase inspection performed by AA Motoring. Mr Wan says that Buy Right Cars agreed to rectify the leak, but it did not. Mr Wan points to subsequent oil leaks identified by Autohaus Rotorua Ford & Mazda (Autohaus), EuroService Auckland Ltd (EuroService) and Buy Right Cars as evidence that Buy Right Cars failed to rectify the pre-purchase oil leak.
[10] The evidence provided by Mr Wan does not show that Buy Right Cars failed to rectify the pre-purchase oil leak. Information from Buy Right Cars shows that it replaced the rocker cover gasket, vacuum pump seals, valvetronic servomotor gasket, eccentric shaft seal and sump gasket to rectify the oil leak. Autohaus found no oil leaks and the information from EuroService and Buy Right Cars shows that the current oil leaks are from the oil filter housing gasket, VVT solenoid and crank seal cover, which are different parts of the engine and appear to be entirely different oil leaks from those repaired by Buy Right Cars before sale.
[11] Accordingly, I am not satisfied that Mr Wan has proven that Buy Right Cars failed to rectify the pre-existing oil leaks. Instead, the evidence shows that the oil leaks currently present in the vehicle are different from those that existed pre-sale.

Mr Wan has proven that the vehicle has had faults that breach the acceptable quality guarantee

[12] Mr Wan has, however, proven that the vehicle has several other faults that breach the acceptable quality guarantee in s 6 of the Act.

The unspecified actuator fault

[13] In April 2017, the vehicle broke down while Mr Wan was in Rotorua. Although the precise nature of the fault that caused the vehicle to break down is unknown, Autohaus replaced an actuator, o-ring and gasket at a cost of $971.76. Mr Wan was instructed by Buy Right Cars to use his Autosure extended warranty policy for those repairs, for which he paid an excess of $350.
[14] Although the precise details of this fault are unknown, I accept Mr Wan’s evidence that the vehicle had a fault that caused it to break down in Rotorua, which was rectified by a replacement actuator, o-ring and gasket.

The rear centre seatbelt

[15] In its pre-purchase inspection, AA Motoring identified that the rear centre seatbelt was seized. This fault is of some significance, as it will cause the vehicle to fail a warrant of fitness inspection. Buy Right Cars agreed to rectify this fault, but Mr Wan says that it did not do so, as the vehicle failed a warrant of fitness inspection in March 2019, in part because of a seized rear centre seatbelt.
[16] Although I am satisfied that the rear centre seatbelt worked when the vehicle was supplied to Mr Wan (and in that regard I note that Mr Wan tested the seatbelt and was satisfied that it worked) I am nonetheless satisfied that Buy Right Cars’ attempted repair was inadequate, and that the rear centre seatbelt again requires repair because it has seized.

The faulty air conditioning unit

[17] Shortly after Mr Wan purchased the vehicle, he noticed that the vehicle’s air conditioning unit would not blow warm air. Although I was not told of the precise nature of the repairs performed, Buy Right Cars has rectified this air conditioning fault.

The faulty water pump

[18] In approximately May 2017, Mr Wan noticed that the vehicle was consuming cooling fluid. The vehicle was then diagnosed as having a faulty water pump, and on 1 June 2017, I & J Compliance Ltd replaced the vehicle’s water pump. This repair was performed using Mr Wan’s Autosure extended warranty policy, and Mr Wan paid a $350 excess for this repair.

The ongoing water leak

[19] After the water pump was replaced, the vehicle continued to consume coolant fluid. Mr Wan advises that the vehicle consumed approximately one litre of coolant fluid every two or three months.
[20] In January 2019, Mr Wan had the vehicle assessed by EuroService, who pressure tested the cooling system and found drips from the evaporator drain. EuroService considered that the vehicle is likely to have a leak from its heater core, which will require replacement at a cost exceeding $1,000.
[21] Although I am not satisfied that the evidence presented by Mr Wan conclusively proves that the vehicle has a leaking heater core, I am satisfied that the evidence shows that the vehicle has had an ongoing coolant leak since May 2017, and that the water pump repair performed by Buy Right Cars has not rectified that leak.

