Herbison v Care a Car Limited - Reference No. MVD 051/2021 [2021] NZMVDT 97 (2 June 2021)

Last Updated: 23 July 2021

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 051/2021
[2021] NZMVDT 97

BETWEEN DANIEL HERBISON

Purchaser

AND CARE A CAR LIMITED

Trader

HEARING at Christchurch on 13 May 2021
MEMBERS OF TRIBUNAL

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

APPEARANCES

D R Herbison, Purchaser (via AVL)
P S Paul, Director of Trader

DATE OF DECISION 2 June 2021

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

Daniel Herbison’s application is dismissed.

___________________________________________________________________

REASONS

Introduction

[1] Daniel Herbison seeks to recover $1,945.23 from Care A Car Ltd, from which he purchased a 1989 Nissan Safari on 29 February 2020 for $10,800.
[2] Mr Herbison says the vehicle was unsafe at the time of sale. He says that rust that was identified in a failed warrant of fitness inspection in 2019 was not addressed but was hidden under a very good paint job. Mr Herbison has had to pay $3,890 for rust repairs on the vehicle and wants Care A Car to pay for half of this expense.
[3] From this background the following issues arise for the Tribunal to determine:

• (a) Did the vehicle fail to comply with the guarantee of acceptable quality?
• (b) If so, was the failure of a substantial character?
• (c) Did Care A Car engage in misleading and deceptive conduct in breach of s 9 of the Fair Trading Act 1986?
• (d) Is Mr Herbison entitled to any remedy?

Issue 1: Did the vehicle fail to comply with the guarantee of acceptable quality?

[4] 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.
[5] “Acceptable quality” is defined in s 7 of the Act (as far as is relevant) 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.

...

[6] 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.
[7] Mr Herbison’s vehicle is a 1989 Nissan Safari, which was sold with 255,104 km on its odometer for $10,800. Mr Herbison complains that the vehicle was not of acceptable quality because it was neither reasonable in look and finish nor durable and safe. Mr Herbison has had to pay more than $3,500 to repair rust in the vehicle. He says that this rust was hidden under a new paint job that came with the vehicle.
[8] The vehicle offer and sale agreement does not disclose as a special condition of sale any defects, including any rust on the vehicle. Shortly before the vehicle was sold it was given a new warrant of fitness by Unique Auto Repairs Ltd, which was issued on or around 21 January 2020. Because this vehicle was manufactured before 2000, warrant of fitness inspections are required on a six-monthly basis.[1] We were supplied the warrant of fitness check sheet from Unique Auto Repairs’ initial inspection of the vehicle on 18 December 2019. The vehicle failed this initial inspection. The reasons for rejection were stated on the check sheet as follows:

Repair rust at all mounting points

Panel beater report required

[9] After the date of this inspection, Care A Car had repairs carried out by First Choice Motor Repairs Ltd. Its invoice simply states “repair and paint rust as required”. Care A Car was charged $287.50 for the repair. Before the warrant of fitness inspection, additional repairs had been carried out by NPD Lincoln Road Workshop. This repair involved removing the driver’s seat anchor, welding, painting and reinstalling at a cost of $103.50.
[10] Although the repairs carried out after the warrant of fitness appear relatively minor, and involved some painting, there was insufficient evidence presented by Mr Herbison to establish that Care A Car or its repairers painted over rust in a way that somehow deceived Unique Auto Repairs into passing the vehicle for its warrant of fitness on reinspection. Based on the limited evidence available, I am not prepared to find that a warrant of fitness should not have been given to the vehicle in January 2020. The NZ Transport Agency is responsible for ensuring that vehicle inspection and certification is carried out in accordance with Waka Kotahi NZ Transport Agency’s Vehicle Inspection Requirements Manual (VIRM)[2] and Land Transport Rules. A person can complain about an inspection not being conducted to those standards.[3] In some cases in this Tribunal, parties produce evidence of their complaints and of the NZ Transport Agency’s investigation. However, Mr Herbison presented no evidence that he made a complaint about the warrant of fitness inspection of his vehicle by Unique Auto Repairs. I am not in a position to second-guess that inspection.
[11] Mr Herbison failed to have his vehicle inspected when it next became due for a warrant of fitness in July 2020. He wrongly assumed that the warrant of fitness the vehicle had when he purchased it would be valid for 12 months after the date of purchase. Indeed, he told the Tribunal that it was only after he was ticketed for operating the vehicle with an expired warrant of fitness that he realised that he needed to get it inspected.
[12] Mr Herbison took the vehicle to a workshop for a warrant of fitness inspection on 27 October 2020, approximately three months after it was due. The vehicle was rejected for the following reasons:

