Wiebe v NZCars Ltd - Reference No. MVD 306/2019 [2019] NZMVDT 274 (11 December 2019)

Last Updated: 17 January 2020

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 306/2019 [2019] NZMVDT 274 BETWEEN VITALY YURIEVICH WIEBE Purchaser AND NZCARS LTD Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Haynes, Assessor

HEARING at Auckland on 5 December 2019

APPEARANCES

V Wiebe, Purchaser (by audio-visual link)

P Watson, for the Trader

DATE OF DECISION 11 December 2019

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DECISION OF THE TRIBUNAL

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1. Vitaly Wiebe’s application to reject the vehicle is dismissed.
2. NZCars Ltd shall, within 10 working days of the date of this decision:
   • (a) replace the vehicle’s alternator and rectify the water leak;
   • (b) pay $499.46 to Vitaly Wiebe.

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REASONS

Introduction

[1] On 10 May 2019, Vitaly Wiebe purchased a 2001 Volkswagen Golf for $6,995 from NZCars Ltd. The vehicle had an odometer reading of 158,018 km at the time of sale. Mr Wiebe also purchased a 36-month Janssen Insurance mechanical breakdown insurance policy for $1,995.
[2] Mr Wiebe now seeks to reject the vehicle, alleging that it has an alternator fault and a water leak that breach the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the CGA), which amounts to a failure of a substantial character and which NZCars has refused to repair.
[3] NZCars says that it is prepared to rectify the vehicle’s defects but submits that Mr Wiebe should not be entitled 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 CGA?
• (b) Issue 2: Has NZCars refused to repair the faults within a reasonable time?
• (c) Issue 3: Are the faults a failure of a substantial character?
• (d) Issue 4: What remedy is Mr Wiebe entitled to under the CGA?

Issue 1: Does the vehicle have faults 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 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 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 Wiebe’s subjective perspective.

The alternator fault

[8] On about 9 July 2019, Mr Wiebe was driving between Whanganui and Raetihi, when the vehicle’s headlights started to fade, and the vehicle then lost all power. The vehicle was towed to Ruapehu Toyota in Raetihi, which found that the vehicle’s alternator was not charging and required replacement.
[9] I accept Mr Wiebe’s evidence as to the existence of this fault. His description of the vehicle’s headlights fading and the vehicle then losing power is consistent with Ruapehu Toyota’s diagnosis of an alternator fault. NZCars did not dispute this diagnosis.
[10] I am satisfied that this fault breaches the acceptable quality guarantee in s 6 of the CGA. Although a reasonable consumer should have realistic expectations as to the quality and durability of a $6,995, 18-year-old vehicle that had travelled more than 158,000 km at the time of sale, I am satisfied that a reasonable consumer would not expect the alternator on such a vehicle to fail a little more than two months after purchase.

The water leak

[11] Mr Wiebe says that he noticed that the vehicle’s coolant levels were reducing shortly after purchase. Mr Wiebe says that he considered that the water usage was “nothing major”, but he topped up the coolant levels with approximately half a litre of water.
[12] When Ruapehu Toyota assessed the vehicle on about 9 July 2019, it found that the vehicle had a water leak from a plastic pipe connected to the radiator overflow tank. Ruapehu Toyota considered that the affected plastic housing and gaskets required replacement. Again, NZCars, which has spoken with Ruapehu Toyota, did not dispute this diagnosis.
[13] Although the water leak is minor – in that coolant fluid is leaking slowly – it has the potential to develop into a much more significant fault if the leak was to worsen and starve the engine of coolant fluid. Accordingly, I am also satisfied that this fault breaches the acceptable quality guarantee in s 6 of the CGA, because a reasonable purchaser would not expect such a vehicle to be sold with a pre-existing water leak.

Issue 2: Did NZCars to repair the fault within a reasonable time?

[14] Mr Wiebe claims that he is entitled to reject the vehicle under s 18(2)(b)(ii) of the CGA because NZCars refused to rectify the vehicle’s faults. Section 18 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.

