Robertson v Motorco Ltd - Reference No. MVD 165/2019 [2019] NZMVDT 142 (9 July 2019)

Last Updated: 18 August 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 165/2019 [2019] NZMVDT 142 BETWEEN IRENE ROBERTSON Purchaser AND MOTORCO LTD Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Haynes, Assessor

HEARING at Auckland on 27 June 2019

APPEARANCES

I Robertson, Purchaser

S Chai and F Fukuda, for the Trader

DATE OF DECISION 9 July 2019

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DECISION OF THE TRIBUNAL

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1. Irene Robertson’s application to reject the vehicle is upheld.
2. Motorco Ltd shall, within 10 working days of the date of this decision, pay $17,285 to Irene Robertson.

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REASONS

Introduction

[1] On 26 November 2017, Irene Robertson purchased a 2007 Nissan Skyline, registration number LBG320, for $15,990 from Motorco Ltd. Ms Robertson also purchased a three-year Provident Insurance mechanical breakdown policy for $1,295.
[2] The vehicle came with aftermarket modifications, including 19-inch wheel rims and adjustable rear suspension. The vehicle had recently passed compliance testing and had a low volume vehicle (LVV) certification for its modified suspension.
[3] Ms Robertson now seeks to reject the vehicle claiming that Motorco modified the vehicle after it obtained its LVV certification, meaning the vehicle was not of warrant of fitness (WOF) standard and unsafe at the time of sale. Ms Robertson also says that she has given Motorco a reasonable opportunity to rectify the vehicle’s faults, and it has failed to do so. She seeks to recover the purchase price vehicle and all other costs incurred in respect of the vehicle.
[4] Motorco agrees that the vehicle did not comply with its LVV certification at the time of sale and had pre-existing defects that should have caused it to fail a WOF inspection. It says that the non-compliance was inadvertent and that it has taken reasonable steps to rectify the vehicle’s faults.

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 Consumer Guarantees Act 1993 (the Act)?
• (b) Has Motorco failed to repair the faults within a reasonable time?
• (c) Are the faults a failure of a substantial character?
• (d) What remedy is Ms Robertson entitled to under the Act?

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

[6] 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.
[7] 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.

[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 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 Ms Robertson’s subjective perspective.
[9] Ms Robertson says that she was attracted to the vehicle because of its appearance. The vehicle’s suspension was lowered and it was supplied with aftermarket modifications, including 19-inch wheel rims, adjustable rear suspension and rear window tints.
[10] Ms Robertson says that, throughout her ownership, she has had concerns about the vehicle’s handling. She gave evidence that the vehicle felt unstable, particularly at open road speeds in wet conditions. She continued to use the vehicle because she thought that these symptoms may have been a normal characteristic of a Nissan Skyline.
[11] In January 2019, Ms Robertson took the vehicle to Vehicle Testing New Zealand (VTNZ) for its annual WOF inspection. The vehicle failed that WOF inspection because, among other things, the rear window tints were illegal and the LVV certification did not match the vehicle’s modifications. The vehicle had 19-inch wheel rims but its LVV certification had been granted on the basis that the vehicle’s wheel rims were factory standard 18-inch wheel rims. Ms Robertson has since discovered that the vehicle’s wheels were also significantly out of alignment.
[12] Motorco accepts that the LVV certification for the vehicle did not match its modifications at the time of sale. It says that the LVV certification was granted on the basis that the vehicle had factory standard 18-inch wheel rims and the vehicle did have 18-inch wheel rims at the time of certification, but afterwards, to dress the vehicle for sale, Motorco added 19-inch wheel rims to the vehicle and tinted the rear windows. It accepts that, in doing so, the vehicle’s modifications were not of WOF standard at the time of sale.
[13] Mr Haynes, the Tribunal’s Assessor, advises that the addition of 19-inch wheel rims to this vehicle is significant because the larger wheels, together with the lowered suspension, significantly change the alignment of the vehicle’s rear wheels. Mr Haynes says that this change can negatively affect the handling and stability of the vehicle, especially at high speeds if the camber of the rear wheels is negative (ie the top of the wheels lean inwards).
[14] Ms Robertson has provided a copy of the wheel alignment report from Birch Ave Tyres & Alignment dated 20 February 2019. This wheel alignment report shows that the camber angle on the vehicle’s rear wheels was between -1.80 degrees and -1.90 degrees. The minimum permissible camber angle is -1.33 degrees. Mr Haynes advises that this wheel alignment report shows that the vehicle’s rear wheel camber was negative and significantly outside of recommended specifications. Mr Haynes advises that this significant negative camber will have made the vehicle unstable and unsafe.
[15] On the basis of the evidence presented by the parties, and the advice I have received from Mr Haynes, I am satisfied that the vehicle has not been of acceptable quality for the purposes of s 6 of the Act. The vehicle had pre-existing defects that should have caused its pre-purchase WOF inspection to fail, meaning the vehicle was not free of minor defects at the time of sale. Further, the installation of 19-inch wheels has made the vehicle unsafe.
[16] Motorco submitted that the protections in the Act may no longer apply because Ms Robertson had owned the vehicle for more than one year before the vehicle’s defects were identified. Although I acknowledge that the protections in s 6 of the Act are not indefinite, and last only for as long as is reasonable in the circumstances of each case, I am satisfied that the protections in s 6 of the Act continue to apply in this case. The vehicle’s defects were readily not observable and were detected at the first annual WOF inspection, which was realistically the first time that Ms Robertson could have reasonably discovered the existence of those defects.

