Scales v Hutt Valley Wholesalers Limited - Reference No. MVD 218/2022 [2022] NZMVDT 203 (21 September 2022)

Last Updated: 30 October 2022

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 218/2022
[2022] NZMVDT 203

BETWEEN RICHARD SCALES

Purchaser

AND HUTT VALLEY WHOLESALERS LIMITED

Trader

HEARING at Wellington on 29 August 2022
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator
A B Cate – Assessor

APPEARANCES

R Scales, Purchaser
A B Gawn, Director of Trader

DATE OF DECISION 21 September 2022

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

Hutt Valley Wholesalers Ltd must pay Richard Scales $1,162.31 no later than 5 October 2022.

___________________________________________________________________

REASONS

Introduction

[1] On 21 June 2021, Richard Scales purchased a 2008 Nissan X Trail from Hutt Valley Wholesalers Ltd for $9,990. Mr Scales purchased the vehicle to launch and retrieve his 1500 kg trailer-sailer at a sailing club which is about 5 km from his house.
[2] Slightly less than five months after purchasing the vehicle, it was diagnosed as having a faulty centre bearing on the flexible propeller shaft. Repairs cost $1,162.31.
[3] In this proceeding, Mr Scales seeks to recover the full cost of the repair, plus $750 damages for stress, from Hutt Valley Wholesalers.
[4] On behalf of Hutt Valley Wholesalers, its director Bruce Gawn submitted that his company will not entertain Mr Scales’ request for compensation for the repairs he undertook on the vehicle. Mr Gawn says that Hutt Valley Wholesalers offered to help Mr Scales, but that he “took it upon himself to get the work done”. Mr Gawn submitted that, at most, Hutt Valley Wholesalers would have offered to share the cost of the repairs, due to the age and mileage of the vehicle. Mr Gawn said that the vehicle did not have the issue with its centre bearing when Mr Scales purchased the vehicle some five months earlier.
[5] Mr Gawn relies on the fact that Mr Scales advised Hutt Valley Wholesalers that he was authorising his own mechanic to do the work. In light of that, Mr Gawn says, Hutt Valley Wholesalers was not given an opportunity to remedy the failure for itself.
[6] Mr Gawn said it is also important to note that the vehicle had travelled 188,000 km at the time of purchase and that it would be reasonable to expect some maintenance would be on the horizon. By the time the problem arose, Mr Gawn says, Mr Scales had already travelled an additional 5,000 km in the vehicle.
[7] 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, what (if anything) is the appropriate remedy?

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

[8] 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.
[9] “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.

...

(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.

...

[10] 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.
[11] A centre bearing is a type of drivetrain bearing that serves as a support for the vehicle’s driveshaft. It transfers power from the vehicle’s transmission to the rear differential, where it is then transferred to the wheels. The Tribunal’s Assessor, Mr Cate, advised that a failed centre bearing can compromise the drivability of the vehicle.
[12] As Mr Gawn points out, the vehicle already had a relatively high mileage when Mr Scales purchased it, at nearly 188,000 km. However, Mr Scales thought that by buying his vehicle from a registered motor vehicle trader, he would receive the protections in the consumer legislation, even if that meant paying more than if he had bought the vehicle privately.
[13] Mr Scales is correct in his expectation that he would be protected under consumer legislation. One of the particular protections in the Act is that a consumer is entitled to expect a vehicle to be reasonably durable. The durability protection applies in respect of problems emerging after the date of purchase. In other words, under the Act, a purchaser is not required to prove that a fault is pre-existing, for it to amount to a breach of the guarantee of acceptable quality.
[14] Mr Gawn is also correct that the guarantee of acceptable quality does not provide indefinite protection for consumers. Sooner or later, a reasonable consumer must expect to have to shoulder the burden for ongoing maintenance and repairs to their vehicle. Exactly how long the guarantee of acceptable quality continues to apply is variable, according to the factors set out in the definition of “acceptable quality” in s 7 of the Act.
[15] In the present case, the fault with the centre bearing arose less than six months after Mr Scales purchased the vehicle and after he had travelled only about 5,000 km in it. In my view, Mr Scales was entitled to expect that the guarantee of acceptable quality would continue to apply at least until this point, subject to any defence of contributory negligence as provided in s 7(4). That defence has two elements, both of which must be established for it to operate:

• (a) was the vehicle used unreasonably?
• (b) would the vehicle have otherwise complied with the guarantee of acceptable quality, if it had not been used unreasonably?

