NZLII Home | Databases | WorldLII | Search | Feedback

Motor Vehicles Disputes Tribunal of New Zealand
You are here:  NZLII >> Databases >> Motor Vehicles Disputes Tribunal of New Zealand >> 2022 >> [2022] NZMVDT 26

Database Search | Name Search | Recent Decisions | Noteup | LawCite | Download | Help

McKeeman v Auto Spot West Ltd - Reference No. MVD 435/2021 [2022] NZMVDT 26 (11 March 2022)

Last Updated: 24 April 2022

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

MVD 435/2021
[2022] NZMVDT 26

BETWEEN KAREN MCKEEMAN

Applicant

AND AUTO SPOT WEST LTD
Respondent





MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor

HEARING at Auckland on 24 February 2022 (by audio-visual link)



APPEARANCES
K McKeeman, Applicant
J Fitchett, Witness for the Applicant
A Brown and R Stratford for the Respondent

DATE OF DECISION 11 March 2022

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

Karen McKeeman’s application is dismissed.

_________________________________________________________________

REASONS

Introduction

[1] Karen McKeeman wants to reject the 2010 Honda Odyssey she purchased for $11,990 from Auto Spot West Ltd on 7 August 2021. She says that Auto Spot misrepresented the condition of the vehicle and that the vehicle had several pre-existing faults that mean it was not of acceptable quality. Auto Spot West has declined to accept Ms McKeeman’s rejection of the vehicle, so Ms McKeeman has applied to the Tribunal seeking to recover the purchase price.

Relevant background

Relevant pre-purchase events

[2] Ms McKeeman, who lived in Kawerau at the time, negotiated the purchase of the vehicle with Gordon Summerville, a salesperson from Auto Spot West. Email correspondence between Ms McKeeman and Mr Summerville shows that they spent some days negotiating the purchase price and discussing obtaining a pre-purchase inspection report. Ms McKeeman says that during those discussions, and in pre-purchase advertising, Auto Spot West represented that the vehicle was in good condition with no major faults.
[3] Ms McKeeman then had a pre-purchase inspection performed by VTNZ in Avondale on 6 August 2021. That report concluded that the vehicle was in good condition for its age and mileage, but had some issues including the brakes were “borderline”, the battery was “getting weak”, the rear window washer jet was not working, an interior cover was missing, there was water in the spare wheel well in the boot and a rear air conditioning vent “requires further investigation”.
[4] Ms McKeeman raised those concerns with Auto Spot West, which agreed to have the vehicle assessed by its workshop, to install a new battery, obtain a new warrant of fitness and registration, to rectify the water leak in the boot and the faulty rear window washer jet. It considered that the air conditioning was working properly. Ms McKeeman then agreed to purchase the vehicle.
[5] Ms McKeeman collected the vehicle from Auto Spot West’s Avondale premises on 7 August 2021. Ms McKeeman says that Mr Summerville told her that the battery had been replaced, the brakes passed a warrant of fitness inspection and were working fine, the blockage in the rear washer jets was probably due to the nozzle and it would send her a replacement, the air conditioning was working and Auto Spot West could not find any water leak into the boot.
[6] Ms McKeeman says that Mr Summerville then failed to explain the details of the vehicle offer and sale agreement and the Consumer Information Notice. Ms McKeeman says that she has since discovered that the Consumer Information Notice contained incorrect information, including the odometer reading, warrant of fitness date and registration expiry date. Ms McKeeman also says that she believed that she had five days to cancel the agreement to purchase the vehicle if she chose to do so.

Post-sale issues

Ms McKeeman’s evidence

[7] Ms McKeeman says that she almost immediately noticed that the vehicle was consuming an excessive amount of fuel. She says that the vehicle had about half a tank of fuel when she left Auckland to return to Kawerau. By the time she reached Cambridge, a journey of about 150 km, the vehicle required refuelling.
[8] On 8 August 2021, while attempting to put children’s car seats into the rear of the vehicle, Ms McKeeman noticed that two rear headrests were missing. She then drove from Kawerau to Whakatane. While in Whakatane, Ms McKeeman says that her daughter removed a pram from the rear of the vehicle and noticed that the pram was wet, that there was a piece of fabric missing from the boot, that there was mould in the boot and a seat clip was rusty. Ms McKeeman also noticed that there was still water in the spare wheel well.
[9] While returning home from Whakatane, Ms McKeeman says the vehicle began to violently shake and shudder. She pulled over. After about 10 minutes she restarted the vehicle and continued to drive home. Almost immediately, the vehicle began to shake and shudder. She pulled over again and restarted the vehicle. Those symptoms did not return, so she completed her journey home.
[10] On the journey home, Ms McKeeman says that the vehicle began to make a different “horrendous screaming noise”, which she believes was due to the vehicle’s brakes pads being thin. Ms McKeeman then emailed Mr Summerville, who advised her to have the brakes assessed by a local workshop and to obtain an estimate for the required repairs
[11] Rather than have the vehicle assessed, on 10 August 2021 Ms McKeeman returned the vehicle to Auto Spot West and purported to reject it, claiming that the vehicle was not of acceptably quality, not fit for purpose, not as described, that information provided was misleading and inaccurate and the vehicle was unsafe.
[12] Ms McKeeman says:
[13] Of most concern to Ms McKeeman are the alleged faults that cause the vehicle to shake and shudder, the water in the boot and the excessive fuel consumption.
[14] Ms McKeeman says that Mr Summerville initially offered to refund the purchase price and asked for her bank account details to enable the refund of the purchase price. Ms McKeeman says that she was then told by Reade Stratford, a manager at Auto Spot West, that it would not refund the purchase price.

