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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 19 February 2019
IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA
MVD
457/2018
[2019] NZMVDT 15
BETWEEN MATTHEW SAMUEL CAVANAGH
Purchaser
AND UNIVERSAL IMPORTS 1998 LIMITED
Trader
HEARING at Auckland on 15 January 2019
MEMBERS OF
TRIBUNAL
J S McHerron, Barrister – Adjudicator
S N Haynes – Assessor
APPEARANCES
M S Cavanagh, Purchaser
S W Williams, Technician, Archibald & Shorter
(by telephone)
A E P Peck, Director of Trader
DATE OF DECISION 31 January 2019
___________________________________________________________________
DECISION OF THE TRIBUNAL
___________________________________________________________________
___________________________________________________________________
REASONS
Introduction
[1] About three months after Matthew Cavanagh purchased a Volvo V50 from Universal Imports 1998 Ltd, he noticed the carpet in the left rear passenger footwell was wet. After unsuccessfully trying to dry the carpet, Mr Cavanagh realised there must be a leak. The repairs were time-consuming and expensive as the car’s dashboard and other interior parts had to be stripped and dried out. Universal Imports has refused to pay. Mr Cavanagh has applied to the Tribunal to recover the $1,725.86 repair costs.
[2] The following issues arise for determination:
- (a) Did the vehicle fail to comply with the guarantee of acceptable quality?
- (b) If so, what remedy (if any) is Mr Cavanagh entitled to?
Issue one: Did the vehicle fail to comply with the guarantee of acceptable quality?
[3] Section 6(1) of the Consumer Guarantees Act 1993 (the Act) provides that "where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality”. According to s 2 of the Act, “goods” includes vehicles.
[4] "Acceptable quality" is defined in s 7 of the Act (as far as is relevant) as follows:
- 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.
[5] Whether a vehicle is of acceptable quality is considered from the point of view of a reasonable consumer who is fully acquainted with the state and condition of the vehicle, including any hidden defects.
[6] Mr Cavanagh purchased the vehicle on 1 September 2018. It is a 2010 Volvo V50 with 52,740 km on the odometer at the time of sale. The purchase price was $14,499. The car performed well during the test drive and there were no reported mechanical issues or history of damage.
[7] Just over three months later, on 1 September 2018, after a long drive, Mr Cavanagh and his wife first noticed water soaking the carpet in the left rear footwell. At first, Mr and Mrs Cavanagh thought that their young son had spilled his drink. Mr Cavanagh tried several times to dry out the carpet, but was unsuccessful, eventually concluding there was a leak.
[8] After some initial efforts to obtain assistance from Universal Imports, which will be described further below, Mr Cavanagh took the vehicle to Archibald & Shorter, a Volvo service agent in Greenlane.
Assessment by Archibald & Shorter
[9] Archibald & Shorter carried out investigations into the water leak. It observed that a substantial amount of water had been entering the front of the vehicle’s passenger area and running down the back of the dashboard, then under the front flooring and into the rear footwell. The entire left front carpeting was saturated and the sound insulation, which is sandwiched between the dashboard and firewall, was soaked in water as well.
[10] Archibald & Shorter removed the seating and carpeting to get at the sound insulation and take it out of the vehicle.
[11] In its invoice dated 24 October 2018, Archibald & Shorter said that the leak was caused by the sun roof drain being disconnected at dashboard level instead of continuing down and out of the underside of the car.
[12] Archibald & Shorter repaired the sun roof drain and reassembled the vehicle after drying out all water-soaked components. It then retested the vehicle for water leaks, concluding that it had fixed the problem. It suggested that the vehicle be left in the sun with its windows open to get rid of the stale smell. It also recommended that if the vehicle is garaged it should be left with its windows open and a dehumidifier running.
[13] Archibald & Shorter told Mr Cavanagh that while it was de-trimming the inside of the vehicle it found signs of a panel/paint repair having been done previously on the vehicle’s left side.
[14] This was confirmed by Mr Shaylin Williams, the Archibald & Shorter technician who repaired the vehicle. He also noted signs of recent panelbeating in the vehicle, including overspray on the left A, B and C pillars.