Did Mr Scales use the vehicle unreasonably?

[16] Mr Gawn suggested, albeit somewhat faintly, that Mr Scales’ use of the vehicle to tow his boat amounted to unreasonable use of the vehicle.
[17] According to Mr Cate, it is not uncommon to use this type of vehicle for towing. Indeed it appears the vehicle was supplied to Mr Scales with a towbar.
[18] I do not consider that Hutt Valley Wholesalers has proved that the towing done by Mr Scales using his vehicle amounts to unreasonable use of the vehicle, or that the fault complained about arose because of the towing that had been done.
[19] As Hutt Valley Wholesalers has not established that Mr Scales has used his vehicle unreasonably, it is unnecessary to consider the second element of the test in s 7(4) of the Act
[20] Accordingly, I conclude that Hutt Valley Wholesalers has not established any contributory negligence respect of the fault arising, in terms of s 7(4) of the Act.

Conclusion

[21] Mr Scales has established that his vehicle failed to comply with the guarantee of acceptable quality.

Issue 2: What is the appropriate remedy?

[22] The remedies available to a consumer where a vehicle does not comply with the guarantee of acceptable quality are set out in s 18 of the Act, 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.

[23] The primary remedy available to a consumer where a vehicle fails to comply with the guarantee of acceptable quality is set out in s 18(2)(a) and allows the consumer to require the supplier to remedy the failure within a reasonable time.
[24] Indeed, s 18(2)(a) of the Act provides where a failure can be remedied, the consumer must give the trader an opportunity to remedy the failure before going ahead and getting repairs done by someone else.
[25] The High Court confirmed in Acquired Holdings Ltd v Turvey that a consumer must follow a particular sequence of steps in order to be eligible to obtain a remedy under s 18 of the Act.[1] In that case, the Court held a purchaser must follow the requirement in s 18(2)(a) to allow the supplier an opportunity to remedy the failure within a reasonable time.[2] The subsequent self-help remedy in s 18(2)(b), in which a consumer may have the failure remedied elsewhere and obtain from the supplier all reasonable costs in doing so is exercisable only if the supplier refuses, neglects or fails to remedy the failure under s 18(2)(a).[3]
[26] To have a chance of recovering repair costs, a consumer must generally provide the trader with an opportunity to repair or replace the vehicle, before commissioning the repairs themselves. This is to allow the supplier to assess whether the goods have been subjected to unreasonable use, whether a defect has caused a problem and, in particular to control the quality of the repair.[4]

What happened to Mr Scales’ vehicle?

[27] After noticing a deep rumbling from the vehicle, on 17 December 2021, Mr Scales took it to The Local Garage for diagnosis. The workshop owner, Carl Northcote, thoroughly inspected the vehicle and diagnosed that the centre bearing on the flexible propeller shaft was the cause of the noise. Mr Scales asked Mr Northcote to order a replacement bearing.
[28] Mr Scales then texted Hutt Valley Wholesalers on 20 December 2021 to let it know about a mechanical problem that had developed in the last week and which he planned to get fixed in the coming week. He said in his text that the vehicle was “booked” for tomorrow. Mr Scales offered Hutt Valley Wholesalers an opportunity to help him with the repairs of the vehicle. He also offered the vehicle salesman Mike Cody, and Mr Gawn, an opportunity to take a ride in the vehicle to listen to the noise before it was fixed. Mr Scales also wrote a letter to Hutt Valley Wholesalers on 20 December 2021, which he emailed to Mr Gawn. The letter explained that a new replacement part would cost over $8,000 but that Mr Scales had asked The Local Garage to find a second hand part which would cost over $1,000.
[29] About an hour after Mr Scales’ 20 December 2021 text, Hutt Valley Wholesalers texted back as follows:

If you want our involvement you would need to get the car to Motortech in Laery Street Lower Hutt. You will need to book in on 04-568-3153.