Auto Spot West’s response

[15] Auto Spot West agrees that the vehicle’s front brake pads required replacement and the front brake discs required skimming, that two headrests required replacement and the rear washer jets were blocked. It says that it intended to perform each of those repairs before sale, but Ms McKeeman collected the vehicle before it could do so. It has since replaced the rear washer jets nozzle, replaced the front brake pads and skimmed the front brake discs and replaced the two missing headrests.
[16] Auto Spot West says that it has been unable to identify any of the other issues alleged by Ms McKeeman, and in that regard, it says:

Post hearing information

[17] During the hearing, it became apparent to the Tribunal that at least some of the symptoms experienced by Ms McKeeman (including the shaking/shuddering and increased fuel consumption) may have been caused by faulty ignition coils in the engine, which can cause such symptoms. After the hearing, the Tribunal asked Auto Spot West to assess the condition of the ignition coils and spark plugs and to provide a copy of a diagnostic scan for the vehicle. Auto Spot West had the vehicle assessed by North Harbour Electrical. An invoice dated 2 March 2022 shows that it tested the vehicle and found no fault with its ignition coils.

The issues

[18] Against that background, the issues requiring the Tribunal’s consideration in this case are:

Issue 1: Has the vehicle been of acceptable quality?

[19] 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.
[20] 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.

[21] 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 McKeeman’s subjective perspective.

Some of the alleged defects mean the vehicle has not been of acceptable quality

[22] The squealing brakes, missing headrests, blocked rear washer jet, water in the spare wheel well and damp and mouldy interior fabrics all mean that the vehicle was not of acceptable quality for the purposes of s 6 of the CGA.
[23] None of those defects is significant, and on the evidence presented, none is a warrant of fitness failure. The water ingress into the boot is not subject to warrant of fitness requirements, the brakes, although low and noisy, were of a warrant of fitness standard, the windscreen wash system requirements in the VIRM do not apply to the rear window wash systems[1] and the missing headrests are only a warrant of fitness failure if there is a solid object within 300 mm of the rear of the seat, which does not appear to be the case with this vehicle.[2] Nonetheless, the defects mean the vehicle is not of acceptable quality because it was not as free of minor defects or as durable as a reasonable consumer would consider acceptable.

The other defects do not breach the guarantee of acceptable quality

[24] As the applicant, Ms McKeeman has the burden of proving all aspects of her claim on the balance of probabilities, meaning she must prove that it is more likely than not that the vehicle has the defects that she alleges and that those defects breach the guarantee of acceptable quality.

The alleged transmission fault

[25] Although I accept Ms McKeeman’s evidence that the vehicle shuddered and shook on two occasions on 8 August 2021, she has not discharged the evidential burden to prove the existence of any defect that would breach the guarantee of acceptable quality. The evidence shows that the vehicle has no identifiable fault with its transmission or ignition coils, which are the most common causes of such symptoms. There is also no evidence of any fault codes consistent with such a defect, which one would expect to see if the vehicle had an underlying transmission or ignition coil fault.
[26] Mr Gregory, the Tribunal’s Assessor, advises that, in the absence of evidence of such a fault, he cannot discount the possibility that the symptoms experienced by Ms McKeeman were a temporary glitch that may never return. Consequently, I cannot be satisfied that the vehicle has any defect that caused it to shake and shudder that breaches the guarantee of acceptable quality.

The water leak

[27] Again, I accept that the vehicle had water in the boot and moisture and mould in some interior fabric at the time of sale and those issues mean the vehicle was not of acceptable quality. However, Ms McKeeman has not proven that the vehicle has any ongoing water leak. Ms McKeeman has presented no evidence to prove that water is still leaking into the vehicle and the evidence presented by Auto Spot West shows that the vehicle has no ongoing water ingress issues, and I accept its submission that water may have entered the rear of the vehicle when it was being groomed before sale, but there is no ongoing problem.

