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Benson v Meikle t/a 282 Cars - Reference No. MVD 472/2018 [2019] NZMVDT 52 (19 March 2019)

Last Updated: 19 April 2019

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

MVD 472/2018
[2019] NZMVDT 052

BETWEEN MARIA BENSON

Purchaser

AND MATTHEW ANTHONY ROBERT MEIKLE T/A 282 CARS
First Respondent

AND BRENT SMITH AKA ANTONY SOLEN BASTURKMEN
Second Respondent






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

HEARING at Auckland on 12 February 2019 and 14 March 2019



APPEARANCES
M Benson, Purchaser
No appearance from Matthew Meikle or Brent Smith

DATE OF DECISION 19 March 2019

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

  1. Maria Benson’s application to reject the vehicle is upheld.
  2. Matthew Anthony Robert Meikle shall, within 10 working days of the date of this decision:

_________________________________________________________________

REASONS

Introduction

[1] On 6 October 2018, Maria Benson purchased a 2008 Mazda Premacy for $4,200 from Matthew Anthony Robert Meikle, trading as 282 Cars. The vehicle had an odometer reading of approximately 136,900km at the time of sale.
[2] Although it had a recently issued warrant of fitness, the vehicle had several pre-existing faults, three of which should have caused the vehicle to fail a warrant of fitness inspection. Mrs Benson has now rejected the vehicle and seeks to obtain a refund of the purchase price and other costs incurred in respect of the vehicle since purchase.
[3] Despite receiving a Notice of Hearing advising each of the time, date and location of the hearing, Matthew Meikle and Brent Smith failed to attend the hearing. The hearing proceeded without them.

The Issues

[4] The issues requiring consideration in this case are:

Who sold the vehicle to Mrs Benson?

[5] Before considering the vehicle’s faults and what, if any, remedy Mrs Benson may be entitled to, I must determine who sold the vehicle to her.
[6] Ordinarily, the documents provided to Mrs Benson when she purchased the vehicle should show the identity of the seller. However, neither the Vehicle Offer and Sale Agreement (VOSA) or Consumer Information Notice (CIN) provided to Mrs Benson disclose the seller of the vehicle. They simply say that the vehicle was sold by 282 Cars of 282 Church Street in Auckland, but there is no person or company called 282 Cars in existence. Accordingly, I must look to other evidence to determine the identity of the seller.
[7] Despite the documents obscuring the identity of the seller of the vehicle, I am satisfied that it was sold by Mr Meikle for the following reasons:
[8] In reaching the conclusion that the vehicle was sold by Mr Meikle, I acknowledge that this Tribunal has previously found that another trader, Angad Jit Singh Bhatia, also operates from premises at 282 Church Street in Onehunga, using the trading name “282 Cars”.
[9] My finding that this vehicle was sold by Mr Meikle, operating as 282 Cars, is not inconsistent with the earlier findings that Mr Bhatia has also sold vehicles from the same premises using the same trading name. The evidence I heard in this case leads me to suspect that more than one registered motor vehicle trader has been selling vehicles from premises at 282 Church Street in Onehunga, and that it is quite possible that those sellers (including Mr Bhatia and Mr Meikle) are operating under the direction of a third party.
[10] In that regard, although Mr Meikle was a registered motor vehicle trader at the time this vehicle was sold to Mrs Benson, Mrs Benson says that Mr Meikle told her that he needed to consult with Brent Smith, who Mr Meikle described as “his boss”, during discussions with Mrs Benson about providing a remedy for the vehicle’s defects.
[11] Brent Smith, also known as Antony Solen Basturkmen, is a banned motor vehicle trader, who before being banned, operated from 282 Church Street in Onehunga. He was banned for routinely failing to comply with orders made by this Tribunal.
[12] Given Mrs Benson’s evidence that Brent Smith may have been involved in selling this vehicle, in exercising powers I have under cl 7 of sch 1 to the Motor Vehicle Sales Act 2003 (the MVSA), I joined Brent Smith to these proceedings, as I considered that his involvement may be necessary to determine the questions that arise.
[13] Brent Smith did not attend the hearing, so I have not had the benefit of hearing evidence as to his involvement or otherwise in the operation of 282 Cars. Mr Meikle also chose not to attend the hearings. Accordingly, without hearing evidence from Mr Meikle or Brent Smith, I must rely on the documents provided by Mrs Benson and her oral testimony. That evidence satisfies me that it is most likely that, notwithstanding that Mr Meikle may be no more than the public face of a business operated by a third party, he has nonetheless held himself out as being the seller of this vehicle, and accordingly I am satisfied that he sold the vehicle to Mrs Benson.

Does the vehicle have a fault that breaches the acceptable quality guarantee?

[14] 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.
[15] 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.

[16] 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 Mrs Benson’s subjective perspective.

The vehicle’s faults

[17] The evidence from Mrs Benson, Advanced Automatics Northland in Whangarei and Checkered Flag Automotive in Whangarei satisfies me that the vehicle had numerous pre-existing faults.
[18] Two days after taking possession of the vehicle, Mrs Benson noticed clunking noises from the vehicle and was then unable to put the vehicle into gear. Mrs Benson contacted Mr Meikle, who advised her to contact Protecta Insurance. It seems Mr Meikle had provided a mechanical breakdown insurance policy with the vehicle. Mrs Benson did as advised, and Protecta Insurance arranged for the vehicle to be sent to Advanced Automatics Northland.
[19] Advanced Automatics Northland diagnosed a fault with the vehicle’s transmission control module, which it replaced. Advanced Automatics Northland also identified some “engine issues” with the vehicle. It considered that the engine was “running rough when cold” and that it had a rattle from the engine bay.
[20] Mrs Benson then filed a claim with the Tribunal, alleging that the vehicle was not fit for purpose. At the Tribunal’s direction, on about 25 January 2019, Mrs Benson had the vehicle assessed by Checkered Flag Automotive. Relevant to this claim, Checkered Flag Automotive found the following faults:
[21] Checkered Flag Automotive also found that the vehicle’s instrument cluster has been tampered with, so the engine warning light does not illuminate. It considers that the vehicle will require a new instrument cluster.

