Lavers v East Auckland Trading Company Ltd (Formerly Robert Allen Wholesale Ltd) - Reference No. 113/2020 MVD [2020] NZMVDT 106 (6 July 2020)

Last Updated: 18 August 2020

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 113/2020 [2020] NZMVDT 106 BETWEEN MARC LAVERS Purchaser AND EAST AUCKLAND TRADING COMPANY LTD (FORMERLY ROBERT ALLEN WHOLESALE LTD) Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Haynes, Assessor

HEARING at Auckland on 6 July 2020

APPEARANCES

M Lavers, Purchaser

No appearance for the Trader

DATE OF DECISION 22 July 2020

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DECISION OF THE TRIBUNAL

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1. Marc Lavers’ application is dismissed

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REASONS

Introduction

[1] The 2009 Volkswagen Touran that Marc Lavers purchased for $4,400 from East Auckland Trading Company Ltd in May 2019 suffered significant engine damage in December 2019. Mr Lavers now wants to reject the vehicle and obtain a refund of the purchase price.

The issues

[2] The sole issue requiring consideration is whether the vehicle has been of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA).

Has the vehicle been of acceptable quality?

[3] 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.
[4] 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.

[5] 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 Lavers’ subjective perspective.

The vehicle has significant engine and turbo damage

[6] Mr Lavers purchased the vehicle on 5 May 2019 and after five and a half months of trouble-free motoring, the vehicle broke down and would not restart. Mr Lavers says that there was no warning sign of the impending breakdown and that he initially thought that the vehicle had suffered an electrical fault because the vehicle had simply lost all power without any indication of a mechanical fault.
[7] The vehicle was transported to Ken Turner Motors in Titirangi, which found that the vehicle’s turbocharger turbine or impeller shaft was broken, that there was a “significant metallic noise” from the engine and that “excessive amounts of piston ring blow-by is apparent”. Ken Turner Motors considered the vehicle to be uneconomic to repair.
[8] Mr Haynes, the Tribunal’s Assessor, advises that the circumstances of the breakdown described by Mr Lavers and the diagnosis from Ken Turner Motors show that it is likely that the engine has suffered a catastrophic engine failure because the turbo impeller shaft snapped causing metal fragments to enter the engine, damaging the pistons and combustion bore. Mr Haynes advises that such damage can be instantaneous, with the engine becoming irreparably damaged almost immediately.

The defects were not pre-existing

[9] After the hearing, Mr Lavers made a submission alleging that the cause of the engine and turbo damage was likely to be pre-existing, or that it was caused by substandard repairs performed by the East Auckland Trading Company.
[10] Mr Lavers says that the vehicle was inspected by AA Motoring on 31 May 2019. During that inspection, AA Motoring noticed an oil leak from the bottom of the engine, which it considered required investigation. Mr Lavers says that “Moe”, an employee of East Auckland Trading Company, told him that this defect had been rectified by replacing a clamp on a turbo hose. Mr Lavers believes that this repair is either related to, or the cause of, the subsequent turbo and engine failure.
[11] I am not satisfied that the evidence shows that the turbo and engine failures were caused by any pre-existing fault with the vehicle.
[12] The evidence from Mr Lavers as to the oil leak found by AA Motoring and the repairs performed by East Auckland Trading Company is not sufficient to enable me to draw any conclusions as to the nature of any pre-existing defect. Further, Mr Lavers says that the vehicle performed well throughout his ownership, with no unusual noise or signs of excessive smoke or oil consumption – which are common signs of a latent engine or turbo fault. The vehicle also passed an engine compression test performed by AA Motoring, meaning that the “excessive engine crankcase pressure” found by Ken Turner Motors was not present at the time of sale. Mr Haynes advises that if the vehicle had a pre-existing engine fault affecting its compression, that would have been identified during the pre-purchase inspection.
[13] I therefore consider it most likely that the vehicle did not have a pre-existing defect and that the turbo and engine damage was caused by a catastrophic failure that arose during Mr Lavers’ ownership.

The vehicle has been of acceptable quality

[14] The protections in s 6 of the CGA are not indefinite, and last only as long as is reasonable taking account of factors such as the price, age and mileage of the vehicle at the time of sale, the length of ownership before the fault became apparent, the distance travelled during that time and the manner in which the vehicle has been used.
[15] In this case, Mr Lavers paid $4,400 for a 10-year old vehicle with an odometer reading of 150,219 km at the time of sale. I consider that a reasonable consumer would have realistic expectations as to the quality and durability of a vehicle of this price, age and mileage and would understand that defects consistent with that age and mileage may arise from time to time.
[16] The significant turbo and engine damage then occurred about five and a half months after purchase when the odometer reading was 155,532 km. Mr Lavers did not service the vehicle during that time despite the vehicle’s service sticker (the only evidence of service history) stating that the vehicle was due for its next service at 151,010 km. Mr Lavers advises that he was intending to service the vehicle “in December”.
[17] Mr Haynes advises that the vehicle has a 1.4 litre TSI turbo engine, which must be properly serviced because such engines can be prone to problems like damage to the turbo or engine because of insufficient lubrication if not adequately serviced.
[18] Mr Lavers did not service this vehicle on time, driving more than 4,500 km while the service was overdue, and I consider that there is a real likelihood that the engine and turbo damage was caused, at least in part, by this failure to adequately service the vehicle. I also consider that the expectations that a reasonable consumer should have as to the quality and durability of a vehicle of this age and mileage would then be significantly reduced by this inadequate servicing.
[19] In light of the length of Mr Laver’s ownership, the distance travelled before the turbo and engine damage occurred and the fact that Mr Lavers drove the vehicle for more than 4,500 km while it was overdue for a service, I am satisfied that the vehicle has been as durable as a reasonable consumer would consider acceptable.
[20] Mr Lavers’ application is therefore dismissed.

DATED at AUCKLAND this 22nd day of July 2020

B.R. Carter
Adjudicator