Eastham v Prestige Park and Sell Limited - Reference No. MVD 219/2019 [2019] NZMVDT 192 (11 September 2019)

Last Updated: 1 November 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 219/2019
[2019] NZMVDT192

BETWEEN LOGAN BRUCE EASTHAM

Purchaser

AND PRESTIGE PARK AND SELL LIMITED

Trader

HEARING at Auckland on 19 August 2019
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

S N Haynes – Assessor
APPEARANCES

L B Eastham, Purchaser (by AVL)
B T Martin, Director of Trader (by phone)

DATE OF DECISION 11 September 2019

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

1. Logan Eastham’s rejection of his Chevrolet Silverado is upheld, as from 11 June 2019.
2. Mr Eastham’s rights and obligations under his loan from Avanti Finance Ltd dated 3 May 2019 (the Collateral Credit Agreement) are vested in Prestige Park and Sell Ltd with effect from the date of rejection, 11 June 2019.

100. Prestige Park and Sell Ltd must pay Mr Eastham $1,148.28 no later than 25 September 2019.

4. Prestige Park and Sell Ltd must refund Mr Eastham all of his payments of principal under the Collateral Credit Agreement prior to 11 June 2019, as well as his payments of interest and principal from 11 June 2019 to the date of this decision. These payments must be made no later than 25 September 2019 to a bank account nominated by Mr Eastham.
5. Once Mr Eastham has been paid in full, he must make the vehicle, and the replacement parts that were supplied by Keith Automotive, available for Prestige Park and Sell Ltd to collect at its cost.
6. Mr Eastham must facilitate the payment of $7,500 to Prestige Park and Sell Ltd by Oxford Finance, pursuant to the loan Mr Eastham has arranged by it. This payment should be made forthwith, and no later than 25 September 2019
7. If there is any disagreement as to the calculation of the amounts payable as set out above, leave is granted to either party to refer that dispute to the Tribunal.
8. Mr Eastham should inform the case manager no later than 27 September 2019, if Prestige Park and Sell Ltd does not comply with the above orders, and the Tribunal will consider whether to take any further steps.

___________________________________________________________________

REASONS

Introduction

[1] Logan Eastham wishes to reject the 1995 Chevrolet Silverado that he purchased in May 2019 from Prestige Park and Sell Ltd. The vehicle’s mileage was significantly understated in its advertising. In addition, the vehicle has failed a warrant of fitness check, with several items needing to be repaired. More recently, the vehicle developed a transmission fault, and may require its transmission to be replaced.
[2] The following issues arise for the Tribunal’s determination:

• (a) Did the vehicle fail to comply with the guarantee of acceptable quality?
• (b) If so, has Prestige Park and Sell refused to remedy the failure?
• (c) Is Mr Eastham entitled to reject the vehicle?

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.
[6] Mr Eastham wanted to buy a tidy, low-mileage, original Chevrolet pickup. He saw one advertised on Trade Me. It was described as being in excellent condition, with 100,000 km on the odometer. Mr Eastham emailed the trader who had advertised the truck, Prestige Park and Sell Ltd, and asked its director, Bryan Martin, how much of a deposit he would need to purchase the vehicle. Mr Martin said no deposit would be needed. Mr Eastham then phoned Mr Martin to discuss obtaining a loan to purchase the truck. He supplied Mr Martin with the information he would need to arrange finance on the vehicle.
[7] Mr Eastham then travelled from his home in Orari, South Canterbury, to Auckland to purchase and collect the vehicle on 4 May 2019.
[8] When Mr Eastham arrived, he found that the vehicle had not been groomed. Mr Martin agreed to reimburse Mr Eastham to have the vehicle groomed when he returned home.
[9] On the drive home to Orari, Mr Eastham realised that the vehicle’s odometer was showing 164,435 miles, rather than the advertised 100,000 km. Mr Eastham rang Mr Martin to discuss this. Mr Martin initially blamed the discrepancy on an error by Trade Me, but later said it was the fault of an employee. Subsequently, the parties agreed that Mr Eastham would be paid a partial refund of $7,500 to reflect the misrepresentation about the vehicle’s mileage. This money was paid to Mr Eastham on or around 17 May 2019.
[10] Mr Eastham had some other concerns about aspects of the vehicle that did not meet the advertised description of it being in “excellent condition”. He took the vehicle to Quality Tyre and Auto Services in Geraldine for an independent warrant of fitness inspection on 13 May 2019. Quality Tyre and Auto Services failed the vehicle for the following reasons:

