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Yang v Evi Ltd t/a Metro Automotive - Reference No. MVD 468/2018 [2019] NZMVDT 31 (20 February 2019)

Last Updated: 20 March 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 468/2018
[2019] NZMVDT 031

BETWEEN JIE QIN YANG

Purchaser

AND EVI LTD T/A METRO AUTOMOTIVE
Trader





MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Haynes, Assessor

HEARING at Auckland on 17 December 2018 and 29 January 2019



APPEARANCES
J Q Yang, Purchaser
A Zhou, Witness for the Purchaser
A Tharani, for the Trader
A M Hudda, Witness for the Trader

DATE OF DECISION 20 February 2019

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

  1. Jie Qin Yang’s application to reject the vehicle is dismissed.
  2. EVI Ltd, trading as Metro Automotive shall, within 10 working days of the date of this decision, replace the vehicle’s radiator.

_________________________________________________________________


REASONS

Introduction

[1] On 27 January 2018, Ji Qin Yang purchased a 2007 BMW X5 for $22,610 from EVI Ltd, trading as Metro Automotive (Metro Automotive). Ms Yang also purchased an extended mechanical warranty for $1,390. The vehicle had an odometer reading of approximately 81,000 km at the time of sale.
[2] Ms Yang now seeks to reject the vehicle. She alleges that the vehicle has had several faults since purchase, and that Metro Automotive has failed to rectify those faults within a reasonable time.
[3] Metro Automotive says that many of the faults alleged by Ms Yang do not exist, and those that do are minor. It also says that it has rectified most of the existing faults and is willing to replace the vehicle’s faulty radiator. Accordingly, it considers that Ms Yang is not entitled to reject the vehicle.

The Issues

[4] Against this background, the issues requiring consideration in this case are:

What faults does the vehicle have?

The alleged faults

[5] Ms Yang’s application was presented by her husband Andy Zhou. Mr Zhou says that the vehicle has had a long list of faults, and that the vehicle was returned to Metro Automotive on eight separate occasions to have faults assessed and rectified.
[6] On the first occasion, the vehicle was returned to rectify an oil leak in the front of the vehicle and a fault with a CV boot. When the vehicle was uplifted following this repair, it immediately developed a knocking noise from the front of the vehicle. The vehicle was returned to Metro Automotive on a second occasion, for the CV joint to be re-greased and a loose suspension bolt to be tightened. Mr Zhou also says that he complained of a smell of burning engine oil.
[7] The vehicle was returned to Metro Automotive on a third occasion, with Mr Zhou complaining that the coolant level warning light was on. Mr Zhou says he put 1.5 litres of water to the radiator before he returned to Metro Automotive. Metro Automotive advises that are found the vehicle’s engine oil cooler was cracked and required a replacement o-ring. It performed those repairs
[8] Mr Zhou then returned the vehicle complaining of a fault with its airbag suspension. He alleged that the suspension was lower on the right-hand side by approximately 4 cm. Metro Automotive says that the vehicle did not have a fault with its suspension. It performed a diagnostic scan and found no fault codes. It did, however, adjust the adjustable height suspension to satisfy Mr Zhou. Mr Zhou also alleged that the vehicle steering noise was making a noise, and that the vehicle steering was “sticky”. Metro Automotive says it could find no fault in relation to the vehicle’s steering
[9] Mr Zhou returned the vehicle for a fifth time complaining that the vehicle’s engine oil warning light had illuminated. Metro Automotive put one litre of oil into the engine.
[10] Mr Zhou then returned the vehicle complaining of a knocking noise from the engine and complaining that the vehicle was low on power. Metro Automotive assessed the faults and found that the vehicle intermittently makes a slight knocking noise on start-up when cold. It considers that this noise is a common characteristic of the BMW X5s, and is not indicative of any fault. It also found no evidence to show that the vehicle was low on power.
[11] Mr Zhou returned the vehicle for a seventh time, complaining of an ongoing noise from the steering column and of warning lights because of a weak battery. Mr Zhou purchased a new battery, and Metro Automotive again could find no fault in relation to the vehicle’s steering.
[12] Mr Zhou then returned the vehicle for an eighth time, complaining that the vehicle’s coolant level warning light had illuminated, that the engine was low on power, that a rear brake light bulb was not working and that the vehicle’s air-conditioning sometimes made an unusual noise. Metro Automotive has diagnosed a fault with the radiator. It says the vehicle has a porous radiator, which is causing coolant fluid to evaporate. It says that the radiator requires replacement. It also said that one of the rear light bulbs required adjustment, but denies Mr Zhou’s allegation that any of the vehicle’s electrical components were rusted required replacement. It again found no fault caused the vehicle to be low on power and has found no fault relation to the vehicle’s air-conditioning.
[13] Mr Zhou also alleges that the vehicle has a fault with its four-wheel-drive (4WD) transfer case that causes warning lights to illuminate of the dashboard.
[14] Since Ms Yang rejected the vehicle, Metro Automotive has had the vehicle assessed by Vehicle Testing New Zealand (VTNZ) to determine what faults the vehicle has. Metro Automotive provided a Vehicle Inspection Report from VTNZ, which found none of the faults alleged by Ms Yang.
[15] Ms Yang then had the vehicle assessed by Auckland City BMW in December 2018 to determine what, if any faults are present in the vehicle. Auckland City BMW assessed the vehicle and performed a diagnostic scan. It could replicate none of the faults alleged by Ms Yang, but found fault codes relating to the vehicle’s airbag suspension, VANOS system and 4WD transfer case.
[16] Against this background, Ms Yang alleges that the vehicle has, or has had, the following faults:

