NZLII Home | Databases | WorldLII | Search | Feedback

Motor Vehicles Disputes Tribunal of New Zealand
You are here:  NZLII >> Databases >> Motor Vehicles Disputes Tribunal of New Zealand >> 2019 >> [2019] NZMVDT 195

Database Search | Name Search | Recent Decisions | Noteup | LawCite | Download | Help

O'Kan v Goldex Limited - Reference No. MVD 261/2019 [2019] NZMVDT 195 (18 September 2019)

Last Updated: 1 November 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 261/2019
[2019] NZMVDT 195

BETWEEN JACINTHA O’KAN

Purchaser

AND GOLDEX LIMITED

Trader

HEARING at Auckland on 26 August 2019
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

S D Gregory – Assessor
APPEARANCES

J O’kan, Purchaser (by AVL)
C J Silva, Witness for Purchaser (by AVL)
D Strelets, Manager of Trader
M Casado, Business Manager/Salesman for Trader

DATE OF DECISION 18 September 2019

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

  1. Jacintha O’kan’s rejection of her BMW 525i is upheld as from 25 June 2019.
  2. I vest Ms O’kan’s rights and obligations under her loan from Wolfgram Ltd trading as MTF Finance Mt Wellington dated 20 June 2019 (the Collateral Credit Agreement) in Goldex Ltd, with effect from 25 June 2019.
  1. Goldex Ltd must refund to Ms O’kan all of her payments of interest and principal under the Collateral Credit Agreement from 25 June 2019 to the date of this decision, minus the $490 on road costs refunded to her. The parties must cooperate to obtain any necessary information from Wolfgram Ltd to calculate these sums. The payments ordered above must be made no later than 2 October 2019, to a bank account nominated by Ms O’kan.
  1. 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. Ms O’kan should advise the case manager no later than 4 October 2019, if Goldex Ltd does not comply with the above orders, and the Tribunal will consider taking additional steps if necessary.
  2. Once the amounts ordered above have been paid in full, Goldex Ltd must collect the vehicle promptly from Ms O’kan at its expense (if any).

___________________________________________________________________


REASONS

Introduction

[1] Jacintha O’kan has rejected the 2006 BMW 525i she purchased on 19 June 2019 from Goldex Ltd. Very soon after purchasing the vehicle, Ms O’kan experienced a number of faults with it, including violent shuddering at speeds greater than 80 kph and a water leak which appears to have caused various electrical faults. Moreover, the key does not work and Ms O’kan has had to use an emergency key since purchasing the vehicle to unlock and lock it.
[2] Goldex does not consider Ms O’kan is entitled to reject the vehicle. It says it has repaired the vehicle’s faults at its expense and is willing to repair any further faults.
[3] From this background, the following issues arise for the Tribunal’s determination:

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

[4] 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.
[5] “Acceptable quality” is defined in s 7 of the Act (as far as is relevant) as follows:
  1. 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.

[6] 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.
[7] The vehicle was listed on Trade Me and no defects were identified. Yet, when Ms O’kan arrived at Goldex’s premises to view the vehicle, its salesman Maurice Casado disclosed that the sun roof did not work. Ms O’kan decided to buy the vehicle anyway. It had been listed for sale at $8,595, but the total purchase price was ultimately $13,070, for reasons to be explained below. Ms O’kan financed the entire purchase price through a loan from Wolfgram Ltd trading as MTF Finance Mt Wellington. This loan is recorded in a Collateral Credit Agreement dated 20 June 2019.
[8] The difference between the advertised purchase price and the price recorded on the vehicle offer and sale agreement was attributable to two factors:
[9] On Ms O’kan’s return trip in the vehicle back to Whangarei on the date of purchase, the vehicle began “shuddering violently” at speeds greater than 80 kph.
[10] Ms O’kan also noticed that the key fob did not work to open and shut the vehicle. Instead, she had to use a plastic emergency key.
[11] A day or so after purchasing the vehicle, after it rained heavily, Ms O’kan noticed multiple error codes had appeared on the dashboard. These included warnings for low oil level and “level control system failure”. Ms O’kan then discovered that part of the boot lining covering the battery and fuse area was very wet. She also noticed the boot lining looked very tatty and damaged, suggesting to her that this was not the first time water had leaked into the car.
[12] Since repairs were carried out by Goldex, the vehicle’s alarm has started to sound regularly and the service light is currently appearing on the vehicle’s dashboard.
[13] Additionally, since the vehicle has been returned to her, Ms O’kan and Mr Silva, who also drives the vehicle, have noticed that the transmission is slow and harsh to engage. However, no diagnosis of any transmission fault has been obtained.
[14] One of the difficulties in this matter was the lack of technical information describing the nature of the vehicle’s faults. On or around 26 June 2019, Goldex collected the vehicle from Ms O’kan in Whangarei and took it back to Auckland for repairs. Goldex had the vehicle for approximately two weeks. On 10 July 2019, Goldex’s Manager, Dimitry Strelets emailed her to confirm that the following “works” had been “performed on your vehicle to get it back up and running again” with a list as follows:
  1. Tyres have been balanced.
  2. Roof Drainage which was blocked has been cleared and maintained. It is recommended to check drainage for blockage every 3 or so years.
  3. Self-leveling Computer module has been replaced.
  4. Your vehicle also had a brand new battery put in.
  5. [W]Hole system has been scanned for any errors using Autel Diagnostic System. No Faults.

