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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 20 June 2019
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IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
BETWEEN KYLE PUNO
Purchaser
AND GRANDE MOTORS LTD
Trader
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MEMBERS OF TRIBUNAL
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B R Carter, Barrister – Adjudicator
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S Haynes, Assessor
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HEARING at Auckland on 2 May 2019
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APPEARANCES
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K Puno, Purchaser
R Puno Pabustan and J-P Manuyag, Witnesses for the Purchaser
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D Zaitsev, for the Trader
V Zhuravlev, Witness for the Trader
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DATE OF DECISION 9 May 2019
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_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
_________________________________________________________________
REASONS
Introduction
[1] On 23 September 2018, Kyle Puno purchased a 2006 BMW 118i for $7,990 from Grande Motors Ltd. The vehicle had an odometer reading of 65,900 km at the time of sale.
[2] The vehicle has an intermittent undiagnosed fault that causes it to shudder at speeds above 80 km/h and that causes the vehicle’s control modules to generate fault codes relating to its valvetronic system (the undiagnosed fault). Relying on the provisions in the Consumer Guarantees Act 1993 (the Act), Mr Puno has now rejected the vehicle claiming that Grande Motors has failed to rectify the undiagnosed fault despite being given a reasonable opportunity to do so.
[3] Grande Motors says that it has not been given a reasonable chance to rectify the vehicle’s defects, so Mr Puno is not entitled to reject the vehicle.
The Issues
[4] The issues requiring consideration in this case are:
- (a) Does the vehicle have a fault that breaches the acceptable quality guarantee in s 6 of the Act?
- (b) Has Grande Motors failed to repair the fault within a reasonable time?
- (c) Is the fault a failure of a substantial character?
- (d) What remedy is Mr Puno entitled to under the Act?
Does the vehicle have a fault that breaches the acceptable quality guarantee?
[5] 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.
[6] 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.
[7] 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 Puno’s subjective perspective.
[8] I am satisfied that the vehicle has an undiagnosed fault that has caused it to shudder and misfire since shortly after purchase, triggering fault codes relating to its valvetronic system. The valvetronic system is a variable valve lift system which allows adjustment of the vehicle’s intake valve timing to improve vehicle performance and fuel economy. In BMW vehicles, the valvetronic system performs a similar role to a throttle body.
[9] Mr Puno first noticed the vehicle shudder on 28 September 2018, about five days after he bought the vehicle. He returned the vehicle to Grande Motors for repairs to be performed, and on about 4 October 2018 the vehicle’s valvetronic motor was replaced by PQ Automotive Ltd in Otahuhu.
[10] That repair did not cure the symptoms experienced by Mr Puno, and Mr Puno twice returned the vehicle to Grande Motors for the cause of the symptoms to be diagnosed and rectified. On 4 November 2018, Mr Puno then attempted to reject the vehicle. Grande Motors refused to accept this rejection, and the parties agreed that Grande Motors should be given another opportunity to attempt to rectify the vehicle’s faults. The vehicle was then sent to Car Lab, an Auckland-based repairer, for repairs to be performed. Car Lab replaced the vehicle’s valvetronic motor, but this repair also did not rectify the vehicle’s faults.
[11] Although Grande Motors questioned whether the vehicle had any ongoing faults, Mr Puno has subsequently had the vehicle assessed by Champ Motors Ltd and Manukau Vehicle Servicing 2014 Ltd, both of whom have confirmed the presence of fault codes relating to the vehicle’s valvetronic system. Champ Motors also confirmed that the vehicle shudders at speeds above 80 km/h.
[12] In respect of the evidence from Champ Motors, Grande Motors questioned the credibility of that evidence. I understood Grande Motors to suggest that the evidence from John-Paul Manuyag, an automotive technician from Champ Motors may not be reliable. I do not share Grande Motors’ reservations about Mr Manuyag’s evidence. I found Mr Manuyag to be a thorough and credible witness, and I accept what he told me about the symptoms he experienced and the fault codes he found when he assessed the vehicle.
[13] Mr Manuyag says that the vehicle is likely to have a defect with its valvetronic system. Mr Manuyag says that he has not been able to diagnose the cause of the defect, as there are a number of potential electrical and/or mechanical causes of such a fault, and he would have to perform a more thorough diagnosis than he has performed to date to determine the root cause.
