Johnstone v Manic Enterprises Ltd - Reference No. MVD 38/2022 [2022] NZMVDT 81 (13 May 2022)

Last Updated: 12 July 2022

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 38/2022 [2022] NZMVDT 81 BETWEEN JASON JOHNSTONE Purchaser AND MANIC ENTERPRISES LTD Trader

MEMBERS OF TRIBUNAL

D M Jackson, Barrister – Adjudicator

S Gregory, Assessor

HEARING by way of Microsoft Teams on 14 April 2022

APPEARANCES

J Johnstone, Purchaser A Lowe, Purchaser Support Person

T Clark, Director for the Trader

DATE OF DECISION 13 May 2022

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DECISION OF THE TRIBUNAL

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1. Mr Johnstone’s application for the repair of the vehicle is upheld.
2. Manic Enterprises Ltd shall, within 10 working days of the date of this decision, uplift the vehicle, using a vehicle transporter given it is unsafe and unroadworthy, from Mr Johnstone and transport it to its repairer where the following is to occur:
   • The vehicle’s springs and shocks are to be replaced and the vehicle lowered to a warrant of fitness compliant standard;

• All works carried out shall meet the manufacturer’s specifications and the parts used shall meet those specifications and the sales description as advertised;
• The cracked wheel rim is to be replaced;
• Four new tyres are to be installed to the vehicle;
• The trader is to obtain a Low Volume Vehicle (LVV) certificate for the wheel spacers used in the vehicle at present;
• The trader is to then take the vehicle to either a VTNZ or VINZ inspection site for a full warrant of fitness and pass prior to its return to Mr Johnstone.

100. Manic Enterprises Limited is to refund Mr Johnstone the sum of $60.00 by way of consequential losses.

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REASONS

Introduction

[1] On 25 November 2021, Mr Johnstone purchased a 2008 Ford FG XR6 for $11,500 from Manic Enterprises Limited. The vehicle came with a three-month mechanical warranty as part of the purchase price.
[2] The vehicle came with aftermarket modifications, including the heating and welding of both the front and the rear spring suspension system. These works are illegal, meaning the vehicle was not of warrant of fitness (WOF) standard and unsafe at the time of sale. Mr Johnstone also says that he has given the Trader a reasonable opportunity to rectify the vehicle’s faults (which extend beyond the modifications and include a cracked wheel rim and rapidly balding tyres), and it has failed to do so. However, Mr Johnstone does not wish to reject the vehicle. Rather, Mr Johnstone wants the vehicle repaired to a compliant regulatory standard. It seems though that Mr Johnstone does not trust the Trader to do this work.
[3] The Trader largely accepts the faults complained of, says that it was unaware of them, and that it has offered to repair the vehicle or refund Mr Johnstone. It would appear from the extensive text message correspondence between the parties that they have fallen out over how the vehicle is to be repaired, by whom and to what extent.

The issues

[4] Against this background, the issues requiring consideration in this case are:

• (a) Does the vehicle have faults that breach the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the Act)?
• (b) What remedy is Mr Johnstone entitled to under the Act?

Does the vehicle have faults that breach the acceptable quality guarantee?

[5] Section 6 of the Act imposes on suppliers and manufacturers of consumer goods "a guarantee that the goods are of acceptable quality." Section 2 of the Act defines "goods" as including vehicles.
[6] The expression "acceptable quality" is defined in s 7(1) 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.