R/F park light; R/R indicator, R/R len[s] dull and water

Link rod tie rod end to pitman arm, panhard rod bushes, washers to operate, rust drivers roof sill, rust rear door area, rust firewall, play R/F wheel bearing, panhard bolt to[o] small, exhaust leak manifold down pipe, rear sway bar bushes, rear sway bar links – exhaust hitting L/R shock

[13] At this stage Mr Herbison had travelled nearly 7,000 km in the vehicle since purchasing it.
[14] Mr Herbison had rust repairs carried out to the left door weld in the window frames and in the left and right door jams, as well as repairing what was described as comprehensive rust in the roof and in the vehicle’s fire wall. These repairs were completed on or around 13 November 2020 by Heretaunga Collision Repair Centre at a cost of $3,890.45.
[15] Mr Herbison took the vehicle for a further warrant of fitness inspection on 23 December 2020, which it also failed for the following reasons:

R/F park light to work

Washers to work properly

Exhaust dent at manifold to down pipe

[16] Mr Herbison had further repairs completed by Midas Newtown on or around 20 January 2021 at a cost of $175.77. He then successfully obtained a warrant of fitness for the vehicle on 5 February 2021.

Tribunal’s assessment

[17] This vehicle was 31 years old at the time of sale. It also has a high mileage, more than a quarter of a million kilometres at the time of sale. Any purchaser of such an elderly, high-mileage vehicle needs to be realistic about the likelihood of extensive, and quite possibly expensive, repairs that may be needed. Moreover, as I have indicated, I do not consider that Mr Herbison has presented enough evidence to establish that the warrant of fitness that was given to the vehicle in January 2020 should not have been given to the vehicle, or that rust issues had been covered up by the trader prior to selling the vehicle. That is something that Mr Herbison would need to take up with the provider of the warrant of fitness, Unique Auto Repairs, by way of a complaint to the NZ Transport Agency.
[18] Nevertheless, on the basis of the Tribunal’s Assessor Mr Dixon’s advice, and having regard to the extensive repairs required in order to have the vehicle certified as compliant with warrant of fitness requirements, I conclude that the vehicle was not as durable as a reasonable consumer would regard as acceptable, even considering its advanced age and mileage.

Issue 2: Was it a failure of a substantial character?

[19] A failure to comply with the guarantee of acceptable quality will be of a substantial character in the circumstances outlined in s 21 of the Act, which provides:

21. Failure of substantial character

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.

[20] I do not consider that Mr Herbison has presented enough evidence to establish that the vehicle was unsafe at the time he purchased it. Nor do I accept that on the basis of the information provided a reasonable purchaser would not have acquired the vehicle, even if acquainted with the extensive rust repairs required.
[21] Rather, I consider that the nature and extent of repairs required, when assessed against the age and mileage of the vehicle, and its price, do not amount to a failure of a substantial character.

Issue 3: Did Care A Car engage in misleading conduct in breach of s 9 of the Fair Trading Act 1986?

