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Pye v Tandarra Enterprises Ltd - Reference No. MVD 174/2023 [2023] NZMVDT 147 (21 July 2023)

Last Updated: 27 August 2023

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

MVD 174/2023
[2023] NZMVDT 147

BETWEEN DINELLE MARIE PYE & GRAEME PYE

Applicants

AND TANDARRA ENTERPRISES LTD
Respondent

HEARING at AUCKLAND on 3 July 2023 (by audio-visual link)

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




APPEARANCES
D M Pye and G Pye, Applicants
A Lucich and O Ishina for the Respondent

DATE OF DECISION 21 July 2023

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

A Dinelle Pye and Graeme Pye’s application to reject the vehicle is dismissed.

  1. Tandarra Enterprises Ltd shall, within a reasonable time of the date of this decision, remedy the fault that affects the operation of the vehicle’s diesel particulate filter.

_________________________________________________________________

REASONS

Introduction

[1] Danielle Pye and her father Graeme Pye (the Applicants) purchased a 2013 Jeep Cherokee Overland for $23,000 from Tandarra Enterprises Ltd (TEL) on 18 October 2021. The Applicants say the vehicle has not been of acceptable quality due to numerous faults. They want to reject the vehicle, obtain a refund of all amounts paid for the vehicle, compensation for more than $11,000 spent on repairs and to have the loan that Ms Pye entered into with Oxford Finance Ltd to purchase the vehicle assigned to TEL.
[2] TEL denies liability. It says that it sold the vehicle to Ms Pye, and she has since disposed of the vehicle by first transferring registered ownership to a friend and then to Mr Pye. TEL therefore considers that Ms Pye is entitled to no remedy under the Consumer Guarantees Act 1993 (the CGA).
[3] TEL also says that it has repaired the defects initially complained of by Ms Pye, and it was not advised of the faults that the Applicants have since paid to repair and that the issues it has not fixed have all occurred too long after purchase for it to have liability.

Relevant background

Purchase of the vehicle

[4] The vehicle offer and sale agreement records that the purchaser of the vehicle was Ms Pye. The vehicle was also registered in Ms Pye’s name. However, the Applicants say that the vehicle was owned jointly by Ms Pye and Mr Pye. They say that Ms Pye and Mr Pye jointly owned the 2012 Ford Falcon that was traded in for $12,000 to purchase the Jeep Cherokee, and that they agreed between themselves that Mr Pye would retain an ownership interest in the Jeep Cherokee.

The early problems

[5] Due to COVID-19 restrictions in place at that time, TEL delivered the vehicle to Ms Pye on 22 October 2021 as she was unable to enter the Auckland region. Ms Pye says that the TEL employee who delivered the vehicle told her that a fault with the vehicle’s forward collision warning (FCW) system had appeared while he was driving the vehicle.
[6] Ms Pye quickly became concerned about other issues. She then emailed TEL on 27 October 2021 and identified the following issues:
[7] TEL advised Ms Pye to have the vehicle assessed locally, so Ms Pye took the vehicle to Northridge Automotive. An email from Northridge Automotive to TEL dated 3 November 2021 states that Northridge Automotive confirmed that a warning message relating to the FCW system was present. It had attempted to clean and secure the relevant sensor without success. Northridge Automotive also considered that:
[8] Ms Pye also says that the vehicle shuddered occasionally and the 4WD service light illuminated intermittently, but Northridge Automotive could find no related fault at that time.

The TEL assessments and repairs

[9] TEL collected the vehicle on about 5 November 2021 and took it to Auckland for assessment and repairs. The vehicle was then taken to Sonic Ltd (trading as Sonic Automotive) for repairs to be performed. An invoice dated 25 November 2021 states that Sonic Automotive:
[10] TEL then attempted to purchase a replacement FCW sensor. None were available in New Zealand, so TEL contacted Papatoetoe Auto Electricians 1998 Ltd, which ordered a replacement FCW sensor from the United States of America at a cost of $5,721.25. TEL was then advised that there would be a significant delay in delivering that part due to COVID-19 related supply chain delays. TEL says it was told that the vehicle could still be safely driven, so it then decided to return the vehicle to Ms Pye and install the FCW sensor when it arrived.
[11] Before the vehicle was returned to Ms Pye, TEL took the vehicle to Brett Payne Auto Electrical Ltd on 2 February 2022. An invoice of that date records that Brett Payne Auto Electrical inspected the vehicle to “repair [a] fault in [the] DPF system”. It then scanned the vehicle for faults and performed a DPF regeneration.

