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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 24 August 2020
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IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
BETWEEN KARUNDEEP SINGH
Purchaser
AND MOTO LTD
Trader
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MEMBERS OF TRIBUNAL
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B R Carter, Barrister – Adjudicator
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S D Gregory, Assessor
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HEARING at Auckland on 17 July 2020
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APPEARANCES
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K Singh, Purchaser
P Singh, Witness for the Purchaser
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T Moreton, for the Trader
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DATE OF DECISION 27 July 2020
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_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
_________________________________________________________________
REASONS
Introduction
[1] Karundeep Singh wants to reject the 2011 Audi A5 he purchased for $21,000 from Moto Ltd on 7 January 2020. Mr Singh alleges that the vehicle had several pre-existing defects, which Moto Ltd has failed to adequately rectify. Moto Ltd says that it is prepared to fix the vehicle’s faults but does not consider that Mr Singh should be entitled to rejection.
The issues
[2] The issues requiring the Tribunal’s consideration in this case are:
- (a) Has the vehicle been of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA)?
- (b) Has Mr Singh lost the right to reject the vehicle?
- (c) What remedy is Mr Singh entitled to under the CGA?
Issue 1: 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(1) 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.
[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”.
Mr Singh’s evidence
[6] Mr Singh alleges that the vehicle has had the following unacceptable defects since purchase:
- (a) a faulty positive crankcase ventilation (PCV) valve;[1]
- (b) faulty front suspension components;
- (c) an ongoing engine misfire caused by excessive engine blowby;[2]
- (d) ongoing oil leaks and excessive oil consumption;
- (e) sunroof and keyless door entry faults;
- (f) faulty headlight wipers; and
- (g) a flickering fuel light and a faulty rear number plate light.
The faulty PCV valve
[7] Mr Singh lives in Wellington. He purchased the vehicle from Moto Ltd’s Auckland premises on 7 January 2020 and later that week drove home. On that drive he noticed a persistent misfire. After contacting Moto Ltd, Mr Singh took the vehicle to Wellington European, which found that the PCV valve was leaking boost pressure and pushing oil into the number three cylinder.
[8] Using the Autosure mechanical breakdown insurance policy purchased by Mr Singh, Wellington European replaced the leaking PCV valve.
The faulty suspension components
[9] Wellington European also found a squeaking noise from the left front suspension, which it traced to the lower suspension arm and balljoint. Wellington European replaced those components, again using the Autosure policy purchased by Mr Singh.
The ongoing misfire/excessive engine blowby
[10] Mr Singh says that, despite the PCV valve repair, the vehicle continued to misfire. He returned the vehicle to Wellington European, which confirmed the continuing misfire. Wellington European performed a diagnostic scan, which found no fault codes. Wellington European considered that the misfire may have been caused by a mechanical fault, as it did not find any evidence of an electrical fault (such as faulty ignition coils). Although it did not diagnose the existence of any mechanical fault, it considered that the misfire may be caused by engine blowby, which it considered was “more [than] we would expect”.
[11] The vehicle has since been assessed by Armstrong’s, an Audi franchise in Wellington, which contrary to Wellington European’s view, considered that the ongoing engine misfire was likely to be an electrical issue caused by worn and mismatched spark plugs and ignition coils. In an email to Mr Singh dated 19 June 2020, Armstrong’s advised that it found “multiple codes stored for engine misfire on random cylinders”. Its initial investigation into the cause of these fault codes suggested that the “engine ignition system components” (spark plugs and ignition coils) were “struggling due to wear and mismatched parts used”. It suggested replacing the spark plugs and ignition coils.
[12] Armstrongs also considered that there was no evidence of significant engine blowby. It performed a cylinder compression test and found that the compression on all cylinders was between 11 and 14 “bars”, which was within the manufacturer’s specification. It considered any further testing to be a “waste of time” as the compression figures “show that the system is sealing correctly but being influenced by other measures (oil leaks, ignition or fuel delivery problems are examples)”.
Ongoing oil leaks and excessive oil consumption
[13] Mr Singh alleges that the vehicle is also using excessive oil. He says that the vehicle’s oil level warning message has illuminated at least three times during his ownership, and that oil levels have been topped up, on three occasions. On each occasion no more than one litre of oil was put into the vehicle.
The faulty sunroof and keyless door entry
[14] Mr Singh says that the vehicle’s sunroof does not open from the vehicle’s key, although the sunroof opens when the switch inside the vehicle is used. The existence of this fault has been confirmed by Wellington European.
[15] He also alleges that the keyless door entry (or proximity key) does not work. The door handle sensors were replaced by Moto Ltd on 4 February 2020 in an attempt to rectify this fault. Mr Singh says that this repair worked for a short time, but the fault has returned.