The accepted faults

[17] Metro Automotive accepts that the vehicle has, or has had, the following faults:
[18] Metro Automotive says that the other faults alleged by Ms Yang do not exist.

Evidence of the alleged faults

[19] As applicant, it is for Ms Yang to prove the existence of each of the alleged faults, on the balance of probabilities. In that regard, Ms Yang must provide sufficient information to enable the Tribunal to be satisfied that it is more likely than not that the alleged faults exist.

The airbag suspension

[20] Ms Yang alleges that the vehicle has faulty airbag suspension. Mr Zhou alleges that the airbag suspension sags when it is parked and that the suspension air compressor frequently engages.
[21] In support of this allegation, Ms Yang provided a photograph of the vehicle, which shows the vehicle sagging at its rear right corner. Mr Zhou also gave evidence as to other instances of sagging suspension and the air compressor engaging.
[22] I am not satisfied that the photograph of the vehicle and Mr Zhou’s evidence as to the symptoms he has experienced sufficient to prove the existence of a fault with the vehicle’s airbag suspension. Mr Haynes, the Tribunal’s Assessor, advises that, from time to time, the airbag suspension of a BMW X5 may sag, and that the air compressor may engage. Mr Haynes advises that, unless those symptoms occurred regularly, the existence of sagging or of air compressor engagement is not necessarily indicative of a fault. Mr Zhou did allege that the symptoms occurred regularly, but I am not satisfied that his oral testimony is sufficient to enable me to conclude that the symptoms he experienced are consistent with a fault, rather than the usual operation of the airbag suspension on an 11-year-old BMW X5.
[23] In support of her allegation that the vehicle’s airbag suspension was faulty, Ms Yang also provided a copy of the Auckland City BMW report, which shows two fault codes relating to the vehicle’s airbag suspension.
[24] Although Auckland City BMW found two fault codes relating to the vehicle’s airbag suspension, I am not satisfied that report proves the existence of an airbag suspension fault. The report from Auckland City BMW is not particularly detailed as to that company’s finding as to the existence of any fault. Ms Yang did provide an email from Patrick O’Carroll, a service manager at Auckland City BMW dated 20 December 2018. At first blush, this email suggests that Auckland City BMW had identified a fault with the vehicle’s airbag suspension. However, Mr O’Carroll clarified in further correspondence with Metro Automotive that, at the time Auckland City BMW inspected the vehicle, its airbag suspension operated normally, and did not physically fault. Mr O’Carroll advised that the repairs recommended in his email of 20 December 2018 were based on the customer’s description of the fault and the fault codes Auckland City BMW found when it performed a diagnostic scan on the vehicle.
[25] In relation to those fault codes, Mr Haynes advises that the presence of fault codes is not necessarily proof of an existence of a fault. Mr Haynes advises that a vehicle’s computer can register fault codes for many different reasons, and although a fault code may be indicative of fault, that is often not the case.
[26] Accordingly, because neither VTNZ or Auckland City BMW have been able to replicate any fault with the vehicle’s airbag suspension, and because I do not feel able to rely on a photograph of the rear of the vehicle or the existence of two fault codes as conclusive proof of the existence of such a fault, I am not satisfied that Ms Yang has proven that a fault exists. Although the fault may exist, as the applicant in this case Ms Yang has the obligation to prove the existence of this fault on the balance of probabilities. On the evidence presented, I am not satisfied that she has done so.