• [window] Washers
• Driver’s seat [not secured]
• Steering wheel alignment
• Driver’s sun visor
• Rear view mirror
• Passenger seat security
• Pitman arm
• LH exhaust manifold crack
• LH rear brake
• Headlight aim/pattern
• LH & RH lower arms bent
• Power steering pump leak
• Engine light on

[11] Several other items were also listed for comment on the warrant of fitness checksheet, including:

• LH front tyre outer wear
• LH & RH front wheel bearing slight play
• Rust scale drive shaft
• LH rear brake pipe bent

[12] These reasons for rejection and comments gave Mr Eastham reason to doubt whether the vehicle should have passed its warrant of fitness inspection just before being sold to him. Keith Automotive in Auckland was the workshop that issued this warrant of fitness.
[13] Mr Eastham agreed with Keith Automotive that it would supply parts for the repairs needed to remedy the defects identified by Quality Tyre and Auto Services. Mr Eastham agreed with Mr Martin that Prestige Park and Sell would pay for the labour cost of those repairs (this is confirmed in a text from Mr Martin before he refunded Mr Eastham the $7,500). This was intended to be on top of the $7,500 refund to Mr Eastham.

Repairs to air conditioning

[14] Mr Eastham also found that the vehicle’s air conditioning was not working when he collected it from Prestige Park and Sell. Mr Eastham and Mr Martin agreed that Prestige Park and Sell would pay for the repairs to the air conditioning. However, this agreement broke down because Mr Martin was having trouble recovering the cost of the air conditioning repairs from the vehicle’s previous owner. Mr Martin was also unhappy because he had asked the air conditioning repairer, TNT Auto Electric Ltd, to confirm the price of the repairs before going ahead with the work, but it had not done so.
[15] TNT Auto Electric’s invoice dated 31 May 2019 states that it pressure checked the air conditioning system and found a leak in the high side hose, which it had to send to an air conditioning specialist to repair. A second leak was also found from the pressure switch at the back of the pump. TNT Auto Electric fitted a new O-ring and rechecked the system, which it found to be working satisfactorily. It vacuumed down the system and recharged it with UV dye. The total amount of TNT Auto Electric’s invoice was $568.28, which included three hours of labour as well as parts and outwork.
[16] I am satisfied that Mr Martin authorised Mr Eastham to take the vehicle in for air conditioning repairs at TNT Auto Electric. Mr Eastham produced a text from Mr Martin confirming that this was acceptable. Moreover, Mr Martin has subsequently confirmed that he did not have a problem with the bill and that it would be paid. However, as at the date of the hearing Mr Martin had not paid Mr Eastham for the cost of the repairs, leaving Mr Eastham to pay it himself.