[30] In accordance with Hutt Valley Wholesalers’ request in its text of 20 December 2021, Mr Scales took his vehicle to Motortech. When he was there, he showed the vehicle to a technician called Graham. Graham said that the workshop was too busy to attend to the vehicle immediately, but he agreed to go for a drive with Mr Scales in the vehicle on 20 December 2021.
[31] According to Mr Scales, Graham at Motortech diagnosed the problem as being a transmission noise, maybe from the gearbox. Mr Scales then told Graham about The Local Garage’s diagnosis that the driveshaft centre bearing was faulty.
[32] On 21 December 2021, Mr Scales emailed Mr Gawn to tell him that he had taken the vehicle to Motortech. He copied Mr Gawn in on a text that he sent to Graham at Motortech. Neither Mr Gawn nor anyone else at Hutt Valley Wholesalers replied to Mr Scales’ text.
[33] In his 20 December letter to Hutt Valley Wholesalers, Mr Scales referred to a limitation of liability provision in the vehicle offer and sale agreement. That provision states (inter alia):

Except as expressly provided in these Terms and Conditions, all representations or warranties (statutory, express or implied), except any which may not lawfully be excluded, are expressly excluded, including the implied warranties of merchantability and fitness for a particular purpose.

[34] Hutt Valley Wholesalers did not attempt to rely on that provision to exclude liability under the Act. If it had, it would have been unsuccessful because the requirements for contracting out in s 43 of the Act have not been complied with.
[35] Mr Scales said in his letter of 20 December 2021 that he would take advice as to what liabilities, if any, are unlawfully excluded by the clause. Irrespective of the legal position, Mr Scales suggested that Hutt Valley Wholesalers may wish to make a contribution to the repair costs as a “goodwill gesture”. Mr Scales also attached a quote from the Local Garage for a new driveshaft.
[36] On 7 January 2022, Mr Scales emailed Mr Gawn again to advise that the second hand spare part for the car that was initially expected to arrive just before Christmas, was held up in transit. Mr Scales advised that The Local Garage expected to be able to carry out the repair in the coming week. Mr Scales supplied the telephone number of the workshop and the name of its owner and asked Hutt Valley Wholesalers to “speak to him to satisfy yourselves should you so need to.” Mr Scales also said that he would be pleased to hear from Hutt Valley Wholesalers in respect of its “coming to the party” for the repair costs.
[37] Again, Hutt Valley Wholesalers did not reply to Mr Scales’ email.
[38] The repair work was completed on or around 17 January 2022. The Local Garage removed and replaced the rear main driveshaft at a cost of $1,162.31.
[39] On 23 February 2022, Mr Scales emailed Mr Gawn again and summarised:

• (a) the fault;
• (b) that Hutt Valley Wholesalers told him he should ask the local workshop, Motortech, to take a look, which he did;
• (c) that Motortech’s mechanic (Graham) came for a drive with Mr Scales and diagnosed the problems as being a transmission noise, maybe from the gearbox.

[40] Mr Scales advised Hutt Valley Wholesalers that the repair work had been delayed due to the Christmas break and a courier problem but was completed on 17 January 2022 and that the vibration was now gone.
[41] Mr Scales said that, since the repair, he had driven the car 200 km and it appeared to be fine.
[42] Mr Scales attached the $1,162.31 bill for the repair and asked Hutt Valley Wholesalers for its contribution.
[43] Again, Hutt Valley Wholesalers did not reply.
[44] Mr Gawn and Mr Scales spoke by telephone on or around 9 March 2022. Mr Gawn professed not to have received Mr Scales’ emails (although there appears to be no doubt that Mr Scales sent them to the correct address).
[45] Mr Scales re-sent the emails to Mr Gawn.
[46] Mr Gawn emailed Mr Scales on 23 March 2022 and stated he was:

...struggling to understand why you think that I should pay for a job that you undertook yourself when we offered to assist and discuss prior to you doing so. It’s not the way it works I’m afraid.

