Pickering v Storer Motors Limited (decision) - Reference No. MVD 366/2019 [2019] NZMVDT 270 (10 December 2019)

Last Updated: 17 January 2020

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 366/2019
[2019] NZMVDT 270

BETWEEN LEIGH DIANNE PICKERING

Purchaser

AND STORER MOTORS LIMITED

Trader

HEARING at Christchurch on 26 November 2019
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

R C Dixon – Assessor
APPEARANCES

L D Pickering, Purchaser
K Addei, Support person for Purchaser
R R J Storer, Managing Director of Trader
J R Stocker, Sales Manager of Trader

DATE OF DECISION 10 December 2019

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

1. Leigh Pickering’s application to reject her BMW X3 is not upheld.
2. No later than 17 December 2019, Ms Pickering is to advise the case manager whether she wishes to:
   • (a) take the vehicle to Eastside Autos for repair of the brakes, oil leak and engine check light, and then return to the Tribunal for its assessment of the reasonable costs payable in respect of those repairs by Storer Motors Ltd (option one); or
   • (b) take the vehicle to Storer Motors for repair of the brakes, oil leak and engine check light at Storer Motors’ expense (option two).

100. Once I have received Ms Pickering’s indication of her choice of remedy, I will make a final order.

___________________________________________________________________

REASONS

Introduction

[1] Leigh Pickering purchased a 2009 BMW X3 with 63,261 km on the odometer for $18,995 on 19 February 2019 from Storer Motors Ltd. Ms Pickering purchased the vehicle for both her private and business use. Within a short time after purchase, Ms Pickering has experienced a number of problems with the vehicle. The main faults include squeaking brakes and an oil leak which has not been fully diagnosed or quoted for repair. In addition, the engine light is currently illuminated on the vehicle.
[2] Ms Pickering is frustrated at the difficulty she has had in rectifying these issues. She wishes to reject the vehicle and obtain a full refund of the purchase price.
[3] Storer Motors says it has attempted to fix the problems experienced by Ms Pickering with the vehicle, but that it needs a further opportunity to complete necessary repairs, which it is willing to do at its expense. It says Ms Pickering is not entitled to reject the vehicle as the faults complained about are not serious enough. Moreover, the vehicle has been damaged in an accident since it was sold to Ms Pickering.
[4] The following issues arise for the Tribunal’s consideration:

• (a) Did the vehicle fail to comply with the guarantee of acceptable quality?
• (b) If so, did Storer Motors succeed in remedying the failure within a reasonable time?
• (c) If not, what is the appropriate remedy?

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

[5] 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.
[6] “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.

[7] 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.
[8] As mentioned in the introduction, the vehicle’s alleged faults are:

• (a) squeaking brakes;
• (b) oil leak(s); and
• (c) engine check light.

Squeaking brakes

[9] Ms Pickering says that the brakes shudder when the vehicle is travelling over about 80 kph and, in addition, they make a squealing noise when it is stopping. Ms Pickering has complained about this issue to Storer Motors on several occasions. Each time, Storer Motors has attempted to repair the problem, but it has not succeeded in doing so, according to Ms Pickering. Storer Motors says that after the vehicle was imported to New Zealand in late 2018, it replaced the front disc rotors and brake pads. These were fitted in November 2018 to satisfy compliance requirements. In addition, Jim’s Brake Disc Machining lightly skimmed the near new front brake disc rotors on 7 March 2019 in response to Ms Pickering’s complaints of brake squealing noise. Murray Hawes, of Jim’s Brake Disc Machining, provided a report stating that the front and rear disc rotors were discoloured a light blue which indicated heavier than normal braking.
[10] Jim’s Brake Disc Machining checked the brake rotors again on 11 June 2019, also at Storer Motors’ expense. Jim’s Brake Disc Machining noted that the front rotors were discoloured again. They were removed and fully machined and rechecked and then left for Storer Motors to refit. Jim’s Brake Disc Machining also lightly skimmed the rear rotors to remove discolouration. The rear rotors were measured and they were found to still be within tolerance.
[11] At the Tribunal hearing, Ms Pickering was adamant that it was never explained to her what work had been carried out by Storer Motors to rectify the brakes. Nor did she consider that whatever work had been done had addressed her concerns. Mr Storer said that his technician ordinarily would have explained to Ms Pickering the work that was carried out and, in addition, the need for her to use the brakes gently in the first few hundred kilometres to ensure that they properly bedded in. However, Mr Storer acknowledged that (at best) this was hearsay, as the technician concerned was not present in the hearing to give evidence of what he told Ms Pickering after attending to the brakes each time.
[12] The Tribunal’s Assessor, Mr Dixon, and I were left thinking that the work that was carried out on the brakes is unlikely to have been adequately explained to Ms Pickering, and nor is it likely that it was adequately explained that she would need to operate the brakes gently at first so that they could be worn in.
[13] I also note that Mr Storer’s evidence was that he could not make the brakes squeal when Ms Pickering brought the vehicle in for assessment. In June 2019, Mr Storer took the vehicle to the AA Auto Centre to assess the vehicle in respect of the matters about which Ms Pickering was complaining. It carried out a visual check of the brakes, noting that the brake rotors had been machined very recently and new brake pads fitted. The AA noted that all appeared visually okay and that, after a test drive, the brake system operated correctly. No squealing was reported by the AA in its report dated 11 June 2019.

