Stephen v Markham Motors Ltd - Reference No. MVD 072/2023 [2023] NZMVDT 73 (26 April 2023)

Last Updated: 25 May 2023

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 072/2023 [2023] NZMVDT 073 BETWEEN ROHAN STEPHEN Applicant AND MARKHAM MOTORS LTD Respondent

HEARING at AUCKLAND on 18 April 2023 (by audio-visual link) MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator S Gregory – Assessor

APPEARANCES

R Stephen, Applicant

G Markham for the Respondent

DATE OF DECISION 26 April 2023

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DECISION OF THE TRIBUNAL

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Rohan Stephen’s claim is dismissed.

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REASONS

Introduction

[1] Rohan Stephen purchased a 2009 Mercedes-Benz ML350 from Markham Motors Ltd for $21,990 on 27 November 2020. Mr Stephen says the vehicle has had airbag suspension faults since shortly after purchase, and despite two attempts to remedy those suspension problems, Markham Motors has failed to do so. As a result, Mr Stephen now wants Markham Motors to compensate him for the cost of replacing the suspension airbag compressor and both front suspension airbags. Markham Motors denies liability.

Relevant background

[2] After purchase, the vehicle required repairs before it was delivered to Mr Stephen. On 3 December 2020, the vehicle was assessed by Spillman Automotive which, relevant to this claim, found that the left rear suspension airbag was leaking. It replaced the airbag. The vehicle’s odometer reading at that time was 150,683km.
[3] Mr Stephen says that the vehicle’s airbag suspension was faulty again within a month of purchase. Mr Stephen says that the suspension “malfunction” warning message appeared on the dashboard display and the vehicle sagged to the front. He says that he returned the vehicle to Markham Motors, which has no record on any repair.
[4] About one month later, the same symptoms returned. Mr Stephen returned the vehicle to Markham Motors. The vehicle was then assessed by Mercedes-Benz Botany, which replaced the airbag suspension valve block. Markham Motors paid $700 towards that repair, with the remainder covered by the Autosure mechanical breakdown insurance policy (MBI policy) that Mr Stephen purchased with the vehicle. The vehicle’s odometer reading at the time of this repair was 156,285 km.
[5] Mr Stephen says that the airbag suspension problems continued. He says that the malfunction warning message returned in about June or July 2021. Mr Stephen did not contact Markham Motors about these ongoing issues. He says that he thought that Markham Motors would not assist because it had told him that the suspension issues were minor. He also says that Markham Motors declined to replace the vehicle’s tyres in May 2021, so he thought that it would not assist with any ongoing suspension issues.
[6] Mr Stephen continued to drive the vehicle, and by about March 2022, the vehicle was making unusual noises from the suspension and the front airbag suspension had sagged to the point that the vehicle was not usable. Mr Stephen had the vehicle assessed by Gazley Motors Cambridge Ltd, trading as Mercedes-Benz Wellington. Mercedes-Benz Wellington found that the vehicle’s “airmatic” airbag suspension compressor was faulty and required replacement. It replaced the compressor and then found that the left front suspension airbag (or strut) was leaking and required replacement. The vehicle’s odometer reading at that time was 168,883 km.
[7] Mr Stephen made an insurance claim using the MBI policy. He says that the repairs were not covered by the MBI policy because the left front airbag leak was caused by perishing and the airbag suspension compressor failed due to consequential damage caused by the compressor continuously running due to the faulty airbag.
[8] Mr Stephen then instructed Mercedes-Benz Wellington to replace the compressor and left front suspension airbag, which it did so at a total cost of more than $5,500. Mercedes-Benz Wellington then re-tested the suspension and found that the right front suspension airbag was also leaking and that a replacement airbag would cost $3,500.
[9] Mr Stephen continued to use the vehicle but says that the right front airbag has now failed, and the vehicle cannot be used until that airbag is replaced. Mr Stephen says that Markham Motors has declined to assist, so he has instructed Mercedes-Benz Wellington to commence that repair, and he had paid a deposit to purchase a replacement airbag.
[10] Markham Motors says that the vehicle did have a leaking airbag at the time of sale, which it paid to replace. It also agrees that the airbag suspension valve block was faulty in March 2021 and that faulty valve block was replaced by Mercedes-Benz Botany. Markham Motors says that, at the same time, Mercedes-Benz Botany would have inspected the other airbag suspension components and deemed them to be in good working order. It says that the airbag suspension faults that have occurred since are not related to the earlier issues and have happened too long after purchase for it to have liability.

