Farhat v Universal Imports 1998 Limited Reference No. MVD 239/2023 [2023] NZMVDT 227 (6 November 2023)

Last Updated: 19 January 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 239/2023 [2023] NZMVDT 227 UNDER APPEAL BETWEEN SEYAR FARHAT Applicant AND UNIVERSAL IMPORTS 1998 LIMITED Respondent

MEMBERS OF TRIBUNAL

D Watson, Adjudicator

S Gregory, Assessor

HEARING at Auckland on 15 August 2023 (in person) and on 24 October 2023 (by audio-visual link)

APPEARANCES

Seyar Farhat, Applicant Farash Ali, Witness for the Applicant

John Baird, Witness for the Respondent Andrew Peck, Director of the Respondent

DATE OF DECISION 6 November 2023

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

1. Universal Imports 1998 Ltd must pay Seyar Farhat $100 within 10 working days of the date of this decision.
2. The balance of Seyar Farhat’s claims are dismissed.

_________________________________________________________________

REASONS

Introduction

[1] Seyar Farhat purchased a 2012 Volkswagon Scirocco from Universal Imports 1998 Ltd (UIL) for $13,999 on 16 July 2022. The vehicle had then travelled 52,782 km. He wants to reject the vehicle, which he claims has suffered from a range of faults, including a faulty clutch and general loss of power. He says he is entitled to reject because, having given UIL a reasonable opportunity to repair the vehicle, it has failed to do so.
[2] UIL denies liability and says that it has repaired the vehicle as requested. With respect to any other faults, it says it has not been given an adequate opportunity of repair.

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) Has UIL failed to repair the faults within a reasonable time?

Relevant background

[4] At the time of sale, Mr Farhat dealt with Mr John Baird, a salesperson engaged by UIL. Mr Farhat purchased a Protecta MBI policy from UIL as part of the sale, at the suggestion of Mr Baird.

September 2022

[5] Having returned from a month overseas in September 2022, Mr Farhat contacted Mr Baird because he had not yet received the MBI policy certificate.
[6] Mr Baird said that he would follow up on it and get back to him. Mr Farhat heard nothing further.

October 2022

[7] In around October 2022, the brake and anti-lock braking system (ABS) warning lights began illuminating. Intermittently, a warning light also came on that said “workshop now” or something similar.
[8] Mr Farhat also noticed that when the vehicle was in gear and when he applied the accelerator it “wouldn’t bite” and would be slow to start.
[9] Mr Farhat wanted to pursue a claim against the MBI policy to get these issues fixed but he still did not have the MBI certificate. He believed he needed the MBI certificate before making any claim. He was unaware of any obligations UIL may have had as the supplier and thought any mechanical faults had to be pursued through the MBI policy. He contacted Mr Baird and asked for the MBI certificate. Once again, Mr Baird said that he would follow up and get back to him.
[10] Mr Farhat did not tell Mr Baird at this time about any of the issues he was experiencing with the vehicle. The reason was because he intended to make a claim on his mechanical insurance. He did not realise he had the right to ask UIL to investigate the issues.

November 2022

[11] By November, the same warning lights were still coming on but the MBI certificate had still not arrived. Additionally, Mr Farhat noticed what appeared to be a major oil leak from underneath the vehicle. That leak subsequently stained the garage floor of his rented accommodation. He produced photographs of the wheel on the garage floor.
[12] Mr Farhat contacted Mr Baird again about the whereabouts of the MBI certificate. Mr Baird said that he would follow up and come back to him.

26 January 2023

[13] Mr Farhat eventually received the MBI certificate by email from Mr Baird. The delay in providing this was because Mr Baird had mistakenly sent it to the wrong email address.
[14] Having now received the MBI certificate, Mr Farhat took his vehicle to Europa Auto Service (Europa) on 26 January 2023 for an assessment. The mileage was then 57,310 km.
[15] Europa undertook work on the vehicle, recorded in its invoice, as follows:

-Front Left wheel speed sensor faulty permanent fault and not reading and Right was playing up as well. Require to be taken off and tested.

-Engine oil leak everywhere found Breather hose with one-way valve been taped up and glued together. Due to that engine leaking air and not running right.
-Looks like engine sump has been taken off for some reason.
-All the coil full with oil may require replacement soon.