[7] 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 Act 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 Mr Johnstone’s subjective perspective.
[8] Mr Johnstone says that he was attracted to the vehicle because of its appearance. The vehicle’s advertisement on the TradeMe website described that it was “lowered on Monroe GT gas reflex short shocks and springs”, had 18x9 mag wheels with new tread and “full 3 inch exhaust with a couple nice mufflers sounds good remote control dump pipe that makes it very loud”. Mr Johnstone, a self-described “old hoon” fell in love with the vehicle.
[9] Mr Johnstone says that, throughout his brief ownership, he has had concerns about the vehicle’s handling. He gave evidence that the vehicle bounces or shudders around corners, and does not handle undulating road conditions well at all.
[10] Mr Johnstone explained that he was so eager to purchase the car and return to Timaru, that he undertook to carry out the wheel alignment which was due. He took the vehicle to a Firestone workshop which informed him that it could not carry out a wheel alignment due to the modifications and, in particular, the lowering of the vehicle. Mr Johnstone took the vehicle to a local workshop specializing in modified vehicles, who confirmed Firestone’s advice, reported the modifications were illegal, and estimated the cost of repair to be $1,767.86.
[11] At the end of December 2021, Mr Johnstone took the vehicle to Beaurepaires who quoted him $480.00 to replace the right rear rim, which was cracked and needed to be replaced. Beaurepaires provided an inspection report, which recorded that the rear tyres had worn out due to “too much camber and toein”. Beaurepaires likewise confirmed that no wheel alignment was possible until the springs were replaced.
[12] Dissatisfied, Mr Johnstone turned to Mr Clark for redress. The Tribunal was provided with the parties’ extensive text message correspondence. The correspondence reflects their respective evidence before the Tribunal, which was to the effect that they agreed there were problems which needed resolution, but could not agree on how to resolve them. Their correspondence descended into argument and they resolved to let the Tribunal decide the dispute for them. Mr Johnstone complained that Mr Clark did not know what he was doing and was trying to palm him off with cheaper replacement parts as part of the repair. Mr Clark said he was prepared to have the repairs carried out but Mr Johnstone was being unreasonable.
[13] Mr Johnstone gave evidence that in addition to the modifications he carried out a number of repairs himself namely – fixing a headlight, replacing two tyres, fixing a front grill and replacing a door handle. He accepted that he carried out these repairs without reference to Mr Clark.
[14] Mr Clark disputes the tyre wear and says Mr Johnstone is responsible to the balding of tyres due to use. He says he was prepared to repair the vehicle but struggled to get Mr Johnstone to agree to bring the vehicle up to Christchurch for the repairs to be carried out (which would cost him less due to him being able to access trade rates). He offered to contribute $1,000.00 to Mr Johnstone’s repair estimate therefore. He outlined an agreement struck in March (but never implemented) whereby he would provide two rear short shocks, two rear tyres, one mag wheel and four lowered springs. Some of these items have been purchased but the parties fell out about their suitability for the repair.
[15] Mr Clark denies knowledge of the springs being “cut”. Mr Clark confirmed that the wheels have “spacers”, which he runs on his own vehicle and which he knows to be illegal. The balance of Mr Clark’s evidence went to his efforts to have the repairs agreed with Mr Johnstone and the circumstances in which they fell out.
[16] Mr Gregory, the Tribunal’s Assessor, advises that the vehicle, by virtue of its modifications and lowering (and the cracked wheel rim) is unsafe and in a dangerous condition. The wearing of the tyres is a consequence of the suspension modifications.
[17] The Beaurepaires’ wheel alignment report (referred to above) proves that the vehicle’s front and rear wheel camber was negative and significantly outside of recommended specifications. Mr Gregory advises that this significant negative camber will have made the vehicle unstable and unsafe. It is consistent with Mr Johnstone’s evidence as to handling and bouncing or shuttering. Mr Gregory is also entirely satisfied that the modifications to the vehicle are illegal and that it is not roadworthy. This extends to the modified exhaust system and the “dump”, which Mr Johnstone knows to be illegal but likes the sound of.
[18] On the basis of the evidence presented by the parties, and the advice I have received from Mr Gregory, I am satisfied that the vehicle has not been of acceptable quality for the purposes of s 6 of the Act. The vehicle had pre-existing defects that should have caused a pre-purchase WOF inspection to fail, meaning the vehicle was not free of minor defects at the time of sale. Further, the illegal lowering of the vehicle and the cracking of a wheel rim has made the vehicle unsafe.
[19] Here, the vehicle was not sold with a warrant that is less than one month old as required under rule 9.12 Land Transport Rule: Vehicle Standards Compliance 2002. The warrant was issued 3 June 2021, some five months or so before Mr Johnstone purchased the vehicle. The vehicle’s defects were readily not observable and were detected when Mr Johnstone undertook to carry out the wheel alignment, and learned that such works were impossible due to the existence of the defects and the illegality of the modifications to the vehicle.

What remedy is Mr Johnstone entitled to under the Act?

[20] Mr Johnstone was at pains to emphasise that he wants to keep the vehicle and does not wish to reject it under s 18(2)(b)(ii) of the Act (because the trader has failed to repair the vehicle’s faults within a reasonable time).
[21] Section 18 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.

[22] Mr Johnstone has not had the repairs carried out elsewhere because he cannot afford them. Mr Johnstone wants the trader to be responsible for repairing the vehicle on the basis that it makes the vehicle compliant with WOF standards while ensuring that the vehicle’s pre-purchase specifications (set out in paragraph 8 above) remained unchanged (to the extent permissible by law), because the appearance of the vehicle was important to Mr Johnstone.
[23] The trader has offered a refund or a repair. The parties have disagreed as to the extent of the repair necessary including the parts to be used and who shall carry out such work. Mr Johnstone has failed to appreciate that the Act requires him to give the trader the opportunity to repair the vehicle before he can have the work carried out elsewhere and then recover the cost of same from the trader. This is not fatal to his claim however and he is entitled to have the repairs carried out but he must yield possession to the trader in order for the repairs to be completed. Mr Johnstone says he has no faith in Mr Clark to carry out the repairs. Mr Clark made it clear that he would access appropriate trades to do the work and secure trade rates. I can deal with Mr Johnstone’s concerns in the orders to be made, which will give him the outcome he seeks and peace of mind that the vehicle is roadworthy. I also order that the trader is to refund Mr Johnstone the $60.00 cost of the Beaurepaires report on which the Tribunal has relied by way of consequential loss claim.
[24] Accordingly, I direct that within ten working days the trader is to uplift the vehicle, using a vehicle transporter given it is unsafe and unroadworthy, from Mr Johnstone and transport it to its repairer where the following is to occur:

• The vehicle’s springs and shocks are to be replaced and the vehicle lowered to a warrant of fitness compliant standard;
• All works carried out shall meet the manufacturer’s specifications and the parts used shall meet those specifications and the sales description as advertised;
• The cracked wheel rim is to be replaced;
• New tyres are to be installed to the vehicle;
• The trader is to obtain a LVV certificate for the wheel spacers used in the vehicle at present;
• The trader is to then take the vehicle to either a VTNZ or VINZ inspection site for a full warrant of fitness and pass prior to its return to Mr Johnstone.

[25] Finally, I warn the Trader that if the Tribunal becomes aware of another vehicle having been sold without a current warrant of fitness as defined, the Tribunal may notify the Commerce Commission to investigate and prosecution may follow.

DATED at CHRISTCHURCH this 13th day of May 2022

D M Jackson
Adjudicator