The traffic fine

[12] An employee of TEL drove the vehicle in a bus lane on 10 February 2022. Ms Pye then received a fines summary notification from the Ministry of Justice advising her that she was required to pay the fine of $180. Ms Pye then paid that fine and seeks to recover that amount from TEL. TEL agrees that it is liable and says that it will pay $180 to Ms Pye.
[13] The Tribunal does not have any power to order TEL to pay that amount to Ms Pye. The Tribunal may only make orders under the CGA, Fair Trading Act and certain parts of the Contract and Commercial Law Act, none of which apply to traffic fines. However, the Tribunal notes that TEL accepted liability for this fine during the hearing, so no orders should be required anyway.

Requests to swap the vehicle for a replacement and request for a refund

[14] Ms Pye has provided a series of emails between herself and Olya Ishina, the After Sales Manager at TEL. In those emails, Ms Pye asks whether she could replace her vehicle with a different vehicle, with any difference in price to be worked out between the parties. No agreement could be reached.
[15] Ms Pye also asked for a refund of the vehicle’s purchase price. In an email dated 24 January 2022, she advised Ms Ishina that she wanted to swap her vehicle for one of the vehicle’s identified in the email, and that:

These are the only vehicle’s that are ok, if we can’t get any of these cars could I please have a refund and I can get a better variety of vehicles.

[16] No agreement was reached, and the vehicle was returned to Ms Pye on 15 February 2023.

Transfer of the vehicle

[17] Ms Pye was a director and shareholder of Trio Smart Ltd, which was placed in liquidation in February 2022. It seems that Ms Pye was concerned that her personal assets may be vulnerable under the liquidation, so she says that she decided to attempt to protect the vehicle from the liquidation proceedings by transferring registered ownership to Aaron Williamson, a family friend. That transfer occurred on 11 February 2022. Ms Pye says that no money changed hands and she retained possession and control of the vehicle.
[18] Mr Pye says that once he became aware that Ms Pye had transferred to the vehicle to Mr Williamson, he asked his daughter to transfer the vehicle into his name instead. That occurred on 7 March 2022. Ms Pye and her father both say that Ms Pye has retained possession and use of the vehicle and that Ms Pye has continued to make all payments owing under the collateral credit agreement. The vehicle remains registered in Mr Pye’s name.

Ms Pye’s concerns following the return of the vehicle

[19] Ms Pye says that, once the vehicle was returned to her on 15 February 2022, she almost immediately noticed that the vehicle continued to jerk occasionally and that there is an unusual noise from beneath the bonnet. Ms Pye also says that the left front tyre and both left side rims were damaged, and the aerial was missing when the vehicle was returned to her.
[20] Ms Pye also says that the vehicle’s odometer reading was much higher than it should have been. She says that the odometer reading at the time of sale was 245,645 km, so the odometer reading would have been about 247,000 km when the vehicle was collected by TEL. Ms Pye says that the odometer reading had increased to 255,000 km when it was returned by TEL in February 2022.
[21] TEL denied driving the vehicle to any significant extent and the Tribunal asked Ms Pye to provide evidence of the odometer reading from February 2022. Ms Pye provided a photograph from 27 May 2022, when the vehicle’s odometer reading was 257,396 km.
[22] Given the other evidence as to her use of the vehicle, I find it unlikely that Ms Pye would have travelled only 2,000 km between February and May 2022. For example, the evidence shows that Ms Pye drove more than 9,000 km between 27 May 2022 and 21 October 2022, when Farmer Autovillage recorded the odometer reading as 266,745 km. Ms Pye then drove nearly 10,000 km between 21 October 2022 and 16 May 2023, when Farmer Autovillage recorded the odometer reading as 276,543 km.
[23] Consequently, given the evidence as to Ms Pye’s use of the vehicle and in the absence of any clear evidence as to the odometer reading when the vehicle was returned in February 2022, I cannot be satisfied that TEL drove the vehicle to the extent alleged by Ms Pye.

