Hill v Prestige Park and Sell Ltd - Reference No. MVD 055/2019 [2019] NZMVDT 75 (16 April 2019)

Last Updated: 19 May 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 055/2019 [2019] NZMVDT 075 BETWEEN HIRAMANA HILL Purchaser AND PRESTIGE PARK AND SELL LTD Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Haynes, Assessor

HEARING at Auckland on 4 April 2019

APPEARANCES

H HIll, Purchaser M Marsh, Witness for the Purchaser

B T Martin, for the Trader

DATE OF DECISION 16 April 2019

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DECISION OF THE TRIBUNAL

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1. Prestige Park and Sell Ltd shall, within ten working days of the date of this decision, pay $429.30 to Hiramana Hill.

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REASONS

Introduction

[1] On 9 January 2019, Hiramana Hill purchased a 2013 Ford Ranger for $28,585 from Prestige Park and Sell Ltd.
[2] Prestige Park and Sell had recently replaced the vehicle’s tyres. Six days after taking possession of the vehicle, during which time he drove no more than 500 km, Mr Hill noticed that the vehicle’s left rear wheel was loose, with broken wheel studs. Mr Hill has replaced the wheel studs and nuts on the left rear wheel and seeks to recover the cost of that repair from Prestige Park and Sell.
[3] Prestige Park and Sell questioned whether the loose rear wheel was caused by the manner in which Mr Hill used the vehicle, rather than any inherent defect with the vehicle. It also says that Mr Hill repaired the fault without first giving it a reasonable opportunity to do so. Finally, it says that the amount paid by Mr Hill to repair broken wheel studs was unreasonable, and the repair should have been much less expensive.
[4] Mr Hill also paid $1,595 for a Janssen Insurance mechanical breakdown insurance policy. That policy was cancelled by Janssen Insurance because Prestige Park and Sell had not paid the premium. Prestige Park and Sell says that the policy was cancelled due to a “book keeping mistake”. Mr Hill has agreed to allow Prestige Park and Sell to provide a replacement mechanical breakdown insurance policy from Janssen Insurance and provided correspondence after the hearing showing that this had occurred. Accordingly, no orders are required regarding the warranty.

The Issues

[5] Against this background, the issues requiring consideration are:

• (a) Did the vehicle have a fault that breaches the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the Act)?
• (b) Is the fault a failure of a substantial character?
• (c) What remedy is Mr Hill entitled to under the Act?
  

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

[6] 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.
[7] 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.

[8] 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 Mr Hill’s subjective perspective.
[9] Six days after Mr Hill purchased the vehicle, he noticed that the left rear wheel was loose. Mr Hill arranged for the vehicle to be transported to his home, and then shortly afterwards the vehicle was transported to Tirau Motors. Tirau Motors confirmed that three of the six wheel studs on the left rear wheel were broken. Tirau Motors also found that the wheel nuts on all the other wheels were loose.
[10] This evidence satisfies me that the vehicle has not complied with the guarantee of acceptable quality in s 6 of the Act because it was not free of defects at the time of sale and has not been as durable as a reasonable consumer would consider acceptable. Mr Hill paid $26,990 for a 6-year-old vehicle that had travelled about 160,000 km at the time of sale. A reasonable consumer would never expect a wheel on such a vehicle to come loose and break three of the six wheel studs within one week of purchase.
[11] Prestige Park and Sell questions whether it should have responsibility for the left rear wheel coming loose. It says the vehicle’s tyres were changed by a company called Auto Tyres Direct shortly before purchase. Bryan Martin, a director of Prestige Park and Sell, pointed me to information from Naveed Khan of Auto Tyres Direct, which stated that Mr Khan considered that the wheels were tightened by qualified staff at Auto Tyre Direct, which has a routine to ensure that wheels are adequately tightened by a rattle gun and wrench before the vehicle is returned to its customers.
[12] In questioning whether Prestige Park and Sell should have responsibility for the fault, Mr Martin presented two possible theories as to how the wheel had worked loose because:

• (a) the vehicle may have been overloaded after purchase, presumably with the additional weight putting strain on the vehicle causing the wheel to loosen; or

(b) Mr Hill had performed burnouts in the vehicle, causing the wheel to loosen.

[13] There is no evidence to support either theory and Mr Hill denies carrying any load on the vehicle or performing burnouts. I accept his evidence and consider that, despite Mr Khan’s statements to the contrary, that the most likely cause of the fault is that Auto Tyres Direct did not adequately torque the rear wheel to the specified requirement when the tyres were replaced prior to purchase.
[14] Mr Haynes, the Tribunal’s Assessor, advises that the procedure described by Mr Khan is a common procedure for the replacement of wheels. A rattle gun is used to tighten the wheel nuts, but a torque wrench must then be used to ensure that the wheels are sufficiently secure. Where a rattle gun only is used, the wheels will appear tight, but will loosen as the vehicle is used.
[15] In this case, I am satisfied that the evidence shows that is most likely that the vehicle’s wheels loosened because they were not adequately tightened by Auto Tyres Direct. All of the vehicle’s tyres were changed shortly before purchase and within six days of purchase the left rear wheel had loosened to the extent that three of its six wheel studs were broken. There is no evidence to show that the wheel was loosened by Mr Hill, or by the manner in which he used the vehicle. Instead, I consider it likely that Auto Tyres Direct tightened the wheels using a rattle gun only and did not further tighten the wheels with a torque wrench, which is the usual procedure. The wheel nuts then slowly worked loose as Mr Hill drove the vehicle.
[16] On this basis, I am not satisfied that the loose rear wheel was caused by the manner in which Mr Hill used the vehicle.

