Bennett v Millbrook Car Co Limited - Reference No. MVD 074/2020 [2020] NZMVDT 58 (21 May 2020)

Last Updated: 19 June 2020

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 074/2020
[2020] NZMVDT 058

BETWEEN JOANNE ELIZABETH BENNETT

Purchaser

AND MILLBROOK CAR CO LIMITED

Trader

HEARING on 13 May 2020
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

R C Dixon – Assessor
APPEARANCES

J E Bennett, Purchaser (by VMR)
P J Mills, Director of Trader (by phone)

DATE OF DECISION 21 May 2020

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

1. Joanne Bennett’s application to reject her Mini Cooper S is not upheld.
2. Millbrook Car Co Ltd must pay Ms Bennett $296.70 no later than 5 June 2020.

___________________________________________________________________

REASONS

Introduction

[1] Joanne Bennett has rejected her 2010 Mini Cooper S. It has had a number of problems in the short time since Ms Bennett purchased it, causing her to lose confidence in it. She asks the Tribunal to uphold her rejection of the vehicle.
[2] Ms Bennett’s application raises the following issues for the Tribunal’s consideration:

• (a) Did the vehicle fail to comply with the guarantee of acceptable quality?
• (b) If so, was the failure of a substantial character?
• (c) What remedy, if any, is Ms Bennett entitled to?

[3] Ms Bennett’s application names both Millbrook Car Co Ltd and Christchurch European as the respondent trader. This was done, at least partly, because the sleeve for the vehicle’s licence certificate, affixed to the inside of the windscreen, had Christchurch European branding on it.
[4] Phillip Mills, Millbrook Car Co’s director, denied that Ms Bennett’s complaint was properly brought against Christchurch European. Mr Mills was previously associated with that business. But he told the Tribunal that he sold Christchurch European to his sons about two years ago. I accept Mr Mills’ submission. The vehicle offer and sale agreement and consumer information notice clearly state that the vehicle was sold by Millbrook Car Co Ltd. That company, rather than Christchurch European, is the correct respondent to Ms Bennett’s application.

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

[5] Section 6(1) of the Consumer Guarantees Act 1993 (the Act) provides that “where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality”. According to s 2 of the Act, “goods” includes vehicles.
[6] “Acceptable quality” is defined in s 7 of the Act (as far as is relevant) 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.

...

[7] 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.
[8] Within a few minutes of the Mini being delivered to Ms Bennett on 27 November 2019 she experienced problems changing its gears. She became stranded in the countryside on a hot day, only half an hour after the Mini was delivered to her. Ms Bennett called Mr Mills for help. He telephoned Auto Gas Specialists, a Timaru repairer which had done work for him in the past and which Mr Mills acknowledged had a “very good knowledge of all cars and particularly European”. Mr Mills arranged for Jarrod Parmenter from Auto Gas Specialists to collect the vehicle and take it to his workshop for repairs.

Transmission filter

[9] Auto Gas Specialists’ invoice dated 27 November 2019 states that it found stones and dirt clogging the Mini’s transmission filter, which was also very bent and damaged. It removed and replaced the filter and oil pan gasket and filled it with new oil. Millbrook Car Co paid this invoice, totalling $492.99.

