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Hills v New Zealand Car Canterbury Ltd - Reference No. MVD 077/2021 [2021] NZMVDT 116 (23 June 2021)

Last Updated: 23 July 2021

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 077/2021
[2021] NZMVDT 116

BETWEEN CHRISTOPHER JAMES HILLS

Purchaser

AND NEW ZEALAND CAR CANTERBURY LTD

Trader

HEARING at Christchurch on 28 May 2021
MEMBERS OF TRIBUNAL

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

APPEARANCES

C J Hills, Purchaser
K L Hills, Purchaser’s wife
T Bondarenko, Managing Director of Trader
G Sodorowski, General Manager, New Zealand Car Canterbury Ltd, Auckland

DATE OF DECISION 23 June 2021

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

  1. Christopher Hills’ rejection of his Mitsubishi Pajero is upheld.
  2. New Zealand Car Canterbury Ltd must pay Mr Hills $24,599 no later than 7 July 2021.
  1. Once the amount in B. has been paid in full, Mr Hills must make the vehicle available for New Zealand Car Canterbury Ltd to collect at its cost (if any).

___________________________________________________________________

REASONS

Introduction

[1] Christopher Hills has rejected the 2010 Mitsubishi Pajero that he purchased on 11 August 2020 from New Zealand Car Canterbury Ltd for $24,490.
[2] The vehicle has had a range of faults since Mr Hills purchased it, some of which have not been fixed or have not been fixed properly. The main current issue is that the vehicle has seized suspension and wheel alignment adjuster bushes, preventing it from being able to have a wheel alignment carried out properly. An attempt has been made to fix this problem, but the vehicle has not been completely repaired.
[3] New Zealand Car Canterbury does not accept that Mr Hills is entitled to reject the vehicle. Nor does it accept that the seized adjuster bushes are its responsibility. Rather, it says that the adjuster bushes have seized because of the way in which Mr Hills has used the vehicle.
[4] From this background the following issues arise for the Tribunal to determine:

Issue 1: 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:
  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.

...

(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.

...


[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] The vehicle was imported to New Zealand from Japan in or around May 2020. The light vehicle repair record of certification for the vehicle reveals that, when imported, it had underbody surface rust from the front to the rear. A note on the description of structural damage states that, on first inspection, heavy rust was visible which needed to be sand blasted and inspected again prior to being treated. All areas of underbody rust were sand blasted, cleared and treated. No visible signs of severe rust were noted on the recheck and all areas of heavy rust were described as “good”, with no patching required.
[9] The Tribunal’s Assessor, Mr Dixon, noted that, in the compliance process for newly imported vehicles, the primary focus is on the structure of the vehicle. Anything that is removable, such as bolts and bushes, is not a focus of the compliance process.
[10] Mr Hills had a number of items on the vehicle repaired in the first few months that he owned it, mostly at New Zealand Car Canterbury’s expense. These included:
[11] On or around 27 December 2020, Mr Hills drove the vehicle to Twizel. While cornering, he found that the vehicle was losing grip in the turn. He also found that the inside tread of the front left tyre was worn. At this stage, the vehicle had 130,682 km on its odometer, approximately 7,000 km more than at the date of purchase.
[12] Mr Hills took the vehicle to Twizel Auto and Marine Centre. He asked it to rotate the tyres and carry out a wheel alignment. It swapped the tyre that had worn with the vehicle’s spare tyre. It found that the rear eccentric bolts were seized.[1] Twizel Auto and Marine Centre also found the front left camber bolt was seized. In its invoice dated 5 January 2021, it concluded that it was “unable to complete 4- wheel wheel alignment”.
[13] Mr Hills emailed New Zealand Car Canterbury about this problem on 11 January 2021. Mr Hills pointed out that “the front and rear alignment can and should be adjusted, [but] in the case of this Pajero the adjustment is seized”. Mr Hills asked New Zealand Car Canterbury to address this issue.
[14] According to Mr Hills, when he visited New Zealand Car Canterbury to discuss this issue, its sales representative showed Mr Hills a document purporting to be a wheel alignment for the vehicle prior to Mr Hills’ purchase. However, Mr Hills said that this document did not clearly identify that it pertained to his vehicle. The document was not produced in evidence by New Zealand Car Canterbury.
[15] Mr Hills said that he was told by the trader’s representative that New Zealand Car Canterbury would not be covering this issue. This was confirmed by New Zealand Car Canterbury’s managing director, Tatiana Bondarenko. She wrote to Mr Hills on 11 January 2021 and said that as Mr Hills had been driving the vehicle for more than five months since it was purchased in August 2020, he “could easily hit the curb or drive in saltwater which could affect wheel alignment easily”. Ms Bondarenko also asserted that the vehicle’s camber bolts could have become seized during that five month period as well. Ms Bondarenko said:

Chris, we’ve been looking after you when it was needed and we agreed to pay 100% for Campbelt changed, while we legally didn’t have to, but this time we really don’t understand why you do ask us to loo after wear and tier parts of the car

