Chandler-Yates v Auckland Auto Collection Limited t/a North Harbour Ford and Mazda - Reference No. MVD 448/2018 [2019] NZMVDT 33 (21 February 2019)

Last Updated: 20 March 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 448/2018
[2019] NZMVDT 33

BETWEEN KRISTYN MAREE CHANDLER-YATES

Purchaser

AND AUCKLAND AUTO COLLECTION LIMITED T/A NORTH HARBOUR FORD AND MAZDA

Trader

HEARING at Auckland on 15 January 2019
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

S N Haynes – Assessor
APPEARANCES

K M Chandler-Yates, Purchaser
C Chandler-Yates, Husband of Purchaser
S Parrey, Dealer Principal of Trader
C Meikle, Trader's Workshop Foreman (by telephone)

DATE OF DECISION 21 February 2019

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DECISION OF THE TRIBUNAL

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Ms Chandler-Yates' application is dismissed.

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REASONS

Introduction

[1] Kristyn Chandler-Yates wishes to reject the 2016 Mazda 2 she purchased as a new or near-new vehicle in February 2017 from Auckland Auto Collection Ltd, trading as North Harbour Ford and Mazda, for $24,440. The problem Ms Chandler-Yates has with the vehicle is that it has developed “a jerking motion at 2,500 rpm when accelerating – almost a feeling like when you drive a manual and let the clutch out too fast”. North Harbour Ford and Mazda has made extensive efforts to try and diagnose the fault, including by replacing the transmission twice. However, it has not yet settled on what may be causing this issue. North Harbour Ford and Mazda has concluded that it is a normal characteristic of the vehicle.
[2] The primary issue raised by Ms Chandler-Yates' application is whether her vehicle failed to comply with the guarantee of acceptable quality.

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

[3] 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.
[4] "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.

[5] 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.

Symptoms experienced by Ms and Mr Chandler-Yates

[6] When Ms Chandler-Yates bought the car she says that it had “smooth acceleration and shifted exceptionally well”. However, after she and her husband, Christopher Chandler-Yates, had driven the car about 5,000 km, it began to develop a jerking motion when accelerating. This problem usually appears after the vehicle has been sitting unused overnight or after a day at work. It is most noticeable within the first five km of driving the vehicle. The problem is usually worse just after the engine warms up to normal operating temperature, when the blue (cold engine temperature) light on the dashboard goes out. The problem is usually noticeable at 2,000–3,000 rpm. Ms Chandler-Yates described it as like being in a manual vehicle (her vehicle is automatic) when you drop the clutch. There is a split second delay or hesitation, like a turbo-lag.
[7] It is an intermittent problem — sometimes it does not happen at all — but, overall, it occurs 50 — 60 per cent of times that Mr and Ms Chandler-Yates drive the car. Mr Chandler-Yates said the problem generally went away if you “plant the throttle”.

North Harbour Ford and Mazda's assessment of the problem

[8] The trader was represented at the hearing by its Dealer Principal, Mr Sean Parrey and his Workshop Foreman Mr Chris Meikle. Mr Meikle and Mr Parrey did not deny the presence of the symptoms alleged by the purchaser. However, their conclusion after the vehicle has been exhaustively tested is that the symptoms described are a normal characteristic of the car, especially when it is cold.
[9] In particular, Mr Meikle pointed out that the vehicle presents no diagnostic fault code history. Mr Meikle says he has conducted live testing and data logging and has been unable to find any engine system diagnostic pathway. In other words, while the symptoms have appeared as described, they have not manifested in any tangible fault in the vehicle.
[10] Notwithstanding the absence of a specific fault, Mr Meikle acknowledges a slight imperfection in the vehicle’s acceleration, in particular a juddering when the vehicle is cold. He says that he experienced it himself twice, including on a test drive with Mr Chandler-Yates. However, Mr Meikle said that he probably would have missed this feature if he had not been particularly looking out for it.
[11] Mr Meikle says he has experienced a similar issue in some other Mazda 2s. However, he said that every vehicle is different. This model has a feature known as “adaptive learning” in which the vehicle’s performance characteristics adjust to suit the driving techniques of the particular person who is driving it. However, Mr Meikle did not make any comment about the particular driving techniques of Mr and Ms Chandler-Yates that could be relevant to solving this problem that they are facing with their vehicle.
[12] When asked why Ms Chandler-Yates only noticed this issue after the vehicle had been driven about 5,000 km, he said that perhaps a component "relaxed" in the gearbox. Mr Meikle observed that it was not uncommon for a vehicle’s characteristics to change over time in this way.
[13] Overall, Mr Meikle said there was very little more that he could do without finding more evidence of a particular fault. Mr Meikle was, however, happy to continue working with Ms Chandler-Yates and with Mazda New Zealand to continue to attempt to find what might be wrong with the vehicle.
[14] As described in the North Harbour Ford and Mazda invoices relating to the vehicle, the following specific testing and intervention has taken place.