[15] Mr Williams also observed that the sun roof drain that had become disconnected was blocked with dirt and dust and leaves. Mr Williams said he thought a build-up of pressure due to this blockage may have caused the drain to become disconnected.
[16] Mr Williams confirmed that the drain connection was not usually accessible by hand. This suggests that it is unlikely that anyone accidentally disconnected the drain while the car was in its normal fully-assembled state.
[17] Mr Williams told the Tribunal that the vehicle had quite a bad smell when it was first brought in to the workshop. This suggested to him that the leak had been occurring over some time and that the drain had not been disconnected recently.
Universal Imports' response
[18] Mr Peck, who appeared on behalf of Universal Imports, was adamant that this was not a pre-existing fault with the vehicle. Mr Peck said that he thought that if the leak was pre-existing, it would have been noticeable much sooner than three months after purchase, especially given the amount of rain that fell in Auckland last winter. Mr Peck noted that the vehicle had been stored outside on his yard without any evidence of it leaking. For the moisture only to become apparent three months after purchase suggested to him that this only happened subsequent to the sale of the vehicle to Mr Cavanagh.
Our assessment
[19] Mr Haynes, the Tribunal’s Assessor, and I consider that the disconnected drain causing water to leak into the car is likely to have been a pre-existing fault. We have reached this conclusion because the vehicle was reported by both Mr Cavanagh and Archibald & Shorter to be musty, suggesting the leak developed over some time. Mr Cavanagh reported that he uses the vehicle reasonably infrequently, which may also explain why it took him three months to notice the problem. Archibald & Shorter's evidence was that the water leaked into the front of the vehicle behind its dashboard, then flowed down to the left rear footwell via the front passenger footwell. Mr Cavanagh first noticed the water after it had reached the left rear footwell and soaked into the carpet there. Mr Cavanagh explained that the vehicle was left in a car port on his property on an angle with the nose of the car uphill, allowing water to flow from the front of the vehicle to the rear.
[20] Mr Peck pointed out that his car yard, where the vehicle was stored prior to sale, is also situated on an angle. However, from Mr Haynes’ direct observation (which I have confirmed on Google street view), the cars on Mr Peck’s yard are parked nose downwards, making it less likely that the water would have flowed as easily from the front to the back of the car.
[21] Mr Cavanagh confirmed that there are no trees dropping leaves onto his vehicle where it is parked on his property. Furthermore, there is no evidence that Mr Cavanagh or another member of his family did anything to disconnect the drain themselves (also recalling Mr Williams' evidence that the drain was not even accessible by hand).
[22] In any event, while Mr Haynes and I consider it is likely the disconnected drain was a pre-existing fault, this finding does not affect the outcome of Mr Cavanagh's claim. Even if the fault only occurred after the sale of the vehicle to Mr Cavanagh, we do not consider that a reasonable consumer would have found the vehicle to be sufficiently durable. A reasonable consumer would not expect to experience a substantial leak, requiring extensive investigation and repair work, to arise just three months after purchasing a 2010 vehicle with only 56,837 km on the odometer, for $14,499.
[23] Accordingly, whether or not this was a pre-existing fault, I conclude that the vehicle failed to comply with the guarantee of acceptable quality in s 6 of the Act.
Issue two: What remedy, if any, is Mr Cavanagh entitled to?
[24] The remedies available to Mr Cavanagh are as 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.
[25] As provided in s 18(2) (above), where a failure can be remedied, the first thing the consumer must do is to require the supplier to remedy that failure within a reasonable time.[1]
[26] After his initial attempts to dry out the carpet failed, Mr Cavanagh emailed Universal Imports on 27 September 2018. In his email, he advised that water was leaking into the passenger footwell. Mr Cavanagh said he thought this could be a “warrantable issue” and said that he would like to have Universal Imports look at the vehicle. Mr Cavanagh asked if he could bring the car to Universal Imports to look at it, or whether it had a repair agent that he could take the car to directly.
[27] Nikolay Pipa, an employee of Universal Imports, replied by email to Mr Cavanagh the same day to say that Universal Imports “have a specialist who can have a look and fix the water leak, going to organise an appointment and let you know day and time, please, send your phone number to be in contact”. Mr Cavanagh replied with his phone number, but did not hear anything more for approximately two weeks.