[16] Europa charged Mr Farhat $178.25 for that work.
[17] According to Mr Farhat, Europa told him that the engine had been repaired and someone had used RTV sealant (room temperature vulcanising sealant) to seal up the camshaft cover. Europa said that this was what was causing the oil leak and that the MBI policy might not cover this. Further, it told him that the “transmission has gone”. It said the clutch needed a full replacement. It provided a diagnostic report which showed a transmission diagnostic trouble code (DTC) of “P177C Clutch 2: tolerance Limit reached”.
[18] Europa also replaced two wheel speed sensors at a cost to Mr Farhat of $449.65.
[19] Mr Farhat did not tell UIL about any of these repairs or the diagnosis before he arranged to have the repair work undertaken.

4 February 2023 - Mr Farhat rejects the vehicle

[20] At this point Mr Farhat undertook some research about the Tribunal and the ability to request a refund under the CGA. He learned of the obligations of a trader under the CGA.
[21] He sent a rejection email to Mr Baird on 4 February 2023 in which he stated:

There has been work done on the engine which wasn't disclosed to me which will not help in making a claim for the oil leak. The transmission needs work, the wheel sensors need to be replaced the list goes on the engine cover has been put back with silicone...

......

I can send you the diagnosis report from the mechanic but I am afraid you already know the issues.

[22] Mr Farhat also sent the two Europa invoices and the diagnostic report to Mr Baird.
[23] Mr Baird and Mr Farhat spoke over the telephone. A recording of this telephone call was provided to the Tribunal. Mr Baird did not know he was being recorded. Mr Farhat can be heard describing the Europa diagnosis to Mr Baird. In relation to the wheel sensors, he told Mr Baird that he had replaced these at a cost of $450. When Mr Baird says he should have told UIL about that, Mr Farhat said he “did not care” about the wheel sensors because he had already had this fixed. He said he was concerned, however, about the other issues.
[24] Mr Baird gave him the contact details of the owner of the business, who referred him to his son, Mr Chris Peck.
[25] Mr Farhat spoke with Mr Peck over the telephone on 9 February 2023. Arrangements were made for the vehicle to be brought to UIL for repairs.
[26] Repairs were undertaken by UIL and the vehicle was returned to Mr Farhat. The repairs involved changing the hoses that seemed to cause the oil leak and wiping the oil from the engine.
[27] According to UIL, before returning the vehicle to Mr Farhat, it test drove the vehicle to see how the transmission was performing and considered that the vehicle drove fine. It concluded that it did not have any issues with its transmission. Its evidence was that transmissions require expert knowledge and it considers that a report from a mechanic which simply commented on the transmission was not an adequate diagnosis of a transmission fault.

22 March 2023: Mr Farhat has the vehicle scanned for diagnostic trouble codes (DTC’s)

[28] On 22 March 2023, Mr Farhat took the vehicle to Your Neighbourhood Mechanic (YNM) and had it inspected and scanned. He wanted to check what repairs had been done and to obtain a second opinion. The mileage was then 58,406 kms. YNM found that both outer constant velocity (CV) boots were split and that there were two codes store in the vehicle’s electronic control unit (ECU). These were P177c and P0441. Mr Gregory, the Tribunal’s assessor, [1] advises that P177c signalled that most likely the clutch was worn and P0441 is a common code relating to the fuel tank breather system.
[29] YNM told Mr Farhat that the clutch tolerance level had been reached.
[30] Mr Farhat contacted Mr Baird and told him about the YNM report. Mr Baird asked to see a copy of the report. Mr Farhat sent a copy through on 23 March 2023 and said he was rejecting the vehicle.

