Lavin v Adopt A Car Limited - Reference No. MVD 139/2019 [2019] NZMVDT 164 (30 July 2019)

Last Updated: 23 August 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 139/2019
[2019] NZMVDT 164

BETWEEN STEPHEN CARL LAVIN

Purchaser

AND ADOPT A CAR LIMITED

Trader

HEARING on 10 July 2019 (by AVL)
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

D Binding – Assessor
APPEARANCES

S C Lavin, Purchaser
T J Lavin, Witness for Purchaser
M L McQuade, Managing Director of Trader
W N Cleland, Witness for Trader

DATE OF DECISION 30 July 2019

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

1. Stephen Lavin's application to reject his Nissan Navara is not upheld.
2. The parties are to attempt to resolve the matter as outlined below at [50].

100. Either party has leave to request a telephone conference if necessary, and the Tribunal will consider making any further orders that may be required.

___________________________________________________________________

REASONS

Introduction

[1] Stephen Lavin wishes to reject his 2006 Nissan Navara. In Mr Lavin’s submission, the vehicle needs repairs estimated at $14,617.71 to correct a lack of power and the engine "hunting" at idle when it is hot. Adopt A Car, which sold Mr Lavin the vehicle in November 2018, denies he is entitled to reject it. It says the only repair that is definitely needed to the vehicle is to replace its suction control valve (SCV), which will cost approximately $600. Adopt A Car says it is willing to assist Mr Lavin with this repair.
[2] The following issues arise for determination:

• (a) Did the vehicle fail to comply with the guarantee of acceptable quality?
• (b) If so, was the failure of a substantial character?
• (c) What is the appropriate remedy (if any)?

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:

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.

[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.

Initial problem with brakes

[6] About four weeks after he purchased the vehicle on 14 November 2018, Mr Lavin had a problem with its brakes. Mr Lavin had to take Adopt A Car to the Disputes Tribunal after it refused to assist with repairs. The Disputes Tribunal upheld Mr Lavin’s claim in a decision dated 25 March 2019. The Disputes Tribunal found that:

• (a) the vehicle’s brake discs needed to be replaced;
• (b) this amounted to a failure of the vehicle to comply with the guarantee of acceptable quality;
• (c) Adopt A Car had refused to pay for this repair; and
• (d) the cost of the repair, $718.15, was reasonable.

[7] Accordingly, the Disputes Tribunal ordered Adopt A Car to pay Mr Lavin $718.15. After some delay, Adopt A Car has now paid this amount to Mr Lavin.

Replacement of SCV

[8] About four months after he purchased the vehicle, in March 2019, Mr Lavin noticed that its engine was not idling satisfactorily and it was stalling. Mr Lavin's friend replaced the vehicle’s SCV. No receipts for this work, or for the SCV itself, or any evidence from the person who allegedly installed the SCV in the vehicle, was produced. Nor did the Tribunal receive any evidence of that person’s qualifications to do this work.

Assessment by AutoDIESEL, Glenfield

[9] The attempted repair by Mr Lavin’s friend did not fix the problem, so Mr Lavin took the vehicle to AutoDIESEL in Glenfield, Auckland, on or around 21 March 2019, for further assessment.
[10] AutoDIESEL’s invoice records that the vehicle came to its workshop with an unstable idle. Using a scan tool, AutoDIESEL found the fuel pressure at the rail was unstable from 200 to 400 bar. The invoice records that Mr Lavin had already changed the SCV and rail valve. AutoDIESEL tested the vehicle’s diesel injectors. The invoice itself does not record any fault or recommended repair. However, Mr Lavin submitted that AutoDIESEL told him it was likely that the vehicle had a faulty diesel pump. It is important to record that there is no mention in AutoDIESEL’s invoice of any loss of engine power.
[11] Following the assessment by AutoDIESEL, there was an exchange of texts between Mr Lavin and Michael McQuade, one of the directors of Adopt A Car. The first text that was produced was from Mr Lavin stating that he had left a message on Mr McQuade’s phone, and with a co-worker, regarding the vehicle “not idling an [sic] keeps stalling”.
[12] Mr McQuade’s response was to invite Mr Lavin to “bring [the vehicle] in and we will have a look at it”. At the hearing, Mr McQuade accepted that he knew that Mr Lavin was based in Auckland. He also agreed, in hindsight, that it would have made more sense for him to invite Mr Lavin to take the vehicle to a Nissan service agent in Auckland in the first instance, rather than ask him to bring it in to Adopt A Car in Palmerston North. When Mr Lavin asked if Mr McQuade was prepared to truck the vehicle down to Palmerston North, Mr McQuade said no. This suggests that Mr McQuade was attempting to deter Mr Lavin from pursuing the matter, given the obvious inconvenience to him of transporting the vehicle all the way from Auckland.
[13] Adopt A Car’s refusal to pay for the vehicle to be transported to Palmerston North prompted Mr Lavin to ask if he could return the vehicle in exchange for a refund of the purchase price. Mr Lavin said that it felt to him like he had “bought a lemon”.
[14] Mr Lavin and Mr McQuade then spoke to each other by phone and reached a compromise. Mr Lavin could take the vehicle to his brother, Thomas Lavin, who is the director of a heavy diesel repair workshop, CRV Equipment, in Whanganui. It was agreed by Stephen Lavin and Mr McQuade that Thomas Lavin would be invited to diagnose the problem. If it was a small part that needed replacing, Mr McQuade said that Adopt A Car would consider contributing to the cost. Again, it is noteworthy that in this text exchange there was still no mention by Mr Lavin that the vehicle had lost power.

