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Bowater v Signet 2011 Ltd T/A Signet Motors Reference No. 138/2020 MVD [2020] NZMVDT 123 (11 August 2020)

Last Updated: 17 September 2020

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

MVD 138/2020
[2020] NZMVDT 123

BETWEEN WAYNE ANTHONY BOWATER

Purchaser

AND SIGNET 2011 LTD T/A SIGNET MOTORS
Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S D Gregory, Assessor

HEARING at Auckland on 21 July and 4 August 2020.



APPEARANCES
W A Bowater, Purchaser
J Bowater, Witness for the Purchaser
G Martin and T Tatafu, for the Trader

DATE OF DECISION 11 August 2020

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

A Wayne Bowater’s application to reject the vehicle is dismissed.

B Signet 2011 Ltd shall, within 15 working days of the date of this decision:

(a) rectify the undiagnosed fault that is causing the vehicle to intermittently lose power; and
(b) pay $1,659.08 to Mr Bowater.

_________________________________________________________________

REASONS

Introduction

[1] Wayne Bowater wants to reject the 2013 BMW 116i he purchased for $14,700 from Signet 2011 Ltd, trading as Signet Motors, in June 2019. Mr Bowater says that the vehicle has had several defects since purchase, including ongoing “acceleration issues”, which Signet Motors has failed to rectify. Signet Motors denies liability saying that the vehicle’s defects may have been caused by the manner in which the vehicle was driven and that the vehicle has been acceptably durable.

The issues

[2] The issues requiring the Tribunal’s consideration are:

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 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”.

Mr Bowater’s evidence

[6] The vehicle has mostly been driven by Mr Bowater’s daughter Jade. On about 10 November 2019, Ms Bowater says that the vehicle unexpectedly lost power while driving on the motorway at about 80km/h. A warning message stating “Drivetrain Malfunction Drive Moderately” also appeared on the dashboard display.
[7] The vehicle was then assessed on 12 November 2019 by Euro Lab, which describes itself as a mobile European automotive workshop. Euro Lab performed a diagnostic scan and found a fault code (D01646) relating to a network communication error with the Integrated Chassis Management (ICM) module, where that module was unable to detect the angle of the accelerator pedal.
[8] Euro Lab also inspected the vehicle and found:
[9] In an email dated 15 November 2019, Mr Bowater provided a copy of the Euro Lab assessment to Signet Motors and attempted to reject the vehicle under the CGA. Signet Motors declined to accept Mr Bowater’s rejection of the vehicle and advised him to have the vehicle assessed and repaired using the Protecta Insurance mechanical breakdown insurance policy he purchased with the vehicle.
[10] Following Signet Motors’ advice, Mr Bowater contacted Protecta Insurance, and the vehicle was taken to Bellars Motor Works (2005) Ltd (Bellars) for further assessment. Bellars replaced the front brake pads and discs and the broken turbo air intake pipe. Mr Bowater contributed $1,476.80 towards the cost of those repairs.
[11] In late December 2019, the vehicle again lost power. Ms Bowater advised that the symptoms she experienced were the same as present when the vehicle first broke down in November 2019, with the vehicle losing power on the motorway at a speed above 80 km/h. The vehicle was then assessed by AA Motoring Auto Centre in Wairau Park, which found a coolant leak from the auxiliary water pump, which it replaced using the Protecta Insurance policy, with Mr Bowater paying $430.43 as an insurance excess. AA Motoring Auto Centre also performed a diagnostic scan and found no fault codes.
[12] The vehicle lost power again almost immediately after it was returned from AA Motoring Auto Centre, again while being driven on the open road at speeds above 80 km/h. That company assessed the vehicle again on 28 January 2020 and found a small water leak from the top hose bypass connector. It also found a fault code (“120308 Charge Air Pressure Control Plausibility Pressure Too Low”) but could find no fault relating to that code. The vehicle lost power again on 8 February 2020 while driving on the motorway. Mr Bowater then emailed Signet Motors on 12 February 2020 and rejected the vehicle.

