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Mullins v Carswest Limited - Reference No. MVD 242/2019 [2019] NZMVDT 202 (26 September 2019)

Last Updated: 1 November 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 242/2019
[2019] NZMVDT 202

BETWEEN SAMUEL IAN ELLIOTT MULLINS

Purchaser

AND CARSWEST LIMITED

Trader

HEARING at Christchurch on 13 September 2019
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

R C Dixon – Assessor
APPEARANCES

S I E Mullins, Purchaser (by AVL)
No appearance for Trader

DATE OF DECISION 26 September 2019

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

  1. Carswest Ltd must pay Samuel Mullins $2,194.01 no later than 10 October 2019.
  2. Carswest Ltd must pay costs of $650 to the Crown (Ministry of Justice, Tribunals Unit, Level 1, Chorus House, 41 Federal Street, Auckland 1010) no later than 10 October 2019.

___________________________________________________________________


REASONS

Introduction

[1] Samuel Mullins has had various problems with his Alfa Romeo 147, mainly related to its transmission and starting issues. Mr Mullins also claims that Carswest Ltd, which sold him the vehicle, misrepresented certain matters to him, in particular in relation to the mechanical breakdown insurance policy that was supplied by Carswest.
[2] Mr Mullins initially rejected the car and sought a refund of the purchase price, reimbursement of the cost of repairs and damages for alleged losses.
[3] However, at the hearing, Mr Mullins confirmed that he had completed the remaining repairs that were required to the vehicle and that it is now operating satisfactorily. Mr Mullins withdrew his application to reject the vehicle and now only seeks reimbursement of the cost of repairs and damages.
[4] The following issues arise from this background:

Issue one: Who is the proper respondent?

[5] Mr Mullins commenced his application in the Tribunal against both Carswest Ltd and Costello Cars Ltd. Based on the documentation supplied to the Tribunal, it was unclear why Costello Cars was named as a respondent. The vehicle offer and sale agreement (VOSA) and consumer information notice (CIN) both name Carswest Ltd as the trader.
[6] However, on closer inspection, there did appear to be various links between the two companies:
[7] Mr Mullins submitted that these factors together indicate that Carswest Ltd and Costello Cars Ltd are “related companies” as defined under s 2(3) of the Companies Act 1993. That provision states that a company is related to another company if “the businesses of the companies have been so carried on that the separate business of each company, or a substantial part of it, is not readily identifiable”.[2] Even if this were correct, I am not sure how it assists Mr Mullins in relation to his claim in this Tribunal. He can still only bring his claim against the company that sold him the car. In any event, I do not consider that Mr Mullins has produce sufficient evidence to establish that Costello Cars Ltd and Carswest Ltd are related companies for the purposes of the Companies Act.

Conclusion

[8] As the evidence points to the fact that Mr Mullins purchased his vehicle from Carswest Ltd, I consider that it is the only appropriate respondent to his application in the Tribunal and I will proceed on that basis.

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

[9] 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.
[10] “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.

[11] 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.
[12] Mr Mullins purchased his vehicle on 31 December 2018. The VOSA states the purchase price was $3,990. This price included a mechanical warranty, which was separately listed on the VOSA but with a purchase price of $0. The VOSA and CIN state that the vehicle’s odometer reading was 102,897 km. However, Mr Mullins alleged that the actual odometer reading for the vehicle when he purchased it was 107,105 km. As at the date of his application to the Tribunal, 28 May 2019, the odometer reading was 109,122 km. Mr Mullins indicated at the hearing that he had not driven much further in the vehicle since then.
[13] Mr Mullins collected the vehicle from Carswest on 4 January 2019 and drove it to his parents’ home in Christchurch. The next day, Mr Mullins found that the vehicle would not operate in reverse gear. He returned the vehicle to the trader on 7 January 2019 because of this issue. The trader did some unspecified work on the vehicle at that time and returned it back to Mr Mullins the following day, 8 January 2019.
[14] The transmission fault apparently did not improve and so Mr Mullins took the vehicle to Tyres & More to investigate it as well as what appeared to Mr Mullins to be an intermittent starting issue. He obtained a report from Tyres & More dated 11 February 2019 described as a “vehicle maintenance check sheet”. That report listed the following items for attention:
[15] Tyres & More does not appear to have done any work on the vehicle apart from tightening the battery terminals after investigating a battery charging issue.
[16] After some discussion between Mr Mullins and Mr Cross, the vehicle was taken to Automotive Electrical Specialists (otherwise known as Auto Super Shoppe), which:
[17] These repairs cost $632.80, which was paid by Carswest.

