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Boult v Dutton Garage NZ Limited - Reference No. MVD 218/2020 [2020] NZMVDT 192 (4 November 2020)

Last Updated: 17 December 2020


IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 218/2020
[2020] NZMVDT 192

BETWEEN KELVIN JOHN BOULT

Purchaser

AND DUTTON GARAGE NZ LIMITED

Respondent

HEARING at Christchurch on 9 October 2020, further submissions received on 16, 19, 26 October 2020
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator
R C Dixon, Assessor

APPEARANCES

K J Boult, Purchaser
C C Cook, Purchaser’s witness
R P Mauger, Director of Trader

DATE OF DECISION 4 November 2020

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

Dutton Garage NZ Ltd must pay Kelvin Boult $372.50 no later than 18 November 2020. In addition, Dutton Garage is liable to replace the supercharger belt, pulley and tensioner and the intercooler water pump in Mr Boult’s Mercedes. Mr Boult should give Dutton Garage a chance to carry out these repairs itself but, if it refuses to do so, I will convert this decision into a further monetary award in favour of Mr Boult. Dutton Garage must confirm its position on whether it is willing to carry out these repairs at its cost within seven days of the date of this decision.


REASONS

Introduction

[1] Kelvin Boult seeks damages for repair costs in respect of several alleged defects on the 2006 Mercedes SL 55 that he purchased on 6 December 2019 from Dutton Garage NZ Ltd for $50,000.
[2] A dispute has also arisen between Mr Boult and Dutton Garage in relation to another vehicle that Mr Boult traded in as part of the purchase of the Mercedes but, as I outlined at the beginning of the hearing, the Tribunal has no jurisdiction to determine the dispute relating to the traded-in vehicle.
[3] Mr Boult made it clear in his written submissions that he likes the Mercedes and wants to keep it, but that he would appreciate having the outstanding issues repaired by Dutton Garage under warranty, and to be reimbursed for what he has already spent on repairs to the vehicle.
[4] Mr Boult also acknowledges (after a recent inspection by Armstrong Prestige) that the overall condition of the vehicle is good.
[5] The alleged defects can be described under the following 10 headings:
[6] In respect of these alleged defects the primary issues for the Tribunal to determine are as follows:

Issue one: did the vehicle fail to comply with its description?

[7] Section 9(1) of the Consumer Guarantees Act 1993 (the Act) provides that where goods are supplied by description to a consumer, there is a guarantee that the goods correspond with the description. According to s 2 of the Act, “goods” includes vehicles.

Odometer discrepancy

[8] Mr Boult complains that the consumer information notice and vehicle offer and sale agreement both record the vehicle’s odometer reading as 80,250 km. Yet the most recent warrant of fitness for the vehicle, obtained on 24 October 2019, approximately six weeks before Mr Boult purchased the vehicle, indicates that its odometer reading at the time of inspection was in fact 81,213 km, nearly 1,000 km more than is recorded on these sales documents. I note also that the advertising material for the vehicle on Dutton Garage’s website states the odometer reading as 80,250 km. However, a photo of the vehicle’s instrument cluster, which was downloaded from the trader’s website, shows the odometer display at 80,929 km and Mr Boult acknowledged that the instrument cluster and odometer readout was visible to him at the time he inspected the vehicle before purchasing it.
[9] Although the vehicle’s odometer reading has clearly been misstated carelessly on the sales documentation, I do not consider that Mr Boult was (or any reasonable consumer would have been) misled by these statements, or that the under-recording of the vehicle’s odometer has translated into any form of loss in value suffered by Mr Boult.
[10] I do not consider that any reasonable consumer would have decided not to purchase the vehicle or negotiated a materially lower purchase price by virtue of the fact that the true odometer reading was approximately 1,000 km higher than claimed on the documents.
[11] That said, traders commonly understate odometer readings on sales documents, presumably because the data used in these documents is recorded some time before the vehicle is sold and is not updated. I indicated to Mr Mauger at the hearing that it would take minimal effort to accurately represent the vehicle’s odometer reading on the sales agreement. Doing so would avoid arguments such as this, which are all too common. Mr Mauger agreed and said that he would improve Dutton Garage’s practices in this regard.