[15] In addition to this list of repairs, Goldex advised Ms O’kan that there was a problem with her vehicle’s heating system, which it also claims to have repaired.
[16] The vehicle was returned to Ms O’kan on or about 15 July 2019.
[17] After the hearing, Goldex supplied an invoice for a self-levelling computer purchased on 5 July 2019 and a statement from Goldex’s head mechanic Stanislav Nikolaev stating that he:
[18] As mentioned, the vehicle’s current faults include that:

Tribunal’s assessment

[19] It is clear that the vehicle has suffered a number of problems since purchase. A reasonable consumer would not have regarded this vehicle to be as free from minor defects or fit for all the purposes for which a vehicle of this type was commonly described, having regard to the vehicle’s age, mileage, and relatively high total purchase price.
[20] Accordingly, I conclude that the vehicle failed to comply with the guarantee of acceptable quality.

Issue two: If so, was the failure of a substantial character?

[21] Section 21 of the Act provides that a failure to comply with the guarantee of acceptable quality will be of a substantial character in the following circumstances:
  1. 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.

[22] Ms O’kan wishes to reject the vehicle because of the numerous faults it has had since it was supplied to her.
[23] In Cooper v Ashley & Johnson Motors Ltd, the District Court held that a purchaser may reject a vehicle where there has been an accumulation of defects. The Court concluded that a point will eventually be reached where a consumer can say “convincingly that he or she had ‘no confidence in the reliability of the vehicle’”.[1]
[24] In the present case, there was an accumulation of several faults that together are sufficient to justify the conclusion that Ms O’kan’s vehicle’s failure to comply with the guarantee of acceptable quality was of a substantial character. The first issue experienced by Ms O’kan was the violent shuddering of the vehicle when travelling at speeds in excess of 80 kph. Goldex says that it has since balanced the vehicle’s tyres. Apparently this has fixed the problem of the vehicle’s shuddering.
[25] A more serious concern was the vehicle’s blocked roof drains, which appears to have led to water ingress in the vehicle causing electrical faults requiring the replacement of the vehicle’s self-levelling computer and a new battery. Ms O’kan is concerned that this water ingress will lead to further electrical faults. She has not been reassured by the lack of information supplied by Goldex to indicate what repairs it has carried out on the vehicle and whether the problem of water leaking in the vehicle is likely to lead to further problems. Nor has she been reassured by Goldex’s claim that any further electrical faults will be capable of being fixed through a claim under her Autosure insurance policy. Ms O’kan points to the common exclusion under such policies for pre-existing faults and for repairs necessitated by external causes such as water damage.
[26] Again, Goldex’s failure to provide the detailed information requested by the Tribunal about what repairs were needed after the water leak has made it difficult to assess the extent of the damage caused by the leak. However, it is clear that the water ingress required the vehicle’s self-levelling computer to be replaced and a new battery to be installed. The Tribunal’s Assessor, Mr Gregory, and I consider that Ms O’kan has reason to be concerned about further faults arising.
[27] In addition, a small but significant problem with the vehicle is that its key does not work. Since purchasing it, Ms O’kan has had to use a temporary emergency plastic key. This is highly unsatisfactory. Goldex should have ensured that the key was operable when it delivered the vehicle to her after purchase and after taking the vehicle back for repairs.
[28] Another concern is that the vehicle’s transmission appears to be engaging harshly. While no technical assessment of this fault has been carried out, it appears that the vehicle has been sold with several faults that should have been identified before its sale to Ms O’kan.
[29] The vehicle also appears to have a faulty heating system. This was not described in detail and no invoices were produced relating to the repairs needed to allow the Tribunal to assess the nature of this fault.
[30] The current faults, including the transmission issues, the randomly sounding alarm, and the faulty heater, combine with the other faults identified to lead the Tribunal to conclude that this vehicle’s failure to comply with the guarantee of acceptable quality is of a substantial character. I have reached this conclusion because of the combination of faults experienced with the vehicle and the fact that they occurred almost immediately after purchase.