Recorded phone conversations

[17] Mr Eastham produced recordings of his phone conversations with Mr Martin. Mr Martin complained that the Tribunal should not take those phone conversations into account as they were recorded without his consent, in breach of Mr Martin’s privacy. As Mr Eastham was a participant in those phone conversations, it was not an offence for him to record them.[1] I suggested to Mr Martin that if he had a complaint about a breach of his privacy in respect of the recordings he could take that up with the Privacy Commissioner. The Privacy Act 1993 says, generally speaking, an agency must tell you if it is collecting your personal information.[2] However, this principle does not apply where the information is being collected by an individual solely or principally for the purposes of, or in connection with, that individual’s personal, family, or household affairs, unless the collection disclosure, or use of the information would be highly offensive to an ordinary reasonable person.[3] I note that I found the phone conversations to be relevant and reliable evidence that assisted the Tribunal to ascertain what the parties had agreed to.[4] I decided to receive and take account of the recorded phone conversations.
[18] There was one phone conversation in particular that I found helpful because it confirmed that the parties agreed that Mr Eastham would have the option to unwind the agreement to purchase the vehicle.
[19] In that phone conversation, which took place after the $7,500 had been refunded to Mr Eastham on 17 May 2019, the parties also discussed the air conditioning repairs. Mr Martin told Mr Eastham that the price of those repairs was “Ok”. However, Mr Martin and Mr Eastham argued about whether TNT Auto Electric was required to contact Mr Martin to tell him what the price would be, before going ahead with the repairs. Mr Eastham responded that that was a matter between Mr Martin and TNT Auto Electric and was no concern of Mr Eastham’s, as Mr Martin had already agreed that Mr Eastham could take the vehicle to TNT Auto Electric and had authorised the repairs. I agree with Mr Eastham on this point. Whether TNT Auto Electric contacted Mr Martin about the repairs does not affect whether Mr Eastham was entitled to expect Prestige Park and Sell to pay for the repairs.
[20] In the same phone conversation, Mr Martin also attempted unsuccessfully to get Mr Eastham to accept that the cost of the air conditioning repairs should be deducted from the $7,500 that Prestige Park and Sell had already refunded to him. Mr Martin then attempted to get Mr Eastham to agree that if Mr Martin paid for the air conditioning repairs, then everything would be settled between them. When Mr Eastham did not agree to this proposal, Mr Martin said “if you’re not happy, give me the $7,500 back and we’ll go back to where we were before”. That is a reference to a previous arrangement on 16 May 2019 to unwind the purchase of the vehicle, which was to be collected by Prestige Park and Sell from Timaru. This original agreement to unwind was superseded by the payment of the $7,500 on 17 May.
[21] In the recorded phone conversation, Mr Martin also made it clear that he does not want to pay any more for repairs to the vehicle. At one point he said “I’ve fucking put a full stop on what I’m paying for that car”. Mr Martin also said “I’ve paid you out, I’ve told you what the deal is with the air con and I’ve told you how I will pay for those other things. If you don’t like it then ... pay the $7,500 back, bring the ... truck back and we’ll unwind the deal”. He also said “give the $7,500 back, give me the fucking truck back and we’ll unwind it”.
[22] Later on 11 June 2019, Mr Martin texted Mr Eastham to ask if the air conditioning had been paid for. Mr Eastham said not as far as he was aware and Mr Martin then said “OK, I’ll get onto that”. However, as at the date of hearing, Prestige Park and Sell had still not paid for those repairs.
[23] Finally, on 19 June 2019, Mr Martin emailed Mr Eastham as follows:

As agreed

Upon deposit

The rewind can begin

[24] Mr Martin alleged at the hearing that this email was forged by Mr Eastham. This prompted Mr Eastham to provide a statement from a Justice of the Peace confirming that the email existed in Mr Eastham’s Gmail account. I am not persuaded by Mr Martin’s submission that the email is forged. To the contrary, the evidence suggests that it was a genuine email.
[25] Mr Eastham, in turn, alleged Mr Martin had forged his signature on the credit contract and consumer information notice for the vehicle. He said that those documents were not signed by him, but were sent to him after he had collected the vehicle, purportedly with his signature on them. I am not able to determine whether these documents were forged. Fortunately, it is not necessary for me to make a finding on that point to resolve this particular dispute.

