Bailey v MSK Motors Ltd - Reference No. MVD 253/2020 [2020] NZMVDT 161 (2 October 2020)

Last Updated: 23 November 2020

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 253/2020 [2020] NZMVDT 161 BETWEEN IAN LEONARD BAILEY Purchaser AND MSK MOTORS LTD Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Haynes, Assessor

HEARING at Hamilton on 1 October 2020

APPEARANCES

I L Bailey, Purchaser

No appearance for the Trader

DATE OF DECISION 2 October 2020

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DECISION OF THE TRIBUNAL

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1. MSK Motors Ltd shall, within 10 working days of the date of this decision pay:
   • (a) $885.27 to Ian Bailey; and
   • (b) costs of $650 to the Crown (payable to Ministry of Justice, Tribunals Unit, Level 1, Chorus House, 41 Federal Street, Auckland 1010).

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REASONS

Introduction

[1] Ian Bailey purchased a 2008 Suzuki Escudo for $13,140 from MSK Motors Ltd in February 2020. Since purchasing the vehicle, he has discovered that its radio reception is inadequate and the driver side rear door has unacceptable corrosion. Mr Bailey says that he asked MSK Motors to rectify those faults, but it did not respond to his requests. Mr Bailey has now had the radio replaced and the corrosion repaired at a cost of $835.27. He has applied to recover those costs from MSK Motors.
[2] Despite being sent a notice of hearing advising it of the time and place of the hearing, MSK Motors did not attend. The hearing proceeded without it.

The issues

[3] 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) What remedy is Mr Bailey entitled to under the CGA?

Issue 1: Has the vehicle been of acceptable quality?

[4] 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.
[5] 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.

[6] 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 radio reception

[7] Mr Bailey says that he spoke with an employee of MSK Motors before purchasing the vehicle and was told that the vehicle’s radio “works with only a few stations”, but a band expander would be installed before purchase to increase the radio’s bandwidth. Mr Bailey says that no band expander was installed, and the vehicle’s radio could only detect two or three radio stations.
[8] I accept Mr Bailey’s evidence that he was told that a band expander had been installed in the vehicle prior to purchase and that the radio’s bandwidth was limited to the extent that the radio could only detect a small number of radio stations. I found Mr Bailey to be a clear and consistent witness and I have no reason to doubt that evidence.
[9] In light of MSK Motors’ pre-purchase representation that a band expander had been installed, a reasonable consumer would have expected this vehicle’s radio to have sufficient bandwidth to detect all local radio stations. It did not, meaning the vehicle was not of acceptable quality for the purposes of s 6 of the CGA.

The corrosion

[10] In May 2020, Mr Bailey also discovered corrosion around the driver side rear door. Mr Bailey provided photographs, which clearly show corrosion in the door seal channel in the driver side C pillar. Mr Haynes, the Tribunals Assessor, advises that this corrosion should have caused the vehicle to fail its pre-purchase warrant of fitness inspection if it had been detected. Mr Haynes considers it most likely that the corrosion was not detected during that inspection because it was concealed behind a rubber seal.
[11] I am satisfied that the corrosion means the vehicle has not been of acceptable quality. A reasonable consumer would not expect a recently purchased $13,140 vehicle to have pre-existing corrosion that would cause it to fail a warrant of fitness inspection.

Issue 2: What remedy is Mr Bailey entitled to under the CGA?

[12] The remedies relevant to this claim are set out in s 18 of the CGA, which provides:

18. 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.

[13] Mr Bailey seeks to recover the cost of replacing the radio and repairing the vehicle’s corrosion. He says that he contacted MSK Motors about the vehicle’s defects before incurring those costs, but MSK Motors ignored him and offered no remedy.
[14] I am satisfied that Mr Bailey is entitled to recover the costs he seeks under s 18(2)(b)(i) of the CGA. Mr Bailey repeatedly called MSK Motors to obtain a remedy for the defective radio and corrosion, but MSK Motors either did not answer his calls or did not return his calls as promised. In my view, MSK Motors’ evasion of its obligation to engage with Mr Bailey and provide him with a remedy amounts to a refusal to rectify the vehicle’s defects. Mr Bailey is therefore entitled to recover the following amounts:

• (c) $491.63 — being the cost of corrosion repairs performed by Manawatu Autobodies in August 2020.
• (d) $199.89 — being the cost of purchasing a replacement radio on 20 June 2020.
• (e) $143.75 — being the cost of installing the radio on 2 July 2020.

Costs

[15] Under cl 14(1)(b) of Sch 1 to the Motor Vehicle Sales Act 2003 (the MVSA), the Tribunal may award costs against a party who, after receiving notice of the hearing, fails to attend without reasonable cause. I am satisfied that MSK Motors, after receiving notice of the hearing, failed to attend without reasonable cause. Accordingly, under cl 14(2)(b) of Sch 1 to the MVSA, Mr Bailey is entitled to recover $50, being the filing fee for this application. Further, under cl 14(2)(a)(i) of Sch 1 to the MVSA, I also order that MSK Motors pay $650, being the reasonable costs of the Tribunal hearing.

DATED at AUCKLAND this 2nd day of October 2020

B.R. Carter
Adjudicator