The flickering dashboard display
[16] In his application Mr Singh alleged that the vehicle’s fuel light intermittently flickered. During his evidence it became clear that his complaint was that the dashboard display backlight, which illuminates the dashboard display at night, intermittently flickered, making it hard to see the dashboard display (which includes the fuel gauge, engine temperature gauge and speedometer) at night.
The faulty number plate light and headlight wipers
[17] Mr Singh also alleged that the vehicle’s rear number plate light (which is an aftermarket LED light) and the vehicle’s headlight wipers do not work.
Moto Ltd’s response
[18] Moto Ltd agrees that the vehicle has had some of the faults complained of by Mr Singh. It accepts that the vehicle’s PCV valve required replacement and that the vehicle had an oil leak from the top engine chain timing cover.
[19] It also accepts that the vehicle has an ongoing misfire but considers that this fault is not as serious as Mr Singh believes. Terence Moreton, who appeared for Moto Ltd, submitted that the ongoing misfire is likely to be linked to the earlier PCV valve failure. Mr Moreton considers that the PCV valve failure led to an excessive oil leak, which caused the ignition coils to become contaminated with oil, affecting their performance and causing the misfire. Mr Moreton considers that the vehicle has no significant fault with its engine. He submitted that the cylinder compression tests performed by Armstrong’s are within reasonable limits and that there is no evidence of excessive blowby.
[20] Moto Ltd also disputed the existence of the remaining alleged faults. In respect of the alleged faults with the sunroof or keyless entry system, Moto Ltd queried the existence of any fault with those components and suggested that the vehicle’s key, which is used for both the remote operation of the sunroof and the keyless entry function, may be faulty. Moto Ltd also disputed whether the vehicle has any fault that is causing it to consume an excessive amount of oil. Mr Moreton submitted that the evidence presented by Mr Singh does not show excessive oil consumption.
[21] Although it disputed its liability in respect of many of the vehicle’s faults, Moto Ltd advised the Tribunal that it was nonetheless prepared to assess the vehicle and rectify those faults that were found.
The Tribunal’s assessment
The faulty PCV valve and suspension components
[22] The evidence shows that the vehicle had a faulty PCV valve and suspension components. Those faults have been rectified, so require no further consideration.
The ongoing misfire/excessive engine blowby
[23] The evidence also shows that the vehicle has an ongoing misfire. The existence of this fault has been confirmed by both Wellington European and Armstrong’s. The evidence presented suggests that the misfire could be caused by faulty or worn ignition coils and spark plugs, perhaps caused by oil contamination due to the PCV valve failure, but further diagnosis is required to determine the underlying cause of that misfire.
Ongoing oil leaks and excessive oil consumption
[24] The vehicle does not appear to have any ongoing oil leaks. The vehicle did have a leak from the top engine timing cover, but that was repaired by Wellington European on 26 February 2020 and there is no evidence of any further leaks.
[25] Further, although the vehicle is clearly consuming some oil, there is no conclusive evidence as to the extent of that oil consumption or the existence of any fault that might be causing the vehicle to consume an excessive amount of oil.
[26] In 11 June 2020, the Tribunal issued a direction asking Mr Singh:
to have any current faults diagnosed and quoted for repair by an Audi franchise or MTA repairer. If the vehicle is still consuming excessive amounts of engine oil, an oil consumption test is to be carried out and the results submitted to the Tribunal.
[27] Mr Singh has not performed an oil consumption test, relying on Armstrong’s advice that the cause of the misfire should be rectified before any oil consumption test is performed. Mr Singh was entitled to rely on that advice, but in the absence of an oil consumption test, there is just not enough evidence for me to reach a view one way or the other as to the existence of such a fault. Consistent with Armstrong’s advice, the cause of the misfire will need to be rectified before any view can be reached as to whether the vehicle has a fault that is causing excessive oil consumption.
The sunroof, keyless door entry, flickering dashboard display light, headlight wipers and rear number plate light
[28] I am satisfied that the vehicle has each of these faults, which are all electrical and could well be related. In that regard, I accept the evidence of Mr Singh and his brother Pushapdeep Singh as to the various electrical faults they have experienced.
[29] Mr Gregory, the Tribunal’s Assessor, advises that each of these components is controlled by the vehicle’s body control module, which is the computer that controls the vehicle’s auxiliary electrical components. Mr Gregory considers that the body control module may be faulty or incorrectly coded, causing the electrical problems experienced by Mr Singh because any interference with the wiring related to the body control module can cause different, apparently unrelated, functions to fault in the manner described by Mr Singh. Alternatively, Mr Gregory advises that it is possible that the aftermarket LED lights installed in the vehicle’s doors and number plate could be interfering with the body control module’s operation, causing the problems complained of by Mr Singh.
