Alack v Nelson Suzuki Limited t/a Nelson Bays Suzuki and Subaru - Reference No. MVD 351/2019 [2019] NZMVDT 262 (29 November 2019)

Last Updated: 20 December 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 351/2019
[2019] NZMVDT 262

BETWEEN FRANZ DEAL ALACK AND SHEILA MARGARET BEGGS

Purchasers

AND NELSON SUZUKI LIMITED T/A NELSON BAYS SUZUKI AND SUBARU

Trader

HEARING at Nelson on 8 November 2019
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

R C Dixon – Assessor
APPEARANCES

F D Alack and S M Beggs, Purchasers
J M Chapman, Director of Trader

DATE OF DECISION 29 November 2019

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DECISION OF THE TRIBUNAL

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Franz Alack and Sheila Beggs’ application is dismissed.

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REASONS

Introduction

[1] In 2018, Franz Alack and Sheila Beggs purchased a new Suzuki Grand Vitara from Nelson Suzuki Ltd. While being prepared for delivery, the new car was damaged by a Nelson Suzuki employee after a small low speed impact with a bollard. The damage was disclosed to Mr Alack and Ms Beggs who agreed to proceed with the purchase after repairs were carried out by Nelson Suzuki. These repairs cost $3,935.81. The invoice for the repairs was paid by Nelson Suzuki’s insurer. The repairs involved replacing the vehicle’s left front guard, left front door and the colour matched moulding below the door. The new parts were supplied by Nelson Suzuki and these were assembled and painted by Paul Stephens Panel & Paint.
[2] Sometime afterwards, Mr Alack and Ms Beggs noticed a small deformation and paint damage near the bottom of the vehicle’s left A pillar. They were concerned that this “may have been symptomatic of further damage that may have been overlooked at the original time of the repair”. Fearing the worst, they became concerned that there might be structural damage to the vehicle.
[3] Initially, on 22 February 2019, they requested Nelson Suzuki to supply them with a replacement vehicle. This was on the basis that repairs were now required to the “structural monocoque such as that now proven to be needed to our car”.
[4] Mr Chapman, Nelson Suzuki’s dealer principal and director, replied to ask who had told them that the car required structural repairs. Unfortunately, Mr Chapman may have added to Mr Alack and Ms Beggs’ concerns by denying that he had previously given them any assurance that no structural damage had occurred. Nevertheless, Mr Chapman maintained that, as the accident in question happened at a very low crawling speed as the car was being driven off the yard, no structural damage should have occurred. Mr Chapman acknowledged, however, that the original repairs carried out to the vehicle had been shown to be substandard. He indicated that, after contacting Nelson Suzuki’s insurers, the original claim could be reopened. Quality Paint & Panel would be engaged to carry out any repairs that were necessary.
[5] Mr Alack and Ms Beggs remained concerned about what would happen if further damage was revealed once the panels were removed from the vehicle and a competent and thorough check was undertaken. Mr Chapman produced a description of the repairs that would be undertaken by Quality Paint & Panel to rectify the poor repair and provided a copy of that to Mr Alack and Ms Beggs. Mr Chapman indicated that, if more damage was found, he was sure that Nelson Suzuki’s insurer would agree to it being repaired. However, he reiterated his view that no further structural damage should be there. Mr Chapman assured Mr Alack and Ms Beggs that the original three-year manufacturers’ warranty carried on, as did the two year power train warranty, from the vehicle’s original registration date of 16 March 2018.
[6] Mr Alack and Ms Beggs were reluctant to agree to the repairs being carried out without an assurance that, if structural damage were found, Nelson Suzuki would replace the car. They instructed their solicitor to write a letter to Nelson Suzuki proposing that Neville Simpson, a local repair certifier, would be engaged as an independent expert. Mr Simpson would make an assessment of the damage once the panels were removed and the vehicle stripped by Quality Paint & Panel. In addition, Mr Alack and Ms Beggs’ solicitor asked Nelson Suzuki to agree that if, in Mr Simpson’s assessment, there was any question about the structural integrity of the vehicle, then Nelson Suzuki would replace it with a brand new vehicle of the same specification. Mr Alack and Ms Beggs were willing to pay reasonable compensation for the use they had had of their original vehicle. If, however, there was no issue about the structural integrity of the vehicle, then Nelson Suzuki, through Quality Paint & Panel, would repair and reinstate the vehicle so that it is “as new”.
[7] Nelson Suzuki agreed to these terms. However, it did not agree to a further term requested by the solicitor, namely that Nelson Suzuki would pay Mr Simpson’s fees and the solicitor’s own reasonable fees and expenses on a solicitor/client basis. Rather, Mr Chapman replied to the solicitor, on 5 April 2019, that Nelson Suzuki would not be held liable for costs in any way as these costs had been introduced by Mr Alack and Ms Beggs. Reluctantly, Mr Alack and Ms Beggs agreed to park the issue of costs and the vehicle was brought to Quality Paint & Panel on 10 June 2019 for assessment by Mr Simpson and repairs by Quality Paint & Panel.
[8] Mr Simpson’s report dated 24 June 2019 was accompanied by photographs showing the original damage, as well as pictures of the vehicle after the panels had been removed for inspection in June 2019. Mr Simpson stated as follows:

The vehicle had a dent to the left front guard and left front door during vehicle delivery process.