[16] Ms Bondarenko contacted Mr Hills again to confirm that no wheel alignment was carried out on the vehicle prior to its sale to Mr Hills. Ms Bondarenko said that New Zealand Car Canterbury would help him with the problem of the seized bolts. However, she said that this was “going above our legal responsibilities”. New Zealand Car Canterbury asked Mr Hills to take the vehicle to Fasttrack Compliance, which he did on 18 January 2021. I did not see any invoice from Fasttrack Compliance in respect of this work. However, Mr Hills produced a letter from Fastrack to Ms Bondarenko which confirmed the following work was carried out:

Hi Tatiana

Regarding the Mitsubishi Pajero V97W-0300126 sold to Chris Hills. As requested by NZ Cars, we checked all wheel alignment adjustors both front and rear. Any seized or stiff alignment bolts/adjustors were loosened and lubricated. Upon completion the vehicle was ready for a wheel alignment to be completed elsewhere.

[17] While attempting to address the seized camber bolts, Mr Hills discovered that the vehicle had a split boot that was leaking power steering fluid. Fasttrack confirmed that it would not change the split boot, or complete a wheel alignment, and suggested Mr Hills take the vehicle to a specialist such as CV Specialists.
[18] In the meantime, however, Mr Hills rejected the vehicle. He decided to reject the vehicle because of the combination of issues he had experienced with it to date. Together, Mr Hills thought these faults amounted to a failure of a substantial character.
[19] Mr Hills’ email of rejection dated 4 February 2021, noted that New Zealand Car Canterbury was refusing to complete repairs and resolve the outstanding issues with the vehicle. Mr Hills gave New Zealand Car Canterbury notice that he was rejecting the vehicle due to its “current and failed components”. Mr Hills stated:

The current powers steering fault (pre-existing mechanical) and previous faults are a failure of a substantial character and that I have lost complete faith in this vehicle, that it is not suitable for the purpose it was purchased for, that the vehicle has not been durable, and is not of acceptable quality.

[20] However, notwithstanding his rejection of the vehicle, Mr Hills went ahead and had repairs done to fix the problem with the vehicle’s power steering. These repairs were carried out on or around 23 February 2021 by CV Specialists. It had determined, based on an analysis of the power steering fluid, that the power steering rack needed to be repaired.
[21] CV Specialists was unable to obtain the necessary parts in time. It decided to replace the power steering rack with a second-hand rack. Again, however, it had difficulty locating suitable parts. It eventually completed the repair using a combination of two second-hand axles.
[22] CV Specialists also attempted to carry out a wheel alignment but found:

Everything in the red. Most suspension and adjustment bolts seized. Managed to bring forward and rear toe to green road test OK

NB Lots of suspension bolts frozen in bushes and lots of rust present under vehicle.

[23] The cost of CV Specialists’ work, $2,213.03, was paid by Mr Hills on 23 February 2021. He seeks to recover that amount from New Zealand Car Canterbury.
[24] Accordingly, although Mr Hills has had his vehicle’s power steering problems fixed, he is still unable to get a wheel alignment for the vehicle due to its suspension bolts being seized in their bushes.
[25] On behalf of New Zealand Car Canterbury, Ms Bondarenko submitted there was no proof that the vehicle had seized camber bolts at the time of purchase. Rather, Ms Bondarenko submitted that this problem had arisen due to Mr Hills’ off-road driving in the vehicle and towing of heavy goods. Ms Bondarenko also blamed the seized camber bolts on Mr Hills’ use of the vehicle in areas close to the ocean. However, these submissions were presented at the level of assertion only, with no reliable evidence being presented to support them. Mr Hills denied these assertions were correct. At the hearing, Ms Bondarenko also sought to establish that the seized adjustment bolts could have been caused by the 4,000 additional kilometres travelled by Mr Hills after Fasttrack’s attempts to unseize the bolts.

Tribunal’s assessment

[26] Mr Dixon considered that the vehicle’s seized wheel alignment adjustment bolts are likely to have been present since before Mr Hills purchased the vehicle. Mr Dixon thought that these seized bolts likely arose from the corrosion that was apparent on the vehicle at the time it was certified for compliance with New Zealand regulations. As Mr Dixon indicated, it is not a requirement for compliance certification that removable parts be free of corrosion. Therefore, in his view, it is likely that these bolts were seized before the time of purchase.
[27] New Zealand Car Canterbury has not produced any evidence to establish that Mr Hills caused the vehicle’s camber bolts to become seized, either through off-road driving, towing of heavy goods or use of the vehicle close to the ocean.
[28] Moreover, according to Mr Dixon, the work done by Fasttrack to attempt to free the bolts may have ended up making them worse. Indeed, Mr Hills produced an estimate from Christchurch Mitsubishi quoting up to $5,690.48 to replace the seized suspension and wheel alignment adjustor bushes, as well as to replace a leaking engine water pump kit. This is a further problem identified by Mr Hills subsequent to his rejection of the vehicle.
[29] Mr Dixon thought this estimate seemed expensive. I agree, especially when it is compared to an earlier estimate of $1,409 presented by Mr Hills from BSCS Service to replace the front lower arm bushes, the front camber bolts and a wheel alignment. New Zealand Car Canterbury also presented its own estimate for this work, which was similar in price to the BSCS Service estimate.
[30] Nevertheless, I accept, based on Mr Dixon’s advice, that:
[31] I also consider that Mr Hills has established that the earlier faults he has experienced with the vehicle, in particular its leaking water pump, split CV boot and leaking shock absorber, failed inhibiter switch, and leaking power steering unit, all amount to failures to comply with the guarantee of acceptable quality.

