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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 22 October 2020
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IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
BETWEEN LIAM BARGROVE BROWN
Purchaser
AND CNB 1 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 22 September 2020
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APPEARANCES
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L B Brown, Purchaser
N Purvis, Witness for the Purchaser
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C Broadhurst, for the Trader
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DATE OF DECISION 28 September 2020
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_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
_________________________________________________________________
REASONS
Introduction
[1] Liam Brown wants to reject the 2007 Audi S6[1] he purchased for $14,250 from CNB 1 Ltd on 31 December 2019. Mr Brown says that the vehicle has an intake manifold fault, which CNB 1 Ltd did not fix in the six months since the vehicle was returned for repairs. Mr Brown wants to return the vehicle, obtain a refund of the purchase price and be compensated for other costs he has incurred.
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 CNB 1 Ltd failed to rectify the vehicle’s defects within a reasonable time?
- (c) What remedy is Mr Brown 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.
[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 Brown’s evidence
[6] Mr Brown lives in Christchurch, and he drove the vehicle home from Auckland after purchasing it on 31 December 2019. Near Cheviot he noticed that an engine warning light had illuminated on the vehicle’s dashboard display. Mr Brown took the vehicle to Matipo Garage, his mechanic, which performed a smoke test and found an air leak from the intake manifold. After discussions with CNB 1 Ltd, the vehicle was taken to Dubworld, a Christchurch based European vehicle repairer, which performed repairs, including machining the surface of the manifold, to fix the air leak.
CNB 1 Ltd’s response
[8] CNB 1 Ltd agrees that the vehicle had a fault that caused the vehicle’s engine warning light to illuminate. It says that carbon buildup in the intake manifold, or on the intake manifold flap seating surface, caused the manifold flap to seat incorrectly, allowing unmetered air into the manifold.
[9] CNB 1 Ltd says that this is a common fault in Audi S6’s, which have V10 engines, and says that the fault has now been rectified following repairs performed by Engine Specialties 2012 Ltd. CNB 1 Ltd produced an invoice from Engine Specialties 2012 Ltd from September 2020, which states that it performed intake manifold repairs including “an ultra sonic clean, bead blast, fill and shape hole as required”. CNB 1 Ltd was charged $230 for those repairs.
The Tribunal’s assessment
[10] Mr Gregory, the Tribunal’s Assessor, advises that the symptoms described by Mr Brown (the engine warning light, unusual noise from the engine and the vehicle entering limp mode) are consistent with an intake manifold flap fault. Mr Gregory says that the unusual noise was most likely caused by the manifold flap motor repetitively trying to correctly seat the manifold flap, which would in turn have triggered an engine warning and caused the vehicle to enter limp mode to protect the engine from damage.
[11] On the basis of the evidence presented by the parties, and the advice I have received from Mr Gregory, I am satisfied that the vehicle had a defect that caused excessive carbon build up between the intake manifold flap and its seating surface. Although the manifold flap fault has been inexpensively repaired, it was nonetheless a fault of some significance that required repair. Mr Gregory advises that this fault would cause excessive fuel consumption and poor performance at idle and while cruising.
[12] This defect means the vehicle was not of acceptable quality as required by s 6 of the CGA because a reasonable consumer would not consider such a defect to be acceptable in a recently purchased, $14,250 13-year-old vehicle.
Issue 2: Has CNB 1 Ltd failed to rectify the vehicle’s defects within a reasonable time?
[13] 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.
[14] Mr Brown returned the vehicle in mid to late February 2020 for repairs to be performed. He then rejected the vehicle when those repairs had not been completed by 17 July 2020, nearly five months later.
[15] CNB 1 Ltd says that the delay in rectifying the manifold flap fault was not unreasonable in the circumstances of this case, because of:
- (a) difficulties in finding a suitable repairer, with the manifold needing to be transported from Christchurch to Auckland for repairs;
- (b) delays caused by the unavailability of repairers during Covid-19 lockdown periods in March and April and then in August and September 2020; and
- (c) the general demands of running a business during Covid-19 lockdown periods.
[16] Mr Gregory advises that the manifold did not need to be transported to Auckland for repairs. Mr Gregory says that the repair described in the invoice from Engine Specialties 2012 Ltd was not complicated and could have been performed by any experienced automotive machinist in Christchurch or elsewhere in the South Island. Mr Gregory also considers that the required diagnosis, removal of the manifold, repair and refitting of the manifold should ordinarily take no longer than two weeks.
[17] Although there were extenuating circumstances (particularly the challenges posed by Covid-19 lockdowns) that meant that this repair was going to take longer than usual, this was not a difficult repair and I am satisfied that CNB 1 Ltd should have rectified the manifold flap fault well before Mr Brown rejected the vehicle on 17 July 2020. Mr Brown was therefore entitled to reject the vehicle because of CNB 1 Ltd’s failure to rectify the manifold flap fault within a reasonable time.
Issue 3: What remedy is Mr Brown entitled to under the CGA?
[18] 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.
[19] Under s 18(2)(b)(ii) of the CGA, Mr Brown is entitled to reject the vehicle because CNB 1 Ltd failed to rectify the manifold flap fault within a reasonable time. Under s 23(1)(a) of the CGA, Mr Brown is entitled to recover all amounts paid in respect of the vehicle, which in this case is the purchase price of $14,250.
[20] Mr Brown also seeks to recover the cost of insuring the vehicle. I do not intend to award this amount to Mr Brown. I consider that Mr Brown has suffered no loss in insuring the vehicle. The vehicle has remained insured, to Mr Brown’s benefit, throughout his ownership. I am certain that if the vehicle had been damaged or stolen, Mr Brown would have made a claim against the insurance policy. That being the case, the cost of insurance in these circumstances is not recoverable under the CGA.
The Tribunal’s orders
[21] The Tribunal therefore upholds Mr Brown’s rejection of the vehicle and orders that CNB 1 Ltd pay Mr Brown $14,250 within 10 working days of the date of this decision.
DATED at AUCKLAND this 28th day of September 2020
B.R. Carter
Adjudicator
[1] Registration plate number GGH919.
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2020/157.html