Johansen v Nova Motors Penrose Ltd - Reference No. MVD 189/2021 [2021] NZMVDT 135 (20 July 2021)

Last Updated: 16 August 2021

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 189/2021 [2021] NZMVDT 135 BETWEEN MATTHEW JOHANSEN Applicant AND NOVA MOTORS PENROSE LTD Respondent

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Gregory, Assessor

HEARING at Auckland on 13 July 2021

APPEARANCES

M Johansen, Applicant

E Kuklina and V Odintsov for the Respondent

DATE OF DECISION 20 July 2021

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DECISION OF THE TRIBUNAL

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1. Matthew Johansen’s application is dismissed

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REASONS

Introduction

[1] Matthew Johansen purchased a 2011 BMW 116i for $12,900 from Nova Motors Penrose Ltd on 11 May 2020. The vehicle then suffered engine damage in February 2021, which Mr Johansen repaired using the Provident Insurance mechanical breakdown insurance policy (the MBI policy) he purchased after buying the vehicle. In March 2021, the vehicle then developed a leak from its coolant housing, which Mr Johansen again repaired using the MBI policy.
[2] Nova Motor Penrose has declined to compensate Mr Johansen for those repair costs, so he has now applied to the Tribunal seeking to recover the $2,464.71 he spent rectifying the engine damage and coolant housing leak.
[3] Nova Motors Penrose denies liability. It says that the vehicle has been sufficiently durable, that the engine damage was caused by Mr Johansen’s use of the vehicle and that Mr Johansen should not be entitled to recover the costs he has incurred as he never gave Nova Motors Penrose a reasonable opportunity to rectify those faults itself.

Relevant background

[4] In July 2020, about two months after purchase, Mr Johansen returned the vehicle to Nova Motors Penrose for minor repairs to be performed, including repairing damage to the front bumper, securing a badge to the front of the vehicle and rectifying a faulty coolant level sensor. The vehicle was returned to Mr Johansen shortly thereafter.
[5] On 9 February 2021, when the vehicle’s odometer reading was 75,788 km,[1] Mr Johansen noticed an unusual ticking noise from the vehicle’s engine. He had the vehicle assessed by Wade Motors 2016 Ltd. In a letter dated 10 March 2021, Sylvie Weibel of Wade Motors advised that Wade Motors “ascertained that the vehicle oil level was insufficient causing damage to main bearings and camshafts”.
[6] Mr Johansen says that he received no forewarning of this fault. He says that he regularly checked the vehicle’s oil levels and the vehicle displayed no symptoms consistent with low oil levels or engine damage. He believes that Nova Motors Penrose may have tampered with the vehicle’s systems when it repaired the vehicle in July 2020 by disabling any warning messages that should have appeared.
[7] Mr Johansen then contacted Provident Insurance, which supplied the MBI policy to him. Provident Insurance assessed the vehicle and authorised the required repair. Wade Motors then replaced the engine with a second-hand unit and replaced the thermostat, water pump and other related components. Mr Johansen contributed $2,064.71 towards that repair.
[8] The vehicle was returned to Mr Johansen in March 2021 and shortly afterwards the coolant level warning light illuminated. The vehicle was again assessed by Wade Motors, which found a leak from the coolant housing. Mr Johansen made another claim under the MBI policy for the required repair. That claim was approved, and Wade Motors replaced the coolant housing. Mr Johansen contributed $400 towards that repair.
[9] Mr Johansen considers that the engine damage and coolant leak mean the vehicle has not been of acceptable quality, and that Nova Motors Penrose should compensate him for the costs he has incurred.

The issues

[10] Against this background, the sole issue requiring the Tribunal’s consideration in this case is whether the vehicle has been of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA)?

Has the vehicle been of acceptable quality?

[11] 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.
[12] 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.

[13] 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 Johansen’s subjective perspective.
[14] The evidence shows that the vehicle suffered engine damage due to low oil levels in February 2021 and that the coolant housing then required replacement in March 2021. Nonetheless, and even if I accept Mr Johansen’s submission that his use of the vehicle has not caused or contributed to either of those faults, I am satisfied that the vehicle has been of acceptable quality for the purposes of s 6 of the CGA.
[15] The protections in s 6 are not indefinite and last only as long as is reasonable in the circumstances of each case, considering the factors in s 7(1)(f) to (j) of the CGA. In this case, Mr Johansen purchased a $12,900, nine-year-old vehicle with an odometer reading of about 57,800 km. In my view, a reasonable consumer must have realistic expectations as to the quality and durability of such a vehicle and should understand that the vehicle may develop faults over time consistent with its age and mileage.
[16] The engine damage became apparent in February 2021, about nine months after purchase, by which time Mr Johansen had driven about 18,000 km, and the coolant housing fault occurred in April 2021, about 3,000 km later. Considering the price, age and mileage of the vehicle at the time of sale, the length of Mr Johansen’s ownership, and the distance travelled before the engine damage and coolant housing fault became apparent, I am satisfied that the vehicle has been as free of minor defects and as durable as a reasonable consumer would consider acceptable.
[17] I also note that Mr Johansen alleged that Nova Motors Penrose tampered with the vehicle’s warning systems in July 2020, which may have contributed to, or disguised, the vehicle’s faults. That allegation was unfounded. There was no evidence presented to demonstrate that Nova Motors Penrose has tampered with this vehicle in any way.

Outcome

[18] Because the vehicle has been as free of minor defects and as durable as a reasonable consumer would consider acceptable, Mr Johansen’s application is dismissed.

DATED at AUCKLAND this 20th day of July 2021

B.R. Carter
Adjudicator

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[1] See invoice number 56672-1 from Wade Motors 2016 Ltd dated 3 March 2021.