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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 25 March 2019
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IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
BETWEEN CADENCE ALLAN HILLIER
Purchaser
AND ANGAD JIT SINGH BHATIA T/A 282 CARS
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 4 February 2019
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APPEARANCES
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C A Hillier, Purchaser
M L Hillier, Witness for the Purchaser
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No appearance for the Trader
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DATE OF DECISION 8 February 2019
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______________________________________________________________
DECISION OF THE TRIBUNAL
______________________________________________________________
A Cadence Hillier’s application to reject the vehicle is upheld.
_________________________________________________________________
REASONS
Introduction
[1] On 23 August 2018, Cadence Hillier purchased a 1993 Toyota Hilux, registration number GLB302, for $6,995 from Angad Jit Singh Bhatia, trading as 282 Cars. Mr Hillier also purchased a 24 month extended warranty for $1,395. To fund the purchase of the vehicle and extended warranty, Mr Hillier entered into a consumer credit contract (the collateral credit agreement) with Geoff Kenny Ltd, trading as MTF Lower Hutt (MTF).
[2] Mr Hillier has now rejected the vehicle, alleging that it has defects that amount to a failure of a substantial character for the purposes of the Consumer Guarantees Act 1993 (the Act).
[3] Mr Hillier initially named 282 Cars as the Respondent to this application. However, after considering the information provided by Mr Hillier, I exercised my powers under cl 7(1) of sch 1 of the Motor Vehicle Sales Act 2003 (the MVSA) to join Mr Bhatia as a party to these proceedings. Despite receiving a notice of hearing, advising him of the time, date and location of the hearing, Mr Bhatia did not attend. The hearing proceeded without Mr Bhatia.
The Issues
[4] Against this background, the issues requiring consideration in this case are:
- (a) Did Mr Bhatia sell the vehicle to Mr Hillier?
- (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 Hillier entitled to under the Act?
Did Mr Bhatia sell the vehicle to Mr Hillier?
[5] Before considering the vehicle’s faults and what, if any, remedy Mr Hillier may be entitled to, I must determine who sold the vehicle to him.
[6] Ordinarily, the documents provided to Mr Hillier when he purchased the vehicle should show the identity of the seller. However, neither the Vehicle Offer and Sale Agreement (VOSA) or Consumer Information Notice (CIN) provided to Mr Hillier disclose the seller of the vehicle. They simply say that the vehicle was sold, by 282 Cars of 282A Church Street in Auckland, but there is no person or company called 282 Cars.
[7] Despite the documents obscuring the identity of the seller of the vehicle, I am satisfied that it was sold by Mr Bhatia. That is because Mr Bhatia is a registered motor vehicle trader who operates from 282A Church Street, Onehunga using the trading name 282 Cars.
[8] Mr Bhatia is a registered on the Motor Vehicle Trader Register as a motor vehicle trader and his registration states that his registered address for service is 282A Church Street, Onehunga, Auckland. Further, although Mr Bhatia’s registration on the Motor Vehicle Trader Register now states that his trading name is “Autoland Cars”, Mr Bhatia has also traded under the name 282 Cars, operating from premises at 282A Church Street, Onehunga. The Tribunal recently heard two other cases involving Mr Bhatia where he operated under the trading name 282 Cars from those premises.[1] The Tribunal’s file for one of those cases (Wilkinson v Bhatia) shows that, as at 6 July 2018, about six weeks before Mr Hillier bought the vehicle, the Motor Vehicle Trader Register recorded that Mr Bhatia’s registered trading name was 282 Cars. It seems that, on an unknown date after 6 July 2018, Mr Bhatia changed his trading name on the Motor Vehicle Traders Register from 282 Cars to Autoland Cars.
[9] Despite changing his trading name of the Motor Vehicle Trader Register, I am satisfied that Mr Bhatia has continued to sell vehicles using the 282 Cars trading name, and that he sold this vehicle to Mr Hillier.
Does the vehicle have faults that breach the acceptable quality guarantee?
[10] 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.
[11] 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.
[12] 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 Hillier’s subjective perspective.
[13] Shortly after purchase, Mr Hillier’s took the vehicle to Auto Bro Ltd, an automotive compliance centre in Otara. Auto Bro discovered defects with the vehicle, including holes in the exhaust, a left front control arm that required replacement, worn suspension bushes and oil leaks. Mr Hillier returned the vehicle to Mr Bhatia for those defects to be remedied.
[14] In November 2018, Mr Hillier took the vehicle to Vehicle Inspection New Zealand (VINZ) for a warrant of fitness inspection. The vehicle failed its warrant of fitness for the following reasons:
- (a) play at the left front steering components;
- (b) its tyres were too wide;
- (c) the left front spotlight aim is too low;
- (d) the windscreen washer was missing from the right side;
- (e) excessive handbrake travel; and
- (f) the vehicle has been modified and no low volume vehicle certification has been obtained for those modifications.