CRV Equipment estimate

[15] The vehicle was taken to CRV Equipment. On or around the beginning of April 2019, Thomas Lavin phoned Mr McQuade. In this call, according to Mr McQuade, Thomas Lavin told him that the vehicle’s diesel pump needed replacing, at a cost of approximately $1,500.
[16] However, in his evidence given at the hearing, Thomas Lavin denied that, at the time he spoke to Mr McQuade, he had carried out a comprehensive diagnosis, or that $1,500 was a true estimate, as he had not at that stage finished investigating everything that was wrong with the vehicle.
[17] Around a week later, Mr McQuade received a written estimate from CRV Equipment. By then, CRV Equipment estimated that $14,617.71 in repairs were needed.
[18] Mr McQuade was naturally surprised by this written estimate, as it was a big jump from the $1,500 indication he had received over the phone.
[19] CRV Equipment’s report describes the fault reported as “lack of power & hunting at idle when hot”. CRV Equipment described the following checks as having been carried out with a “computer scope”:

• (a) the fuel rail pressure was checked and it was found that the rail pressure was fluctuating at idle when hot;
• (b) the SCV was checked and found to be working and compensating fuel pressure as required (it was noted on the estimate that the SCV had been changed previously); and
• (c) the signal from the air mass sensor was checked and found to be faulty, so a new air mass sensor appears to have been installed.

[20] CRV Equipment also checked the vehicle’s turbo boost pressure, which initially recorded 5 lbs. With the new air mass sensor it recorded 8 lbs, and with the vehicle’s exhaust pipe disconnected the turbo boost pressure was 20 lbs.
[21] CRV Equipment removed and checked the exhaust catalytic converter and found it was partially blocked. It also noted the turbocharger compressor wheel was badly damaged and recommended a new turbocharger be installed. CRV Equipment’s report noted that the vehicle’s diesel injectors had been tested previously by AutoDIESEL with no faults noted. CRV Equipment removed the exhaust gas reticulation valve and cleaned it and checked its operation. It also indicated that the fuel rail pump was suspected as being faulty and requiring replacement.
[22] As mentioned already, CRV Equipment estimated the total cost of repairs would be $14,617.71. This included $1,223.73 for work carried out in the process of assessing the vehicle and preparing the report, including 10 hours’ labour and the cost of a replacement air mass sensor. There was also $11,487.31 plus GST in recommended repairs to replace the turbocharger, fuel rail pump and catalytic converter, plus 12 hours’ labour and associated parts.
[23] Mr McQuade was “rather taken back” by CRV Equipment’s estimate and felt that he was being “taken for a ride”. He called Thomas Lavin to talk about the much higher than expected estimate and was duly invited by Mr Lavin to collect the vehicle and sort out its problems himself.
[24] Mr McQuade then called Stephen Lavin and asked to have the vehicle made available to him so that he could pick it up from Whanganui, bring it to Palmerston North, and have it assessed to find the fault. Based on what he had initially been told as being the problem, namely that the vehicle was stalling and not idling properly, Mr McQuade wanted to check whether replacing the SCV would remedy the problem. At this stage, Mr McQuade said he was not aware that Mr Lavin had already replaced the SCV. Mr McQuade reported that Mr Lavin refused to allow him to take the vehicle and insisted on getting his money back.
[25] On the basis of CRV Equipment's report and estimate, Mr Lavin communicated his rejection of the vehicle by email and text to Mr McQuade on 9 April 2019. Mr Lavin applied to this Tribunal on the same day.

