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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 20 March 2019
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IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
BETWEEN DARRYL VICTOR TEBAY
Purchaser
AND EVERGREEN ENTERPRISES (NZ) TRADING LTD T/A GREEN
MOTORS
Trader
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MEMBERS OF TRIBUNAL
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B R Carter, Barrister – Adjudicator
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S Haynes, Assessor
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HEARING at Auckland on 31 January 2019
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APPEARANCES
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D V TeBay, Purchaser
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H Wang, for the Trader
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DATE OF DECISION 8 February 2019
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_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
_________________________________________________________________
REASONS
Introduction
[1] On 10 August 2018, Darryl TeBay purchased a 2005 Toyota Noah for $6,600 from Evergreen Enterprises (NZ) Trading Ltd, trading as Green Motors (Green Motors). The vehicle had an odometer reading of 79,850 km at the time of sale.
[2] About one month after purchase, the vehicle’s electric sliding doors began to malfunction. Mr TeBay has now rejected the vehicle, alleging that the faults with the sliding doors make the vehicle unsafe and amount to a failure of a substantial character under the Consumer Guarantees Act 1993 (the Act).
[3] Green Motors has not accepted Mr TeBay’s rejection of the vehicle. It says that:
- (a) the Act does not apply to this transaction because Mr TeBay has used the vehicle for business purposes;
- (b) Mr TeBay is not entitled to remedy because he did not first return the vehicle to Green Motors for it to assess the fault. Instead Mr TeBay attempted to perform his own repairs on the vehicle and then had the vehicle assessed by a third party before returning it to Green Motors; and
- (c) the damage to the sliding doors was caused by Mr TeBay’s use of the vehicle.
The Issues
[4] Against this background, the issues requiring consideration in this case are:
- (a) Does the Act apply to this transaction?
- (b) Does the vehicle have faults that breach the acceptable quality guarantee in s 6 of the Act?
- (c) Are the faults a failure of a substantial character?
- (d) What remedy is Mr TeBay entitled to under the Act?
Have the parties contracted out of the Act?
[5] Although it was not the main thrust of its defence, Green Motors noted that the Act may not apply to this transaction, because Mr TeBay used the vehicle for business purposes.
[6] Parties who are in trade may contract out of the Act, provided the provisions in s 43(2) of the Act, which sets out the rules for contracting out of the Act, are complied with:
43 No contracting out except for business transactions
(2) However, despite subsection (1), parties to an agreement may include a provision in their agreement to the effect that the provisions of this Act will not apply to that agreement, provided that—
(a) the agreement is in writing; and
(b) the goods or services are, or (in connection only with the guarantee of acceptable quality in section 7A) the gas or electricity is, supplied and acquired in trade; and
(c) all parties to the agreement—
(i) are in trade; and
(ii) agree to contract out of the provisions of this Act; and
(d) it is fair and reasonable that the parties are bound by the provision in the agreement.
(2A) If, in any case, a court is required to decide what is fair and reasonable for the purposes of subsection (2)(d), the court must take account of all the circumstances of the agreement, including—
(a) the subject matter of the agreement; and
(b) the value of the goods, services, gas, or electricity (as relevant); and
(c) the respective bargaining power of the parties, including—
(i) the extent to which a party was able to negotiate the terms of the agreement; and
(ii) whether a party was required to either accept or reject the agreement on the terms and conditions presented by another party; and
(d) whether all or any of the parties received advice from, or were represented by, a lawyer, either at the time of the negotiations leading to the agreement or at any other relevant time.
[7] I am not satisfied that Mr TeBay purchased or used this vehicle for business purposes. Mr TeBay advised that the vehicle was purchased for his personal use. He is married and has four children and two dogs and needed a large vehicle to transport his family and pets, particularly on proposed journeys to the East Cape. I found Mr TeBay to be a straightforward and reliable witness, and I accept his evidence that the vehicle was purchased primarily for personal use.
[8] The fact that Mr TeBay twice used the vehicle to transport schoolchildren (he was employed as a caretaker at an Auckland school at the time) does not mean that Mr TeBay is in trade, that he acquired the vehicle in trade or that the vehicle has been used for business or commercial purposes. Accordingly, I am satisfied that the Act applies to this transaction.
Does the vehicle have faults that breach the acceptable quality guarantee?
[9] 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.
[10] 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.
[11] 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 TeBay’s subjective perspective.
[12] On 6 September 2018, the driver’s side sliding door malfunctioned. Mr TeBay says the door opened only about 3 cm when the automatic function was used, and he had to then push the door open with his fingers. The door then closed automatically without further fault.