Transmission issues

[26] More recently, Mr Eastham reports that there has been a high pitched whining noise coming from the vehicle. He believes that this noise indicates that the transmission pump is failing.
[27] Mr Eastham produced a quote from Des Segar Motors 2006 for transmission pressure and diagnostic tests in the sum of $313.11. Mr Eastham also produced a quote for rebuilding the transmission in the sum of $4,252.56.
[28] I had asked Mr Eastham to have the alleged transmission fault diagnosed and quoted for repair by a transmission specialist but the quotes that Mr Eastham produced did not provide the Tribunal with adequate information to reach a conclusion that the alleged transmission fault amounted to a failure to comply with the guarantee of acceptable quality.

Tribunal’s assessment

[29] Mr Eastham has satisfied the Tribunal’s Assessor, Mr Haynes, and me that this vehicle failed to comply with the guarantee of acceptable quality. That is because of the large number of matters that need repairing before the vehicle can obtain a new warrant of fitness. In addition, we are satisfied that the air conditioning repairs were necessary to ensure the air conditioning was restored to normal operation. The evidence shows that this was a pre-existing fault and was another example of the vehicle failing to comply with the guarantee of acceptable quality.

Issue two: Did Prestige Park and Sell refuse to remedy the failure?

[30] The remedies available to a consumer where a vehicle fails to comply with a guarantee in 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.

[31] Mr Martin argued that Mr Eastham has been fully compensated for all of the vehicle’s defects. Mr Martin did not make any further offers to compensate Mr Eastham for the repairs that have already been carried out on the vehicle or the repairs still to be carried out.
[32] In my view, Mr Eastham has established that Prestige Park and Sell has refused to remedy any of the vehicle’s remaining defects. This was confirmed by a text from Mr Martin to Mr Eastham on 11 June 2019, stating as follows:

I know what was agreed to

7.5k is more than enough to sort out any issues

You have been compensated generously

The deal is complete

I will talk to the previous owner and ensure the air con is paid for

Thanks.

[33] This email shows Prestige Park and Sell refuses to pay for the further repairs required to ensure the vehicle gets a new warrant of fitness. Moreover, in respect of the air conditioning repairs, there was no evidence that Mr Martin had followed that up with the previous owner. Nor was there any evidence that he had arranged for Prestige Park and Sell to reimburse Mr Eastham for the air conditioning repairs.
[34] Following that text, on 11 June 2019, Mr Eastham sent Mr Martin a text communicating his rejection of the vehicle. The text states as follows:

OK I’ve know [sic] choice but to take this matter further. I will be unwinding the deal.

[35] It seems that the deal would have been unwound at that point, but for the $7,500 payment which Prestige Park and Sell had made to Mr Eastham on 17 May 2019. Mr Eastham was unable to refund that money because he had already used it for other purposes. Subsequently, Mr Eastham has arranged a further loan specifically in order to repay Prestige Park and Sell the $7,500. However, before that money can be repaid, the lender, Oxford Finance says that it is necessary for Mr Eastham’s original loan for the Chevrolet to be settled. That is to satisfy the lender that responsible lending requirements have been met, before it is willing to lend a further $7,500 to Mr Eastham.
[36] The ability of a purchaser to reject goods is subject to the factors set out in s 20(1) of the Act, which provides:

20. Loss of right to reject goods

(1) The right to reject goods conferred by this Act shall not apply if—

(a) the right is not exercised within a reasonable time within the meaning of subsection (2); or

(b) the goods have been disposed of by the consumer, or have been lost or destroyed while in the possession of a person other than the supplier or an agent of the supplier; or

(c) the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply; or

(d) the goods have been attached to or incorporated in any real or personal property and they cannot be detached or isolated without damaging them.

(2) In subsection (1)(a), the term reasonable time means a period from the time of supply of the goods in which it would be reasonable to expect the defect to become apparent having regard to—

(a) the type of goods:

(b) the use to which a consumer is likely to put them:

(c) the length of time for which it is reasonable for them to be used:

(d) the amount of use to which it is reasonable for them to be put before the defect becomes apparent.

(3) This section applies notwithstanding section 170 of the Contract and Commercial Law Act 2017.

