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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 27 September 2021
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BETWEEN JAMIE SAUNDERS
Applicant
AND ZINDAR CORPORATION LTD
Respondent
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MEMBERS OF TRIBUNAL
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B R Carter, Barrister – Adjudicator
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S Gregory, Assessor
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HEARING at Auckland on 17 August 2021
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APPEARANCES
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J Saunders, Applicant
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C Wall, for the Respondent
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DATE OF DECISION 24 August 2021
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_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
_________________________________________________________________
REASONS
Introduction
[1] The 2010 Subaru Legacy[1] that Jamie Saunders purchased for $10,500 from Zindar Corporation Ltd in December 2020 now has a blown head gasket, so Mr Saunders wants to reject the vehicle and obtain a refund of the purchase price and compensation for costs he has incurred in diagnosing the engine damage.
[2] Zindar Corporation denies liability. It says that the vehicle was in acceptable condition at the time of sale, that it has been sufficiently durable and that the blown head gasket and other potential engine damage was caused by Mr Saunders continuing to drive the vehicle after it overheated.
Relevant background
[3] Mr Saunders returned to New Zealand from Australia in early December 2020. On 14 December (his second to last day in managed isolation quarantine), Mr Saunders contacted Craig Wall of Zindar Corporation to enquire about purchasing the vehicle, which was advertised online. Mr Saunders told Mr Wall that he was looking for a vehicle to drive around New Zealand, including to the South Island, where Mr Saunders intended to participate in the Coast to Coast adventure race. He agreed to purchase the vehicle that day. The vehicle’s odometer reading at the date of purchase was 131,080 km.
[4] Mr Saunders took possession of the vehicle on 15 December 2020 and proceeded to drive around New Zealand, without incident, until 21 February 2021. On that day. Mr Saunders drove from Wellington to Auckland and, near Cambridge, he noticed a flashing red light illuminate on the dashboard display for between 10 and 30 seconds and then disappear. That light is a warning that the vehicle is at risk of overheating.
[5] Mr Saunders then stopped at a friend’s house in Cambridge and called AA for advice. He says that AA told him that because the flashing red light had not stayed on and there was no sign of any leaks or steam from the cooling system, the vehicle was safe to drive, although Mr Saunders should continue to monitor the warning light. Mr Saunders says that he also checked the coolant level in the coolant expansion tank, which he says was between the low and full marks. Mr Saunders then continued to drive to Auckland. The temperature warning light did not return.
[6] On 1 March 2021, Mr Saunders had the vehicle assessed by Winger Motors Ltd in Auckland. Winger Motors considered that the vehicle had a faulty radiator cap, which was not holding pressure. Winger Motors replaced the radiator cap. The vehicle’s odometer reading at that time was 139,256 km.
[7] Mr Saunders drove back to Wellington that same day. Between Bulls and Petone, the temperature warning light illuminated twice, for about 30 seconds each time. Mr Saunders says that there were no other signs of the vehicle overheating so he continued to drive until he reached his home in Lower Hutt.
[8] Concerned that the vehicle had a more serious problem than diagnosed by Winger Motors, Mr Saunders then had the vehicle assessed by Armstrong’s Subaru in Lower Hutt, which pressure tested the radiator and found that the cylinder head had failed. Relevantly, it also found that
- the cooling system was holding pressure, with no external leaks;
- the radiator was empty (ie had no cooling fluid in it); and
- the thermostat was opening, and coolant was circulating.
[9] Armstrong’s Subaru recommended that Mr Saunders replace both cylinder head gaskets and have the cylinder heads sent to an engineer for assessment, and presumably for repair if required. It advised Mr Saunders that the repairs would cost $3,533.39 plus the cost of any repair to the cylinder head.
[10] Mr Saunders then contacted Zindar Corporation, which declined to take full responsibility for the engine damage because it considered that the damage was not pre-existing and was likely caused by Mr Saunders driving the vehicle after it overheated. Mr Saunders then filed this claim, seeking to reject the vehicle.
The issues
[11] The issues requiring the Tribunal’s consideration in this case are:
- (a) Has the vehicle been of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA)?
- (b) Are the vehicle’s defects a failure of a substantial character?
- (c) What remedy is Mr Saunders entitled to under the CGA?
Issue 1: Has the vehicle been of acceptable quality?
[12] 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.
[13] 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.
[14] 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 Saunders’ subjective perspective.
[15] Zindar Corporation considers that the vehicle’s engine damage was likely caused by Mr Saunders continuing to drive the vehicle after it overheated on 21 February 2021. Craig Wall, who appeared for the company, considered that Mr Saunders should have immediately stopped driving the vehicle once the flashing red warning light illuminated on 21 February 2021 and the blown head gasket and any other engine damage was caused by Mr Saunders continuing to drive the vehicle when he should not have.
[16] I agree with Mr Wall that driving an overheating vehicle can lead to significant engine damage, such as a blown head gasket. However, I am satisfied, on the evidence presented by Mr Saunders and the advice I have received from Mr Gregory, the Tribunal’s Assessor, that the head gasket was already blown, through no fault of Mr Saunders, by the time the flashing temperature warning light first illuminated on 21 February 2021.