The MTA mediation

[24] Concerned about the vehicle’s ongoing issues and TEL’s response, Ms Pye then initiated a mediation process through MTA in June 2022. Ms Pye advised MTA that she considered that the vehicle has not been of acceptable quality and that she wanted a refund of the purchase price. Ms Pye made no mention of any concern about the odometer reading at that time.
[25] Ms Pye then had the vehicle assessed by JB Autos. An invoice dated 21 June 2022 records that JB Autos found that the vehicle’s DPF was blocked. JB Autos removed and cleaned the DPF and advised that the vehicle may require a new DPF if that repair failed.
[26] Ms Pye says that this diagnosis was consistent with her experience when driving the vehicle. She says that the vehicle could not be driven at speeds over 80 km/h and the engine revs are too high when driving up hill. She considered that these symptoms were caused by a faulty DPF and meant that the vehicle was not safe to drive.
[27] The new FCW sensor was installed while the MTA mediation process was ongoing, but Ms Pye says that she received no further assistance or remedy.

The further faults

[28] Ms Pye has continued to drive the vehicle, and further issues have arisen:
[29] Ms Pye says that she has also recently paid to replace the vehicle’s alternator.

The issues

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

Issue 1: Has Ms Pye disposed of the vehicle?

[31] Ms Pye has transferred the vehicle to Mr Williamson and then to Mr Pye. TEL says that those transfers mean that Ms Pye has disposed of the vehicle, and that it has no liability because it sold the vehicle to Ms Pye, who no longer owns it.
[32] That submission is of some relevance, as Ms Pye will have no standing to bring a claim under the CGA if she is not the owner of the vehicle. Further, under s 20(1)(b), Ms Pye may also lose any right to reject the vehicle if she has disposed of it. However, considering the evidence presented, I am not satisfied that Ms Pye has disposed of the vehicle or otherwise transferred legal ownership to another person.
[33] Ms Pye has not transferred possession or control of the vehicle to another person. The vehicle has remained in her possession, she continued to use the vehicle in the same manner she had used it before it was registered in Mr Williamson’s and then Mr Pye’s name, and she continued to repay money she borrowed to purchase the vehicle. I am therefore satisfied that the vehicle belongs to Ms Pye and Mr Pye, and that Ms Pye has not disposed of the vehicle.
[34] I am also satisfied that Ms Pye has not transferred legal ownership to anyone else. I accept her evidence that she received no money from Mr Williamson or Mr Pye when the registered ownership was transferred to them, and that these were paper transactions only, intended to protect the vehicle from her company’s liquidation.
[35] In concluding that legal ownership has not be transferred, I note that the registered owner (or registered person) of a motor vehicle is not necessarily the legal owner of the vehicle, and that fact is well known within the motor vehicle industry. For example, the Waka Kotahi NZ Transport Agency Website states:[1]

2023_14700.jpg

[36] I therefore find that Ms Pye has not disposed of the vehicle or transferred legal ownership.

Issue 2: Has the vehicle been of acceptable quality?

[37] 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”.
[38] “Acceptable quality” is defined in s 7 of the CGA (as far as is relevant) as follows:
  1. 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.

(2) Where any defects in goods have been specifically drawn to the consumer’s attention before he or she agreed to the supply, then notwithstanding that a reasonable consumer may not have regarded the goods as acceptable with those defects, the goods will not fail to comply with the guarantee as to acceptable quality by reason only of those defects.

(3) Where goods are displayed for sale or hire, the defects that are to be treated as having been specifically drawn to the consumer’s attention for the purposes of subsection (2) are those disclosed on a written notice displayed with the goods.

(4) Goods will not fail to comply with the guarantee of acceptable quality if—

(a) the goods have been used in a manner, or to an extent which is inconsistent with the manner or extent of use that a reasonable consumer would expect to obtain from the goods; and

(b) the goods would have complied with the guarantee of acceptable quality if they had not been used in that manner or to that extent.

(5) A reference in subsections (2) and (3) to a defect means any failure of the goods to comply with the guarantee of acceptable quality.

[39] 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.

The vehicle has not been of acceptable quality due to the FCW sensor, fuel filter hose and DPF faults

[40] The vehicle had pre-existing faults that meant it was not of acceptable quality for the purposes of s 6 of the CGA. The FCW sensor was faulty and required replacement and the fuel filter hose had been cut and required repair. Both of those defects have now been remedied by TEL.
[41] I am also satisfied that the vehicle was not of acceptable quality because it has had a DPF fault since shortly after purchase. Ms Pye complained of shuddering and over-revving early in her ownership, consistent with a DPF fault. TEL also appears to have had concerns about the DPF when it assessed the vehicle in late 2021 and early 2022, as it sent the vehicle to Brett Payne Auto Electricians for it to assess a possible DPF fault. That DPF fault was not fixed and has since been confirmed by JB Autos and Farmer Autovillage and means that the vehicle has not been as free of minor defects or as durable as a reasonable consumer would consider acceptable.

