Copeland v Leafgreen Enterprises Ltd - Reference No. MVD 112/2023 [2023] NZMVDT 132 (23 June 2023)

Last Updated: 12 August 2023

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD112/2023 [2023] NZMVDT 132 BETWEEN GEMMA COPELAND Applicant AND LEAFGREEN ENTERPRISES LTD Respondent

HEARING at AUCKLAND on 13 June 2023 (by audio-visual link) MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator S Gregory – Assessor

APPEARANCES

G Copeland, Applicant D Charles, Witness for the Applicant

S Taylor for the Respondent

DATE OF DECISION 23 June 2023

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DECISION OF THE TRIBUNAL

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Leafgreen Enterprises Ltd shall, within 10 working days of the date of this decision, pay $7,629.49 to Gemma Copeland.

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REASONS

Introduction

[1] Gemma Copeland purchased a 2012 Mazda CX9 for $9,999 from Leafgreen Enterprises Ltd on 14 February 2023. Ms Copeland has since paid more than $9,000 to remedy a damaged transfer case and differential carrier. Ms Copeland says that she incurred those repair costs because Leafgreen Enterprises declined to assist. She has therefore applied to the Tribunal seeking to recover those costs.
[2] Leafgreen Enterprises says that it declined to assist Ms Copeland because of threats made against it by the father of Ms Copeland’s partner.

Relevant background

[3] The vehicle’s odometer reading at the time of sale was 250,054 km. Ms Copeland says that she started to notice a strange knocking noise from under the vehicle and from its wheels, particularly when turning hard to the left. She had also noticed that the vehicle was due for a service, so she arranged to have the vehicle assessed and serviced by Foster Motors in Kaitaia.
[4] Foster Motors assessed the vehicle on 13 March 2023, when the odometer reading was 251,368 km. An invoice from Foster Motors dated 16 March 2023 records that, relevant to this claim, it considered:

• (a) the front shock absorbers were “very soft” and required replacement
• (b) the left hand steering rack had play and should be replaced
• (c) the right rear seatbelt did not lock and had damaged webbing, so required replacement
• (d) the driveshaft front joint was worn and required replacement; and
• (e) the transfer case oil was “very dirty and full of filings”.

[5] On about 15 March 2023, Daniel Charles, Ms Copeland’s husband, called Stephen Taylor, a director of Leafgreen Enterprises, and advised him of the issues found by Foster Motors. Mr Charles says that he told Mr Taylor that the repairs could cost at least $4,000. Mr Charles says that Mr Taylor advised him that the vehicle had travelled more than 250,000 km and that there was no warranty for a vehicle with that mileage. Mr Charles then called his father, who used to work in the motor vehicle sales industry.
[6] Mr Taylor says that, on 15 March, he received a phone call from a man who introduced himself as Mr Charles’ father (Mr Charles Snr). Mr Taylor says that Mr Charles Snr first suggested that Leafgreen Enterprises should sell Ms Copeland a “back dated warranty” so a claim could be made to repair the vehicle. Mr Taylor says that he declined to do so because he did not want to participate in what he considered to be fraudulent activities. Mr Taylor says that Mr Charles Snr then threatened him, claiming that Daniel Charles knows “some heavy characters” and he would send them around to sort Mr Taylor out. Mr Taylor says that he then filed a formal complaint with the Police on 16 March 2023.
[7] On 15 March 2023, Mr Taylor sent a text message to Mr Charles saying that he had received a threatening call from Mr Charles Snr. Mr Charles replied stating:

[8] Mr Taylor responded stating:

[9] Mr Charles replied:

[10] On 16 March 2023, Ms Copeland and Mr Charles then emailed Mr Taylor and formally advised Leafgreen Enterprises of the issues found by Foster Motors. Ms Copeland referred to her rights under the Consumer Guarantees Act and asked Leafgreen Enterprises to remedy the vehicle’s defects within 10 working days. Ms Copeland and Mr Charles say that the only response they received from Mr Taylor was a request for Mr Charles Snr’s details.
[11] Mr Charles then sent a further email on 16 March 2023 attaching a copy of the report from Foster Motors and advising:

[12] Ms Copeland then took the vehicle to A Automotive Ltd in Auckland for further assessment. Ms Copeland says that A Automotive advised her that the vehicle needed to be repaired urgently. On 21 March 2023, Ms Copeland emailed Leafgreen Enterprises and asked it to pay the full cost of repairs or refund the vehicle’s purchase price. Ms Copeland stated that, if Leafgreen Enterprises did not respond within two working days, she would immediately lodge a claim with the Tribunal. Leafgreen Enterprises did not respond.
[13] Ms Copeland then decided to have the vehicle repaired by A Automotive. Separate invoices, both dated 23 March 2023, record that A Automotive:

• (a) replaced the transfer case with a new unit at a cost of $4,842.93; and
• (b) replaced the differential carrier and related components and fluids at a cost of $4,132.94.

[14] Ms Copeland then filed this claim on 29 March 2023. Included in the evidence provided with the application are colour photographs of the vehicle’s transfer case and differential carrier. Ms Copeland has also since provided a signed statement from Karl Browne of A Automotive, in which Mr Browne states that he dismantled the transfer case and found that the coupling splines from the differential carrier and the accompanying spline within the transfer caser were damaged and were “worn out”.
[15] In response to Ms Copeland’s claim, Leafgreen Enterprises says:

• (a) there was no sign of any fault with the transfer case or differential carrier before the vehicle was sold
• (b) the transmission was serviced by Central Automatics before sale and no issues were found at that time.
• (c) Ms Copeland and Mr Charles did not raise any concern regarding the vehicle until 14 March 2023 and Leafgreen Enterprises did not receive a copy of Foster Motors’ invoice until 16 March 2023.
• (d) it was concerned that the vehicle had been driven from Orewa to Kaitaia for servicing and then returned to Auckland, which may have exacerbated the vehicle’s problems; and
• (e) Mr Taylor ceased all communications with Ms Copeland and Mr Charles because of the threats he says were made by Mr Charles Snr. Mr Taylor says that he does not respond to threats and does not engage in fraudulent activities.

