Howles v Wayne Kirk Motor Group Limited - Reference No. MVD 237/2019 [2019] NZMVDT 215 (10 October 2019)

Last Updated: 5 December 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA
MVD 237/2019
[2019] NZMVDT 215

BETWEEN VIVIENNE ANN HOWLES AND PHILIP VORTMAN

Applicants

AND WAYNE KIRK MOTOR GROUP LIMITED

Trader

HEARING at Hastings on 16 September 2019
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

S D Gregory – Assessor
APPEARANCES

V A Howles, Purchaser
P Vortman, Purchaser’s son and current vehicle owner
W Kirk, Director and Dealer Principal of Trader
M Barry, Sales Manager of Trader
M Gay, Service Manager of Trader
A Sterling, Employee of Trader

DATE OF DECISION 10 October 2019

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

Vivienne Howles’ and Philip Vortman’s application is dismissed.

___________________________________________________________________

REASONS

Introduction

[1] The Mitsubishi Mirage purchased new by Vivienne Howles in 2013 from Wayne Kirk Motor Group Ltd has a serious problem with its transmission. The precise nature of the problem and what repairs are needed is not yet totally clear. A dispute has arisen between Ms Howles and her son Philip Vortman on one side, and Wayne Kirk Motor Group on the other, as to who is responsible for the cost of diagnosing and repairing the fault.
[2] Ms Howles and Mr Vortman said the transmission problem began in or around October 2018, with a rattling noise that they observed when the vehicle was idling. This began a few weeks before the vehicle was taken in for servicing at Wayne Kirk Motor Group on 13 November 2018. The noise was apparently checked at this time but Wayne Kirk Motor Group found no faults. However, after returning the vehicle to Wayne Kirk Motor Group a couple of days later, Mr Vortman was advised that the transmission needed replacing, at a cost of up to $10,000. No written advice was produced to the Tribunal to confirm this recommendation.
[3] Ms Howles and Mr Vortman told the Tribunal that the vehicle is undriveable as it stalls when it is put into gear.
[4] In or around December 2018, Ms Howles pointed out to Wayne Kirk Motor Group that, even though she had purchased the vehicle more than five years earlier on 3 September 2013, its power train was covered by a manufacturer’s warranty for 10 years or 160,000 km, whichever came first. Wayne Kirk Motor Group says that the 10 year power train warranty no longer applies for a range of reasons, including that in 2017 the ownership of the vehicle changed from Ms Howles to Mr Vortman. Wayne Kirk Motor Group sought to rely on the fact that the 10 year power train warranty is not transferable to a subsequent owner of the vehicle.
[5] As evidence of change in ownership, Wayne Kirk Motor Group primarily relied on the fact that the vehicle was transferred into Mr Vortman’s name on the Motor Vehicle Register. However, the Motor Vehicle Register does not in fact record legal ownership.
[6] Ms Howles was clearly the original purchaser of the vehicle (it is her name alone that is recorded on the vehicle offer and sale agreement). But she told the Tribunal that she and Mr Vortman jointly paid for the vehicle (though no written evidence in support of this claim was produced to the Tribunal).
[7] Ms Howles and Mr Vortman live in the same house as each other, which is where the vehicle is kept. And it appears that, at least recently, Mr Vortman has been the primary user of the vehicle. Prior to the hearing, the Tribunal requested further information to support the claim that the vehicle was purchased jointly by Ms Howles and Mr Vortman or any evidence that the vehicle remains in their joint ownership. No further information was provided. Nevertheless, I record that I was not satisfied that the ownership of the vehicle had in fact “changed” so that the warranty would no longer apply. Rather, as is common in family situations, the ownership of the vehicle appears to have been shared, probably from the date of purchase, between Ms Howles and Mr Vortman.
[8] Wayne Kirk Motor Group also argued the 10 year power train warranty only applied if all scheduled maintenance services had been completed by an authorised Mitsubishi service agent. Wayne Kirk Motor Group argued that the first vehicle service was 10 months late. However, as Ms Howles submitted, this appeared to omit the fact that the first service was carried out by Wayne Kirk Motor Group on 9 September 2014, only a few days more than 12 months after purchase.
[9] A stronger basis for excluding the terms of the 10 year power train warranty is that the vehicle was deregistered in 2017. The terms of the new vehicle warranty clearly state that the warranty is void if the vehicle has been deregistered.
[10] In any event, this Tribunal has no ability to decide whether the 10 year power train warranty still applies. Rather, the jurisdiction of the Tribunal in this kind of case is effectively limited to considering whether the vehicle failed to comply with the guarantee of acceptable quality.
[11] While the rights under the Consumer Guarantees Act 1993 (the Act) generally apply to consumers, namely those who acquire goods (suggesting those rights would apply to Ms Howles), they also apply to donees, that is persons who have been given goods by the original acquirer.[1]
[12] I am not satisfied either that Ms Howles lost her rights (if any) under the Act, or that Mr Vortman did not gain rights under the Act after being given the vehicle as a donee (assuming he was not a joint purchaser in the first place, contrary to Ms Howles’ submissions).
[13] Indeed, at the hearing, Ms Howles was content to focus on establishing her rights under the Act, rather than relying solely on any rights still existing under the factory warranty.
[14] The substantive issue for the Tribunal is therefore to ascertain whether the vehicle failed to comply with the guarantee of acceptable quality under s 6 of the Act. That is an issue which I will now proceed to consider.

