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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 23 July 2022
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BETWEEN EMA MEILI ALOI LATU
Applicant
AND FORWARD MOTION 101 LTD
Respondent
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MEMBERS OF TRIBUNAL
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D Watson, Barrister – Adjudicator
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S Gregory, Assessor
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HEARING at Auckland on 12 April 2022 (by audio-visual link)
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APPEARANCES
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Ema Meili Aloi Latu, Applicant
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Joseph Skudder, Director of the Respondent
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DATE OF DECISION 20 June 2022
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_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
a) uplift the 2005 Nissan Murano (JMW897) vehicle from the premises of JP Autocentre Ltd; and
b) pay the sum of $5,401.25 to Ms Latu.
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REASONS
Introduction
[1] On 5 May 2021, Ms Latu agreed to purchase a 2005 Nissan Murano (JMW897) from Forward Motion 101 Ltd (FML) for $5,100.00 (the agreement). Shortly after purchase, the vehicle became hard to start. Ms Latu filed an application with the Motor Vehicle Disputes Tribunal on 13 May 2021 in which she sought an order for rejection of the vehicle and a full refund of the purchase price.
[2] By decision dated 16 August 2021,[1] the Tribunal declined her request to reject the vehicle, but instead made an order that FML must “repair the faulty headlight, faulty brake light and the undiagnosed fault that makes the vehicle hard to start.”
[3] Ms Latu has now made a second application. She is, once again, wanting to reject the vehicle, but this time for a separate fault. The fault relates to a leak in the radiator which resulted in a blown head gasket. This fault has rendered the vehicle undriveable.
[4] FML denies any legal liability towards Ms Latu. It says that it complied with the previous order of the Tribunal. It claims that the additional fault has developed too long after purchase for this fault to be the responsibility of FML. It also says that it requested several times to be given the opportunity to examine the vehicle, to no avail. It also claims that Ms Latu contributed to the fault by not properly monitoring the coolant levels of the vehicle and by continuing to drive the vehicle when she should have known about a coolant leak.
Relevant background
[5] The prior order of the Tribunal sets out the background relating to Ms Latu’s purchase of the vehicle. I do not repeat that background here.
[6] After the repairs previously ordered by the Tribunal were completed, Ms Latu visited the premises of FML to uplift her vehicle. This was on 20 October 2021.
[7] When she tried to start the vehicle, she noticed it was making the same noise as the noise she had noticed previously.
[8] She was eventually able to get the vehicle to start on this occasion but was not happy. She attempted to talk with Mr Skudder, the director of FML, about the issue there and then.
[9] An attempt at a discussion quickly led to an altercation between the parties. The consequence was that Ms Latu left the premises that day with the vehicle, still unhappy and with the matter unresolved.
[10] FML provided an invoice from A Grade Auto Services relating to the repairs performed following the first Tribunal decision. That invoice states:
“Vehicle towed in. Find starting problem. Remove spark plugs, fouled, clean and refit. Check for spark and fuel. O.K. Find faulty starter. Source obtain and fit replacement. Top-up fluid levels. Jumpstart vehicle. Check charging system and battery O.K.”
[11] The invoice also records that FML was charged for a second-hand starter and 3 litres of oil. It records that the odometer reading at that time was 215,288 km.
[12] After Ms Latu uplifted her vehicle on 20 October 2021, she then extensively used it, driving on a daily basis between West, South and North Auckland.
[13] Her evidence that there was still a fault with the vehicle not always starting properly, although she put forward no diagnostic evidence at all in support of this.
[14] During the following weeks Ms Latu did not notice any warning lights on the vehicle’s dash.
[15] On 14 November 2021, there was an incident where Ms Latu was driving in the middle lane of the Southern motorway. She noticed that the vehicle seemed to be slowing down and shaking. She then noticed that the coolant gauge suddenly shot up to “hot”. She was able to safely pull over to the side of the motorway and called her brother who helped her get it towed to the closest mechanic. Her evidence was that there had been no warning light on the dashboard preceding this event.
[16] The mechanic she took the car to was JP Autocentre Limited (JPA). The vehicle has remained at JPA’s premises since then and is undrivable. Its current odometer reading is 217,966 km. When it arrived with JPA it had therefore travelled 2,678 kms since its repair by A Grade Auto Services.
[17] The report from JPA records that the vehicle had a blown head gasket, a cracked radiator and a possible cylinder head crack. A visual inspection identified a leak from the radiator. JPA said in its report: “In my professional opinion the issues presented here with the car predates Ema’s ownership of the car.”
Following the hearing
[18] Following the hearing, JPA undertook further investigation and diagnosis of the vehicle and the parties had the opportunity to make submissions about this.
[19] JPA did compression tests on all four cylinders. It reported:
“Test results indicates the compression test carried out confirming #2 and #3 as low in compression which allows the compressed air in one or more cylinders to bleed off to the cooling system as shown on the snippets provided.”
