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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 23 August 2019
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IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
BETWEEN MICHIEL VAN DER WALT
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 11 July 2019
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APPEARANCES
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M A van der Walt, Purchaser
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No appearance for the Trader
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DATE OF DECISION 22 July 2019
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_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
_________________________________________________________________
REASONS
Introduction
[1] On about 13 April 2019, Michiel van der Walt purchased a 2004 Nissan Elgrand for $6,990 from Hazleton Grove Ltd (Hazleton Grove). The vehicle had an odometer reading of 219,746 km at the time of sale. Mr van der Walt entered into a consumer credit contract with Oxford Finance Ltd dated 13 April 2019 (the collateral credit agreement) to purchase the vehicle.
[2] Despite having a recently issued warrant of fitness, the vehicle had numerous pre-existing faults that should have caused it to fail a warrant of fitness inspection, which will cost more than $3,000 to rectify. Mr van der Walt has rejected the vehicle and seeks to recover all amounts paid in respect of the vehicle and other costs he has incurred in pursuing this claim. He also seeks to be relieved of his ongoing obligations under the collateral credit agreement.
[3] Despite receiving a Notice of Hearing setting out 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 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) Are the faults a failure of a substantial character?
- (c) What remedy is Mr van der Walt entitled to?
Does the vehicle have faults 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(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 Mr van der Walt’s subjective perspective.
[8] Mr van der Walt uplifted the vehicle on 16 April 2019. On the same day, he heard unusual noises from the vehicle. He contacted Hazleton Grove and after unproductive email correspondence, decided to have the vehicle assessed by Whangaparaoa Autocentre Ltd and Albany Toyota.
[9] Whangaparaoa Autocentre inspected the vehicle on about 13 May 2019 and considered that the vehicle had several faults that would cause it to fail a warrant of fitness inspection including:
- (a) the left high beam was not working;
- (b) the headlamps and fog lamp were aimed incorrectly;
- (c) the right front lower suspension arm front bushes were worn;
- (d) the rear suspension/hub lower bushes were worn;
- (e) the left front wheel bearing was worn;
- (f) a left front wheel stud was damaged with a nut missing; and
- (g) the front wipers require replacement.
[10] Whangaparaoa Automotive Ltd estimated that the required repairs would cost $3,437.85.
[11] Albany Toyota then assessed the vehicle on 21 May 2019 and also considered that the vehicle had many defects, some of which would cause the vehicle to fail a warrant of fitness inspection including:
- (a) excessive play in the left front hub bearing;
- (b) a left front wheel stud and nut were missing and/or broken;
- (c) the left-hand high beam was not working;
- (d) both front lower arm front bushes were cracked and required replacement;
- (e) both rear hub assembly lower bushes and rear bushes were cracked and required replacement; and
- (f) the front windscreen wipers were worn and the washer jets were not working.
[12] Albany Toyota estimated that the required repairs would cost between $3,315 plus GST and $4,878 plus GST.
[13] Mr Haynes, the Tribunal’s Assessor, advises that each of the defects identified above should have caused the vehicle to fail its pre-purchase warrant of fitness inspection and I accept the evidence from Whangaparaoa Autocentre and Albany Toyota as being credible and reliable indications as to the nature and extent of the vehicle’s pre-existing faults. Mr Haynes also advises that the repair estimates from those two companies are a reasonable reflection of the cost of the required repairs.
[14] Accordingly, I am satisfied that the vehicle has not been of acceptable quality for the purposes of s 6 of the Act because it was not as free of minor defects at the time of sale as a reasonable consumer would consider acceptable. In reaching this conclusion, I acknowledge that a reasonable consumer should have realistic expectations as to the quality and durability of a vehicle of this price, age and mileage. However, I am nonetheless satisfied that a reasonable consumer would not expect such a vehicle to have an extensive list of pre-existing faults that should have caused it to fail its pre-purchase warrant of fitness inspection.
