Lyall v Hautapu Motors Limited t/a Trademautos - Reference No. MVD 061/2022 [2022] NZMVDT 84 (18 May 2022)

Last Updated: 12 July 2022

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 061/2022
[2022] NZMVDT 84

BETWEEN MARLENE SUZANNE LYALL

Purchaser

AND HAUTAPU MOTORS LIMITED T/A TRADEMAUTOS

Trader

HEARING on 28 April 2022
MEMBERS OF TRIBUNAL

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

APPEARANCES (via Microsoft Teams)

M S Lyall, Purchaser
C J Steffensen, Manager of Trader
G B McIntyre, Vehicle Sales Consultant for Trader

DATE OF DECISION 18 May 2022

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DECISION OF THE TRIBUNAL

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Marlene Lyall’s application is dismissed.

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REASONS

Introduction

[1] Marlene Lyall seeks a refund of the purchase price for her 2015 Foton. Ms Lyall purchased the vehicle from Hautapu Motors Ltd on 28 August 2020. Since she purchased the vehicle it has needed a number of repairs, some of which have been covered under the mechanical breakdown insurance policy that Ms Lyall purchased with the vehicle. Hautapu Motors paid the excess for these insurance claims. However, Ms Lyall has had to pay for some of the repairs herself.
[2] The vehicle was out of action for repairs over summer 2021/2022, resulting in great inconvenience for Ms Lyall, as she was unable to use the vehicle as she wanted to.
[3] Hautapu Motors’ position is that it has acted in good faith with respect to the vehicle repairs while Ms Lyall has owned the Foton. It says it has covered the excess on each of her insurance claims and has provided a loan vehicle each time, including in respect of the repairs over the 2021/2022 summer. It did this even though it sold the vehicle to her as long ago as August 2020. Since then, Ms Lyall has travelled over 32,000 km in the vehicle.
[4] The most expensive repair that Ms Lyall has had to pay for herself is a repair to the vehicle’s clutch. Hautapu Motors considers this to be a wear and tear item rather than a defect. Moreover, the clutch repair was only needed after Ms Lyall had travelled more than 30,000 km in the vehicle. Accordingly, Hautapu Motors does not believe that it should be liable to pay for the clutch repair.
[5] The issue arising for the Tribunal to consider in this application is whether the vehicle failed to comply with the guarantee of acceptable quality.

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

[6] 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.
[7] “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.

...

[8] 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.
[9] The vehicle has required a number of repairs in the time that Ms Lyall has owned it. Broadly speaking, these issues can be separated into:

• (a) defects arising soon after purchase;
• (b) some minor matters arising during 2021; and
• (c) some more significant repairs to the gearbox and clutch required at the end of 2021 and the beginning of 2022.

[10] There is one outstanding repair needed, to rust around the windscreen and various other places, Ms Lyall has received a quotation for those repairs for $2,277, not including the cost of replacing the windscreen itself.

Defects arising soon after purchase

Brake light switch – September 2020

[11] Very soon after Ms Lyall purchased the vehicle, Auto Electrical Solutions replaced a brake light switch. Its invoice records that it checked the vehicle’s traction control system and found system voltage codes and a brake lamp switch fault. After checking the battery, it replaced the switch and tested the vehicle and found “all okay”. The cost of this repair, $264.98, was met by Hautapu Motors.

