Hata v Motorco Ltd - Reference No. MVD 121/2022 [2022] NZMVDT 133 (6 July 2022)

Last Updated: 7 October 2022

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 121/2022 [2022] NZMVDT 133 BETWEEN BIANCA HATA Applicant AND MOTORCO LTD Respondent

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Haynes, Assessor

HEARING at Auckland on 30 June 2022 (by audio-visual link)

APPEARANCES

B Hata, Applicant

No appearance for the Respondent

DATE OF DECISION 6 July 2022

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

Bianca Hata’s application is dismissed.

_________________________________________________________________

REASONS

Introduction

[1] Bianca Hata purchased a 2014 Mazda CX5 for $15,585 from Motorco Ltd in July 2020. The vehicle has since suffered significant engine damage and the engine and turbo have been replaced. Ms Hata wants to recover the cost she has incurred in replacing the engine and turbo from Motorco. Motorco’s position is unknown, as it did not attend the hearing.

Relevant background

[2] The vehicle’s odometer reading was 131,000 km at the time of purchase. She first experienced problems with the vehicle in about May 2021, when the vehicle’s check engine light illuminated. She had the vehicle assessed by Dave Smith Motors, which found a fault with the exhaust gas recirculation (EGR) valve, which is part of the vehicle’s exhaust emission system.
[3] Dave Smith Motors replaced the EGR valve, using the Autosure mechanical breakdown insurance policy Ms Hata had purchased with the vehicle. Ms Hata also paid to have the pollen filter and a bypass pipe replaced. The vehicle’s odometer reading at that time was 163,056 km.
[4] The check engine light returned, and on 15 June 2021, Dave Smith Motors found that the EGR cooler was blocked. Dave Smith Motors then replaced the EGR cooler. That repair was also covered by the Autosure mechanical breakdown insurance policy. The vehicle’s odometer reading at that time was 164,305 km.
[5] By 22 July 2021, the check engine light had returned, and the reversing camera, air conditioning, radio, lights and other electrical components were not working. Dave Smith Motors found that check engine light was caused by a faulty secondary EGR valve and the electrical issues were caused by a faulty body control module (BCM). It replaced both components, at a cost of $853.88. The vehicle’s odometer reading at that time was 165,689 km.
[6] Motorco has reimbursed Ms Hata for all expenses she incurred in respect of the EGR and body control module faults.
[7] In late 2021 or early 2022, the vehicle overheated near Taupō. The vehicle’s odometer reading at that time was about 180,000 km.[1]
[8] The vehicle was then transported to Dave Smith Motors, which has since assessed the vehicle. It performed a teekay test and found combustion gases in the cooling system. It then stripped the engine and found that the head gasket was blown allowing water to enter the number three cylinder, which now has rusty valves. Ms Hata has since replaced the engine and turbo. Autosure has covered $4,700 of that cost, so Ms Hata seeks to recover the remainder - $9,053.68 - from Motorco.

The issue

[9] Against this background, the sole issue requiring consideration 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?

[10] 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.
[11] 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.

[12] 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 Hata’s subjective perspective.
[13] Ms Hata paid $15,585 for a 6-year-old vehicle with an odometer reading of about 131,000 km at the time of sale. A reasonable consumer should understand that motor vehicles of this price, age and mileage can develop defects, that can sometimes be expensive to repair. They should also understand that a supplier’s obligations under 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 is determined with reference to the factors in s 7(1)(f) to (j) of the CGA.
[14] I accept Ms Hata’s evidence as to the existence of each of the claimed faults. The invoices and report from Dave Smith Motors show that each of these issues was present. I also accept that Ms Hata has adequately serviced the vehicle throughout her ownership.
[15] However, considering the mandatory factors in s 7(1)(f) to (j) of the CGA, I am not satisfied that the vehicle’s defects breached the guarantee of acceptable quality. Given the price, age, and mileage of the vehicle at the time of sale, the length of Ms Hata’s ownership (about 17 months) and the distance travelled before those faults because apparent (about 32,000 km before the EGR system and BCM faults and at least 48,000 km before the engine damage occurred), those faults occurred too long after purchase and the vehicle has been driven too far in that time for Motorco to still have liability under s 6 of the CGA.
[16] Ms Hata’s claim is therefore dismissed.

DATED at AUCKLAND this 6th day of July 2022

B.R. Carter
Adjudicator

---

[1] See report from Dave Smith Motors stating that it serviced the vehicle on 30 December 2021, when the odometer reading was 179,924 km.