The faulty spare key

[22] Mr Wan also alleges that the vehicle has a faulty spare key. The spare key does not remotely lock the car. Buy Right Cars has attempted to rectify this fault, without success.
[23] Although this is a relatively minor fault, and affects the operation of the spare key only, I consider that where a trader chooses to provide a spare key, a reasonable consumer would expect that spare key to remain fully operational for a reasonable period of time. The spare key has not been fully operational for a reasonable period of time and requires repair or replacement.

These faults breach the acceptable quality guarantee

[24] I am satisfied that each of the faults discussed above breaches the acceptable quality guarantee in s 6 of the Act. Section 7(1) of the Act requires that vehicle’s must be as free of minor defects and as durable as a reasonable consumer would consider acceptable, taking account of the factors listed in s 7(f) to (j) of the Act. In this case, I consider that a reasonable consumer would not expect a vehicle of this price, age and mileage to develop faults of the kind discussed above so shortly after purchase. Accordingly, I consider those faults mean the vehicle has not been of acceptable quality because it has not been sufficiently durable.

The remaining faults do not breach the acceptable quality guarantee

[25] Although Mr Wan has proven that many of the other faults listed in paragraph [7] exist, I am not satisfied that those faults breach the acceptable quality guarantee in s 6 of the Act because those faults arose too long after purchase for the protections in the Act to continue to apply. That is because the protections in the Act are not indefinite, and last only for as long as is reasonable, taking account of factors such as the price, age and mileage of the vehicle at the time of sale, the nature of the fault, the length of time before the fault arose and the distance travelled in that time.

The window regulator fault

[26] In December 2017 or January 2018, the vehicle developed a fault with the driver side rear window regulator, which cost $175 plus labour charges to rectify. Given the minor nature of this fault, and the length of time since purchase before it developed (between seven and eight months), I am satisfied that the window regulator fault does not breach the acceptable quality guarantee because, in respect of the window regulator, the vehicle was as durable as a reasonable consumer would consider acceptable.

The dynamic stability control fault

[27] Likewise, Mr Wan has proven that the vehicle has a fault that causes the dynamic stability control warning light (which Mr Wan called the traction control light) to illuminate, which was most likely caused by a steering angle sensor fault. This fault first became apparent in April 2018 and remains unrectified.
[28] This fault arose more than 12 months after purchase, by which time Mr Wan had driven more than 8,800 km in the vehicle. Given the nature of the fault and the relative ease and cost of the repair – Mr Haynes, the Tribunal’s Assessor, advises that if the fault is caused by a steering angle sensor the repair should take no longer than two hours and cost no more than $500 – 12 months is too long for the protections in the Act to continue to apply.

The faults identified on or after 9 January 2019

[29] Finally, all of the other faults alleged by Mr Wan were identified on or after 9 January 2019, by which time Mr Wan had owned the vehicle for 22 months and driven approximately 15,000 km in the vehicle. Again, taking account of the nature of those faults, the protections in the Act do not continue to apply so long after purchase.
[30] Ultimately, in alleging that the vehicle has not been of acceptable quality because of defects that arose so long after purchase, I consider that Mr Wan has unrealistic expectations as to the quality and durability of a $9,624, 11-year-old BMW 118i that had travelled nearly 160,000 km at the time of sale. A reasonable purchaser of such a vehicle should understand that, as occurred in this case, faults consistent with the vehicle’s age and mileage will develop over time and that, after a reasonable period of time, the purchaser must assume responsibility for rectifying those faults.

Are the faults a failure of a substantial character?

[31] Under s 18(3) of the Act, Mr Wan 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:
  1. 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.

