Bailey v Gazley Motors Limited - Reference No. MVD 318/2019 [2019] NZMVDT 261 (28 November 2019)

Last Updated: 20 December 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 318/2019
[2019] NZMVDT 261

BETWEEN ARON CHARLES BAILEY

Purchaser

AND GAZLEY MOTORS LIMITED

Trader

HEARING at Wellington on 12 November 2019
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

D Binding – Assessor
APPEARANCES

A C Bailey, Purchaser
D M Bailey, Purchaser’s wife
O C Gazley, Dealer Principal of Trader

DATE OF DECISION 28 November 2019

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DECISION OF THE TRIBUNAL

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Aron Bailey’s application is dismissed.

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REASONS

Introduction

[1] Aron and Adelle Bailey decided to upsize their family car as they were expecting twins. They test-drove a Volkswagen Sharan at Gazley Motors Ltd. The vehicle appealed to them because it had plenty of room for the twins’ car seats and buggy.
[2] Before deciding to purchase the vehicle, Mr and Mrs Bailey asked for a copy of its service book. The salesman told them that the vehicle had no service history as it was a Japanese import. Mr and Mrs Bailey decided to purchase the vehicle anyway.
[3] Mr Bailey says he is 100% certain that no one at Gazley Motors told them what sort of fuel should be used in the vehicle other than “petrol”. There is no sticker on the fuel filling area to identify which fuel to use.
[4] Mr Bailey had previously owned European vehicles, including a Volkswagen with the same size engine as the Sharan (1.4 litres) and an Audi, both of which he had fueled with 95 octane petrol. However, being on a budget with a family, Mr and Mrs Bailey filled the Volkswagen Sharan with 91 octane petrol, as “it’s the cheapest option”.
[5] Unfortunately, the Baileys’ decision to use 91 octane petrol has had expensive consequences for them. One of the pistons in the engine showed signs of damage some 23 months and 13,000 km after they purchased the Sharan. Mr and Mrs Bailey’s mechanic’s assessment is that this damage is likely to have been caused by their use of 91 octane petrol. The engine cost $7,576.66 to repair. Mr and Mrs Bailey seek to recover that sum from Gazley Motors.
[6] Mr and Mrs Bailey also raised a concern about the failure of Gazley Motors to service the direct-shift gearbox (DSG) transmission in the vehicle prior to selling it to them.
[7] The issue for the Tribunal’s determination is whether the vehicle failed to comply with the guarantee of acceptable quality.

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

[8] 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.
[9] “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.

[10] 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.
[11] The effect of s 7(4) of the Act (above), is that if there has been unreasonable use of a vehicle that has caused the defect about which the purchaser complains, then that will not amount to a breach of the guarantee of acceptable quality.
[12] The vehicle operated satisfactorily with no problems for approximately 13,000 km after the date of purchase, 27 July 2017. On or around 21 June 2019, the engine started losing power and a dashboard warning light illuminated. Mrs Bailey, who was driving the vehicle at that time, said it seemed to lose power and she noticed it surging and stuttering when pulling away at an intersection. Mrs Bailey also noticed that the automatic start-stop function was not working normally.
[13] Mr and Mrs Bailey took the vehicle to Mike Page European in Paraparaumu, which found multiple faults logged in the engine control unit, including misfires in cylinder 1. After troubleshooting the engine misfire and carrying out a compression test, Mike Page European confirmed a compression leakage into the crank case and the piston in cylinder 1. Mike Page European installed a new piston set, bearing shells, timing chain, guides and tensioner and carried out an oil service. The total cost of this repair was $7,576.66. Mike Page European advised Mr and Mrs Bailey that the piston was damaged because the incorrect fuel type had been used. Instead of 91 octane petrol, Mike Page European advised that the engine should run on high-octane fuel, a minimum of 95 octane. This was not in dispute.
[14] It was only after these repairs had been completed, around mid-July 2019, that Mr and Mrs Bailey contacted Gazley Motors about the problem they had experienced with their vehicle. Gazley Motors does not accept liability. It says that its normal practice is to advise customers what fuel they should use, although it acknowledges that, in the present case, there is no evidence that this advice was given. Gazley Motors says that if Mr and Mrs Bailey had any doubts about the correct fuel to use in their vehicle they should have contacted Gazley Motors to ask. But they did not do so. Although Gazley Motors initially offered $1,000 as a goodwill payment, it has subsequently retracted that offer. However, Gazley Motors still agrees to carry out a service of the vehicle’s DSG transmission, either itself or by Mike Page European but at Gazley Motors’ expense.

Tribunal’s assessment

[15] The Tribunal’s Assessor, Mr Binding, advises that the octane number of fuel is used as a standard measure of its performance. The higher the octane number, the more resistant the fuel is to detonation under compression. Engines are tuned to use petrol of a certain octane. However, if petrol with a lower octane rating than that for which the engine is tuned is used, then the petrol can detonate too early. This can lead to the piston being forced down before reaching the top of its stroke. This, in turn, can lead to the problem of engine knocking, which occurs when the air/fuel mixture explodes outside the normal combustion cycle. Knocking can cause serious engine damage if left to occur.
[16] In New Zealand, most petrol car engines run satisfactorily on 91 octane petrol. In particular, Japanese cars usually use 91 octane petrol, which is readily available in Japan as well.
[17] However, it is common for older vehicles, and many European cars, to require premium grade 95 octane petrol. Mr Bailey remarked in the hearing that he used 95 octane petrol in his previous Volkswagen in the United Kingdom because that was the lowest octane fuel that was readily available there. Mr Binding advised that occasional use of lower octane fuel in a car designed for premium fuel might be tolerated, however long-term use can damage the engine, as has occurred in the present case.

Whose responsibility is it?

[18] Mr and Mrs Bailey argue that Gazley Motors should have told them that the vehicle was designed to use 95 octane fuel. I agree that this would have been preferable. However, whether or not Gazley Motors advised Mr and Mrs Bailey what octane fuel to use, I do not consider that it was Gazley Motors’ fault that the wrong fuel was used.
[19] Rather, I consider that it is up to a reasonable vehicle operator to ensure that the correct fuel is being used in the vehicle. Mr and Mrs Bailey accept that they never asked anyone what octane fuel they should use; and nor do they allege that anyone actively told them to use 91 octane petrol. Rather, they simply assumed that 91 octane petrol would be acceptable to use.
[20] I do not consider that Gazley Motors had an obligation to tell Mr and Mrs Bailey that they may only use 95 octane fuel in the vehicle. As this Tribunal has previously found, it is not the responsibility of a motor vehicle trader to positively disclose such information. Rather, it is the consumer’s responsibility to make the necessary enquiries to determine what sort of fuel should be used in a vehicle, in much the same way as it is the consumer’s responsibility to make enquiries as to the type of oil, brake fluid or transmission fluid that should be used if they are putting those substances into a vehicle.[1]
[21] Accordingly, Mr and Mrs Bailey’s application to the Tribunal must be dismissed. As mentioned, Gazley Motors has agreed to carry out the service of the DSG


transmission, either itself or to pay for Mike Page European to carry it out. I do not need to make any orders and the parties can arrange this themselves.

J S McHerron
Adjudicator

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[1] Chan v Olinone Infotainment Ltd [2019] NZMVDT 177 at [23].