[30] Again, although the underlying cause of the vehicle’s numerous electrical faults remains undiagnosed, these faults exist and require repair.
The Tribunal’s conclusion
[31] The vehicle has not been of acceptable quality for the purposes of s 6 of the CGA. It has had faults with its PCV valve and front suspension components, an ongoing engine misfire and various electrical faults that a reasonable consumer would not consider acceptable in an Audi A5 of this price, age and mileage.
Issue 2: Has Mr Singh lost the right to reject the vehicle?
[32] The law relating to the loss of the right to reject goods is set out in s 20 of the CGA, which states:
20 Loss of right to reject goods
(1) The right to reject goods conferred by this Act shall not apply if—
(a) the right is not exercised within a reasonable time within the meaning of subsection (2); or
(b) the goods have been disposed of by the consumer, or have been lost or destroyed while in the possession of a person other than the supplier or an agent of the supplier; or
(c) the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply; or
(d) the goods have been attached to or incorporated in any real or personal property and they cannot be detached or isolated without damaging them.
(2) In subsection (1)(a), the term reasonable time means a period from the time of supply of the goods in which it would be reasonable to expect the defect to become apparent having regard to—
(a) the type of goods:
(b) the use to which a consumer is likely to put them:
(c) the length of time for which it is reasonable for them to be used:
(d) the amount of use to which it is reasonable for them to be put before the defect becomes apparent.
(3) This section applies notwithstanding section 170 of the Contract and Commercial Law Act 2017.
[33] Under s 20(1)(a) of the CGA, Mr Singh will lose the right to reject the vehicle if he has not exercised that right within a reasonable time. For the purposes of s 20(1)(a) of the CGA, a "reasonable time" is a period from the time of supply of the goods in which it would be reasonable for the defect to become apparent, having regard to the factors set out in s 20(2)(a)–(d) of the CGA.
[34] In Nesbit v Porter, the Court of Appeal shed some light on the statutory words in s 20(2) of the CGA.[3] The Court observed that: [4]
... A reasonable time under s 20 must accordingly be one which suffices to enable the consumer to become fully acquainted with the nature of the defect, which, where the cause of a breakage or malfunction is not apparent, the consumer can be expected to do by taking the goods to someone, usually and preferably the supplier, for inspection.
[35] By 21 January 2020, Mr Singh was aware of most, if not all, of the faults that he now complains of. By that time the vehicle had been assessed by Wellington European, and in an email of that date Mr Singh advised Moto Ltd of the vehicle’s various faults. Mr Singh did not unequivocally reject the vehicle until 31 May 2020, when he sent an email to Moto Ltd rejecting the vehicle. That is too long.
[36] I appreciate Mr Singh’s explanation for this delay, in that he agreed to allow the vehicle to be repaired in February 2020 and that the Covid-19 lockdown then occurred. Nonetheless, the law imposes an obligation of Mr Singh to exercise his right to reject the vehicle with reasonable haste once he becomes acquainted with the nature of the vehicle’s defects. Mr Singh knew of the nature of the vehicle’s defects by 21 January 2020. He did not unequivocally reject the vehicle until over four months later, during which time he continued to drive the vehicle. Applying Nesbit v Porter, by waiting so long to reject the vehicle, Mr Singh took too long, and has now lost that right.
Issue 3: What remedy is Mr Singh entitled to under the CGA?
[37] The remedies relevant to this claim are set out in s 18 of the CGA, 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.
[38] Mr Singh is not entitled to reject the vehicle because he took too long to do so, so his application to reject the vehicle is dismissed. However, Mr Singh is entitled to have the vehicle’s defects rectified under s 18(2)(a) of the CGA, and the Tribunal orders that Moto Ltd shall, within 15 working days of the date of this decision rectify the cause of the ongoing misfire and the faults affecting the operation of the sunroof, keyless door entry, dashboard display light, headlight wipers and rear number plate light:
[39] If, after these repairs are performed, it becomes apparent that the vehicle is consuming an excessive amount of oil, Mr Singh is entitled to bring another claim to the Tribunal to have that matter considered.
DATED at AUCKLAND this 27th day of July 2020
B.R. Carter
Adjudicator
[1] The PCV valve returns combustion gases from the crankcase to the combustion chamber to reduce air pollution and increase engine performance.
[2] Engine blowby occurs when the air/fuel mixture and/or combustion gases leak between a piston and the cylinder wall into the engine’s crankcase. Engine blowby can cause poor performance, including misfires and excessive exhaust smoke.
[3] Nesbit v Porter [2000] NZCA 288; [2000] 2 NZLR 465 (CA).
[4] At [39].
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2020/114.html