Christian v JK Import Solutions Ltd t/a Portage Cars - Reference No. MVD 174/2019 [2019] NZMVDT 165 (31 July 2019)

Last Updated: 23 August 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 174/2019 [2019] NZMVDT 165 BETWEEN YASH CHRISTIAN Purchaser AND JK IMPORT SOLUTIONS LTD T/A PORTAGE CARS Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Haynes, Assessor

HEARING at Auckland on 25 July 2019

APPEARANCES

Y Christian, Purchaser A Kassamaly and A Dhariwal, Witnesses for the Purchaser

A J Bhatia, for the Trader C Karl and D Seegar, Witnesses for the Trader

DATE OF DECISION 31 July 2019

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DECISION OF THE TRIBUNAL

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1. Yash Christian’s application is dismissed.

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REASONS

Introduction

[1] Yash Christian seeks to reject the 2011 Jaguar XJ he purchased from JK Import Solutions Ltd trading as Portage Cars (Portage Cars) for $31,495 on 21 November 2018.
[2] Mr Christian says that the vehicle suffered extensive engine damage about four months after purchase, meaning it has not been of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the Act). He seeks to recover the deposit he paid for the vehicle, all interest and principal payments made under the loan he entered into to purchase the vehicle and other costs incurred in dealing with the vehicle’s faults.
[3] Portage Cars says it has not liability under the Act because the engine damage was caused by Mr Christian continuing to drive the vehicle when it was low on oil.

The issues

[4] Against this background, the sole issue requiring consideration is whether the vehicle has a fault that breaches the acceptable quality guarantee in s 6 of the Act.

Does the vehicle have a fault 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 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.

(2) Where any defects in goods have been specifically drawn to the consumer's attention before he or she agreed to the supply, then notwithstanding that a reasonable consumer may not have regarded the goods as acceptable with those defects, the goods will not fail to comply with the guarantee as to acceptable quality by reason only of those defects.

(3) Where goods are displayed for sale or hire, the defects that are to be treated as having been specifically drawn to the consumer's attention for the purposes of subsection (2) are those disclosed on a written notice displayed with the goods.

(4) Goods will not fail to comply with the guarantee of acceptable quality if—

(a) the goods have been used in a manner, or to an extent which is inconsistent with the manner or extent of use that a reasonable consumer would expect to obtain from the goods; and

(b) the goods would have complied with the guarantee of acceptable quality if they had not been used in that manner or to that extent.

(5) A reference in subsections (2) and (3) to a defect means any failure of the goods to comply with the guarantee of acceptable quality.

[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 Christian’s subjective perspective.
[8] On 17 March 2019, while driving from Hamilton to Auckland, Mr Christian says that he noticed the vehicle make a “clanging” noise and lose power. Mr Christian pulled over, and unsuccessfully tried to restart the vehicle.
[9] Mr Christian says the vehicle was then towed to a Jaguar franchise in Greenlane, who considered that the engine was damaged, but that it did not have the expertise to perform the required diagnosis. The vehicle was then transported to Beacham European, who considered that the engine was irreparably seized.
[10] Wanting a second opinion, Mr Christian transported the vehicle to Marcus Motors, who also found significant engine damage, caused by the vehicle being driven while its oil levels were too low. Marcus Motors considers that the engine can be rebuilt — at a cost of nearly $30,000 — or replaced at a cost exceeding $36,000.

The vehicle’s oil levels were low

[11] The vehicle’s oil sump has a capacity of 7.2 litres of oil, and I am satisfied that the vehicle’s oil levels were correct at the time of sale. In that regard, I accept the evidence from Christopher Karl, formerly of CCW Compliance, who says he topped the vehicle’s oil levels up before the vehicle was sold to Mr Christian.
[12] The evidence shows that the vehicle then consumed most of that oil during Mr Christian’s ownership. By the time the vehicle broke down, it had only approximately 1.5 litres of oil in its sump, as shown by the 1.5 litre plastic bottle brought to the hearing by Mr Christian, which contained the entire contents of the vehicle’s oil sump after it had broken down.
[13] The evidence is not clear as to what caused the vehicle to consume that oil. There is no evidence of any fault that would have caused a rapid loss of oil (for example, there was no evidence of any significant amount of oil found in the engine bay or beneath the vehicle when it broke down) and the evidence regarding the cause of the gradual loss of oil was conflicting. For example, Mr Christian says the vehicle had a significant oil leak from its rocker cover, which is consistent with a report from Marcus Motors. However, I also heard evidence from Dylan Seegar, a claims assessor at Janssens Insurance, who says he saw no sign of an oil leak when he assessed the vehicle. Further, Mr Haynes, the Tribunal’s Assessor, advises that any oil leak that would cause the vehicle to consume around five and a half litres of oil over a four month period will be significant and will almost inevitably leave pools of oil beneath the vehicle when it is parked. Mr Christian says that he saw no signs of any pools of oil, or any other sign of oil leaking from the vehicle before it broke down.
[14] Nonetheless, although the evidence is not clear as to the cause of the vehicle’s oil consumption, I am satisfied that the vehicle consumed an excessive amount of oil and that its oil levels were extremely low when the vehicle broke down in March 2019.