[22] Section 9 of the Fair Trading Act 1986 provides that no person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. As I have already found, Mr Herbison has not presented enough evidence to prove that Care A Car hid rust on the vehicle (by painting over it) or otherwise engaged in any misleading or deceptive conduct in the sale of the vehicle. However, Mr Herbison has established that Care A Car misled him by telling him on 19 February 2020, just before he decided to purchase the vehicle, that its most recent warrant of fitness had been done by VTNZ. In fact, as indicated, the warrant of fitness inspection was done by Unique Auto Repairs. Indeed, Care A Car’s statement was incorrect and, strictly speaking, amounts to misleading and deceptive conduct in breach of the Fair Trading Act.
[23] However, evidence of loss caused by this conduct would be required before Mr Herbison would be entitled to any remedy under the Fair Trading Act. Before obtaining damages under the Fair Trading Act, a claimant must prove that they have suffered loss or damage “by” the conduct of the defendant. This is known as “causation”. It is an essential element of a claim.[4]
[24] There is no evidence that the erroneous statement that VTNZ issued the vehicle’s warrant of fitness has caused Mr Herbison to suffer any losses. For example, Mr Herbison has not established that VTNZ would have assessed the vehicle any differently from Unique Auto Repairs. In other words, Mr Herbison has not established that if the vehicle’s warrant of fitness had been issued by VTNZ, it would have made any difference in terms of the losses that he has since suffered by having to pay for rust repairs to the vehicle.

Conclusion

[25] As Mr Herbison has not established Care A Car’s misleading and deceptive conduct caused him any losses, his claim under the Fair Trading Act is dismissed.

Issue 4: Is Mr Herbison entitled to any remedy?

[26] Having established a breach of the guarantee of acceptable quality, it is necessary to consider whether any remedy is available in respect of that breach. The remedies available to a consumer in respect of a breach of a guarantee under the Consumer Guarantees Act are set out in s 18, 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.

[27] Care A Car’s primary submission in response to Mr Herbison’s claim is that he did not complain to it for ten months after it sold the vehicle to him. Its argument is that Mr Herbison was required to approach Care A Car first before undertaking repairs on the vehicle himself so that it could have been given a reasonable chance to address the issues with the vehicle. This would have included an opportunity to assess the vehicle for itself and the opportunity to make any repairs that were needed.
[28] As is clear from the facts outlined above, instead of contacting Care A Car, Mr Herbison went ahead and got the rust repairs carried out by Heretaunga Collision Repair Centre. Only then did he complain to Care A Car and seek to recover the cost of the repairs.
[29] I agree with Care A Car that this presents an obstacle for Mr Herbison in seeking to recover any damages in the present case. In Acquired Holdings Ltd v Turvey, the High Court held that on a plain reading of s 18 of the Act in circumstances where a defect can be remedied and is not of a substantial character, the purchaser must follow the requirements in s 18(2) to allow the supplier an opportunity to remedy the failure within a reasonable time. The self-help remedy in s 18(2)(b), allowing a consumer to have the failure remedied elsewhere and obtain from the supplier all reasonable costs incurred doing so, is exercisable only if the supplier refuses or fails to remedy the failure under s 18(2)(a).[5]
[30] Moreover, even if I am wrong and Mr Herbison could establish that the defects with his Nissan are of a substantial character, allowing him to make a damages claim under s 18(3)(b) of the Act, the losses claimed by him are not of a kind which he might recover in such circumstances. Compensation under s 18(3) is only available for any reduction in the value of the goods below the price paid or payable.[6] Mr Herbison did not establish that his vehicle is worth less than he paid for it as a result of the damage he discovered.

Conclusion

[31] Accordingly, for the above reasons, Mr Herbison is not entitled to any remedy and his claim must be dismissed.

J S McHerron
Adjudicator

---

[1] Land Transport Rule: Vehicle Standards Compliance 2002, r 9.5(4)(a), sch 4.

[2] Waka Kotahi NZ Transport Agency Vehicle inspection requirements manual (VIRM): In-service certification (WoF and CoF).

[3] See the complaint form at <https://www.nzta.govt.nz/resources/vehicle-certification-complaints-form/>.

[4] Red Eagle Corporation Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [29].

[5] Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 (HC) at [11].

[6] At [15].