Sato v Nova Motors Penrose Limited - Reference No. MVD 288/2022 [2022] NZMVDT 225 (14 October 2022)

Last Updated: 23 November 2022

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 288/2022 [2022] NZMVDT 225

BETWEEN KYOKO SATO

Applicant

AND NOVA MOTORS PENROSE LTD

Respondent

HEARING at AUCKLAND on 5 October 2022 (by audio-visual link)

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Haynes – Assessor

APPEARANCES

K Sato, Applicant

N Skachkova, for the Respondent

_{DATE OF DECISION 14 October 2022}

_{DECISION OF THE TRIBUNAL}

Nova Motors Penrose Ltd shall, within 10 working days of the date of this decision, pay $3,658.40 to Kyoko Sato.

_REASONS

Introduction

[1] Kyoko Sato purchased a 2012 Mercedes-Benz B180 for $12,970 from Nova Motors Penrose Ltd on 14 June 2022. She has since spent nearly $5,000 servicing and repairing the vehicle and seeks to recover a proportion of that cost from Nova Motors Penrose. Nova Motors Penrose has offered to pay $2,000 but denies liability for any further amount.

Relevant background

[2] The Vehicle Offer and Sale Agreement for this vehicle dated 14 June 2022 states that, among other things, Nova Motors Penrose agreed to service the vehicle and replace the battery before the vehicle was delivered to Ms Sato.

[3] On 27 June 2022, the Anti-Lock Braking System (ABS) and check engine warning lights illuminated, and the vehicle would not reverse. Ms Sato visited Nova Motors Penrose’s premises and found it was no longer trading. She then took the vehicle to EuroService Auckland Ltd for assessment.

[4] An estimate dated 29 June 2022 states that EuroService assessed the vehicle and considered that:

(a) the main and auxiliary batteries and right front ABS sensor required replacement;

(b) there was excessive play in both front lower ball joints, so the suspension lower control arms required replacement;

(c) the transmission control module should be reprogrammed; and

(d) the brake fluid, air filter and air conditioning filter and radiator expansion tank required replacement.

[5] EuroService provided an estimate of $4,630.89 for the recommended repairs.

[6] Ms Sato then contacted Nova Motors Penrose by email and sent a copy of the EuroService estimate. She received a response from Natalia Skachkova on 3

July 2022, advising her that the company was no longer trading, and that Ms Sato should bring a claim to the Tribunal for it to determine the company’s legal obligations.

[7] Ms Sato has since had the vehicle repaired by EuroService, at a total cost of

$4,989.47. She seeks to recover $3,813.72 of that cost from Nova Motors Penrose, which she says excludes the cost of replacing the air conditioning dust filter, air filter, bacterial treatment, radiator expansion tank and coolant and the cost of the loan car, workshop expendables and an urgent courier fee. She says that she incurred those costs in performing an extensive service on the vehicle and believes that Nova Motors Penrose should not therefore be liable.

[8] Nova Motors Penrose accepts that the vehicle had defects shortly after purchase, and has offered to pay $2,000, which excludes the cost of replacing the lower control arms (which it says had passed a warrant of fitness inspection in June

2022 and did not require replacement) and consumable and servicing items that it considers it should not be liable for.

The issues

[9] 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) What remedy is Ms Sato entitled to under the CGA?

[10] Ms Sato also alleged that Nova Motors Penrose engaged in misleading conduct by representing that the vehicle would be serviced and the battery would be replaced and by declining to repair the vehicle. Given my findings under the CGA and the remedies ordered, there is no need to consider that FTA claim any further, as Ms Sato would have been entitled to no additional remedy.

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

[11] Section 6(1) of the CGA provides that “where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality”.

[12] “Acceptable quality” is defined in s 7 of the CGA (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.

[13] 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.

[14] The vehicle was not of acceptable quality. Despite representations on the

Vehicle Offer and Sale Agreement that the vehicle would be serviced, and that the

battery was replaced, I am satisfied that the vehicle was not serviced and, if the main 12-volt battery was replaced, the replacement battery was in poor condition and required replacement shortly afterwards. The evidence also shows:

(a) an ABS sensor failed shortly after purchase, causing the vehicle to lose reverse gear;

(b) the transmission needed to be reprogrammed after the ABS sensor was replaced;

(c) the auxiliary battery required replacement; and

(d) although the lower control arms passed entry certification testing, EuroService discovered excessive play in the ball joints, and the lower control arms required replacement to ensure the vehicle remained of warrant of fitness standard.

[15] These issues all mean that the vehicle was not of acceptable quality for the purposes of s 6 of the CGA because the vehicle was not as free of minor defects or as durable as a reasonable consumer would consider acceptable.

[16] The remaining items repaired or replaced by EuroService do not breach the guarantee. As recognised by Ms Sato, the replacement of the air conditioning dust filter, air filter and bacterial treatment are not part of a basic service and are the kind of maintenance cost that a reasonable consumer can expect to incur. Also, Ms Sato did not pursue any remedy for the replacement of the radiator expansion tank and in the absence of any evidence as to why that component was replaced, she is not entitled to any remedy.

Issue 2: What remedy is Ms Sato entitled to under the CGA?

[17] The relevant remedies are set out in s 18 of the CGA, 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.

[18] Under s 18(2)(b)(i), Ms Sato is entitled to recover the reasonable cost of having the defects that breach the guarantee of acceptable quality rectified. She asked Nova Motors Penrose to rectify those defects and it declined to do so. Mr Haynes, the Tribunal’s Assessor, advises that the amounts charged by EuroService to rectify those defects are at the higher end of the range, but are nonetheless reasonable, although Mr Haynes notes that a significant proportion (approximately fifty per cent) of the labour costs incurred by Ms Sato related to work that Nova Motors Penrose does not have liability for.

[19] I therefore find that Ms Sato is entitled to recover the following:

Item	Cost (including GST)
Computer diagnostic testing	$68.90

Replacement of main 12-volt battery	$493.40
Replacement of auxiliary battery	$343.40
Programming transmission	$224.30
Replacement of ABS sensor	$172.50
Replacement of lower control arms	$1,531.70
Wheel alignment (required after the lower control arms were replaced)	$114.30
Labour (50 per cent of the total labour cost)	$709.90

[20] The Tribunal therefore orders that Nova Motors Penrose shall, within 10 working days of the date of this decision, pay $3,658.40.

B R Carter

Adjudicator