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Bing v Central Car Company Ltd - Reference No. MVD 394/2018 [2019] NZMVDT 68 (10 April 2019)

Last Updated: 15 May 2019

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

MVD 394/2018
[2019] NZMVDT 068

BETWEEN JEFFREY NEVILLE BING

Purchaser

AND CENTRAL CAR COMPANY LTD
Trader





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

HEARING at Auckland on 13 December 2018 and 17 January 2019



APPEARANCES
J N Bing, Purchaser
B Katipa and M Marshall, Witnesses for the Purchaser
J P Murphy, for the Trader

DATE OF DECISION 10 April 2019

______________________________________________________________

DECISION OF THE TRIBUNAL

______________________________________________________________

  1. Jeffrey Bing’s application to reject the vehicle is dismissed.
  2. Central Car Company shall, within 15 working days of the date of this decision:

_____________________________________________________________

REASONS

Introduction

[1] On about 28 April 2018, Jeffrey Bing purchased a 2005 Bentley Continental Flying Spur for $36,995 from Central Car Company. The vehicle had an odometer reading of 70,141 km at the time of sale.
[2] Mr Bing advises that he noticed warning lights relating to the vehicle’s suspension and stability control systems on the vehicle’s dashboard display before taking possession. He discussed these warning lights with Central Car Company who agreed that the warning lights required resetting, and that the vehicle should be returned the following week for that to occur.
[3] Mr Bing then took the vehicle for a lengthy drive. Mr Bing says that he drove for approximately 500 kms and says the vehicle performed “very well”, except the warning light relating to vehicle’s suspension remained illuminated on the dashboard display and the warning light relating to the vehicle’s stability control systems would sometimes illuminate when turning right.
[4] Near the completion of this drive, and while delivering his daughter and her fiancé home in heavy rain, he was involved in a low speed nose to tail collision on the Mt Wellington motorway offramp (the collision). Mr Bing immediately heard a hissing noise from the front of the vehicle and shortly afterwards the vehicle’s front suspension failed. Mr Bing has since had the vehicle assessed and, in addition to the front suspension failure, Mr Bing alleges that the vehicle also has a poorly repaired front bumper cover and faults with its tyres, engine vacuum hoses, digital instrument cluster and exhaust sensors.
[5] Mr Bing has now applied to the Tribunal, alleging that the vehicle’s faults mean it has not been of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA), and that its faults amount to a failure of a substantial character under s 21 of the CGA. Mr Bing has rejected the vehicle and seeks to recover the purchase price and other costs incurred in relation to this claim. Mr Bing also alleges that Central Car Company made misleading representations in breach of the Fair Trading Act 1986 (the FTA) that the vehicle’s shock absorbers had been recently replaced, when they had not.
[6] Central Car Company says that Mr Bing is not entitled to reject the vehicle under the CGA. It says that any faults the vehicle may have are minor and not sufficiently serious to justify rejection. Further, it says that even if the faults were sufficiently serious to justify rejection, Mr Bing has lost the right to do so by damaging the vehicle. Central Car Company also denies representing that vehicle’s shock absorbers had been recently replaced.

The Issues

[7] Against this background, the issues requiring consideration in this case are:
[8] Shortly before the release of this decision, John Murphy, a director of Central Car Company, emailed the Tribunal asking that this matter be moved to the High Court, on the basis that he had seen a letter, which he felt gave Central Car Company an unfair advantage in this claim. I am not sure as to the letter referred to, or how Central Car Company could obtain an unfair advantage in these proceedings because of that letter. Further, the Tribunal has no power to transfer matters before it to the High Court, so I decline Mr Murphy’s request to transfer this matter to the High Court.

Does the vehicle have faults that breach the acceptable quality guarantee?

[9] 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.
[10] 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.

[11] 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 Bing’s subjective perspective.
[12] Mr Bing acknowledges that he was aware of many defects with the vehicle before he purchased it, including a fault with the infotainment system screen, evidence of water damage in the vehicle’s interior, cosmetic damage to the walnut finish throughout the vehicle and cosmetic damage to the rear bumper. He does not pursue any claim in relation to those matters.
[13] However, Mr Bing alleges that the vehicle has several other defects that breach the guarantees in the CGA, specifically:

The split and leaking vacuum hoses

[14] Mr Bing alleges that the vehicle has split and leaking vacuum hoses. At the hearing on 13 December 2018, Mr Bing relied upon the email dated 22 May 2018 from Giltrap Prestige that states that the vehicle has split engine vacuum hoses.
[15] That email is insufficient to prove the existence and extent of this alleged fault. The email simply says “engine vacuum hoses split” and then provides an estimate for repair. There is no evidence from Giltrap Prestige describing how or where those splits are, how many of the vacuum hoses are split, or how Giltrap Prestige diagnosed this alleged fault. Several photographs were provided of the alleged faults with the vehicle, none of which show any split vacuum hoses. Accordingly, I am not satisfied that the evidence from Giltrap Prestige is sufficient to prove the existence of any vacuum hose leak that would breach the acceptable quality guarantee.
[16] After the hearing, I asked Mr Haynes, the Tribunal’s Assessor, to inspect the vehicle. The Tribunal may, “on its own initiative, seek and receive any other evidence and make any other investigations and inquiries that it thinks fit".[1] In light of the disputed evidence in this case, I considered it appropriate for Mr Haynes, on behalf of the Tribunal, to investigate the vehicle and record his observations. Mr Haynes conducted that assessment on 28 December 2018, and has provided a written report of his inspection, which has been provided to the parties for comment. That report does not mention the vehicle’s vacuum hoses because Mr Haynes did not inspect those parts.
[17] In response to Mr Haynes’ report, Mr Bing provided a report from Scott Wedlake of East Tamaki Automotive. Mr Wedlake says that the vehicle has split and leaking vacuum hoses that are sufficient to cause it to fail a warrant of fitness inspection.
[18] As with the email from Giltrap Prestige, aside from assertions in Mr Wedlake’s report as to the existence of a fault, there is no supporting evidence to show the extent or significance of any cracking or splitting of vacuum hoses or of which components would be adversely affected by the alleged split or leaking vacuum hoses. There is a photograph showing a split vacuum hose included in Mr Wedlake’s report. I was initially led to believe that this was a photograph of one of the vehicle’s vacuum hoses. It was only after further enquiries by Central Car Company that I became aware that it was not a photograph of a vacuum hose from the vehicle. Instead it is a photograph of a vacuum hose from an entirely different vehicle. Accordingly, I place no weight whatsoever on this photograph, and express concern that this photograph was included in Mr Wedlake’s report without the Tribunal being clearly notified that it was not a photograph of any of the vehicle’s vacuum hoses.
[19] In his report, Mr Wedlake also opines that the vehicle’s braking performance may have been affected by split or leaking vacuum hoses but has provided no evidence to show that any vacuum hose connected to the brake booster is affected.
[20] In that regard, I note that the other evidence presented in this case demonstrates that the vehicle’s brakes did work as they should. In particular, I note Mr Bing’s evidence that he drove the vehicle for approximately 500 km without identifying any issue with the brakes and that the brakes did not fail before the collision. Mr Haynes advises that if there were defects with the braking system caused by split or leaking vacuum hoses, it is highly likely that the vehicle’s braking performance would have been affected during that journey. I also note Mr Haynes’s advice (discussed below) that the right front suspension airbag was damaged because of the braking forces generated during the collision. Finally, I note that if the vehicle’s brakes had not performed adequately, I have no doubt that, given the brittle condition of the front bumper cover (also discussed below), the collision would have caused much more significant damage to the front of the vehicle than the minor cracking shown in the photographs provided by Mr Bing.
[21] Mr Wedlake also says that the split vacuum hoses may have made the vehicle unsafe, because the lack of a sealed vacuum system would have introduced additional unmetered air into the engine, which would likely to have been detected by the engine control unit. Mr Wedlake says that this would likely have caused the vehicle to run rough at times, and if the differential between the two sensors were significant enough, the vehicle would have entered “limp home mode” until the vehicle was restarted.
[22] Again, this opinion is unsupported by evidence. Mr Wedlake does not describe which vacuum hoses have been affected or provide any evidence as to the extent or significance of any cracking or splitting on those affected vacuum hoses. Further, Mr Bing’s evidence was that he drove approximately 500 km in the vehicle, and the vehicle performed “very well”, with no suggestion that the engine was running rough. Mr Bing did give evidence that the vehicle’s engine shut down, or went into a “funny mode”, immediately before the collision, but I have concerns about relying on Mr Bing’s evidence as to what occurred immediately before the collision.
[23] That is because Mr Bing’s version of events has changed significantly over time. Initially, Mr Bing alleged that the collision was caused by the vehicle’s brakes failing. In that regard, I refer to a letter dated 20 July 2018, from Webster Malcolm Law, Mr Bing’s solicitors, which states that the collision was caused by brake failure. A report prepared by Mr Bing’s insurer IAG New Zealand Ltd (IAG) also record that Mr Bing advised that the collision occurred because the vehicle’s brakes failed.[2] At the hearings, Mr Bing resiled from this position, and said that he was driving on the Mt Wellington offramp when he became distracted by warning lights and warning alarms from the vehicle. He says the vehicle then lost power and drive, causing the collision. Mr Bing says he has changed his explanation for the cause of the accident based upon the findings of Giltrap Prestige and IAG, who both concluded that the brakes were not at fault.
[24] Given the malleability of Mr Bing’s recollection of events, and the way in which his recollection has been influenced by the subsequent opinion of others, I am not satisfied that I can rely on his evidence as to what occurred immediately before the collision in determining what, if any, faults this vehicle has. There is also no other evidence to support Mr Bing’s claim that he was distracted by warning lights or warning alarms, or by the vehicle losing power. In that regard, I note that there were two other occupants in the vehicle at the time of the collision, Mr Bing’s daughter and her fiancé. Neither was called to give evidence.
[25] Accordingly, I am not satisfied that the vehicle has a fault with its vacuum hoses that is sufficient to cause the vehicle to fail a warrant of fitness inspection, or that affected its braking or that made the vehicle lose power causing it to become unsafe.
[26] Although there is insufficient evidence to support the existence of a fault with the vehicle’s vacuum hoses, Mr Murphy advises that the vehicle does have an intermittent engine warning light, which he considers may be related to split engine vacuum hoses. Mr Murphy says he has asked Mr Bing to return the vehicle to Central Car Company to have the cause of the engine warning light diagnosed and rectified.
[27] On the basis of the concessions made by Mr Murphy, I am satisfied that the vehicle has an intermittent engine warning light that requires assessment and rectification, which may, or may not, be caused by split vacuum hoses. I am accordingly satisfied that, although Mr Bing has not proven that the vehicle has split or leaking vacuum hoses, the vehicle does have a fault that causes its engine warning light to intermittently illuminate that breaches the acceptable quality guarantee in s 6 of the CGA. I consider a reasonable consumer would not expect a vehicle of this price, age and mileage to have a fault that causes its engine warning light to intermittently illuminate.