Did Motorco fail to repair the fault within a reasonable time?

[17] Ms Robertson claims that she is entitled to reject the vehicle under s 18(2)(b)(ii) of the Act because Motorco has failed to repair the vehicle’s fault within a reasonable time.
[18] 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.

[19] Ms Robertson initially rejected the vehicle, but then agreed to allow Motorco to repair the vehicle on the basis that it made the vehicle compliant with WOF standards while ensuring that the vehicle’s pre-purchase specifications (including the 19-inch rims and lowered, adjustable suspension) remained unchanged, because the appearance of the vehicle was important to Ms Robertson. To do this, Ms Robertson expected Motorco to install aftermarket camber arms, which she had been told would correct the vehicle’s wheel alignment while retaining its lowered suspension and 19-inch wheel rims.
[20] The vehicle was then returned to Motorco on 15 March 2019 for those repairs to be performed. In contradiction to Ms Robertson’s requirements, Motorco has not installed aftermarket camber arms or ensured that the vehicle has retained its specifications. Instead, the vehicle is no longer lowered — Motorco has raised the vehicle by 20 mm at the front and 40 mm at the rear — and the vehicle no longer has adjustable suspension — Motorco has removed the adjustable rear shock absorber platforms and replaced them with standard springs.
[21] Although the evidence presented by Motorco shows that the vehicle now appears to be compliant with WOF standards, the vehicle is also quite different from that initially purchased by Ms Robertson. Ms Robertson’s consent to repair the vehicle was obtained on the basis that it would be made compliant with WOF standards while ensuring that the vehicle’s pre-purchase specifications remained unchanged. Motorco has failed to do this and I am satisfied that Ms Robertson is therefore entitled to reject the vehicle under s 18(2)(b)(ii) of the Act.

Is the fault a failure of a substantial character?

[22] Under s 18(3) of the Act, Ms Robertson may also 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.

[23] Section 21(d) of the Act applies to this case and, for the reasons set out above, I am satisfied that the vehicle was unsafe because the addition of 19-inch wheels adversely affected the vehicle’s stability and handling.

What remedy is Ms Robertson entitled to under the Act?

[24] The remedies relevant to this claim are set out in s 18 of the Act, set out at [18] above.
[25] I am not satisfied that Ms Robertson is entitled to reject the vehicle on the basis that its faults amount to a failure of a substantial character. Under the Act, a consumer has a choice of remedies where goods fail to comply with the Act’s guarantees. A consumer may choose to have the failure remedied, to accept replacement goods or to obtain a refund of the purchase price. Having chosen to allow Motorco to repair the vehicle, I am not satisfied that Ms Robertson can now seek an additional remedy by rejecting the vehicle because those faults amounted to a failure of a substantial character.
[26] Although Ms Robertson cannot reject the vehicle because its faults are a failure of a substantial character, she can reject the vehicle because of Motorco’s failure to rectify the faults under s 18(2)(b)(ii). Ms Robertson asked Motorco to rectify the vehicle’s defects while ensuring that the vehicle retained its pre-purchase specifications, but it failed to do so.
[27] Accordingly, under s 23(1)(a) of the Act, Ms Robertson is entitled to recover all amounts paid in respect of the vehicle, being the purchase price of $15,990 and the $1,295 paid for the Provident Insurance mechanical breakdown policy.

Costs

[28] Ms Robertson also seeks to recover the cost of attending the hearing. She provided invoices to show that she incurred $256.10 in travel and accommodation costs to attend the hearing.
[29] 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.
[30] I am not satisfied that this is a case where such a costs award is justified. Motorco attempted to resolve Ms Robertson’s concerns by paying her $3,000 compensation and refunding the cost of the mechanical breakdown insurance. I consider that to have been a reasonable offer and I am not satisfied that Ms Robertson should be entitled to recover costs because of any failure by Motorco to participate in pre-hearing settlement discussions. Further, Motorco attended the hearing, so Ms Robertson cannot recover costs on that basis.

DATED at AUCKLAND this 9th day of July 2019

B.R. Carter
Adjudicator