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

[15] 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.
[16] “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.

...

(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.

[17] 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.
[18] Ms Howles and Mr Vortman argue that this vehicle has a low mileage, has been regularly serviced, and has not been mistreated. Therefore, they say, there is no reason for its transmission to fail, other than faulty components or manufacturing.
[19] However, as Wayne Kirk Motor Group points out, there is a difficulty with this argument. The vehicle was stolen in 2017 and it was taken from Havelock North to Rotorua, where it was recovered. No one other than the thief (who did not give evidence to the Tribunal) can say for certain what happened to the vehicle at that time. But the evidence indicates that the vehicle is likely to have been mistreated while in that person’s possession.
[20] The vehicle was reported missing on 10 August 2017 from Ms Howles’ and Mr Vortman’s residence in Havelock North. It was recovered in Rotorua a few days later. A former flatmate of Mr Vortman’s was convicted of unlawfully taking the vehicle and he was sentenced to 10 months’ imprisonment. The vehicle was held at the Rotorua Police Station until after the Court case leading to the offender’s conviction.
[21] Mr Vortman recovered the vehicle from the Rotorua Police Station. He drove it back to Havelock North. Mr Vortman did not have a clear recollection of the condition of the vehicle when he collected it. In particular, he could not recall whether there was, but he accepted there may have been, a space saver spare wheel on the vehicle in place of the usual right front wheel. Nor could he recall anything unusual about the vehicle’s performance on the way home from Rotorua to Havelock North.
[22] The vehicle was brought into Wayne Kirk Motor Group’s workshop for a service and check on 20 September 2017. At that time, Mr Vortman informed Wayne Kirk Motor Group that the vehicle had been stolen.
[23] Wayne Kirk Motor Group’s Service Manager, Matthew Gay, recorded that when brought into the workshop, the vehicle had three non-genuine wheels plus its space saver spare wheel had been installed instead of the right front wheel. Mr Gay reported that one of the vehicle’s original wheels was left in the vehicle’s boot. The tyre on that wheel was worn to the cords.
[24] Mr Gay supplemented his written report with oral evidence that the wheel found in the boot of the vehicle was bent, although it was not clear whether he had actually seen this or was relying on the statement of a colleague. The wheels that had been installed on the vehicle in place of its original wheels were 13 inches in diameter, compared to the original wheel specification of 15 inches. Mr Gay also reported that tyre rubber was found on the inside of the right front wheel guard, which indicated that the tyres had become very warm and had started to perish, as would occur in a burn out.
[25] Mr Gay said that when the vehicle was checked, its rear brake drums were removed and it was found that the brake shoes were worn out and needed to be replaced. The vehicle’s odometer reading at this point was 31,162 km. Mr Gay said that it was very unusual for the brake shoes to need to be replaced so early in the vehicle’s life. Under normal braking conditions, brake shoes should last at least 200,000 km.
[26] Chris Riley, a salesperson for Wayne Kirk Motor Group, told the Tribunal that when the vehicle was brought in on 20 September 2017, he observed damage to a headlight and that the vehicle had odd wheels installed. His recollection was that the vehicle was in a “sad” condition.
[27] Mr Gay reported that just after 12 months following the September 2017 service, the vehicle was brought back in to Wayne Kirk Motor Group for another service and warrant of fitness. Mr Gay reported that both right hand tyres were “worn to the cords” and the technician noted that rubber was again visible on the vehicle’s inner guards.
[28] These indications led the representatives of Wayne Kirk Motor Group to submit that the vehicle was showing signs of mistreatment. In particular during the period when it had been stolen, but possibly subsequently as well.
[29] As part of settlement discussions following the commencement of Ms Howles’ and Mr Vortman’s Tribunal application, Wayne Kirk Motor Group gave them the option of removing the vehicle’s transmission at their cost of approximately $400. The transmission would then be sent to Mitsubishi New Zealand. It would, in turn, send the transmission off to a specialist for examination to determine the cause of the failure.
[30] If the cause of the transmission failure was found to be due to a manufacturing fault there would be no cost to Mr Howles or Mr Vortman for the work required, be it replacement or repair. If, however, the failure was found to have been caused by abuse to the vehicle, then Ms Howles and Mr Vortman would need to pay all the diagnosis and repair costs themselves.
[31] Wayne Kirk Motor Group also told Ms Howles that she would have full access to the repairer in order to discuss any concerns that she might have about the diagnostic process.
[32] Ms Howles and Mr Vortman did not accept this offer. Ms Howles explained that, in view of attempts by Wayne Kirk Motor Group to blame Mr Vortman or the offender for the damage, she was unable to trust Mitsubishi to undertake or arrange for any examination of the vehicle in an unbiased way.