The water pump, tyre pressure sensors, transmission, torque converter and alternator do not breach the guarantee

[42] Ms Pye paid $23,000 for an 8-year-old Jeep Cherokee with an odometer reading of more than 245,645 km at the time of sale. A reasonable consumer should understand that the vehicle will have wear and tear consistent with that age and mileage and that there is a real likelihood that faults, which may be expensive to repair, may occur from time to time.
[43] A reasonable consumer should also understand that a supplier’s obligations under s 6 of the CGA are finite and, at some point, the risk of the vehicle developing defects must transfer from the 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.
[44] The water pump did not require replacement until after 22 October 2022, by which time the vehicle had travelled about 21,000 km since purchase. The tyre pressure sensors, which are a relatively minor issue, then occurred in November 2022. Those faults occurred too long after purchase for the protections in s 6 of the CGA to continue to apply to those defects.
[45] The transmission and torque converter faults are more significant defects. However, those components did not require replacement until May 2023, about 18 months after purchase, by which time the vehicle had been driven about 31,000 km. The alternator was then replaced after the transmission and torque convertor. Again, given the price, age and mileage of the vehicle, the length of the Applicants’ ownership and the distance travelled since purchase, that is too long for the protections in the CGA to continue to apply.

The Applicants have not proven the existence of the other defects

[46] The Applicants mentioned other issues, including the 4WD service light, a water leak, problems with the key fob and noise from the sunroof. The evidence presented by the Applicants does not prove the nature and extent of any such issues, so I cannot then be satisfied that any of those alleged issues would breach the guarantee of acceptable quality.
[47] Ms Pye also complained about damage to two tyres, an aerial and a wheel while the vehicle was being repaired by TEL. The only evidence of that damage is photographs taken by Ms Pye after the vehicle was returned to her. There was no evidence presented as to the condition of the vehicle before it was returned to TEL. Consequently, I am not satisfied that Ms Pye has proven that this damage was caused by TEL, so I cannot be satisfied that she is entitled to any remedy.

Issue 3: Has TEL refused or failed to rectify the vehicle’s defects within a reasonable time?

[48] Ms Pye says that she should be entitled to reject the vehicle because TEL failed to remedy the vehicle’s defects within a reasonable time. 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.
[49] Section 18 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.

[50] TEL failed to remedy the FCW fault within a reasonable time. The fault was known in October 2021 and was not repaired until October 2022. Even though there were supply chain delays, that is much longer than was reasonable in any circumstances.
[51] TEL did not unreasonably fail to remedy any of the other defects that breached the guarantee of acceptable quality. It fixed the faulty fuel filter hose and although it did not remedy the DPF fault, I am satisfied that the work performed by Brett Payne Auto Electrical was an appropriate first attempt at rectifying the fault and Ms Pye has not since asked TEL to perform further repairs.

Issue 4: Are the vehicle’s defects a failure of a substantial character?

[52] 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.

[53] The defects that breach the guarantee of acceptable quality – the FCW sensor, cut fuel filter hose and DPF – are not a failure of a substantial character in a vehicle of this price, age and mileage. None of those faults make the vehicle unsafe; the faults can all be fixed and are not so serious that a reasonable consumer would have declined to purchase the vehicle. Certainly, a consumer would expect the supplier to remedy those defects, but I do not think that a reasonable consumer would have declined to purchase the vehicle due to those issues.

Issue 5: Have the Applicants lost the right to reject the vehicle?

[54] The law relating to the loss of the right to reject goods is set out in s 20 of the CGA, which states:

20 Loss of right to reject goods

(1) The right to reject goods conferred by this Act shall not apply if—

(a) the right is not exercised within a reasonable time within the meaning of subsection (2); or

(b) the goods have been disposed of by the consumer, or have been lost or destroyed while in the possession of a person other than the supplier or an agent of the supplier; or

(c) the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply; or

(d) the goods have been attached to or incorporated in any real or personal property and they cannot be detached or isolated without damaging them.

