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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 1 July 2023
IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA
MVD
036/2023
[2023] NZMVDT 086
BETWEEN KENNETH MIKHAIL VICTOR TYREE
Purchaser
AND EUROLAND MOTOR COMPANY LIMITED
Trader
HEARING on 27 March 2023
MEMBERS OF TRIBUNAL
J S McHerron, Barrister – Adjudicator
A B Cate – Assessor
APPEARANCES
K M V T Tyree, Purchaser
A P Smith, Director of Trader
DATE OF DECISION 12 May 2023
___________________________________________________________________
DECISION OF THE TRIBUNAL
___________________________________________________________________
___________________________________________________________________
Contents
REASONS
Introduction
[1] In early August 2021, Kenneth Tyree (or by Kenneth’s mother acting on Kenneth’s behalf) purchased a 1996 Toyota Hiace from Euroland Motor Company Ltd (Euroland) for $4,990. The purchase was made using Trade Me’s online auction platform.
[2] Kenneth says that after the vehicle was sold on Trade Me, but before paying for it, Kenneth advised representatives of Euroland of an intention to convert the vehicle to a certified self-contained vehicle for “extensive summer camping”. Over the next few months, Kenneth modified the vehicle into a campervan through “extensive installation of modular amenities”. On 22 December 2021, the vehicle was certified as self-contained.
[3] The van failed its first warrant of fitness inspection after Kenneth purchased it, on 17 February 2022. It failed the inspection for three reasons: structural damage in the rear of the vehicle, an exhaust leak and an insecure side mirror.
[4] Based on that warrant of fitness inspection, Kenneth claims that the vehicle was in an unroadworthy and unsafe condition at the time it was sold. However, Kenneth wishes to keep it, after having put considerable effort and resources into modifying the vehicle into a campervan. Instead of seeking to reject the vehicle and receive a refund of the $4,990 purchase price, Kenneth seeks $11,679.27 in damages from Euroland.[1] These claimed damages represent:
- (a) repairs to the vehicle, some of which have been carried out and some of which are still to be carried out;
- (b) compensation for a Vehicle Testing NZ (VTNZ) inspection fee, insurance and taxi/Uber fares;
- (c) reimbursement of Kenneth’s Tribunal application fee; and
- (d) $4,000 damages and compensation for Kenneth’s stress and inconvenience.
[5] Kenneth claims that the vehicle was sold by Euroland with pre-existing problems that led to it failing its warrant of fitness, in particular its leaking exhaust, structural damage to its rear, rust within 150 mm of the boot latch and rust contravening warrant of fitness requirements at the front of the vehicle. Kenneth also claims that the vehicle’s left wing mirror was loose and insecure at or soon after the time of purchase.
[6] Euroland opposes Kenneth’s application for damages. However, it is prepared to refund the vehicle’s purchase price of $4,990, provided the vehicle is returned in the configuration and condition as when purchased. Alternatively, Euroland is prepared to compensate Kenneth $253.09, being the amount already spent on repairs to the vehicle’s exhaust.
[7] Euroland’s opposition to Kenneth’s application is based on two factors:
- (a) Kenneth’s expectations are too high in respect of this 26-year-old van with more than a quarter of a million kilometres on its odometer which was sold for a relatively modest price;
- (b) it never wanted to trade with Kenneth in the first place;
Euroland submits Kenneth’s expectations in respect of the van are too high
[8] Euroland submits that a reasonable consumer would expect that a 26-year-old vehicle that has travelled approximately 277,000 km would very likely require regular and ongoing maintenance to keep it in a roadworthy condition in order to pass six-monthly warrant of fitness inspections.
[9] The warrant of fitness for the van was issued just before Kenneth purchased it, by an independent garage which checked the vehicle against the Vehicle Inspection Requirements Manual (VIRM). The standard in the VIRM is applied at the time of inspection and does not operate as a prediction of what aspects of a vehicle may need maintenance after six months and 7,000 km of use. When inspected, the vehicle was deemed to have met the required standard by an authorised inspection agent and passed its warrant of fitness inspection.
[10] Euroland says that it is not a warrant of fitness inspection agent and is not responsible for the outcome or any disagreement with the warrant fitness inspection. Euroland says that Kenneth is trying to shift liability for a subsequent warrant of fitness inspection failure after six months, onto Euroland, which has no legal responsibility.
[11] Euroland says that the warrant of fitness pass was issued by a completely independent party, which made its own judgement as to the van’s roadworthiness at the time of the inspection. Euroland says legal action should be brought against the warrant of fitness issuer if Kenneth retrospectively believes the warrant of fitness pass was not valid.
