Kaur v Taj Imports Limited Reference No. MVD 236/2023 [2023] NZMVDT 236 (14 November 2023)

Last Updated: 19 January 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 348/2023 [2023] NZMVDT 236 BETWEEN SIMRANDEEP KAUR Applicant AND TAJ CAR IMPORTS LTD Respondent

HEARING at AUCKLAND on 31 October 2023 (by audio-visual link) MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator S Gregory – Assessor

APPEARANCES

S Kaur, Applicant G Kent, Witness for the Applicant

R Singh for the Respondent

DATE OF DECISION 14 November 2023

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

Taj Car Imports Ltd shall, within 10 working days of the date of this decision:

(a) remedy the significant oil leak from the engine, including by replacing the cracked oil filter housing; and
(b) pay $1,211.85 to Ms Kaur.

_________________________________________________________________

REASONS

Introduction

[1] Simrandeep Kaur purchased a 2013 Mercedes-Benz CLA180 for $24,920 from Taj Car Imports Ltd on 9 March 2023. Ms Kaur then noticed an oil leak and unusual engine noises in July 2023. Ms Kaur then contacted Taj Car Imports and says that the company declined to assist, so she filed this claim.
[2] In her application, Ms Kaur advised that she wanted to reject the vehicle or alternatively have the vehicle repaired by Taj Car Imports. During the hearing she confirmed that her preferred option is to have the vehicle repaired and obtain compensation for costs she has incurred. On that basis, the Tribunal has determined this claim on the basis that Ms Kaur seeks repair and compensation rather than rejection.
[3] Taj Car Imports denies liability, saying the oil leak was wear and tear and occurred too long after purchase for it to have liability. It also says that any engine damage now present was caused by Ms Kaur continuing to drive the vehicle while the engine warning light was illuminated and the engine was making an unusual noise.

The issues

[4] 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) Was Ms Kaur entitled to reject the vehicle?
• (c) What remedy is Ms Kaur entitled to under the CGA?

Issue 1: Has the vehicle been of acceptable quality?

[5] 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.

[6] 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.

Relevant evidence

[7] The vehicle’s odometer reading at purchase in March 2023 was 60,265 km. Ms Kaur used the vehicle without incident until the evening of 15 July 2023, when an orange check engine light illuminated, and a check engine oil message appeared on the dashboard display. Ms Kaur topped up the oil levels with no more than 500 millilitres of oil and then drove twice to and from her home in Mellons Bay and Auckland City and also to Manukau that evening. She says that the warning light and warning message did not return during those journeys.
[8] The following day, Ms Kaur noticed an unusual clanking engine noise while driving near Whitford. That noise happened only once, so she continued to drive about 10 km home to Mellons Bay. Ms Kaur says that she cannot remember whether any warning lights or messages appeared on the dashboard. Later that evening, Ms Kaur found that the vehicle would not start. The vehicle then started the next morning, but the engine made a clanking noise, the engine light and oil warning message had returned, and Ms Kaur discovered oil on her driveway. At that time the odometer reading was 67,912 km.
[9] Ms Kaur then contacted Taj Car Imports and advised it of the oil leak. Based upon the information provided by Ms Kaur at that time, Taj Car Imports declined to assist because of the length of her ownership and the distance she had travelled in that time. Ms Kaur then drove the vehicle to Pigeon Mountain Motors. Pigeon Mountain Motors recommended that she should have the vehicle assessed by Auto Avantgarde. Ms Kaur then drove the vehicle to Auto Avantgarde’s premises.
[10] Auto Avantgarde Ltd assessed the vehicle on 18 July 2023. It found that the vehicle has a “major oil leak”, the engine management light was illuminated and there was no oil on the dipstick. Auto Avantgarde also performed a diagnostic scan and found the following fault codes:

• P032714 Knock sensor 1
• P032711 Knock sensor 1
• P032c14 Knock sensor 2
• P001164 Position of intake camshaft
• P036600 Position of exhaust camshaft
  
• P001785 Position of exhaust camshaft
• P008700 Fuel pressure to low
• P06DA00 Valve for engine oil pump
  • P012800 Coolant temperature
  • P011711 Coolant temperature sensor

[11] Auto Avantgarde then inspected the engine bay and considered that the oil leak was coming from a cracked oil filter housing and the housing required replacement. It also inspected the condition of the oil filter and although it was significantly drier than normal, there was not metal debris in the oil filter. Auto Avantgarde then topped up the oil levels with about four litres of oil (the capacity of the oil sump is six litres). Ms Kaur paid $711.85 for this assessment.
[12] I heard evidence from Gregory Kent of Auto Avantgarde. Mr Kent confirmed the information contained in the invoice and further stated that after Auto Avantgarde had replenished the oil, the engine took longer to crank than normal and then made a rattling noise from the timing chain area and larger knocking or a clunking noise. The clunking/knocking went away as oil pressure built up, but the noise from the timing chain remained. Mr Kent says that Auto Avantgarde performed no further assessment, so he does not know whether the engine was damaged and considered that further diagnosis was required to determine whether the engine has suffered damage from a lack of oil pressure due to low oil levels.

