ZM Contracting Limited v NZ Tyres Limited - Reference No. MVD 245/2019 [2019] NZMVDT 221 (15 October 2019)

Last Updated: 5 December 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 245/2019
[2019] NZMVDT 221

BETWEEN ZM CONTRACTING LIMITED

Purchaser

AND NZ TYRES LIMITED

Trader

HEARING at Christchurch on 1 October 2019
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

S D Gregory – Assessor
APPEARANCES

M Matyas, Director of Purchaser
J Clarkson, Employee of Purchaser
W D N Fernando, Director of Trader
N Fernando, Employee of Trader

DATE OF DECISION 15 October 2019

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DECISION OF THE TRIBUNAL

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1. NZ Tyres Ltd must repair ZM Contracting Ltd’s BMW X5’s front radius/caster arm bushes, its left passenger side mirror, and its leaking rocker cover gasket at NZ Tyres Ltd’s expense, no later than 5 November 2019.
2. NZ Tyres Ltd must pay ZM Contracting Ltd $292.50, no later than 29 October 2019.

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REASONS

Introduction

[1] ZM Contracting Ltd purchased a 2006 BMW X5 with 109,882 km on the odometer for $12,400 on 15 April 2019 from NZ Tyres Ltd. Included in the purchase price was a mechanical breakdown insurance policy. Since purchasing the vehicle, ZM Contracting has had a number of problems with it. To varying degrees, these problems have been addressed by NZ Tyres. However, ZM Contracting is dissatisfied with the quality of some of the repairs and the time taken to carry them out. In addition, there are various outstanding problems with the vehicle, which ZM Contracting would like to have addressed by a workshop of its choice, but at NZ Tyres’ cost. In addition, ZM Contracting wishes to recover its costs involved with two reports that it has obtained in respect of the vehicle’s faults.
[2] From this background, the following issues arise for the Tribunal’s determination:

• (a) Did the vehicle fail to comply with the guarantee of acceptable quality?
• (b) If so, what is the appropriate remedy?

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

[3] 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.
[4] “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.

[5] 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.
[6] Because of the large number of alleged faults, I asked ZM Contracting’s director, Mate Matyas, to clarify what were the vehicle’s outstanding problems. Mr Matyas indicated the vehicle still has the following problems:

• (a) it pulls to the left and shudders;
• (b) oil is leaking from the engine onto the exhaust;
• (c) there is a problem with the left wing mirror, which was loose and folds inwards when the vehicle is travelling at speed.

[7] Mr Matyas confirmed that the vehicle currently has no warning lights illuminated on the dashboard, except that when he pushes the dynamic stability control (DSC) button a warning light appears, even though the DSC disengages and re-engages normally. However, there were no technical reports confirming that any fault existed and the Tribunal’s Assessor, Mr Gregory, did not consider that any outstanding fault was established in respect of the DSC.

Vehicle pulling to left and shuddering

[8] In respect of the first identified issue, that the vehicle pulls to the left and shudders, Mr Matyas alleged that this was an issue identified before purchase and that NZ Tyres had agreed to rectify it before ZM Contracting took delivery of the vehicle. Remedial action appears to have been limited to having a wheel alignment and balance carried out at the trader’s expense, although no receipts were provided for this work.
[9] ZM Contracting obtained a VTNZ pre-purchase assessment report on 3 May 2019, which identified that a suspension alignment adjustment was required because the vehicle pulls to the left. Mr Matyas and Ms Clarkson attributed this fault to worn left and right lower ball joints which were identified by Revolution Automotive Services in a report dated 1 August 2019 as having excessive wear and slight play respectively.
[10] Mr Gregory thought that the cause of the vehicle pulling to the left was perhaps more likely to be the split radius rod/caster arm bushes, which was also identified by Revolution Automotive Services. This fault was identified as well by Vehicle Inspection NZ in a warrant of fitness inspection, carried out on 20 May 2019 at NZ Tyres’ expense. In that warrant of fitness inspection the radius rod bushes were identified as “marginal”, but they were not sufficiently worn to cause the vehicle to fail the inspection. Mr Matyas also referred to the vehicle “shuddering” and he thought that this problem was occurring because of the worn ball joints. Mr Gregory thought that the shuddering may signal that the brake rotors either need to be machined or replaced. This, in Mr Gregory’s experience, is a common fault found in this model of vehicle at this age and mileage. However, it has not been diagnosed as a current fault by any of the workshops to which the vehicle has been taken thus far. Mr Gregory advised that this is an issue of vehicle maintenance which, given that ZM Contracting has now operated the vehicle for 10,000 km since purchase, is not the kind of matter that the Tribunal would usually uphold as a failure to comply with the guarantee of acceptable quality.
[11] I agree with Mr Gregory’s assessment. If there is a fault with the vehicle’s brakes it is not a matter that was identified at the time or soon after the vehicle was purchased; rather, it is a fault that appears to have arisen much later, confirming Mr Gregory’s assessment that this is a matter of wear and tear.

