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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 20 December 2019
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IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
BETWEEN DANIEL CLARK & NATALIE AKOORIE
Purchaser
AND KAZBAR HOLDINGS PTY LTD T/A CAR CITY AUTOS
Trader
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MEMBERS OF TRIBUNAL
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B R Carter, Barrister – Adjudicator
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S D Gregory, Assessor
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HEARING at Auckland on 22 October 2019
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APPEARANCES
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N Akoorie, Purchaser (by audio-visual link)
W Brocket and C Ryan, Witness for the Purchaser (by audio-visual
link)
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S Vulinovich, for the Trader
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DATE OF DECISION 1 November 2019
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_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
_________________________________________________________________
REASONS
Introduction
[1] On 15 April 2019, Daniel Clark and Natalie Akoorie purchased a 2013 BMW 120i for $17,500 from Kazbar Holdings Pty Ltd, trading as Car City Autos (Car City Autos). The vehicle had an odometer reading of 47,460 km at the time of sale.
[2] Mr Clark and Ms Akoorie now seek to reject the vehicle, claiming that it has not been of acceptable quality for the purposes of the Consumer Guarantees Act 1993 (the Act). They say the vehicle has had a coolant leak, missing inspection covers and an ongoing fault that causes it to lose power, shudder and stall, which Car City Autos has failed to rectify.
[3] Car City Autos says that it has rectified the coolant leak and is prepared to rectify the fault that causes the vehicle to shudder and stall but does not believe that the vehicle’s defects are sufficient to entitle Mr Clark and Ms Akoorie to reject the vehicle.
The Issues
[4] Against this background, the issues requiring consideration are:
- (a) Issue 1: Does the vehicle have faults that breach the acceptable quality guarantee in s 6 of the Act?
- (b) Issue 2: Has Car City Autos failed to rectify the faults within a reasonable time?
- (c) Issue 3: Are the faults a failure of a substantial character?
- (d) Issue 4: What remedy are Mr Clark and Ms Akoorie entitled to under the Act?
Issue 1: Does the vehicle have faults that breach the acceptable quality guarantee?
[5] 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.
[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.
[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 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 Clark and Ms Akoorie’s subjective perspective.
The coolant leak
[8] Three days after purchasing the vehicle, Mr Clark noticed fluid leaking onto his garage floor from beneath the vehicle. Mr Clark and Ms Akoorie had the vehicle inspected by a local mechanic, who found a coolant leak. After discussions with Car City Autos, the vehicle was taken to Matangi Motors Ltd, which found faults with the thermostat housing and a bypass hose. It replaced those components at a cost of $944.78, which was paid by Car City Autos.
[9] I am satisfied that the evidence shows that this was a pre-existing leak. Mr Clark did not notice the coolant leak until three days after purchase, but there is evidence to show that someone had previously attempted to remedy the coolant leak using a plastic clip, which satisfies me that the vehicle was leaking coolant before it was purchased by Mr Clark and Ms Akoorie. I am also satisfied that this coolant leak breached the acceptable quality guarantee in s 6 of the Act. I consider that a reasonable consumer would not expect a vehicle at this price, age and mileage to have a pre-existing coolant leak.
The missing inspection covers
[10] Mr Clark and Ms Akoorie say that the vehicle has two missing inspection covers beneath the vehicle. Ms Akoorie provided videos filmed on 25 April 2019, 10 days after they purchased the vehicle, which she says shows that the vehicle had two missing inspection covers at the time of sale. Mr Gregory, the Tribunal’s Assessor, agrees that the evidence shows that the vehicle has missing inspection covers and advises that the missing inspection covers are intended to protect the radiator, oil sump and other driveline components, which can be easily damaged, from debris thrown up from the road.
[11] On the basis of the evidence presented by Ms Akoorie and the advice I have received from Mr Gregory, I am satisfied that the inspection covers were missing at the time of sale which means that the vehicle was not of acceptable quality for the purposes of s 6 of the Act.