[28] About two weeks later, Mr Peck phoned him to say that there was only 90 days’ cover on vehicles sold by Universal Imports. However, Mr Peck said he would not leave Mr Cavanagh in the lurch and that someone would be in touch about repairing the vehicle, though it was likely to cost Mr Cavanagh $120.
[29] At the hearing, Mr Peck confirmed that he supposed at that point that there was a windscreen leak, which in his experience was a common problem with this model of vehicle. Mr Peck said that, in his conversation with Mr Cavanagh, Mr Cavanagh agreed to pay for the cost of the repairs. Mr Cavanagh did not accept that this was a matter of "agreement" as such. Rather, Mr Cavanagh recalled that Mr Peck told him Mr Cavanagh would have to pay for any repairs. I accept Mr Cavanagh’s version of events. It is consistent with the evidence that Mr Peck told him that the vehicle only came with a 90 day warranty, and that Mr Cavanagh was outside the warranty period for his vehicle, which Mr Peck did not deny.
[30] Mr Cavanagh then received a call from a windscreen repairer but as MrCavanagh did not think that the leak was coming from the windscreen, he did not ask that repairer to repair the vehicle. Instead, he went to Archibald & Shorter.
[31] After Archibald & Shorter had carried out its initial investigation work, and had told him that the drain from the sun roof had been disconnected and there was likely to have been previous panel repair work done on the left rear door, Mr Cavanagh asked Universal Imports if it would “reconsider my request to consider this to be a warrantable fault”.
[32] Nikolay Pipa responded to ask Mr Cavanagh to bring the car in for Universal Imports to have a look at it and fix it if needed. Mr Cavanagh advised that the car was currently being repaired. Nikolay Pipa responded “we didn’t accept this repair, we repair all our cars ourselves” but still encouraged Mr Cavanagh to bring the car in to Universal Imports’ workshop to fix.
[33] Mr Cavanagh responded that Mr Peck had rung him a week or two after his first email to Universal Imports to say that the car was out of warranty and that Mr Cavanagh would have to deal with repairing it himself. He explained that he had found his own repairer following Mr Peck’s call to him. Mr Cavanagh indicated that, as far as he was concerned, Universal Imports had waived its rights to inspect the vehicle and have the repair work done by its own repairer. He indicated that he would be picking the car up in the next few days and would send Universal Imports the invoice for it.
[34] Universal Imports then appears to have renewed its offer to fix the vehicle itself, but Mr Cavanagh expressed reservations about whether the vehicle was driveable in its current state (after having been dismantled by Archibald & Shorter). In any event he wanted to know how Universal Imports proposed to deal with the repair costs incurred to date. Mr Cavanagh said that he was open to offers that include a contribution from him to meet the costs, but he did not want to have the work stopped and the car moved without some sort of idea about what Universal Imports’ suggested remedy was.
[35] Mr Cavanagh provided Universal Imports with information sourced from Archibald & Shorter regarding the nature of the repair work required and the estimated costs.
[36] Universal Imports responded repeating that it required the vehicle to be returned to it for it to repair the water drain issue if Mr Cavanagh required its assistance. Universal Imports offered to provide a tow truck to have the vehicle picked up, but the cost would be payable by Mr Cavanagh “at a very reasonable rate to be taken to our chosen repairer”. Universal Imports confirmed that its intention was not to pay any costs incurred up to now.
[37] Universal Imports also confirmed to Mr Cavanagh that any repairs authorised by him would be at his own expense. Mr Pipa repeated what Mr Peck had told Mr Cavanagh orally, that the fault “seemed to happen outside our three-month warranty we offer to our clients”. Again, he repeated Universal Imports' offer to “assist using our own repair people”, but nowhere in the documents produced to the Tribunal did I see any offer by Universal Imports to pay for any repairs to the vehicle.
[38] Mr Cavanagh’s understanding was that any repairs carried out by Universal Imports would be at his own cost. There is nothing in any of the evidence to suggest otherwise.
