Rasmussen v Simon Lucas Motors Ltd - Reference No. MVD 126/2019 [2019] NZMVDT 128 (24 June 2019)

Last Updated: 16 July 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 126/2019 [2019] NZMVDT 128 BETWEEN PATRICIA RASMUSSEN & LANCE RASMUSSEN Purchasers AND SIMON LUCAS MOTORS LTD Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S D Gregory, Assessor

HEARING at Auckland on 11 June 2019

APPEARANCES

P and L Rasmussen, Purchasers

C Porter, for the Trader

DATE OF DECISION 24 June 2019

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DECISION OF THE TRIBUNAL

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1. Patricia and Lance Rasmussen’s application to reject the vehicle is dismissed.

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REASONS

Introduction

[1] Six years ago, Patricia and Lance Rasmussen bought a new Great Wall X200 SUV for $29,990 from Simon Lucas Motors Ltd.
[2] Mrs and Mr Rasmussen now seek to reject the vehicle and obtain a refund of the purchase price. They say that the vehicle has had numerous defects during its life that breach the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the Act), which Simon Lucas Motors has repeatedly failed to rectify.
[3] Simon Lucas Motors says that Mrs and Mr Rasmussen are not entitled to reject the vehicle. It says that the vehicle has had some minor faults, which have been rectified and that many of the other alleged faults either do not exist or are simply characteristics of the vehicle.

The Issues

[4] 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 Act?
• (b) Has Simon Lucas failed to repair those faults within a reasonable time?
• (c) May Mrs and Mr Rasmussen to reject the vehicle because its faults are a failure of a substantial character?
• (d) What remedy are Mrs and Mr Rasmussen entitled to under the Act?

Does the vehicle have 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] 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 Mrs and Mr Rasmussen’s subjective perspective.
[8] Mrs and Mr Rasmussen allege that the vehicle has had the following faults since purchase:

• (a) a fault that caused it to be low on power;
• (b) delayed acceleration from a standstill;
• (c) an air conditioning fault;
• (d) a noise from the vehicle’s 4WD unit;
• (e) a fuel system fault;
• (f) defective brakes;
• (g) an oil leak at the rear of the vehicle; and
• (h) significant premature engine damage.
  

The fault that causes the vehicle to be low on power

[9] Mrs and Mr Rasmussen purchased this vehicle specifically to tow a caravan. They say that the vehicle has not been fit for that purpose, or fit for purpose generally, because it is low on power.
[10] Mr Rasmussen says that, from the date of purchase, the vehicle struggled to reach 100 km an hour on a straight flat road and reached much lower maximum speeds when driving uphill or towing. Mr Rasmussen says that the vehicle’s top end speed improved when Simon Lucas Motors installed a diesel tuning unit (DTU), but even then, the vehicle has less power than he would have expected in a new two litre SUV.
[11] I do not feel able to rely solely on Mrs and Mr Rasmussen’s evidence that the vehicle was unacceptably low on power. I got the impression that Mrs and Mr Rasmussen overstated certain parts of their evidence to emphasise the faults they alleged. I cautioned Mrs and Mr Rasmussen on two occasions to be more careful in the evidence they gave, and I have some reservations in unreservedly accepting their evidence as to the existence of this fault.
[12] Mr Gregory, the Tribunal’s Assessor, advises that the vehicle is not a high-powered SUV. Mr Gregory advises that the vehicle has a two litre diesel engine that generates 105 kw of power, which is a low level of power for a diesel SUV. Mr Gregory says that the vehicle’s low level of power is evident in a lack of top end speed, particularly when driving uphill or when towing.
[13] I also note that the vehicle has been assessed by at least three separate repairers — Simon Lucas Motors, Waiuku Automotive Services 2017 Ltd and Andrew Simms Botany (which is a Great Wall franchisee). None of the evidence provided from those repairers suggests that the vehicle is unacceptably low on power. In that regard, I note evidence from Colin Porter, a service manager at Simon Lucas Motors, that the vehicle’s top end power is normal for a 2013 Great Wall two litre diesel SUV. Mr Porter says this characteristic is not a fault.
[14] Accordingly, in the absence of corroborative evidence to prove that the vehicle is unacceptably low on power, I am not satisfied that Mrs and Mr Rasmussen have proven that the vehicle has such a fault. In reaching this conclusion, I acknowledge that Simon Lucas Motors installed a DTU, which will have increased the vehicle’s power. Although I accept that the DTU was installed to further increase the vehicle’s power, on the evidence provided I do not feel able to conclude that the vehicle’s power was unacceptably low before the DTU was installed and I am not satisfied that the vehicle has any fault that makes the vehicle low on power that would breach the acceptable quality guarantee.