The vehicle’s suspension

[28] Shortly after the collision, the vehicle’s right front suspension airbag failed. Mr Bing says that he was driving slowly down Ruawai St in Mt Wellington when the right front suspension airbag collapsed as he drove over a speed bump. Mr Bing says he heard an “almighty bang”, and the front of the vehicle collapsed.
[29] The vehicle was then assessed by Giltrap Prestige and Russell Beynon, a motor vehicle assessor for IAG. Although no representative from Giltrap Prestige or IAG gave evidence at the hearings, documents provided by Mr Bing state that Giltrap Prestige and IAG consider that the fault with the right front airbag suspension was caused by airbag failure, rather than any damage caused by the collision.
[30] Mr Bing alleges that the vehicle’s suspension components were in poor condition when he purchased the vehicle. Mr Bing says that the warning lights relating to the vehicle’s suspension and stability control illuminated on the dashboard at the time of purchase indicated a fault with those components. Mr Bing also pointed to an email from Giltrap Prestige dated 22 May 2018, in which Giltrap Prestige advised that it considers that the upper suspension arm bushes were torn, both lower rear front suspension arms were worn and both sub-frame isolator bushes were worn. Mr Bing also provided photographs of the affected suspension components. Those photographs show that the right front airbag suspension dust boot has burst. The photographs also show wear to suspension bushes.
[31] Central Car Company accepts that the right front suspension airbag has collapsed. However, it submits that the vehicle’s suspension was in good condition at the time of sale, having been replaced in 2012, and that the suspension airbag collapse was caused by the collision, rather than any underlying fault with the vehicle.
[32] Mr Haynes advises that the vehicle has suspension airbags, which are commonly used in place of conventional steel suspension springs. As with conventional suspension springs, suspension airbags play an important role in ensuring the ride quality and stability of the vehicle.
[33] Mr Haynes advises that the vehicle’s right front suspension airbag has collapsed. Other than the damage caused when the suspension collapsed, Mr Haynes advises that the vehicle’s suspension appears to be in good condition. Mr Haynes says that none of the suspension components are bent or misaligned, and although some of the suspension bushes are worn, they are still in acceptable condition for a vehicle of this age and mileage and would pass a warrant of fitness inspection.
[34] Mr Haynes says that the right front suspension airbag collapsed because the airbag has been damaged, causing air intended for the airbag suspension to leak into the suspension dust boot, which has then become pressurised, and burst. Mr Haynes considers it is most likely that the dust boot became pressurised because the suspension airbag bladder was damaged during the collision, allowing air to escape.
[35] Mr Haynes says that the downward force created when Mr Bing applied the vehicle’s brakes, together with the minor impact during the collision, caused the right front suspension to violently compress, which in turn caused the suspension strut cone to impact with the top airbag strut housing. Mr Haynes notes that there are clear “witness marks” at the top of the wheel arch, consistent with the top control arm making contact with the wheel arch, which he considered occurred when the suspension reached “maximum compression” during the collision. Mr Haynes considers that this violent compression caused the airbag bladder to become torn or dislodged from the top suspension cone, allowing air to escape and enter the dust boot cavity. Mr Haynes advises that the dust boot is not designed to be pressurised and will eventually burst with the increased pressure.
[36] Mr Wedlake agrees with Mr Haynes’s conclusions that the dust boot has become pressurised and burst and that the other suspension components show signs consistent with wear and tear but are not damaged.
[37] Mr Wedlake disagrees with Mr Haynes’ conclusion that the witness marks present in the front right wheel arch were caused during the collision. Mr Wedlake instead considers that those marks were most were caused after the collision when the vehicle was transported or moved. Given the low clearance now present between the upper suspension control arm and the wheel arch, Mr Wedlake considers that the witness marks could have been caused by “a minor bump” while the vehicle was being maneuvered. Mr Wedlake may well be right on this point, as may Mr Haynes, as both have plausible explanations for the existence of those witness marks.
[38] Mr Wedlake also says that the maximum compression described by Mr Haynes could not have been achieved because the vehicle’s braking performance would have been compromised by split or leaking vacuum hoses. In light of my conclusion above that there is insufficient evidence to prove split or leaking vacuum hoses that affected the vehicle’s braking performance, and that the evidence shows that the vehicle’s brakes performed as they should, I do not accept Mr Wedlake’s opinion on this point.
[39] Instead, on the basis of the evidence presented by the parties, I consider that the right front suspension airbag did fail because of the forces generated during the collision. In reaching this conclusion, I note Mr Bing’s evidence that immediately after the collision he noticed a hissing sound from the vehicle (consistent with an air leak from the suspension airbag). That noise was not present before the collision and the suspension failed shortly thereafter. I consider that the hissing noise heard by Mr Bing immediately after the collision was the sound of air bypassing the airbag bladder and entering the dust boot. The “almighty bang” that Mr Bing then heard was the pressurised dust boot exploding. Given the absence of these symptoms before the collision, I conclude the damage to the right front suspension airbag was caused during the collision.
[40] Although the right front airbag failed during the collision, I am nonetheless satisfied that the right front suspension airbag breaches the acceptable quality guarantee in s 6 of the CGA because it was not sufficiently durable. I consider that a reasonable consumer would expect the suspension in a vehicle of this price, age and mileage to survive this type of incident. The collision occurred at low speed, and the impact with the other vehicle was minor. The suspension components of such vehicles should be designed to survive such minor events. The right front suspension airbag did not, and I am therefore satisfied that it has not been as durable as a reasonable consumer would consider acceptable.