[17] Winger Motors appears to have believed that it was a faulty radiator cap, rather than a blown head gasket, that caused the vehicle to overheat on 21 February 2021. However, Winger Motors does not appear to have performed a thorough diagnosis to reach that view. Mr Gregory advises that a reasonable mechanic presented with the symptoms described by Mr Saunders (the engine overheating with no obvious coolant leaks) would have performed a TK test (which detects the presence of combustion gases in the cooling system) and a radiator pressure test, both of which would have identified any blown head gasket. Winger Motors did not do that and appears to have simply assessed the radiator cap and considered that the radiator cap was the cause of the vehicle overheating.
[18] Mr Gregory says that if the radiator cap had failed to the point that the cooling system was losing pressure causing the vehicle to overheat, as diagnosed by Winger Motors, excessive coolant from the radiator would then have been pushed into the overflow tank. That did not occur. Mr Saunders’ evidence was that the coolant level in the overflow tank was normal, which it would not have been if the radiator cap was faulty.
[19] Instead, Mr Gregory considers that the evidence shows that it is likely that it was a blown head gasket, rather than a faulty radiator cap or any other fault, that caused the vehicle to overheat on 21 February 2021. Because there were no external coolant leaks, the thermostat was opening, coolant was circulating and because the overflow tank was not overfilled, Mr Gregory considers that the most likely cause of the overheating on 21 February 2021 was an already blown head gasket, most likely due to the head gasket having deteriorated over time due to poor coolant condition, gasket design or poor previous repairs. Mr Gregory says that a blown head gasket will cause the vehicle to consume coolant and then overheat, which is what occurred on 21 February and 1 March 2021. I am therefore satisfied that Mr Saunders’ continued driving of the vehicle on 21 February 2021 did not cause the blown head gasket.
[20] Likewise, I consider it highly unlikely that his continued driving has worsened the engine damage that was already present. Mr Saunders’ evidence shows that the engine did not get hot enough during his driving to cause damage over and above the blown head gasket. If the vehicle was overheating to the extent that further damage would occur, the red overheating warning light would have stayed illuminated, not flashed on and off, and there would have been other signs of severe overheating, such as steam or unusual burning smells, none of which were present.
The vehicle has not been of acceptable quality
[21] The purchaser of a $10,500, 10-year-old Subaru Legacy with an odometer reading exceeding 131,000 km must have realistic expectations as to the vehicle’s quality and durability. That purchaser should also reasonably expect the vehicle to have wear and tear consistent with its age and mileage and should know that the vehicle is likely to require ongoing repairs and maintenance due to its age and mileage.
[22] Mr Saunders purchased the vehicle in mid-December 2020. Its engine first overheated about two months later, on 21 February 2021. Mr Saunders had travelled nearly 8,000 km in that time, which is extensive use for such a short period.
[23] The blown head gasket was not a pre-existing defect, but developed during Mr Saunders’ ownership, with the head gasket most likely failing shortly before 21 February 2021. If the head gasket had blown any earlier, Mr Saunders would have noticed symptoms consistent with that blown head gasket, such as excessive coolant consumption and overheating, much sooner.
[24] Nonetheless, by a fine margin, I am satisfied at this vehicle has not been of acceptable quality for the purposes of s 6 of the CGA because the blown head gasket, which was not caused by Mr Saunders’ unreasonable use of the vehicle, means that it was not as free of minor defects or as durable as a reasonable consumer would consider acceptable. The vehicle now requires expensive engine repairs (which Mr Gregory advises will cost at least $2,000) and I consider that a reasonable consumer would not expect such a defect to occur in a vehicle of this price, age and mileage within a little more than two months of purchase, by which time the vehicle had travelled about 8,000km.
Issue 2: Are the vehicle’s defects a failure of a substantial character?
[25] Under s 18(3) of the CGA, Mr Saunders may reject the vehicle if its defects amount to a failure of a substantial character. A failure of a substantial character is defined in s 21 of the CGA:
- 21 Failure of substantial character
(1) 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.
[26] Section 21(a) of the CGA applies to this case and I am satisfied that the blown head gasket is significant engine damage that makes the vehicle unusable (as further driving could lead to even more serious engine damage) and will be expensive to repair. I consider that a reasonable consumer, fully acquainted with the true nature and extent of that fault, would not have purchased the vehicle.
Issue 3: What remedy is Mr Saunders entitled to under the CGA?
[27] The relevant remedies are set out in s 18 of the CGA, which provides:
- 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.
[28] Under s 18(3)(a) of the CGA, Mr Saunders is entitled to reject the vehicle. He is therefore entitled to recover all amounts he has paid with respect to the vehicle,[2] which in this case is the purchase price of $10,500.
[29] Under s 18(4) of the CGA, Mr Saunders is also entitled to recover the $143.75 cost of having the blown head gasket diagnosed by Armstrong’s Lower Hutt. That cost was a reasonably foreseeable consequence of the vehicle’s failure to comply with the guarantee of acceptable quality. Mr Saunders is not entitled to recover the cost of the Winger Motors assessment, as Winger Motors appears to have misdiagnosed the underlying cause of the vehicle’s overheating, so I do not consider it appropriate to make Zindar Corporation liable for that cost.
[30] The Tribunal therefore upholds Mr Saunders’ rejection of the vehicle and orders that Zindar Corporation shall, within 10 working days of the date of this decision, pay $10,643.75 to Mr Saunders. Mr Saunders must then make the vehicle available to be collected by Zindar Corporation, at its expense.
DATED at AUCKLAND this 24th day of August 2021
B.R. Carter
Adjudicator
[1] Registration plate number KMK444
[2] Consumer Guarantees Act1993, s 23(1)(a)
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