[20] A video was provided showing the existing condition of the radiator. Mr Gregory, the Tribunal’s Assessor, advises that the video shows that the leak from the radiator came from the top tank. The top tank, which is plastic, is joined to the main core by way of crimping and a rubber seal. Commonly, the seal can perish or excessive radiator coolant pressure can lift the tank off the core (typically, if the radiator cap is faulty or a blown head gasket is already present).
[21] FML submits that after 18 October 2021, the vehicle started to leak coolant. It says that the cause of the damage was the vehicle being driven with the incorrect water coolant level in the cooling system. It submits Ms Latu did not maintain her vehicle and that she should have known about the coolant water leak. It claims she was not properly monitoring the coolant gauge.
[22] Ms Latu says that the mileage of the vehicle was well under where coolant level needed to be checked or changed. She submits that a photograph produced by FML showing the dash at the time of the sale depicted even back then a warning light for the gauge and coolant level. She says therefore FML must have known that this was a faulty aspect of the vehicle back at the time it was sold to her. She puts the blame at the feet of FML and says that it must have put in the wrong coolant level when servicing the vehicle prior to selling it to her.
The issues
[23] The issues requiring the Tribunal’s consideration in this case are:
- (a) Was the vehicle of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA)?
- (b) Were the vehicle’s defects a failure of a substantial character?
- (c) What remedy is Ms Latu entitled to under the CGA?
Issue 1: Was the vehicle of acceptable quality?
[24] 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.
[25] 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.
[26] 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 the purchaser’s subjective perspective.
What were the faults with the vehicle?
The starter motor
[27] Ms Latu submitted that after uplifting the vehicle from A Grade Auto Service she continued to experience an issue with the starter motor and the vehicle not starting properly.
[28] There was no independent diagnostic evidence at all put forward by her about this. I am therefore not satisfied there was a failure with the starter motor.
[29] As the applicant, Ms Latu bears the onus of proving that the vehicle has a starting fault that breaches the guarantee of acceptable quality. She has provided no independent diagnosis to prove the existence of any fault. In the absence of any diagnosis, I cannot be satisfied that the vehicle has any starting fault that breaches the guarantee in s 6.
The radiator failure
[30] Mr Gregory advises, after viewing the submitted video, that the coolant has quickly evacuated from the engine’s cooling system, once it let go. He advises that the vehicle has therefore suffered a sudden radiator failure, rather than a failure following a gradual leak. The sudden failure in the radiator has then caused power loss in the vehicle, the coolant gauge to shoot up to “hot” and the subsequent damage to the vehicle’s engine, being the blown head gasket and possible cracked cylinder head.
[31] Mr Gregory advises that, most likely, a new engine will need to be sourced for the vehicle at a cost likely to come close to exceeding the value of the vehicle itself.
How long had the vehicle been driven after sale before the fault emerged?
[32] One of the relevant factors to be taken into account in assessing whether there has been a failure of the guarantee of acceptable quality is the time and distance travelled since purchase before the faults and the vehicle occurred.
[33] The parties accept that the odometer reading at the time of the failure was 217,966 kms. There was some uncertainty however regarding the odometer reading at the time of sale.
[34] The agreement recorded that the odometer reading was then 216,900 km. If this was accurate, it would mean that the fault emerged only after 1,000 km of driving from the time of sale. FML says however that the stated milage on the agreement is a mistake and that the true milage at sale was 211,900 km.
[35] Ms Latu was uncertain as to what the exact odometer reading was at the time of sale. On her application, she wrote that the odometer reading was then 211,900 km. She said that she obtained this information from the “window card”. This is a reference to the consumer information notice displayed in the window of the vehicle when it is being offered for sale.
[36] The consumer information notice recorded that the odometer reading was only 211,900 km.
[37] Mr Skudder gave evidence that the warrant of fitness details on the CARJAM report for the most recent warrant of fitness before sale (dated February 2021) was 211,567 km. Since that time, the vehicle was taken for some test drives but was mainly just situated at the premises of FML, not being driven at all.
[38] After the hearing, Mr Skudder produced a photograph showing that the vehicle’s mileage at the time of sale was 211,618 km.
[39] I find that it is more probable than not that the mileage of the vehicle at the time of sale was 211,618 km and that the reference to 216,900 km on the agreement must be a mistake. The consumer information notice is more likely to be the accurate record of the mileage of the vehicle. Consistent with this is the photograph that Mr Scudder produced.
[40] At the point the failure emerged, the vehicle had therefore travelled 6066 km from the point of sale.
Was there a failure of the guarantee of acceptable quality in relation to the radiator fault?
[41] I accept the evidence of Ms Latu that there was no prior warning that she noticed of the radiator failing. I find that there was no warning light on the dash that preceded the radiator failure. That is not necessarily unusual because it is the advice of Mr Gregory that a sudden radiator failure may not always follow the appearance of a warning light. This is because the failure could have been caused by a sudden failure in the radiator that has not, for instance, followed any slow leak.