The front bumper cover

[41] Mr Bing alleges that the vehicle’s front bumper cover is in unacceptable condition. Mr Bing submits that the front bumper cover has pre-existing damage that had been repaired in a substandard manner, using builders bog and gib screws. IAG refused to cover the full cost of repairs required to the front bumper cover because of the pre-existing damage and substandard repairs. Mr Bing produced correspondence from IAG setting out its conclusion that the front bumper cover has had many repairs that have not been to the required standard.
[42] Central Car Company submitted that the front bumper cover was in acceptable condition at the time of sale. It produced photographs of the vehicle before sale to demonstrate the appearance of the front bumper cover. It says that the bumper cover was damaged during the collision.
[43] I accept Central Car Company’s submission that the front bumper cover looked acceptable at the time of sale. However, I am satisfied that it was in poor condition, in that it had been previously damaged, and the repair performed to rectify that damage was substandard.
[44] Mr Haynes advises that, when he inspected the vehicle, he observed the nature of previous repairs to the front bumper cover. Mr Haynes says that the front bumper cover has previously been repaired with a 2mm layer of bog or filler. A steel bracket has been used to reinforce the middle of the bumper cover and gib screws have been used to attach the front number plate. Mr Haynes advises that this is not a conventional or acceptable repair.
[45] I am satisfied that the vehicle’s front bumper cover was in unacceptable condition, in breach of s 6 of the CGA, at the time of sale. I am satisfied that, although a reasonable consumer purchasing a 12-year-old Bentley Continental Flying Spur should have realistic expectations as to its quality, that reasonable consumer would not consider such a poorly repaired front bumper cover to be acceptable.

The perished tyres

[46] Mr Bing also alleges that the vehicle’s rear tyres were in unacceptable condition and that they will fail a warrant of fitness inspection in their current condition. The email from Giltrap Prestige dated 22 May 2018 states that Giltrap Prestige considers that both rear tyres are perished and require replacement.
[47] Central Car Company says that the tyres were in acceptable condition, and notes that the vehicle passed a warrant of fitness inspection before purchase.
[48] Mr Haynes examined the condition of the vehicle’s tyres when he inspected the vehicle on 28 December 2018. Mr Haynes considers that the vehicle’s tyres are in acceptable condition and are safe. He considers that the tyres have not deteriorated to the extent that they would fail a warrant of fitness inspection. In that regard, Mr Haynes advises that the requirements for a warrant of fitness are set out in the In-service Certification (WoF and CoF) vehicle inspection requirements manual (the In-service Certification VIRM). Part 10–11 to 10.14 of the In-service Certification VIRM sets out the requirements that a vehicle’s tyres must comply with to pass a warrant of fitness inspection. He considers that the tyres complied with each of those requirements.
[49] Mr Wedlake considers that the tyres are not of a warrant of fitness standard because of significant perishing of the tyres (which would cause the tyre to a warrant of fitness under part 10-12(f) of the In-service Certification VIRM). As I read Mr Wedlake’s report, he believes that the tyres are as described in Mr Haynes’ report, in that there are no signs of visible steel cords and no cracks longer than 25mm. Nonetheless, Mr Wedlake believes that the tyres have perished to the point that they would fail a warrant of fitness inspection.
[50] Mr Wedlake has provided no evidence, other than a description of the age of the tyres, to demonstrate how he has reached the view that the tyres have perished to the point that they would fail a warrant of fitness inspection. The age of the tyres does not determine whether those tyres remain fit for purpose, and in the absence of specific evidence describing how the tyres have perished the point that they would fail a warrant of fitness inspection, I am not satisfied that Mr Wedlake’s opinion shows that the vehicle’s tyres were in unacceptable condition.
[51] Instead, although I am satisfied that the tyres are showing significant signs of wear — and in that regard I note that the pre-purchase warrant of fitness checksheet notes that the tyres are “borderline” — I am not satisfied that Mr Bing has presented sufficient evidence to show that the condition of the vehicle’s tyres breach any of the guarantees in the CGA.