[32] 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.
[33] None of the faults that breach the acceptable quality guarantee are a failure of a substantial character in its own right. Given the price, age and mileage of the vehicle at the time of sale, and the realistic expectations a reasonable consumer must have as to the vehicle’s quality and durability, I am not satisfied that any one of the faults are such that a reasonable consumer would have refused to purchase the vehicle.
[34] I am also satisfied, that when considered together, the faults that breach the acceptable quality guarantee do not amount to a failure of a substantial character for the purposes of s 21(a) of the Act. In Cooper v Ashley & Johnson Motors Ltd, the District Court stated that a purchaser may also reject a vehicle where there has been an accumulation of defects, even when those defects may not amount to a failure of substantial character in their own right.[1] 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]
[35] I am not satisfied that the accumulated defects that breach the acceptable quality guarantee are not such that a reasonable consumer can convincingly say that he or she had no confidence in the reliability of the vehicle. As discussed above, a reasonable purchaser of an 11-year-old BMW 118i that has travelled nearly 160,000 km at the time of sale must understand that defects consistent with the vehicle’s age and mileage can arise from time to time. Taking account of the nature of the vehicle’s proven faults and when those faults occurred, I am not satisfied that a reasonable consumer would have reached the point that it had lost confidence in the reliability of the vehicle.
[36] For completeness I note that, even if Mr Wan had been entitled to reject the vehicle, I consider that he has lost the right to do so because the vehicle has been damaged while in his possession for reasons unrelated to any of the vehicle’s defects.
[37] Section 20 of the Act sets out the circumstances in which a purchaser loses the right to reject a vehicle. Relevant to this case, s 20(1)(c) of the Act states:

20 Loss of right to reject goods

(1) The right to reject goods conferred by this Act shall not apply if—

...

(c) the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply.

[38] After the hearing, Mr Wan provided photographs of damage to the rear passenger side of the vehicle. Those photographs show damage to three panels — the rear passenger side door, the lower sill and the left rear quarter panel — including scratches and a dent to the rear passenger side door. Mr Haynes advises that the dent will need to be removed and the affected parts of the panels repainted. Mr Haynes considers that the required repairs will cost between $800 and $1,000, at retail prices.
[39] Although Mr Wan may be able to easily repair the damage, I am satisfied that if Mr Wan had been entitled to reject the vehicle, the damage is sufficient to amount to damage for the purposes of s 20(1)(c) of the Act and that Mr Wan has lost the right to reject the vehicle.

What remedy is Mr Wan entitled to under the Act?

[40] The remedies relevant to this claim are set out in s 18 of the Act, which provides:
  1. 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.

[41] As set out above, Mr Wan is not entitled to reject the vehicle. Under s 18(2)(a) of the Act, Mr Wan is instead entitled to have the existing defects that breach the acceptable quality guarantee rectified within a reasonable time. In that regard, I order that Buy Right Cars must rectify the faulty rear centre seatbelt, the ongoing coolant leak and the faulty spare key within 10 working days of the date of this decision.
[42] Under s 18(4) of the Act, Mr Wan is also entitled to recover the $700 in insurance excesses he paid to Autosure for the unspecified actuator repair and the water pump repair.
[43] Buy Right Cars accepts that it should pay the insurance excess for the water pump repair but denies that it should pay the excess for the actuator repair. In Acquired Holdings Ltd v Turvey, the High Court concluded that under s 18(2) of the Act, the consumer must first give the supplier an opportunity to remedy the failure before having the defect rectified elsewhere and recovering the cost of repairs from the supplier.[3] Buy Right Cars says that Mr Wan did not contact it before having that unspecified actuator repair performed, so he should not be entitled to recover the excess he paid for that repair.
[44] I do not agree. I accept Mr Wan’s evidence that he contacted Buy Right Cars on the day that the vehicle broke down and it abdicated its responsibilities under the Act by telling Mr Want to make a claim using the Autosure policy. Consequently, Mr Wan is entitled to recover the $350 excess he paid for that repair.

DATED at AUCKLAND this 24th day of May 2019

B.R. Carter
Adjudicator


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

[2] At 417.

[3] Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2007) 8 NZBLC 102,107 (HC).

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