The excessive fuel consumption

[28] Ms McKeeman has not had the vehicle’s fuel consumption tested by any suitably qualified technician, and she relies upon her own observations of the vehicle’s fuel consumption. In my view, when considered objectively, her observations demonstrate that the vehicle’s fuel consumption is well within normal range.
[29] Although Ms McKeeman says that the vehicle consumed half a tank of fuel between Auckland and Cambridge on 7 August 2021, she then gave evidence that she drove from Cambridge to Kawerau and then Kawerau to Whakatane return – a total distance of about 200 km. She says she then purchased $50 worth of fuel to top up the vehicle before returning it to Auckland.
[30] Those facts show that the vehicle used $50 worth of fuel over a distance of about 200 km. Given fuel prices at that time (approximately $2.20 per litre based upon information provided by the parties), Ms McKeeman has used approximately 23 litres of fuel over the 200 km distance. Given the roads she drove (which included hilly and windy sections between Cambridge and Kawerau) that fuel consumption is entirely normal in a vehicle with a 2.4 litre engine.
[31] I am therefore satisfied that Ms McKeeman has not proven that the vehicle had any underlying fault that caused it to consume an excessive amount of fuel.

The inaccurate speedometer

[32] Ms McKeeman has not had the vehicle’s odometer assessed, so there is no technical evidence to support her assertion that the vehicle’s speedometer is inaccurate. Further, her method for determining its accuracy – comparing the speedometer reading to the speed shown on her GPS – is not in my view sufficiently reliable to enable the Tribunal to conclude that the speedometer is inaccurate. Although I cannot discount the possibility that the speedometer is inaccurate, in the absence of evidence proving the existence of such a fault, I cannot conclude that the vehicle has any such defect.

The rear air conditioning

[33] Again, Ms McKeeman has not had any fault with the rear air conditioning properly diagnosed, and in light of Auto Spot West’s evidence that the air conditioning is working properly, I cannot be satisfied that such a fault exists.

The missing trim button

[34] A missing trim button is a minor defect and is not the kind of issue that would cause a vehicle of this age and mileage to breach the guarantee of acceptable quality.

Issue 2: Are the vehicle’s defects a failure of a substantial character?

[35] A failure of a substantial character is defined in s 21 of the CGA:
  1. 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.

[36] The vehicle had defects that breached the guarantee of acceptable that required repair to bring it to an acceptable standard for the purposes of the CGA. However, those defects were all relatively minor, did not make the vehicle unfit for purpose or unsafe and are not such that a reasonable consumer would have declined to purchase the vehicle if they had known of those defects in advance. Consequently, I am not satisfied that those defects, either separately or cumulatively, amount to a failure of a substantial character.

Issue 3: What remedy is Ms McKeeman entitled to under the CGA?

[37] The relevant remedies are set out in s 18 of the CGA, which provides:
  1. 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.

[38] Ms McKeeman was not entitled to reject the vehicle because its defects are not a failure of a substantial character. Further, although Ms McKeeman thought she had a right to return the vehicle within five days, no such right exists. Instead, Ms McKeeman was entitled to have those defects rectified under s 18(2)(a) of the CGA. Auto Spot West advises that it has rectified all of the defects that breach the guarantee of acceptable quality. No further orders for repairs are therefore necessary.
[39] Likewise, the other remedies sought by Ms McKeeman are declined, as those remedies would only have been available if she was entitled to reject the vehicle. Ms McKeeman’s claim under the CGA is therefore dismissed.

The counterclaim

[40] Auto Spot West sought to recover the cost of having the vehicle assessed by North Harbour Electrical. It says that it only incurred that cost because, despite being asked to do so by the Tribunal, Ms McKeeman had failed to have the vehicle diagnosed herself.
[41] The Tribunal does not have the power to award diagnostic costs against Ms McKeeman, so the counterclaim is dismissed. Auto Spot West should take some solace in the fact that the diagnosis from North Harbour Electrical substantially assisted its defence, as that diagnosis showed that the vehicle has no fault with its ignition coils, which is what the evidence presented at the hearing suggested may have been the case.

Issue 4: Has Auto Spot West engaged in conduct that breached s 9 of the FTA?

[42] Section 9 of the FTA provides:
  1. Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

[43] The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corp Ltd v Ellis:[3]

The question to be answered in relation to s 9 ... is ... whether a reasonable person in the claimant’s situation – that is, with the characteristics known to the defendant or of which the defendant ought to have been aware – would likely have been misled or deceived. If so, a breach of s 9 has been established.