The undiagnosed fault that causes the vehicle to shudder and stall
[12] The vehicle has broken down twice — both times on cold nights –— due to an undiagnosed fault that causes it to shudder and stall.
[13] The vehicle first broke down on 27 June 2019. Ms Akoorie says that she was driving the vehicle about 9.30 pm, when it repeatedly shuddered and then failed to start. With Car City Autos’ consent, the vehicle was taken to Coombes Johnston BMW in Hamilton for assessment. Coombes Johnston BMW considered that the vehicle had a fault with its timing chain and replaced that component. Car City Autos paid $1,382.97 for that repair.
[14] The repair performed by Coombes Johnston BMW appears to have been unsuccessful, as the vehicle broke down again on the night of 2 August 2019, with the same symptoms as those present on 27 June 2019. Ms Akoorie gave evidence that the vehicle has continued to intermittently shudder and lose power. Further, after the hearing, Ms Akoorie also advised that the vehicle had again failed to start after a cold night.
[15] Car City Auto accepts that the vehicle has an ongoing fault that causes it to shudder and stall, which it should repair. It says that it has since had the vehicle inspected by Endeavour Motors in Auckland, which considers that the vehicle may well have a fault with its high pressure or low pressure fuel pumps.
[16] Mr Gregory advises that the symptoms described by Ms Akoorie are inconsistent with the vehicle having any fault with its timing chain, so in that regard the repair performed by Coombes Johnston BMW appears to have been unnecessary. Instead, Mr Gregory considers that the symptoms are more consistent with a fault with its fuel pump, a fault with the engine control unit (ECU) and/or the wiring that is causing the symptoms experienced by Mr Clark and Ms Akoorie. Mr Gregory also advises that it is possible that the symptoms are caused by a blockage in the fuel tank or a restriction in the fuel lines due to contamination. He considers that further diagnosis will be required before the true cause of the fault can be identified — but given the fact that the symptoms are worse in the cold, Mr Gregory considers that the most likely cause is a fault with the vehicle’s fuel pump.
[17] I am therefore satisfied that the vehicle has an ongoing undiagnosed fault that causes the vehicle to shudder and stall, most likely caused by a fault with its fuel pump, ECU and/or wiring. Although the fault remains undiagnosed, I am also satisfied that this fault means the vehicle has not been of acceptable quality for the purposes of s 6 of the Act. A reasonable consumer would not expect a vehicle of this price, age and mileage to develop a fault that causes it to intermittently shudder and stall so shortly after purchase.
Issue 2: Did Car City Autos fail to rectify the faults within a reasonable time?
[18] Mr Clark and Ms Akoorie may reject the vehicle under s 18(2)(b)(ii) of the Act if Car City Autos has failed to repair the vehicle’s faults within a reasonable time. Section 18 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] The coolant leak was repaired promptly by Car City Autos, so Mr Clark and Ms Akoorie are not entitled to reject the vehicle on that basis. Further, I am not satisfied that Car City Autos has been given any reasonable opportunity to replace the missing inspection covers, so the vehicle cannot be rejected for any failure to rectify that fault.
[20] In respect of the undiagnosed fault that causes the vehicle to shudder and stall, although that fault has not yet been rectified, I am not satisfied that Mr Clark and Ms Akoorie gave Car City Autos a reasonable opportunity to rectify that fault before they rejected the vehicle. The evidence shows that the fault first occurred on 27 June 2019. Car City Autos responded promptly by agreeing to have the vehicle repaired by Coombes Johnston BMW. Unfortunately, that repair did not rectify the fault, and the fault returned on 2 August 2019. Mr Clark and Ms Akoorie then promptly rejected the vehicle, without giving Car City Autos another opportunity to diagnose and repair the fault.
