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Porter v Affordable Kiwi Cars Ltd - Reference No. MVD 227/2023 [2023] NZMVDT 192 (29 August 2023)

Last Updated: 30 September 2023

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

MVD 227/2023
[2023] NZMVDT 192

BETWEEN MYA ROSE TURNER PORTER

Applicant

AND AFFORDABLE KIWI CARS LTD
Respondent





HEARING at AUCKLAND on 22 August 2023 (by audio-visual link)

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




APPEARANCES
M R T Porter, Applicant
T Singh for the Respondent

DATE OF DECISION 29 August 2023

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

A Mya Porter’s application to reject the vehicle is dismissed.

  1. Affordable Kiwi Cars Ltd shall, within 10 working days of the date of this decision:

_________________________________________________________________

REASONS

Introduction

[1] Mya Porter purchased a 2001 Toyota Corolla for $2,300 from Affordable Kiwi Cars Ltd in May 2023. Ms Porter says the vehicle has many faults that make it unsafe, and she now wants to reject the vehicle and obtain a refund of the purchase price. Affordable Kiwi Cars says it did not sell the vehicle to Ms Porter. It says that this was a private sale conducted by Taranpreet Singh, a director of Affordable Kiwi Cars. Affordable Kiwi Cars also says that the vehicle was a 22 year old vehicle with an odometer reading of about 328,000 km, so it has no warranty.

The issues

[2] The issues requiring the Tribunal’s consideration in this case are:

Relevant background

[3] Ms Porter saw the vehicle advertised on Facebook Marketplace. Among other things, Affordable Kiwi Cars represented that the vehicle had a “valid WOF”, “Smooth Running”, “No Mechanically Issue”, “Overall Perfect car for Daily uses” and that the vehicle was a “Good Car for Learner”. The vehicle offer and sale agreement states that the vehicle’s odometer reading at the time of sale was about 328,000 km.
[4] Ms Porter then messaged Taranpreet Singh of Affordable Kiwi Cars. In one of those messages, Ms Porter asked “Are you a car dealer?”. Taranpreet Singh responded “Yes”. Ms Porter then decided to purchase the vehicle. She paid $1,900 cash, with the balance of $400 paid into a bank account belonging to Affordable Kiwi Cars.
[5] The vehicle was previously owned by Parampreet Singh, a cousin of Taranpreet Singh. Taranpreet Singh says that Parampreet had traded this vehicle in to purchase another vehicle from Affordable Kiwi Cars. A vehicle sales/purchase agreement dated 20 May 2023 states that Affordable Kiwi Cars purchased the vehicle for $2,200 from Parampreet.
[6] Taranpreet Singh says that Affordable Kiwi Cars only sells vehicles that are less than 10 years old. Any older vehicles are sold by Taranpreet Singh online. He says that those sales are “private sales” and are not made by Affordable Kiwi Cars.
[7] Shortly after purchasing the vehicle, Ms Porter noticed that the vehicle pulled to the right and felt like it “slid out” from the rear when cornering. Ms Porter says the vehicle also made numerous whining, squealing and clunking noises.
[8] Ms Porter then had the vehicle assessed by Silverdale Car Services 2017 Ltd on 8 June 2023. Silverdale Car Services identified numerous issues, including:
[9] In Silverdale Car Services’ opinion, the cost of the required repairs outweighed the value of the vehicle, and the fault that causes the vehicle to pull to the right and the mismatched front tyres made the vehicle dangerous to drive. The odometer reading at that time was 329,952 km
[10] Ms Porter then rejected the vehicle on 12 June 2023. Affordable Kiwi Cars declined to accept that rejection, so Ms Porter then filed this claim three days later. Ms Porter has continued to use the vehicle and its current odometer reading is now approximately 332,000 km.
[11] Following a direction from the Tribunal, Ms Porter then had a warrant of fitness inspection performed on the vehicle by VTNZ. The vehicle failed that inspection due to:

[12] Ms Porter has continued to use the vehicle, and on 3 August 2023 she paid $123 to Orewa Tyre Centre to replace the mismatched and worn right front tyre.

Issue 1: Was this a private sale?

[13] This was not a private sale. The evidence shows that the vehicle was owned by Affordable Kiwi Cars when it was sold to Ms Porter, that Ms Porter paid part of the purchase price into Affordable Kiwi Cars’ bank account and that Taranpreet Singh told Ms Porter that the seller of the vehicle was a car dealer. That evidence clearly establishes that the vehicle was sold as part of Affordable Kiwi Cars’ business.
[14] It appears that Affordable Kiwi Cars and Taranpreet Singh have a business model under which Mr Singh uses his personal Facebook account to sell older vehicles that Affordable Kiwi Cars does not want to provide a warranty for. Consumer protection laws cannot be avoided in this way, and I am satisfied that this was not a private sale, that the vehicle was sold by Affordable Kiwi Cars and Affordable Kiwi Cars has liability for this vehicle under the CGA because it was the supplier of the vehicle.