Issue two: Did the vehicle fail to comply with the guarantee of acceptable quality?

[12] Section 6(1) of the Act provides that “where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality”.
[13] “Acceptable quality” is defined in s 7 of the Act (as far as is relevant) as follows:
  1. 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.

...


[14] Whether a vehicle is of acceptable quality is considered from the point of view of a reasonable consumer who is fully acquainted with the state and condition of the vehicle, including any hidden defects.

Tyres

[15] In or around April 2020, Mr Boult noticed that the vehicle’s front tyres were damaged. He has since removed the tyres and he brought them to the hearing. The Tribunal’s Assessor, Mr Dixon, and I were able to inspect the damage, which took the form of severe cracks on the sidewalls.
[16] Before the vehicle was sold to Mr Boult, Dutton Garage replaced its rear tyres and refurbished all of its wheels at a cost to Dutton Garage of $2,675. However, the front tyres were not replaced at this time. Hayden Knighton, of Mag and Turbo Tyre & Service Centre, confirmed in a written statement that when he replaced the rear tyres, the front tyres “seemed fine to us and safe as we would not have put them back on the rims if they weren’t”. Mr Knighton has subsequently reviewed post-sale photographs of the front tyres showing cracks in the side walls and said that, in his view, it appeared that these cracks were caused by the tyres having been run without enough air in them.
[17] Mr Boult produced an email from Jono Pawsey, of Bridgestone Tyre Centre Ashburton, who stated that both front tyres had splits on the inside walls consistent with them having been under-inflated previously. Mr Pawsey said that both tyres had excessive shoulder wear and that the front left tyre had an impact on the outside wall, which had taken a chunk out of the side wall, but which had left no corresponding mark or damage to the wheel rim.
[18] Mr Pawsey said that, in his view, both front tyres are dangerous and should not be on a vehicle, especially with the splits in the side walls which are very dangerous. Mr Pawsey said that the rear tyres “are OK”. However, he said the rear tyres had an old date stamp on them, suggesting that they had been purchased secondhand and then fitted to the vehicle to be sold as new. Mr Pawsey estimated the cost of new front tyres (255/35R19 Bridgestone S007A) at $367 each.
[19] Dutton Garage produced a letter from Shaun Ashton, who carried out a warrant of fitness inspection on the vehicle on 24 October 2019. Mr Ashton confirmed that the vehicle would not have passed a warrant of fitness inspection had the tyres been in the condition shown in photos that Mr Ashton saw. Based on this, Mr Ashton concluded that the tyres had been damaged after the warrant of fitness inspection or that they had been changed.
[20] Mr Boult said that he first noticed that the front tyres were damaged around the time when he had exhaust repairs done to the vehicle. This was in or around April 2020, which was nearly four months after Mr Boult purchased the vehicle. Because Mr Boult only noticed the damage so long after the date of purchase, I am not prepared to find that the tyres were sold in a damaged state when Mr Boult purchased the vehicle. If they had been, I would likely have upheld his claim for reimbursement of the costs of replacing the front tyres, as long as he had duly notified Dutton Garage of this defect and sought its assistance first. However, I am not prepared to discount the likelihood that the tyres were damaged after Mr Boult purchased the vehicle.
[21] The Tribunal rarely awards a remedy in respect of tyres, given that they are the quintessential wear-and-tear item. As Mr Boult cannot prove the front tyres were damaged when he purchased the vehicle, I am not prepared to conclude that they failed to comply with the guarantee of acceptable quality. Nor am I prepared to make any finding that the rear tyres did not comply with the guarantee of acceptable quality or that they failed to match any pre-sale representations about them. Mr Boult did not present sufficient evidence to enable the Tribunal to make such a finding.

Warrant of fitness

[22] As will already be clear from the above summary, the warrant of fitness for this vehicle was more than one month old as at the date of delivery of the vehicle, in breach of relevant Land Transport Rules.[1] The warrant of fitness was obtained on 24 October 2020, meaning that Dutton Garage breached the relevant legislation by about two weeks. It needs to improve its compliance with legal requirements when selling vehicles. I will allow Mr Boult to recover the cost of his obtaining a new warrant of fitness for the vehicle, $60.