Lack of acceleration

[15] Mrs and Mr Rasmussen also alleged that the vehicle has a fault that causes a delay in acceleration from a standstill. They say that the delay in acceleration makes the vehicle unsafe.
[16] Simon Lucas Motors accepts that the vehicle has the acceleration delay alleged by Mrs and Mr Rasmussen but considers the vehicle’s acceleration to be normal for a Great Wall X200 SUV. Mr Porter advises that the lack of acceleration described by Mrs and Mr Rasmussen is consistent with turbo lag and a fly by wire throttle system, which can cause delayed acceleration.
[17] Although Mr Gregory does not agree that the fly by wire throttle system would cause the acceleration delay, he does agree that the delay is caused by turbo lag, which occurs when there is delay in the turbo building up sufficient boost for the engine to accelerate. Mr Gregory advises that such a delay is common in modern turbo diesel vehicles.
[18] Mr Gregory also notes that, in many modern diesel vehicles, the amount of fuel available to the engine under acceleration from a standstill is intentionally limited to preserve fuel and ensure that the vehicle’s emissions do not exceed Euro 5 emissions requirements. This can cause delay of the kind described by Mrs and Mr Rasmussen before the vehicle has full power. Mr Gregory advises that the heavier the acceleration, the longer the delay.
[19] Consequently, I am not satisfied that the vehicle has any fault that causes an unacceptable delay in acceleration from a standstill. Instead, I consider that the delayed acceleration described by Mrs and Mr Rasmussen is a common characteristic of modern turbo diesel vehicles. I also note that the vehicle has been inspected by at least three workshops and none has found a fault relating to any unacceptable delay in acceleration.

The air conditioning fault

[20] I am satisfied that the vehicle developed a leak from its air conditioning condenser, which was replaced by Andrew Simms Botany in April 2014. This fault means the vehicle was not of acceptable quality because it has not been sufficiently durable. A reasonable consumer would not expect a new vehicle to develop a leaking air conditioning condenser so shortly after purchase.

A noise from the 4WD unit

[21] Mrs and Mr Rasmussen says the vehicle has a fault with its 4WD unit, which causes the unit to make a grinding noise when 4WD is selected. Mrs and Mr Rasmussen gave evidence that they live at the end of a long steep driveway and that they engage the vehicle’s 4WD function to travel up the driveway. They say the vehicle makes an unacceptable grinding noise, which they believe is indicative of a fault.
[22] Again, as with many of the other faults alleged by Mrs and Mr Rasmussen, despite this vehicle being inspected by at least three repairers, there is no evidence from any of those repairers that the vehicle has any fault with its 4WD unit. Further, Mr Gregory advises that 4WD units can be noisy. Mr Gregory advises that the 4WD unit in a Great Wall X200 has a differential lock, which “locks” the front and rear wheels together so they will turn in unison, regardless of the traction available to any one wheel. Mr Gregory says that such systems are inherently noisy, with the differential commonly making a “clunking” sound on cornering and the tyres making a scuffing sound as the vehicle seeks traction.
[23] Consequently, in the absence of any diagnosis from a suitably qualified person as to the existence of a fault, I am not satisfied that the vehicle has any fault with its 4WD unit.