Faulty rear differential

[12] At the vehicle’s first service, which took place in or around October 2020, Rangitikei Truck and Diesel found that the vehicle had problems with its differential. It was taken to Geartech, which replaced the limited slip differential and associated parts at a cost of $1,247.53. This cost was met by Autosure Insurance, apart from the $250 excess, which Hautapu Motors paid.
[13] Ms Lyall said that, before the differential repair took place, she told Hautapu Motors’ sales consultant, Gary McIntyre, that she wished to reject the vehicle. However, Ms Lyall said that Hautapu Motors ignored her rejection and went ahead and repaired the vehicle anyway. Ms Lyall said she queried this with Autosure, which told her that she should take the vehicle back and see how it performed. On the basis of this advice, Ms Lyall said that she decided to “move on” from her rejection of the vehicle.
[14] Mr McIntyre denied that Ms Lyall had rejected the vehicle before the differential repair took place.
[15] No documented evidence of Ms Lyall’s alleged rejection of the vehicle was presented to the Tribunal. This lack of corroboration, and Hautapu Motors’ denial that the rejection occurred made it difficult to verify that any rejection took place. Although s 22 of the Act does not require notification of a rejection to be in writing, it certainly helps a purchaser to prove they have rejected a vehicle by putting their notification of rejection in writing.
[16] In any event, Ms Lyall’s evidence that, after taking advice from Autosure she decided to “move on” suggests that she withdrew her decision to reject the vehicle after the differential repairs were carried out. Ms Lyall can also be said to have acquiesced in Hautapu Motors’ decision to repair the vehicle by her decision to keep using the vehicle after the differential repairs were carried out.
[17] Ms Lyall did not report any ongoing problems in respect of the differential, apart from her concerns about the vehicle being noisy. As these concerns about noise were never diagnosed as being linked to any particular defect, it is not possible for the Tribunal to find that they give Ms Lyall any grounds for relief.

Minor matters arising during 2021

Headlight bulbs

[18] In May 2021, Ms Lyall found that the vehicle’s headlights were too dim for night driving. She had the bulbs replaced with halogen long life bulbs at a cost of $215.74. This repair was carried out by Rangitikei Truck and Diesel. Its invoice records that one of the bulbs had blown. Ms Lyall said that she did not raise this issue with Hautapu Motors. Rather, she went ahead and got the issue fixed without drawing it to their attention.

Broken left tail light

[19] An issue arose in December 2021 in respect of a broken left rear tail light, which Rangitikei Truck and Diesel replaced for Ms Lyall at a cost of $762.47. Again, she did not raise this issue with Hautapu Motors. At the hearing, Ms Lyall appeared content to absorb this cost herself.

Rear brake squeal

[20] In December 2021, Ms Lyall noticed that her vehicle’s rear brakes were squealing. Rangitikei Truck and Diesel inspected the rear brakes and found the caliper guides were semi-seized. It unseized the guides and reassembled the brakes, lubricating them as required. Ms Lyall paid the cost of this repair, $171.44. Again, she did not raise this issue with Hautapu Motors before having the vehicle repaired.

Gearbox and clutch repairs in late 2021 / early 2022

Gearbox repairs

[21] Ms Lyall told the Tribunal that, from about September 2021, she noticed that it had become harder to change down to second gear without the gears graunching. She had this issue assessed by Geartech, which confirmed that the synchromesh on the second gear had failed. A replacement first/second synchromesh and associated parts, including a fifth gear needle bearing, was supplied and installed in the vehicle at a cost of $1,643.47. This cost was met under Ms Lyall’s Autosure insurance policy. Hautapu Motors paid the excess.

Clutch

[22] While assessing the gearbox Geartech found that the vehicle’s clutch was worn and needed to be replaced at a cost estimated at $1,894.89. When Ms Lyall commenced her application in the Tribunal she had not had this repair carried out. However, at the hearing Ms Lyall confirmed that the clutch had been replaced, although no final invoice for that repair was produced. Ms Lyall had asked Hautapu Motors to contribute to this repair cost but it was unwilling to do so. So, Ms Lyall paid for the repair herself as it was not covered under her insurance policy.
[23] Ms Lyall alleged that, while repairing the vehicle, Geartech damaged her vehicle’s keys. However, Geartech was not a party to this dispute. Nor was it given an opportunity to respond to this allegation. Accordingly, Ms Lyall will need to sort that issue out separately with Geartech.

Rust

[24] Ms Lyall produced photos showing a line of rust and bubbling paintwork on the left front pillar near the windscreen. She also produced a quote from Perfect Choice Panel n Paint for rust repairs in this area, as well as on the deck and one of the doors, in the sum of $2,277. Ms Lyall alleged that she had been told that the vehicle would fail its next warrant of fitness. However, Hautapu Motors pointed out that the vehicle was issued with a new warrant of fitness in December 2021. The warrant of fitness check sheet dated 15 December 2021 mentioned nothing about rust, either as a fail item or as a comment.