Battery

[23] On 2 March 2020, almost three months after Mr Boult purchased the vehicle, he contacted Dutton Garage to advise that he thought that the new auxiliary battery that had been installed in the boot of the vehicle had failed. Armstrong Prestige had reported to Mr Boult that the battery was in poor condition, as part of an overall vehicle check Mr Boult had arranged. Mr Boult also had problems with remotely opening the vehicle’s doors and then found that the vehicle’s “convenience” functions would not operate at all.
[24] Mr Boult asked Dutton Garage to send him a copy of the receipt for the battery that it had purchased so that he could return it and obtain a warranty replacement.
[25] This is indeed exactly what Mr Boult has done. He obtained a replacement battery which has now been installed in the vehicle. At the hearing, Mr Boult confirmed that he had not experienced any problems with the replacement battery, although he has been disconnecting it to prevent damage to the vehicle when not being used.
[26] Mr Boult made enquiries with the battery distributor who said that the battery that had been installed in the vehicle was a “second”. However, the distributor confirmed that the batteries it sells meet “new battery performance standards” before being sold and that this assurance of quality applied to Mr Boult’s battery.
[27] Based on this information, I do not consider that Mr Boult has established that the battery sold with his vehicle failed to comply with the guarantee of acceptable quality (at least after it has now been replaced under warranty). It appears that Mr Boult’s real concern is that the newness of the battery has been exaggerated but I am not satisfied, based on the evidence, that there was any exaggeration as to the newness of the battery by Dutton Garage.

Service history

[28] Mr Boult complains that Dutton Garage promised to provide him the vehicle’s service history when he purchased it. As well, Mr Boult is not satisfied with the service history that was ultimately provided to him.
[29] At the hearing, it transpired that Mr Boult was given various service manuals relating to the vehicle, as well as a service booklet showing the last service had been carried out in 2013. Mr Boult confirmed at the hearing that he was not pressing this aspect of his application, but it appeared to me that Dutton Garage had indeed provided Mr Boult with all of the service-related information that it possessed.
[30] A related concern was that Mr Boult found out reasonably soon after taking ownership of the vehicle that it needed to be serviced. He says that this contradicted a promise by the salesperson at the time of the sale that the vehicle had been recently serviced. Again, there was insufficient evidence that Dutton Garage told Mr Boult that the vehicle had recently been serviced. This sort of allegation should be verified with written evidence, either as a special condition of sale or some sort of documented promise by a trader that the vehicle has been serviced. Absent such evidence the Tribunal will likely have difficulty reaching a finding in regard to any promise made as to servicing, particularly in light of the fact that traders have no general obligation to service vehicles before selling them. In this case, Mr Wansbrough, who was the salesman who sold the vehicle to Mr Boult, denied that he told Mr Boult that the car had been recently serviced. There was no written evidence to the contrary. The Tribunal is unable to resolve this disputed evidence.

Loss of power on acceleration

[31] On or around the day after Mr Boult purchased the vehicle, he found that it suddenly lost power when under full acceleration at high speed. He immediately advised Dutton Garage about this by email dated 7 December 2019. Dutton Garage suggested there may be a spark plug fault. It invited Mr Boult to bring the vehicle in for attention at Elite Auto Electronics next time he was in Christchurch.
[32] However, Dutton Garage later retracted its offer to assist with repairs to the vehicle, in part due to its concerns regarding Mr Boult’s trade-in vehicle, and partly due to the fact that no diagnostic trouble codes were generated in relation to this fault and Mr Boult’s mechanic was unable to identify any specific engine fault.
[33] Armstrong Prestige has since identified that a faulty intercooler water pump is to blame for this loss of power under acceleration. In a report dated 16 October 2020, provided after the hearing, Armstrong Prestige’s service manager Jeremy Duffy noted as follows:

The symptoms of [a faulty intercooler water pump] are a loss of engine power intermittently, usually experienced on harder acceleration and more common on hotter days where the ambient temperature of the engine is higher. This fault most often does not cause the engine lamp to come on and rarely records any fault codes in the electronics, if it does the code relates to the temperature sensor for the intercooler liquid which is located on the engine itself and this can be misleading. The reason for this is that the electric intercooler pump fails and the unit stops circulating the coolant quickly enough through the engine and cooling radiators to reduce the temperature of the intake air which has run through the compressor. The coolant then runs too hot to effectively cool the air entering the engine and so the ECU adapts the operating parameters of the compressor to reduce risk of engine damage by too much boost pressure. This fault is hard to diagnose for people not experienced in the brand and their particular curiosities, there are no documents that assist in locating it and the lack of fault codes makes it difficult for technicians who aren’t experienced to locate ...