Failure of a substantial character

[32] In Cooper v Ashley & Johnson Motors Ltd, the District Court held that a purchaser may reject a vehicle where there has been an accumulation of minor defects, which individually could not be described as substantial.[2] The Court noted that a point will eventually be reached where the purchaser could “say convincingly that he or she had no confidence in the reliability of the vehicle”.[3]
[33] I consider the Pajero’s accumulated defects are such that a reasonable consumer could convincingly say that they no longer have confidence in its reliability. In combination, these failures amount to a failure of a substantial character.

Issue 2: What is the appropriate remedy?

[34] The remedies available to a consumer where a vehicle fails to comply with the guarantee of acceptable quality 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 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.

[35] The primary remedy available to a consumer where a vehicle fails to comply with the guarantee of acceptable quality is to require the supplier to remedy the failure within a reasonable time. Mr Hills exercised his right to require New Zealand Car Canterbury to repair several of the vehicle’s initial failures, including in relation to its leaking water pump, split CV boot and shock absorber, as well as the failed inhibiter switch. New Zealand Car Canterbury also seems to have, albeit reluctantly, agreed to address the seized wheel alignment adjustment bolts by agreeing that the vehicle could be taken to Fasttrack for these bolts to be freed up.
[36] However, as I have indicated, this repair was not successful and, in Mr Dixon’s view has quite possibly made matters worse. Mr Hills said that he had been told by Christchurch Mitsubishi that a gas axe may need to be used to properly free up the wheel alignment adjustment bolts. This may also explain Christchurch Mitsubishi’s high estimate of the cost of repairs
[37] Accordingly, I conclude that Mr Hills has established that New Zealand Car Canterbury has not succeeded in remedying the problem with the seized wheel alignment bolts within a reasonable time. That gave him the right to reject the vehicle, which he did on 4 February 2021. In addition, Mr Hills had the right to reject the vehicle because its failures, in combination, were of a substantial character.
[38] I uphold Mr Hills’ rejection of the vehicle. I find that New Zealand Car Canterbury is required to refund Mr Hills the full purchase price of the vehicle, $24,490.
[39] In addition to seeking a refund of the purchase price, Mr Hills seeks reimbursement of the following costs:
Item for which costs claimed
Costs
Tow bar
$629.00
Wheel alignment and report
$109.00
Replacement tyre
$279.00
Power steering fluid
$14.90
Power steering repairs
$2,213.03
USB keys
$30.00
[40] As I said in the hearing, the remedy available to a purchaser who has successfully established the right to reject a vehicle does not include the cost of repairs in respect of the matters for which the rejection is being exercised. The two remedies of rejection or reimbursement of the cost of repairs are alternatives, as reflected in s 18(2)(b) of the Act.
[41] Having rejected the vehicle, Mr Hills was perhaps unwise to go ahead and get further repairs done in respect of its power steering. The other remedies potentially available to a consumer on top of a refund of the purchase price are:
[42] There is no basis here for awarding compensation for loss of value. No evidence was adduced to allow the Tribunal to calculate the extent to which the vehicle has lost value, if any.
[43] Any consequential losses must be “reasonably foreseeable as liable to result from the failure”. Thus, in this category, I am prepared to include the cost of Mr Hills’ wheel alignment attempt and report from Twizel Auto and Marine Centre, $109, but not any of the other costs he has claimed. I would also have allowed him to claim the costs he paid to CV Specialists to repair the power steering, as well as the additional costs faced by him to repair the wheel alignment adjustment bolts, but only if he had decided to keep the vehicle. Mr Hills made it clear in the hearing that he does not wish to keep the vehicle any longer and so I am limited in the remedy that I can give him to his purchase price plus the costs he incurred from Twizel Auto and Marine Centre.

Conclusion

[44] For the above reasons, I uphold Mr Hills’ rejection of his vehicle. New Zealand Car Canterbury Ltd must pay Mr Hills $24,599 no later than 7 July 2021. Once this amount has been paid in full, Mr Hills must make the vehicle available for New Zealand Car Canterbury to collect at its cost (if any).

J S McHerron
Adjudicator

[1] The eccentric bolts, like the camber bolts, are used as a point of adjustment for wheel alignments.

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

[3] At 417.

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