Transpec Services' first report

[26] On 10 May 2019, Adopt A Car obtained a brief report from Transpec Services, a mechanical workshop in Palmerston North. Transpec Services is owned by Warren Cleland, who appeared at the Tribunal hearing to give evidence for Adopt A Car.
[27] Transpec Services’ report advised Adopt A Car on the possible cause of erratic fuel rail pressure causing an unstable idle. Although it did not assess the vehicle at this stage, Transpec advised that this was quite a common issue for a vehicle of its age and mileage (13 years old and approximately 187,000 km). Transpec Services advised that the most common repair would be to replace the SCV on the high-pressure pump and to relearn the pump values. Transpec Services' advice was that very seldom would the whole pump need replacing.
[28] Transpec did not comment on CRV Equipment’s recommendation that the turbocharger and catalytic converter should be replaced, as it needed to assess the vehicle to determine if these parts needed replacing.

Telephone conference – 24 May 2019

[29] I held a telephone conference with the parties on 24 May 2019. That was because I understood Adopt A Car still wanted to have the opportunity to collect the vehicle from CRV Equipment and repair it. However, Mr Lavin was unwilling to allow it to do so. I urged the parties to cooperate and allow Adopt A Car to test the vehicle. At the end of the telephone conference, an arrangement was made for Mr McQuade to pick up the vehicle and supply Mr Lavin with a loan vehicle for him to take back to Auckland.

Transpec Services' assessment of vehicle

[30] Mr McQuade then took the vehicle to Transpec Services. Its invoice dated 5 June 2019 says that it checked the vehicle by connecting its scan tool and checked the fuel rail pressure, which it found was erratic. It visually inspected the SCV and found that it looked like it had been replaced. However, there was no part number on the valve, so Transpec Services was unable to determine if the correct SCV had been fitted.
[31] Transpec Services sent the vehicle to Hautapu Motors Ltd (Nissan Manawatu) for the SCV to be “relearnt”. Nissan Manuwatu’s invoice dated 4 June 2019 records that it attempted to relearn the SCV but found the injector coding was blank. It carried out the coding procedure for the injectors to allow the relearning of the SCV, but found the SCV was either faulty or the wrong type of SCV had been used on the vehicle. Nissan Manawatu also found that SCV would not hold a steady pressure.

Mr Cleland's evidence on the proper functioning of the SCV

[32] At the hearing, Mr Cleland explained that the SCV dictates how much fuel goes into the diesel pump. As he explained it, the pump just pumps whatever fuel it is delivered, making it crucial that the SCV is working properly to ensure that the correct fuel pressure can be provided for whatever the vehicle’s needs are at a particular time.
[33] For this reason, Mr Cleland and Mr McQuade disputed Thomas Lavin’s conclusion that the SCV was working and compensating fuel pressure as required. They did not think that this conclusion was consistent with the fact that the vehicle’s fuel pressure was fluctuating. Nor did they accept that Thomas Lavin’s testing technique for the SCV was valid as he was unable to specify what scanning tool he had used to check the operation of the SCV. Nor did Mr Cleland and Mr McQuade accept that Thomas Lavin had the necessary equipment to do a proper “relearn” process for the SCV.

Tribunal's assessment

[34] The Tribunal’s Assessor, Mr Binding, found Mr Cleland’s criticisms of Thomas Lavin’s techniques to be valid. Therefore, the conclusions of CRV Equipment could not be relied upon. Mr Binding accepted the evidence given on behalf of Adopt A Car that the first step in addressing an erratic idle/stalling problem is to start with the SCV and to properly assess whether it is working.
[35] To summarise the evidence to this point, Mr Stephen Lavin replaced the SCV. Transpec Services' evidence was that the replacement SCV appeared to be either faulty or inappropriate for the vehicle. Moreover, the necessary relearning process has not occurred.
[36] Based on this evidence, the Tribunal accepts Adopt A Car’s submission that the repair process for this vehicle needs to start from scratch with a competent replacement of the SCV.