Phone calls between Mr Farhat and Mr Baird on 4 and 5 April 2023

[31] Mr Farhat and Mr Baird spoke again on 4 April 2023. This conversation was also secretly recorded by Mr Farhat. Mr Farhat said he wanted a refund. He said two mechanics had now said the same thing about the vehicle’s transmission. Mr Baird said UIL had to be given an opportunity to repair first. He asked what the vehicle’s actual symptoms were because when it had been driven by UIL’s mechanic and Mr Baird himself, it was driving fine. He emphasised that the vehicle needed to be seen by a transmission specialist to assess what was actually wrong with it. Mr Farhat said there were now significant differences in the vehicle’s gear shifts from when he had bought the car.
[32] Having initially said he wanted rejection, towards the end of the telephone call Mr Farhat agreed, however, that he would provide the vehicle to UIL “one more time”, for UIL to assess whether there was an issue and that, if there was, he wanted UIL to fix the problem under the MBI policy. He said that when he got the vehicle back after those repairs, if there was still an issue, he would need to take further action. He added that even if the vehicle was repaired, he was still wanting some sort of refund or compensation, referring to the costs of the wheel sensors and damage to his driveway from the oil leak.
[33] The following day, there was a second phone call between Mr Farhat and Mr Baird. A recording of this conversation was produced for the Tribunal. Mr Baird said that he had now contacted The Gearbox Factory in Roselle Avenue but that it could not check the vehicle until after Easter. He explained that The Gearbox Factory was a recognised Protecta provider.

June 2023

[34] There was a delay in the vehicle being seen by the transmission specialist because Mr Farhat was living on Waiheke Island and also because he was once more away.
[35] On 7 June 2023, there was a telephone conversation between Mr Baird and Mr Farhat. This conversation was also secretly recorded by Mr Farhat. Mr Farhat said he wanted “to make a deal”. He proposed that once everything is fixed he would take the vehicle for a scan and if nothing was wrong with the vehicle, he said UIL will “never hear from me again”. He said, however, if the scan finds anything wrong that UIL has not fixed (that he has raised with UIL), he would then bring a claim before the Tribunal.
[36] Arrangements were then made for the vehicle to be dropped off the following day with UIL.
[37] Mr Farhat did not drop the vehicle off with UIL the following day but instead took the vehicle to a transmission specialist in Glen Innes and showed it the YNM report. He asked for an estimate to replace the clutch. The transmission specialist verbally estimated that the cost would be $3,000 plus labour.
[38] On 9 June 2023, Mr Farhat contacted Mr Baird to tell him about this estimate. He said he had telephoned Protecta which said that if the replacement of the clutch was a wear and tear issue it would not be covered under the MBI policy. Mr Baird said that The Gearbox Factory was recognised to do work for Protecta and invited Mr Farhat to drop the vehicle off so that the vehicle could be seen by its transmission specialist.
[39] That same afternoon, Mr Farhat dropped the vehicle with Chris Peck at the premises of UIL. The parties took the vehicle for a test arrive. Once again, Mr Farhat has secretly recorded the entire conversation.
[40] Mr Farhat explains that the gear shift problem is that when driving up a hill, “the gear stays in D2 and won’t shift to D3 until the top”. Mr Peck can be heard expressing the opinion that the vehicle drives fine when going uphill but nevertheless UIL will take it to a transmission shop so that it can be looked at. At the end of the discussion, Mr Farhat can be heard telling Mr Peck: “once it’s all done and you can let me know what’s wrong with it and then you can fix it”. He adds that at this point he would still like some of his money back and refers again to the damage to his garage floor. This seems to be a reference to wanting some additional compensation.
[41] On 20 June 2023 Mr Baird contacted Mr Farhat to report that the vehicle had now been seen by Kaspa Transmissions which had recommended a new clutch pack. It was arranging for the vehicle to be seen by the Protecta Assessor because it was of the view that the repair could be done through Mr Farhat’s MBI policy.
[42] On 20 June 2023, Mr Farhat received a copy of the diagnosis from Kaspa. This noted that the vehicle was scanned on arrival and had clutch codes and an engine misfire. In relation to that misfire, its advice was that this should be monitored.
[43] On 21 June 2023, Mr Farhat filed the current application.