Tribunal’s assessment

[25] It is easy to have sympathy for Ms Lyall. She has purchased what is, to her, an expensive vehicle, especially when financing costs are included. She did not expect it to have the range of problems that it has had.
[26] Without a doubt, the early failures experienced by Ms Lyall in respect of the vehicle’s differential and brake light switch amount to failures to comply with the guarantee of acceptable quality.
[27] However, I have reached a different conclusion in respect of the repairs that were required more recently. These repairs were needed after Ms Lyall had owned the vehicle for well over a year and had travelled 30,000 km in it.
[28] As this Tribunal has held in many previous cases, the guarantee of acceptable quality does not impose indefinite liability on the supplier of a motor vehicle. At some point the risk of the vehicle developing defects transfers from the supplier to the purchaser. When this transfer of risk occurs must be determined by reference to the factors in s 7(1)(f)–(j) of the Act.
[29] In respect of Ms Lyall’s Foton, it is necessary to consider its price, age, and mileage at the time of sale, the nature of the vehicle’s defects and the length of time and distance travelled before those defects became apparent. After considering these factors, particularly the extensive distance travelled by Ms Lyall in the vehicle, I am satisfied the vehicle has been as durable as a reasonable consumer would consider acceptable. For that reason, Hautapu Motors is not liable to reimburse her for the purchase price of the vehicle.
[30] In any event, Ms Lyall would have had difficulty obtaining any remedy from Hautapu Motors in respect of the matters described at [18]-[20] above even if they had triggered the acceptable quality guarantee. That is because she did not give Hautapu Motors any opportunity to remedy those matters itself, before she we[1]t ahead with repairs.1
[31] In particular, Ms Lyall confirmed that the sole outstanding repair required is in respect of the rust, for which she has been quoted $2,277. I fully accept that Ms Lyall will be disappointed that her vehicle has rust requiring repair at this stage in its life. However, although Ms Lyall says she keeps the vehicle in a garage, it is not possible to account for the vehicle’s previous history.
[32] In particular, it is not possible to ascertain whether environmental factors may have accelerated the rust that has arisen. Nor is it possible to link the development of rust on the vehicle to the paint and panel repairs that were done pre-purchase. Although the invoice for those repairs does refer to paintwork done on the front left pillar, there is no mention of rust on the invoice and insufficient basis for any conclusion that part of that work involved covering up early signs of rust.
[33] In some cases, the Tribunal may uphold a purchaser’s claim in respect of rust on a second hand vehicle, even up to several years after the vehicle’s purchase. But this tends to be where the purchaser is able to prove the rust was present at or soon after purchase, and the purchaser has taken any reasonable steps to mitigate the rust’s development.
[34] Although the outcome of this application will be disappointing to Ms Lyall, she does still have the benefit of her mechanical breakdown insurance policy for another sixteen months or so. That will provide some further protection for her if there are any other significant mechanical defects.
[35] Furthermore, despite alleging the vehicle has lost value, Ms Lyall did not produce any evidence to establish the vehicle’s value after the rust repairs had been carried out would be materially less than a similar 2015 Foton with 137,500 km on its odometer.
[36] Finally, it is important to emphasise that Hautapu Motors has in fact assisted Ms Lyall with respect to the insurance excesses she would otherwise have had to pay. This reflects its acknowledgement that, but for her insurance policy, it is likely to have been liable to meet the cost of those repairs in accordance with its obligations under the Act.
[37] However, in respect of the most recent clutch repair, I agree with Hautapu Motors’ submission that, in light of the distance travelled by Ms Lyall since purchasing the vehicle, the faulty clutch can be attributed to ordinary wear and tear, rather than a mechanical defect for which there would be a remedy under the Act.

Conclusion

[38] Accordingly, Ms Lyall’s application is dismissed.

J S McHerron
Adjudicator

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[1] Consumer Guarantees Act 1993, s 18(1); Acquired Holdings Ltd v Turvey [2007] NZHC 1251; [2007] 8 NZBLC 102,107 (HC) at [14].