The odometer reading

[44] I am satisfied that Auto Spot West has engaged in misleading conduct by representing that the vehicle’s odometer reading was 75,000 km at the time of sale.
[45] The website advertisement for the vehicle and the vehicle offer and sale agreement and Consumer Information Notice signed by the parties record that the vehicle’s odometer reading was 75,000 km. The vehicle’s true odometer reading was 75,924 km.
[46] Although the discrepancy between the represented and true odometer readings was small, the representation that the odometer reading was 75,000 km was nonetheless false, in breach of s 9 of the FTA.
[47] Ms McKeeman also complained that the warrant of fitness date and registration expiry date on the Consumer Information Notice were incorrect. Those dates were true at the time Ms McKeeman saw the Consumer Information Notice and only changed because Auto Spot West then updated the warrant of fitness and registration after it sold the vehicle to her. Its conduct in those circumstances is not misleading.

The representation that the vehicle was in good condition

[48] Ms McKeeman alleged that Auto Spot West engaged in misleading conduct by describing the vehicle as being in good condition. She says that the vehicle’s pre-existing defects mean that it was not as represented.
[49] Auto Spot West’s statement that the vehicle was in good condition was an expression of an opinion as to the vehicle’s condition, from which a reasonable consumer would have concluded that the vehicle had no readily identifiable and significant cosmetic or mechanical defects. Even if it is subsequently proven that the vehicle was not in good condition, under s 9 of the FTA, such statements of opinion will only be misleading if that opinion was not honestly held and based on reasonable grounds.[4]
[50] In this case, I am satisfied that the evidence shows that Auto Spot West representation that the vehicle was in good condition was an honestly held opinion and based on reasonable grounds.
[51] The vehicle appears to have had no obvious significant cosmetic or performance defects, and its condition appeared consistent with its age and mileage. In that regard, I note that the VTNZ Pre-Purchase Assessment Report obtained by Ms McKeeman the day before purchase states that the inspector considered:

- Overall the vehicle condition is in good condition for its age and mileage.

- The vehicle exterior is in average condition for the age of the vehicle.
- The vehicle interior is in average condition for the age of the vehicle.
- The vehicle has been found to be mechanically sound.
- The vehicle has been found to be structurally sound.
[52] The vehicle also had no obvious safety defects. The vehicle passed a warrant of fitness on the day of purchase and there were no significant defects identified at that time. Further, as set out above, the defects that were present at the time of sale were relatively minor and none of those defects would have caused the vehicle to fail a warrant of fitness inspection.
[53] I accept that Ms McKeeman has subsequently proven that the vehicle did have pre-existing defects, but given the minor nature of the defects and, in the absence of any evidence to show that Auto Spot West knew about those defects at the time it represented that the vehicle was in good condition, I am not satisfied that Auto Spot West has engaged in misleading conduct in breach of s 9 of the FTA by expressing an honestly held opinion, based upon reasonable grounds, that the vehicle was in good condition.

Issue 5: What remedy is Ms McKeeman entitled to under the FTA?

[54] As set out above, I am satisfied that Auto Spot West has engaged in misleading conduct by misrepresenting the odometer reading. However, the fact that Auto Spot West has engaged in misleading and deceptive conduct does not automatically entitle Ms McKeeman to a remedy under the FTA. Instead, to obtain a remedy, Ms McKeeman must have suffered, or be likely to suffer, loss or damage caused by Auto Spot West’s misleading conduct.
[55] Under s 43 of the FTA, the normal measure of loss or damage is “the difference between the value of what was acquired and the price paid”.[5] The question I must therefore answer is whether Ms McKeeman has suffered any loss because of the difference between the value of the vehicle and the price she paid for it.
[56] In this case, I am not satisfied that Ms McKeeman has suffered any loss because of any misleading representation as to the vehicle’s odometer reading because a 924 km difference in the odometer reading is highly unlikely to have any effect on the value of the vehicle.
[57] Ms McKeeman’s application is therefore dismissed.
[58] For completeness, I also note that even if I had found that Auto Spot West’s representations about the condition of the vehicle were misleading, the appropriate remedy in the circumstances of this case would have been an order requiring Auto Spot West to rectify those defects, rather than an order allowing Ms McKeeman to return the vehicle.

DATED at AUCKLAND this 11th day of March 2022

B.R. Carter
Adjudicator


[1] In-service Certification (WoF and CoF) vehicle inspection requirements manual, part 5. The wash systems requirements apply only to the windscreen, which is defined as the glazing across the front of the vehicle.

[2] In-service Certification (WoF and CoF) vehicle inspection requirements manual, part 7-3(3). A rear headrest (or head restraint) may be removed provided there is not a solid structure within 300 mm of the seat back.

[3] Red Eagle Corp Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].

[4] Premium Real Estate Ltd v Stevens [2008] NZCA 82; (2008) 12 TCLR 133 at [54].

[5] Narayan v Arranmore Developments Ltd [2011] NZCA 681, (2012) 13 NZCPR 123 at [49].

NZLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.nzlii.org/nz/cases/NZMVDT/2022/26.html