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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 5 December 2019
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IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
BETWEEN THOMAS WATSON
Purchaser
AND YAS MOTORS LTD
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 14 October 2019
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APPEARANCES
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T Watson, Purchaser
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No appearance for the Trader
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DATE OF DECISION October 2019
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_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
_________________________________________________________________
REASONS
Introduction
[1] On 30 January 2019, Thomas Watson purchased a 2003 Toyota Hiace campervan, registration number EEZ197, for $8,000 from Yas Motors Ltd. The vehicle had an odometer reading of approximately 305,000 km at the time of sale.
[2] The vehicle failed a warrant of fitness inspection on 1 March 2019 due to, among other things, structural corrosion. Yas Motors paid for the corrosion found during this warrant of fitness inspection to be rectified. The vehicle then failed a further warrant of fitness inspection because of additional corrosion that was not identified during the previous inspection. Mr Watson advises that the further corrosion will cost more than $5,000 to rectify. He has now rejected the vehicle under the Consumer Guarantees Act 1993 (the CGA) and seeks to recover the purchase price from Yas Motors.
[3] Despite receiving a notice of hearing, Yas Motors did not attend the hearing, which proceeded without Yas Motors.
The Issues
[4] Against this background, the issues requiring consideration are:
- (a) Issue 1: Does the vehicle have a fault that breaches the acceptable quality guarantee in s 6 of the CGA?
- (b) Issue 2: Is the fault a failure of a substantial character?
- (c) Issue 3: What remedy is Mr Watson entitled to under the CGA?
Issue 1: Does the vehicle have a fault that breaches the acceptable quality guarantee?
[5] Section 6 of the CGA imposes on suppliers and manufacturers of consumer goods “a guarantee that the goods are of acceptable quality.” Section 2 of the CGA defines “goods” as including vehicles.
[6] The expression “acceptable quality” is defined in s 7(1) 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.
if they had not been used in that manner or to that extent.
[7] 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 CGA 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 Watson’s perspective.
[8] Before purchasing the vehicle, Mr Watson had the vehicle inspected by AA Motoring, which found no significant defects. AA Motoring did note, however, that underseal had recently been applied to the underside of the vehicle.
[9] Because the vehicle did not have a recently issued warrant of fitness, on 1 March 2019 Mr Watson took the vehicle to VTNZ in Christchurch for a warrant of fitness inspection. The vehicle failed that inspection due to, amongst other things, structural corrosion. Yas Motors paid for the affected areas identified by VTNZ to be rectified, however the vehicle failed a post-repair warrant of fitness inspection on 8 May 2019 because other areas of structural corrosion were then discovered.
[10] Mr Watson provided photographs of the vehicle’s corrosion, which show significant and obvious structural corrosion that someone has attempted to disguise with black underseal.
[11] Mr Haynes, the Tribunal’s Assessor, advises that the evidence presented by Mr Watson shows that the vehicle has extensive structural corrosion, including corrosion in the floor pan, in the subframe where the engine and gearbox bolt to the chassis and in various suspension components. Mr Haynes agrees that the corrosion means the vehicle is not of warrant of fitness standard.
[12] Mr Watson has obtained an estimate of “$5,000 or more” from Performance Panel & Paint in Christchurch for the required corrosion repairs. Mr Haynes advises that this is a realistic estimate of the cost of rectifying the corrosion. Mr Haynes also advises that the repairs previously performed by Yas Motors, as set out in the invoice from OK Panel n Paint Ltd dated 22 December 2018, were entirely inadequate to rectify the significant structural corrosion in this vehicle.
[13] I am satisfied, on the basis of the evidence presented by Mr Watson and the advice I have received from Mr Haynes, that this vehicle was not of acceptable quality when it was sold to Mr Watson. The vehicle was not free of minor defects, in that it had significant structural corrosion that a reasonable consumer would not consider acceptable. Although I acknowledge that a reasonable purchaser of a 16-year-old Toyota Hiace van that has travelled more than 305,000 km should have realistic expectations as to the quality of such a vehicle, I consider that no reasonable consumer would expect a vehicle sold by a registered motor vehicle trader to have structural corrosion sufficient to cause it to fail a warrant of fitness inspection and cost more than $5,000 to rectify at the time of sale. I am therefore satisfied that the vehicle has not been of acceptable quality for the purposes of s 6 of the CGA.
Are the faults a failure of a substantial character?
[14] Under s 18(3) of the CGA, Mr Watson 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 CGA:
- 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.
[15] Section 21(a) and (d) of the CGA applies to this case.
[16] The vehicle’s faults are a failure of a substantial character for the purposes of s 21(a) of the CGA. Notwithstanding that this was an inexpensive, high mileage vehicle, I consider that a reasonable consumer would not have purchased it if they had known of the true nature and extent of the corrosion present in the vehicle at the time of sale, and that the corrosion would make the vehicle structurally unsound and will cost approximately $5,000 to rectify.
[17] The corrosion is also a failure of a substantial character under s 21(d) of the CGA because it has compromised the structural integrity of the vehicle, making it unsafe.
What remedy is Mr Watson entitled to under the CGA?
[18] The remedies relevant to this claim are set out in s 18 of the CGA, 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.
[19] Because the vehicle’s faults amount to a failure of a substantial character, under s 18(3)(a) of the CGA, Mr Watson is entitled to reject the vehicle. Under s 23(1)(a) of the CGA, Mr Watson is entitled to recover $8,000, being the purchase price of the vehicle.
Costs
[20] Under cl 14(1)(b) of sch 1 to the Motor Vehicle Sales Act 2003 (the MVSA), the Tribunal may award costs against a party where, after receiving notice of the hearing, that party fails to attend without reasonable cause.
[21] A notice of hearing setting out the time and place of the hearing was sent to Yas Motors on 24 September 2019. Yas Motors did not attend and has provided no reasonable excuse for its non-attendance. Initially, in an email to the Tribunal, Yasar Maywand, a director of Yas Motors, advised that the company is no longer in trade. Mr Maywand subsequently advised Tribunal staff that he was out of the country, so could not attend the hearing. Despite being asked to do so, Mr Maywand provided no evidence to prove his whereabouts. Finally, on the morning of the hearing, after being contacted by Tribunal staff, Mr Maywand sent an email advising that he would not be attending the hearing.
[22] Under cl 14(2)(b) of sch 1 to the MVSA, Mr Watson is therefore entitled to recover $50, being the filing fee for this application. Further, under cl 14(2)(a)(i) of sch 1 to the MVSA, I also order that Yas Motors pay $650, being the reasonable costs of the Tribunal hearing.
DATED at AUCKLAND this 17th day of October 2019
B.R. Carter
Adjudicator
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2019/222.html