[42] I must consider whether the damage has happened too long after sale and whether there was any lack of maintenance issue which may have caused or contributed to the fault.
[43] I note that the invoice of A Grade Auto Services refers to “fluid levels” being topped up. This suggests that the coolant level at that time was checked and topped up. At the point at which the vehicle had travelled 215,288 kms, the coolant levels were therefore at an appropriate level. Within only a further 2500 odd kilometres, the radiator has suffered a sudden failure. Fluid levels that were topped up at 215,288 km would not be expected to deplete in such a short period of milage.
[44] I therefore find that Ms Latu has not contributed to the radiator fault by any lack of maintenance on her part.
[45] In relation to the distance that the vehicle had travelled since purchase, a reasonable consumer of an older motor vehicle with high mileage and a low purchase price must have reasonable expectations about the quality of the vehicle and potentially the need for expense to be incurred in unplanned repairs and maintenance.
[46] That said, I do not believe a reasonable purchaser of this vehicle would regard it as acceptable to be put to the expense of repairing a fault of this sort (likely to require a replacement engine) after such a low amount of mileage after purchase.
[47] I therefore find that the defect with the radiator and the subsequent engine failure amounted to a failure of the guarantee of acceptable quality pursuant to s 6 of the CGA.
Issue 2: Was the vehicle’s fault a failure of a substantial character?
[48] Under s 18(3) of the CGA, Ms Latu 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 as follows:
- 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.
[49] Section 21(a) of the CGA applies to this case. The question I must answer is whether the fault that this vehicle has, was such that a reasonable consumer, fully acquainted with the true nature and extent of the faults, would not have purchased the vehicle.
[50] The defect makes the vehicle unusable. The vehicle is currently located at JPA and cannot be driven until it is repaired, likely by replacement of the engine.
[51] The defects will be expensive to rectify. Mr Gregory advises that although there is no estimate for the repair work, it is likely to involve full engine replacement. The cost of that will likely equal or exceed the purchase price of the vehicle.
[52] Applying s 21(a) of the CGA, I am therefore satisfied that the vehicle’s failure, which makes the vehicle unusable and will be expensive to repair, is such that a reasonable consumer, fully acquainted with the true nature and extent of the faults, would not have purchased the vehicle.
Issue 3: What remedy is Ms Latu entitled to pursuant to the CGA
[53] I have found that the vehicle’s failure is of a substantial character. It follows that Ms Latu is entitled to the remedy that she has sought. She is therefore entitled to reject the vehicle.
[54] Ms Latu entitled to a refund of all amounts paid in respect of the vehicle,[2] which in this case is the purchase price of $5,100.00.
[55] Pursuant to s 18(4) of the CGA, Ms Latu is additionally entitled to damages for any loss or damage resulting from the failure which was reasonably foreseeable as liable to result from the failure, such as diagnostic and towing costs.
Towing costs
[56] A direction was made for Ms Latu to submit her towing costs, but she has not done so. There being no evidence put forward to corroborate whether there were any towing costs, I make no order in that regard.
Diagnostic and storage costs
[57] In relation to the diagnostic costs, following directions being issued, Ms Latu submitted a quote from JPA for storage and diagnostic costs of $782.00. The amount of $379.50 is claimed for storage of the vehicle since 7 November 2021 and the amount of $402.50 is claimed for the diagnostic costs.
[58] In regard to the claim for storage costs, Ms Latu has an obligation to mitigate her loss and could potentially have had the vehicle towed back to her home after it was initially diagnosed. That said, this may have involved further towing costs.
[59] Further, as is pointed out by Mr Skudder, the vehicle has been stored by JPA since 7 November 2021 but the application was not filed until 30 March 2022.
[60] On balance, I consider a fair and reasonable amount to order to compensate Ms Latu for any storage costs is $100.00.
[61] In regard to the diagnostic charges, JPA claims that the work done included compression tests on all four cylinders, a radiator leak test and a leak down test. The amount claimed is 5 hours work at $80.50 per hour. Mr Gregory advises that the above tests were necessary to successfully diagnose the failure in this vehicle. He advises that a reasonable period of time to perform these tests is 2.5 hours. I therefore allow $201.25 for the diagnostic costs.
Outcome
[62] Ms Latu’s application to reject the vehicle is allowed.
[63] Within 10 days of the date of this order, FML must:
a) uplift the vehicle from JPA’s premises, and
b) pay the sum of $5,401.25 to Ms Latu.
DATED at AUCKLAND this 20th day of June 2022
D A Watson
Adjudicator
This decision has been appealed. The outcome of that appeal was unknown at the date of the publication of this decision.
[1] Latu v Forward Motion 101 Ltd [2021] NZMVDT 153.
[2] Section 23(1)(a) of the CGA.
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2022/112.html