Gonzales v Carnation Limited - Reference No. MVD 235/2019 [2019] NZMVDT 183 (21 August 2019)

Last Updated: 17 September 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 235/2019
[2019] NZMVDT183

BETWEEN ERIN-LEE AND NATHAN GONZALES

Purchasers

AND CARNATION LIMITED

Trader

HEARING at Auckland on 12 August 2019
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

S N Haynes – Assessor
APPEARANCES

E-L and N Gonzales, Purchasers
V Gonzales, Purchasers’ husband/father (respectively)
G A McPheat, Director of Trader
E Erasmus, Trader’s Witness

DATE OF DECISION 21 August 2019

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

Carnation Limited must pay Nathan Gonzales $650 no later than 4 September 2019.

___________________________________________________________________

REASONS

Introduction

[1] Nathan Gonzales and his parents decided to buy a car for Nathan and his teenage siblings to learn to drive in. They looked at several Subaru Foresters. As Subarus have an interference engine they knew that, to reduce the risk of future expensive repairs, it was important to ensure the cambelt had been replaced.
[2] The vehicle Mr Gonzales bought was listed on Trade Me. Before deciding to buy it, Mr Gonzales asked the trader, Carnation Ltd, the following question, through the Trade Me platform:

Hi, has the cambelt been done? Thanks.

[3] The director of Carnation, Graeme McPheat, replied:

Hi, the current owner has had the car for 10 years. He said his local garage last did the cambelt at just over 200 kms. Thanks, Graeme.

[4] It was accepted that the reference to “200 kms” was an abbreviation of 200,000 km. The vehicle’s odometer reading at the time of sale was 227,417 km.
[5] This question and answer was displayed underneath the Trade Me listing for the vehicle. Mr McPheat’s response to his question influenced Mr Gonzales’s decision to buy the vehicle.
[6] After purchasing the Subaru, on 28 June 2019, Mr Gonzales discovered that its cambelt had not been replaced at “200,000 kms” after all. Rather, the cambelt had last been replaced at approximately 114,000 km, eight years ago.
[7] After this fact emerged, Mr Gonzales and his mother asked Carnation to pay for the vehicle’s cambelt to be replaced, but Carnation refused to do so. Accordingly, Victoriano Gonzales, Nathan Gonzales’s father, went ahead and had the vehicle’s cambelt replaced at his expense. The Gonzales family now seek to recover the cost of this repair from Carnation.
[8] From this background, the following issues arise for the Tribunal’s determination:

• (a) Did the vehicle fail to comply with its description?
• (b) Did the vehicle fail to comply with the guarantee of acceptable quality?
• (c) If either guarantee was breached, what remedy (if any) is Mr Gonzales entitled to?

Issue one: Did the vehicle fail to comply with its description?

[9] Section 9 of the Consumer Guarantees Act 1993 (the Act) provides that where goods are supplied by description to a consumer, there is a guarantee that the goods correspond with the description.
[10] It is not controversial that the contents of a vehicle’s listing on Trade Me can be regarded as part of the description by which the vehicle is supplied.[1] Here, the question about the cambelt and Carnation’s response are part of the description by which the Subaru Forester was supplied to Nathan Gonzales. As mentioned, whether the cambelt had been replaced was an important feature of the vehicle to Mr Gonzales, who said that he chose this car ahead of another Subaru Forester that had not had its cambelt replaced, even though the other Subaru was newer.
[11] Mr Gonzales took the vehicle for a test drive with his grandfather but his evidence was that he did not check the cambelt at that time. Rather, he relied on what Mr McPheat had said in answering his question on Trade Me.
[12] The day after purchasing the vehicle, Mr Gonzales saw an old sticker from the previous cambelt replacement in 2011 stating that it had been replaced at 114,697 km on 6 December 2011.
[13] Mr Gonzales enquired with Mr McPheat who (Mr Gonzales said) initially told him that the cambelt was replaced at just over 200,000 km so Mr Gonzales could leave it to 300,000 km before he would need to replace it again. At the hearing Mr McPheat denied saying this.
[14] After further enquiries were made by Mr Gonzales and his mother, Mr McPheat’s position changed. He now said he had only found out about the cambelt secondhand from Winger, which had traded in the vehicle and from which Carnation had bought it.
[15] Mr McPheat told Ms Gonzales “the previous owner told Winger who told me”. This was despite the fact that there had been no reference to Winger standing between the previous owner and Carnation, in Mr McPheat’s response to Mr Gonzales’s original question on Trade Me. Mr McPheat told Ms Gonzales that he could not help her with any further enquiries about the vehicle, saying “I wish you had asked me before you bought because I would have explained that I don’t have direct contact with the previous owner”. In a further email dated 8 July 2019, Mr McPheat stated that if the cambelt replacement was an important decision in buying the car:

