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Bester v Kiwicheapcars Ltd - Reference No. MVD [2023] NZMVDT 54 (30 March 2023)

Last Updated: 30 April 2023

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

MVD 032/2023
[2023] NZMVDT 054

BETWEEN JADE BESTER

Applicant

AND KIWICHEAPCARS LTD
Respondent





HEARING at AUCKLAND on 21 March 2023 (by audio-visual link)

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




APPEARANCES
J Bester, Applicant
E Bester, Witness for the Applicant
A Hafeez for the Respondent

DATE OF DECISION 30 March 2023

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

A Jade Bester’s application to reject the vehicle is allowed.

  1. Kiwicheapcars Ltd shall, within 10 working days of the date of this decision, pay $9,809.24 to Ms Bester.

_________________________________________________________________

REASONS

Introduction

[1] Jade Bester wants to reject the 2016 Nissan March[1] she purchased for $8,500 from Kiwicheapcars Ltd on 3 January 2023 because the vehicle’s continuous velocity transmission (CVT) was faulty at the time of sale and requires overhaul at an estimated cost of more than $6,500. Ms Bester wants to return the vehicle for a refund of the purchase and the $1,200 she spent purchasing a Protecta Insurance mechanical breakdown insurance policy (the MBI policy) and compensation for costs she has incurred in diagnosing the transmission fault.
[2] Kiwicheapcars says that Ms Bester should not be entitled to reject the vehicle and that it is prepared to have the vehicle assessed by a transmission specialist and perform any repairs required.

Relevant background

[3] Ms Bester purchased the vehicle on 3 January 2023. Her father Eugene Bester helped her purchase the vehicle.
[4] Ms Bester says that she test drove the vehicle before purchase, but only over a short distance as the vehicle was low on fuel. She noticed no performance issues. Mr Bester says that he asked the Kiwicheapcars salesperson about the CVT gearbox and if it had known issues. He says that the salesperson advised him that there were no issues with the CVT in this vehicle. Ms Bester says that the salesperson advised her to purchase a mechanical breakdown insurance policy. On the basis of that advice, Ms Bester paid $1,200 to Kiwicheapcars to purchase the MBI policy.
[5] Ms Bester collected the vehicle on 5 January 2023. She says that she almost immediately noticed a problem with the CVT. She says that the vehicle felt like it was constantly trying to change gears and was “jerky”. She says the symptoms worsened when the vehicle was in “sports mode”. There were no warning lights visible at that time.
[6] Mr Bester gave evidence. He also drove the vehicle on 5 January 2023. Mr Bester says that he also owns a Nissan vehicle with a CVT, and the performance of the CVT in this vehicle are different from his vehicle. He says that the CVT in Ms Bester’s vehicle feels like it is constantly trying to change gears, and the symptoms worsen as the vehicle gets hotter and if the vehicle is driven in sports mode.
[7] Unhappy with the vehicle, Ms Bester contacted Kiwicheapcars. She says that Kiwicheapcars told her that the vehicle needed to be serviced and only filled with 98 octane fuel. By that time, Ms Bester had also noticed that the vehicle’s warrant of fitness had expired in October 2022. Despite having an obligation to ensure that the vehicle had a warrant of fitness issued within one month of the vehicle being supplied to Ms Bester, unless Ms Bester acknowledged in writing that the warrant of fitness was older,[2] Kiwicheapcars did not update the warrant of fitness before sale.
[8] Ms Bester then attempted to reject the vehicle, but Kiwicheapcars declined to accept that rejection, so she left the vehicle with Kiwicheapcars to update the warrant of fitness and assess the CVT. The vehicle was returned to Ms Bester on about 18 January 2023. The warrant of fitness had been updated, but Ms Bester was told that Kiwicheapcars’ mechanic could find no fault with the CVT.
[9] Ms Bester says that the CVT symptoms continued, so she had the vehicle assessed by DK Automotive Ltd. An invoice dated 23 January 2023 states that DK Automotive found the CVT to “be slipping on cones inside the transmission” and that a complete rebuild of the CVT was required, at an estimated cost of $6,595.15. Ms Bester was charged $109.24 for this assessment.
[10] Ms Bester advised Kiwicheapcars of this diagnosis and again rejected the vehicle. Ms Bester says that she also advised Kiwicheapcars that she was going to bring a claim to the Tribunal and Kiwicheapcars then offered to repair the vehicle or provide a replacement vehicle. Ms Bester declined that offer and filed this claim.
[11] Abdul (Zac) Hafeez, the General Manager at Kiwicheapcars, appeared for the company. He says that Ms Bester test drove the vehicle and was happy with its condition. Mr Hafeez also says that Kiwicheapcars has not noticed any issues with the CVT. He also says that Mr Bester also test drove the vehicle with a director of Kiwicheapcars and the alleged transmission fault did not occur at that time. Nonetheless, after it saw the diagnosis from DK Automotive, Kiwicheapcars is now happy to have the vehicle assessed by a transmission expert and for any required repairs to be performed.