Tribunal’s assessment

[33] The Tribunal’s Assessor, Mr Gregory, considered that the evidence indicates a potential problem with the vehicle’s CVT (continuously variable transmission) belt or torque converters, both of which are components of the CVT gearbox.
[34] Mr Gregory agreed with Wayne Kirk Motor Group’s assessment that in order to properly diagnose the nature of the fault, whether it was caused by the vehicle being misused, or whether it is a manufacturing defect, and the nature of any repairs that are needed as well as their cost, the transmission needs to be removed and stripped down so that it can be properly assessed.
[35] Mr Gregory considers that the evidence of shredded tyres, and a bent right front wheel, as well as the fact that the vehicle was stolen and taken to Rotorua, strongly suggests the likelihood of some mistreatment. In addition, the premature brake shoe wear indicates mistreatment.
[36] Moreover, Mr Gregory was concerned that the vehicle appears to have been driven a considerable distance with the wrong size wheels, including a space saver wheel. This, in Mr Gregory’s view, is likely to have put additional strain on the transmission.
[37] Accordingly, it seems that there is a reasonable likelihood that s 7(4) of the Act (above) may apply as it appears likely that the vehicle has been used in a manner that is inconsistent with the way in which a reasonable consumer would have used the vehicle and the vehicle would otherwise have complied with the guarantee of acceptable quality if it had not been used in that manner.
[38] However, the only way in which it will be possible to accurately ascertain whether this vehicle’s transmission problems are the result of mistreatment or not is for the transmission to be removed and properly diagnosed as was proposed by the trader.
[39] The course of action suggested by Mitsubishi New Zealand and Wayne Kirk Motor Group is therefore a reasonable suggestion for the way forward. Mr Kirk suggested at the hearing that given this offer had been refused by Ms Howles, it was no longer on the table. However, he indicated that he did not think that there would be much of a problem in reinstating the offer if appropriate.

Conclusion

[40] For the above reasons, I conclude that Ms Howles and Mr Vortman have not established that the vehicle failed to comply with the guarantee of acceptable quality.
[41] If further examination of the transmission does not support Wayne Kirk Motor Group’s contention that the transmission fault arose as a result of mistreatment, then Ms Howles and Mr Vortman will be on stronger ground to establish that the fault is a failure to comply with the guarantee of acceptable quality, given the vehicle’s low mileage. However, at this point that is not possible for them to do so. Accordingly, their application to the Tribunal must be dismissed.

J S McHerron
Adjudicator

---

[1] Consumer Guarantees Act 1993, s 24.