Bennett v KiwiCheapCars Limited Reference No. MVD 312/2023 [2023] NZMVDT 222 (1 November 2023)

Last Updated: 19 January 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 312/2023 [2023] NZMVDT 222 BETWEEN BRIONY BENNETT Applicant AND KIWICHEAPCARS LTD Respondent

HEARING at AUCKLAND on 12 October 2023 (by audio-visual link) MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator S Haynes – Assessor

APPEARANCES

B Bennett, Applicant A Araya, Witness for the Applicant

R Ahmed for the Respondent

DATE OF DECISION 1 November 2023

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DECISION OF THE TRIBUNAL

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Briony Bennett’s claim is dismissed. _________________________________________________________________

REASONS

Introduction

[1] Briony Bennett purchased a 2014 Toyota Aqua S hybrid vehicle for $12,000 from Kiwicheapcars Ltd on 18 November 2022. The vehicle’s odometer reading at that time was 132,232 km. The hybrid battery required replacement about eight months later, by which time Ms Bennett had driven about 1,800 km. Ms Bennett has since replaced the hybrid battery and seeks to recover the $1,800 she spent replacing the hybrid battery and alternative transport costs incurred while she was unable to use the vehicle.
[2] Kiwicheapcars says that Ms Bennett should not be entitled to any remedy because it offered to remedy the hybrid battery fault, but Ms Bennett did not give it a reasonable opportunity to do so.

The issues

[3] 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) Are the vehicle’s defects a failure of a substantial character?
• (c) What remedy is Ms Bennett entitled to under the CGA?

Issue 1: Has the vehicle been of acceptable quality?

[4] 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:

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.

[5] 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.
[6] The engine and hybrid battery warning lights illuminated in July 2023. Ms Bennett then had the vehicle assessed by Auckland City Toyota, which performed a diagnostic scan and found a “P0480 Replace Hybrid Battery Pack” fault code. The vehicle’s odometer reading at that time was approximately 134,042 km.
[7] Ms Bennett says that Auckland City Toyota told her that the hybrid battery pack required replacement, at an estimated cost of $3,644.93. Ms Bennett then made inquiries with other repairers, and in September 2023 the hybrid battery was replaced by Ultimate EV, at a cost of $1,800.
[8] Following the hearing on 12 October 2023, Ms Bennett provided the results from the diagnostic scan of the hybrid battery performed by Auckland City Toyota. Mr Haynes, the Tribunal’s Assessor, advises that the diagnostic scan results show that the hybrid battery had degraded to the extent that it required replacement or significant overhaul. For example, the voltage on cell number 6 of the hybrid battery pack is 12.14V, whereas the other cells have a voltage of between 13.35V and 14.09V.

The Tribunal’s assessment

[9] Ms Bennett paid $12,000 for an eight-year-old hybrid vehicle with an odometer reading of 132,232 km at the time of sale. A reasonable consumer must have realistic expectations as to the durability of the hybrid battery cells in a vehicle of this age and mileage and should understand that the hybrid battery will degrade as the vehicle is used and will require refurbishment or replacement from time to time. 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.
[10] Nonetheless, considering the factors in s 7(1)(f) to (j) of the CGA, particularly the fact that Ms Bennett had driven only a little more than 1,800 km before the hybrid battery fault became apparent, I find that the vehicle was not of acceptable quality because it was not as free of minor defects or as durable as a reasonable consumer would consider acceptable. I consider that a reasonable consumer would have expected the hybrid battery in a vehicle of this price, age and mileage to be more durable that the battery in this vehicle proved to be.

Issue 2: Are the vehicle’s defects a failure of a substantial character?

[11] A failure of a substantial character is defined in s 21 of the CGA:

21. 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.

[12] Section 21(a) of the CGA applies to this case and the question I must answer is whether the faults that this vehicle has, are such that a reasonable consumer, fully acquainted with the true nature and extent of the faults, would not have purchased the vehicle.
[13] I consider that purchasers of hybrid vehicles of this age and mileage should understand that the hybrid battery is not new and that it will degrade and will require replacement as the vehicle ages. Certainly, a reasonable consumer would expect the supplier to provide a remedy where the battery required replacement after about 1,800 km of driving, but I am not satisfied that a reasonable purchaser of an eight year old hybrid vehicle with an odometer reading of 132,232 km would decline to purchase the vehicle because of a fault of this nature.

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

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

[15] Ms Bennett seeks to recover the $1,800 cost of replacing the hybrid battery. It is well established that, where a vehicle has defects that breach the guarantee of acceptable quality, a consumer must first give the supplier a reasonable opportunity to remedy a failure before having any defect rectified elsewhere and recovering the cost of repairs from the supplier.[1] Ms Bennett may therefore recover the repair cost under s 18(2)(b)(i) of the CGA if Kiwicheapcars has failed, refused, neglected, or otherwise not succeeded in remedying the hybrid battery failure after being given a reasonable opportunity to do so.
[16] Email correspondence between the parties shows that Kiwicheapcars did initially decline to take responsibility for the repair because it considered that the vehicle had been of acceptable quality. On 28 July 2023, Ms Bennett then advised Kiwicheapcars that she would take her complaint to the Tribunal. Kiwicheapcars responded on 31 July 2023, advising Ms Bennett that it would address the issue at its cost and provide a six month warranty. I therefore find that Kiwicheapcars had offered to provide a remedy as at 31 July 2023.
[17] Ms Bennett then asked for further information from Kiwicheapcars, including an appointment time to bring the vehicle in, the identity of the repairer and the work that would be performed. Kiwicheapcars did not provide that information and instead simply asked Ms Bennett to return the vehicle.
[18] Ms Bennett was unhappy with that response, so she filed this claim in early August 2023. She initially sought to reject the vehicle and obtain a refund of the purchase price. However, on about 23 September 2023, Ms Bennett then arranged to have the hybrid battery replaced by Ultimate EV as she had been without a vehicle since the hybrid battery warning light illuminated. She now seeks to recover that cost.
[19] Against this background, I find that Kiwicheapcars did initially decline to provide a remedy, but it then changed its mind and offered to remedy the hybrid battery failure. Ms Bennett did not then give it a reasonable opportunity to do so.
[20] Kiwicheapcars’ correspondence with Ms Bennett was less than ideal, and undoubtedly left her uncertain as to what would be done to her vehicle, when and by whom. However, Kiwicheapcars’ conduct did not amount to a refusal, failure or neglect to repair. It remained willing to remedy the failure at its expense, but Ms Bennett was not prepared to give it that opportunity because it did not supply the information she sought.
[21] Ms Bennett’s position was understandable. She wanted reassurance about the identity of the repairer and the repair that would be performed. However, Kiwicheapcars’ failure to provide that information did not amount to a failure or refusal to remedy the vehicle’s faults. Ms Bennett is not therefore entitled to recover her repair costs under s 18(2)(b)(i) of the CGA.
[22] Ms Bennett may also have been entitled to compensation under s 18(3)(b) of the CGA if the hybrid battery failure was a failure of a substantial character. As set out above, it was not, so Ms Bennett has no entitlement to compensation under s 18(3)(b).

[23] Ms Bennett’s claim is therefore dismissed.

B R Carter
Adjudicator

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[1] Acquired Holdings Ltd v Turvey [2007] NZHC 1251; (2008) 8 NZBLC 102,107 (HC).