[15] The vehicle was then inspected at Auto Bro’s premises by a certifier from the Low Volume Vehicle Technical Association Inc (LVVTA), who found 11 items that required rectification before the vehicle could receive low volume vehicle certification. Most significantly, the certifier found that:
- (a) the vehicle’s body had been lifted, and the diameter of the blocks used in the body lift was too small;
- (b) the rubbers on which those blocks sat were split;
- (c) the vehicle has cracked and broken chassis body mounts;
- (d) its chassis rail is cracked around the steering box mount; and
- (e) its steering shaft was rubbing against the firewall.
[16] The LVVTA certifier considered that the vehicle was dangerous and should not be driven until its faults were rectified. Mr Hillier was charged $375 for this inspection.
[17] The evidence presented by Mr Hillier shows that many of the vehicle’s faults were pre-existing. Although some of the vehicle’s faults may have arisen after sale, and in the case of the left front spotlight and windscreen washer, may be consistent with the age and mileage of the vehicle, the evidence nonetheless shows faults with the width of the tyres, the uncertified body lift modifications and the faults with the body mounts and rubbers were pre-existing. Mr Hillier says that he has not replaced the vehicle’s tyres or performed any modifications to the structure of the vehicle. I found him to be a reliable and credible witness, and accept his evidence in that regard.
[18] Evidence also shows that many of the faults are significant. Mr Haynes, the Tribunal’s Assessor, advises that the uncertified body lift, and the condition of the body mounts and rubbers defects mean the vehicle is not roadworthy, is unsafe and requires expensive repairs.
[19] Given the significance of these pre-existing faults, one would have expected the faults to have been identified in a pre-purchase warrant of fitness inspection. Those faults were not identified because Mr Bhatia did not comply with his obligation to obtain a pre-purchase warrant of fitness. Land Transport regulations require that vehicles sold to consumers must be have a warrant of fitness issued no later than one month before the vehicle is delivered to the purchaser.[2] In this case the vehicle’s warrant of fitness was issued in May 2018, more than three months before purchase.
[20] Taking account of the evidence presented by Mr Hillier, I am satisfied that the vehicle has not complied with the acceptable quality guarantee in s 6 of the Act because it was not free of minor defects at the time of sale and has not been as durable as a reasonable consumer would consider acceptable. Although a reasonable consumer should have realistic expectations as to the quality and durability of a 25-year-old Toyota Hilux that has travelled more than 260,000 km at the time of sale, I am nonetheless satisfied a reasonable consumer would not consider the condition of this vehicle to be acceptable.
[21] Further, I am satisfied that the vehicle breaches the acceptable quality guarantee because it is unsafe. Mr Haynes says that the insufficient diameter of the body lift blocks and the condition of the body mounts and rubbers means that the vehicle’s body is not appropriately attached to its chassis, making it structurally unsound. Significant repairs are required to ensure that the vehicle is made roadworthy and safe.
Are the faults a failure of a substantial character?
[22] 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.
[23] Section 21(a) and (d) of the Act apply to this case.
[24] For the purposes of s 21(a) of the Act, I am satisfied that the uncertified body lift, and the condition of the body mounts and rubbers amount to a failure of a substantial character. As set out above, Mr Haynes advises that these defects mean the vehicle is not roadworthy and requires expensive repair. I consider that a reasonable consumer would not have purchased the vehicle if they knew of the true nature and extent of these defects.
[25] Further, quite aside from whether any of the vehicle’s defects, in their own right, amount to a failure of a substantial character, I am satisfied that the vehicle’s accumulated defects are undoubtedly a failure of a substantial character.
[26] In Cooper v Ashley & Johnson Motors Ltd, the District Court stated that a purchaser may reject a vehicle where there has been an accumulation of defects, which in themselves could not be described as substantial.[3] The Court noted that a point will eventually be reached where the purchaser could “say convincingly that he or she had no ‘confidence in the reliability of the vehicle”.[4]
[27] This vehicle has numerous faults that have caused it to fail a warrant of fitness inspection, which will cost many thousands of dollars to rectify. Although the purchaser of an old, inexpensive Toyota Hilux should understand that the vehicle may develop faults that require expensive repair from time to time, I am satisfied that a reasonable consumer would not have purchased this vehicle if it had known of the nature of the faults that existed with this vehicle.
[28] Further, for the purposes of s 21(d) of the Act, I am also satisfied that the vehicle’s faults are failure of a substantial character because the vehicle is unsafe. The vehicle’s body is insecurely attached to its chassis, meaning its structural integrity has been compromised, making it unsafe.
What remedy is Mr Hillier entitled to under the Act?
[29] The remedies relevant to this claim are 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.
