Knight v Giltrap Motors Ltd - Reference No. MVD 047/2022 [2022] NZMVDT 83 (16 May 2022)

Last Updated: 12 July 2022

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 047/2022 [2022] NZMVDT 083 BETWEEN DEBRAH KNIGHT Applicant AND GILTRAP MOTORS LTD Respondent

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S Gregory, Assessor

HEARING at Auckland on 5 May 2022 (by audio-visual link)

APPEARANCES

D Knight, Applicant M Knight, Witness for the Applicant

N Tipler for the Respondent

DATE OF DECISION 16 May 2022

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DECISION OF THE TRIBUNAL

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1. Debrah Knight’s application is dismissed.

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REASONS

Introduction

[1] Debrah (Debby) Knight purchased a 2015 Kia Sportage for $18,880 from Giltrap Motors Ltd[1] in January 2020. The vehicle’s odometer reading at that time was approximately 104,000 km. Mrs Knight and her husband Matthew used the vehicle without incident until December 2021 when, without warning, the vehicle suffered significant mechanical failure.
[2] Mrs and Mr Knight had the vehicle assessed by Panel Tech (2006) Ltd, which considered that the engine required replacement, at a cost of more than $10,000. Mrs and Mr Knight then sold the vehicle for $4,000 and although the precise nature of the engine damage remains unclear, as the cause has not been diagnosed, Mrs Knight considers that Giltrap Motors should compensate her for the loss she has suffered as the engine damage was likely caused by an inherent fault with the engine, which she believes is common in this make and model of vehicle.
[3] Giltrap Motors denies liability. It says that Mrs Knight has failed to adequately service the vehicle and the engine damage has occurred too long after purchase for it to have responsibility.

The issue

[4] The sole issue requiring the Tribunal’s consideration is whether the vehicle has been of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA).

Has the vehicle been of acceptable quality?

[5] 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.
[6] 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.

[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 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 Mrs Knight’s subjective perspective.
[8] Mrs Knight paid $18,880 for a five-year-old vehicle with an odometer reading of about 104,000 km at the time of sale. Mrs Knight had high expectations of the quality and durability of a vehicle of this price, age and mileage and says that the engine damage means the vehicle has not been of acceptable quality. She says that a vehicle of this price, age and mileage should not suffer such significant engine damage so shortly after purchase.
[9] Although the nature and extent of the engine damage has not been properly diagnosed, I find that it is likely that the engine is damaged to the extent it required expensive overhaul or replacement. I accept Mr and Mrs Knight’s evidence that the engine made a loud grinding noise, which is consistent with significant internal engine damage.
[10] Nonetheless, I am satisfied that the vehicle has been of acceptable quality. A reasonable consumer should understand that motor vehicles can develop defects, that can sometimes be expensive to repair. They should also understand that a supplier’s obligations under s 6 of the CGA are finite and, at some point, the risk of a used motor vehicle developing defects must transfer from the manufacturer and 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.
[11] In this case, the engine damage occurred nearly two years after purchase, by which time Mrs Knight had driven about 26,000 km in the vehicle. I find that the vehicle was therefore as durable and as free of minor defects as a reasonable consumer would consider acceptable.
[12] That is particularly the case where this vehicle was not adequately serviced by Mrs and Mr Knight. Mr Gregory, the Tribunal’s Assessor, advises that the vehicle should be serviced every 12 months or 15,000 km, whichever occurs first. Failure to do so can lead to premature engine damage, as the vehicle’s oil can lose its lubricating properties if not regularly changed.
[13] Giltrap Motors presented service invoices that show that the vehicle was serviced properly before it was sold to the Knights, including a service on 8 November 2019. The odometer reading at that date was 103,118 km.
[14] Mrs and Mr Knight say the vehicle was not serviced by a qualified technician during their ownership, although Mr Knight says that he changed the oil and oil filter in about June 2021, about 20 months after purchase. The odometer reading at that time is unknown, although warrant of fitness records from the Carjam.co.nz website (which uses information from Waka Kotahi NZ Transport Agency records) shows that the vehicle’s odometer reading was 123,666 km in February 2021, about four months before Mr Knight says he changed the oil and filter. I am therefore satisfied that the Knights used the vehicle for about 20 months, travelling more than 20,000 km before the claimed oil and filter change, well outside the recommended servicing window. That inadequate servicing may well have contributed to the engine damage, and a reasonable consumer should not expect a motor vehicle trader to then have liability for defects that occur so long after purchase in an inadequately serviced vehicle of this age and mileage.
[15] Further, despite allegations from the Knights that the vehicle’s engine was inherently defective and that the defect is common in this make and model, there was no evidence presented to show that this particular vehicle had any inherent manufacturing defect that caused or contributed to the engine damage, and in that regard, I accept the evidence from Giltrap Motors that there are no relevant recalls or campaigns relating to this vehicle’s engine.
[16] Mrs Knight’s claim is therefore dismissed.

DATED at AUCKLAND this 16th day of May 2022

B.R. Carter
Adjudicator

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[1] Giltrap North Shore Ltd was named as the respondent when this claim was processed by the Ministry of Justice. That was an error. At the commencement of the hearing, Nigel Tipler, who appeared for Giltrap Motors Ltd, which trades as Giltrap North Shore, advised the Tribunal that Giltrap Motors Ltd sold the vehicle and that it was the proper respondent. Mrs Knight agreed. The Tribunal therefore exercised its power to join Giltrap Motors Ltd as a party, and the hearing proceeded with the consent of the parties.