[15] I also note that the vehicle passed a warrant of fitness inspection shortly before it was sold to Mr van der Walt, meaning the inspector deemed the vehicle to be in warrantable condition at that time. Regrettably, this Tribunal has seen many cases where vehicles have defects that make them unroadworthy despite recently passing a warrant of fitness inspection. Consequently, the fact that the vehicle passed a warrant of fitness inspection is not conclusive evidence that it was free of the defects that should have been identified during that inspection, and in light of other evidence from Whangaparaoa Autocentre and Albany Toyota, I am satisfied that the vehicle was not of acceptable quality at the time of sale.
Are faults a failure of a substantial character?
[16] Under s 18(3) of the Act, Mr van der Walt 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 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.
[17] Section 21(a) of the Act applies to this case and I am satisfied that, although none of the faults are serious in their own right, the vehicle’s accumulated defects amount to a failure of substantial character.
[18] In Cooper v Ashley & Johnson Motors Ltd, the District Court stated that a purchaser may also reject a vehicle where there has been an accumulation of defects, even when those defects may not amount to a failure of substantial character in their own right.[1] The Court noted that a point will eventually be reached where the purchaser could “say convincingly that he or she had no ‘confidence in the reliability of the vehicle’”.[2]
[19] Notwithstanding the price, age and mileage of this vehicle, given the large number of pre-existing faults that will cause the vehicle to fail a warrant of fitness inspection and the cost of the required repairs, I am satisfied that the accumulated defects amount to a failure of a substantial character for the purposes of s 21(a) of the Act and that a reasonable consumer would no longer have confidence in the ongoing reliability of this vehicle.
What remedy is Mr van der Walt now entitled to under the Act?
[20] 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.
[21] Under s 18(3)(a) of the Act, Mr van der Walt is entitled to reject vehicle because its defects amount to a failure of a substantial character. Under s 23(1)(a) of the Act, Mr van der Walt is entitled to recover any money paid or other consideration provided for the vehicle from Hazleton Grove. In that regard, Mr van der Walt is entitled to recover:
- (a) $1,500 — being the deposit paid to purchase the vehicle; and
- (b) $951.99 — being all payments of principal and interest made by Mr van der Walt under the collateral credit agreement from 19 May 2019 until the date of this decision.
[22] Under s 18(4) of the Act, Mr van der Walt is also entitled to recover $173.78, being the cost of the assessment performed by Whangaparaoa Autocentre and $65.55, being the cost of the Albany Toyota assessment. Those costs are a reasonable foreseeable consequence of the vehicle’s failures.
[23] Mr van der Walt is also entitled to have his ongoing rights and obligations under the collateral credit agreement with Oxford Finance Ltd 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.
[24] 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 van der Walt and Oxford Finance Ltd is a collateral credit agreement for the purposes of s 89(2) of the MVSA. The agreement was arranged or procured by Mr van der Walt for the provision of credit by Oxford Finance Ltd to enable Mr van der Walt to purchase the vehicle;
(b) Hazleton Grove sold the vehicle to Mr van der Walt, so he is a party to the contract to purchase the vehicle; and
(c) Mr van der Walt 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.
[25] Accordingly, under s 89(2) of the MVSA, all of Mr van der Walt’s rights and obligations under the collateral credit agreement are assigned to Hazleton Grove from the date of this decision.
Costs
[26] Under cl 14(1)(b) of Sch 1 to the MVSA, the Tribunal may also award costs against a party where that party, after receiving notice of the hearing, fails to attend without good cause.
[27] I am satisfied that Hazleton Grove, after receiving notice of the hearing, failed to attend without good cause. Indeed, Hazleton Grove provided no excuse for non-attendance. Accordingly, under cl 14(2)(b) of Sch 1 to the MVSA, Mr van der Walt is entitled to recover:
- (a) $50 — being the filing fee for this application;
- (b) $45.60 — being the cost of parking to attend the hearing; and
- (c) $218.50 — being the lost income Mr van der Walt incurred in taking one day’s unpaid leave to attend the hearing.
[28] 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 22nd day of July 2019
B.R. Carter
Adjudicator
[1] Cooper v Ashley & Johnson Motors Ltd (1996) 7 TCLR 407 (DC).
[2] At 417.
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