Issue 2: Has the vehicle been of acceptable quality?

[15] 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”. “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.

[16] 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 warrant of fitness failures mean the vehicle was not of acceptable quality

[17] The vehicle is not of acceptable quality. As set out above, the vehicle has many defects that have caused it to fail the VTNZ warrant of fitness inspection.
[18] I consider it more likely than not that all those warrant of fitness failures were present when the vehicle was sold to Ms Porter. As a motor vehicle trader, Affordable Kiwi Cars was obliged to ensure that the vehicle had a warrant of fitness issued within one month of supply, unless Ms Porter agreed in writing to accept the vehicle with an older warrant of fitness.[1] The warrant of fitness was issued on 19 November 2022, more than six months before the vehicle was sold to Ms Porter and Ms Porter did not consent in writing to such an aged warrant of witness.
[19] If Affordable Kiwi Cars had complied with its legal obligations, it would have been able to point to the recently issued warrant of fitness as evidence that the vehicle was free of warrant of fitness failures at the time of sale. It cannot do that in this case because it did not comply with that obligation, and I am satisfied that it is more than likely that all the warrant of fitness failures were present when the vehicle was sold. Consequently, notwithstanding the vehicle’s age, high mileage and low price, I find that the vehicle was not of acceptable quality due to the numerous pre-existing warrant of fitness failures.
[20] I am also satisfied that the loose exhaust bracket, which is contacting the rear cross member, is a breach of the guarantee. That loose bracket is likely to be the cause of most, if not all, of the knocking noises complained of by Ms Porter. Further, that loose bracket should also have caused the vehicle to fail the warrant of fitness inspection, because the exhaust is not securely mounted.[2]

The remaining defects do not breach the guarantee

[21] The other issues complained of by Ms Porter do not breach the guarantee of acceptable quality for the following reasons:

Issue 3: Are the vehicle’s defects a failure of a substantial character?

[22] 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.

[23] By a slim margin, I am not satisfied that the vehicle’s defects are a failure of a substantial character in a vehicle of this age and mileage. Each of the faults can be easily and inexpensively remedied, and once that occurs, Ms Porter will have the vehicle that she thought she was purchasing. Further, the worn front tyre has been replaced and the ongoing issues do not make the vehicle inherently unsafe, although the warrant of fitness failures do require repair.

[24] Further, a reasonable consumer must have realistic expectations as to the quality and durability of a vehicle of this price, age and mileage. Certainly, a reasonable consumer would expect the supplier to ensure that the vehicle was free of warrant of fitness failures at the time of sale, but I am not satisfied that the faults present in this vehicle are so serious that a reasonable consumer would have declined to purchase the vehicle.

Issue 4: What remedy is Ms Porter entitled to under the CGA?

[25] The relevant remedies are set out in s 18 of the CGA, which 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.

[26] Ms Porter is not entitled to reject the vehicle because its defects are not a failure of a substantial character in a vehicle of this price, age and mileage. Instead, Ms Porter is entitled to have the defects that cause the vehicle to fail a warrant of fitness remedied within a reasonable time. Ms Porter is also entitled to recover the cost of replacing the right front tyre. Affordable Kiwi Cars illegitimately denied liability for that fault by claiming that this was a private sale. Ms Porter was therefore entitled to pay to have the tyre replaced and recover that cost from Affordable Kiwi Cars.

Outcome

[27] Ms Porter’s application to reject the vehicle is dismissed and Affordable Kiwi Cars shall, within 10 working days of the date of this decision:

Referral to the Commerce Commission

[28] As set out in this decision, I have found that Affordable Kiwi Cars has tried to pass off the sale of a motor vehicle that belonged to it as a private sale and failed to provide a Consumer Information Notice with the vehicle.
[29] I therefore direct the Tribunal’s registry staff to provide a copy of this decision to the Commerce Commission for consideration as to whether this conduct raises issues under the legislation it enforces.

B R Carter
Adjudicator

[1] Land Transport Rule: Vehicle Standards Compliance 2002, r 9.12(3).

[2] Vehicle Inspection Requirements Manual, In-service certifications (WoF and CoF), General vehicles at part 11-1-3.

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