The engine damage was caused by the vehicle being driven while low on oil

[15] As set out above, Marcus Motors considered that the engine damage was caused by the vehicle being driven while low on oil. Mr Haynes agrees and advises that the symptoms described by Mr Christian are consistent with the vehicle being driven while low on oil, as diagnosed by Marcus Motors. Mr Haynes advises that the low oil levels will cause engine components to seize because they have been starved of lubrication. Mr Haynes also agrees that any repair will be expensive.
[16] Mr Christian also submitted that the engine oil was in poor condition, which may have contributed to the engine damage. I am not satisfied that the condition of the vehicle’s oil contributed to the engine damage. Mr Haynes agrees that the vehicle’s oil was in poor condition but advises that the quality of the oil had no bearing on the damage to the engine. Mr Haynes says that the damage to the engine was caused by it being starved of oil because its oil levels were too low, not because of the poor quality of the oil.
[17] Accordingly, on the basis of the evidence presented by Mr Christian, and the advice I have received from Mr Haynes, I am satisfied that the engine damage was caused by the vehicle being driven while low on oil.

Mr Christian caused the engine damage by driving when warning signs of low oil levels were present

[18] Portage Cars accepts that the vehicle had low oil levels and now has significant engine damage, which requires expensive repair. However, it says that it should not be liable for that damage because Mr Christian caused the extensive engine damage by continuing to drive the vehicle when warning signs were present to show that the vehicle was low on oil. Portage Cars says that Mr Christian should have stopped driving the vehicle once those warning signs occurred, and if he had done so, the significant engine damage would have been avoided.
[19] This submission is significant because, under s 7(4) of the Act, the engine damage will not breach the acceptable quality guarantee if it was caused by the vehicle being used in a manner, or to an extent, which is inconsistent with the manner or extent of use that a reasonable consumer would expect to obtain from the goods, and that use caused or contributed to the engine damage.
[20] Mr Haynes advises that the vehicle has an oil level warning system, including oil level sensors and an oil level warning light, which should activate when the oil levels drop below minimum specifications. Given the sump capacity of 7.2 litres, Mr Haynes advises that the vehicle’s oil level warning system would activate well before the oil level reached the 1.5 litres found in this vehicle when it broke down. Mr Haynes advises that, if the vehicle’s oil level warning system was functioning properly, the oil level warning light would have illuminated on the vehicle’s dashboard display and be obvious to any driver of the vehicle.
[21] Mr Christian and his partner Arzina Kassamaly say that the oil warning level light did not activate and that there were no other observable warning signs before the vehicle broke down. Mr Christian says that the only warning signs were a loss of power and then a clanging sound shortly before the vehicle broke down. Mr Christian also says that Arsh Dhariwal, the tow truck driver who towed the vehicle after it broke down did not detect any warning lights when he inspected the vehicle.
[22] Despite this evidence, I am satisfied that it is likely that the vehicle’s oil level warning light did illuminate some time before the engine failed and that Mr Christian nonetheless continued to drive the vehicle.
[23] Mr Dhariwal’s evidence did not show that no oil warning light illuminated or that the vehicle’s oil level warning system was malfunctioning. Instead, Mr Dhariwal gave evidence that the vehicle’s battery was flat when he assessed the vehicle. It is then unsurprising that he observed no warning lights, as the warning lights will not work if the battery is flat.
[24] Further, Mr Haynes advises that, given the extremely low levels of oil present in this vehicle when it broke down, the only possible reason for the oil warning light failing to illuminate is a fault with one of the vehicle’s sensors or its electronic components, which affected the operation of the vehicle’s oil level warning system. Mr Haynes advises that any fault with the vehicle’s oil level warning system would have been identified during any diagnostic scan performed on the vehicle after it broke down.
[25] In this case, a diagnostic scan was performed by Marcus Motors shortly after the vehicle broke down, the results of which were provided by Mr Christian after the hearing. No fault codes consistent with a fault with the vehicle’s oil level warning system were found.
[26] Accordingly, in the absence of evidence corroborating Mr Christian and Ms Kassamaly’s evidence that the oil level warning light did not illuminate, and given that the diagnostic scan performed on the vehicle did not identify any fault code consistent with the vehicle having any fault with its oil level warning system, I consider it most likely that the vehicle’s oil warning level system was working, that the oil level warning light illuminated and that Mr Christian continued to drive the vehicle after that warning light illuminated.
[27] Mr Christian should have stopped driving immediately when the oil level warning light illuminated. I consider that a reasonable consumer should understand that an oil level warning light is a warning that the vehicle may have a significant fault that requires immediate attention and that continued use of the vehicle could damage the engine. A reasonable consumer would immediately pull over, check the vehicle’s oil levels and seek help if required.
[28] If Mr Christian had done these things, the significant engine damage would have been avoided. He did not do so, and I am therefore satisfied that the engine damage was caused by the vehicle being used in a manner inconsistent with the way in which a reasonable consumer would have used the vehicle, meaning that the significant engine damage does not amount to a breach of the acceptable quality guarantee in s 6 of the Act.
[29] Mr Christian’s application is therefore dismissed.

DATED at AUCKLAND this 31st day of July 2019

B.R. Carter
Adjudicator