[30] Under s 18(3)(a) of the Act, Mr Hillier is entitled to reject the vehicle because its faults amount to a failure of a substantial character. Under s 23(1)(a) of the Act, Mr Hillier is therefore entitled to recover any money paid or other consideration provided for the vehicle from Mr Bhatia. In that regard, Mr Hillier is entitled to recover:
- (a) $200, being the cash deposit he paid to purchase the vehicle;
- (b) the capital component of all payments made by Mr Hillier under the collateral credit agreement as from the date the collateral credit agreement was entered into until 27 November 2018 (the date Mr Hillier rejected the vehicle); and
- (c) all payments of principal and interest made by Mr Hillier under the collateral credit agreement from 28 November 2018 until the date of this decision.
- (d) $98.50, being the cost of the warrant of fitness inspection by VINZ, as set out in the Auto Bro invoice of 15 November 2018;
- (e) $40, being the cost of the inspection conducted by Auto Bro, as set out in the Auto Bro invoice of 15 November 2018; and
- (f) $375, being the cost of the LVV certification inspection.
[31] Mr Hillier is also entitled to have his rights and obligations under the collateral credit agreement with MTF assigned to Mr Bhatia. The relevant provisions are set out in s 89(2) and (3) of the MVSA, which state:
89 Jurisdiction of Disputes Tribunal
...
(2) A Disputes Tribunal may order that the rights and obligations of the buyer of a motor vehicle under a collateral credit agreement vest in a motor vehicle trader if—
(a) the collateral credit agreement is associated with the contract for the sale of that motor vehicle; and
(b) the motor vehicle trader is a party to that contract for sale; and
(c) either one of the following circumstances applies:
(i) the buyer exercises the right conferred by the Consumer Guarantees Act 1993 to reject that motor vehicle and, on a claim by the buyer under section 47(1) of that Act, the Disputes Tribunal orders the motor vehicle trader to refund any money paid, or other consideration provided, for that motor vehicle; or
(ii) the Disputes Tribunal finds that the buyer has suffered, or is likely to suffer, loss or damage by the conduct of the motor vehicle trader that constitutes, or would constitute, any of the conduct referred to in section 43(1) of the Fair Trading Act 1986 and the Disputes Tribunal makes an order under section 43(2) of that Act declaring the whole or any part of the contract for sale to be void.
(3) For the purposes of subsection (2), collateral credit agreement, in relation to a contract for the sale of a motor vehicle, means a contract or agreement arranged or procured by the motor vehicle trader or the buyer for the provision of credit by a person other than by the motor vehicle trader to enable the buyer to pay the price reserved by the contract for sale in respect of the motor vehicle.
[32] The criteria in s 89(2) of the MVSA for the assignment of rights and obligations under a collateral credit agreement are all met in this case:
- (a) the agreement between Mr Hillier and MTF is a collateral credit agreement for the purposes of s 89(2) of the MVSA. The agreement was arranged or procured by Mr Hillier for the provision of credit by MTF to enable Mr Hillier to purchase the vehicle;
- (b) Mr Bhatia sold the vehicle to Mr Hillier, so he is a party to the contract to purchase the vehicle; and
- (c) Mr Hillier has exercised the right conferred by the Act to reject the vehicle, and the Tribunal has ordered that Mr Bhatia must refund any money paid, or other consideration provided, for that vehicle.
[33] Accordingly, under s 89(2) of the MVSA, all of Mr Hillier’ rights and obligations under the collateral credit agreement are assigned to Mr Bhatia from the date of this decision.
Costs
[34] Under cl 14(1)(a)(i) and (b) of sch 1 to the MVSA, the Tribunal may award costs against a party where that party, after receiving notice of the hearing, fails to attend without reasonable cause.
[35] I am satisfied that Mr Bhatia, after receiving notice of the hearing, failed to attend without reasonable cause. Indeed, Mr Bhatia provided no excuse for non-attendance. Accordingly, under cl 14(2)(b) of sch 1 to the MVSA, Mr Hillier is entitled to recover $50, being the filing fee for this application.
[36] Further, under cl 14(2)(a)(i) of sch 1 to the MVSA, I also order that Mr Bhatia pay $650, being the reasonable costs of the Tribunal hearing.
Referral to the Commerce Commission
[37] As set out in this decision, I consider that the seller of this vehicle obscured its identity by naming 282 Cars as the seller in the VOSA and CIN. Consequently, I will refer this decision to the Commerce Commission, which has jurisdiction to consider whether conduct engaged in by those in trade amounts to a breach of the Fair Trading Act 1986. In making this referral, I also note that Mr Hillier paid $1,395 for an extended warranty. Mr Hillier advises that he never received any information from the seller of the vehicle about the existence or terms of any extended warranty.
DATED at AUCKLAND this 8th day of February 2019
B.R. Carter
Adjudicator
[1] See Wilkinson v Bhatia t/a 282 Cars [2018] NZMVDT 201 (3 September 2018) and Bakker v Bhatia t/a 282 Cars [2018] NZMVDT 303 (19 December 2018)
[2] Land Transport Rule: Vehicle Standards Compliance 2002, r 9.12(3).
[3] Cooper v Ashley & Johnson Motors Ltd (1996) 7 TCLR 407 (DC).
[4] At 417.
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2019/22.html