[13] On 6 September 2018, the passenger side sliding door malfunctioned. Mr TeBay says the door opened more slowly than usual, but would close without problem.
[14] On 7 and 11 September 2018, the driver side door again malfunctioned, and would not open.
[15] Mr TeBay then took the vehicle to Autosparx, an Auckland-based auto electrician. Mr TeBay advises that Autosparx found no electrical fault with the vehicle, and advised that further investigation would be required to determine the cause of the sliding door malfunction
[16] The vehicle was then taken to Manukau Toyota Botany on 17 September 2018. Manukau Toyota Botany found that the main cause of the malfunctioning sliding doors was that the door body rubbers were out of shape and holding the doors shut. It also found that a cable on the driver’s side door was damaged. It had to cut the cable to open the driver side door. Manukau Toyota Botany has provided an estimate of approximately $3,000 to rectify the faults with the sliding doors.
[17] The evidence from Mr TeBay and Toyota Manukau Botany satisfies me that the vehicle has faults with both sliding doors. The fault with the passenger side door is caused by damage to the door body rubber and the fault with the driver side door is caused by a combination of the damage to the door body rubber and a damaged cable.
[18] Green Motors agrees that the vehicle’s sliding doors have malfunctioned. However, it submits that it should not have responsibility for those faults because:
- (a) Mr TeBay did not return the vehicle to Green Motors for it to assess the fault before attempting his own repairs on the vehicle and having the vehicle assessed by a third party; and
- (b) the damage to the sliding doors may have been caused by Mr TeBay’s use of the vehicle.
Was Mr TeBay required to return the vehicle to Green Motors to have the faults assessed?
[19] Mr TeBay did not immediately return the vehicle to have the faults with the sliding doors assessed. Instead, he removed the sliding door panels and rear seats so as he could inspect the sliding door mechanisms himself. When he could see no obvious cause of the fault, he took the vehicle to Autosparx for assessment.
[20] Green Motors submitted that Mr TeBay should not be entitled to a remedy under the Act because of those actions. It submitted that Mr TeBay had an obligation to return the vehicle to it before performing any assessment or diagnosis of the potential defects. Green Motors sought to rely on examples published by consumer protection organisations in support of this submission. As I said to Haitan Wang, the owner of Green Motors during the hearing, such examples do not greatly assist the Tribunal as they are merely the opinion of the author of the example, applied to hypothetical facts. Rather than relying on those examples, the Tribunal must instead look to the law and to relevant caselaw.
[21] Applying that relevant law, Green Motors cannot avoid responsibility under the Act because of the steps taken by Mr TeBay. Mr TeBay had no obligation to first return the vehicle to Green Motors for it to assess the malfunctioning doors. Mr TeBay was within his rights to assess the vehicle himself and then have it inspected by Autosparx before returning it to Green Motors.
[22] Certainly, as set out in Acquired Holdings Ltd v Turvey[1], where goods have failed to comply with the acceptable quality guarantee in s 6 of the Act, the consumer must first give the supplier an opportunity to remedy the failure before they can have the fault repaired elsewhere and recover the cost. However, this obligation does not extend to giving the supplier the first opportunity to assess and diagnose the failure. A consumer may, as Mr TeBay has done here, attempt to diagnose the failure itself or have a third party do so, before returning the vehicle to the supplier to have any repairs performed.
Was the damage to the sliding door caused by Mr TeBay’s use of the vehicle?
[23] Green Motors also submitted that the damage to the sliding doors may well have been caused by Mr TeBay’s use of the vehicle.
[24] In support of the submission, Green Motors noted that the vehicle had no fault with its sliding doors at the time of sale. It says the doors were functioning as they should when the vehicle was supplied to Mr TeBay, and that it tested the doors with Mr TeBay to confirm that they worked. Mr Wang says that he also told Mr TeBay that the sliding doors could be damaged if the doors were pulled too hard.
[25] Green Motors says that fault with the sliding doors must therefore have arisen after sale, and that fault may have been caused by the way in which Mr TeBay used the vehicle. In particular, Green Motors suggested that someone may have damaged the doors by pulling on them too hard.
[26] Although I accept Green Motors submission that the defects with the sliding doors manifested themselves sometime after sale, I am not satisfied that the faults were caused by the way in which Mr TeBay used the vehicle. Mr Haynes, the Tribunal’s Assessor, advises that vehicles of this age and mileage with electric sliding doors commonly develop such faults because of general wear and tear, rather than misuse, and I accept Mr TeBay’s evidence that he has not misused the doors. As set out above, I found him to be an honest and reliable witness.