[14] Mr Haynes, the Tribunal’s Assessor, agrees that there are many potential causes of a fault that causes a vehicle to shudder and generate fault codes relating to the valvetronic system. Mr Haynes advises that the vehicle could have a defect with one or more of the valvetronic motor, the sensors connected to the valvetronic motor, the control module responsible for the operation of the valvetronic motor or the electrical connections between the valvetronic motor and its sensors. Mr Haynes agrees with Mr Manuyag’s evidence that more thorough diagnosis is required before the true cause of the fault can be ascertained.
[15] Although the underlying cause of the undiagnosed fault has not been identified, the evidence presented by the parties shows that the vehicle has a defect, which first manifested itself shortly after purchase, and which has not yet been rectified.
[16] That undiagnosed fault breaches the acceptable quality guarantee in s 6 of the Act. I acknowledge that a reasonable consumer purchasing a 12-year-old BMW that had travelled approximately 65,000 km the time of purchase should have realistic expectations as to its quality and durability. Nonetheless, a reasonable consumer would not expect a vehicle to have develop a fault that causes it to shudder at speeds above 80 km/h and that causes the vehicle’s control modules to generate fault codes relating to its valvetronic system so soon after purchase.
Did Grande Motors fail to repair the undiagnosed fault within a reasonable time?
[17] Mr Puno claims that he is entitled to reject the vehicle under s 18(2)(b)(ii) of the Act because Grande Motors has failed to repair the undiagnosed fault within a reasonable time. He says that he has given Grande Motors a reasonable opportunity to diagnose and repair the fault.
[18] Section 18 provides:
- 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.
The repair attempts
[19] Mr Puno says he return the vehicle four times to Grande Motors to have the defect assessed, diagnosed and repaired.
[20] In respect of the first repair performed by PQ Automotive, in which it installed a secondhand valvetronic motor, I accept Grande Motors evidence that it performed a speedy repair on the vehicle because Mr Puno asked for the vehicle to be returned quickly so he could use it to attend a social function. I also accept Grande Motors’ evidence that it may have performed a more thorough diagnosis if it had been given more time.
[21] The vehicle was then returned on 7 October 2018 for the cause of the symptoms experienced by Mr Puno to be diagnosed. Mr Puno says that Grande Motors detected the symptoms complained of but did not rectify the underlying fault. I prefer the evidence of Grande Motors as to what happened when the vehicle was returned on 7 October 2018. I heard evidence from Denis Zaitsev, a salesperson at Grande Motors and Vitalii Zhuravlev, a sales manager at Grande Motors. Both say they test drove the vehicle on that day. Neither could identify any defect that affected the performance of the vehicle and the vehicle was returned to Mr Puno without any repairs being performed. I accept their evidence on this point and conclude that Grande Motors attempted to diagnose the fault but experienced no symptoms to assist in the diagnosis.
[22] Mr Zaitsev also advised that he had no record of the vehicle being returned on 21 October 2018 for further assessment. Although Mr Zaitsev may have no information to show that the vehicle was returned on that day, I accept the evidence of Mr Puno’s mother, Rein Puno Pabistan, that the vehicle was returned on that day for the fault to be assessed. The undiagnosed fault was not rectified.
[23] Finally, the vehicle was returned to Grande Motors on 4 November 2018, when it was sent to Car Lab for the valvetronic motor to be replaced. Car Lab installed a new valvetronic motor.
[24] Mr Puno alleges that this repair was substandard and inadequate because Car Lab did not install a new valvetronic motor. In that regard, Mr Manuyag gave evidence that the discolouration on a plastic part of the valvetronic motor, together with pink markings on the valvetronic motor, lead him to believe that this is a secondhand part. In support of this evidence, Mr Manuyag tendered a video he filmed of the vehicle’s valvetronic motor.
[25] Mr Haynes advises that the evidence from Mr Manuyag does not prove that the valvetronic motor is secondhand. Mr Haynes considers that the discolouration on the motor is not conclusive as to its age or whether it is a used part and says that the presence of pink markings is also not evidence that the part had previously been used. Further, Grande Motors provided evidence to show that this was a new part. It presented an invoice from Euro Auto Spares dated 6 November 2018 the purchase of a new valvetronic motor. It also presented a statement from Roman Borovikov of Car Lab, which states that on 9 November 2018, Car Lab installed a new valvetronic motor.
