Qu v Nova Motors Penrose Ltd - Reference No. 072/2020 MVD [2020] NZMVDT 72 (10 June 2020)

Last Updated: 20 July 2020

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 072/2020 [2020] NZMVDT 72 BETWEEN ZHE QU Purchaser AND NOVA MOTORS PENROSE LTD Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Haynes, Assessor

HEARING at Auckland on 4 June 2020

APPEARANCES

Z Qu, Purchaser

J Domracheva, for the Trader S Papsuiev, Witness for the Trader

DATE OF DECISION 10 June 2020

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DECISION OF THE TRIBUNAL

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1. Nova Motors Penrose Ltd shall, within 10 working days of the date of this decision, perform all necessary repairs to ensure that the vehicle’s parking sensors function as they should.

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REASONS

Introduction

[1] Zhe Qu purchased a 2014 Toyota Aqua S for $10,941 from Nova Motors Penrose in January 2020 believing that the vehicle had functional front and rear parking sensors. It does not, so Mr Qu has applied to the Tribunal for orders that Nova Motors Penrose pay the cost of fixing the parking sensors.
[2] Nova Motors Penrose says that it should not have liability. It says that the vehicle was not advertised as having parking sensors and it never told Mr Qu that the vehicle had functional parking sensors. It also says that Mr Qu performed a pre-purchase mechanical inspection and no defects were found with the vehicle at that time.

The issues

[3] Against this background, the issues requiring consideration are:

• (a) Has the vehicle been of acceptable quality?
• (b) What remedy is Mr Qu 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.

(2) Where any defects in goods have been specifically drawn to the consumer's attention before he or she agreed to the supply, then notwithstanding that a reasonable consumer may not have regarded the goods as acceptable with those defects, the goods will not fail to comply with the guarantee as to acceptable quality by reason only of those defects.

(3) Where goods are displayed for sale or hire, the defects that are to be treated as having been specifically drawn to the consumer's attention for the purposes of subsection (2) are those disclosed on a written notice displayed with the goods.

(4) Goods will not fail to comply with the guarantee of acceptable quality if—

(a) the goods have been used in a manner, or to an extent which is inconsistent with the manner or extent of use that a reasonable consumer would expect to obtain from the goods; and

(b) the goods would have complied with the guarantee of acceptable quality if they had not been used in that manner or to that extent.

(5) A reference in subsections (2) and (3) to a defect means any failure of the goods to comply with the guarantee of acceptable quality.

[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 test is an objective one; it is not a view of those factors from Mr Qu’s subjective perspective.
[7] Although the vehicle was not manufactured with parking sensors, it seems that a previous owner in Japan had installed aftermarket parking sensors. Those sensors remain in the vehicle but the control module, which is essential to the operation of the parking sensors, was removed sometime before the vehicle was imported into New Zealand.
[8] Mr Qu says that he was attracted to the vehicle because of its parking sensors. He says that he told the Nova Motors Penrose salesperson that he dealt with that the parking sensors were an important feature for him and considers that their absence means the vehicle is not of acceptable quality.
[9] Nova Motors Penrose agrees that the vehicle’s parking sensors do not work. It has had the vehicle assessed by Navpro, which confirmed that fact and provided an estimate of $400 plus GST for the required repairs.
[10] Nova Motors Penrose says that it should not be liable for that cost because it never represented that the vehicle had parking sensors. It also says that Mr Qu conducted a mechanical inspection before sale, and that if the parking sensors were so important to him, he should have ensured that their operation was tested at that time.
[11] I accept that Nova Motors Penrose made no explicit claim in its advertising that the vehicle had parking sensors. However, the photographs that Nova Motors Penrose published on the vehicle’s online listing clearly show that the vehicle has small round holes in its bumpers consistent with it having parking sensors. In my mind, those photographs would lead a reasonable person to conclude that the vehicle had parking sensors. Likewise, any person who inspected the vehicle (as Mr Qu did) would also have been led to believe that the vehicle had parking sensors.
[12] Those parking sensors do not work, and I am satisfied that this means that the vehicle has not been of acceptable quality for the purposes of s 6 of the CGA because it was not as free of minor defects at the time of sale as a reasonable consumer would consider acceptable. I consider that a reasonable consumer purchasing a vehicle of this price, age and mileage would expect all its functions to work, or to be told if they do not. In this case, the parking sensors did not work, meaning the vehicle was of unacceptable quality.
[13] The fact that Mr Qu arranged for a mechanical inspection of the vehicle before he decided to purchase it does not change that conclusion. Under the CGA, the purchaser of a motor vehicle has no obligation to identify any pre-existing faults before deciding to purchase. A consumer is entitled to proceed on the basis that the vehicle being supplied is of acceptable quality, including that it is as free of minor defects as a reasonable consumer would consider acceptable. Certainly, if the evidence had shown that Mr Qu had discovered that the sensors did not work before he purchased the vehicle, then his claim would not be successful. But Mr Qu did not know, and the fact that the faulty parking sensors were not identified during the pre-purchase inspection does not provide Nova Motors Penrose with a defence to his claim.

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

[14] 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.

[15] Mr Qu is entitled to a remedy under s 18(2)(a) of the CGA. Mr Qu asked for orders requiring Nova Motors Penrose to pay $500, being his estimate of the cost of repairs. I cannot make that order under s 18(2)(a) of the CGA. Instead, the only order I can make is an order requiring Nova Motors Penrose to perform whatever work is necessary to make the parking sensors functional. Accordingly, the Tribunal orders that Nova Motors Penrose shall, within 10 working days of the date of this decision, perform all necessary repairs to ensure that the vehicle’s parking sensors function as they should.
[16] Mr Qu also seeks to recover the cost of bringing this application. Under cl 14(1)(a)(ii) and (b) of Sch 1 to the Motor Vehicle Sales Act 2003 the Tribunal may award costs against a party where:

• (a) the matter ought reasonably to have been settled before the hearing but that party either fails to participate in pre-hearing settlement discussions; or
• (b) after receiving notice of the hearing, that party fails to attend without reasonable cause.

[17] Nova Motors Penrose has not failed to participate in pre-hearing settlement discussions. Indeed, Nova Motors Penrose made credible settlement offers by offering to pay half the cost of the required repairs, or alternatively to refund the purchase price less on road costs. Nova Motors Penrose also attended the hearing, so Mr Qu is not entitled to costs on that basis.

DATED at AUCKLAND this 10th day of June 2020

B.R. Carter
Adjudicator