[34] In its response to Armstrong Prestige’s 16 October 2020 report, Dutton Garage did not dispute the existence of a fault with the intercooler water pump, as diagnosed by Armstrong Prestige. But it implicitly criticised Mr Boult for identifying the symptoms of this fault (loss of engine power) while driving the vehicle at speeds much higher than the legal limit. It questioned whether a safety system fault, designed to protect the engine from damage when being driven “at double the open speed limit” makes the car not “fit for purpose” or not of “acceptable quality”.
[35] But while the Tribunal cannot condone driving at the unlawful and unsafe speeds described, the fact that this may be a fault that no one can legally replicate does not change the fact that it is a diagnosed fault with the vehicle.
[36] Armstrong Prestige has quoted $1,415.35 to replace the intercooler water pump. This is clearly a fault with the vehicle that is likely to have been pre-existing and which required Armstrong Prestige as the franchise service agent to apply its expertise and experience to diagnose the problem. I consider this to be a failure to comply with the guarantee of acceptable quality.

Splash trays

[37] On or around 8 January 2020, Mr Boult and his friend Clyde Cook, who appeared at the Tribunal hearing to give evidence for Mr Boult, were out in the Mercedes for a drive. They had the cruise control set at 105 kph when the splash tray suddenly dropped down from below the engine and made a “flap flap” sound. Mr Boult said he braked hard and stopped quickly. They were able to tuck the splash tray back up against a pipe under the vehicle and then limped back home at 50 kph.
[38] They later found that the splash trays were considerably worn, and the left hand triangle portion attached to the inner guard was missing completely. The right hand triangle portion had an area that incorporates a mounting tab which had completely worn away.
[39] Mr Boult alleged that the cause of the splash trays’ falling off was that they were inadequately attached to the bottom of the vehicle. But there is no reliable evidence that this is the case. Dutton Garage submitted that the damage to the undertrays was likely to have been caused by Mr Boult driving over a curb or other solid object. It produced evidence from Kyle Lowe, of Kyle’s Mechanical Services, that the vehicle had been driven at high speed for some time with the splash trays dragging on the ground. Mr Lowe doubted that they could have been held onto the bottom of the car by only one screw and, in his view, the only way the trays could have become detached was some kind of impact damage, whether by being caught on something or running over something. Through its lawyer, Dutton Garage said that the damage is likely to have been caused by driving over a curb or other solid object.
[40] There is insufficient evidence for the Tribunal to conclude that the damage to the undertrays was pre-existing, or that it was otherwise caused by a failure to comply with the guarantee of acceptable quality. The alternative theory suggested by Dutton Garage seemed to Mr Dixon and me to be entirely plausible, especially given the reckless speeds at which Mr Boult (by his own admission) has driven the vehicle. In any event, the cost to replace the relevant undertrays is not significant, amounting to approximately $460.

Exhaust defects

[41] In April 2020, Mr Boult commissioned Eclipse Services to remove the exhaust system from the vehicle and to fabricate a new stainless centre section, which was then refitted to the vehicle at a total cost of $1,950.69. After the hearing, Mr Boult produced a letter from Eclipse Services stating that the exhaust was leaking. Mr Christie of Eclipse Services says that when he inspected the vehicle it was obvious that it had been in contact with a judder bar (or similar object) more than once as the pipes were badly grazed and flattened in the centre section. Mr Christie also referred to cracks at the rear of the centre section with the left hand pipe leaking quite badly. Both front manifold flanges were weeping slightly also.
[42] Again, there was insufficient evidence to conclude that the vehicle was sold with a damaged exhaust. Indeed, as Dutton Garage pointed out, when Mr Boult had the vehicle inspected by Armstrong Prestige in February 2020 its vehicle inspection report did not indicate any problems with the exhaust system. Dutton Garage also takes issue with the repairs carried out by Eclipse Garage on behalf of Mr Boult. It says that, instead of merely welding and resealing the leaks, Mr Boult has instead chosen to take the opportunity to instal a full performance-modified exhaust system, including removing the catalytic convertors, increasing the pipe size to larger than original and installing a “crossover” section for added horsepower and increased sound.
[43] Accordingly, on balance it appears likely that the impact damaging the exhaust occurred after the vehicle was sold to Mr Boult.