The faults breach the acceptable quality guarantee

[22] This evidence demonstrates that the vehicle has not been of acceptable quality for the purposes of s 6 of the Act. I am satisfied that the vehicle had the following pre-existing faults:
[23] Although the vehicle had a warrant of fitness issued shortly before Mrs Benson took possession, Mr Gregory, the Tribunal’s Assessor, advises that the leaking shock absorbers, low power steering fluid and broken lower control arm bush are all warrant of fitness failures, meaning the vehicle should not have been issued with a warrant of fitness before it was supplied to Mrs Benson.
[24] Taking account of the faults that were present in the vehicle at the time of sale, I am satisfied that it has not been of acceptable quality. Although a reasonable consumer purchasing a $4,200, 10-year-old vehicle that has travelled more than 136,000 km at the time of sale should have realistic expectations as to its quality and durability, I consider that a reasonable consumer would not expect such a vehicle to have such a lengthy list of pre-existing defects, including defects that should have caused it to fail a warrant of fitness inspection.

Are the faults a failure of a substantial character?

[25] Under s 18(3) of the Act, Mrs Benson may reject the vehicle if its faults amount to a failure of a substantial character. 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.

[26] 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.
[27] None of the proven faults, individually, are sufficient to justify rejection of the vehicle. However, I am satisfied that the vehicle’s accumulated defects are undoubtedly a failure of a substantial character.
[28] In Cooper v Ashley & Johnson Motors Ltd, the District Court stated that a purchaser may reject a vehicle where there has been an accumulation of 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]
[29] This vehicle had several pre-existing faults, three of which would cause it to fail a warrant of fitness inspection, and the vehicle requires immediate repair to make it roadworthy. Although the purchaser of an old, inexpensive vehicle should understand that the vehicle may develop faults that require expensive repair from time to time, I am satisfied that a reasonable consumer would not have purchased this vehicle if it had known of the nature and extent of the faults that existed at the time of sale and the cost of rectifying those faults.

What remedy is Mrs Benson now entitled to under the Act?

[30] The remedies relevant to this claim are set out in s 18 of the Act, which 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.

[31] Under s 18(3)(a) of the Act, Mrs Benson is entitled to reject the vehicle because its faults amount to a failure of a substantial character. Under s 23(1)(a) of the Act, Mrs Benson is therefore entitled to recover $4,200, being the purchase price of the vehicle.
[32] Mrs Benson also seeks to recover $149 for the cost of the assessment performed by Checkered Flag Automotive on 25 January 2019 and $396.75 for the cost of having the faulty mass airflow sensor replaced by that company on 30 January 2019.
[33] Under s 18(4) of the Act, Mrs Benson is entitled to recover the cost of having the defects assessed by Checkered Flag Automotive on 25 January 2019. That cost is a reasonably foreseeable consequence of the vehicle’s defects.
[34] However, Mrs Benson is not entitled to recover the cost of replacing the faulty mass airflow sensor. In Acquired Holdings Ltd v Turvey, the High Court found that, under s 18(2) of the Act, where goods have failed to comply with the acceptable quality guarantee in s 6 of the Act (as the vehicle did in this case), the consumer must first give the supplier an opportunity to remedy the failure before they can have the fault repaired elsewhere and recover the cost.[3]
[35] In this case, Mr Meikle was not given an opportunity to rectify the defective mass airflow sensor before it was replaced. I accept Mrs Benson’s evidence that Checkered Flag Automotive performed that repair without her knowledge, but the fact that she did not agree to the repair does not affect the outcome. Because she did not first give Mr Meikle a chance to rectify the fault, she cannot recover the cost of the repair.

Costs

[36] Under cl 14(b) of sch 1 to the MVSA, the Tribunal may award costs against a party where that party, after receiving notice of the hearing, fails to attend without reasonable cause.
[37] I am satisfied that Mr Meikle, after receiving notice of the hearing, failed to attend without reasonable cause. Indeed, Mr Meikle provided no excuse for his non-attendance. Accordingly, under cl 14(2)(b) of sch 1 to the MVSA, Mrs Benson is entitled to recover $50, being the filing fee for this application. Further, under cl 14(2)(a)(i) of sch 1 to the MVSA, I also order that Mr Meikle pay $650, being the reasonable costs of the Tribunal hearing.
[38] Despite his failure to attend the hearing, given my finding that Mr Meikle sold the vehicle, no costs orders are made against Brent Smith.

Referral to the Commerce Commission

[39] As set out in this decision, I consider that the seller of this vehicle obscured its identity by naming 282 Cars as the seller in the VOSA and CIN, when no such entity exists. Consequently, I will refer this decision to the Commerce Commission, which has jurisdiction to consider whether conduct engaged in by those in trade amounts to a breach of the Fair Trading Act 1986.

DATED at AUCKLAND this 19th day of March 2019

B.R. Carter
Adjudicator


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

[2] At 417.

[3] Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 (HC) at [11].

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