Tyres

[10] Ms Bennett says that she was told by Auto Gas Specialists that three of the vehicle’s tyres were “barely warrant worthy”. However, nothing about the tyres was recorded on Auto Gas’s invoice of 27 November 2019. Nor was any photographic evidence of the vehicle’s tyre condition produced to the Tribunal.
[11] The vehicle had reasonably recently been given a new warrant of fitness as part of its compliance inspection, on 8 October 2019. The VINZ certification checksheet produced as part of the compliance process states that at the time the vehicle was presented for its certification inspection all of the tyres were recorded as being in poor condition with the front tyres recorded as being “due soon” and having “edge wear”. The rear tyres were recorded as “feathering”. However, the tyres passed the certification inspection and the vehicle was given a warrant of fitness. The tread on the tyres is recorded at 3 mm for the front tyres and 4 mm for the rear tyres, exceeding the legal minimum tread level of 1.5 mm.[1]
[12] Notwithstanding their apparent compliance with legal requirements at the time of certification, and the lack of evidence of the tyres’ condition on delivery, the certification checksheet confirms that the tyres were all in poor condition, and that they were due for replacement soon.
[13] Moreover, Millbrook Car Co failed to get a new warrant of fitness for the vehicle before delivering the vehicle to Ms Bennett. It should have done so. A seller of a vehicle must ensure that it has been certified for in-service fitness within one month before the date of delivery of the vehicle to the purchaser.[2] It is possible that, had Millbrook Car Co done this, the vehicle’s tyres would have failed on further inspection.
[14] Furthermore, by the time the vehicle was delivered to Ms Bennett, following a delivery journey from the trader’s premises in Christchurch to Ms Bennett’s residence in Timaru, it is plausible that the tyres would by that stage have been “barely warrantable”.
[15] Accordingly, although Ms Bennett did not produce any photographs of the tyres or any other reliable evidence to support her second hand account of what Auto Gas Specialists apparently told her, it is a reasonable inference from the VINZ checksheet produced belatedly after the hearing by Mr Mills, that the vehicle’s tyres failed to comply with the guarantee of acceptable quality, as they were sold in such a poor condition that they effectively needed to be replaced as soon as Ms Bennett received the vehicle.

Leaking oil pressure sensor

[16] On 18 December 2019, just over three weeks after Ms Bennett received the Mini, her friend noticed a sizeable oil spill that had come from the vehicle. Ms Bennett said that she could see oil dripping from the car and that its engine oil level was significantly reduced.
[17] Ms Bennett contacted Mr Mills again. He encouraged her to take the Mini back to Auto Gas Specialists, which she did. According to its invoice dated 19 December 2019, Auto Gas Specialists found the vehicle’s oil pressure sensor was leaking. It replaced the sensor and topped up the engine oil. The cost of this work, $232.13, was paid by Millbrook Car Co.

Petrol leaks

[18] At the end of January 2020, Ms Bennett found the vehicle was leaking petrol “all over the road”. She managed to drive it back to Auto Gas Specialists, which reconnected the fuel pipe. This was obviously a quick job and was not invoiced to Ms Bennett, however she said she voluntarily paid them $20 in appreciation of their work.
[19] However, Auto Gas Specialists’ quick fix did not last. While driving the vehicle to Winchester to give it a run, Ms Bennett could still smell fuel. By the time she got the Mini back to Timaru, its engine was shaking and clunking and then cut out completely. Ms Bennett was forced to pull into a bus stop in a busy street, where she left the car to be towed by Auto Gas Specialists.
[20] Ms Bennett contacted Mr Mills by email on 30 January 2020 to tell him what had happened. She asked Mr Mills whether he would be prepared to pay for the repairs, and whether he would buy the car back. Mr Mills replied the same day. He encouraged Ms Bennett to take the vehicle back to Auto Gas Specialists for it to further investigate the problem. However, this time Mr Mills indicated that he was reluctant to pay for any repairs, telling Ms Bennett “no more bills please”.
[21] Auto Gas Specialists’ invoice dated 30 January 2020 records that it picked up the vehicle from Church Street, Timaru, removed all necessary parts, removed and replaced the main fuel line and reassembled the vehicle. The cost of this work, $296.70, was paid by Ms Bennett.
[22] Unfortunately, however, Ms Bennett’s problems with the vehicle continued. She found that the vehicle’s engine was still not running smoothly and that the fumes coming from its engine gave her a migraine and made her feel very unwell. She took the vehicle back to Auto Gas Specialists on or around 3 February 2020. It found fault codes in relation to the vanos unit, but it did not recommend any repairs. Auto Gas Specialists inspected the vehicle for the fuel smell but it was unable to locate the smell or any further leaks. Auto Gas Specialists charged Ms Bennett $55.20 for this work.

