McMinn v SR Motors Ltd t/a J's Auto Import - Reference No. MVD 125/2019 [2019] NZMVDT 122 (17 June 2019)

Last Updated: 16 July 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 125/2019 [2019] NZMVDT 122 BETWEEN TUTA ADAM SYDNEY MCMINN Purchaser AND SR MOTORS LTD T/A J’S AUTO IMPORT Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Haynes, Assessor

HEARING at Auckland on 4 June 2019

APPEARANCES

T A S McMinn, Purchaser R Welham, Witness for the Purchaser

Z Jiang, for the Trader

DATE OF DECISION 17 June 2019

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DECISION OF THE TRIBUNAL

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1. Tuta McMinn’s application to reject the vehicle is dismissed.
2. SR Motors Ltd, trading as J’s Auto Import shall within 20 working days of the date of this decision:
   • (a) replace the vehicle’s rear shock absorbers; and
   • (b) pay $253.46 to Tuta McMinn.

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REASONS

Introduction

[1] On 23 August 2018, Tuta McMinn purchased a 2007 Lexus LS460 for $15,500 from SR Motors Ltd, trading as J’s Auto Import (J’s Auto Import). The vehicle had an odometer reading of 80,390 km at the time of sale. Mr McMinn has now rejected the vehicle, alleging that it had a pre-existing shock absorber defect that J’s Auto Import has refused to repair. Mr McMinn seeks to recover the purchase price, together with the cost of having the defective shock absorbers diagnosed.
[2] J’s Auto Import denies that the vehicle had a pre-existing fault with its shock absorbers and says that the fault arose too long after purchase for the protections in the Consumer Guarantees Act 1993 (the Act) to still apply.

The Issues

[3] 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 J’s Auto Import failed to repair the fault within a reasonable time?
• (c) What remedy is Mr McMinn entitled to under the Act?

Does the vehicle have a fault that breaches the acceptable quality guarantee?

[4] 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.
[5] 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.

[6] 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 McMinn’s subjective perspective.
[7] The parties agree that the vehicle’s rear shock absorbers. In that regard, Zichu Jiang, a director of J’s Auto Import, has test driven the vehicle and confirmed that the rear shock absorbers are too stiff and require replacement. Mr McMinn has also had the vehicle assessed by North Western Toyota, who confirmed the existence of the shock absorber fault.
[8] The parties disagree as to when that fault developed.
[9] Mr McMinn says that the fault was present from the time of sale. In support of this submission, Mr McMinn says that the vehicle’s suspension has been “bouncy” throughout his ownership. He has never owned a vehicle with airbag suspension, so thought this bounciness was normal. Mr McMinn says that he became aware that this bounciness was indicative of a defect with the suspension on 24 March 2019, when a rear passenger advised him that the vehicle’s rear suspension was faulty. The vehicle was then assessed by J’s Auto Import and North Western Toyota, both of whom confirmed the passenger’s diagnosis.
[10] J’s Auto Import says that the vehicle’s suspension was not faulty at the time of purchase. It relies on two compliance inspections conducted by Vehicle Testing New Zealand on 19 June 2018 and 24 August 2018. Both compliance inspections involved testing the rear suspension and no problems with the suspension were identified at that time. J’s Auto Import submits that if the vehicle’s rear shock absorbers had been defective, those defects would have been identified during the compliance inspection
[11] Based on the evidence presented by the parties, I am satisfied that the vehicle is unlikely to have had a pre-existing fault with its rear suspension. I accept J’s Auto Import’s submission that any pre-existing fault would most likely have been identified during the two compliance inspections. However, I am nonetheless satisfied that the suspension fault arose shortly after purchase. In that regard, I accept Mr McMinn’s evidence that the vehicle has been bouncy for some time — a symptom that Mr Haynes, the Tribunal’s Assessor, describes as being consistent with a gradual decline in the rear shock absorbers’ resistance.
[12] Although I cannot identify with any real precision the date on which the rear shock absorbers deteriorated to the point that they required replacement, I am satisfied that the deterioration occurred well before March 2019, meaning the rear shock absorbers have not been of acceptable quality because they have not been as durable as a reasonable consumer would consider acceptable.