A fuel system fault

[24] Mrs and Mr Rasmussen say that, in about early 2018, the vehicle developed a fault with its fuel system that caused the engine to cut out. Mr Rasmussen says that he has had to pump the fuel priming pump to restart the vehicle.
[25] Mrs and Mr Rasmussen say that Simon Lucas Motors removed the DTU in April 2018 to rectify this fault, but the fault remained. In May 2018 Simon Lucas Motors replaced the vehicle’s suction control valve, which Mrs and Mr Rasmussen say has not rectified the fault.
[26] Simon Lucas Motors denies that the vehicle has a fault with its fuel system. Mr Porter says that Simon Lucas Motors could not find or diagnose any fault, but nonetheless removed the DTU and replaced the suction control valve hoping that these repairs would rectify a fault that it had been unable to detect.
[27] Mr Gregory considers that the symptoms described by Mrs and Mr Rasmussen are consistent with the vehicle having a fault with its fuel system, most likely due to a faulty non-return valve in the primer pump, which allows fuel to return to the fuel tank when it should be diverted to the engine.
[28] After the hearing, Mrs and Mr Rasmussen provided further information from Crosbie Automotive in Pukekohe, which has performed repairs on the vehicle’s engine, discussed below. Crosbie Automotive advises that it has been unable to start the vehicle because of a fault with the vehicle’s fuel system. It considers that the vehicle’s fuel pump requires replacement.
[29] The evidence presented by Mrs and Mr Rasmussen, together with the advice I have received from Mr Gregory, satisfies me that the vehicle has an ongoing fault with its fuel system. However, I am not satisfied that this fault breaches the acceptable quality guarantee in s 6 of the Act. That is because the fault arose too long after purchase for the protections in the Act to continue to apply.
[30] The protections in the Act are not indefinite and last only as long as is reasonable in the circumstances of each case, taking account of the factors set out in s 7(1) of the Act. On the basis that the fuel system fault was not a pre-existing fault and first became apparent in early 2018, more than four and a half years after purchase, by which time the vehicle had travelled approximately 100,000 km, I am satisfied that, in respect of the fuel system fault, the vehicle has been as durable as a reasonable consumer would consider acceptable.

The defective brakes

[31] Mrs and Mr Rasmussen say that the vehicle’s brakes have been poor since purchase. The evidence shows that, by the end of October 2014, the vehicle had begun to shudder under braking at high speeds. Simon Lucas Motors skimmed the front brake discs, which cost Mrs and Mr Rasmussen $165. Mrs and Mr Rasmussen say that the vehicle’s brake performance has remained poor.
[32] I am not satisfied that Mrs and Mr Rasmussen have proven that the vehicle has, or has had, any fault with its brakes that would breach the acceptable quality guarantee. The only clear evidence of a fault — the brake shudder in October 2014 — was caused by wear to the front brake discs, which Mr Gregory advises is entirely consistent with the vehicle’s age and mileage at that time. Further, in respect of the allegation that the vehicle’s brake performance has remained poor, I again note that the vehicle has been assessed by at least three repairers, none of whom have found any other issue with the vehicle’s brakes that could amount to a defect for the purposes of the Act.

An oil leak from the rear of the vehicle

[33] In documents filed with the Tribunal before the hearing, Mrs and Mr Rasmussen also suggested that the vehicle had an oil leak from the rear of the vehicle. Mrs and Mr Rasmussen produced no evidence to prove that the vehicle has an oil leak. Accordingly, I cannot be satisfied that it has any such defects which would breach the quality guarantee.

The engine damage

[34] In April 2019, the vehicle was assessed by Crosbie Automotive in Pukekohe, who found that the cylinder head was badly cracked and leaking from the number four injector holes. It considered that the cylinder head is beyond repair and required replacement. Aaron Dutton of Crosbie Automotive also considered that the aluminium cylinder head and cam carrier cover have been “very poorly machined” and that the poor quality of the workmanship of the vehicle may have contributed to the premature failure of the engine. Mrs and Mr Rasmussen have purchased a replacement cylinder head and associated components, which have now been installed by Waiuku Automotive Services.
[35] I understood Mrs and Mr Rasmussen to submit that this engine damage is proof that the vehicle has had a fault with its engine at purchase, which has caused many of the problems they have experienced, including the vehicle being low on power and acceleration.
[36] I am not satisfied that Mrs and Mr Rasmussen have proven that the vehicle had any pre-existing defect with its engine, which has caused the problems they have experienced since purchase. Mr Gregory advises that if the vehicle had a head or head gasket fault before purchase, the vehicle would not have lasted as long as it has before a serious engine fault became evident.
[37] Further, I am not satisfied that the engine damage present in early 2019 means the vehicle has not been of acceptable quality. As set out above, the protections in the Act are not indefinite and last only as long as is reasonable in the circumstances of each case. On the basis that the engine damage was not a pre-existing fault with the vehicle and first became apparent in April 2019, nearly six years after purchase, by which time the vehicle had travelled nearly 116,000 km, I am satisfied that the vehicle has been as durable as a reasonable consumer would consider acceptable.