Transmission fault

[18] The vehicle was then sent to Automatic Transmission Specialists to address the transmission fault.
[19] The transmission on Mr Mullins’ vehicle is what is known as a “Selespeed”, an electro-hydraulic manual transmission, used in Alfa Romeo cars. It is a “robotized” manual gear box with an electronic clutch.
[20] Automatic Transmission Specialists reported evidence of “clutch slip and hydraulic pressure dropping rapidly”. It found an oil leak from the clutch actuator. It removed the transmission from the vehicle and inspected the clutch. It removed the hydraulic control unit from the transmission and sent it away to be repaired. It then refitted the control unit to the transmission, replaced the clutch and refitted the transmission to the vehicle. It replaced the transmission fluid, carried out shift adaptations and road tested the vehicle.
[21] These repairs cost a total of $4,402.69. $2,650 of this sum was met under Mr Mullins’ Janssen mechanical breakdown insurance policy. However, he had to pay the remaining $1,764.20 himself.

Starting issues

[22] Mr Mullins has also had difficulty starting the car’s engine. He first noticed this problem on 12 January 2019, about eight days after he collected the vehicle. Mr Mullins reported that this problem recurred at least five times in the last week of January and the first 11 days of February 2019. The starting issues persisted after the vehicle’s transmission had been repaired.
[23] On 17 May 2019, Auto Super Shoppe diagnosed the vehicle as requiring a new crank angle sensor at a cost of approximately $150 plus GST and installation. Auto Super Shoppe reported that this fault could be contributing to the vehicle cutting out and not starting.
[24] At the hearing, Mr Mullins stated that he had had a crank angle sensor installed by Euromarque at a cost of approximately $650. No documentation confirming this repair or the cost was produced to the Tribunal and it was unclear why Mr Mullins had not asked Auto Super Shoppe to carry out this work.

Tribunal’s assessment

[25] The Tribunal’s Assessor, Mr Dixon, and I accept that in respect of the transmission fault and starting fault identified by Mr Mullins, he has established that the vehicle failed to comply with the guarantee of acceptable quality. A reasonable consumer would not expect a vehicle to have difficulty starting and operating in reverse, only a few days after purchase. Accordingly, Mr Mullins has established that the vehicle did not comply with the guarantee of acceptable quality in s 6 of the Act.

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

[26] Section 9 of the Act provides that where goods are supplied by description to a consumer, there is a guarantee that the goods correspond with the description. As indicated above, the vehicle was described in the VOSA as being sold with a “mechanical warranty” at an additional cost of $0. When he took delivery of the vehicle, Mr Mullins says that he was provided with a policy booklet for Janssen Insurance Elite Cover to which was attached a “cover plus” policy certificate dated 21 September 2018 (namely, several months before Mr Mullins purchased the vehicle).
[27] “Cover Plus” and “Elite Cover” are different types of Janssen insurance policies with “Elite Cover” providing more cover than “Cover Plus”. On their face, therefore, the insurance documents supplied to Mr Mullins when he purchased the car were ambiguous. It was unclear whether Mr Mullins was meant to have been supplied a “Cover Plus” or an “Elite Cover” policy. At the time, Mr Mullins does not appear to have been aware of this ambiguity. He did not read the documents closely, or ask any questions about the nature of the cover.
[28] Later, when Mr Mullins enquired with Janssen about making a claim under his policy he was told that no policy had in fact been created for his vehicle. On 8 January 2019, Mr Mullins asked Mr Cross for a policy to be taken out as had been agreed when he purchased the vehicle. A policy was then issued to him on 11 February 2019. It was a “Cover Plus” policy with a retail value of $1,495 and with a claim limit of $3,000.
[29] When Mr Mullins received this policy certificate, he thanked Mr Cross by email for providing him with the “correct and current mechanical warranty”.
[30] However, when preparing his claim in the Tribunal, Mr Mullins became aware of the ambiguity in the documents originally supplied to him. He then alleged that the “Cover Plus” policy was different from what he had been sold, which was an “Elite Cover” policy.
[31] This issue came into focus for Mr Mullins after he had the transmission of his vehicle repaired. As mentioned, the total cost of this repair was $4,402.69, but only $2,650 was covered by the Janssen policy because of the maximum cover limit in that policy. That has left Mr Mullins with a shortfall of $1,764.20.