Issue three: Did Goldex neglect to remedy the vehicle’s failures?

[31] The night she collected the vehicle after purchasing it, Ms O’kan contacted Mr Casado. She told him about the vehicle’s shuddering and that she did not feel safe in the vehicle. She also told him that the key did not work. Ms O’kan also mentioned that she was unhappy about the purchase price. Mr Casado said that he would refund her $490, being the amount charged for “on-road costs”. Ms O’kan told Mr Casado that she was still unhappy about the vehicle. He said he would talk to his manager about whether the purchase price could be further revised, but it is not clear whether any such conversation occurred.
[32] Later, Ms O’kan contacted Goldex to advise it of the water damage. She sent pictures. Ms O’kan sent an email to Goldex dated 25 June 2019, some six days after purchasing the vehicle, stating that she wished to “withdraw my purchase of the above vehicle”. The reasons Ms O’kan gave for her decision in her rejection email were as follows:
[33] Ms O’kan said that she considered the vehicle was not fit for purpose and she worried about the long-term damage that could have been caused by water. Mr Casado claimed that Goldex had the right to repair the vehicle and persuaded Ms O’kan to make it available for collection by Goldex the following day. She allowed Goldex to collect the vehicle and make repairs, but Ms O’kan maintained (and did not concede) her right to reject the vehicle. She repeated to Goldex her wish to reject the vehicle on several subsequent occasions.
[34] Although it appears that Goldex has carried out some repairs to the vehicle, its key is still not working and Ms O’kan is still having to use a plastic emergency spare key. Ms O’kan does not wish to return the vehicle to Goldex for further repairs, although Goldex has invited her to do so and has also offered to let her have the vehicle repaired at her local garage.
[35] Ms O’kan is concerned that as the water leak appears to have led to electrical faults, such faults will continue to occur (including for example the current alarm fault). She is concerned that her Autosure policy will not cover any such electrical problems resulting from what was in effect a pre-existing fault with the vehicle.
[36] The remedies to which a consumer may be entitled if a vehicle fails to comply with the guarantee of acceptable quality are set out in s 18 of the Act, which provides:
  1. 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.

[37] The primary remedy, as set out in s 18(2)(a), is for a consumer to “require the supplier to remedy the failure within a reasonable time”. Goldex appears to have remedied some of the vehicle’s faults and has returned the vehicle to Ms O’kan. However, as I have found the failure to comply with the guarantee of acceptable quality was of a substantial character due to an accumulation of faults, this triggered Ms O’kan’s right to reject the vehicle before these repairs were carried out, which she did on 25 June 2019.
[38] Moreover, even if Ms O’kan did not have a right to reject the vehicle on the grounds of a failure of a substantial character, not all of the identified faults have been repaired. The failure of Goldex to remedy the key indicates that it has neglected to remedy a failure that was plainly identified to it. That triggers a further right to reject the vehicle on the part of Ms O’kan under s 18(2)(b)(ii).
[39] For both of these reasons, I conclude that Ms O’kan has the right to reject this vehicle. Her rejection takes effect from the date of her initial rejection of the vehicle on 25 June 2019.

Conclusion

[40] Accordingly, I uphold Ms O’kan’s rejection of the BMW 525i as from 25 June 2019.
[41] As her rejection of the vehicle has been upheld, Ms O’kan is entitled to be refunded the money that she paid for the vehicle.[2] However, as mentioned, Ms O’kan purchased the vehicle by way of a loan from Wolfgram Ltd trading as MTF Finance Mt Wellington dated 20 June 2019. I am satisfied this loan was a collateral credit agreement for the purposes of s 89(2) of the Motor Vehicle Sales Act 2003. I vest Ms O’kan’s rights and obligations under that Collateral Credit Agreement in Goldex Ltd, with effect from 25 June 2019.
[42] Goldex Ltd must refund to Ms O’kan all of her payments of interest and principal under the Collateral Credit Agreement from 25 June 2019 to the date of this decision, minus the $490 on road costs refunded to her. The parties must cooperate to obtain any necessary information from Wolfgram Ltd to calculate these sums. The payments ordered above must be made to Ms O’kan no later than 2 October 2019, to a bank account nominated by her.
[43] 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. Ms O’kan should advise the case manager, no later than 4 October 2019, if Goldex Ltd does not comply with the above orders and the Tribunal will consider taking additional steps if necessary.
[44] Once the amounts ordered above have been paid in full, Goldex Ltd must collect the vehicle promptly from Ms O’kan at its expense (if any).

J S McHerron
Adjudicator

[1] Cooper v Ashley & Johnson Motors Ltd (1996) 7 TCLR 407 at 417.

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

NZLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.nzlii.org/nz/cases/NZMVDT/2019/195.html