[26] On the basis of the evidence presented to the Tribunal, I am not satisfied that Mr Puno has proven that Car Lab installed a secondhand valvetronic motor. Ultimately though, this issue will not determine the outcome of this case, as regardless of whether or not Car Lab installed a new valvetronic motor, it is clear that the repair performed by Car Lab did not rectify the undiagnosed fault.
Were the repair attempts sufficient?
[27] Mr Puno says that he is entitled to now reject the vehicle because Grande Motors has failed to rectify the undiagnosed fault despite being given a reasonable opportunity to do so.
[28] By the barest of margins, I do not agree. Although the vehicle has been returned to Grande Motors on at least three occasions for diagnosis and repair, both Mr Manuyab and Mr Haynes advise that an intermittent fault, such as exists in this vehicle, can be difficult to diagnose and rectify. Further, Mr Haynes advises that, given the symptoms and fault codes present, Grande Motors has acted reasonably by initially replacing the valvetronic motor with a secondhand part, and then with a new unit when that repair did not rectify the fault. Although I consider that Grande Motors could have been more thorough in diagnosing the underlying cause of the fault, the repair efforts it made were nonetheless reasonable.
[29] In respect of any diagnosis or repairs performed when the vehicle was returned on 21 October 2018, I can draw no conclusions on the reasonableness of that work, because there is no evidence as to what was done. Nonetheless, even if Grande Motors’ attempted diagnosis and repair at the time was inadequate, given the complexity of the diagnosis of this fault, I am satisfied that Grande Motors should be given one last opportunity to diagnose and rectify the undiagnosed fault before Mr Puno is entitled to reject the vehicle.
[30] Accordingly, I am not satisfied that Mr Puno is entitled to reject the vehicle because Grande Motors has failed to rectify the undiagnosed fault within a reasonable time.
Is the fault a failure of a substantial character?
[31] Under s 18(3) of the Act, Mr Puno 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:
- 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.
[32] 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.
[33] I am not satisfied that Mr Puno has proven that the undiagnosed fault is a failure of a substantial character. The precise cause of the fault remains unknown, and Mr Haynes advises that the cause of the undiagnosed fault could well be minor, such as a loose electrical connection or a fault with one of the vehicle’s sensors. Accordingly, applying s 21(a) of the Act, I am not satisfied that a reasonable consumer would not have purchased the vehicle if they had been fully acquainted with the nature and extent of the defect.
What remedy is Mr Puno now entitled to under the Act?
[34] The remedies relevant to this claim are set out in s 18 of the Act, which provides:
- 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.
[35] Mr Puno is not entitled to reject the vehicle, because Grande Motors has not failed to rectify the undiagnosed fault within a reasonable time and the fault does not amount to a failure of a substantial character. Instead, under s 18(2)(a) of the Act, Mr Puno is entitled to have the defect rectified within a reasonable time. In that regard, Grande Motors must rectify the defect within 10 working days.
[36] Under s 18(4) of the Act, Mr Puno is also entitled to recover the cost of having the vehicle’s defects assessed. In that regard, he is entitled to recover $120.75, being the cost of the assessment performed by Champ Motors and $50, being the cost of vehicle assessed by Manukau Vehicle Servicing 2014 Ltd.
Costs
[37] Mr Puno also seeks to costs incurred in having Mr Manuyag attend the hearing as a witness. In that regard, Mr Puno seeks to recover $592.25 in fees charged by Champ Motors in preparing for and attending the hearing.
[38] Under cl 14(1)(a)(i) and (b) of Sch 1 to the Motor Vehicle Sales Act 2003 (the MVSA), the Tribunal may only award such costs against a party where the matter ought reasonably to have been settled before hearing but that party failed to participate in pre-hearing settlement discussions or if that party fails to attend the hearing without reasonable cause. There is no other basis on which the Tribunal can make an award for such costs.
[39] Applying cl 14(1)(a)(i) and (b) of Sch 1 to the MVSA, I am not satisfied that Mr Puno is entitled to recover these costs. Given my finding that Mr Puno is not entitled to reject the vehicle, I cannot conclude that this is a matter that Grande Motors ought reasonably to have settled before hearing. Likewise, Grande Motors attended and participated in the hearing, so I cannot award costs on that basis.
[40] Mr Puno’s application to recover the cost of Mr Manuyab attending the hearing is therefore dismissed.
DATED at AUCKLAND this 9th day of May 2019
B.R. Carter
Adjudicator
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2019/97.html