Is the fault a failure of a substantial character?

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

21. 21 Failure of substantial character

For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where—

(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or

(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.

[18] The loose left rear wheel is a failure of a substantial character in terms of s 21(d) of the Act. I am satisfied that the loose rear wheel meant the vehicle was unsafe. It is entirely conceivable that the rear wheel could have fallen off while the vehicle was moving, causing real danger to the occupants of the vehicle, other road users and pedestrians.

What remedy is Mr Hill entitled to under the Act?

[19] The remedies relevant to this claim 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.

Mr Hill is not entitled to recover the cost of repairs under s 18(2) of the Act

[20] Mr Hill seeks to recover the costs of the repairs to the vehicle from Prestige Park and Sell. Although I have found that the vehicle was not of an acceptable quality because of the loose rear wheel, Mr Hill is not entitled to a remedy under s 18(2) of the Act. This is because I am not satisfied that he gave Prestige Park and Sell a reasonable opportunity to repair the vehicle before having that work performed by Tirau Motors.
[21] In Acquired Holdings Ltd v Turvey, the High Court concluded that under s 18(2) of the Act, the consumer must first give the supplier an opportunity to remedy the failure within a reasonable time.[1]
[22] I am satisfied, on the evidence presented by Mr Hill, that he did not give Prestige Park and Sell an opportunity to repair the vehicle before having it repaired by Tirau Motors. I accept that Prestige Park and Sell agreed that Mr Hill should have the fault repaired using the Janssen Insurance policy, and that Prestige Park and Sell agreed to pay any excess charged to Mr Hill. However, Mr Hill did not use the Janssen Insurance policy and instead paid for the repairs himself without telling Prestige Park and Sell that he was doing so. Applying Acquired Holdings, I am not satisfied that Mr Hill is entitled to recover the cost of the repairs under s 18(2) of the Act.

Mr Hill is entitled to a remedy under s 18(3)(b) of the Act

[23] Mr Hill is, however, entitled to a remedy under s 18(3)(b) of the Act. The loose left rear wheel was a failure of a substantial character, so under s 18(3)(b) of the Act, he is able to obtain damages in compensation for any reduction in value of the goods below the price paid by Mr Hill for the vehicle.
[24] I am satisfied that the fault with the vehicle caused a reduction in value of the vehicle below the price paid by Mr Hill. I consider that the reasonable cost of repair is an indication of the reduction in value caused by the fault. I am satisfied that if Mr Hill had tried to sell the vehicle without repairing the damage caused by the wheel falling off, the reasonable cost of repairing the defect would have been taken into account by any prospective buyer.
[25] Prestige Park and Sell submits that the amount charged by Tirau Motors for the repair was not reasonable. It says that it has obtained an estimate from Fairview Motors Ltd, the Ford franchise nearest Mr Hill’s home. Fairview Motors have estimated that the repair would cost approximately $193.20 — about $420 less than the amount charged by Tirau Motors.
[26] Mr Haynes advises that the amount charged by Tirau Motors is likely to exceed a reasonable repair cost. Mr Haynes advises that the labour charge of $240 is likely to be reasonable, as the technician would have been required to check all four wheels, repair the damaged wheel and tighten the remainder. Mr Haynes advises that a charge of $240 for this diagnosis and repair is reasonable. Likewise, Mr Haynes considers that the charges for the replacement wheel studs and towing are reasonable.
[27] However, Mr Haynes considers that the charge of $110.57 for wheel nuts is excessive. Mr Haynes says the estimate of $49.47 (including GST) provided by Fairview Motors for replacement wheel nuts is a much more realistic price for these components. I also consider that the charge of $40 (including GST) for “sundry” amounts is likely to be exceed a reasonable cost. There is no explanation for what a “sundry” charge relates to in respect of this repair. Mr Haynes advises that sundry charges are usually imposed to cover the cost of unbilled small components (such as hose clips), environmental levies or oil disposal charges. Given the simple nature of this repair, and the fact that all parts required to perform the repair have been separately invoiced, Mr Haynes questions the imposition of a charge for sundry items.
[28] Accordingly, I intend to reduce the amount payable to Mr Hill under s 18(3)(b)(ii) by $101.10 to reflect the excessive wheel nut and sundry charges. Mr Hill is therefore entitled to recover $509.30, being the reasonable cost of assessing the vehicle’s loose wheels and performing the required repairs. The total amount payable to Mr Hill should then be reduced by a further $250, being the amount already paid to Mr Hill by Prestige Park and Sell in respect of the repairs performed, meaning Prestige Park and Sell must now pay Mr Hill a total of $259.30 to Mr Hill for the work performed by Tirau Motors.
[29] Under s 18(4) of the Act, Mr Hill is also entitled to recover the cost of towing the vehicle on 14 February 2019. After Mr Hill discovered that the left rear wheel was loose and that three of the wheel studs were broken, he arranged for the vehicle to be towed to his house by GC Towing Services. Mr Hill was charged $170 for this service. This is the type of reasonable foreseeable cost that is recoverable under s 18(4) of the Act.
[30] Prestige Park and Sell says that Mr Hill should have used the roadside assistance service that accompanied the Janssen Insurance policy (which was still valid at that stage) to have the vehicle towed free of charge. I accept Mr Hill’s evidence that he attempted to contact Janssen Insurance to have the vehicle towed but was unable to contact Janssen Insurance on the number provided by Prestige Park and Sell because he was calling outside of usual business hours. I consider that Mr Hill acted reasonably in then arranging for the vehicle to be towed using GC Towing Services.

DATED at AUCKLAND this 16th day of April 2019

B.R. Carter
Adjudicator

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