Gear shift problems

[23] Ms Bennett then began to have intermittent problems putting the vehicle into gear. The dashboard display showed a “service required” message, as well as a gear cog warning light. Ms Bennett could not shift the Mini out of “park”. Eventually, Ms Bennett was able to select “drive” by shifting the gear stick very quickly after turning on the ignition.
[24] She took the vehicle back to Auto Gas Specialists which, initially, could not find anything wrong with it. This was frustrating because Ms Bennett kept finding that this issue recurred when she drove the vehicle for more than 10 minutes — after its engine reached normal operating temperature it would not shift out of “park”.
[25] Eventually, this gear shift problem was fixed upon further investigation by Auto Gas Specialists. Its invoice dated 8 May 2020 recorded that it found a found a fault code for the gear position switch. It replaced the faulty part and has tested the vehicle extensively, concluding that it is now operating satisfactorily with no faults. In addition, Auto Gas Specialists replaced the front brake pad indicator sensor and cleared the warning indicator, as well as checking and testing the vehicle. The invoice records the costs of these repairs was $364.35, which has been paid by Millbrook Car Co.

Other outstanding problems

[26] Ms Bennett also raised a number of other problems with the vehicle. Rubber seals around the windows are perishing and breaking off, the spare key provided with the vehicle does not work, a button has fallen off the fob key that does work, the knob on the handbrake is broken and the white stripes on the front of the vehicle are cracked and burnt from engine heat. As at the date of the hearing, these were the only outstanding faults, with all the other matters having been fixed.

Tribunal’s assessment

[27] Ms Bennett has unfortunately experienced numerous faults with her vehicle within a very short time after purchasing it. The oil and fuel leaks, clogged transmission filter, gear selection fault and worn (though apparently warrantable) tyres all amount to minor defects that a reasonable consumer would not find acceptable. Fortunately, all of these matters have now been fixed, though at some expense and considerable inconvenience to Ms Bennett.
[28] Mr Mills suggested the fuel line may have been damaged by Ms Bennett driving the vehicle over a judder bar, but this was not accepted by Ms Bennett as the cause. The Tribunal’s Assessor, Mr Dixon, and I do not consider Mr Mills has provided any evidence, other than mere speculation, to indicate that this fault was self-inflicted on the vehicle by Ms Bennett.
[29] Before the hearing, the Tribunal asked Ms Bennett to have the vehicle’s current faults diagnosed and a report prepared describing the fault, the repair that is needed and the estimated cost of repairs. She did not provide this information as requested, making it difficult for the Tribunal to assess how serious any of these outstanding problems were or the cost of any repairs that might be needed.
[30] However, it seemed to Mr Dixon and me that these outstanding matters (as described above at [26]) were relatively minor and what would reasonably be expected in a vehicle of this age (10 years) and moderately high mileage (123,000 km as at the date of purchase). None of the outstanding matters appeared to impede the vehicle’s usability. Rather, as indicated, they appear merely to be characteristics that a reasonable consumer would expect to find in a vehicle of this age, mileage and price.

Conclusion

[31] Accordingly, I accept that the vehicle failed to comply with the guarantee of acceptable quality in respect of its:

• (a) clogged transmission filter;
• (b) tyres;
• (c) leaking oil sensor;
• (d) defective fuel pipe;
• (e) faulty gear selector switch.

[32] However, I do not accept Ms Bennett has established the vehicle failed to comply with the guarantee of acceptable quality in respect of the additional minor matters described above at [26]. Rather they are characteristics a reasonable consumer would expect to find in a vehicle of this age, mileage and price.

Issue two: Was there a failure of a substantial character?

[33] Under s 18(3) of the Act, a consumer may reject a vehicle if it has a fault that amounts to a failure of a substantial character. What amounts to a failure of a substantial character is defined in s 21 of the Act:

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.