Oil leaking onto exhaust

[12] Mr Gregory was more concerned about the reports that oil may be leaking onto the exhaust, causing smoke to be produced which is getting into the vehicle’s cabin. This is potentially a safety concern.
[13] The VTNZ assessment report of 3 May 2019 identified engine oil leaks but is not specific as to where those leaks were coming from. NZ Tyres had the vehicle assessed by MK Autotech, which investigated the engine oil leak and carried out an unspecified “repair”. The cost of this repair, $106, suggests that whatever was repaired was not a major leak. Subsequent to that, Revolution Automotive Services has diagnosed that the rocker cover is leaking oil.
[14] In Mr Gregory’s view, this is a matter that needs to be urgently addressed. In his view the fact that an engine oil leak was diagnosed relatively early on, initially by VTNZ, suggests that this may have been a matter that arose early in ZM Contracting’s ownership of the vehicle. As such, it appears likely that this amounts to a failure to comply with the guarantee of acceptable quality.

Loose passenger rear vision mirror

[15] The third matter that is obviously an important safety issue that needs to be addressed is the loose left passenger side mirror which folds inwards when the vehicle is travelling at speed. The trader has already made one attempt to fix this problem, which was unsuccessful. This defect was missed in the warrant of fitness inspection, probably because the inspector would not have driven the vehicle at speed.
[16] In my view this also amounts to a failure to comply with the guarantee of acceptable quality.

Other matters

[17] All of the other matters identified by the VTNZ report, to the extent that they would comprise warrant of fitness issues, appear to have been addressed by the trader. That leaves a range of other issues identified by Revolution Automotive Services including that the transmission selector shaft seal is leaking, that there is a whining noise on cold start and that two fault codes are showing, one relating to the dynamic stability control and the other relating to the gearbox control.
[18] On behalf of NZ Tyres, Mr Fernando said that he was willing to address all of the matters identified by Revolution Automotive Services at NZ Tyres’ cost, but only if he could take the vehicle to his chosen repairer. Due to delays in previous repairs carried out by NZ Tyres’ chosen repairer, ZM Contracting expressed a strong preference that it be entitled to take the vehicle to its own repairer. To that, Mr Fernando said that he would be willing to contribute 50% of the cost of repairs if ZM Contracting took the vehicle elsewhere to have the repairs done.
[19] I will deal with the question of where the vehicle should be taken for repairs in the next section of this decision. However, I mention it now because I have decided only to uphold ZM Contracting’s claim in respect of the left door mirror, the engine oil leak from the rocker cover gasket and the worn/split front radius/caster arm bushes. I find that these matters amount to failures of the vehicle to comply with the guarantee of acceptable quality. I record that none of the other faults alleged by ZM Contracting amount to failures to comply with the guarantee of acceptable quality. The reason my decision is limited to these three issues is because of insufficient evidence of any other identifiable fault and repairs needed, and in any event, because the faults alleged amount to maintenance issues that would be expected in a vehicle of this age, mileage and price.

Issue two: What remedy is ZM Contracting entitled to?

[20] The remedies available to a consumer in respect of a failure to comply with the guarantee of acceptable quality are set out in s 18 of the Act, which provides:

18. 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.

[21] The primary remedy available to a consumer is to require the supplier of the vehicle to remedy the failure. Notwithstanding ZM Contracting’s frustrations at the delays in getting repairs done to the vehicle, and its concerns about the quality of the repairs that were carried out, I consider that NZ Tyres is entitled to have another chance to rectify the three matters I have identified. It is of course ZM Contracting’s option to take the vehicle elsewhere for repairs, but if it does so, then it will be limited to attempting to recover 50% of the cost of those repairs, as offered by Mr Fernando in the hearing. Otherwise, it will have to allow NZ Tyres the opportunity to fix these outstanding faults.

Conclusion

[22] Accordingly, I order NZ Tyres Ltd to rectify the vehicle’s front radius/caster arm bushes, its left passenger side mirror, and the leaking rocker cover gasket at its expense within 21 days of the date of this decision. In addition, NZ Tyres Ltd must pay ZM Contracting Ltd $292.50, being the cost of the reports from VTNZ and Revolution Auto Services, within 14 days of the date of this decision.

J S McHerron
Adjudicator