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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 29 October 2022
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BETWEEN PAMELA JANE HARRIS
Applicant
AND TURNERS GROUP NZ 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 6 September 2022 (by audio-visual link)
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APPEARANCES
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P J Harris, Applicant
P Harris, Witness for the Applicant
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A Zandstra, for the Respondent
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DATE OF DECISION 15 September 2022
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_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
_________________________________________________________________
REASONS
Introduction
[1] Pamela Harris wants to reject the 2008 BMW X3 she purchased for $10,880 from Turners Group NZ Ltd in November 2021. Mrs Harris says that the engine management light illuminated on the day she collected the vehicle and, despite at least three attempts to rectify this fault, the vehicle remains defective. Mrs Harris also says that the vehicle has since developed a coolant leak, an oil leak and a vanos intake solenoid fault. Mrs Harris now wants to return the vehicle, recover the purchase price and receive compensation for the costs she has incurred in rectifying the oil leak, vanos intake solenoid fault and coolant leak.
[2] Turners says that it has fixed the vehicle when asked to do so, and Mrs Harris should not be entitled to reject the vehicle.
Relevant background
[3] The vehicle had pre-existing problems. An invoice dated 30 August 2021 shows that DM Auto Services in Tauranga inspected the vehicle for Turners and found fault codes relating to the vehicle’s oxygen sensors. It removed the rocker cover and injector lifters and vanos shaft and cleared carbon build up from the engine. It also carried out two engine flushes. Fault codes relating to the oxygen sensors remained, so on 24 September 2021, DM Auto Services removed and replaced an oxygen sensor.
[4] Mrs Harris purchased the vehicle on 6 November 2021. The vehicle’s engine warning light illuminated that same day. Mrs Harris contacted Turners and was told by Anna Zandstra, a manager at Turners, to have the vehicle assessed by DM Auto Services. Mrs Harris then took the vehicle to DM Auto Services on 12 November 2021. An invoice dated 30 November 2021 shows that DM Auto Services replaced another oxygen sensor.
[5] Mrs Harris says that the engine warning light continued to illuminate, so she had returned the vehicle to DM Auto Services on at least two further occasions by January 2022. Mrs Harris, and her husband Peter, say that DM Auto Services simply cleared the engine warning light and performed no further repairs at that time.
[6] By April 2022, in addition to the engine warning light (which had remained illuminated throughout their ownership) Mrs and Mr Harris had noticed oil leaking from the vehicle, so they returned the vehicle to DM Auto Services. They did not advise Turners that they were doing so.
[7] An invoice dated 7 April 2022 shows that DM Auto Services performed a diagnostic scan and again found fault codes relating to the vehicle’s oxygen sensors. It also found white residue in the exhaust, suggesting that the engine was running too lean (i.e. the engine is receiving too much air and not enough fuel). DM Auto Services removed and inspected the spark plugs and found that the number 3 and 4 spark plugs were contaminated with oil residue and that the rocker cover was leaking. It also considered that the vanos intake solenoid was faulty. DM Auto Services replaced the spark plugs, vanos intake solenoid, rocker cover gasket and various related components and fluids. Mrs and Mr Harris were charged a total of $1,705.80 for those repairs.
[8] Despite the various repair attempts by DM Auto Services, the engine warning light remains illuminated. Mr and Mrs Harris also say that the vehicle’s performance is affected. Mrs Harris described the vehicle as being low on power and “chuggy”. Mr Harris says that the vehicle seems to have high fuel consumption and the engine feels as if it is “missing”, although the engine performance improves when the engine reaches operating temperature.
[9] Although the cause of those symptoms remains undiagnosed, Mrs Harris says that she has recently been advised by Coombes Johnston European (Tga) Ltd, a BMW franchise, that the warning light has remained on because DM Auto Services has not used genuine BMW oxygen sensors
[10] Mr and Mrs Harris also say that they noticed a coolant leak in June or July 2022, which was rectified by replacing a broken radiator o-ring and radiator expansion bracket. They spent $207 replacing those items.
