Savage v Park N Sell Ltd - Reference No. MVD 092/2019 [2019] NZMVDT 111 (31 May 2019)

Last Updated: 20 June 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 092/2019 [2019] NZMVDT 111 BETWEEN DARREN JOHN SAVAGE & ELIZABETH SAVAGE Purchasers AND PARK N SELL LTD Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S D Gregory, Assessor

HEARING at Whangarei on 28 May 2019

APPEARANCES

D J Savage and E Savage, Purchasers

No appearance for the Trader

DATE OF DECISION 31 May 2019

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DECISION OF THE TRIBUNAL

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1. Park N Sell Ltd shall, within 10 working days of the date of this decision, pay $450.26 to Darren and Elizabeth Savage.

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REASONS

Introduction

[1] On 14 August 2018, Darren and Elizabeth Savage purchased a 2010 Ford Falcon, registration number FGR269, for $10,995 from Park N Sell Ltd. The vehicle had an odometer reading of 157,100 km at the time of sale.
[2] Mr and Mrs Savage say that the vehicle has had several defects that breach the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the CGA). Park N Sell has rectified some of those defects but has declined to rectify the remainder. Mr and Mrs Savage now seek to recover the cost of having those defects rectified.
[3] Mr and Mrs Savage also say that Park N Sell claimed that the vehicle had been fully serviced throughout its life, a representation they say is misleading because the vehicle’s transmission had not been serviced. Mr and Mrs Savage seek to recover the cost of having the transmission serviced.
[4] Despite receiving a notice of hearing advising it of the time and place of the hearing, Park N Sell failed to attend. The Tribunal received an email and text message from David Langridge, a director of Park N Sell, advising that he was overseas and could not attend the hearing. The Tribunal asked Mr Langridge to provide evidence confirming his travel arrangements, which he failed to do. Accordingly, the hearing proceeded without Park N Sell.

The Issues

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

• (a) Does the vehicle have faults that breach the acceptable quality guarantee in s 6 of the CGA?
• (b) If so, what remedy are Mr and Mrs Savage entitled to under the CGA?
• (c) Has Park N Sell engaged in misleading conduct in breach of s 9 of the Fair Trading Act 1986 (the FTA)?

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

[6] Section 6 of the CGA imposes on suppliers and manufacturers of consumer goods “a guarantee that the goods are of acceptable quality”. Section 2 of the CGA defines "goods" as including vehicles.
[7] Relevant to this case, the expression “acceptable quality” is defined in s 7(i) 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.

[8] 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 CGA 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 and Mrs Savage’s subjective perspective.
[9] I am satisfied that the vehicle had pre-existing faults, some of which caused it to fail a warrant of fitness inspection, that breached the acceptable quality guarantee.

The warrant of fitness failures

[10] Park N Sell had an obligation to ensure that the vehicle had a warrant of fitness issued within one month of the sale of the vehicle as required by the Land Transport Regulations.[1] It did not comply with that obligation. The vehicle’s warrant of fitness was issued on 1 December 2017, more than eight months before the vehicle was purchased.
[11] Because the vehicle did not have a recent warrant of fitness, on 22 August 2018 Mr and Mrs Savage took the vehicle to Union Car Spares ARB Northern (Union Car Spares) in Whangarei for a warrant of fitness inspection. The vehicle failed this inspection due to:

• (a) discoloured indicator bulbs;
• (b) low brake fluid;
• (c) a faulty left front fog light;
• (d) both rear lower shock absorber bolts were fouling on suspension arms; and
• (e) the tread depth on the left hand rear tyre was below minimum requirements.

[12] Union Car Spares also considered that the right rear tyre was close to the minimum tread depth, that play was developing in the rear suspension, that the front tyres were becoming worn on their inner edges and that the auto transmission cooler was leaking or seeping.
[13] Mr and Mrs Savage asked Park N Sell to rectify all of the issues found by Union Cars Spares. Park N Sell rectified each of the warrant of fitness failures and replaced the worn right rear tyre.
[14] I am satisfied that the vehicle was not of acceptable quality for the purposes of s 6 of the CGA because of the faults that caused it to fail the warrant of fitness inspection. Notwithstanding that the purchaser of an eight-year-old Ford Falcon that has travelled more than 157,000 km at time of sale must have realistic expectations as to its quality and durability, I am satisfied that a reasonable consumer would not expect such a vehicle to have pre-existing warrant of fitness failures.