Tribunal’s assessment

[14] It was difficult for the Tribunal to assess whether the brake squealing and shuddering issues experienced by Ms Pickering in her vehicle reflected a failure to comply with the guarantee of acceptable quality, or whether it was a fault that had been induced by the way in which the brakes had been operated after new pads had been installed. Either way, we were satisfied that Storer Motors does not appear to have adequately explained to Ms Pickering the need to take care with the brakes to ensure that they do not overheat when the pads were new.
[15] Mr Dixon used the analogy of a cake, whereby once the cake mixture is cooked it has completely different characteristics and qualities from when raw. The same applies to brakes. If they are overheated, then their composition can change in a way that will cause noises and shuddering to occur. This is not to say that the brakes are currently unsafe and, in Mr Dixon’s view, there is no evidence that the performance of the brakes has been impaired. Nevertheless, we have sufficient concerns about the lack of communication to Ms Pickering to describe what repair work was done on the brakes, and how best she used them in the first few hundred kilometres after that repair took place, that we consider it appropriate for Storer Motors to take responsibility for repairing the brakes again to remove the squealing noise that Ms Pickering is clearly experiencing. This time, Storer Motors should properly explain to her the work it has done and any recommended modifications to her braking style while the brakes are bedding in.

Oil leak

[16] Ms Pickering complained about a burnt oil smell coming from the engine. She also noted that leaks were apparent and she produced a report by Eastside Autos stating that the vehicle has several oil leaks, but that it was not clear exactly where they were coming from. Eastside Autos had advised Ms Pickering to take the vehicle back to Storer Motors in June 2019 for it to remedy the leaks. Once she had done this, she returned to Eastside Autos approximately two weeks later. It noted that the engine had been cleaned down but still had several oil leaks. Once again, however, it advised Ms Pickering to take the vehicle back to Storer Motors to be remedied.
[17] Storer Motors appears at all times to have been willing to carry out necessary investigations of the vehicle, and to make any necessary repairs. But Storer Motors complained that Ms Pickering had been unwilling to leave the vehicle with it for long enough to do a proper assessment.
[18] Storer Motors acknowledged that while the vehicle had been checked for its certification prior to sale to Ms Pickering, an oil leak was noticed from the camshaft cover. At this time, Storer Motors had ordered a new gasket. I did not see any evidence that that new gasket had been installed and, indeed, Mr Dixon thought that the fact that Ms Pickering was complaining about burning oil smells suggested that the oil leak may well be coming from the rocker cover gasket.
[19] In addition, the AA Auto Centre report dated 11 June 2019 refers to oil leaks being present from the top of the engine and around the bell housing area. The AA stated that the car requires steam cleaning and then to be rechecked to see what is leaking.

Tribunal’s assessment

[20] It is unfortunate that, despite clear evidence of oil leaks arising relatively early on in Ms Pickering’s ownership of the vehicle, adequate steps have not been taken yet to fully diagnose where those leaks are coming from and what repairs may be necessary. This now needs to occur as a priority. What has got in the way of this occurring, however, is the fact that Ms Pickering has had enough of the vehicle and wishes to reject it. I will have more to say on that issue when I come to discuss what remedies are available to Ms Pickering in respect of her vehicle.

Engine check light

[21] The other matter that requires assessment is the ongoing presence of an engine check light illuminated on the dashboard. It was not clear what this light signifies. Eastside Autos referred to fault codes arising from the exhaust vanos mechanism. However, Storer Motors said that it had replaced an oxygen sensor which it thought had addressed this issue. The Tribunal is not in a position to assess, based on the evidence, what is the cause of the engine light currently illuminating. It will need to be checked and the vehicle rescanned for faults. I will make provision for this in the remedies section below.