Did J’s Auto Import fail to repair the fault within a reasonable time?

[13] Mr McMinn claims that he is entitled to reject the vehicle under s 18(2)(b)(ii) of the Act because J’s Auto Import failed to repair the rear shock absorber fault within a reasonable time.
[14] Section 18 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.

[15] Although I accept that J’s Auto Import has declined to rectify the defective rear shock absorbers, I am not satisfied that its conduct amounts to a failure or refusal to repair the fault sufficient to entitle Mr McMinn to reject the vehicle.
[16] 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 period of time before the fault became apparent and the distance travelled in that time. In this case, J’s Auto Import rightly considered that the fault was not pre-existing. Further, on the basis that Mr McMinn did not raise the issue with it until March 2019, J’s Auto Import considered that it should not have responsibility for the required repair because more than seven months had passed since purchase, during which time Mr McMinn had driven more than 6,000 km in the vehicle. J’s Auto Import therefore considered that it had no responsibility for the repairs because the protections in the Act no longer applied.
[17] I have now had the benefit of hearing and testing all of the evidence, and receiving advice from Mr Haynes, who has many years of experience in the automotive repair industry. Having heard that evidence, and considered the Mr Haynes’ advice, I am satisfied that the vehicle’s rear shock absorbers were defective and that J’s Auto Import should take responsibility for that fault. However, the evidence as to whether this fault breached the acceptable quality guarantee in s 6 of the Act was by no means clear cut, and I consider that J’s Auto Import acted quite reasonably in defending this matter.
[18] I note, for example, that if I had accepted J’s Auto Import submission that the defect did not become apparent until March 2019, then I would have concluded that the defect did not breach the acceptable quality guarantee, because it arose too long after purchase. However, because I was persuaded by Mr McMinn’s evidence that the fault arose sometime before then, I am satisfied that it is a defect that J’s Auto Import should rectify. In those circumstances, I do not consider that it would be reasonable to conclude that J’s Auto Import’s conduct in declining to repair the fault because it thought the Act no longer applied amounted to an unreasonable refusal to rectify the vehicle’s faults.
[19] Mr McMinn also submitted that he was entitled to reject the vehicle because J’s Auto Import told him that it would take approximately one month to source replacement parts. Mr Haynes advised that replacement suspension components for a Lexus LS460 can be difficult to obtain and must usually be imported from Japan. Mr Haynes advises that a delay of one month in sourcing those components is not unreasonable. On that basis, I am satisfied with Mr McMinn is entitled to reject the vehicle due to any delay in performing the repair.

Is the fault a failure of a substantial character?

[20] Under s 18(3) of the Act, Mr McMinn 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:

21. 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.

[21] Section 21(a) of the Act applies to this case. I am not satisfied the defective rear shock absorbers are of a substantial character justifying rejection of the vehicle.
[22] The purchaser of an 11-year-old Lexus LS460 that has travelled more than 80,000 km must have realistic expectations as to the quality and durability of such a vehicle and understand that faults they can be expensive to repair may develop from time to time. Mr Haynes advises that defective rear shock absorbers are the type of fault that can arise in such a vehicle of this age and mileage. On that basis, although I am satisfied that a reasonable consumer would expect the seller to rectify that fault, I am not satisfied that a reasonable consumer would have declined to acquire this vehicle if they had been fully acquainted with the nature and extent of the shock absorber fault that would develop after purchase.

What remedy is Mr McMinn entitled to under the Act?

[23] As set out above, Mr McMinn is not entitled to reject the vehicle. Instead, under s 18(2)(a) of the Act, Mr McMinn is entitled to have the vehicle’s rear shock absorbers replaced within a reasonable time. In that regard, the Tribunal orders that J’s Auto Import must replace the rear shock absorbers within 20 working days of the date of this decision.
[24] Under s 18(4) of the Act, Mr McMinn is also entitled to recover $253.46 being the cost of the assessment performed by North Western Toyota on 27 March 2019.

DATED at AUCKLAND this 17th day of June 2019

B.R. Carter
Adjudicator