The subsequent faults

[15] On 4 March 2019, Mr and Mrs Savage then had the vehicle serviced by Autopro Whangarei, who considered that the vehicle had several defects, including:

• (a) “major” wear on the inner edges of both front tyres;
• (b) a leak from the steering rack;
• (c) a leak from the rear differential axle seals and hat; and
• (d) split rear differential bushes.

[16] Mr and Mrs Savage allege that each of these defects means the vehicle has not been of acceptable quality.

The worn front tyres

[17] I do not agree that the worn front tyres mean the vehicle has not been of acceptable quality. The evidence shows that the tyres were of acceptable quality when the vehicle was sold to Mr and Mrs Savage, as evident in the fact that the front tyres passed the warrant of fitness inspection performed on 22 August 2018.
[18] I am also satisfied that the front tyres have been as durable as a reasonable consumer would consider acceptable. The protections in the CGA are not indefinite, and last only for as long as is reasonable taking account of factors such as the nature of the defect, the price, age and mileage of the vehicle at time of purchase, the length of ownership before the defect required repair and the distance travelled in that time.
[19] In this case, I consider that a reasonable consumer would understand that a vehicle’s tyres are a consumable item that will require replacement from time to time. Taking account of the fact that the tyres did not require replacement until March 2019, nearly seven months after purchase, during which time Mr and Mrs Savage had travelled more than 3,000 km in the vehicle, I am satisfied that those tyres have been as durable as a reasonable consumer would consider acceptable in a vehicle of this price, age and mileage.

The power steering leak

[20] Mr Savage advises that he has routinely topped up the vehicle’s power steering fluid since purchase, putting about 300 ml of power steering fluid into the vehicle every week. Although this defect was not identified by Union Car Spares, Mr Gregory, the Tribunal’s Assessor, advises that the auto transmission cooler hose leak identified by Union Car Spares was most likely a misdiagnosis of the power steering leak. Mr Gregory says that the transmission cooler hose runs close to the power steering rack and because the transmission and power steering fluids are the same, a misdiagnosis can be easily made.
[21] Accordingly, on the basis of Mr Savage’s evidence that he has been routinely topping up the vehicle’s power steering fluid, and Mr Gregory’s advice that transmission cooler hose leak identified by Union Car Spares could well have been the power steering leak, I am satisfied that this fault has existed since purchase and breaches the acceptable quality guarantee in s 6 of the CGA. I consider that a reasonable consumer would not expect a vehicle at this price, age and mileage to have a pre-existing power steering leak.

The rear differential leak and split bushes

[22] I am not satisfied that the leak from the rear differential axle seals and hat, and the split rear differential bushes breach the acceptable quality guarantee.
[23] There is no evidence to suggest that these defects existed at the time of sale, and because the defects were not identified until more than seven months after sale, I am satisfied that the vehicle has been as durable as a reasonable consumer would consider acceptable. In that regard, Mr Gregory advises that defects of this nature are common in Ford Falcons of this age and mileage and are consistent with the ordinary wear and tear that one should expect in such a vehicle.

What remedy are Mr and Mrs Savage entitled to under the CGA?

[24] The remedies relevant to this claim are set out in s 18 of the CGA, 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.

[25] Mr and Mrs Savage are not entitled to recover the cost of replacing the front tyres or of rectifying the differential leak and the split differential bushes as those faults do not breach any of the CGA’s guarantees.
[26] Mr and Mrs Savage also seek to recover the cost of rectifying the power steering leak. After having the vehicle assessed by Autopro Whangarei, Mr and Mrs Savage contacted Park N Sell, asking it to rectify the defects found, which included the power steering leak. In an email dated 12 March 2019, Park N Sell declined to rectify the defects. It advised Mr and Mrs Savage that “under the consumer guarantees act you have 30 days from the date of sale 14/08/2018 to come back to me if the goods are not fit for purpose”. Interpreting this email as a refusal to rectify the vehicle’s faults, Mr and Mrs Savage then had the power steering leak rectified by Autopro Whangarei, using their Janssen Insurance extended warranty.
[27] I am satisfied that Mr and Mrs Savage are entitled to recover the cost of rectifying the power steering leak under s 18(2)(b)(i) of the CGA. Mr and Mrs Savage required Park N Sell to rectify the fault, but Park N Sell refused to do so, claiming that the CGA no longer applied because its arbitrary 30 day period had expired. There is no such 30 day period in the CGA, and in addition to being a misleading representation as to Mr and Mrs Savage’s rights under the CGA, I am satisfied that Park N Sell’s statement amounts to a refusal to rectify the vehicle’s faults.
[28] Accordingly, under s 18(2)(b)(i) of the CGA, Mr and Mrs Savage are entitled to recover the following cost of that repair:

• (a) $125 — being half of the excess paid to Janssen Insurance (the other half being attributable to the differential repair);
• (b) $69 — being the cost of freight and packaging associated with the power steering leak repair;
• (c) $71.26 — being the cost of replacement power steering fluid; and
• (d) $80 — being the cost of the wheel alignment required after the steering rack repairs were performed.

[29] Under s 18(4) of the CGA, Mr and Mrs Savage are also entitled to recover the cost of having the vehicle’s defects assessed. In that regard they may recover $55, being the cost of the warrant of fitness inspection performed in August 2018 by Union Car Spares.

Has Park N Sell engaged in conduct that breached s 9 of the FTA?

[30] Mr and Mrs Savage also allege that Park N Sell has engaged in misleading conduct in breach of s 9 of the FTA by representing that the vehicle had been fully serviced. Mr and Mrs Savage say that this representation was misleading. Mr and Mrs Savage advise that the vehicle’s transmission should have been serviced when its odometer reading was 90,000 km and that he has been told that due to the condition of the transmission fluid, that service most likely did not occur. Mr and Mrs Savage also advise that the vehicle has a plastic transmission pan, which would have been replaced with a steel transmission pan if the vehicle’s transmission had previously been serviced.
[31] There is a dispute between the parties as to what was said about the vehicle’s service history. In email correspondence with the Tribunal, Park N Sell denied representing that the vehicle had been fully serviced.
[32] Ultimately, I do not need to resolve this dispute to determine this aspect of Mr and Mrs Savage’s claim. That is because the evidence presented by Mr and Mrs Savage does not show that the vehicle’s transmission has not been serviced.
[33] Mr Gregory advises that the presence of the plastic transmission pan is not evidence of a lack of servicing. Mr Gregory says that the pan would have been replaced with a steel transmission pan if it had been serviced by a Ford servicing agent but is unlikely to have been replaced if it was serviced by any other mechanic. Further, in the absence of service records proving that a transmission service was performed, Mr Gregory advises that there is simply no way of knowing whether the transmission has been serviced, because the condition of the transmission fluid can degrade quickly and cannot be relied upon as evidence that routine servicing has not been performed.
[34] On that basis, even if Mr and Mrs Savage had successfully proven that Park N Sell had represented that the vehicle had been fully serviced, I am not satisfied that they have proven that this representation was misleading. Accordingly, Mr and Mrs Savage’s application under the FTA is dismissed.

Costs

[35] Under cl 14(1)(a)(i) and (b) of sch 1 to the Motor Vehicle Sales Act 2003 (the MVSA), the Tribunal may award costs against a party where that party either fails to participate in pre-hearing settlement discussions or, after receiving notice of the hearing, fails to attend without reasonable cause.
[36] I am satisfied that Park N Sell, after receiving notice of the hearing, failed to attend without reasonable cause. Accordingly, under cl 14(2)(b) of sch 1 to the MVSA, Mr and Mrs Savage are entitled to recover $50, being the filing fee for this application.

Referral to Commerce Commission

[37] Park N Sell made a misleading representation by stating that the protections in the CGA apply for only 30 days. Section 13(i) of the Fair Trading Act 1986 prohibits representations that mislead consumers as to their rights under the CGA. Consequently, I will refer this decision to the Commerce Commission, which has jurisdiction to consider such matters under the Fair Trading Act.

DATED at AUCKLAND this 31st day of May 2019

B.R. Carter
Adjudicator

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[1] Land Transport Rule: Vehicle Standards Compliance 2002, r 9.12(3).