October 2017 — transmission control module initialisation and relearn procedure

[15] In October 2017, the vehicle was brought into North Harbour Ford and Mazda for its first 12 month service. It had an odometer reading of 7,418 km. North Harbour Ford and Mazda recorded Mr and Ms Chandler-Yates' concerns “that from cold and only when the engine coolant light goes out the transmission shudders or slips when going uphill for approximately two minutes then stops”.
[16] North Harbour Ford and Mazda carried out a drive cycle to try and replicate the fault, but was unable to fault the vehicle at time of testing. It checked the vehicle for error codes but found none. It carried out a transmission control module initialisation and relearn procedure and road tested the vehicle. But it was still unable to find a fault. North Harbour Ford and Mazda rechecked the vehicle for any fault codes but still none were present. It recommended that Ms Chandler-Yates continue to monitor the vehicle.

March 2018 — first transmission replacement

[17] In mid-March 2018, when the vehicle’s odometer recorded 13,731 km, Ms Chandler-Yates returned the vehicle to North Harbour Ford and Mazda complaining of harsh acceleration (shuddering and jerking) when going uphill at any time of the day after the engine/transmission cools down. The downshift from third to second at 3,000 rpm was reported to be "worse". The invoice records the words “gearbox internal failure” although it is not clear to me that that represents a diagnosis.
[18] North Harbour Ford and Mazda road tested the vehicle under conditions as described by Ms Chandler-Yates. It recorded that after the vehicle had been sitting for a long time (overnight or all day when sitting at work) then driving uphill under load when the engine and gearbox are still cold, there is a jerking/shuddering from the gearbox/drive train when changing from second to third gear. Also, when coming to a stop, the same thing happened when the transmission changed from second to first gear. The invoice records that North Harbour Ford and Mazda spoke to Mazda New Zealand and was authorised to remove and replace the transmission. After this transmission replacement took place, the invoice records that North Harbour Ford and Mazda spoke to Mr Chandler-Yates, who confirmed that “all is well with the vehicle and thanks heaps”.
[19] A second, apparently unrelated, fault was recorded on this invoice that the vehicle “does not crank”. A faulty starter motor solenoid was found. The starter motor was replaced under warranty.

Further checks — April 2018

[20] The following month, when the vehicle's odometer reading was 15,496 km, Ms Chandler-Yates brought the vehicle back to North Harbour Ford and Mazda for further checks. She asked it to check for a hesitation and slight judder when cold, uphill and on the flat, at about 2,000 rpm. Mr Meikle was asked to road test the vehicle with Mr Chandler-Yates at this time. The throttle body was cleaned out and "relearnt". The spark plugs were removed, re-gapped and checked. The battery was fully recharged. The engine mounts were loosened and retightened to take off tension and the vehicle was road tested over three mornings. The invoice states “all okay, customer to monitor”.

July 2018 — second replacement transmission

[21] The vehicle was returned to North Harbour Ford and Mazda in July 2018, (no odometer reading was recorded). The invoice records customer concerns about a “judder when cold and when driving at 1,200–1,500 rpm under slight to mid load in second and third gears”. This invoice records that North Harbour Ford and Mazda checked to see whether a replacement battery had improved the vehicle’s performance after a cold start. However, Ms Chandler-Yates reported no change.
[22] North Harbour Ford and Mazda refitted the vehicle's original battery and loosened the engine mount bolts and repositioned the mounts. After a test drive it was confirmed the juddering was still present.
[23] North Harbour Ford and Mazda loaned Mr and Ms Chandler-Yates a courtesy vehicle. It asked them to confirm that they were happy there were no issues with the transmission in the courtesy vehicle. Mazda New Zealand then approved the removal of the transmission from the courtesy vehicle and for it to be fitted to Ms Chandler-Yates’ vehicle. After the transmission transfer took place the invoice records that, after a road test, the vehicle was confirmed to be “all okay”. The donor vehicle was also road-tested and found to be “all okay”.