[12] Euroland also points out that Kenneth’s claim is for 234% of the initial purchase price of the vehicle, $6,689.27 more than was paid for the vehicle.
[13] Euroland states its understanding of the Consumer Guarantees Act 1993 (CGA) is that it is a tool for consumer redress in situations where there is a “substantial failure of character” of goods or services within a reasonable timeframe. It says there is no substantial failure of character in this dispute, just a disagreement from Kenneth about a warrant of fitness outcome.
[14] Euroland also points out that the van only required $253.09 in repairs (to the exhaust system) to pass a warrant of fitness inspection on 17 February 2022. None of the serious issues Kenneth is claiming prevented the warrant of fitness being issued at that time.
[15] Euroland says the van has since passed another warrant of fitness inspection on 25 July 2022 with no issues or fail notes mentioned in the warrant of fitness system. This implies, according to Euroland, that the defects alleged by Kenneth do not hinder the vehicle passing subsequent warrants of fitness.
[16] Euroland also expresses concern about the length of time Kenneth took – more than six months – before contacting it to make Kenneth’s concerns known.
[17] My assessment of Euroland’s second ground of opposition is that the Tribunal’s function is to assess this vehicle against standards in the CGA. The guarantee of acceptable quality is a flexible guarantee – it does not mean the same thing in every case. Rather, application of the guarantee in every case has regard to the age, mileage and price of the vehicle in question.
[18] It may be relevant to the Tribunal’s assessment of this question in the present case to explore whether the vehicle had defects at the time of purchase which meant that it should not have been given a warrant of fitness just before being sold to Kenneth. This assessment will be made on the basis of the evidence and the Tribunal’s judgement as to what a reasonable consumer would regard as acceptable in respect of this particular vehicle.
Euroland never wanted to trade with Kenneth
[19] Euroland had blacklisted Kenneth from purchasing vehicles from it over Trade Me, following a previous vehicle sale in respect of which Kenneth took Euroland to the Disputes Tribunal. Euroland says that Kenneth bypassed this blacklist by purchasing the Toyota Hiace in the name of a separate Trade Me account held by Kenneth’s mother.
[20] I do not consider that this ground of opposition has any merit. Euroland’s regrets in selling the vehicle to Kenneth do not remove its obligations under relevant consumer protection legislation in respect of the vehicle it sold. Moreover, I saw nothing in the evidence to suggest that Euroland objected to the sale when Kenneth made payment for and collected the vehicle, which was done in person.
Kenneth’s application to join additional respondents
[21] On 2 March 2023, Kenneth filed a document entitled “Notice of Request For the Joining of Second and Third Respondents”. In this document, Kenneth requested to join as second and third respondents to the claim:
- (a) Rove Rentals Ltd;
- (b) Rove Rentals NZ Ltd.
[22] The grounds advanced for the joinder application were stated in Kenneth’s notice as follows:
(a) the applicant is in doubt as to the person or persons against whom the plaintiff is entitled relief.
(b) the applicant seeks to join the aforementioned parties with the view of determining within the proceeding which (if any) of the respondents are liable as a:
(c) the applicant believes the first respondent’s Director, Andrew Paul Smith, an individual common to all of the aforementioned entities as their respective sole Director, has sought to establish and orchestrate an affiliation of entities for the purposes of effecting a corporate façade for the purposes of escaping and/or frustrating effective legal recourse.
[23] The Tribunal has the power to join a person as a party to a proceeding if the person has sufficient connection with the proceedings in relation to an application. A person will have sufficient connection with the proceedings in relation to an application if that person’s presence as a party to the proceedings is necessary to enable the Tribunal to determine effectively and completely the questions arising on the application or to grant the relief that it considers to be due.[2]
[24] In my view, the presence of those two additional companies is not necessary to enable the Tribunal to determine effectively and completely the questions arising on Kenneth’s application or to grant the relief that may be due.
[25] The vehicle was sold by Euroland. This is not disputed. The fact that the consumer information notice (CIN) supplied with the vehicle when it was sold is headed “Rove Car Sales” does not lead to any real doubt about who was the seller of the vehicle. That is because Euroland is named as the Trader in the confirmation at the foot of the CIN and it is Euroland’s Trader number, M303172, which is listed at the top of the document. There was no vehicle offer and sale agreement as is usual with transactions involving a motor vehicle trader. However, a tax invoice/delivery note recording the sale of the vehicle on 6 August 2021 names the seller as Euroland. In any event “Rove Car Sales” is not one of the two companies that Kenneth wishes to have joined. That entity was not a company. In fact, it does not appear to be a separate entity at all. Rather, it appears to be a trading name for Euroland.
