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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 15 July 2019
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IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
BETWEEN MAHATHIR MOHAMAD
Purchaser
AND HAZLETON GROVE LTD
Trader
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MEMBERS OF TRIBUNAL
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B R Carter, Barrister – Adjudicator
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S Haynes, Assessor
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HEARING at Auckland on 23 May 2019
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APPEARANCES
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M Mohamad, Purchaser
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No appearance for the Trader
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DATE OF DECISION 5 June 2019
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_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
_________________________________________________________________
REASONS
Introduction
[1] On 31 October 2018, Mahathir Mohamad purchased a 2007 Nissan Pathfinder, registration number EEA779, from Hazleton Grove Ltd for $14,490. The vehicle had an odometer reading of approximately 280,000 km at the time of sale. Mr Mohamad also purchased a Janssen Insurance mechanical breakdown insurance policy for $1,795. To purchase the vehicle and pay for the mechanical breakdown insurance policy, Mr Mohamad entered into a credit contract with Oxford Finance Ltd dated 30 October 2018 (the collateral credit agreement)
[2] Despite the vehicle being described in pre-purchase marketing as being in “excellent order inside and out” and “mechanically perfect”, it was not. Mr Mohamad has now rejected the vehicle, alleging that it has had defects, including a fault with the vehicle’s turbo, that Hazleton Grove has failed to rectify within a reasonable time as required by the Consumer Guarantees Act 1993 (the Act). Mr Mohamad seeks to recover all amounts paid in respect of the vehicle and to be relieved of his obligations under the collateral credit agreement.
[3] Despite receiving a notice of hearing advising it of the time and place of the hearing, Hazleton Grove failed to attend. The hearing proceeded without Hazleton Grove.
The Issues
[4] Against this background, the issues requiring consideration in this case are:
- (a) Does the vehicle have a fault that breaches the acceptable quality guarantee in s 6 of the Act?
- (b) Has Hazleton Grove failed to repair the fault within a reasonable time?
- (c) What remedy is Mr Mohamad entitled to under the Act?
Does the vehicle have a fault that breaches 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 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.
[7] 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 Mohamad’s subjective perspective.
[8] The vehicle has not been of acceptable quality because the vehicle’s turbo failed the day after Mr Mohamad took possession.
[9] Mr Mohamad lives in Central Otago and purchased the vehicle online and sight unseen. The vehicle was then transported from Auckland to Christchurch, and Mr Mohamad took possession on 13 November 2018. The following day, while driving from Christchurch to Central Otago, the vehicle’s turbo failed. Mr Mohamad says that the vehicle lost power and he heard a whistling sound from the engine bay, which Mr Haynes, the Tribunal’s Assessor, advises is consistent with turbo failure.
[10] The vehicle was then towed to a workshop near Mr Mohamad’s home, which considered that the vehicle’s turbo had failed. Mr Mohamad then contacted Hazleton Grove, who advised Mr Mohamad that no work was to be performed on the vehicle by Mr Mohamad’s mechanic. Hazleton Grove advised that the vehicle’s turbo and engine had recently been replaced and it wanted to transport the vehicle to the Auckland-based repairer who had performed those earlier repairs. Mr Mohamad advises that the vehicle was then transported to Pitstop Manukau, arriving there on 14 December 2018.
[11] Although there is no evidence as to what, if any, diagnosis or repair has been performed since the vehicle was returned to Auckland, on the basis of the evidence from Mr Mohamad, I am satisfied that the vehicle’s turbo failed shortly after purchase. I accept Mr Mohamad’s evidence as to the symptoms he experienced while returning home from Christchurch, and I accept his evidence that his mechanic considered that the vehicle’s turbo had failed. Further, email correspondence between Mr Mohamad and Hazleton Grove confirms that the vehicle had significant damage that required repair.
[12] I am also satisfied that this fault breaches the acceptable quality guarantee in s 6 of the Act. Mr Haynes advises that a replacement turbo is likely to cost more than $2,500. I am satisfied that a reasonable consumer would not expect a vehicle of this price, age and mileage, particularly one that has been described as being in “excellent order” and “mechanically perfect”, to develop a fault with its turbo, which will cost more than $2,500 to rectify, so shortly after purchase.
Did Hazleton Grove fail to repair the fault within a reasonable time?
[13] Mr Mohamad claims that he is entitled to reject the vehicle under s 18(2)(b)(ii) of the Act because Hazleton Grove has failed to repair the turbo fault within a reasonable time.
[14] Section 18 provides:
- 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.
