Vile v Auckland Motorcycles Power Sports Ltd - Reference No. MVD 269/2020 [2020] NZMVDT 188 (29 October 2020)

Last Updated: 24 November 2020

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 269/2020 [2020] NZMVDT 188 BETWEEN JEROME VILE Purchaser AND AUCKLAND MOTORCYCLES & POWER SPORTS LTD Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S D Gregory, Assessor

HEARING at Auckland on 20 October 2020

APPEARANCES

J Vile, Purchaser

G K Pratt and T Hetherington, for the Trader

DATE OF DECISION 29 October 2020

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

1. Jerome Vile’s application is dismissed.

_________________________________________________________________

REASONS

Introduction

[1] Jerome Vile purchased a 2019 Harley Davidson Breakout 114 motorcycle for $33,995 from Auckland Motorcycles & Power Sports Ltd (AMPS) in March 2019. The motorcycle suffered significant engine failure in July 2019 and damage to a compensator sprocket in its transmission in June 2020. Mr Vile also alleges that the motorcycle has had ongoing engine performance issues that AMPS has failed to address. Mr Vile seeks to reject the motorcycle and obtain a refund of the purchase price.

The issues

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

• (a) Has the motorcycle been of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA)?
• (b) Are the motorcycle’s defects a failure of a substantial character?
• (c) What remedy is Mr Vile entitled to under the CGA?

Issue 1: Has the motorcycle 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 motorcycles.
[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”.

The relevant evidence

[6] Mr Vile says he purchased this motorcycle as he wanted a safe and reliable bike and “had a lot of confidence in the Harley Davidson brand and considered them to be the most reputable motorcycle manufacturer in the world”. Mr Vile says that the motorcycle has not lived up to his expectations of safety and reliability.
[7] The motorcycle’s engine failed on 21 July 2019, when the motorcycle’s odometer reading was only 2,209 km. AMPS assessed the engine and found that a rubber cap/cover had been left inside the motorcycle’s sump when the vehicle was manufactured, which had restricted oil supply to the engine, causing irreparable damage. AMPS replaced the engine under the manufacturer’s warranty.
[8] Mr Vile says that he then noticed other problems with the motorcycle - unusual clunking noises from the primary drive, an intermittent engine light, an irregular idle and occasional overheating. He returned the motorcycle to AMPS on about 25 September 2019, but no faults were found. Mr Vile remained concerned about the motorcycle’s performance. When the motorcycle was serviced by AMPS in April 2020, he asked the company to perform a thorough assessment. Again, no faults were found.
[9] On 5 June 2020, while Mr Vile was riding on State Highway 16 near Helensville, the motorcycle’s transmission failed, causing a sudden and unexpected loss of power. Mr Vile then returned the motorcycle to AMPS and rejected it. AMPS then assessed the motorcycle and found that the transmission fault was caused by a “shattered” compensator sprocket,[1] which it replaced at a total cost of $712.63.

The Tribunal’s assessment

[10] The motorcycle has not been of acceptable quality for the purposes of s 6 of the CGA because of the premature engine failure and shattered compensator sprocket, which affected the operation of the motorcycle’s transmission. A reasonable consumer who purchased a brand new $33,995 Harley Davidson would not expect such defects to be present so shortly after purchase.
[11] With respect to Mr Vile’s other concerns – the irregular clunking noises from the primary drive, the intermittent engine light, irregular idle and overheating – I am not satisfied that he has proven that the motorcycle has any inherent defect that would cause those symptoms. The motorcycle has been assessed at least twice by AMPS, and no fault consistent with those symptoms has been found and Mr Vile has not had the vehicle assessed by any other technician to confirm the existence of any unacceptable fault.
[12] I also consider there to be a real possibility that at least some of those symptoms were caused by modifications made by Mr Vile. For example, Mr Gregory, the Tribunal’s Assessor, advises that the engine light and irregular idle complained of by Mr Vile could well be caused by modifications Mr Vile has made to the vehicle’s exhaust system. Mr Vile has removed the exhaust baffles, which as well as making the exhaust louder, has increased the amount of air flowing through the exhaust. This can cause the engine to run lean, which can cause an irregular idle and engine warning lights.

Issue 2: Are the motorcycle’s defects a failure of a substantial character?

[13] Under s 18(3) of the CGA, Mr Vile may reject the motorcycle if its defects amount to a failure of a substantial character. A failure of a substantial character is defined in s 21 of the CGA:

21. 21 Failure of substantial character

For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where—

(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or

(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.

[14] Section 21(a) of the CGA is relevant to this case, and I am satisfied that the significant engine fault in July 2019 is a failure of a substantial character. I have no reservation in concluding that a reasonable consumer would not have purchased a new $33,995 motorcycle if they had known that the engine would fail after a little more than 2,000 km of riding.
[15] The shattered compensator sprocket, which occurred in June 2020 is not a failure of a substantial character. Although that fault affected the operation of the transmission, it was easily identified and inexpensively fixed. In my view it is not the kind of fault that would cause a reasonable consumer to decline to purchase this motorcycle. Likewise, I am not satisfied that the shattered compensator sprocket would cause a reasonable consumer to lose confidence in the ongoing reliability of the vehicle. That fault is separate from the earlier engine failure, and although unacceptable, is not indicative of the motorcycle having any inherent flaw that would cause a reasonable person to lose confidence in its ongoing reliability.
[16] Mr Vile also submitted that the shattered compensator sprocket made the motorcycle unsafe, because the motorcycle lost all power on a rural highway, forcing the vehicle behind him to swerve into oncoming traffic, narrowly avoiding a head on collision. I accept Mr Vile’s evidence as to what happened but consider that the actions of the driver of the following vehicle, rather than the shattered compensator sprocket, created this situation.
[17] On his evidence, Mr Vile was able to pull to the side of the road once the transmission failed. The near miss involving the trailing vehicle appears to have been caused by that vehicle following too closely. Road rules require that a following vehicle must leave enough space to safely stop in the event the vehicle in front stops unexpectedly. The near miss appears to have been caused by the trailing vehicle having to take evasive action when it could not safely stop because it was following too closely.

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

[18] 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.

[19] Mr Vile would have been entitled to reject the motorcycle because of the engine damage. However, he agreed to allow AMPS to rectify that defect, which it has done, so he is no longer entitled to that remedy. Further, because the other defect that breached the guarantee of acceptable quality – the shattered compensator sprocket – has been rectified, Mr Vile is entitled to no further remedy under the CGA and his application is dismissed.

DATED at AUCKLAND this 29th day of October 2020

B.R. Carter
Adjudicator

---

[1] The compensator sprocket is part of the transmission and is designed to reduce torsional vibration created by the crankshaft so it is not transmitted through the drivetrain.