Photos showed the damage to the left front guard. The damage to the guard has only been to the outer bolt on guard shell and has not extended to the inner guard frame area.

The guard has not moved at any of the bolt on mount points.

The top edge of the guard at the junction of the A pillar and scuttle panel has not moved.

With the front screen removed the dimple or crease is exposed and this has been formed during the stamping of the A pillar section.

Repairer dressed the area and painted the front screen aperture.

As the front screen helps form the structural integrity of the vehicle its replacement must be done to manufacturer’s specifications this was done by an approved company.

After visiting and looking at the vehicle during the stripping and repair process I do not believe that the dimple or crease has been caused by the accident damage to the left front guard and door. It is a result of the stamping process. The A pillar is a very strong section of the vehicle and has not been structurally damaged in any way.

[9] In summary, therefore, while Nelson Suzuki accepts that the original repair was deficient and needed to be rectified at its cost, there is no evidence that the original damage to the vehicle caused any structural damage, or any damage that was not picked up in the original repairs.

Are Mr Alack and Ms Beggs entitled to recover the costs of their solicitor and certifier?

[10] Mr Alack and Ms Beggs felt they had needed to obtain the services of a solicitor “in order to extract from Mr Chapman the agreement to replace the vehicle if it had been structurally affected”. They say it was also part of that agreement that an independent vehicle certifier was engaged to provide an assessment of the vehicle that would be accepted by both parties. In their application to the Tribunal, Mr Alack and Ms Beggs seek reimbursement of their legal expenses, $3,324.85 plus the independent assessor’s fee, a total of $3,675.60.

Tribunal’s assessment

[11] In the present case, it is not in dispute that the vehicle had a defect that required repair. In that sense, it was effectively agreed that the vehicle failed to comply with the guarantee of acceptable quality in s 6 of the Consumer Guarantees Act 1993 (the Act). That could be said both in respect of the original damage to the vehicle, as well as in respect of Nelson Suzuki’s acknowledgement that the original repair carried out to the vehicle was deficient and needed to be rectified. The question in this case is what, if any, additional remedies might be available beyond the cost of the remediation work itself. In particular, can Mr Alack and Ms Beggs claim compensation for their legal expenses and the cost of the certifier?
[12] To answer that question it is necessary to examine s 18 of the Act, which sets out the remedies that are available where a vehicle does not comply with the guarantee of acceptable quality:

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[1] 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.

[13] The primary remedy where a failure can be fixed is for the consumer to require the supplier to remedy the failure within a reasonable time. There is no doubt in the present case that this remedy was available to Mr Alack and Ms Beggs and that Nelson Suzuki complied with its obligation to remedy the failure. I do not consider that the deficiency in the initial repair was of sufficient gravity to give Mr Alack and Ms Beggs the right to reject the vehicle but, in any event, they did not seek to reject the vehicle. Rather, they are seeking additional compensation for losses which they say were necessarily incurred in pursuing their rights against Nelson Suzuki. Section 18(4) of the Act allows a consumer to recover damages for losses resulting from the failure, and that were reasonably foreseeable as liable to result from the failure. They say that their solicitor’s expenses and the expense of the certifier were both necessary to protect them in case the vehicle had suffered more serious structural damage.
[14] In my view, neither of the expenses claimed can be considered to be losses that were reasonably foreseeable as liable to result from the original failure. I do not consider that matters had progressed to the point where Mr Alack and Ms Beggs needed to instruct a solicitor in this matter. Nor do I consider that it was necessary for them to appoint a certifier to confirm whether or not there was structural damage to the vehicle. Rather, that is something which ought to have been able to be confirmed by the panelbeater and by Nelson Suzuki itself. I do not have any problem with Mr Alack and Ms Beggs obtaining legal advice, nor reassuring themselves by obtaining the view of an independent certifier. However, I do not consider that these were costs that were reasonably foreseeable as liable to result from the original failure.
[15] To put it another way, if structural damage had been found to the vehicle, and if Nelson Suzuki had failed to provide an acceptable remedy for that structural damage, either by way of a suitable repair or replacement of the vehicle with a new vehicle, then it would have been open to Mr Alack and Ms Beggs to come to the Tribunal and seek an additional remedy under the Act. No legal representation is allowed in Tribunal hearings and most parties do well enough in articulating their case, without legal assistance, to enable the Tribunal to identify the relevant issues and resolve the dispute.
[16] As things turned out, however, there was no additional damage requiring any additional remedy of that nature. For that reason, neither the Tribunal’s Assessor Mr Dixon nor I see any real need for the involvement of the solicitor or the certifier. As Nelson Suzuki made it very clear that it did not consider itself liable to meet those costs, then I do not consider that there is any basis upon which I can order Nelson Suzuki to pay them.
[17] My conclusion is reinforced when I refer to the provision regarding costs in respect of Tribunal proceedings. The Motor Vehicle Sales Act 2003 provides that the Tribunal may award costs only in the following circumstances:[2]