[15] The vehicle was returned to Hazleton Grove in December 2018. By 19 February 2019, the vehicle had not been returned to Mr Mohamad. Mr Mohamad advises that he has made repeated attempts to contact Hazleton Grove to find out what had happened to his vehicle, without success. He then rejected the vehicle on 19 February 2019. He has still not had a response from Hazleton Grove as to what has happened to his vehicle.
[16] Hazleton Grove had the vehicle for at least two months before Mr Mohamad rejected it. That is too long. Mr Haynes advises that required repair should have taken no longer than 10 working days, even allowing for unexpected delays. I am satisfied that, by failing to rectify the turbo fault and return the vehicle to Mr Mohamad by 19 February 2019, Hazleton Grove has failed to rectify the turbo fault within a reasonable time.
What remedy is Mr Mohamad now entitled to under the Act?
[17] The remedies relevant to this claim are set out in s 18 of the Act, which provides:
- 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.
[18] Under s 18(2)(b)(ii) of the Act, Mr Mohamad is entitled to reject the vehicle because Hazleton Grove has failed to rectify its faults within a reasonable time. Because this vehicle had a significant defect immediately after purchase and Mr Mohamad has had no meaningful use of it, under s 23(1)(a) of the Act, Mr Mohamad is entitled to recover all amounts paid in respect of the vehicle:
- (a) the deposit of $2,500;
- (b) $2,520 — being all payments of principal and interest made by Mr Mohamad under the collateral credit agreement from 19 December 2018 until the date of this decision.
[19] Mr Mohamad is also entitled to have its ongoing rights and obligations under the collateral credit agreement with Oxford Finance assigned to Hazleton Grove. The relevant provisions are set out in s 89(2) and (3) of the Motor Vehicle Sales Act 2003 (the MVSA), which state:
89 Jurisdiction of Disputes Tribunal
...
(2) A Disputes Tribunal may order that the rights and obligations of the buyer of a motor vehicle under a collateral credit agreement vest in a motor vehicle trader if—
(a) the collateral credit agreement is associated with the contract for the sale of that motor vehicle; and
(b) the motor vehicle trader is a party to that contract for sale; and
(c) either one of the following circumstances applies:
(i) the buyer exercises the right conferred by the Consumer Guarantees Act 1993 to reject that motor vehicle and, on a claim by the buyer under section 47(1) of that Act, the Disputes Tribunal orders the motor vehicle trader to refund any money paid, or other consideration provided, for that motor vehicle; or
(ii) the Disputes Tribunal finds that the buyer has suffered, or is likely to suffer, loss or damage by the conduct of the motor vehicle trader that constitutes, or would constitute, any of the conduct referred to in section 43(1) of the Fair Trading Act 1986 and the Disputes Tribunal makes an order under section 43(2) of that Act declaring the whole or any part of the contract for sale to be void.
(3) For the purposes of subsection (2), collateral credit agreement, in relation to a contract for the sale of a motor vehicle, means a contract or agreement arranged or procured by the motor vehicle trader or the buyer for the provision of credit by a person other than by the motor vehicle trader to enable the buyer to pay the price reserved by the contract for sale in respect of the motor vehicle.
[20] The criteria in s 89(2) of the MVSA for the assignment of rights and obligations under a collateral credit agreement are all met in this case:
- (a) the agreement between Mr Mohamad and Oxford Finance is a collateral credit agreement for the purposes of s 89(2) of the MVSA. The agreement was arranged or procured by Mr Mohamad for the provision of credit by Oxford Finance to enable Mr Mohamad to purchase the vehicle;
- (b) Hazleton Grove sold the vehicle to Mr Mohamad, so it is a party to the contract to purchase the vehicle; and
- (c) Mr Mohamad has exercised the right conferred by the Act to reject the vehicle, and the Tribunal has ordered that Hazleton Grove must refund any money paid, or other consideration provided, for that vehicle.
[21] Accordingly, under s 89(2) of the MVSA, all of Mr Mohamad’s rights and obligations under the collateral credit agreement are assigned to Hazleton Grove from the date of this decision.
Costs
[22] Under cl 14(1)(a)(i) and (b) of Sch 1 to the MVSA, the Tribunal may award costs against a party where, after receiving notice of the hearing, that party fails to attend without reasonable cause.
[23] I am satisfied that Hazleton Grove, 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 Mohamad is entitled to recover $50, being the filing fee for this application. Further, under cl 14(2)(a)(i) of Sch 1 to the MVSA, I also order that Hazleton Grove pay $650, being the reasonable costs of the Tribunal hearing.
DATED at AUCKLAND this 5th day of June 2019
B.R. Carter
Adjudicator
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2019/115.html