[11] After the hearing, Mrs Harris returned the vehicle to DM Auto Services for a further diagnostic scan to be performed, as DM Auto Services had not provided details of the fault codes found during earlier diagnostic scans. The following fault codes were found:
2C7F DME: Lambda Control
2
2C2C DME: Oxygen Sensor 2 Before Catalytic Converter: System
Check
29D0 DME: Combustion Misfires, Cylinder 4
29D1 DME:
Combustion Misfires, Cylinder 5
29D2 DME: Combustion Misfires,
Cylinder 6
29CC DME: Combustion Misfires, Several
Cylinders
29D9 DME: Misfire At Low Tank Fill Level
The issues
[12] Against this background, 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) Has Mrs Harris lost her right to reject the vehicle?
- (c) What remedy is Mrs Harris entitled to under the CGA?
Issue 1: Has the vehicle been of acceptable quality?
[13] 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.
[14] 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.
[15] 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 engine warning light
[16] The vehicle’s engine warning light has remained illuminated throughout Mrs Harris’ ownership, despite several attempts by DM Auto Services to rectify the underlying cause of the engine light. The evidence shows that whatever is causing the engine warning light to illuminate is now likely to be causing the engine to misfire on several cylinders.
[17] Mr Gregory, the Tribunal’s Assessor, considers that it is unlikely that the engine light and misfire is caused by the vehicle’s oxygen sensors. In that regard, Mr Gregory notes that the engine light and misfire symptoms complained of by Mrs and Mr Harris have continued despite DM Auto Services having replaced various oxygen sensors.
[18] Instead, Mr Gregory advises that the fault codes found by DM Auto Services after the hearing – particularly the fault codes relating to the catalytic system and the multiple misfires on various cylinders – suggests that it is more likely that the vehicle has vacuum leaks or an airflow sensor fault. Mr Gregory also notes DM Auto Services’ comment in April 2022 that the vehicle appeared to be running lean, which is a common sign of a vacuum leak.
[19] Although the precise cause of the engine warning light and misfire remains undiagnosed, I am satisfied that the vehicle does have an underlying fault that was present at the time of sale. That fault means the vehicle is not of acceptable quality for the purposes of s 6 of the CGA, because it was not as free of minor defects as a reasonable consumer would consider acceptable.
The oil and coolant leaks
[20] Mrs Harris paid $10,880 for a 13-year-old BMW X3 with an odometer reading of more than 120,000 km at the time of sale. A reasonable consumer should understand that motor vehicles of this price, age and mileage can develop defects and require ongoing maintenance that can sometimes be expensive to repair or perform. They should also understand that a supplier’s obligations under s 6 of the CGA are finite and, at some point, the risk of the 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.
[21] In this case, I am satisfied that the oil and coolant leaks are the kind of maintenance cost that a reasonable consumer can expect to incur in a vehicle of this age and mileage and that those issues arose too long after purchase for Turners to have liability under the CGA.
[22] Regarding the oil leak from the rocker cover gasket, Mrs Harris says that she was told by DM Auto Services that this was a pre-existing oil leak. I find that to be unlikely because the evidence shows that DM Auto Services removed the rocker cover when it performed repairs to the vehicle in August 2021. If the rocker cover gasket was leaking at that time, I consider it highly likely that the gasket would have been replaced, as once the rocker cover is removed, it is an inexpensive repair to replace the gasket. I therefore consider it much more likely that the leak from the rocker cover gasket developed during Mrs Harris’ ownership and was discovered too long after purchase for Turners to have liability.
Issue 2: Has Mrs Harris lost the right to reject the vehicle?
[23] Mrs Harris wants to reject the vehicle, alleging that its defects are a failure of a substantial character and that Turners has failed to rectify the vehicle’s defects after being given a reasonable opportunity to do so.
[24] Although Mrs Harris may have been entitled to reject the vehicle, under s 20(1)(a) of the CGA, Mrs Harris has lost any right she may have had to reject the vehicle because she did not exercise that right within a reasonable time.
[25] Section 20(1)(a) of the CGA provides that the right to reject goods under the CGA shall not apply if the right is not exercised within a reasonable time. For the purposes of s 20(1)(a) of the CGA, a "reasonable time" is a period from the time of supply of the goods in which it would be reasonable for the defect to become apparent, having regard to the factors set out in s 20(2)(a)–(d) of the CGA.