[27] Further, Green Motors presented no evidence from a suitably qualified person (such as Manukau Toyota Botany) to show that the damage to the rear sliding doors was the type of damage that can be caused by misuse.
[28] Finally, I note that Mr TeBay has not had extensive use of the vehicle since purchase, driving a little more than 600 km. Mr Haynes advises that it is unlikely that the damage to the sliding doors could have been caused by misuse over such a short time.
[29] I am therefore satisfied that the faults with the rear sliding doors were not caused by Mr TeBay’s misuse of those doors.
[30] Green Motors also suggested that the damage to the cable in the driver’s side door was caused when Mr TeBay or Autosparx attempting to perform repairs on that door after 4 September 2018.
[31] Again, Green Motors provided no evidence from a suitably qualified person to show that the damage to the cable in the driver side door was caused by anything other than normal wear and tear. Green Motors did provide an invoice from Manukau Toyota Botany, but that invoice states no more than that the driver side door would not open because of a damaged cable. It does not provide any assistance as to the cause of the damage to the cable.
[32] Rather than rely on evidence from a suitably qualified person as to the cause of the damaged cable, Green Motors submitted that the fact that Mr TeBay was still able to open the driver’s side door before he removed the door panels and seats, and before the vehicle was inspected by Autosparx, shows that the damage to the cable must have occurred after Mr TeBay removed the door panels and seats. Mr Wang suggested that attempts by Mr TeBay or Autosparx to assess or rectify the fault must therefore have damaged the cable.
[33] Mr TeBay denied causing any damage to the cable. Mr TeBay says that although he removed the door panels and seats, he simply inspected the interior of the door to see whether he could identify the cause of the fault, and after he could not identify the cause of for visually, he took the vehicle to Autosparx, who also performed a visual inspection only. I accept Mr TeBay’s evidence on this point. As set out earlier, I found him to be an honest and straightforward witness, and I accept his evidence and conclude that it is most likely that the damage to the cable in the driver side door was due to an inherent defect with the vehicle, rather than because of any attempted repairs by Mr TeBay or Autosparx.
[34] Consequently, I am satisfied that the defects with the vehicle’s sliding doors breach the acceptable quality guarantee in s 6 of the Act. Although those defects were not detectable the time of sale, I am satisfied that vehicle has not been as durable as a reasonable consumer would consider acceptable.
Is the fault a failure of a substantial character?
[35] Under s 18(3) of the Act, Mr TeBay may reject the vehicle if it has a fault that amounts to a failure of a substantial character. A failure of a substantial character is defined in s 21 of the Act:
- 21 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.
[36] Although the defective rear sliding doors will cost about $3,000 to rectify, I am not satisfied that the defects with the sliding doors amount to a failure of a substantial character for the purposes of s 21(a) of the Act.
[37] The cost of repairs is only one factor that I can take account of when assessing whether a fault amounts to a failure of a substantial character. I must also take account of the expectations that a reasonable consumer would have for a vehicle of this price, age and mileage, and I consider that a reasonable consumer would understand that such a vehicle may develop faults with its electric sliding doors from time to time, and I am not satisfied that the faults present in this vehicle are such that a reasonable consumer would have refused to purchase it.
[38] Mr TeBay also suggested that the faults of the sliding doors make vehicle unsafe, presumably because the doors could not be opened in the event of an emergency. I do not accept Mr TeBay’s submission that the malfunctioning doors made the vehicle unsafe. Although the fault with the driver-side sliding door means that it is unable to open, the evidence suggested the passenger side sliding door can be manually opened. On that basis, in the event of any emergency, I am
satisfied that the occupants would nonetheless be able to exit the vehicle by the passenger side sliding door, and the condition of the rear sliding doors does not mean that the vehicle is unsafe.
What remedy is Mr TeBay entitled to under the Act?
[39] The remedies relevant to this claim set out in s 18 of the Act, which provides:
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.
[40] Because the vehicle’s faults do not amount to a failure of the substantial character, Mr TeBay’s application to reject the vehicle is dismissed. However, because the faults with the rear sliding doors breach the acceptable quality guarantee, under s 18(2)(a) of the Act, Mr TeBay is entitled to have those defects rectified within a reasonable time.
DATED at AUCKLAND this 8th day of February 2019
B.R. Carter
Adjudicator
[1] Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 (HC) at [11].
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2019/21.html