The stability control system and suspension warning lights

[52] Mr Bing says that the vehicle’s suspension warning light was illuminated at the time of purchase, and that the stability control warning light illuminated intermittently. He also says that warning lights relating to the vehicle’s stability control system illuminated immediately before the collision.
[53] I heard evidence from Bennett Katipa and Michael Marshall who were both present when Mr Bing test drove the vehicle. Both confirmed the presence of warning lights on the vehicle’s dashboard display, and both gave evidence that Mr Murphy advised Mr Bing that the warning light simply needed to be reset.
[54] This evidence satisfies me that there was a warning light on the vehicle’s dashboard display time Mr Bing purchased it. However, other than Mr Bing’s version of events, there is no other evidence to prove that the warning light on the dashboard is indicative of any fault of the vehicle, so I cannot discount Central Car Company’s explanation that there is no fault and that the light simply needs to be reset. Mr Bing alleges that the warning lights are indicative of a fault that affected the performance of the vehicle immediately prior to the collision. As set out above, I do not accept Mr Bing’s evidence on this point, and although Mr Wedlake’s report suggests that split or leaking vacuum hoses may cause warning lights to illuminate and the vehicle to go into limp home mode, I am not satisfied that there is sufficient evidence to prove that this occurred. Further, I note that none of the faults observed by Mr Haynes or Giltrap Prestige are consistent with Mr Bing’s description of these warning lights.
[55] Accordingly, I am not satisfied that Mr Bing has proven that the vehicle has any fault that caused warning lights related to the vehicle suspension and stability control to illuminate. However, I note that if such a fault does exist, it would be sensible for Central Car Company to rectify that fault when performing other repairs to the vehicle, as the presence of a fault that causes the stability control system and/or suspension warning lights to illuminate at the time of sale would breach the acceptable quality guarantee in s 6 of the CGA if its existence was proven.

Faulty instrument cluster

[56] The vehicle’s instrument cluster includes a tachometer, speedometer and a digital display, which displays warning messages and other information about the vehicle. Mr Bing alleges that the digital display is faulty. He says that the back light on the digital display is not working, which makes warning messages extremely difficult to read. In support of this allegation, Mr Bing provided a photograph of the vehicle’s instrument cluster, which he says shows that the digital display is malfunctioning.
[57] Mr Wedlake also advised that vehicle’s instrument cluster is malfunctioning. He says that the screens backlight has a fault that is causing it to become dimmer over time. He sees that the screen is easily viewed in the dark, the can only be viewed with “great difficulty” when ambient light is present.
[58] I am satisfied that the evidence provided by Mr Bing proves, on the balance of probabilities, that the vehicle has a fault with its digital display. A reasonable consumer would not expect vehicle of this price, age and mileage to have a defect that makes its dashboard display difficult to see.

Exhaust sensors

[59] Mr Bing also alleges that the vehicle has a fault with its exhaust sensors. In its email of 22 May 2018, Giltrap Prestige identified two fault codes that suggested a potential fault with the vehicle’s exhaust sensors, which it considers require replacement.
[60] I am not satisfied that the evidence provided by Mr Bing is sufficient to show that the vehicle has an actual fault with its exhaust sensors. The existence of a fault code is not conclusive proof of the existence of an actual fault. Accordingly, in the absence of any evidence of an actual fault, I am not satisfied that Mr Bing has proven that there is any fault with the exhaust sensors sufficient to breach any of the CGA’s guarantees.

Are the faults a failure of a substantial character?

[61] Under s 18(3) of the Act, Mr Bing 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 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.

[62] Section 21(a) and (d) of the CGA apply to this case.
[63] As set out above, I have concluded that the vehicle has an undiagnosed fault that causes its engine warning light to illuminate, a faulty right front suspension airbag, a front bumper cover that is in unacceptable condition and a faulty instrument cluster. Applying s 21(a) of the Act, I consider that none of these faults, when considered separately, amount to a failure of a substantial character.