[39] Accordingly, on 24 October 2018, Mr Cavanagh sent a final email to Universal Imports confirming that it had declined to inspect the fault when he first requested to return the vehicle to it in September 2018. While Universal Imports did introduce a windscreen repair agent, Mr Cavanagh said that it “explicitly told [him] that it would not cover the cost of repair and that it would be at his own expense”. Mr Cavanagh asserted that he had a legal right to choose his own repairer where Universal Imports had declined to repair the vehicle.
[40] At the hearing, Mr Peck asserted that he offered to Mr Cavanagh to pay for the cost of repairs. However, if any such offer was made, it was not put in writing. Mr Cavanagh denied that any such offer had been made. I accept that Mr Cavanagh had no basis for thinking that Universal Imports had offered to pay for any repairs.
My assessment
[41] Having reviewed all of the email communications produced by Mr Cavanagh, and having heard his and Mr Peck's oral evidence, I am left with the clear impression that Universal Imports refused to remedy the failure of Mr Cavanagh’s vehicle to comply with the guarantee of acceptable quality. Merely offering to repair the fault is not enough if the offer is not accompanied by a willingness to pay. In Mr Peck’s initial phone conversation with Mr Cavanagh he said that the vehicle only came with a 90 day warranty and that, as the fault had appeared after that period (although only just afterwards according to the chronology outlined above), Universal Imports would not be liable for the cost of repairs. There was no subsequent communication from Universal Imports to indicate that it ever changed its mind about being unwilling to pay for repairs to the vehicle. While Universal Imports made several offers to have the vehicle assessed for repair, at no point did it ever inform Mr Cavanagh that it was prepared to pay for any repairs. To the contrary, the clear impression remained that he would be liable for any and all repair costs, as Mr Peck indicated initially.
[42] While Mr Peck asserted that he had told Mr Cavanagh that he would pay for repairs, I find there is no evidence that he ever offered to do so. To the contrary, I consider the email of Nikolay Pipa dated 23 October 2018 at 9.38 pm, in which Mr Pipa repeats that the vehicle appears to have faulted outside Universal Imports’ “three-month warranty we offer to our clients”, confirms that Universal Imports did not consider itself to be liable for any repair costs connected with the vehicle’s failure. Its initial response was to put Mr Cavanagh in touch with a windscreen repairer, but Universal Imports made it very clear that the costs of any repair would be at his own expense.
[43] I consider that Mr Cavanagh has established that Universal Imports refused to remedy the failure. It follows that Mr Cavanagh was entitled to have the failure remedied elsewhere and obtain from Universal Imports all reasonable costs incurred in having the failure remedied.[2]
[44] While expensive, Mr Haynes advised that investigating and diagnosing the cause of the failure, and removing all parts of the vehicle necessary to ensure that it was properly dried, would have been time consuming. For that reason, Mr Haynes accepted that the 11.5 hour labour charge for repairing this vehicle was reasonable. As Universal Imports did not recommend an appropriate alternative repairer to Mr Cavanagh, he can hardly be criticised for taking the vehicle to the Volvo service agent, Archibald & Shorter. In Mr Haynes’ view, which I accept, its overall charge for the repairs of $1,725.86 is reasonable in terms of the requirement in s 18(2)(b)(i). Accordingly, I order Universal Imports to pay Mr Cavanagh $1,725.86 no later than 15 February 2019.
Referral to Commerce Commission
[45] Finally, I am concerned that Universal Imports has stated to a customer that its vehicles only come with a 90 day or three-month warranty and that outside that period it has no obligation to remedy faults. The guarantees under the Act do not expire after a prescribed period of time. Rather, they apply for a reasonable period. Traders must assess each reported fault with a vehicle on its own merits. They should not base decisions solely on how long a consumer has owned a vehicle. It is contrary to the Fair Trading Act 1986 to make a false or misleading representation concerning the existence of any guarantee, right, or remedy available under the Act.[3] I will refer a copy of this decision to the Commerce Commission for it to consider whether to take any additional action against Universal Imports.
J S McHerron
Adjudicator
[1] Consumer Guarantees Act 1993, s 18(2)(a), Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 (HC) at [11].
[2] Consumer Guarantees Act 1993, s 18(2)(b)(i).
[3] Fair Trading Act 1986, s 13(i).
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