Next steps

[37] Mr McQuade had offered to send the faulty SCV back to Stephen Lavin so he could swap it for a good one from the parts supplier that he purchased it from. Mr McQuade said that if Mr Lavin then sent the good SCV to him, he could arrange to get it coded. This was a sensible suggestion. But Mr Lavin did not wish to take it up. Instead Mr Lavin suggested Mr McQuade could simply reinstall the original SCV that Mr Lavin’s friend had removed. However, for obvious reasons, Mr McQuade was reluctant to simply put the old SCV (which had presumably been removed by Mr Lavin’s friend because it was faulty) back into the vehicle.

Turbocharger and catalytic converter

[38] Mr Lavin asked whether Manawatu Nissan had checked the turbocharger and the catalytic converter. As Mr McQuade and Mr Cleland explained at the hearing, they did not check the catalytic converter. The logical sequence of diagnostic checks, in Mr Cleland’s evidence, was to fix the fuel pressure fault first, before doing other checks on the vehicle.
[39] Mr Cleland said that he had seen the photos of the turbocharger that were produced for the Tribunal. He said that it was possible that some foreign body, for example a small piece of rubber from an air filter, may have gone through the turbocharger, while allowing it to continue to operate. When the catalytic converter was removed from the vehicle, CRV Equipment recorded 20 lbs of boost pressure, indicating the turbocharger is still working.
[40] Mr Binding accepted this as a likely explanation for the turbocharger damage. The fact that Mr Lavin only began to report a loss of power some four months after purchasing the vehicle suggests that any problem with the turbocharger was not a pre-existing fault when Mr Lavin purchased the vehicle. Mr Binding said that it is possible that the damage shown on the photos to the turbo impeller may have been caused in the process of the SCV repair carried out by Mr Lavin’s friend. In Mr Binding’s view, even if the impeller has been slightly bent by the introduction of a foreign body, it may have no material effect on the operability of the turbocharger. Mr Binding agreed with Mr Cleland’s assessment that the fact that the turbo was still recording 20 lb of boost pressure suggested that it was still functioning adequately. Mr Binding did accept, however, that the readings obtained by CRV Equipment indicate the catalytic converter is blocked. Nevertheless, Mr Binding agreed with Mr Cleland’s suggested logical process of diagnosis and SCV relearning that needs to occur before reaching definitive conclusions in relation to these unrelated parts. In other words, Mr Binding accepts that the best approach is to deal with the defective fuel pressure issue first, by addressing the known problem with the SCV.
[41] On 18 June 2019, Mr Lavin said he wanted to pick up the vehicle and have it assessed once more as the turbocharger and catalytic converter had not been ruled out as faulty. Accordingly, Mr Lavin took the vehicle back to Auckland and asked Auckland Auto Collection Ltd (Manukau Nissan) to inspect the catalytic converter and diesel particulate filter and turbo. Manukau Nissan found that the turbo impeller fin is damaged as it looked like something went through the fins. It also found that the catalytic converter was blocked. It recommended the catalytic converter, turbocharger and both fuel filters be replaced at an estimated cost of $6,989.65. There was nothing in Manukau Nissan’s report about the SCV and it appears that Manukau Nissan may not have been asked to look at this issue or to assess the cause of the vehicle’s erratic idle and stalling.

Conclusion on acceptable quality

[42] As already indicated, Mr Binding accepts Mr Cleland’s evidence of what should happen next to this vehicle; namely to address its erratic idling and stalling issues by replacing and properly relearning and recoding the SCV. It appears this issue arose fairly early on in Mr Lavin’s ownership of the vehicle. Unfortunately he took matters into his own hands by getting a friend to replace the SCV. He should have had this repair done properly by a professional service agent. This is particularly important where replacement parts have to be coded to the vehicle using proper equipment, which it appears Mr Lavin’s friend did not have.
[43] I conclude that the vehicle failed to comply with the guarantee of acceptable quality because it is likely to have had a faulty SCV. I am not prepared to reach any conclusions in relation to the turbocharger or the catalytic converter at this stage. There may be something in Mr McQuade’s arguments that the fact that the converter is partly blocked, and the turbo impeller is bent, may simply reflect what a reasonable consumer might expect given the reasonably advanced age and mileage of this vehicle. Until the fuel pressure issues are sorted out, we will not have a comprehensive readout as to whether the vehicle still has low power and requires further repairs. That is why my finding at this stage is limited to the SCV.