Ms and Mr Chandler-Yates' concerns remain

[24] Despite North Harbour Ford and Mazda’s conclusions after the second transmission replacement that all was "okay", Mr and Ms Chandler-Yates confirmed that they remain unsatisfied with the vehicle. Even as recently as the morning of the hearing, they reported that the vehicle is still continuing to behave in the way that they have described. They consider that the trader has given up trying to help them. They confirmed that North Harbour Ford and Mazda has responded unfavourably to the letter of rejection they sent in respect of the vehicle on 1 October 2018.
[25] The Tribunal asked Ms Chandler-Yates to obtain an independent inspection of the vehicle by a transmission specialist and to provide a report by that specialist on the results. Ms Chandler-Yates submitted a report from Kaspa Transmissions dated 20 November 2018 which states that two of its technicians drove her Mazda but they did not observe any issues with the transmission. However, Ms Chandler-Yates also submitted a text, apparently from one of the Kaspa technicians, stating “can feel something there not really sure what it is. Needs more testing ...”. However, after Kaspa conducted its tests it did not provide any more information about what it thought might be wrong with the vehicle.

Our assessment

[26] The Tribunal requested Mr and Ms Chandler-Yates to bring the vehicle in so that it could be test-driven during the hearing. However, while the vehicle was available to be tested, Mr and Ms Chandler-Yates said they did not think that it was likely that the vehicle would fault, as it had already been driven that day. Accordingly, the Tribunal’s Assessor Mr Haynes and I did not take the vehicle for a drive. [1]
[27] Mr Haynes acknowledged that Mr and Ms Chandler-Yates are experiencing what they describe as a fault in the acceleration of the vehicle after a cold start. However, extensive diagnostic testing has not revealed any diagnostic trouble codes or any effects on the safety, performance or durability of their vehicle.
[28] Mr Haynes and I do not consider it is appropriate to draw any conclusions from the fact that North Harbour Ford and Mazda has replaced the vehicle’s transmission twice. While this seems to be an extraordinary measure to take where no fault has been conclusively established with the vehicle, I accept North Harbour Ford and Mazda’s explanation that it carried out these transmission replacements as an act of goodwill to reassure Ms Chandler-Yates and her husband that nothing was wrong with the vehicle.
[29] This has been confirmed by the independent testing carried out by Kaspa, verifying that no fault has been conclusively diagnosed.
[30] Mr Haynes considers that, apart from replacing the engine, fuel system and electrical system of the vehicle, no basis for which has been established, it is difficult to know what should be done next. It is difficult to escape the conclusion, without further evidence, that the problems being experienced by Ms and Mr Chandler-Yates are indeed a characteristic of the ordinary functioning of this particular vehicle. While its driving characteristics may not be satisfactory in the eyes of Mr and Ms Chandler-Yates, I do not consider that they have established that the vehicle is unfit for purpose or that it has defects that a reasonable consumer would regard as unacceptable.

Conclusion — no failure of acceptable quality

[31] Accordingly, I conclude that Ms Chandler-Yates has not established that the vehicle failed to comply with the guarantee of acceptable quality in s 6 of the Act.

In any event — no right of rejection

[32] Even if I were wrong in respect of this conclusion, however, I do not consider that Ms Chandler-Yates would be entitled to reject the vehicle as she wishes to do.
[33] The options available against a supplier where goods do not 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.