14 Disputes Tribunal may award costs in certain circumstances

(1) The Disputes Tribunal may award costs to or against a party to any proceedings before it only if,—

(a) in the opinion of the Disputes Tribunal,—

(i) the proceedings are frivolous or vexatious or ought not to have been brought:

(ii) the matter ought reasonably to have been settled before proceeding to a hearing but that the party against whom an award of costs is to be made refused, without reasonable excuse, to take part in the discussions referred to in clause 5(1)(b) or acted in a contemptuous or improper manner during those discussions; or

(b) any party, after receiving notice of a hearing, fails to attend the hearing without good cause.

(2) In any case to which subclause (1) applies, the Disputes Tribunal may order a party to pay—

(a) to the Crown all, or any part of, either or both of the following:

(i) the reasonable costs of the Disputes Tribunal hearing:

(ii) the fees and expenses of any witness that have been paid or are payable by the Crown; or

(b) to another party all, or any part of, the reasonable costs of that other party in connection with the proceedings.

[18] As can be seen from the above provision, costs can only be awarded in limited circumstances, such as where a party fails to attend the hearing without good cause, or fails to engage in settlement discussions. None of the circumstances in which costs can be awarded applies in the present case.

Has the manufacturer’s new vehicle warranty been “impaired”?

[19] In addition to their claim for the costs of their solicitor and certifier, Mr Alack and Ms Beggs also sought a refund of $3,750, being 10 per cent of the purchase price for the vehicle, to reflect their view that the manufacturer’s new vehicle warranty has been “impaired’. They have formed this view about the manufacturer’s warranty after Suzuki New Zealand explained to them that the manufacturer’s new vehicle warranty is provided to cover any manufacturing defects or faulty materials from when the vehicle was originally made or assembled by the Suzuki Motor Corporation of Japan. A repair such as was carried out after the pre-delivery accident will have a warranty provided by those who carried out the repair and the original manufacturer warranty will not cover this repair. However, Suzuki New Zealand has confirmed that the new vehicle manufacturer’s warranty provided with the vehicle continues in operation in every other respect.

Tribunal’s assessment

[20] The explanation given by Suzuki New Zealand as to the scope of the warranty and its application to the repairs carried out to the vehicle after the pre-delivery accident, is entirely orthodox. As Mr Dixon explained, a new vehicle warranty is not intended to cover repairs carried out post-manufacture that do not relate to manufacturing defects or faulty materials from when the vehicle was manufactured. This distinction is expressly covered in the terms of the warranty itself, which excludes damage resulting from negligence or accident. As Suzuki points out, Mr Alack and Ms Beggs are nevertheless covered by a warranty provided by those who originally carried the repair. This is also reflected in the Act, pt 4 of which relates to the supply of services. In addition, at the hearing, Mr Chapman reiterated that the manufacturer’s warranty is still valid and if there are any future problems with the guard or door or paint finish then Nelson Suzuki will remedy them. Moreover, Mr Chapman said he will ensure that this repair warranty is transferable to a new purchaser if Mr Alack and Ms Beggs decide to sell the vehicle.
[21] In any event, I do not consider that Mr Alack and Ms Beggs have established that they were misled in any way about the continued operational scope of the manufacturer’s warranty. That precludes them from obtaining any remedy under the Fair Trading Act 1986 in respect of this issue. Even if they were able to establish on the evidence that they were misled, they have not produced any evidence of any losses associated with that issue. In other words, they have not been able to establish any gap in warranty coverage affecting them as a result of the damage to the vehicle that has resulted in them being (or being likely to be) personally liable to pay for any repair costs, or that they otherwise have been prevented from getting their vehicle’s defects fixed.
[22] For the above reasons, Mr Alack and Ms Beggs’ application is dismissed.

J S McHerron
Adjudicator

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[1] In respect of the defective original repair, it was also a breach of s 28 of the Consumer Guarantees Act 1993, which provides a guarantee that where services are supplied to a consumer, that the service will be carried out with reasonable care and skill.

[2] Motor Vehicle Sales Act 2003, sch 1, cl 14.