The engine warning light

[64] The fault that causes the engine warning light to illuminate is undiagnosed, so I cannot conclude that the fault is a failure of a substantial character.

The suspension airbag

[65] The faulty suspension airbag is not a minor fault, but I am not satisfied that Mr Bing should be entitled to reject the vehicle because one of its suspension airbags failed when it was put under stress during a collision.
[66] Mr Bing also suggested that this fault was significant because of the cost of the required repair. In an email dated 22 May 2018 from Giltrap Prestige stated that suspension repairs will cost more than $10,000.
[67] The cost of required repairs, although relevant to the consideration of whether a fault amounts to a failure of substantial character, is not determinative. That is particularly the case with vehicles such as a 13-year-old Bentley Continental Flying Spur, which will often require expensive repairs for relatively minor faults. The purchaser of a 13-year-old Bentley Continental Flying Spur should have realistic expectations as to its quality and durability and should understand that faults, which may be expensive to rectify, are likely to occur from time to time. Further, Mr Haynes advises that the suspension fault can be easily rectified by replacing the right front suspension airbag, which should cost much less than $10,000.

The front bumper cover

[68] The unsatisfactory condition of the front bumper cover also does not justify rejection of the vehicle. Again, Mr Bing provided information to suggest that the required repair would be expensive, with the information suggesting that a replacement front bumper cover may cost more than $12,000. Central Car Company submitted that it could perform this repair for much less, and Mr Haynes agrees that and a replacement, second hand, front bumper cover will cost much less than $12,000. Accordingly, I am not satisfied that this fault amounts to a failure of a substantial character in its own right.

The instrument cluster

[69] Finally, the faulty instrument cluster is not a fault so serious that a reasonable consumer would not have purchased the vehicle.
[70] Accordingly, I am not satisfied that any one of the faults is such that a reasonable consumer would decline to purchase a vehicle of this price, age and mileage because of the existence of that fault.
[71] Mr Bing may also reject the vehicle if the accumulated faults mean a reasonable consumer would lose confidence in the reliability of the vehicle. 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 minor defects, which in themselves could not be described as substantial.[3] 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”.[4]
[72] I am not satisfied that the vehicle’s accumulated defects amount to a failure of a substantial character. Although Mr Bing has experienced several faults that breach the acceptable quality guarantee, I am not satisfied that these faults are such that a reasonable consumer could convincingly say that he or she has no confidence in the reliability of the vehicle.
[73] As set out above, the purchaser of a 13-year-old Bentley Continental Flying Spur should have realistic expectations as to its quality and durability and should understand that defects can arise from time to time. Certainly, the vehicle has had numerous faults, but given the price, age and mileage of the vehicle, and the nature of the faults that have arisen, I am not satisfied that the point has yet been reached where a reasonable consumer could convincingly say that they had no confidence in the reliability of the vehicle. Accordingly, I am not satisfied that the vehicle’s faults amount to a failure of substantial character for the purposes of s 21(a) of the CGA.
[74] Further, I am not satisfied that any of the vehicle’s faults make the vehicle unsafe for the purposes of s 21(d) of the CGA. Mr Bing did not produce sufficient evidence to prove that the affected components made the vehicle unsafe, and the mere presence of faults with components such as the right front suspension airbag does not necessarily prove that the vehicle is unsafe. That is particularly the case where that airbag performed as it should during the collision, and only failed after Mr Bing continued to use the vehicle despite hearing a hissing noise from the front of the vehicle, which should have put him on notice of a potential defect.

What remedy is Mr Bing entitled to under the CGA?

[75] The remedy is relevant to Mr Bing’s claim under the CGA are set out in s 18 of that 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.