After the application was filed

[44] Mr Farhat spoke with Mr Baird on 28 June 2023. This conversation was also secretly recorded. Mr Baird told Mr Farhat that Protecta had now inspected the vehicle and that it would not be covering the cost of the new clutch because it took the view this was a wear and tear issue. He said, however, “my boss is going to stump up and pay and get it all done for you”. Mr Baird was therefore confirming that UIL would undertake the repairs itself and at its own cost. He said that Mr Farhat would be given receipts for the new clutches.
[45] Upon hearing that, Mr Farhat asked “what about the CV joints?”. Mr Baird explained that he had just been focused on the transmission issue. He went on to say that the vehicle would be ready to pick up in four days.
[46] At this point Mr Farhat revealed that he had now made a claim to the Tribunal. He said he would need Mr Baird to put in writing that UIL would fix the clutch and all the issues in the YNM report. He also commented, “once I get that, sweet, you can fix it I’ll be happy. If not, I will still keep going with the dispute...”. Mr Farhat was making it clear he wanted not only the clutch to be repaired but also the other issues referred to in the YNM report.
[47] Mr Baird replied that once the work has been done Mr Farhat would be provided with all the receipts. Mr Farhat said that he would still want a refund of all the money he spent so far on the vehicle, including the cost of replacing the wheel sensors. Mr Baird said “no”, and that wheel sensors are simply a wear and tear item. Mr Farhat became agitated and finished the call by demanding a full refund, stating: “if you’re not going to fix all of the issues plus the money I’ve spent then we will have to have a hearing.”
[48] Three further telephone conversations take place between Mr Baird and Mr Farhat on 2 and 5 July. During these conversations, Mr Baird explains that he is obtaining costings for the other items, being the “rubber things under the vehicle”. This was a reference to the split CV boots. Mr Farhat says that he now wants a refund even although the transmission has by then been fixed.
[49] After getting the vehicle back, Mr Farhat took the vehicle for a warrant of fitness (WOF) check on 19 July 2023. The vehicle failed a WOF because both front parking lights were found not to be working and because the performance was low for the front left indicator light. The check sheet also noted that there were heavy oil leaks, but offered no diagnosis of those, and that both front outer constant velocity CV boots were leaking.
[50] At the end of the first hearing, Mr Farhat maintained that the current problems with the vehicle are:

1. The vehicle loses power.
2. The engine light is now illuminated all the time.

100. The engine still leaks a little oil and occasionally leaves a few drops on the garage floor.

[51] Mr Farhat also claimed that the transmission was not replaced. He referred to the fact that the invoice produced by UIL relating to the transmission’s alleged replacement, an invoice from Gee Shu Mechanic, was not made out to UIL.

Following the first hearing

[51] Given the lack of corroborative evidence relating to Mr Farhat’s claim about the loss of power and the engine light being illuminated, the Tribunal issued a direction[2] for Mr Farhat to either have the vehicle’s alleged loss of power fault diagnosed or provide a copy of a recent diagnostic scan report.
[52] The Tribunal also directed Mr Farhat to arrange for a mechanic to visually inspect the transmission to see whether it had recently been replaced. Mr Gregory’s advice to the Tribunal was that it would be obvious, through visual inspection, whether or not the transmission had recently been replaced or not.
[53] It was not until the end of the first hearing Mr Farhat disclosed he had recorded all of his telephone calls and meetings with UIL. This evidence had not previously been provided to the Tribunal.
[54] The hearing was then adjourned so that all recordings could be provided to the Tribunal and so that UIL would have an opportunity to listen to them before making any further response. Mr Farhat played back only two of the recordings during the hearing.
[55] In the meantime, Mr Farhat had the vehicle assessed by Giltrap Motor Group Ltd and provided its invoice and report dated 21 August 2023 to the Tribunal. This recorded, under the heading “check if transmission was done”:

ACCORDING TO TRANSMISSION SCHEDULE THERE IS NO SERVICE INTERVAL FOR DSG CLUTCH TRANMISSIONS (DQ200). NO PROOF OF TRANSSMISSION SERVICE COULD BE ESTABLISHED.

[56] The Giltrap report also contained the following comments:

FAULT-ENGNE LIGHT IS ON

CAUSE – UNDER INVESTIGTION FOUND THE ENGINE LIGHT IS ON BASED ON MULTIPLE ACTUATORAND CONTROL UNIT RUNS OF THE TWO FUSES ARE BLOWN

FOUND THE BREATHER HOSE FROM TOP ENGINE COVER TO AIR FILTER POD IS NOT FACTORY THIS COULD CONTRIBUTE TO MASSIVE OIL LEAK FOUND REMEDY – NEED MORE TIME TO DIAGNOSE THS ISSUE.