Conclusion

[22] Accordingly, I conclude that the vehicle has failed to comply with the guarantee of acceptable quality in respect of ongoing issues relating to an oil leak that has not as yet been fully diagnosed, the as yet not fully diagnosed issue causing the engine check light to illuminate, and the squealing brakes. As mentioned, the last-mentioned problem may relate to the way in which Ms Pickering has operated the brakes. However, on balance we consider Storer Motors is responsible for putting that issue right, in light of its likely failure to properly advise Ms Pickering as to the correct manner of operating the brakes shortly after new pads had been installed.

Issue two: Did Storer Motors succeed in remedying the failure within a reasonable time?

[23] All three of these faults are matters which Ms Pickering complained about relatively early on in her ownership of the vehicle. For that reason, the fact that she has now driven the vehicle for approximately 12,000 km does not count against her in terms of the availability of a remedy. The fact that the relationship between the parties in this case has broken down may have complicated matters and made it more difficult for Storer Motors to carry into effect its wish to help Ms Pickering to fix her vehicle. Nevertheless, our overall comment is that what are relatively straightforward matters seem to have taken an unreasonably long time to fix. The time taken to fix these problems is relevant in terms of what remedy may be available to Ms Pickering, which I will canvass more fully in determining the third issue below. Needless to say, my conclusion in respect to this second issue is that Storer Motors has not succeeded in remedying the failures in Ms Pickering’s vehicle within a reasonable time.

Issue three: What is the appropriate remedy?

[24] The remedies available to consumers where a vehicle fails 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.

[25] I have found that Storer Motors did not succeed in remedying this vehicle’s failures within a reasonable time. That gives rise to the two remedies set out in s 18(2)(b) (above). In this situation, the consumer has a choice of getting the failures remedied elsewhere and having the supplier (Storer Motors) reimburse her for all reasonable costs incurred. Alternatively, s 18(2)(b)(ii) gives the consumer in this case the right to reject the vehicle. However, and this was a matter discussed in some detail in the hearing, s 18(2)(b)(ii) is expressed to be subject to s 20 of the Act. As I explained to Ms Pickering, s 20 provides that the right to reject is lost if “the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply”.

Has Ms Pickering lost the right to reject the vehicle?

[26] Storer Motors mentioned in its written submission that the vehicle has been in an accident since it was supplied to Ms Pickering. Indeed, Ms Pickering confirmed at the hearing that the X3 was rear-ended by another vehicle while at traffic lights on Ensors Road. After the hearing, Ms Pickering provided the invoice for panel beating work carried out on the vehicle which, while she described it as relatively minor damage, resulted in approximately $4,000 in repairs. I noted at the hearing that s 20(1)(c) does not qualify the amount of damage needed to a vehicle before the right of rejection is lost. In other Tribunal decisions, the Tribunal has excluded ordinary wear and tear from the concept of damage covered under s 20(1)(c). However, I do not think it would be possible to exclude damage of the kind experienced in the accident, resulting in reasonably substantial panel beating work.
[27] As the vehicle was damaged after delivery to Ms Pickering for reasons not related to its state or condition when she bought it, Ms Pickering has lost any right that she might otherwise have had to reject the vehicle. As a result of her losing her right to reject the vehicle, Ms Pickering is limited to the following remedies:

• (a) option one: having the vehicle’s faults fixed elsewhere and obtaining from Storer Motors all reasonable costs incurred (s 18(2)(b)(i) of the Act); or
• (b) option two: requiring Storer Motors to fix the vehicle at its expense (s 18(2)(a) of the Act).

[28] Accordingly, under option one, Ms Pickering is entitled to take her vehicle to Eastside Autos for repairs to the brakes, the oil leak and the check light. The complication involved in that exercise is that it is not possible to ascertain at this point in time what the reasonable cost of repairs might be. If Ms Pickering wants to take the vehicle to Eastside Autos for repairs, she will need to pay for the repairs herself and then come to the Tribunal again so we can consider and determine what the reasonable cost of repairs is. In taking option one, Ms Pickering risks the Tribunal awarding her a lesser sum than she has in fact had to pay to Eastside Autos.
[29] Alternatively, under option two, instead of exercising her right to take the vehicle elsewhere under s 18(2)(b)(i) and then return to the Tribunal for an assessment of what the reasonable costs of that repair were, Ms Pickering can take the vehicle back to Storer Motors for it to fix the faults. Mr Storer indicated at the hearing that he would be prepared to do that voluntarily and that he would need the vehicle for approximately one week. He indicated at the hearing that this could be achieved relatively promptly and that he would provide Ms Pickering with a suitable loan vehicle for the period of time when her vehicle was out of action.
[30] It is for Ms Pickering to decide whether she leaves the vehicle with Storer Motors or whether she sends it to Eastside Autos instead. She should let the Tribunal know within seven days which of these options she prefers.

J S McHerron
Adjudicator