Signet Motors’ evidence

[13] Signet Motors says that the vehicle has been of acceptable quality. It says that the vehicle passed compliance testing before it was sold to Mr Bowater and no faults were found at that time.
[14] Signet Motors also considered that many of the issues that have arisen during Mr Bowater’s ownership may have been caused by Ms Bowater continuing to use the vehicle after the Drivetrain Malfunction warning message appeared, and by accelerated wear and tear due to the vehicle being driven by Ms Bowater, who Signet Motors considered to be an inexperienced driver. Signet Motors questioned whether a driver of Ms Bowater’s age should be driving a turbo vehicle such as this. It also suggested that the wrong fuel and coolant may have been used in the vehicle, contributing to its faults.
[15] Signet Motors also says that it has been unable to find any serious fault with the vehicle. It had the vehicle assessed by BM Workshop Ltd on 15 June 2020. BM Workshop found faults, such as a rear coolant leak, minor cracking to the water pump pulley, moisture in the headlights and steering rack play, but none that would cause the issues complained of by Mr Bowater.

The Tribunal’s assessment

[16] The vehicle has not been of acceptable quality for the purposes of s 6 of the CGA. The evidence shows that, by 12 November 2019, when the vehicle was assessed by Euro Lab, the following unacceptable defects were present:

The split turbo intake pipe and coolant leaks

[17] The split turbo intake pipe has been confirmed by both Euro Lab and Bellars, with Bellars replacing the intake pipe in December 2020. The coolant leak was confirmed by both Euro Lab and AA Motoring Auto Centre, with AA Motoring Auto Centre replacing the water pump and thermostat housing in January 2020.
[18] These defects mean the vehicle was not of acceptable quality in breach of s 6 of the CGA because the vehicle has not been as durable as a reasonable consumer would consider acceptable. Mr Bowater paid $14,700 for a six-year-old vehicle with an odometer reading of 36,053 km, which is a very low reading for a vehicle of this age. I am satisfied that a reasonable consumer would have had high expectations as to the quality and durability of such a vehicle and would not expect a split turbo intake pipe and substantial coolant leaks to be present so shortly after purchase.

The intermittent fault that causes the vehicle to lose power

[19] Likewise, I consider that a reasonable consumer would not expect the vehicle to develop an intermittent fault that causes it to unexpectedly lose power at speeds of about 80km/h.
[20] That intermittent fault has not been diagnosed. Euro Lab found a fault code relating to a network communication error with the ICM, but none of the other technicians who have inspected the vehicle have found any fault that could be the underlying cause of the symptoms experienced by Ms Bowater. Nonetheless, I am satisfied that a fault exists, and I accept Ms Bowater’s evidence as to the existence of the fault, which is supported by the photograph she provided of the “Drivetrain Malfunction Drive Moderately” warning message that appeared every time the vehicle faulted.
[21] The intermittent fault is likely to be caused by an electrical defect due to coolant contamination within the vehicle’s wiring loom, which is affecting the operation of one or more of its control modules. The evidence shows that coolant was leaking throughout the engine and Mr Gregory, the Tribunal’s Assessor, advises that it is most likely that an electrical fault caused by that coolant leak is now affecting the operation of the DME or the ICM, which links the DME to the vehicle’s other control modules. The most telling evidence of a fault affecting the operation of the DME or ICM is the fact that the fault occurs in almost identical circumstances – at speeds above 80 km/h – which suggests that one of those modules is faulting when called upon to perform a particular operation at that speed.
[22] Mr Gregory also notes that the fault code found by Euro Lab, which related to a network communication error with the ICM, where that module was unable to detect the angle of the accelerator pedal, is consistent with an electrical fault affecting the operation of the DME or ICM and is also consistent with the symptoms experienced by Ms Bowater.