[76] Under s 18(2)(a) of the CGA, Mr Bing is entitled to have the defects that breach the acceptable quality guarantee rectified within a reasonable time. In that respect, Central Car Company shall, within 15 working days of the date of this decision:
[77] Mr Bing also seeks to recover the following costs:
[78] Under s 18(4) of the Act, Mr Bing is entitled to recover the cost having the vehicle’s defects assessed by Giltrap Prestige and of storing the vehicle at Giltrap Prestige while that assessment and discussions with Central Car Company occurred. These are reasonably foreseeable costs incurred as a result of the vehicle’s defects. In that regard, Central Car Company must pay $1,438.39 to Mr Bing.
[79] I am also satisfied that Mr Bing is entitled to recover the cost of transporting the vehicle. In that regard, Mr Bing has provided an invoice dated 5 December 2018 from Central Towing Limited for towing of the vehicle from 119 Great North Road, Grey Lynn to rural Waikato and a further invoice from Central Towing Ltd dated 27 December 2018 for the transportation of the vehicle from rural Waikato to Kerwyn Avenue, East Tamaki. Those invoices total $805. Mr Bing also provided an invoice from East Tamaki Automotive dated 28 December 2018 for $92, being the cost of using that companies hoist for the inspection conducted on that day. These were costs incurred to have the vehicle’s defects assessed and diagnosed, and I am satisfied that they are the types of costs that can be recovered under s 18(4) of the CGA.
[80] I am not satisfied that Mr Bing is entitled to recover the cost of insuring or registering the vehicle. I acknowledge that he has not had use of the vehicle since 28 April 2018, meaning he has not had the full benefit of the insurance policy or of the vehicle’s registration. Nonetheless, Mr Bing has not used vehicle because of his decision to reject it, rather than to allow Central Car Company to rectify its faults. Accordingly, I am not satisfied that Central Car Company should be liable for these costs.
[81] Because Mr Bing has not succeeded in rejecting the vehicle, he is not entitled to recover the $5,000 cash deposit paid for the vehicle.
[82] Mr Bing is also not entitled to recover legal fees. The Tribunal has limited powers to award these types of costs. Under cl 14(1)(b) of sch 1 to the MVSA, the Tribunal may award costs against a party where that party either fails to attend without reasonable cause or, if the matter or reasonably to have been settled before hearing, that party refuses to participate in pre-hearing settlement discussions. Central Car Company attended the hearings, and, given my finding that Mr Bing is not entitled to reject the vehicle, this is not a matter that Central Car Company ought reasonably to have been settled before the hearing. Accordingly, I cannot award legal costs against Central Car Company.

Has Central Car Company engaged in conduct that breached s 9 of the FTA?

[83] Mr Bing also alleges that Central Car Company told him that the vehicle’s airbag suspension had been replaced before purchase. He says that this representation was misleading, in breach of s 9 of the FTA because the vehicle’s suspension airbags had not been recently replaced, when they had not been. Bennett Katipa confirmed that Mr Murphy advised that the airbag suspension had been replaced.
[84] Section 9 of the FTA provides;
  1. Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

[85] The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corp Ltd v Ellis:[5]

The question to be answered in relation to s 9 ... is ... whether a reasonable person in the claimant’s situation – that is, with the characteristics known to the defendant or of which the defendant ought to have been aware – would likely have been misled or deceived. If so, a breach of s 9 has been established. It is not necessary under s 9 to prove that the defendant’s conduct actually misled or deceived the particular plaintiff or anyone else. If the conduct objectively had the capacity to mislead or deceive a hypothetical reasonable person, there has been a breach of s 9. If it is likely to do so, it has the capacity to do so. Of course the fact that someone was actually misled or deceived may well be enough to show that the requisite capacity existed.

[86] Central Car Company denies advising Mr Bing that the airbag suspension had been recently replaced. Mr Murphy says that the told Mr Bing that the suspension had been replaced, but not that the replacement was recent. In that regard, Mr Murphy advises that the suspension airbags were replaced in 2012.
[87] Regardless of whether Mr Murphy said that the suspension airbags had been recently replaced, I am satisfied that he represented that the airbags had been replaced, and that a reasonable consumer would have believed, in the absence of qualifying information, that the replacement had occurred recently. Given the evidence that the airbags were replaced in 2012, I am satisfied that Central Car Company engaged in misleading conduct in breach of s 9 of the FTA by telling Mr Bing that the airbags had been replaced.

What remedy is entitled to Mr Bing under the FTA

[88] The remedies available for a breach of the FTA are discretionary. They are set out in s 43 of the FTA which is as follows:

43 Other orders

(1) This section applies if, in proceedings under this Part or on the application of any person, a court or a Disputes Tribunal finds that a person (person A) has suffered, or is likely to suffer, loss or damage by conduct of another person (person B) that does or may constitute any of the following:

(a) a contravention of a provision of Parts 1 to 4A (a relevant provision):

(b) aiding, abetting, counselling, or procuring a contravention of a relevant provision:

(c) inducing by threats, promises, or otherwise a contravention of a relevant provision:

(d) being in any way directly or indirectly knowingly concerned in, or party to, a contravention of a relevant provision:

(e) conspiring with any other person in the contravention of a relevant provision.

(2) The court or the Disputes Tribunal may make 1 or more of the orders described in subsection (3)—

(a) whether or not the court grants an injunction, or the court or the Disputes Tribunal makes any other order, under this Part; and

(b) whether or not person A made the application or is a party to the proceedings.