[21] I consider that Mr Clark and Ms Akoorie were too hasty in rejecting the vehicle. I am not satisfied that Car City Autos’ failure to rectify this fault at the first attempt gives rise to the right to reject the vehicle under s 18(2)(b)(ii) of the Act. Mr Gregory advises that intermittent faults of this nature can be difficult to diagnose and repair — as evidenced by both Matangi Motors and Coombes Johnston BMW being unable to identify the cause of the undiagnosed fault when they assessed the vehicle — and can often take more than one attempt to successfully diagnose and repair.
[22] I am also not satisfied that any subsequent failure by Car City Autos to rectify the fault gives rise to the right to reject the vehicle. That is because Mr Clark and Ms Akoorie rejected the vehicle immediately after the fault returned on 2 August 2019, meaning Car City Autos had no responsibility under the Act to repair the vehicle once it had been rejected.
[23] Accordingly, I am not satisfied that Mr Clark and Ms Akoorie are entitled to reject the vehicle because of any failure by Car City Autos to rectify the vehicle’s faults and that Car City Autos should be given a further opportunity to diagnose and rectify the vehicle’s faults.
Issue 3: Are the faults a failure of a substantial character?
[24] Under s 18(3) of the Act, Mr Clark and Ms Akoorie may also reject the vehicle if its faults amount 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.
[25] Section 21(a) of the Act applies to this case. The question I must answer is whether the faults that this vehicle has, are such that a reasonable consumer, fully acquainted with the true nature and extent of the faults, would not have purchased the vehicle.
[26] None of the vehicle’s faults, when considered separately, is a failure of a substantial character.
[27] The coolant leak and missing inspection covers are relatively minor faults, which are easily rectified. Although those faults breach the acceptable quality guarantee, I am not satisfied that a reasonable consumer would have been deterred from purchasing the vehicle if they had been fully acquainted with the nature and extent of those defects at the time of sale.
[28] Ms Akoorie submitted that she ought to be entitled to reject the vehicle because the fault that causes the vehicle to intermittently shudder and stall makes the vehicle unreliable, and that she would not have purchased the vehicle if she had known that the fault would arise about two and a half months after purchase.
[29] Although I am prepared to accept that, given their personal circumstances, Mr Clark and Ms Akoorie would not have purchased the vehicle if they had known that the undiagnosed fault would arise so shortly after purchase, I must determine the question of whether that fault is a failure of a substantial character from an objective point of view, rather than from Mr Clark and Ms Akoorie’s perspective. Applying that objective perspective, I am not satisfied that a reasonable consumer would have refused to purchase a vehicle of this price, age and mileage because of this undiagnosed intermittent fault. A reasonable consumer purchasing an 6-year-old BMW with an odometer reading of more than 47,000 km should understand that such vehicles may, from time to time, develop intermittent faults that may be difficult to diagnose. Certainly, a consumer would expect a fault of this nature to be rectified by the supplier, but I am not satisfied that a reasonable consumer would have declined to purchase the vehicle because of such a fault.
[30] Further, because the undiagnosed fault that causes the vehicle to shudder and stall remains undiagnosed, it is difficult to conclude that the fault is such that a reasonable consumer would not have purchased the vehicle if they had been fully acquainted with the nature and extent of this fault.
[31] Likewise, I am not satisfied that the vehicle’s accumulated defects, amount to a failure of substantial character. In Cooper v Ashley & Johnson Motors Ltd, the District Court stated that a purchaser may also reject a vehicle where there has been an accumulation of defects, even when those defects may not amount to a failure of substantial character in their own right.[1] 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’”.[2]
[32] Although this vehicle has had three defects that breach the acceptable quality guarantee since purchase, I am not satisfied that the defects are such that a reasonable consumer would have reached the point where he or she had no confidence in the ongoing reliability of the vehicle. The faults are all unrelated, and do not point to the vehicle being inherently unreliable. Further, the coolant leak was easily rectified, the missing inspection covers will be easily replaced, and although the fault that causes the vehicle to shudder and stall remains unrectified, once diagnosed it should be promptly rectified.
