Gledhill v Turners Group NZ Ltd - Reference No. MVD 349/2021 [2021] NZMVDT 247 (8 December 2021)

Last Updated: 24 January 2022

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 349/2021 [2021] NZMVDT 247 BETWEEN ELAINE GLEDHILL Applicant AND TURNERS GROUP NZ LTD Respondent

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Gregory, Assessor

HEARING at Auckland on 3 December 2021 (by audio-visual link)

APPEARANCES

A Graham for the Applicant

D Mason for the Respondent

DATE OF DECISION 8 December 2021

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DECISION OF THE TRIBUNAL

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Elaine Gledhill’s application is dismissed.

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REASONS

Introduction

[1] Elaine Gledhill and Andrew Graham purchased a 2012 Hyundai I45 for $8,950 from Turners Group NZ Ltd (Turners) on 15 November 2020. On about 10 June 2021, the engine failed and now requires replacement. Ms Gledhill and Mr Graham want to reject the vehicle and receive a refund of the purchase price. Turners agrees that the vehicle has significant engine damage but says that the engine damage occurred too long after purchase for it to have liability.

Relevant background

[2] Mr Graham, who was Ms Gledhill’s partner when the vehicle was purchased and who has paid for and used the vehicle since, says that, before purchasing the vehicle, he was told by a Turners salesperson that the vehicle was “a very good vehicle, still got a lot of life in it”. Mr Graham says that he relied on the professional opinion of the salesperson when deciding to purchase the vehicle. The vehicle had an odometer reading of 199,237 km at that time.
[3] Mr Graham used the vehicle, without incident, until about 10 June 2021 when he noticed a “graunching, clanking” noise from the engine bay. Mr Graham stopped after driving one kilometre and arranged to have the vehicle transported to Ngaruawahia Automotive Ltd for assessment. An invoice dated 17 June 2021 states that Ngaruawahia Automotive considered that the vehicle had a “major noise” from the engine and the engine required replacement. It also considered that the engine needed to be dismantled to establish the cause of the engine noise. The vehicle’s odometer reading on 17 June 2021 was 208,094 km.
[4] Ms Gledhill then contacted Turners. Turners declined to assist, so she filed this application seeking to reject the vehicle. Ms Gledhill and Mr Graham say that the vehicle has not been of acceptable quality or fit for purpose as required by the Consumer Guarantees Act 1993 (the CGA). Mr Graham, who presented the claim at the hearing, says that he understood that a vehicle of this age and mileage can have wear and tear, but did not expect such serious engine damage to occur so shortly after purchase.
[5] David Mason, a regional sales manager, appeared for Turners. Mr Mason advised that he has spoken to the mechanic from Ngaruawahia Automotive who assessed the vehicle and Turners accepts that the engine has suffered significant damage and requires replacement.
[6] Mr Mason says that the engine damage was not pre-existing. He says that the vehicle was tested before sale, as set out in the Basic Vehicle Condition Guide provided to Ms Gledhill. That testing included a short test drive to test the performance of the engine. No issues were found during that testing or during the pre-sale service and warrant of fitness inspection. I understood Mr Mason to say that any identifiable pre-existing engine damage would have been detected if it existed. Mr Mason also submitted that the engine damage occurred too long after purchase for the protections in the CGA to apply.

The issues

[7] The parties agree that the vehicle has significant engine damage, so the only 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 CGA.

Has the vehicle been of acceptable quality?

[8] 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.
[9] 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.

[10] 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 Ms Gledhill and Mr Graham’s subjective perspective.

The Tribunal’s assessment

[11] The protections in s 6 of the CGA are finite and at some point the risk of a used motor vehicle developing defects must transfer from the supplier to the purchaser. The point in time at which that risk transfers from the supplier to the purchaser is determined with reference to the factors in s 7(1)(f) to (j) of the CGA.
[12] Ms Gledhill and Mr Graham paid $8,950 for an eight-year-old vehicle with an odometer reading of nearly 200,000 km at the time of sale. A reasonable consumer who has purchased a vehicle of this price, age and mileage must have realistic expectations as to its quality and durability and should understand that defects may arise from time to time, particularly as the vehicle is used.
[13] Mr Graham says that he had increased expectations as to the quality and durability of the vehicle because of the representations from the Turners’ salesperson that the vehicle was a very good vehicle, which still had a lot of life in it. I understood Mr Graham to submit that this representation reassured him that the vehicle would be much more durable than it has proven to be. Indeed, Mr Graham inferred that he thought the vehicle could be driven for another 200,000 km without significant issues.
[14] I accept Mr Graham’s evidence about what he was told by the Turner’s salesperson. However, I do not agree with his interpretation of the salesperson’s statement and I am not satisfied that a reasonable consumer would interpret such a statement as being a guarantee that the vehicle would remain free of major defects for a significant period of time. That representation was, at best, an expression of the salesperson’s opinion that the vehicle was in good condition and had no known defects that would cause problems. That representation was accurate and consistent with the findings of the pre-purchase testing, servicing and warrant of fitness inspection performed by Turners, which found no obvious pre-existing faults or other issues that would shorten the vehicle’s lifespan.
[15] The vehicle then developed major engine damage about seven months after purchase, by which time Mr Graham had driven about 8,800 km in the vehicle. Considering the realistic expectations that a consumer must have for a vehicle of this price, age and mileage, the pre-purchase representations made about the vehicle, and the length of Ms Gledhill and Mr Graham’s ownership and distance travelled before the engine damage, I am satisfied that the vehicle has been as free of minor defects and as durable as a reasonable consumer would consider acceptable.
[16] Ms Gledhill’s claim is therefore dismissed.

DATED at AUCKLAND this 8th day of December 2021

B.R. Carter
Adjudicator