[47] This reflected Mr Gawn’s position in the Tribunal hearing as well. He suggested that Mr Scales’ willingness to take steps to get his vehicle repaired, relieved Hutt Valley Wholesalers of any obligation to assist.
[48] Mr Gawn also indicated, in hindsight, that Hutt Valley Wholesalers would not have been inclined to make any contribution to the repair cost, even if Mr Scales had given it an adequate opportunity to remedy the failure before going ahead and having it repaired himself.

Tribunal’s assessment

[49] As set out above, the Act protects the right of traders by requiring a consumer to give the trader an opportunity to remedy a defect before going ahead and getting it repaired themselves.
[50] However, a trader is not permitted to take advantage of the situation by giving unclear instructions about what they need to do to ensure the trader’s involvement in the diagnosis and repair of the vehicle and to ensure the trader contributes to the cost of repairs.
[51] In the present case, Hutt Valley Wholesalers asked Mr Scales to take the vehicle to Motortech. This is exactly what he did. He then kept Hutt Valley Wholesalers apprised of what Motortech told him and what his intended next steps were. Mr Scales kept Hutt Valley Wholesalers fully informed at all times. Yet Hutt Valley Wholesalers elected not to respond to any of Mr Scales’ communications.
[52] In these circumstances, I consider that this amounts to Hutt Valley Wholesalers neglecting to remedy the failure in Mr Scales’ vehicle, in terms of s 18(2)(b) of the Act (above).
[53] Hutt Valley Wholesalers knew that Mr Scales wished to get the problem with his vehicle fixed. It also knew Mr Scales was required to give it an opportunity to remedy the fault first. Yet, after Mr Scales gave Hutt Valley Wholesalers an opportunity to remedy his faulty vehicle, it failed to do so. Rather, it sat on its hands and allowed him to progress the repairs instead of offering Mr Scales the proactive assistance it ought to have given him.
[54] At the very least, Mr Scales was entitled to expect that Hutt Valley Wholesalers would respond to his emails if it had a problem with The Local Garage’s diagnosis and estimate for repairs. It also owed Mr Scales an obligation to be clearer about exactly what he should have done next, if Hutt Valley Wholesalers wanted to remain involved in the repairs.
[55] In light of Hutt Valley Wholesalers’ inaction, I consider that it neglected to remedy the failure in Mr Scales’ vehicle. For that reason, under s 18(2)(b)(i) of the Act, he was entitled to have the failure remedied elsewhere and obtain from Hutt Valley Wholesalers all reasonable costs incurred in having the failure remedied.
[56] I do not consider that the fact Mr Scales allowed The Local Garage to order a replacement part, or that he made plans for getting the repair carried out, removed Hutt Valley Wholesalers’ obligation to assist him. Mr Scales did everything he could, and everything Hutt Valley Wholesalers asked him to do, to keep Hutt Valley Wholesalers in the picture and to allow it to assess the vehicle and remedy the failure. But, having been given the opportunity to assist, Hutt Valley Wholesalers elected to sit on the sidelines and ignore Mr Scales’ requests for assistance.
[57] Mr Cate agrees that the costs incurred at The Local Garage of $1,162.31 were reasonable in the circumstances.

Conclusion

[58] Accordingly, I find that Mr Scales is entitled to recover the full amount of the repair costs. Hutt Valley Wholesalers Ltd must pay Mr Scales $1,162.31 no later than 5 October 2022.

Mr Scales is not entitled to damages for stress

[59] I do not propose to award any damages to Mr Scales on account of his stress. Compensatory damages for stress are generally reserved for exceptional cases. A disputed claim such as this is inherently stressful and time-consuming and I consider there is nothing in this case to distinguish it from many of the cases that come before the Tribunal in which the successful party has spent significant time, effort and emotional energy attempting to resolve issues with the vehicle and pursuing their legal rights. I am not satisfied that this is an exceptional case justifying an award of compensatory damages for Mr Scales’ stress and time spent pursuing the application.

J S McHerron
Adjudicator

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[1] Acquired Holdings Ltd v Turvey (2008) NZBLC 102,107 (HC).

[2] At [11].

[3] At [11].

[4] Rodger Thornton (ed) Gault on Commercial Law (online loose-leaf ed, Thomson Reuters) at [CG 18.06].