NOTE- RIGHT OUTER CV BOOT IS LEAKING GREASE

[57] Giltrap has charged Mr Farhat $445.65 for that report. According to its invoice, the odometer reading on the vehicle at the time of its inspection was 60,145 km.
[58] Mr Farhat submits that the Giltrap report corroborates his claim that no work has been done on the transmission or anywhere in the engine bay. He submits that UIL has therefore presented a fraudulent invoice and lied to the Tribunal regarding replacement of the transmission.
[59] The Tribunal set the matter down for a further hearing, which was held remotely, due to Mr Peck not being in New Zealand and Mr Baird having left the employment of UIL. Gee Shu Mechanic and Giltrap were directed to be available to give evidence at the second hearing.

Evidence at the second hearing

[60] Mr Farhat confirmed that as well as the faults that were present at the end of the first hearing, the vehicle now makes a grinding noise when shifting from second gear to third gear. He said that he has however continued to drive the vehicle which has now driven between 61,000 km to 62,000 km.

Evidence from Giltrap

[61] I heard evidence from Farash Ali, a service mechanic of Giltrap. He said that Giltrap could not find any evidence as to whether the transmission had been replaced or not. He said there was no evidence of a recent transmission service (as was noted on its invoice), however, that was not the question that the Tribunal had sought directions about.
[62] In relation to the second issue that Giltrap was asked about, relating to diagnosis of the engine light, Giltrap’s conclusion is that further time is needed to diagnose the issue. On questioning from the Tribunal and Mr Gregory, Mr Ali was unable to even shed any light on which fuses had blown.

Gee Shu Mechanic

[63] Gee Shu Mechanic did not pick up the telephone for the second hearing. Following the hearing, UIL was directed to supply an affidavit from Gee Shu Mechanic verifying that the transmission on the vehicle was replaced and explaining why the invoice was made out to Lord Autos Ltd. Mr Peck explained during the second hearing, for the first time, that the reason for that was that UIL in fact sold the vehicle on behalf of Lord Autos, a wholesaler. When it told Lord Auto about the transmission fault, it was Lord Autos which arranged for Gee Shu Mechanic to see the vehicle.
[64] Pursuant to the direction, a statement from Gee Shu Mechanic, witnessed by a Justice of the Peace, was provided to the Tribunal together with the relevant parts invoice. The statement confirms that it replaced the transmission on the vehicle registration PJK915 (VW Sirroco) on 29 June 2023. This is Mr Farhat’s vehicle. It explained that it invoiced Lords Auto for the repair as it was the prior owner of the vehicle and brought the vehicle to it to be repaired.

The position of UIL

[65] With respect to the wheel sensors, UIL maintains that this is a wear and tear issue for which it ought not to have responsibility. It says that in any event, Mr Farhat has paid an excessive amount to have this fault repaired. It also says that Mr Farhat initially told it that he did not care about recovery of the wheel sensors invoice.
[66] UIL says that when it first received the vehicle for repair in February 2023, it took the view that the vehicle drove fine, following a test drive by its own mechanic and by Mr Baird. It says that in the absence of a transmission specialist providing a diagnosis it considered it was entitled to form the view there was no evidence of a fault with the transmission.
[67] It says that the transmission has now been repaired. This work was undertaken by Gee Shu Mechanic, and a copy of the relevant invoice was provided to the Tribunal. It says that Mr Farhat accepted that remedy, which has been provided. It denies it has lied to the Tribunal about the transmission.
[68] In relation to the engine light/loss of power issue, UIL submits that this remains undiagnosed, despite Mr Farhat being given adequate opportunity to obtain a proper diagnosis.

Issue 1: Was the vehicle of acceptable quality?

[69] Section 6 of the CGA imposes on suppliers and manufacturers of consumer goods a guarantee that the goods are of acceptable quality. Section 2 of the CGA defines “goods” as including vehicles.
[70] The expression "acceptable quality" is defined in s 7 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.

(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.