Tribunal’s assessment

[32] I do not consider that Mr Mullins has established that he was sold an “Elite Cover” insurance policy for the vehicle. At best, the evidence is ambiguous on that point, with an Elite Cover booklet having been supplied to Mr Mullins, but the policy certificate only relating to a Cover Plus policy. The VOSA does not assist as it does not specify what type of “mechanical warranty” was sold with the vehicle.
[33] Accordingly, I conclude that Mr Mullins has not established that the vehicle failed to comply with its description.

Issue four: Did Carswest Ltd engage in misleading and deceptive conduct in breach of s 9 of the Fair Trading Act 1986?

[34] Mr Mullins has alleged four misrepresentations by Carswest:

Tribunal’s assessment

I agree with Mr Mullins that Carswest did not provide him with an insurance policy in respect of the vehicle at the time it was sold. This amounts to a breach of s 36U of the Fair Trading Act 1986, as well as a breach of s 9 of that Act.

The remedy I propose to give Mr Mullins in respect of this breach is the same as that which I intend to provide him in respect of the vehicle’s failure to comply with the guarantee of acceptable quality, namely to order the trader to pay him the repair costs that he has incurred over and above the amount that he was reimbursed under his insurance policy. Mr Mullins has not established that he incurred any other losses attributable to the failure to provide him with the insurance policy at the time of sale.

(b) A representation that the insurance policy sold with the vehicle was for Elite Cover but the policy actually provided was only for Cover Plus, with a maximum limit of $3,000 (but subject to a $350 excess payment).

Tribunal’s assessment

As I have set out above, under the heading of whether the vehicle failed to comply with its description, I do not consider that Mr Mullins has established that Carswest represented to him that it would provide an Elite Cover insurance policy.

(c) A representation at the time of sale that the vehicle was well looked after and had been the subject of maintenance checks.

Tribunal’s assessment

Mr Mullins alleged that the extent to which the vehicle has had mechanical failures since he purchased it demonstrates that no maintenance checks had taken place and that misrepresentations were made to him, leading him to purchase a defective vehicle. But as I explained to Mr Mullins in the hearing, I do not think that he has produced sufficient evidence to the Tribunal to allow it to reach a finding that Carswest misrepresented to him that the vehicle had been well looked after and the subject of maintenance checks. Accepting that Mr Mullins has had various problems with the vehicle since purchasing it, it does not necessarily follow that it was not previously well looked after before he bought it. This vehicle is a 2005 Alfa Romeo that has done more than 100,000 km. As I pointed out in the hearing, a reasonable consumer would expect such a vehicle to have various issues requiring maintenance and possibly expensive repairs. This is especially likely given the relatively low purchase price for this vehicle of only $3,990.

(d) Finally, a misrepresentation about the vehicle’s mileage.

Tribunal’s assessment

As mentioned above, the vehicle had an odometer reading at time of sale of 107,105 km, not 102,897 km as was set out in the VOSA and CIN. It appears that these two documents had mistaken references to the vehicle’s odometer reading. On its face, this appears to be misleading in breach of s 9 of the Fair Trading Act. However, Mr Mullins has not established that this odometer reading discrepancy has resulted in any actual losses to him in relation to the misleading conduct regarding the odometer reading.[3] In particular, it is not clear to the Tribunal that the vehicle is worth any less to Mr Mullins, or that he would not have purchased it, if he had known that its mileage was just over 4,000 km higher than was documented in the VOSA and CIN.