The VANOS system

[27] Ms Yang also alleged that the vehicle has a fault that causes it to be low on power and that the vehicle makes unusual noises from its engine.
[28] In respect of the unusual noises from the engine, Mr Zhou presented a video, which he alleged showed unusual noises being emitted from the engine. Mr Haynes advises that the noises evident in this video are not unusual for a BMW X5, and are consistent with noises that such vehicles can make on start-up.
[29] Relying on the diagnostic scan performed by Auckland City BMW, Ms Yang also alleges that the vehicle has a fault with its VANOS system, which is affecting its engine performance.
[30] Mr Haynes advises that the vehicle’s VANOS is a variable valve timing system used by BMW, which determines the vehicle’s engine timing. Mr Haynes advises that fault the variable valve timing system can affect the vehicle’s performance.
[31] Mr Haynes says that the fault codes found by Auckland City BMW are not clear evidence of a fault with the vehicle’s valve timing. Mr Haynes advises that the fault code relating to the cylinder misfire is unlikely to be related to any variable valve timing fault, as such misfires are not ordinarily symptomatic of a variable valve timing fault. Further, as with the fault codes found in relation to the airbag suspension, the fault code found relating to the VANOS system is not conclusive evidence of the existence of an actual fault.
[32] In that regard, I note that Auckland City BMW found no abnormal noise or physical symptoms consistent with a variable valve timing fault when it assessed the vehicle. Instead, Auckland City BMW’s conclusion that the vehicle may have a fault with its variable valve timing was based upon the two fault codes it found, together with Mr Zhou’s description of the symptoms he had encountered, rather than any hard evidence to prove the existence of any fault.
[33] Accordingly, I am not satisfied that the evidence presented by Ms Yang is sufficient to prove the existence of a fault with the vehicle’s VANOS system. Again, a fault may exist, but Ms Yang has not presented sufficient evidence to prove its existence on the balance of probabilities.

4WD transfer case

[34] Ms Yang also alleges that the vehicle has an undiagnosed fault with its 4WD transfer case that causes warning lights to illuminate on the vehicle’s dashboard.
[35] Mr Zhou described situations where, after turning the vehicle sharply and driving uphill, a series of warning lights would illuminate on the vehicle’s dashboard.
[36] Auckland City BMW found two fault codes relating to the vehicles 4WD transfer case, but diagnosed no fault. Notably, in his email of 20 December 2018, Mr O’Carroll noted that fault codes were present, but reached no conclusion as to the existence of any fault.
[37] Mr Haynes advises that the symptoms described by Mr Zhou are indicative of the vehicle having insufficient oil in its 4WD transfer case. Mr Haynes says that the vehicle’s transfer box only contains 600 ml of oil, and that if the oil is low it can cause the clutch to slip, which will produce the symptoms described by Mr Zhou. Mr Haynes suggests that Ms Yang top up the oil in the 4WD transfer case, which could well rectify the symptoms she is experiencing.

The oil consumption fault

[38] In respect of the alleged fault that causes the vehicle to consume an excessive amount of oil, I accept Mr Zhou’s evidence that the oil level gauge on the vehicle is showing that oil levels are low. Mr Zhou advised that the oil level is progressively decreasing.
[39] Although I accept Mr Zhou’s evidence that the vehicle’s oil levels are low, and getting lower, Ms Yang has not provided sufficient evidence to show the extent to which the vehicle is consuming oil, what the cause of that consumption might be, and whether the vehicle’s oil consumption is symptomatic of a fault. For example, in many cases heard by this Tribunal where a vehicle is alleged to consume excessive amounts of oil, the applicant performs an oil consumption test, which involves driving the vehicle for a specified distance (usually no less than 1,000 km) to determine the extent of oil consumption. Ms Yang has provided no such evidence in this case, and accordingly I am satisfied that she has not shown that the vehicle has any fault that causes the vehicle to consume excessive amounts of oil exists.

The other alleged faults

[40] In respect of the other alleged faults, aside from the oral testimony of Mr Zhou, Ms Yang provided no evidence to prove the existence of the fault.
[41] Auckland City BMW found no sign of the remainder of the alleged faults. It found no oil leaks, transmission leaks or any smell of burning engine oil. It did find very minor seepage from CV boots, but considered no action was required. Likewise, it found no unacceptable noise from the steering wheel column, engine noise on start-up, or any evidence that the engine was running roughly on a cold start. Further, although it found signs of corrosion in the rear taillights, it could not confirm that they were currently leaking. Finally, it found no evidence of any unacceptable noise from the vehicle’s air-conditioning. VTNZ also inspected the vehicle and found none of these faults.
[42] Accordingly, although Ms Yang alleges that these faults exist, she has not provided sufficient evidence to prove their existence. The best evidence provided — the assessments from Auckland City BMW and VTNZ — show that no such faults have been found.

Do the vehicle’s faults breach the acceptable quality guarantee?

[43] 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.
[44] 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.