(2) In subsection (1)(a), the term reasonable time means a period from the time of supply of the goods in which it would be reasonable to expect the defect to become apparent having regard to—

(a) the type of goods:

(b) the use to which a consumer is likely to put them:

(c) the length of time for which it is reasonable for them to be used:

(d) the amount of use to which it is reasonable for them to be put before the defect becomes apparent.

(3) This section applies notwithstanding section 170 of the Contract and Commercial Law Act 2017.

Delay

[55] Under s 20(1)(a) of the CGA, the Applicants will lose the right to reject the vehicle if they did not exercise that right within a reasonable time. For the purposes of s 20(1)(a) of the CGA, a "reasonable time" is a period from the time of supply of the goods in which it would be reasonable for the defect to become apparent, having regard to the factors set out in s 20(2)(a)–(d) of the CGA.
[56] In Nesbit v Porter, the Court of Appeal shed some light on the statutory words in s 20(2) of the CGA.[2] The Court observed that:
[39] ... A reasonable time under s 20 must accordingly be one which suffices to enable the consumer to become fully acquainted with the nature of the defect, which, where the cause of a breakage or malfunction is not apparent, the consumer can be expected to do by taking the goods to someone, usually and preferably the supplier, for inspection.
[57] Ms Pye says that she rejected the vehicle in January 2022, when she asked TEL for a refund. By that time Ms Pye was not entitled to reject the vehicle because its defects were not a failure of a substantial character and, as at that date, TEL had not failed to replace the FCW sensor within reasonable time.
[58] Ms Pye then says that she rejected the vehicle when she contacted MTA in June 2022 and asked for a refund of the purchase price. In my view, that does not amount to a valid rejection of the vehicle for the purposes of the CGA. Under s 22 of the CGA, the Applicants had an obligation to notify the TEL (the supplier) of the decision to reject the vehicle. Ms Pye did not notify TEL of her rejection of the vehicle in June 2022. Instead, she notified MTA, which is not TEL or an agent of TEL. Ms Pye has also provided copies of email correspondence between herself and TEL between August and November 2022, and none of that correspondence contains a request to reject the vehicle.
[59] I am therefore satisfied that Ms Pye did not unequivocally reject the vehicle until 9 May 2023 when she filed this claim. By that time she had owned the vehicle for more than one and a half years and had driven more than 30,000 km. Applying Nesbit v Porter, by waiting so long to reject the vehicle, the Applicants have lost the right to reject the vehicle.
[60] The Applicants may consider this conclusion harsh, but the Court of Appeal in Nesbit v Porter considered that there are good policy grounds for requiring the right to reject goods to be exercised within a reasonable time. The Court of Appeal noted:[3]
... the Court should not lose sight of the burden which may be imposed upon a supplier by a lengthy delay in rejecting the goods during a time when their value is likely to depreciate, particularly where depreciation is increased by further usage, as it is for motor vehicles.
[61] Such a situation arose here. Ms Pye has driven the vehicle for more than 18 months and at least 30,000 km since she first became aware of the symptoms consistent with the DPF fault. The vehicle will have depreciated due to that use. Given the length of the delay in rejecting the vehicle and the extent to which the vehicle has been used, I consider that Ms Pye took too long to exercise any right she had to reject the vehicle.

Issue 6: What remedy are the Applicants entitled to under the CGA?

[62] The remedies relevant to this claim are contained in s 18 of the CGA, as set out above. For the reasons mentioned earlier, the Applicants are not entitled to reject the vehicle because its defects are not a failure of a substantial character and the Applicants have lost any right, they had to reject the vehicle due to delay.
[63] Instead, under s 18(2)(a) of the CGA, the Applicants are entitled to have the DPF fault, which is the only outstanding defect that breaches the guarantee of acceptable quality, remedied within a reasonable time.

Outcome

[64] The Applicant’s claim to reject the vehicle is dismissed and TEL shall, within a reasonable time of the date of this decision, remedy the fault that affects the operation of the vehicle’s DPF.

B R Carter
Adjudicator


[1] Waka Kotahi NZ Transport Agency "Registering your vehicle" <www.nzta.govt.nz/vehicles/vehicle-registration/registering-your-vehicle>.

[2] Nesbit v Porter [2000] NZCA 288; [2000] 2 NZLR 465, (2000) 9 TCLR 395 (CA).

[3] At [42].

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