The issues

[16] Against this background, 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) Has Leafgreen Enterprises refused or failed to rectify the vehicle’s defects within a reasonable time?
• (c) What remedy is Ms Copeland entitled to under the CGA?

[17] In her application, Ms Copeland also raised concerns regarding potential issues with a rear seatbelt, steering rack, front shock absorbers and driveshaft. During the hearing, Ms Copeland advised that she wanted this claim to focus solely on the transfer case and differential carrier faults and that she may take future action relating to those other issues. Accordingly, I consider the transfer case and differential carrier faults only in this decision.

Issue 1: Has the vehicle been of acceptable quality?

[18] 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”.
[19] “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.

[20] 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.
[21] A reasonable consumer must have realistic expectations as to the quality and durability of an 11-year old, Mazda CX9 with an odometer reading of more thjan 250,000 km and J should understand that the vehicle will have wear and tear consistent with that age and mileage. Nonetheless, I am satisfied that the vehicle was not of acceptable quality for the purposes of s 6 of the CGA. The evidence shows that the vehicle’s transfer case and differential carrier were badly worn and required replacement shortly after purchase, meaning the vehicle was not as free of minor defects or as durable as a reasonable consumer would consider acceptable.
[22] Mr Gregory, the Tribunal’s Assessor, advises that this vehicle is an “all wheel drive” vehicle and the transfer case and differential carrier are significant features as they assist in transferring drive from the transmission to the rear wheels via the transfer case and rear driveshaft. The photographs of the transfer case and differential carrier splines provided by Ms Copeland clearly show that the splines are worn to the extent that the vehicle no longer operated in all wheel drive mode, because the differential carrier and transfer splines were so worn that there was no drive transferring from the transmission to the transfer case because the splines were not locking together.
[23] Mr Gregory says that this type of damage is common in a Mazda CX9 of this age and mileage, but the damage could not have occurred during the short period of Ms Copeland’s ownership. Mr Gregory also advises that Ms Copeland’s driving of the vehicle would not have contributed to the damage now present.

Issue 2: Has Leafgreen Enterprises refused or failed to rectify the vehicle’s defects within a reasonable time?

[24] Section 18(2)(b)(ii) of the CGA enables a consumer to reject goods where a supplier has been required to remedy a failure but refuses, fails or does not succeed in doing so within a reasonable time.
[25] 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.

[26] Mr Taylor says that he declined to engage further with Ms Copeland after being threatened by Mr Charles Snr. I did not hear evidence from Mr Charles Snr, so I have not had the benefit of hearing his side of the story. However, even if I unreservedly accept Mr Taylor’s version of events, I am not satisfied that any such threats provided a reasonable excuse for failing to remedy the vehicle’s defects.
[27] In my view, the correspondence between the parties shows that Mr Charles and Ms Copeland clearly advised Mr Taylor that they were not threatening Mr Taylor or asking him to commit fraud and that they simply wanted Leafgreen Enterprises, as the motor vehicle trader that sold the vehicle, to remedy the defects identified by Foster Motors and A Automotive in accordance with its obligations under the CGA. I particularly note Mr Charles’ statement, as set out above, that “I just want a peaceful resolution” and that what Mr Charles Snr was alleged to have said was “irrelevant to the actual issue here”.
[28] Consequently, although Mr Taylor was entitled to contact the Police if he felt threatened by Mr Charles Snr, I am not satisfied that those threats were reiterated or endorsed by Ms Copeland or Mr Charles, and I find that Leafgreen Enterprises had no reasonable basis to decline to remedy the vehicle’s defects.

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

[29] The relevant remedies are contained in s 18 of the CGA, as set out above. Under s 18(2)(b)(i), because Leafgreen Enterprises refused to remedy the vehicle’s defects, Ms Copeland was entitled to have the faulty transfer case and differential carrier remedied elsewhere and to recover the reasonable cost of those repairs.
[30] Mr Gregory advises that the repair costs incurred by Ms Copeland – including the replacement of the transfer case and differential carrier and the related labour, fluids and consumables - were all reasonable and consistent with the normal retail cost of such a repair. Leafgreen Enterprises says that it could have repaired the vehicle for less. It has provided evidence from Central Automatics to show that it could have purchased replacement differential carrier for $1,795 and transfer case for $2,495, which was $1,407 less than Ms Copeland paid for those parts.
[31] I decline to take account of the fact that Leafgreen Enterprises could have obtained replacement parts for less than paid by Ms Copeland. It had the chance to repair the vehicle, but it declined to assist for the reasons set out above. Having declined to assist, it cannot now benefit from the fact that it may have been able to obtain parts for less.
[32] Instead, considering the evidence presented and the advice I have received from Mr Gregory, I am satisfied that the cost incurred by Ms Copeland was reasonable for the repair required. However, I intend to reduce the amount awarded to Ms Copeland by 15 per cent to recognise the fact that she has obtained betterment from this repair as the vehicle, which is 11 years old and has an odometer reading of more than 250,000 km now, has a new transfer case and differential carrier.

Outcome

[33] Leafgreen Enterprises shall, within 10 working days of the date of this decision, pay $7,629.49 to Ms Copeland.

B R Carter
Adjudicator