[15] Mr Wiebe says that he called NZCars on 11 July 2019 after the vehicle had been assessed by Ruapehu Toyota, but before any estimate had been provided for the cost of the required repairs. He says that, during a brief telephone conversation with Barry Rogers, who was a manager at NZCars at the time, NZCars told him that he should make a claim under the Janssen Insurance mechanical breakdown policy he purchased with the vehicle. Mr Wiebe submits that this response amounted to a refusal to rectify the vehicle’s faults.
[16] I am not satisfied that Mr Wiebe has proven that NZCars refused to rectify the vehicle’s faults.
[17] I reach this conclusion some reservation, as NZCars directed Mr Wiebe to Janssen Insurance when it should have immediately assumed responsibility for the required repairs under the CGA. In other cases, this Tribunal has found that similar conduct does amount to a refusal to repair.
[18] However, the difference between those cases and this is that NZCars’ conduct did not amount to an outright refusal to repair. In that regard, I accept the evidence of Phillip Watson, a director of NZCars, who says that it directed Mr Wiebe to Janssen Insurance because the insurance company has a nationwide network of repairers who could provide a better service to Mr Wiebe than NZCars could. Certainly, if Mr Wiebe had contacted NZCars after he discovered that Janssen Insurance would not cover the full cost of repairs, and if NZCars had then refused to assist, I would be satisfied that NZCars has refused to rectify the faults. He did not do that. Instead, he proceeded directly to reject the vehicle, without giving NZCars any further opportunity to consider whether it would perform repairs. and Mr Wiebe’s failure to
[19] In those circumstances, I am not satisfied that NZCars’ conduct amounts to a refusal to rectify the vehicle’s faults.

Issue 3: Are the faults a failure of a substantial character?

[20] Under s 18(3) of the CGA, Mr Wiebe 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. 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.

[21] 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.
[22] I am not satisfied that the faulty alternator or water leak are failures of a substantial character. Both faults are consistent with the age and mileage of the vehicle and are the type of fault that a purchaser can expect to arise from time to time in such a vehicle. Certainly, the purchaser would expect a trader to rectify the faults because they occurred so soon after purchase, but I am not satisfied that a reasonable consumer would decline to purchase the vehicle because of the existence of those faults. Further, although Mr Wiebe submitted, based on an estimate from Ruapehu Toyota, that the required repairs would cost $4,311.70, I am not satisfied that this is a realistic estimate. Instead, Mr Haynes, the Tribunal’s Assessor advises that both repairs can be performed for a total of less than $1,500 – which is consistent with estimates that NZCars has provided to the Tribunal.
[23] Accordingly, taking account of the nature of the faults and the cost of the required repairs, I am not satisfied that the faulty alternator and water leak are failures of a substantial character.

Issue 4: What remedy is Mr Wiebe entitled to under the CGA?

[24] The remedies relevant to this claim are set out in s 18 of the CGA, 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] Under s 18(2)(a) of the CGA, Mr Wiebe is entitled to have the alternator replaced and the water leak rectified within a reasonable time. Under s 18(4) of the CGA, Mr Wiebe also seeks to recover:

• (a) $479.47 – being the cost of having the vehicle towed to Ruapehu Toyota; and
• (b) $119.99 – being the cost of having the vehicle assessed by Ruapehu Toyota.

[26] I am satisfied that the towing and assessment costs were a reasonably foreseeable consequence of the vehicle developing an alternator fault that caused it to break down. However, I am not satisfied that Mr Wiebe should be entitled to recover the entire cost of towing and assessment. That is because Mr Wiebe failed to mitigate those potential losses by using the breakdown assistance service provided by Janssen Insurance as part of his mechanical breakdown insurance. That policy provided roadside assistance up to a value of $100 in the event of a breakdown. Although I accept Mr Wiebe’s evidence that Janssen Insurance would have towed the vehicle to its preferred repairer in Whanganui for assessment, which would have inconvenienced him, I do not think that NZCars should be penalised because Mr Wiebe decided on the more convenient, but more expensive, option. Accordingly, I consider it fair and reasonable to reduce the amount payable to Mr Wiebe by $100.

Legal costs

[27] Mr Wiebe consulted a lawyer to advise him in respect of this dispute. That lawyer has charged Mr Wiebe $803.56 for those services. Mr Wiebe now seeks to recover that amount from NZCars.
[28] Under cl 14(1)(a)(i) and (b) of sch 1 to the Motor Vehicle Sales Act 2003, the Tribunal may only award costs against a party where the matter ought to have been settled before a hearing, but that party fails to participate in pre-hearing settlement discussions, or where the other party fails to attend without reasonable cause.
[29] In this case, I am not satisfied that the matter ought reasonably to have been settled before the hearing. Mr Wiebe sought to reject the vehicle, an application that NZCars has successfully defended. Likewise, NZCars attended the hearing, meaning the Tribunal cannot award costs against it.

DATED at AUCKLAND this 11th day of December 2019

B.R. Carter
Adjudicator