[34] I do not consider that Ms Bennett has established that paragraphs (b)-(d) of s 21 apply. She has not established that the vehicle has departed in a significant respect from the description by which it was supplied, or that the vehicle is substantially unfit for purpose. The fact the tyres were in poor condition could potentially give rise to an issue of safety, but I do not consider Ms Bennett has provided enough evidence to establish the tyres on her Mini were unsafe, particularly in light of the fact that they appear to have had adequate tread depth and recently passed a warrant of fitness inspection.
[35] There remains a question about whether paragraph (a) of s 21 applies, namely whether the vehicle would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of failures experienced with the vehicle. Here, I acknowledge that this vehicle has had a number of faults in the short period since Ms Bennett purchased it in November 2019. These faults have been extremely annoying and time consuming for Ms Bennett to get fixed. However, I do not consider that any of the faults identified with this vehicle is significant enough on its own that a reasonable consumer would have declined to purchase the vehicle if they had known about it. Each of the faults identified (apart from the minor matters I have found did not breach the acceptable quality guarantee) has now been fixed and will not affect the ongoing performance of the vehicle. I do not consider that any one of these faults on its own was serious enough that it would have put off a reasonable consumer from buying the vehicle at all.
[36] Nor do I consider that when each of the defects are viewed together, they amount to a failure of a substantial character. In Cooper v Ashley & Johnson Motors Ltd, the District Court found that a purchaser can reject a vehicle where there has been an accumulation of defects, even when those defects may not amount to a failure of substantial character on their own.[3] The Court described a point that could eventually be reached where a reasonable purchaser could “say convincingly that he or she had no confidence in the reliability of the vehicle”.[4]
[37] While Ms Bennett’s Mini has had several annoying faults, she has not established overall that its condition is inconsistent with its age and mileage. Unfortunately, European vehicles of this age and mileage are known to be susceptible to various troublesome faults. Ms Bennett has had a most unfortunate time with this vehicle but none of the faults have required major repairs. Instead, each of the identified faults has been readily capable of being fixed relatively inexpensively. At present, only the minor matters that I have found do not amount to a breach of the guarantee of acceptable quality remain outstanding. While acknowledging Ms Bennett’s disappointment with the vehicle, I do not accept that a reasonable consumer would have reached the point of having no confidence in its ongoing acceptable quality.

Conclusion

[38] For these reasons, Ms Bennett is not entitled to reject the vehicle as I do not consider she has established a failure of a substantial character in terms of s 21 of the Act.

Issue three: What remedy, if any, is Ms Bennett entitled to?

[39] The remedies available to a consumer who has established a failure to comply with the guarantee of acceptable quality are set out in s 18 of the Act, 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.