(2) Where any defects in goods have been specifically drawn to the consumer's attention before he or she agreed to the supply, then notwithstanding that a reasonable consumer may not have regarded the goods as acceptable with those defects, the goods will not fail to comply with the guarantee as to acceptable quality by reason only of those defects.

(3) Where goods are displayed for sale or hire, the defects that are to be treated as having been specifically drawn to the consumer's attention for the purposes of subsection (2) are those disclosed on a written notice displayed with 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.

(5) A reference in subsections (2) and (3) to a defect means any failure of the goods to comply with the guarantee of acceptable quality.

[45] 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 Ms Yang’s subjective perspective.
[46] I am satisfied that the oil leak from the front of the vehicle, the loose CV boot strap, the dry CV joint, the cracked oil cooler and the faulty radiator are all faults that breach the acceptable quality guarantee in s 6 of the Act. Although a reasonable consumer who purchases an 11-year-old BMW should understand that faults can arise from time to time given the vehicle’s age and mileage, I am satisfied that a reasonable consumer would not expect such a vehicle to develop these faults so shortly after purchase.
[47] I am not satisfied that the vehicle has a fault with its 4WD transfer case the breaches the acceptable quality guarantee. The 4WD transfer case is likely to be low on oil, but maintaining the oil levels in the 4WD transfer case is part of the ongoing maintenance of a vehicle. Accordingly, I am not no satisfied that Metro Automotive should have liability for ensuring that those oil levels are maintained.

Has Metro Automotive failed to rectify the vehicle’s faults?

[48] Ms Yang says that Metro Automotive has failed to rectify the vehicle’s faults within a reasonable time, meaning she is entitled to reject the vehicle under s 18(2)(b)(ii) of the Act.
[49] Section 18 provides:
  1. 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.

[50] As detailed above, Ms Yang returned the vehicle to Metro Automotive on at least eight locations for its faults and alleged faults to be assessed and rectified. Ms Yang says that Metro Automotive has failed to rectify the vehicle’s faults despite being given several opportunities.
[51] Ms Yang’s application proceeds on the basis that the vehicle has all of the faults alleged. It does not. In respect of the faults that have been proven to exist, I am satisfied that Metro Automotive has either promptly rectified those faults, or in respect of the radiator, has offered to promptly rectify the fault once it became apparent. I am not satisfied that Metro Automotive has unacceptably delayed any of the repairs it was required to perform to this vehicle.

Are the faults a failure of a substantial character?

[52] A failure of a substantial character is defined in s 21 of the Act:
  1. 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.

[53] 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.
[54] The vehicle’s faults do not amount to a failure of substantial character, either separately, or cumulatively. Each of the proven faults is minor and easily repaired. The radiator fault can be rectified with a replacement radiator, and the other faults were quickly and inexpensively repaired. I do not consider that a

purchaser of an 11-year-pld BMW X5 would have refused to purchase the vehicle because of the existence of any one of these faults.

[55] Further, I am not satisfied that the faults, when considered together, amount to a failure of a substantial character. In Cooper v Ashley & Johnson Motors Limited, the District Court stated that a purchaser may reject a vehicle where there had been an accumulation of minor defects, which in themselves could not be described as substantial.[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]
[56] Given the minor nature of the proven faults, a reasonable consumer would not have reached the point that they had lost all confidence vehicle. The proven faults are not significant enough, or sufficiently indicative of any inherent unreliability with the vehicle, for a reasonable purchaser of a $22,610, 11-year-old BMW that had travelled 81,000 km to say that they no longer had confidence with the vehicle. I am satisfied that the purchaser of such a vehicle would understand that a BMW X5 of this price, age and mileage may develop faults from time to time, and I do not consider that this vehicle’s faults are such that a reasonable consumer could say that they have lost all confidence in the reliability of the vehicle.

What remedy is Ms Yang now entitled to under the Act?

[57] Under s 18(2)(a) of the Act, Ms Yang is entitled to have the vehicle’s radiator replaced within a reasonable time. Because the other faults that breach the acceptable quality guarantee have already been rectified, no further orders are required.
[58] In respect of other remedies that Ms Yang may be entitled to, I have considered whether Ms Yang is entitled to recover $345, being the cost of having vehicle’s defects assessed by Auckland City BMW on 20 December 2018. I do not consider she is. That report identified no faults that breach any of the Act’s guarantees, so it would not be appropriate to require Metro Automotive to compensate Ms Yang for this cost.

DATED at AUCKLAND this 20th day of February 2019

B.R. Carter
Adjudicator


[1] Cooper v Ashley & Johnson Motors Limited (1996) 7 TCLR 407 (DC).

[2] At 417.

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