Singh v M R Motors Ltd - Reference No. MVD 054/2023 [2023] NZMVDT 57 (6 April 2023)

Last Updated: 26 May 2023

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 054/2023 [2023] NZMVDT 057 BETWEEN RAJVEER SINGH Applicant AND M & R MOTORS LTD Respondent

HEARING at AUCKLAND on 28 March 2023 MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator S Gregory – Assessor (by audio-visual link)

APPEARANCES

R Singh, Applicant R Kumar, Witness for the Applicant

A Alifu, for the Respondent

DATE OF DECISION 6 April 2023

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DECISION OF THE TRIBUNAL

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A Rajveer Singh’s application to reject the vehicle is dismissed.

2. M & R Motors Ltd shall, within 15 working days of the date of this decision:
   • (a) rectify the noise from the transmission, including by replacing the vehicle’s dual mass flywheel; and
   • (b) pay $103.82 to Mr Singh.

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REASONS

Introduction

[1] Rajveer Singh wants to reject the 2014 Audi A5 Sportback he purchased for $26,500 from M & R Motors Ltd on 12 October 2022. Mr Singh says that the vehicle’s dual mass flywheel requires replacement, at an estimated cost of more than $4,000. He considers that to be a serious fault, so he wants to return the vehicle for a refund of the purchase price.
[2] M & R Motors says that it has had the vehicle assessed by two mechanics and a transmission specialist, and none has diagnosed any significant fault with the vehicle. It says that it remains prepared to assist Mr Singh if it is proven that the vehicle is faulty.

Relevant background

[3] On the day he purchased the vehicle, Mr Singh noticed a ticking or rattling noise from the engine bay when the engine was idling in park or neutral gear. Mr Singh says the noise has worsened during his ownership.
[4] Mr Singh contacted M & R Motors on 4 November 2022 and returned the vehicle on 7 November 2022. M & R Motors then had the vehicle assessed by Midas Glenfield. Mr Singh says that M & R Motors told him that Midas Glenfield advised it that the noise may be due to the vehicle being unused for some time and would likely go away as the vehicle is driven.
[5] Mr Singh continued to drive the vehicle and the noise worsened. Mr Singh then contacted M & R Motors on about 10 December 2022. M & R Motors told him that it could not assess the vehicle until 5 January 2023. Mr Singh was not available that day, so the vehicle was not returned for assessment until 24 January 2023.
[6] Mr Singh says that Michael, who he says is an owner of M & R Motors, initially told him that there was no noise from the transmission. Mr Singh says that Michael also told him to have the vehicle assessed again by Midas Glenfield. Mr Singh says that Midas Glenfield then told him that it suspected that the vehicle had an issue with its transmission, and that the vehicle needed to be assessed by a transmission specialist.
[7] M & R Motors then had the vehicle assessed by Endeavour Motors. Mr Singh says that Endeavour Motors heard a noise from the vehicle but could not identify the cause. M & R Motors then arranged for the vehicle to be assessed by Kaspa Transmissions North Shore. Mr Singh says that Michael then contacted him and told him that Kaspa Transmissions North Shore had found no issue.
[8] Mr Singh then visited Kaspa Transmissions North Shore and explained the issues he was having, and in particular that the noise was only present when the vehicle was idling in park or neutral gear. Mr Singh says that the technician from Kaspa Transmissions North Shore then identified the noise from the transmission. Mr Singh says that the technician advised him to continue to use the vehicle, and if the noise remained then further assessment was required.
[9] Mr Singh then spoke with M & R Motors and asked it to fix the vehicle. He says that M & R Motors offered to have the vehicle assessed again by an Audi specialist. Mr Singh says that M & R Motors initially said that he would have to pay the cost of any diagnosis. Mr Singh did not want to pay the diagnosis cost, so M & R Motors then agreed to pay for the diagnosis. However, the parties then had a dispute about what might happen following any diagnosis, so M & R Motors advised Mr Singh that he should bring a claim to the Tribunal.
[10] Mr Singh has since had the vehicle assessed by two transmission specialists – Kaspa Transmissions Otahuhu 2005 Ltd and Transmission Solutions NZ Ltd:

• (a) An estimate dated 1 February 2023 from Kaspa Transmissions Otahuhu states that the vehicle is shuddering in park gear, which Kaspa Transmissions Otahuhu suspects is caused by the dual mass flywheel in the transmission. It has provided an estimate of $4,094 to replace the flywheel – but noted that this was an estimate as “can not confirm issue until further diagnosis carried out”.
• (b) An invoice dated 2 February 2023 states that Transmission Solutions assessed the vehicle and found that it “drives fine”. Transmission Solutions also performed a diagnostic scan and found no fault codes. However, it did detect a “minor noise” from the transmission flywheel.

[11] In support of his application, Mr Singh has also provided videos, which demonstrate a knocking noise from the transmission.
[12] Aydar Alifu appeared for M & R Motors. Mr Alifu says that Mr Singh should not be entitled to reject the vehicle. He says that none of the mechanics or specialists who have assessed the vehicle have conclusively diagnosed any fault. Mr Alifu also says that M & R Motors offered to have the vehicle assessed by an Audi specialist and that M & R Motors would fix any significant issue found. Mr Alifu says that Mr Singh declined that offer because he wanted to reject the vehicle if a serious fault was found.

The issues

[13] 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 M & R Motors failed to rectify the vehicle’s defects within a reasonable time?
• (c) Are the vehicle’s defects a failure of a substantial character?
• (d) What remedy is Mr Singh entitled to under the CGA?