... then your son should have checked the status, documentation, receipts, etc PRIOR to purchase. If he had asked if I had written proof or receipts from the previous owner of the cambelt change at around 200,000 kms then I would have investigated further PRIOR to purchase. If as you suggest, he had read the response to this question on Trade Me before purchasing the car, then he did so in the knowledge that any advice had been given to me verbally! I did not state that I had a receipt or written evidence. If your son required written confirmation, then he should have requested this prior to purchase, which he didn’t do.

Tribunal’s assessment

[16] I do not accept Mr McPheat’s submission that Nathan Gonzalez “effectively slipped up by neglecting to ask for evidence of a cambelt change [at 200,000 kms] in writing”. Rather, in my view, it is Mr McPheat who “slipped up” by representing on Trade Me that the vehicle’s cambelt had been changed, without verifying that fact.
[17] The law requires a trader to make sufficient enquiries to check whether a representation about a vehicle is true. A purchaser should be able to rely on statements made by a trader. Unsubstantiated representations act as an inducement to purchasers, as did Mr McPheat’s representation about the cambelt in the present case. Mr McPheat’s representation influenced Mr Gonzales’s purchasing decision. If a representation later turns out to be incorrect, as it was here, it is the maker of the representation who bears the consequences. It is no excuse that Mr McPheat was only passing on information he received from someone else. He was the one who passed the information on, so he was responsible for making sure it was correct. If he was unable to do so, then the safest thing would have been for him to say nothing at all. As the Commerce Commission says, “if you can’t back it up, don’t say it”.[2]

Conclusion

[18] For these reasons, I conclude that the vehicle failed to comply with the guarantee that it correspond with its description. In particular, the representation made by Mr McPheat on Trade Me would have induced a reasonable consumer to believe that the vehicle’s cambelt had been replaced at 200,000 km. Contrary to that representation, the vehicle’s cambelt had last been replaced at 114,697 km. This was contrary to the way in which the vehicle had been described in the Trade Me listing.

Issue two: Did the vehicle fail to comply with the guarantee of acceptable quality?

[19] Section 6(1) of 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.
[20] “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.

[21] 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.
[22] Apart from the representation made by Mr McPheat in the answer to Mr Gonzales’s question, I would not find the lack of a recent cambelt replacement was a failure of the vehicle to comply with the guarantee of acceptable quality. Cambelts are recognised wear and tear items that regularly require replacement in a vehicle of this kind approximately every 100,000 km. As this vehicle had done approximately 227,000 km as at the time of sale, it could not necessarily be expected that the vehicle would be sold with a new cambelt.
[23] Generally, it is incumbent on a prospective purchaser of a vehicle to check whether its cambelt has been replaced. As I have found already, however, I am satisfied that Mr Gonzales made adequate checks by asking Mr McPheat whether the cambelt had been replaced.
[24] In considering whether a reasonable consumer would regard a vehicle as acceptable in terms of the definition of acceptable quality in s 7 of the Act, the Tribunal has regard to “any representation made about the goods by the supplier or the manufacturer”.[3]
[25] In the present case, I consider the representation made by Mr McPheat in his answer to Mr Gonzales’s question amounts to a representation that the cambelt was replaced at 200,000 km. For this reason alone, the fact that the cambelt was not replaced at 200,000 km, but was replaced more than 100,000 km prior to purchase, amounts to a breach of the guarantee of acceptable quality. In these circumstances, in light of the representation made, a reasonable consumer would not consider the vehicle to be of acceptable quality, given that it was now overdue for a further cambelt replacement, contrary to the representation made on behalf of Carnation by Mr McPheat.

Conclusion

[26] Accordingly, for these reasons I conclude that the vehicle also failed to comply with the guarantee of acceptable quality.

Issue three: What remedy (if any) is Mr Gonzales entitled to?

[27] The remedies available to a consumer where goods do not comply with a guarantee under the Act are set out in s 18, which 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.

[28] In the present case, the Gonzales family are relying on s 18(2)(b)(i). That is because they have already had the cambelt replaced in Mr Gonzales’s Subaru and they seek to recover all reasonable costs incurred in doing so. In order to establish entitlement to that remedy they need to establish that Carnation was “required to remedy the failure” and that Carnation had “refused” or “neglected” to do so or did not succeed in doing so within a reasonable time.
[29] On 3 July 2019, Ms Gonzales told Mr McPheat:

We like the car, but the price we paid included the cambelt having been done as the vehicle was described on Trade Me; under the CGA you should get it done if you can’t get proof, or else compensate us so that we can get it done.