The vehicle’s other defects

[23] The vehicle’s other defects do not breach the guarantee of acceptable quality.
[24] The worn front brake pads and rotors, identified by Euro Lab and repaired by Bellars, are consumable items that require replacement from time to time. The front brake pads and rotors were replaced more than six months after purchase, by which time the vehicle’s odometer reading was 44,379 km (meaning the vehicle had travelled more than 8,000 km since purchase). Mr Gregory advises that it is not unusual for the brake pads and rotors in a BMW 116i to require replacement at this mileage and given the length of Mr Bowater’s ownership and the distance travelled before the brake pads and discs were replaced, I am satisfied that those components have been as durable as could reasonably be expected.
[25] Similarly, the small water leak from the top hose bypass connector found in January 2020 is the type of defect that can arise from time to time in a vehicle of this age and mileage, and I am not satisfied that it means the vehicle was of unacceptable quality.

Issue 2: Has Mr Bowater lost the right to reject the vehicle?

[26] 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.

[27] Section 20 of the CGA sets out the circumstances in which a purchaser loses the right to reject a vehicle. Relevant to this case, s 20(1)(c) of the CGA states:

20 Loss of right to reject goods

(2) The right to reject goods conferred by this Act shall not apply if—

...

(c) the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply.

[28] The vehicle has been damaged since it was sold to Mr Bowater. Ms Bowater says that, when reversing from a carpark at her school, she bumped into a small bollard. Signet Motors has provided photographs of the damage caused, which show impact damage to the driver’s side of the rear bumper. The bumper has a dent and is gouged in at least four places. The bumper requires removal, repair and repainting.
[29] Although this damage is relatively easily repaired, I am satisfied that the damage is sufficient to amount to damage for the purposes of s 20(1)(c) of the CGA and that Mr Bowater has lost the right to reject the vehicle. His application to reject the vehicle under the CGA must therefore be dismissed.
[30] Mr Bowater will undoubtedly consider this aspect of the decision to be harsh, given the relatively minor nature of the damage compared to the value of the vehicle. However, I have no discretion under s 20(1)(c) of the CGA. Once I am satisfied that the vehicle has been damaged while in Mr Bowater’s possession, I have no option but to conclude that he has lost the right to reject the vehicle.

Issue 3: What remedy is Mr Bowater entitled to under the CGA?

[31] The remedies relevant to this claim are set out in s 18 of the CGA, 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.

[32] Under s 18(2)(a) of the CGA, Mr Bowater is entitled to have the ongoing defects that breach s 6 of the CGA rectified within a reasonable time. Signet Motors must therefore, within 15 working days of the date of this decision rectify the undiagnosed fault that is causing the vehicle to intermittently lose power.
[33] Under s 18(2)(b)(i) of the CGA, Mr Bowater is also entitled to recover:
[34] Mr Bowater is entitled to recover these amounts because Signet Motors refused to rectify these defects. Mr Bowater notified Signet Motors of the coolant leak and damaged intake boot on 15 November 2019, when he sent a copy of the Euro Lab assessment to the company. It should have been clear to Signet Motors that the vehicle had unacceptable defects that it had liability for under the CGA. Rather than take responsibility for rectifying those defects, Signet Motors referred Mr Bowater to Protecta Insurance. By doing so, I am satisfied that Signet Motors has refused to rectify the vehicle’s defects.
[35] In reaching this conclusion, I note that Signet Motors’ submission during the hearing that its dealer warranty required Mr Bowater to provide two separate diagnoses is irrelevant, because the CGA contains no such requirement. Instead, I am satisfied that the diagnosis from Euro Lab was more than sufficient to notify Signet Motors of the vehicle’s defects.
[36] Under s 18(4) of the CGA, Mr Bowater is also entitled to recover the cost of having the vehicle’s defects assessed, which were:
[37] Mr Bowater is not entitled to recover the other amounts he sought – including the cost of replacing the brakes pads and discs and the losses he says were incurred in purchasing a replacement vehicle. The worn brake pads and discs did not breach the acceptable quality guarantee, so Mr Bowater is not entitled to any remedy for those repairs and the cost of purchasing a replacement vehicle is not recoverable as Mr Bowater has suffered no loss by purchasing that vehicle.

The Tribunal’s orders

[38] Mr Bowater’s application to reject the vehicle is dismissed and the Tribunal orders that Signet Motors shall, within 15 working days of the date of this decision:

DATED at AUCKLAND this 11th day of August 2020

B.R. Carter
Adjudicator


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