[71] In considering whether or not goods meet the guarantee of acceptable quality, the Tribunal must consider the quality elements as set out in s 7(1)(a)-(e) of the CGA as modified by the factors set out in s 7(1)(f)-(j), from the perspective of a “reasonable consumer”. The test is an objective one; it is not a view of those factors from a purchaser’s subjective perspective.
[72] This was an older European vehicle with reasonable milage at a purchase price of $13,999. A reasonable consumer of such a vehicle would understand that European vehicles with these characteristics can develop defects and require ongoing maintenance of a sometimes unplanned and expensive nature. They would 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.
[73] Before I go on to consider each alleged fault, I record that it is for Mr Farhat to prove the facts giving rise to the faults on the balance of probabilities. Corroborating documents such as invoices, videos, photographs, emails and reports are often useful evidence to assist the Tribunal in determining what the relevant facts are.
[74] In reaching my decision and conducting the hearing, I was assisted by Mr Gregory, who also asked questions of the parties during the hearing.

The wheel sensors

[75] I find that the evidence establishes that at a very early point in Mr Farhat’s ownership of the vehicle, two wheel speed sensors were faulty and needed to be replaced. Although that diagnosis was not made until early 2023, at which point the vehicle had travelled 57,310 km, I am satisfied that it is more probable than not that the various warning lights were coming on in October 2022 can be attributed to the wheel sensors being faulty.
[76] I agree with UIL that generally wheel sensors will be a wear and tear issue but I find that a reasonable purchaser, even of a vehicle of this age, price and mileage, would not expect to encounter such an issue so early into their ownership of the vehicle. The condition of the wheel sensors has meant the vehicle failed the guarantee of acceptable quality. The vehicle has not been as free from minor defects as would be expected by a reasonable consumer.
[77] I find, however, that there is no remedy with respect to this fault because Mr Farhat arranged to have the diagnosis and repair undertaken without reference at all to UIL. It is clear that a consumer wanting to recover the cost of remedying a defect such as this must first provide the supplier a reasonable opportunity of repair.[3]

The oil leak caused by the broken hose

[78] The evidence establishes that the vehicle has, in around November 2022, sustained a significant oil leak. Mr Farhat produced photographs of the leak which do show a substantial amount of oil having leaked from the vehicle onto the garage floor. Mr Farhat submitted that there were various possible causes of this oil leak, including that the engine cover had been removed and resealed with silicone but I find that it is more likely than not that the broken hose, which was subsequently repaired, was the cause of that initial substantial oil leak.
[79] Mr Gregory advises that older European vehicles can develop oil leaks, and their presence does not necessarily mean there is anything defective about the vehicle. I find that a reasonable consumer of this vehicle would consider a minor amount of oil leakage acceptable. I find that they would not however find acceptable the extent of the oil leakage depicted in the photograph, caused by the faulty hose. The faulty hose has meant the vehicle was not as free from minor defects or as durable as would be expected by a reasonable consumer, given its age, price and mileage.
[80] With respect to this failure, I find that there is no remedy, however, because the issue was repaired by UIL when it had the vehicle back for repair in February 2023.

The further oil leak

[81] Mr Farhat’s evidence at the first hearing was that there are still some additional oil leaks, although not to the extent as experienced previously.
[82] The evidence as to how any further oil leak is being caused is inadequate. Giltrap refers to there being an aftermarket air intake system fitted, however, Mr Gregory advises that this is fairly common and would not be detrimental to the vehicle’s day to day running.
[83] I am not satisfied that Mr Farhat has proven any further oil leak is at a level where it would amount to a breach of the guarantee of acceptable quality. This is because although there is evidence of an ongoing leak, I accept Mr Gregory’s advice that some oil leaks would be considered reasonably normal in European vehicles of this age and mileage. It is also because there is inadequate diagnosis of what is causing that leak. I find that the further oil leak does not amount to a breach of the CGA.

The split CV boots/joints

[84] On 22 March 2023, YNM has diagnosed the vehicle as having split CV boots. At this point the vehicle had travelled 58,405 km.
[85] CV boots are a wear and tear item. Mr Gregory advises that these will gradually wear out over time, and that this is what has happened in this case. These boots have split after the vehicle has travelled approximately 5,500 km.
[86] I find that a reasonable purchaser of a vehicle of this age, price and mileage would expect to encounter the need for ongoing and sometimes unplanned and expensive maintenance, in particular of wear and tear items like CV boots/joints.
[87] There has been no failure of the vehicle to comply with s 6 of the CGA as a consequence of the split CV boots/joints.