[30] Following Ms Gonzales’s request, Mr McPheat refused on at least four occasions to replace the cambelt at Carnation’s expense.
[31] The first occasion was on 3 July 2019 in which Mr McPheat emailed Ms Gonzales and said:

No Erin, like I said, you drove the car and inspected it and satisfied yourself prior to purchase. If you’re not happy then I can exchange it for another but I am not giving you a $400 discount off the purchase price and then paying for an unnecessary cambelt replacement, nor am I giving you a refund.

[32] The second refusal was also on 3 July 2019, in which Mr McPheat emailed Victoriano Gonzales and said:

Do not go ahead with the cambelt replacement, I do not authorise or agree to pay for this. If you go ahead with a cambelt replacement then you do so without my agreement or authority.

Return the car to U–sell at your earliest convenience and I will look into this further.

[33] The third occasion on which Mr McPheat refused to replace the cambelt was on 5 July 2019 in which he emailed Ms Gonzales and said:

As the car has now done around 227,000 kms then it’s likely to be between cambelt replacement periods, so only you can decide if you want to pay to have the cambelt replaced again, or not. But to be clear, this is your decision, I will not be contributing towards a cambelt replacement as per my previous emails which gave you alternate options.

[34] The fourth occasion on which Mr McPheat refused to replace the cambelt was on 8 July 2019, in which he emailed Ms Gonzales stating:

... I disagree with your view that I am required to replace the cambelt and water pump and will defend my position, just as many RMVT’s have done in the past.

[35] Mr McPheat submitted that Mr Gonzales needed to give him an opportunity to look at the car before getting the cambelt replaced and that he had invited Mr Gonzales to bring the car to Carnation so it could see what work needed to be done. But Mr McPheat’s invitation must be read in light of his prior repeated refusals to remedy the failure at Carnation’s expense.
[36] Accordingly, I conclude that Mr Gonzales has established that Carnation refused to remedy the failure of the Subaru to comply with the guarantee of acceptable quality and to correspond with its description, after having been given an opportunity to do so.
[37] Following Carnation’s refusals, the Gonzales family had the vehicle’s cambelt replaced by Michies Automotive on 10 July 2019. Michies also carried out a general engine service on the vehicle and, in addition to replacing the cambelt, also replaced the tensioners, idlers, cam seals, water pump, thermostat and replaced the coolant. The total cost of all this work was $1,442.33. Ms Gonzales clarified that the cambelt and associated repairs amounted to $1,230 of this total, with the rest relating to the servicing of the vehicle.
[38] Mr McPheat submitted that the cost of this work was excessive. As a consumer is only entitled to recover the “reasonable costs incurred” under s 18(2)(b)(i), the Tribunal must therefore assess what those reasonable costs were.
[39] Mr McPheat provided two estimates for replacing the cambelt: $432.02 and $480.93 respectively. Part of this difference in price related to the fact that Mr McPheat’s quotes only relate to replacing the cambelt and labour rather than any associated parts.
[40] The Tribunal’s Assessor, Mr Haynes, pointed out that ordinarily as a minimum the tensioner is replaced at the same time as the cambelt. However, Mr Haynes agreed with Mr McPheat’s submission that it is not always necessary to go ahead and replace the idlers, cam seals, water pump, coolant and thermostat. Even though these associated parts are commonly replaced at the same time, I do not consider that Mr McPheat’s response to Nathan Gonzales’s question on Trade Me, that the previous owner “did the cambelt” implies that these associated parts were replaced. Accordingly, any reimbursement for reasonable costs will only account for the cambelt and tensioner rather than the associated parts.
[41] By reference to advertised prices for cambelt replacement for the same model vehicle, Mr Haynes advised that a reasonable cost of replacing the cambelt and tensioner in Mr Gonzales’s car is $650.

Conclusion

[42] For the above reasons, Carnation Ltd must pay Nathan Gonzales $650 within 14 days of the date of this decision. Although it appears to have been Victoriano Gonzales who paid for the repair, he will need to recover that sum from his son, if necessary.

J S McHerron
Adjudicator

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[1] See, for example, Mikitasov v Lee DC Kaikohe CIV-2010-027-331, 4 July 2011.

[2] See Commerce Commission “If you can’t back it up, don’t say it” (19 February 2018) <https://youtu.be/a9a2HtaeNFE>.

[3] Consumer Guarantees Act 1993, s 7(1)(i).