[34] If she could establish the vehicle is faulty, Ms Chandler-Yates could potentially be entitled to reject it, under s 18(2)(b)(ii) (above), on the basis that North Harbour Ford and Mazda has not succeeded in remedying her vehicle’s failure within a reasonable time.
[35] However, any entitlement to reject the vehicle is subject to s 20 of the Act which provides (among other things) that the right to reject goods is lost if not exercised within a reasonable time. Reasonable time is defined in s 20(2) as a period from the time of supply of the goods in which it would be reasonable to expect the defect to become apparent.
[36] On Ms Chandler-Yates’ evidence, this problem first emerged with the vehicle after she had driven it approximately 5,000 km. The first evidence of work done by North Harbour Ford and Mazda to attempt to diagnose the problem is in October 2017 at which the vehicle’s odometer reading was 7,418 km. The first documented record of Ms Chandler-Yates attempting to reject the vehicle is her letter to North Harbour Ford and Mazda dated 24 September 2018 but sent on 1 October 2018. Ms Chandler-Yates said that she rejected the vehicle orally before that, but North Harbour Ford and Mazda says it has no record of any earlier rejection.
[37] I find that there was at least a one year delay between the symptoms of the problem first becoming apparent and reported to North Harbour Ford and Mazda and Ms Chandler-Yates’ rejection of the vehicle. In that time, she and Mr Chandler-Yates have driven the vehicle a further approximately 18,000 km. Its current odometer reading is approximately 25,000 km. Even if she otherwise would have had a right to reject the vehicle, I do not consider that Ms Chandler-Yates rejected the vehicle within a reasonable time in terms of s 20(1)(a) of the Act.
[38] In Nesbit v Porter, the Court of Appeal stated that “the Court should not lose sight of the burden which may be imposed upon a supplier by a lengthy delay in rejecting the goods during a time when their value is likely to depreciate, particularly where depreciation is increased by further usage, as it is for motor vehicles”.[2] The Court of Appeal’s comment is relevant in the present case. In the year that passed between North Harbour Ford and Mazda’s first diagnostic checks in relation to the fault identified by Ms Chandler-Yates and her letter of rejection, the vehicle is likely to have depreciated in value, not only because of the passage of time but also because of the additional mileage that Mr and Ms Chandler-Yates have added to the vehicle in that time. The burden for the trader, described by the Court of Appeal in Nesbit v Porter, is very real in the present case as well. Accordingly, I conclude that, even if Mr and Ms Chandler-Yates had a right to reject the vehicle, it would have been lost because of their delay in notifying their rejection to the trader.
[39] For the same reason, I consider that Mr and Ms Chandler-Yates would have lost any right of rejection that may have accrued to them under s 18(3)(a) of the Act (above). This right of rejection could possibly have applied if the Tribunal had concluded that a failure to comply with the guarantee of acceptable quality had been established, but that North Harbour Ford and Mazda had been unable to remedy that failure (or alternatively that the failure was of a “substantial character”). The alternative remedy, provided in s 18(3)(b), that the purchaser may obtain damages and compensation for any reduction in value of the vehicle below the price paid or payable, would also be unavailable in the present case. That is because Ms Chandler-Yates has not established any reduction in value of her vehicle attributable to the fault that she alleges.
[40] However, I do note that Mr Parrey renewed North Harbour Ford and Mazda’s offer to buy back the vehicle from Ms Chandler-Yates for $20,000. As I pointed out in the hearing, and will repeat now, this was a very reasonable offer made on behalf of the trader. As a vehicle that is now nearly two years old and which the purchaser has driven for approximately 25,000 km, to have an offer from a trader to buy the vehicle back at only $4,440 less than the $24,440 purchase price seems to me to indicate that the vehicle has not devalued, other than through the ordinary depreciation that one would expect from the passage of time and increase of its mileage that has occurred.

Conclusion

[41] I have concluded that Ms Chandler-Yates has failed to establish that the vehicle did not comply with the guarantee of acceptable quality in s 6 of the Act. Even if I am wrong in respect of that conclusion, I find that Ms Chandler-Yates lost any right to reject the vehicle because she did not do so within a reasonable time after the vehicle was supplied to her.
[42] For these reasons, Ms Chandler-Yates is not entitled to any remedy under the Act, and her application must be dismissed.

J S McHerron
Adjudicator

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[1] Mr Haynes disclosed at the hearing that he was employed as the Service Manager for West Auckland Nissan between 2016 and 2017. Auckland Nissan which is part of the Automotive Holdings Group of which there are nine motor vehicle dealerships in Auckland. Mr Haynes confirmed that he was never employed by North Harbour Ford and Mazda. Ms Chandler-Yates and Mr Parrey confirmed at the hearing that they did not object to Mr Haynes continuing to sit as a member of the Tribunal in this matter.

[2] Nesbit v Porter [2000] NZCA 288; [2000] 2 NZLR 465 (CA) at [42].