The issues

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

Issue 1: Has the vehicle been of acceptable quality?

[13] 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”.
[14] “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.

[15] 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.
[16] The evidence shows that there is significant damage inside the vehicle’s CVT that will require costly replacement or overhaul. I accept Ms Bester and Mr Bester’s evidence as to the existence of the CVT fault and the symptoms they experienced. I found them to be clear and consistent witnesses. Their evidence is also corroborated by the diagnosis from DK Automotive, which considers that the CVT is faulty and requires overhaul.
[17] Mr Gregory, the Tribunal’s Assessor, advises that the CVT in this vehicle operates by varying the drive ratio within the transmission by moving a belt along one or more drive cones. The symptoms described by Ms Bester and Mr Bester are consistent with the fault diagnosed by DK Automotive. Mr Gregory says that the jerking feeling experienced by the Besters is due to the CVT belt slipping on the drive cones, which causes the CVT to unintentionally jump between gears.
[18] Mr Gregory advises that the CVT requires replacement or overhaul. He says that the estimate from DK Automotive is at the high end of the scale for this vehicle, and it is likely that a proper repair can be performed by a transmission specialist for about $4,500 (and possibly lower at trade rates).
[19] Based on the evidence presented by Ms Bester and Mr Bester, the diagnosis from DK Automotive and the advice I have received from Mr Gregory, I find that the vehicle had a pre-existing CVT fault that means that it is not of acceptable quality for the purposes of s 6 of the CGA. The vehicle has not been as free of minor defects or as durable as a reasonable consumer would consider acceptable.

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

[20] 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.

[21] Applying s 21(a) of the CGA, I find that the CVT fault is a failure of a substantial character. The CVT is essential to a vehicle’s operation and requires immediate repair at a cost of about $4,500. Given the significance of this fault and the cost of repair, I consider that a reasonable consumer fully acquainted with the true nature and extent of the transmission fault, would not have purchased the vehicle.

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

[22] 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.

[23] Because the CVT fault is a failure of a substantial character, Ms Bester is entitled to reject the vehicle under s 18(3)(a) of the CGA. Under s 23(1)(a) of the CGA, Ms Bester is therefore entitled to obtain a refund of the purchase price.
[24] Ms Bester also paid $1,200 to Kiwicheapcars to purchase the MBI policy. She is entitled to recover that cost under s 18(4) of the CGA. The MBI policy is now of no value to her as she has successfully rejected the vehicle and the loss she has suffered by purchasing that policy was reasonably foreseeable as liable to result from the vehicle’s failure to comply with the guarantee of acceptable quality. Likewise, Ms Bester is entitled to recover the reasonably foreseeable cost of having the CVT fault diagnosed by DK Automotive.

Outcome

[25] Ms Bester’s application to reject the vehicle is allowed and Kiwicheapcars shall, within 10 working days of the date of this decision, pay $9,809.24, comprised of:
[26] Once it has paid that amount, Kiwicheapcars may collect the vehicle from Ms Bester.

B R Carter
Adjudicator



[1] Registration plate PRP493.

[2] Land Transport Rule: Vehicle Standards Compliance 2002, r 9.12(3) and (4).


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