(3) The orders are as follows:

(a) an order declaring all or part of a contract made between person A and person B, or a collateral arrangement (for example, a collateral credit agreement) relating to such a contract,—

(i) to be void; and

(ii) if the court or the Disputes Tribunal thinks fit, to have been void at all times on and after a date specified in the order, which may be before the date on which the order is made:

(b) if an order described in paragraph (a) is made in res pect of a contract that is associated with a collateral credit agreement, an order vesting in person B all or any of the rights and obligations of person A under the collateral credit agreement:

(c) an order in respect of a contract made between person A and person B, or a collateral arrangement (for example, a collateral credit agreement) relating to such a contract,—

(i) varying the contract or the arrangement in the manner specified in the order; and

(ii) if the court or the Disputes Tribunal thinks fit, declaring the varied contract or arrangement to have had effect on and after a date specified in the order, which may be before the date on which the order is made:

(d) if an order described in paragraph (c) is made in respect of a contract that is associated with a collateral credit agreement, and if that order results in person A no longer having property in the goods that are the subject of the contract, an order vesting in person B the rights and obligations of person A under the collateral credit agreement:

(e) an order directing person B to refund money or return property to person A:

(f) an order directing person B to pay to person A the amount of the loss or damage:

(g) an order directing person B, at person B’s own expense, to repair, or to provide parts for, goods that have been supplied by person B to person A:

(h) an order directing person B, at person B’s own expense, to supply specified goods or services to person A.

(4) In subsection (3) (a) to (d), collateral credit agreement, in relation to a contract for the supply of goods, means a contract or an agreement that—

(a) is arranged or procured by the supplier of the goods; and

(b) is for the provision of credit by a person other than the supplier to enable person A to pay, or defer payment, for the goods.

(5) An order made under subsection (3) (a) to (d) does not prevent proceedings being instituted or commenced under this Part.

(6) This section does not limit or affect—

(a) subpart 5 of Part 2 of the Contract and Commercial Law Act 2017; or

(b) section 317 of the Accident Compensation Act 2001.

[89] The remedies in s 43(3) of the FTA are discretionary, and the discretion is to be exercised so as to give effect to the policy of the FTA, which includes to protect the interests of consumers. The object of the remedies in s 43(3) of the FTA is to do justice to the parties in the particular circumstances of the case.[6]
[90] Mr Wedlake examined the right front suspension airbag. He advises that the part number on the right front shock absorber was “3W5616040C”. He advises that he contacted Bentley Auckland, who advised him that the vehicle was originally fitted with “3W5616040H” shock absorbers. Mr Wedlake advises that he was told by Bentley Auckland that the “revision C” shock absorber currently fitted to the right front of the vehicle was superseded in August 2007, meaning that the right front shock absorber was produced on or before that date. Mr Wedlake concludes that the shock absorber was therefore at least four and a half years old when fitted to the vehicle in 2012. Mr Wedlake considers that shock absorber assemblies are components that require regular replacement. He considers that the rubber-based components of the shock absorber (for example seals and airbags) are likely to have deteriorated, causing the suspension failure.
[91] Much of Mr Wedlake’s evidence on this point is hearsay, in that he is passing on information provided to him by a third party (Bentley Auckland), and I have some reservations about accepting this evidence without seeing confirmation of it from the source
[92] Nonetheless, even if I were to unreservedly accept Mr Wedlake’s evidence as being correct, his evidence relates only to the right front airbag. Mr Wedlake has not assessed any of the other suspension airbags on the vehicle, meaning I find it difficult to reach conclusions on the age and condition of the other airbags. For example, there is no evidence to show that those airbags have the same part number, that they are of the same age or that their condition is such that they require replacement.
[93] Accordingly, I consider that, at best, the evidence shows that the right front suspension airbag requires replacement. Applying s 43(3)(g) of the FTA, I consider that the remedy that would best do justice between the parties would be to require Central Car Company to replace the right front suspension airbag. I do not consider that any of the other remedies in s 43(3) of the FTA are appropriate in the circumstances of this case.
[94] Because I have already made orders requiring Central Car Company to replace the right front suspension airbag under the CGA, no further orders under the FTA are required.

DATED at AUCKLAND this 10th day of April 2019

B.R. Carter
Adjudicator


[1] Motor Vehicle Sales Act 2003, sch 1, cl 9C(3). Clause 9C(3) makes it clear that the Tribunal's process has an inquisitorial aspect. It provides that the Tribunal (which according to s 82(3) of the Motor Vehicle Sales Act comprises an adjudicator and an assessor) may make its own investigations and inquiries. Clause 9C(4) provides that all evidence and information received or ascertained from the Tribunal's investigations and inquiries must then be disclosed to every party, and every party must be given a reasonable opportunity to comment on it. In exercising this inquisitorial function, I am conscious of comments recently made in Whittington v Bayswater Vehicles Ltd [2018] NZDC 24926, especially the Court's comments on the role of the Tribunal's Assessor at [53]–[56], referring to Allan v Rick Armstrong Motor Court Ltd DC Christchurch CIV-2008-009-1360, 7 May 2009 and Martins Wholesale RMVT v Findlay DC Christchurch CIV-2009-009-548, 8 June 2009 at [13]. In concluding that it was appropriate to use the Tribunal's inquisitorial function, I note that cl 9C(3) of sch 1 of the Act came into effect after the Tribunal decisions that were considered by the District Court in these cases and so the District Court did not consider that provision in any of the above decisions.

[2] See Investigation Report Final, dated 16 June 2018 from IAG

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

[4] At 417.

[5] Red Eagle Corp Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].

[6] At [31].

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