The transmission/clutch

[88] I find that the vehicle’s transmission/clutch was diagnosed as faulty and in need of repair, from the point that diagnosis was made by Kaspa in June 2023. Transmissions are a specialist component and Kaspa specialises in transmission diagnosis and repairs. The diagnosis has been made at a point when the vehicle had travelled 59,046 km.
[89] I find that a reasonable consumer, even of an older European vehicle of this age, price and mileage, would not expect to encounter the failure of such a significant and expensive component so soon into their ownership of the vehicle. The clutch code was first identified in January 2023, so only around 6 months after purchase. Although Mr Farhat had owned the vehicle for close to a year, I note that the delays in diagnosis were occasioned by the fact he was away and then was on Waiheke Island for a while, during which time it was difficult to get the vehicle in for inspection.
[90] I find that the faulty transmission/clutch meant that the vehicle failed the guarantee of acceptable quality. A reasonable consumer would not regard the vehicle as being as durable as was reasonably expected, given the age, price and mileage of the vehicle.

The loss of power/engine light on

[91] Giltrap’s report has not offered any diagnosis about the cause of the engine light or for the loss of power, only suggesting that it might be an electrical issue.
[92] I am not satisfied that Mr Farhat has proven any fault here, despite Mr Farhat having been given that additional opportunity to do so. There is simply inadequate evidence corroborating the existence and cause of any fault, much less that the fault is the responsibility of UIL.

Issue 2: Did UIL fail to repair the faults within a reasonable time?

[93] The only faults that I have found that amount to a failure of the guarantee of acceptable quality (and that UIL was asked to repair) were the transmission fault and the oil leak caused by a broken hose. Regarding the wheel sensors, UIL was not asked to repair those, and so no remedy lies for that fault, as I have explained above.
[94] Mr Farhat is only able to reject the vehicle if he can prove that under s 18(2)(b)(ii) of the CGA, UIL failed to repair these faults within a reasonable time.
[95] 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.

The transmission

[96] Transmission diagnosis and repair is a specialist field. Until Kaspa offered its diagnosis in June 2023, no transmission specialist had yet examined the vehicle, although Mr Farhat had obtained some mechanics reports and diagnostic trouble codes (DTC) scans. By June 2023, Mr Farhat had attempted to reject the vehicle on 4 February 2023 and on subsequent occasions, including after he received the vehicle back from UIL following the initial repairs.
[97] UIL’s evidence, which I accept, was that it test drove the vehicle when it had the vehicle for repairs and took the view that there was nothing wrong with the transmission. Though there was a mechanical report evidence and DTC codes suggesting a transmission/clutch issue, I accept that these were not a formal diagnosis of a transmission/clutch problem.
[98] UIL did not simply ignore the diagnostic scan report; its mechanic drove the vehicle, as did Mr Baird, and both formed the opinion that the vehicle was driving fine.
[99] I consider it notable that in the recording Mr Farhat made when he was test driving the vehicle with Mr Peck, the sound of the vehicle moving through the gear shifts can be audibly heard. Mr Gregory advises that the gear shifts sound normal.
[100] I am satisfied that although frustrating to Mr Farhat, it was not unreasonable for UIL to return the vehicle to Mr Farhat in March 2023 with no work on the transmission being undertaken. I consider that the information provided to UIL about the transmission was at that point incomplete and insufficient to trigger UIL’s obligation under the CGA to repair the transmission. Although a supplier is obliged to rectify defects that breach the guarantee of acceptable quality, there will be cases where the consumer also has an obligation to prove that such defects exist before the supplier’s obligation to repair is triggered. In this case, I am satisfied that Mr Farhat had not given UIL enough information about the vehicle’s defects before rejecting the vehicle.
[101] At the point at which Kaspa diagnosed the faulty clutch, UIL’s obligation to repair clearly arose. I am satisfied, however, that from that point, UIL has repaired the vehicle within a reasonable period of time.
[102] I reject Mr Farhat’s submission that the transmission was not replaced, relying on the fact that the Gee Shu Mechanic invoice was made out to a different entity. This was a serious allegation and Mr Farhat was directed to have a mechanic inspect the transmission in order to verify whether it had been replaced or not.
[103] The written report from Giltrap did not conclude the transmission had not been replaced, rather, it simply commented on whether a transmission service had taken place. In Mr Ali’s oral evidence, he was equivocal on the point of whether the transmission had been replaced or not, simply concluding, after questioning from the Tribunal and Mr Peck, that there was no evidence to suggest the transmission had been replaced, one way or the other.
[104] Mr Farhat also invited me to draw a negative inference from the fact that although there was a diagnosis from Kaspa about the transmission, the repair work was ultimately not undertaken by Kaspa at all but was undertaken by Gee Shu Mechanic.
[105] It would not be unusual for a trader to have a repair undertaken by its own preferred mechanic at a cheaper rate and in indeed, consistent with that viewpoint, Mr Peck’s evidence that the repair works were undertaken by Lord Autos, for whom UIL had sold the vehicle on behalf.
[106] I accept the written statement from Gee Shu Mechanic that it did legitimately replace the transmission in this vehicle. I find there to be no basis whatsoever for any suggestion that UIL has lied to the Tribunal and been “fraudulent” in the manner suggested by Mr Farhat.
[107] Although Mr Farhat did request rejection at a very early point, I find that the recordings that he has produced show that he clearly agreed to allow UIL an opportunity to repair the transmission. He accepted the remedy of repair.
[108] His counterargument was that that was only on the condition that the other things he was complaining about were fixed and that he also received some compensation, for example, reimbursement for the wheel sensors invoice. I find that not to be a reasonable stance on his part because other than the transmission and the initial oil leak, there were no other faults that amounted to a failure of the guarantee of acceptable quality that UIL was asked to fix. Demanding repair of the CV boots was not a position Mr Farhat was entitled to take. Demanding reimbursement for the wheel sensors invoice was also not a demand he was entitled to make.