[33] I have also considered whether the intermittent fault that causes the vehicle to shudder and stall amounts to a failure of a substantial character because it makes the vehicle unsafe for the purposes of s 21(d) of the Act. In that regard, Ms Akoorie gave evidence as to the ongoing symptoms she is experiencing, including that the vehicle hesitated when driving through a busy intersection. Again, without seeking to diminish Ms Akoorie’s concerns about the vehicle, I am not satisfied that the evidence provided by Mr Clark and Ms Akoorie proves that the vehicle is unsafe.
Issue 4: What remedy is Mr Clark and Ms Akoorie now entitled to under the Act?
[34] 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.
[35] Under s 18(2)(a) of the Act, Mr Clark and Ms Akoorie are entitled to have the undiagnosed fault that causes the vehicle to shudder and stall rectified, and the missing inspection covers replaced within a reasonable time. Because the coolant leak has already been rectified, no further orders are required in respect of that fault.
[36] Under s 18(4) of the Act, Mr Clark and Ms Akoorie are also entitled to recover damages for any reasonably foreseeable loss or damage resulting from the vehicle’s defects. In that regard, I am satisfied that Mr Clark and Ms Akoorie are entitled to recover:
- (a) $51.90, being the cost of obtaining a Carjam report to determine the history of the vehicle. That information should have been set out on a Consumer Information Notice provided to them at the time of sale, but Car City Auto failed to comply with its legal obligation to provide that document;
- (b) $44.30, being the cost of hiring a taxi after the vehicle broke down on 27 June 2019; and
- (c) $200, being a reasonable estimate of the cost incurred by Mr Clark and Ms Akoorie in travelling to and from Auckland to collect the vehicle from Endeavour Motors on 27 August 2019. The vehicle was returned to Car City Autos on 9 August 2019. Mr Clark and Ms Akoorie then became concerned at the lack of contact from Car City Autos as to what was happening with the vehicle. It seems that Stevo Vulinovich, a director of Car City Autos, who had been communicating with Ms Akoorie, had left the country without telling Mr Clark and Ms Akoorie what was happening with vehicle. Following discussions with another employee of Car City Autos and with Endeavour Motors, Mr Clark and Ms Akoorie decided to travel to Auckland to collect the vehicle. I consider that, in light of the absence of any clear communication from Car City Autos as to what its intentions for the vehicle were, and when — if ever — any remedy would be provided, it was entirely reasonable for Mr Clark and Ms Akoorie to travel to Auckland to collect the vehicle, and I consider that they are entitled to recover that cost from Car City Autos. Mr Clark and Ms Akoorie sought $386 in compensation, but I consider that amount to be an unrealistic estimate of the cost they actually incurred.
[37] Mr Clark and Ms Akoorie also sought to recover $186 for the cost of using Ms Akoorie’s brother’s car after their vehicle had broken down. Mr Clark and Ms Akoorie provided no evidence to show that they had directly incurred this cost, so I do not feel able to award this amount to them under s 18(4) of the Act. Further, the Tribunal is not able to award costs for any loss incurred by Ms Akoorie’s brother, as he is not a party to these proceedings.
Costs
[38] Mr Clark and Ms Akoorie also seek to recover the $50 filing fee for bringing this application. Under cl 14(1)(a)(ii) and (b) of Sch 1 to the Motor Vehicle Sales Act 2003, the Tribunal may award costs against a party where:
- (a) the matter ought reasonably to have been settled before hearing but that party either fails to properly participate in pre-hearing settlement discussions or;
- (b) after receiving notice of the hearing, that party fails to attend without reasonable cause.
[39] I am not satisfied that Car City Autos ought reasonably to have settled this matter before the hearing. Mr Clark and Ms Akoorie sought to reject the vehicle, an application that Car City Autos has successfully defended. Further, Car City Autos attended the hearing, meaning that there is no basis upon which I can impose an award of costs against it.
DATED at AUCKLAND this 1st day of November 2019
B.R. Carter
Adjudicator
[1] Cooper v Ashley & Johnson Motors Ltd (1996) 7 TCLR 407 (DC).
[2] At 417.
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2019/230.html