Conclusion

[35] Accordingly, while I accept Mr Mullins’ submissions that aspects of the sale process of this vehicle were misleading and deceptive, in breach of s 9 of the Fair Trading Act 1986, I am not satisfied that any of these misrepresentations have caused Mr Mullins any losses that would be recoverable under s 43 of that Act. Ultimately, damages awarded under the Fair Trading Act are discretionary. As I am satisfied that Mr Mullins’ losses are sufficiently recoverable in respect of the Consumer Guarantees Act breaches that he has established, I do not consider that he has established any grounds for additional damages to be awarded under the Fair Trading Act.
[36] I also note that Mr Mullins made various allegations regarding Carswest’s “predatory sales practices” and a “proposal to commit insurance fraud”. I record that I do not propose to consider those allegations any further as any redress which Mr Mullins could possibly be entitled to in relation to those matters, even if proved, is outside the jurisdiction of the Tribunal.

Issue five: What remedy (if any) is Mr Mullins entitled to?

[37] The remedies available under the Consumer Guarantees Act are set out in s 18, 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.

[38] While Mr Cross initially cooperated with Mr Mullins in having the problems identified with the vehicle fixed, he later seemed to drop out of the picture, leaving Mr Mullins to continue with the process of repairing the vehicle on his own.
[39] Fortunately, this process has now apparently been successful. Mr Mullins reported at the hearing that the vehicle is now operating satisfactorily.
[40] I consider that Mr Mullins is entitled to be reimbursed for the balance of his repair costs in respect of the transmission, to the extent that it was not covered by his insurance policy. This amount is recoverable under s 18(2)(b)(i) of the Act given that, apparently, Carswest has neglected to remedy the failures in Mr Mullins' vehicle.
[41] Accordingly, Mr Mullins is entitled to recover $1,764.20 in respect of the outstanding amounts payable to Automatic Transmission Specialists (1996) Ltd.
[42] In addition, Mr Mullins is entitled to reimbursement for the reasonable costs incurred in having the vehicle’s starting issues rectified. These include the diagnostic costs at Auto Super Shoppe in the sum of $107.31, plus the reasonable costs incurred in replacing the vehicle’s crank angle sensor. Mr Mullins reported that he had had this repaired by Euromarque at a cost of $650. However, Mr Mullins did not provide any receipt for this work. Accordingly, I propose instead to award him the amount for the repair as estimated by Auto Super Shoppe, namely $150 plus GST with an allowance of $100 for labour. That means he is entitled $272.50 for this repair.
[43] As mentioned, Mr Mullins also sought compensation for what he described as “loss of use of the vehicle” and “mental duress”. I do not consider that this is a case where Mr Mullins ought to be compensated under s 18(4) of the Act, or any other remedial provision within the Tribunal’s jurisdiction, in respect of these matters. It is not usual for the Tribunal to award damages for intangible losses such as these, and Mr Mullins has not produced any evidence of actual out-of-pocket expenses attributable to these factors, apart from the cost of his Tribunal application, which I cover below at [46].

Costs

[44] The Tribunal may award costs against a party where, after receiving notice of the hearing, that party fails to attend without good cause.[4]
[45] I am satisfied that Carswest, after receiving notice of the hearing, failed to attend without reasonable cause. Carswest provided no excuse for its non-attendance. Accordingly, I also order Carswest to pay $650 to the Crown, being the reasonable costs of the Tribunal hearing, within 14 days of the date of this decision.
[46] I also order Carswest to pay Mr Mullins a further $50, being the filing fee for this application.

Orders

[47] The orders of the Tribunal are as set out on the front page of this decision.

2019_20200.jpg

J S McHerron
Adjudicator

[1] Costello Cars <www.costellocars.co.nz>.

[2] Companies Act 1993, s 2(3)(d).

[3] As is required under Fair Trading Act 1986, s 43. See Red Eagle Corporation Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [29].

[4] Motor Vehicle Sales Act 2003, sch 1, cl 14(1)(b).

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