[40] The primary remedy available to Ms Bennett in the present case is that set out in s 18(2)(a) of the Act, to require the supplier of the vehicle, namely Millbrook Car Co, to remedy the failures within a reasonable time. Largely, Millbrook Car Co has paid for the various repairs needed to the vehicle, with three exceptions.
[41] The first defect Millbrook Car Co did not pay for was the tyres, the replacement of which has cost Ms Bennett $832. As she has established that the tyres failed to comply with the guarantee of acceptable quality, ordinarily I would have found in her favour that she was entitled to have them replaced at Millbrook Car Co’s expense.
[42] However, as the High Court confirmed in Acquired Holdings Ltd v Turvey, a consumer must follow a particular sequence of steps in order to be eligible to obtain a remedy under s 18 of the Act.[5] The High Court held that a purchaser must first follow the requirement in s 18(2)(a) to allow the supplier an opportunity to remedy a failure within a reasonable time.[6] The subsequent “self-help” remedy in s 18(2)(b), in which a consumer may have the failure remedied elsewhere and obtain from the supplier all reasonable costs in doing so, is exercisable only if the supplier refuses or fails to remedy the failure under s 18(2)(a).[7]
[43] It is important that a consumer should provide a supplier with an opportunity to remedy or replace before commissioning repairs him or herself. This is to allow the supplier to “assess whether the goods have been subjected to unreasonable use, whether the defect has caused the problem and, in particular, to control the quality of the remedy, which would not necessarily be the case if repairs were carried out by an unauthorised repairer.[8]
[44] In the present case, there was no evidence that Ms Bennett advised Millbrook Car Co that the tyres were defective and needed to be replaced. Rather, the evidence indicates that she went ahead and had the tyres replaced without consulting with Mr Mills. If she had consulted with him and he had refused to replace the tyres then she may have been entitled to a remedy. But I did not see any evidence that this occurred. As Ms Bennett appeared to go ahead with her self-help remedy without giving Millbrook Car Co an opportunity to replace the tyres she is not entitled to recover the cost of their replacement.
[45] I have reached a different conclusion, however, in relation to second matter Millbrook Car Co did not pay for, replacing the fuel line, which cost $296.70. In respect of this repair I consider that Mr Mills encouraged Ms Bennett to take the vehicle to Auto Gas Specialists, which she did. In his email of 30 January 2020 at 1.27 pm, Mr Mills then said, “no more bills please”. I consider that this is evidence of a refusal by Millbrook Car Co to remedy the broken fuel line. This means that, under s 18(2)(b)(i) of the Act (above), Ms Bennett was entitled to have the failure remedied by Auto Gas Specialists and recover the costs of doing so from Millbrook Car Co, which she is now doing. Accordingly, I find that she is entitled to recover the sum of $296.70 from Millbrook Car Co and I order it to pay her that sum within 14 days.
[46] I do not consider that Ms Bennett is entitled to recover the third sum Millbrook Car Co has not paid for, the $55.20 that she paid Auto Gas Specialists in respect of its inspection of the Mini for a fuel smell on 3 February 2020. Auto Gas Specialists was unable to locate any smell or leaks at that time. As Mr Dixon noted at the hearing, this may simply have been residual fuel smells arising from the earlier repair. I note however that Auto Gas Specialists found a fault code on that inspection in relation to the vanos unit. Auto Gas Specialists made no recommendation for replacement of the vanos unit. However, if Ms Bennett finds any further issues in relation to the vanos unit she may be entitled to ask Millbrook Car Co for that to be addressed at its expense.

Millbrook Car Co may be liable to Ms Bennett if there are further faults

[47] One final matter arises for discussion and that is an indication in correspondence from Mr Mills that Millbrook Car Co was only obliged to provide remedy for any failures arising in the first three months of Ms Bennett’s ownership of the vehicle. As Mr Mills should know, from his many years’ experience in the auto trade, the timeframes for which a trader will be responsible under the Act are not capable of precise definition. The period for which the trader will be liable for repairs under the Act is governed by what is reasonable according to the facts of a particular case, Millbrook Car Co will be liable for repairs to this vehicle for a reasonable period after Ms Bennett purchased it. It was misleading of Mr Mills, and potentially an offence, to tell Ms Bennett otherwise.[9] Therefore, I would encourage Ms Bennett, if she experiences any further faults with this vehicle, to approach Millbrook Car Co in the first instance to see if it will repair the vehicle, and then to continue to exercise her rights under the Act, including by making a further application to the Tribunal if Millbrook Car Co does not assist. I trust that will not be necessary, given Mr Mills has (largely) been responsive and cooperative and has paid for most of the repairs needed to date.

Conclusion

[48] Ms Bennett has established that her Mini failed to comply with the guarantee of acceptable quality. She is entitled to recover repair costs of $296.70. In all other respects her claim is not upheld, including her application to reject the vehicle.

J S McHerron
Adjudicator

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[1] New Zealand Transport Agency VIRM In-service Certification (WOF and COF) at 10-1.

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

[3] Cooper v Ashley & Johnson Motors Ltd (1996) 7 TCLR 407 (DC).

[4] At 417.

[5] Acquired Holdings Limited v Turvey (2008) 8 NZBLC 102, 107 (HC).

[6] At [11].

[7] At [11].

[8] Roger Thornton (ed) Gault on Commercial Law (Online loose-leaf ed, Thompson Reuters) at CG 18.06.

[9] Consumer Guarantees Act 1993, s 43(4); Fair Trading Act 1986, s 13(i).