Did Simon Lucas Motors fail to repair the vehicle’s faults within a reasonable time?

[38] Mrs and Mr Rasmussen say they are entitled to reject the vehicle under s 18(2)(b)(ii) of the Act because Simon Lucas Motors has failed to repair the vehicle’s faults within a reasonable time.
[39] 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.

[40] As set out above, many of the faults alleged by Mrs and Mr Rasmussen either do not exist, or do not breach the acceptable quality guarantee. Accordingly, I cannot take account of those alleged faults in determining whether Simon Lucas Motors has failed to rectify the vehicle’s defects within a reasonable time.
[41] The only fault that breaches the acceptable quality guarantee is the air conditioning fault and I am not satisfied that Simon Lucas Motors has failed to rectify that fault. Indeed, there was no evidence to show that Simon Lucas Motors was ever asked to rectify that fault. Instead, the evidence shows that Mrs and Mr Rasmussen took the vehicle to Andrew Simms Botany for that repair to be performed. Accordingly, Mrs and Mr Rasmussen are not entitled to reject the vehicle because of any failure by Simon Lucas Motors to rectify the vehicle’s faults.

Are the faults a failure of a substantial character?

[42] Under s 18(3) of the Act, Mrs and Mr Rasmussen may reject the vehicle if it has faults 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.

[43] The vehicle has one proven fault that breach the acceptable quality guarantee — the faulty air conditioning condenser. That fault has been repaired, so Mrs and Mr Rasmussen have no grounds to reject the vehicle because of that fault. Even if the fault had not been repaired, I am not satisfied that it is such a significant fault that a reasonable consumer fully acquainted with it would have been deterred from purchasing the vehicle. Accordingly, Mrs and Mr Rasmussen are not entitled to reject the vehicle because its faults amount to a failure of a substantial character.

What remedy are Mrs and Mr Rasmussen entitled to under the Act?

[44] Because the air conditioning fault, which is the only fault that breaches any of the Act’s guarantees, has been rectified, Mrs and Mr Rasmussen are entitled to no further remedy under the Act. Accordingly, their application is dismissed.

A conclusory point

[45] Having heard evidence from Mrs and Mr Rasmussen, I have no doubt that they will disagree with many of the conclusions I have reached in this decision as to the existence or otherwise of the vehicle’s alleged defects.
[46] For completeness, I note that even if Mrs and Mr Rasmussen had proven each of the alleged defects, they would not have been entitled to reject the vehicle because the vehicle has been damaged while in their possession, meaning they have lost the right to reject it.
[47] The law relating to the loss of the right to reject goods is set out in s 20 of the Act. Relevant to this case, s 20(1)(c) 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;

.

[48] Under s 21(c) of the Act, Mrs and Mr Rasmussen will lose the right to reject the vehicle if it has been damaged after delivery. In this case, Mrs and Mr Rasmussen have provided a photograph of a dent in the passenger side front guard. Mrs and Mr Rasmussen described this as a small dent, which was caused by someone throwing a pole at the vehicle.
[49] Although I agree that this is not a large dent, I am satisfied that it is damage for the purposes of s 20(1)(c) of the Act sufficient for Mrs and Mr Rasmussen to lose any right to reject the vehicle they may have. Mr Gregory advises that the damaged front guard requires replacement to rectify the damage, at a cost exceeding $600.
[50] Accordingly, even if Mrs and Mr Rasmussen had been entitled to reject the vehicle, they would have lost the right to do so because of this damage.

DATED at AUCKLAND this 24th day of June 2019

B.R. Carter
Adjudicator