Idler bearings

[44] Mr Boult produced an audio recording of a noise coming from the vehicle’s engine area after starting up cold. This noise was described in a report by David Stevens of Automotive Diagnostics and Servicing dated 30 April 2020, as coming from the supercharger belt idler bearing. Mr Stevens advised that the bearing will need to be replaced. He also advised that the two other idler bearings on the other belts are also noisy. The total cost of these repairs is estimated to be $3,590, including GST. The cost of replacing the supercharger belt, pulley and tensioner on their own is estimated at $2,393.06 by Armstrong Prestige.
[45] Dutton Garage advised that in March 2019 it arranged for the idler bearing to be replaced by R E Sinclair. It was not clear on the evidence however that this was the same idler bearing that is now defective. Mr Boult accepted that only the supercharger idler bearing needs to be repaired as it is about to collapse, whereas the other idler belts are just noisy and could be considered as normal wear and tear.

Left front wheel bearing play

[46] This was identified by Armstrong Prestige. It was a simple matter to fix and has now been addressed at a cost of $55.

Tribunal’s assessment

[47] From the above list of matters, the matters identified as being in breach of the guarantee of acceptable quality are the loss of power attributable to the intercooler water pump and the supercharger idler bearing. The left front wheel bearing is also an issue that is attributable to the guarantee of acceptable quality. However, I do not think any of the other matters alleged by Mr Boult provide the basis for any additional finding that the vehicle failed to comply with the guarantee of acceptable quality.

Issue two: What (if anything) is the appropriate remedy?

[48] The remedies available to a consumer where a vehicle fails to comply with the guarantee of acceptable quality or the guarantee as to description are set out in s 18 of the Act, 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:

(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.

[49] Having taken into account Mr Dixon’s advice, my preliminary view is that Mr Boult is entitled to recover the costs of repair for the intercooler water pump, as well as the supercharger belt, pulley and tensioner. I do not consider that Mr Boult is entitled to recover the costs of fixing the left front wheel bearing as it does not appear that he raised this matter as a concern with Dutton Garage before proceeding to get the repairs done, contrary to what is required under s 18(2)(a) of the Act.[2]
[50] Apart from two exceptions, nor do I consider that Mr Boult is eligible to recover any of the consequential losses he has claimed in this proceeding. These amount to Mr Boult’s costs to attend the hearing, which would only be recoverable if Dutton Garage had not attended the hearing.[3] The exceptions are:

Mr Boult is entitled to recover these two expenses under s 18(4) of the Act.

[51] Nor is Mr Boult entitled to any damages in relation to the minor odometer discrepancy identified as he did not establish any loss of value attributable to that discrepancy.[4]
[52] In terms of repair costs, I am also minded to give Dutton Garage the opportunity to carry out the repairs to the supercharger belt, pulley and tensioner and the intercooler water pump itself, as it may be able to access trade pricing. At the hearing, Mr Mauger signalled Dutton Garage’s willingness to assist with repairs that the Tribunal found to be its responsibility.
[53] Because there have been difficulties in the relationship between the parties, and other issues may have clouded Dutton Garage’s normal willingness to comply with its obligations under the Act, I believe that it deserves a second chance in this case. However, if this proves to be something that it is not willing to carry out, or other difficulties arise, I will consider converting the decision into a simple monetary award which will comprise the total estimated cost of these repairs by Armstrong Prestige. Dutton Garage is directed to identify any concerns with this approach and let me know whether it is prepared to proceed on this basis, within seven days of the date of this decision.

J S McHerron
Adjudicator

[1] Land Transport Rule: Vehicle Standards Compliance 2002, rule 9.12(3).

[2] Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 (HC) at [11].

[3] Motor Vehicle Sales Act 2003, sch 1, cl 14.

[4] Consumer Guarantees Act, s 18(3)(b)

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