Issue 1: Has the vehicle been of acceptable quality?

[14] 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”.
[15] “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.

[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.
[17] The evidence, particularly the videos provided by Mr Singh, demonstrate that the vehicle’s transmission is making an unusual noise when in park or neutral gear. Mr Gregory, the Tribunal’s Assessor, advises that the noise from the transmission is evidence that the dual mass flywheel is failing.
[18] With respect to Transmission Solutions’ comment that this is a “minor noise”, Mr Gregory advises that no noise from the flywheel can be considered minor. Mr Gregory says that there should be no noise at all from the flywheel and any noise is evidence of a fault within the flywheel assembly that requires repair. If the flywheel is not replaced it will eventually fail causing loss of drive.
[19] I accept M & R Motors’ submission that none of the technicians who have assessed the vehicle have provided a conclusive diagnosis as to the precise cause of that noise or the repair required. However, I also accept Mr Gregory’s advice that the flywheel is faulty and requires replacement.
[20] I therefore find that the faulty flywheel means the vehicle is not of acceptable quality for the purposes of s 6 of the CGA, because it was not as free of minor defects as a reasonable consumer would consider acceptable.

Issue 2: Has M & R Motors failed to rectify the vehicle’s defects within a reasonable time?

[21] Mr Singh says that he should be entitled to reject the vehicle because he complained of the flywheel noise shortly after purchase and M & R Motors has failed to rectify that fault despite being given many opportunities to do so.
[22] Section 18(2)(b)(ii) of the CGA enables a consumer to reject goods where a supplier has been required to remedy a failure but refuses, fails or does not succeed in doing so within a reasonable time.
[23] 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.

[24] Before M & R Motors can have any obligation to repair the vehicle, Mr Singh had an obligation to prove that the vehicle was faulty, and that M & R Motors had an obligation under the CGA to remedy that fault.
[25] I accept M & R Motors’ submission that it has remained prepared to remedy any proven defect, but it has not done so because Mr Singh did not provide conclusive evidence of the precise cause of the noise from the transmission. In that regard, Midas Glenfield, Endeavour Motors and Kaspa Transmissions North Shore appear to have assessed the vehicle and found no issue, or at least did not diagnose any particular fault. Kaspa Transmissions Otahuhu did suspect that there may be a “flywheel shudder” but noted that further diagnosis should be carried out. Transmission Solutions also found a “minor rattle from the transmission flywheel”, but none of the technicians provided a conclusive diagnosis of the precise cause of the fault or the full nature of the repair required.
[26] The Tribunal, having had the opportunity to hear all the relevant evidence, is now confident that evidence shows that the flywheel does require replacement. However, because M & R Motors remained willing to remedy any proven defects, and because the evidence provided to it by Mr Singh before he filed this claim did not provide a clear diagnosis of the nature of the fault and what, if any, repair was required, I find that M & R Motors has not unreasonably failed to rectify that fault.

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

[27] 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.

[28] The required repairs will be expensive – Mr Gregory advises that the estimate from Kaspa Transmissions Otahuhu is a reasonable one. However, the cost of required repairs, although relevant to the consideration of whether a fault amounts to a failure of substantial character, is not determinative. That is particularly the case with vehicles such as an eight-year-old Audi A5. The purchaser of such a vehicle, even one with an odometer as low as 21,390 km at the time of sale, should understand that faults, which may be expensive to rectify, may occur from time to time
[29] In this case, although there is a noise from the transmission, the vehicle remains safe and usable – as evident by Mr Singh’s continued use of the vehicle throughout his ownership. There is also no evidence to show that the transmission noise is indicative of any other underlying issue with the vehicle or that any problems will remain once the required repairs are performed
[30] Weighing all those factors, I am not satisfied that a reasonable person would have refused to purchase the vehicle because of the transmission noise, which is most likely caused by a faulty dual mass flywheel. Certainly, a reasonable consumer can expect the supplier to rectify that defect within a reasonable time, but I am not satisfied that the defect present in this vehicle is so significant that a reasonable consumer would have refused to purchase the vehicle.

Issue 4: What remedy is Mr Singh entitled to under the CGA?

[31] The relevant remedies are set out in s 18 of the CGA, as above. For the reasons explained earlier, Mr Singh is not entitled to reject the vehicle. Instead, under s 18(2)(a), he is entitled to have the noise from the transmission rectified within a reasonable time.
[32] Under s 18(4) of the CGA, he is also entitled to recover the $94.67 cost of the diagnosis performed by Transmission Solutions and the $9.15 cost of hiring a taxi to collect the vehicle from Transmission Solutions on 2 February 2023. Those costs were a reasonably foreseeable consequence of the vehicle’s failure to comply with the guarantee of acceptable quality.
[33] Mr Singh also sought to recover the cost of putting fuel in the vehicle on 6 November 2022 and 24 January 2023 when he returned the vehicle to M & R Motors for diagnosis. I find that Mr Singh is not entitled to recover those costs as the evidence simply does not show how much fuel Mr Singh used during those journeys, and I do not consider that he should be entitled to recover the $129.08 sought when there is no evidence as to the actual cost incurred.

Outcome

[34] Mr Singh’s application to reject the vehicle is dismissed and M & R Motors shall, within 15 working days of the date of this decision:

• (a) rectify the noise from the transmission, including by replacing the vehicle’s dual mass flywheel; and
• (b) pay $103.82 to Mr Singh.
  

B R Carter
Adjudicator