The issues

[11] Against this background, the sole issue requiring the Tribunal’s consideration in this case is whether the vehicle has been of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA).

Issue 1: Has the vehicle been of acceptable quality?

[12] 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.

[13] 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.

The suspension faults shortly after purchase breached the guarantee of acceptable quality

[14] The vehicle was not of acceptable quality due to the airbag suspension issues that arose early in Mr Stephen’s ownership that caused the airbag suspension valve block to be replaced in March 2021, by which time Mr Stephen had driven about 5,500 km in the vehicle. Although a reasonable consumer must have realistic expectations as to the quality and durability of an 11-year-old Mercedes-Benz ML350 with an odometer reading of more than 150,000 km, I am satisfied that the airbag suspension faults occurred too soon after purchase and meant the vehicle was not of acceptable quality.
[15] I am satisfied that Markham Motors then repaired the airbag suspension faults that were present at that time. Mr Stephen queries whether Markham Motors performed any meaningful repairs to the vehicle’s suspension in 2021. He says that he has spoken to Mercedes-Benz Botany, which told him that it only performed minor repairs on the vehicle. Markham Motors produced an invoice from Mercedes-Benz Botany, which states that it replaced the vehicle’s “air suspension valve block” on 18 March 2021.
[16] I accept that invoice as an accurate record of the repair performed and conclude that the valve block was replaced by Mercedes-Benz Botany. I also accept that this was an appropriate repair. Mr Gregory, the Tribunal’s Assessor, advises that a faulty valve block can cause the airbag suspension to deflate as described by Mr Stephen. I therefore find that the vehicle was not of acceptable quality due to airbag suspension faults that arose shortly after purchase and that Markham Motors remedied those faults by replacing the airbag suspension valve block.

The subsequent suspension faults did not

[17] The CGA provides important protections for consumers, including that goods will be reasonably durable and free of defects. However, there are limits to the protections the CGA offers, and the guarantee of acceptable quality in s 6 of the CGA does not impose indefinite liability on the supplier of a motor vehicle. 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 from the supplier to the purchaser is determined with reference to the factors in s 7(1)(f) to (j) of the CGA.
[18] Mr Stephen says that the airbag suspension faults returned in June or July 2021, although the precise cause and extent of any faults present at that time is unknown, as Mr Stephen continued to use the vehicle without having it assessed. The airbag suspension compressor and left front airbag then failed in about March 2022, approximately 14 months after purchase, by which time Mr Stephen had driven about 18,000 km in the vehicle. The right front suspension airbag failed shortly afterwards.
[19] A consumer who purchases a Mercedes-Benz ML350 of this age and mileage should understand that the vehicle will have wear and tear consistent with that age and mileage and that repairs, which may be expensive to perform, may be required from time to time. Unfortunately for Mr Stephen, the suspension faults that have arisen later in his ownership are the kind of expensive maintenance cost that a reasonable consumer can expect to occur in a Mercedes-Benz ML350 of this age and mileage. Further, given the length of his ownership and the distance he travelled before those later suspension faults became apparent, I am satisfied that those faults do not breach the guarantee of acceptable quality.
[20] Mr Stephen’s claim is therefore dismissed.
[21] For completion, I note that even if I had found that the vehicle was not of acceptable quality due to the latest airbag suspension issues, Mr Stephen would not have been entitled to recover the cost of replacing the left front suspension airbag or the airbag compressor under the CGA. Mr Stephen replaced the airbag suspension compressor and left front airbag without contacting Markham Motors and under s 18(2)(b)(i) of the CGA, a consumer must first give the supplier a reasonable opportunity to remedy a failure before having it rectified elsewhere and recovering the cost of repairs from the supplier.[1]
[22] Mr Stephen says that he did not contact Markham Motors because he thought that it would not assist. He did not have a reasonable basis for that belief. Markham Motors had previously performed repairs on the vehicle’s suspension, and I heard no evidence to show that it had indicated that it would not take responsibility for any further suspension faults that arose within a reasonable time of purchase.

B R Carter
Adjudicator

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