[26] In Nesbit v Porter, the Court of Appeal shed some light on the statutory words in s 20(2) of the CGA.[1] The Court observed that:[2]
... A reasonable time under s 20 must accordingly be one which suffices to enable the consumer to become fully acquainted with the nature of the defect, which, where the cause of a breakage or malfunction is not apparent, the consumer can be expected to do by taking the goods to someone, usually and preferably the supplier, for inspection.
[27] Mrs Harris first knew that the vehicle had a fault that caused the engine warning light to illuminate on the day that she purchased the vehicle on 6 November 2021. Despite that warning light remaining on throughout her ownership, she continued to use the vehicle and did not exercise her right to reject it until 10 May 2022, more than six months later, by which time she had travelled about 6,500 km.
[28] I accept that Mrs Harris gave Turners at least three opportunities to rectify the fault and that Mrs Harris did not understand that she potentially had rights under the CGA to reject the vehicle. Mrs Harris also says that she delayed pursuing this matter because she was told by an employee of Turners that, because she declined to purchase a mechanical breakdown insurance policy with the vehicle, Turners had no liability to rectify any defects more than three months after purchase.
[29] Turners denies making any such representation and I am not satisfied that Mrs Harris has proven that Turners made this representation. In that regard, I note that Mrs and Mr Harris’ recollection of this discussion changed somewhat during the hearing. Initially, Mrs and Mr Harris claimed that they were told that this discussion occurred while they were purchasing the vehicle. Later in the hearing, they advised that this discussion actually occurred after they had purchased the vehicle and had noticed that the engine warning light had illuminated. Given the inconsistencies in their evidence and Turners’ denial that any such representation was made, I am not satisfied that Mrs and Mr Harris have proven that Turners represented that it would not take responsibility for any repairs required after three months.
[30] Ultimately, the law imposed an obligation on Mrs Harris to pursue her right to reject the vehicle promptly. Mrs Harris was aware of the warning light on 6 November 2021 and of Turners’ failed efforts to repair shortly thereafter. By continuing to use the vehicle and waiting until May 2022 to reject the vehicle, Mrs Harris has not acted promptly and has now lost any right she had to reject the vehicle.
Issue 3: What remedy is Mrs Harris entitled to under the CGA?
[31] 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.
[32] Under s 18(2)(a) of the CGA, Mrs Harris is entitled to have the fault that is causing the engine warning light to illuminate, and the engine misfire rectified within a reasonable time. The decision as to who performs the necessary repairs rests with Turners but given the number of unsuccessful diagnostic and repair attempts to date, it may be advisable to have that work performed by a different repairer. Mr Gregory also considers that Mrs Harris should start using 98 octane fuel in the vehicle – she currently uses 91 octane – as this vehicle’s engine runs best with high octane fuel. Mr Gregory also suggests that Mrs Harris uses an injector cleaning additive in the first tank of 98 octane fuel, which will help to clear any carbon build up around the fuel injectors caused by using 91 octane fuel.
[33] Mrs Harris also seeks to recover the cost other repairs performed. She is not entitled to recover the cost of rectifying the coolant leak or oil leak, as those defects did not breach the guarantee of acceptable quality, or the cost of replacing the spark plugs, as the spark plugs only required replacement because they were contaminated with oil from the rocker cover gasket leak.
[34] Further, although the vanos intake solenoid was replaced by DM Auto Services, presumably in an attempt to rectify the underlying cause of the engine warning light, that appears to have been an unnecessary repair, as none of the evidence presented suggested any fault with the vanos intake solenoid and that repair did not rectify the fault. Mrs Harris cannot therefore recover the cost of that repair.
Outcome
[35] Mrs Harris’ application to reject the vehicle is dismissed and Turners shall, within 10 working days of the date of this decision, rectify the fault that is causing the engine warning light to illuminate and the vehicle to misfire.
DATED at AUCKLAND this 15th day of September 2022
B.R. Carter
Adjudicator
[1] Nesbit v Porter [2000] NZCA 288; [2000] 2 NZLR 465 (CA).
[2] At [39].
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2022/198.html