The Tribunal’s assessment

[13] Ms Kaur has proven that the vehicle developed a significant oil leak from the cracked oil filter housing by about 16 July 2023. That leak was sufficient to drain about four litres of oil from the sump in a matter of days.
[14] The cracked oil filter housing is an uncommon failure. Ordinarily a purchaser of a Mercedes-Benz of this age and mileage might expect oil leaks from gaskets, seals and/or O-rings, but not from an oil filter housing, which is made of sturdier and more durable material.
[15] Consequently, considering the price, age and mileage of the vehicle at the time of sale, the length of Ms Kaur’s ownership and the distance she has travelled before the leak occurred, I find that the vehicle was not of acceptable quality for the purposes of s 6 of the CGA because it was not as free of minor defects or as durable as a reasonable consumer would consider acceptable.
[16] Ms Kaur has not proven that the engine is damaged. The Tribunal cannot simply assume engine damage because of the low oil levels. Further, although there were unusual noises from the engine while it was low on oil on 17 and 18 July 2023 and when Auto Avantgarde first assessed the vehicle, those noises mostly went away once Auto Avantgarde replenished the oil, even though the substantial oil leak remained, which would have continued to lower the oil pressure below the correct operating level. The Tribunal also notes that Auto Avantgarde found no oil pressure fault codes when it assessed the vehicle, suggesting that there was still enough oil pressure to keep the engine lubricated to the extent that the oil pressure warning light did not illuminate.
[17] In the absence of any conclusive diagnosis proving engine damage, the Tribunal cannot therefore be satisfied that the vehicle has any engine damage that means it is not of acceptable quality.

Issue 2: Was Ms Kaur entitled to reject the vehicle?

[18] Ms Kaur initially sought to reject the vehicle and wrote to Taj Car Imports on 18 July 2023 advising it that her preferred option was to reject the vehicle. There are two bases on which Ms Kaur could have rejected the vehicle under the CGA:

• (a) under s 18(3)(a) if its defects are a failure of a substantial character for the purposes of s 21 of the CGA; and/or
• (b) under s 18(2)(b)(ii) if Taj Car Imports has unreasonably refused or failed to remedy the vehicle’s defects within a reasonable time.

[19] The oil leak, which is the only defect that breaches the guarantee of acceptable quality, is not a failure of a substantial character. It does not make the vehicle unsafe, can be easily remedied and is not so significant that a reasonable consumer would have declined to purchase a Mercedes-Benz CLA180 of this age and mileage.
[20] Neither was Ms Kaur entitled to reject the vehicle due to any failure or refusal to repair by Taj Car Imports. Taj Car Imports’ obligation to remedy the oil leak was only triggered once Ms Kaur had provided sufficient evidence to prove the existence of a significant oil leak from a cracked oil filter housing. The evidence shows that Ms Kaur sent a text message to Taj Car Imports on 17 July 2023 advising it that the vehicle had an oil leak. In the absence of any diagnosis as to the cause and significance of that leak, Taj Car Imports was entitled to decline liability at that time.
[21] Ms Kaur then had the vehicle assessed by Auto Avantgarde, which found the cause and extent of the oil leak. However, Ms Kaur then rejected the vehicle on 18 July 2023 without giving Taj Car Imports a further opportunity to repair.

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

[22] 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.

Ms Kaur is entitled to have the oil leak remedied

[23] Because the oil leak breaches the guarantee of acceptable quality, under s 18(2)(a) of the CGA, Ms Kaur is entitled to have the oil leak remedied by Taj Car Imports within a reasonable time. Ms Kaur is not entitled to any remedy for the alleged engine damage because she has not proven that the engine is damaged.

Consequential losses

[24] Ms Kaur has been without the vehicle since July 2023. She says that, where possible, she has used public transport or relied upon friends to transport her around. However, Ms Kaur says that from time to time she has had to use UBER for work and personal travel, so she seeks to recover those UBER and public transport expenses.
[25] Under s 18(4) of the CGA, Ms Kaur is entitled to recover damages for any loss or damage resulting from the failure to comply with the guarantee od acceptable quality (other than loss or damage through reduction in value of the goods) which was reasonably foreseeable as liable to result from the failure. Ms Kaur has provided a “Schedule of Consequential Expenses” setting out the various UBER journeys and public transport expenses that she claims to have incurred, totaling $2,941.04.

[26] It was reasonably foreseeable that Ms Kaur would incur transport costs due to the oil leak, which made the vehicle unusable. However, Ms Kaur is not entitled to recover the full amount she seeks for the following reasons.
[27] First, by using UBER and public transport, Ms Kaur has avoided some of the costs associated with owning and using the vehicle, including petrol and parking costs. I must take those avoided costs into account when determining the loss or damage suffered by using alternative transport.
[28] Second, Ms Kaur has contributed to any loss she has suffered by initially pursuing rejection of the vehicle when she was not entitled to that remedy. Rather than pursuing a remedy she was not entitled to, Ms Kaur could have mitigated her loss by providing evidence of the oil leak diagnosis to Taj Car Imports and then requiring it to repair that oil leak. If Taj Car Imports refused to do so, Ms Kaur would have then been entitled to pay to have the oil leak repaired and seeking to recover that cost from Taj Car Imports. If she had done so, she would have had use of the vehicle much sooner and avoided the alternative transport costs.
[29] Third, at least some of the UBER journeys involve travel to and from Auckland Airport, Intercity Bus stops and travel within Palmerston North, which on their face appear to be expenses that she may have incurred even if the vehicle was usable.
[30] Considering those factors, I find that Ms Kaur is entitled to recover $500 for the alternative transport costs she incurred.
[31] Ms Kaur also seeks to recover the $711.85 cost of the Auto Avantgarde assessment. She is entitled to recover that full cost under s 18(4) of the CGA as it was a reasonably foreseeable consequence of the vehicle’s failure to comply with the guarantee of acceptable quality.

Outcome

[32] Taj Car Imports shall, within 10 working days of the date of this decision:

• (a) remedy the significant oil leak from the engine, including by replacing the cracked oil filter housing; and
• (b) pay $1,211.85 to Ms Kaur.
  

B R Carter
Adjudicator