Compensation

[109] Mr Farhat advanced a claim in relation to damage to the garage floor of his rented property, caused by the initial oil leak. He has been quoted $450 for an external contractor to clean the garage floor, but this work has not yet been done. I agree the damage to the garage floor is substantial, and that it is damage which was reasonably foreseeable. I am therefore prepared to allow Mr Farhat an order for damages, being his loss pursuant to s 18(4) of the CGA, but not that the level he is claiming. Mr Gregory advises that the purchase of a degreasing product will cost about $100 and that this product will be adequate to remove any oil stains from the garage floor. I therefore awarded Mr Farhat $100. This sum must be paid by UIL to Mr Farhat within 10 working days of the date of this decision.
[110] Mr Farhat is not entitled to recover the Giltrap diagnostic charge because its diagnosis did not prove the existence of any faults that I have upheld.

Conclusion

[111] It follows that UIL having undertaken repairs of the proven faults it was asked to fix Mr Farhat is not entitled to any further remedy under the CGA. The balance of his claims are dismissed.

DATED at AUCKLAND this 6th day of November 2023

D Watson
Adjudicator

This decision has been appealed. The outcome of that appeal was unknown at the date of the publication of this decision.

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[1] Assessors are appointed by the Minister of Commerce and Consumer Affairs pursuant to s 88 of

the Motor Vehicles Sales Act 2003, having regard to the Assessor’s personal attributes, qualifications and skills, and knowledge of, or experience in, the different aspects of matters likely to come before the Tribunal. Assessors generally have significant expertise in technical matters that arise in claims before the Tribunal. Under cl 10 of sch 1 of the Motor Vehicle Sales Act, an Assessor sits as a member of the Tribunal and has a duty to assist the Adjudicator in the determination of the claim, although the Adjudicator alone determines the claim. The duties of an Assessor are to: (a) sit with the Tribunal; and (b) act in all respects as an extra member of the Tribunal for the hearing of the application; and (c) act as an extra member of the Disputes Tribunal to assist in the determination of the application.

[2] Directions are frequently issued in the Tribunal for further information ahead of (and sometimes after) the hearing to assist the Tribunal in its inquiry where further information is relevant to the issues to be determined by the Tribunal and available to the parties (as to “inquiry”, see s 89(1) of the Motor Vehicle Sales Act 2003). It is not uncommon for the Tribunal to request, for instance the prior service history of a vehicle, or further diagnostic reports about a vehicle.

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