[37] I am satisfied that Mr Eastham has exercised his right to reject the vehicle within a reasonable time, namely just over one month since he purchased it.
[38] Mr Martin also raised a concern that the vehicle was damaged after delivery to Mr Eastham. If this is correct, it would disqualify Mr Eastham from rejecting the vehicle under s 20(1)(c). Mr Martin’s concerns appear to relate to the damage, reported in the warrant of fitness check, to suspension components. Mr Martin thought this damage may have occurred while Mr Eastham drove the vehicle back from Auckland to Orari, immediately after purchasing it. Mr Eastham denied that he had damaged the vehicle in any way since purchasing it. He produced a photograph of the front of the vehicle which appeared to show that everything was still intact. On that basis, I am not satisfied that Mr Martin has established there has been any damage to the vehicle after it was delivered to Mr Eastham.

Conclusion

[39] Mr Eastham’s rejection of the Chevrolet is upheld as from 11 June 2019.
[40] Mr Eastham is entitled to be refunded the money that he paid for the vehicle.[5] As mentioned, he purchased the vehicle by way of a loan from Avanti Finance Ltd dated 3 May 2019. I am satisfied that this loan was a collateral credit agreement for the purposes of s 89(2) of the Motor Vehicle Sales Act 2003. I vest Mr Eastham’s rights and obligations under that collateral credit agreement in Prestige Park and Sell Ltd with effect from the date of rejection, 11 June 2019.
[41] A copy of this decision is to be forwarded to Oxford Finance, which has confirmed that it will be paying $7,500 on behalf of Mr Eastham to Prestige Park and Sell once Avanti Finance has been paid in full. This will become a matter for Prestige Park and Sell to follow up with Oxford Finance. However, Mr Eastham is to take all reasonable steps to facilitate this payment forthwith. There is no basis for waiting until the Avanti loan has been repaid. That loan (the Collateral Credit Agreement) is now vested in Prestige Park and Sell and is no longer Mr Eastham’s responsibility. So, in my view, Oxford Finance cannot justify further delay in payment of the $7,500 on the basis of lender responsibility requirements.
[42] I also conclude that Prestige Park and Sell must also pay Mr Eastham $858.28 to reimburse him for the air conditioning repairs at TNT Auto Electric, the $200 grooming costs which Mr Martin had already agreed to pay and the $90 fee that Mr Eastham paid for the comprehensive warrant of fitness check that he obtained at Quality Tyre and Auto Services.
[43] In addition, Prestige Park and Sell must refund Mr Eastham all of his payments of principal under the Collateral Credit Agreement prior to 11 June 2019, as well as his payments of interest and principal from 11 June 2019 to the date of this decision.
[44] The payments ordered above must be made within 14 days of the date of this decision to a bank account nominated by Mr Eastham. Once Mr Eastham has been paid in full, he must make the vehicle available for Prestige Park and Sell to collect at its cost. With the vehicle, Mr Eastham must include the replacement parts that he has been supplied by Keith Automotive to repair the matters identified in the warrant of fitness check sheet. These parts include two lower suspension arms and a new Pitman arm.
[45] If there is any disagreement as to the calculation of the amounts payable as set out above, leave is granted to either party to refer that dispute to the Tribunal.
[46] Mr Eastham should inform the case manager no later than 27 September 2019, if Prestige Park and Sell does not comply with the above orders, and the Tribunal will consider whether to take any further steps.

J S McHerron
Adjudicator

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[1] Crimes Act 1961, s 216B(2)(a).

[2] Privacy Act 1993, s 6 information privacy principle 3.

[3] Section 56.

[4] See Motor Vehicle Sales Act 2003, sch 1, cl 9C(5), which provides that the Tribunal may receive and take into account any relevant evidence or information, whether or not that evidence or information would normally be admissible in a court of law.

[5] Consumer Guarantees Act 1993, s 23(1)(a).