Issue two: Was it a failure of a substantial character?

[44] Rather than the $14,610.76 of repairs estimated by CRV Equipment, or the $6,989.65 in repairs estimated by Manukau Nissan, I accept Mr Cleland’s evidence that the cost to replace the SCV and ensure that it is properly relearnt is in the order of $600. As this amounts to a reasonably small cost to repair the vehicle's known issue, I do not accept it signifies a failure of a substantial character for the purposes of s 21 of the Act.

Issue three: What is the appropriate remedy (if any)?

[45] Section 18 of the Act sets out the appropriate remedies for breach of a guarantee. It 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.

[46] As I have found that the vehicle does not have a failure of a substantial character, Mr Lavin is only entitled to the remedy provided in ss 18(2)(a) or 18(2)(b)(i) (above). He was entitled to request the trader to remedy the failure and if the trader refused or neglected to do so, or did not succeed in doing so, he was entitled to have the failure remedied elsewhere.
[47] I accept that Mr Lavin had reasons to be ill-disposed towards Adopt A Car. It had failed to repair the vehicle’s brakes, and it initially failed to comply with the Disputes Tribunal order. Moreover, Mr Lavin’s initial experience in trying to get Mr McQuade to assist with repairs was hardly encouraging, with Mr McQuade suggesting he bring the vehicle down to Palmerston North and then baulking at the high cost of CRV Equipment’s estimated repair costs.
[48] Ultimately, however, I consider both parties are responsible for failing to solve what looks like a relatively simple fault. In hindsight, Mr McQuade accepts that he should have just recommended Mr Lavin to take the vehicle to a local service agent in Auckland, get an estimate and provide that to him for his consideration. The complicated and ill-humoured way in which both parties have gone about this whole episode suggests that they have got themselves locked into an unfortunate dispute and have not tried hard enough to solve the vehicle’s underlying problem. Both parties need to take responsibility for that and the orders I propose to make will require both parties to cooperate now to get this problem resolved.
[49] In terms of the appropriate remedy under s 18(2) of the Act, I do not think that Mr Lavin has established conclusively that Adopt A Car has refused to remedy the failure. Rather, Mr McQuade has demonstrated that he is prepared to cooperate to solve the problem, as long as the repair costs are proportionate and reasonable.
[50] The Tribunal accepts Mr McQuade’s submission that the first step in this repair is to get the SCV properly replaced. Accordingly, what should happen next is this:

• (a) Mr Lavin is to take the vehicle to Manukau Nissan or another franchise Nissan service agent for it to replace the SCV with a factory replacement part and to ensure that this is properly relearnt and recoded to the vehicle.
• (b) Following this repair, the vehicle’s boost pressure is to be tested.
• (c) Mr Lavin is liable in the first instance to meet the cost of these repairs. However, he should provide a copy of the invoice to the Tribunal's case manager together with the boost pressure test results. The Tribunal will then order Adopt A Car to reimburse Mr Lavin for the reasonable cost of repairs and testing, up to the full amount of the invoice.
• (d) In addition, once Manukau Nissan (or another Nissan franchise dealer) has provided a report on the vehicle’s boost pressure following the SCV repairs, the Tribunal will further consider whether Adopt A Car should be required to pay for (or pay a contribution towards) replacement of the turbocharger and/or catalytic converter, if that is necessary. In that regard, it may be helpful for Adopt A Car to provide to the Tribunal its own estimate of the cost of these replacement parts, as well as exploring the option of simply removing the catalytic converter if that is suitable, or replacing it with an aftermarket part.

[51] I confirm that I am not prepared to order any reimbursement to Mr Lavin for the costs of the CRV Equipment assessment or that by AutoDIESEL, neither of which the Tribunal found particularly helpful.
[52] Nor am I prepared to reimburse Mr Lavin for any of his rental car costs or road user charges. As mentioned, both parties have delayed resolution of this matter to some extent. Mr McQuade could have been more cooperative from the outset. And Mr Lavin has overcomplicated the process for resolving this issue. Unfortunately, he prematurely fixed on getting rid of the vehicle, without trying hard enough to remedy what could be a relatively minor fault.

[53] Once the steps I have outlined above have taken place, the Tribunal will have another telephone conference with the parties if necessary.

J S McHerron
Adjudicator