[26] In respect of the grounds identified by Kenneth in the joinder application, my assessment is that:
- (a) Kenneth has not established any basis for claiming relief in the Tribunal against anyone other than the company which sold Kenneth the vehicle, Euroland;
- (b) the issue of whether either of the two named companies in Kenneth’s application should be deemed to be motor vehicle traders in terms of s 8 of the Motor Vehicle Sales Act is beyond the scope of the present proceeding as there is no evidence that either of the named companies that Kenneth wishes to join had any involvement in the sale of the vehicle to Kenneth. Whether either of those companies is or has been involved in selling motor vehicles to other persons is not relevant to Kenneth’s application in the Tribunal.
- (c) I am not satisfied that the existence of the two named companies suggests that either Euroland or its director Andrew Smith is attempting to escape or frustrate effective legal recourse in the present proceeding. Even if they were, the mechanism of joinder of other parties would not necessarily solve that problem. For example, Mr Smith advised the case manager that Euroland is no longer a trading entity and has no assets, income or motor trader registration. If that is so, then the Tribunal still retains jurisdiction in respect of Euroland for as long as it remains a registered company. Whether or not it retains assets does not allow Kenneth to choose an alternative respondent simply on the basis that it may have deeper pockets, if that alternative respondent has no other connection to the facts at issue in the underlying application.
[27] For the above reasons, I decline Kenneth’s application for joinder of the two companies named above.
Kenneth Tyree’s “Notice of Perception of Presumptive Bias and Concern for Impartiality of Assessor”
[28] At the beginning of the hearing of this matter, the Tribunal’s Assessor, Mr Cate, realised that he knew the trader’s director, Andrew Smith. Mr Cate advises that the connection between him and Mr Smith is not current but historical, stemming from a period in the early 1990s where both of them studied together at the same polytech. Mr Cate confirmed that he has no current association with Mr Smith. Mr Cate also confirmed that he has never had any financial or other business association with Mr Smith.
[29] At the hearing, I briefly indicated that, as the Assessor’s role is advisory and the decision of the Tribunal is the adjudicator’s alone, and as the association between Mr Cate and Mr Smith is historic, I did not consider there to be any basis for disqualifying Mr Cate from being able to continue as a member of the Tribunal for this hearing. I invited the parties to comment on this aspect, before continuing with their substantive submissions at the hearing.
[30] Kenneth agreed to proceed with the hearing with Mr Cate sitting as a member of the Tribunal, on the basis that the association between him and Mr Smith was limited and historic as discussed. Mr Smith also confirmed he was happy to proceed with the hearing.
[31] On the basis of my understanding at the hearing of the historical and limited nature of the association of Mr Smith and Mr Cate, and my understanding of Mr Cate’s role in the Tribunal proceeding, I determined that there was no indication of presumptive bias on the part of Mr Cate that meant he could not continue to participate in the hearing. Nor, in my view, would a fair-minded observer reasonably apprehend that the Tribunal (that is, myself, aided by Mr Cate’s input on technical matters) might not decide Kenneth’s application impartially. On this basis, I decided to continue with the hearing.
[32] Three days after the hearing, Kenneth filed a 13-page document headed “Notice of Perception of Presumptive Bias and Concern for Impartiality of Assessor”. In that document, Kenneth stated that given the trivial and historic nature of the claimed association between Mr Cate and Mr Smith, Kenneth did not perceive any hesitation about Mr Cate, whether objectively justifiable or otherwise, to be of sufficient merit to request the ordering of his recusal.
[33] However, after speaking with Kenneth’s support person and reflecting on the disclosure and the hearing itself, Kenneth submitted there remained a doubt surrounding the true extent of the relationship between Mr Smith and Mr Cate. In particular, Kenneth had pinpointed an apparent discrepancy between my description of the association between Mr Cate and Mr Smith as an “industry” relationship, and Mr Smith’s statement that the association was limited to studies at the Polytech. Kenneth outlined a concern that Mr Smith’s contention represented a historic relationship whereas Mr Cate implied an association that is more recent and potentially ongoing.
[34] Mr Smith said that he and Mr Cate attended the same Hutt Valley Polytech course in the early 1990s. To the best of his memory, Mr Smith said that he and Mr Cate had not met or corresponded since. However, he pointed out that, as he had spent 33 years in the motor business in the Wellington region, he is likely to have interacted through service, parts or other motor-related business with any assessor engaged by the Tribunal.
[35] I also asked Mr Cate to confirm all previous contact he had had with Mr Smith in any context. Mr Cate said he attended Polytech apprenticeship block training with Mr Smith in the early 1990s, training together for around two weeks in each year of the course. Mr Cate recalled some other interactions in that period with Mr Smith, but could not recall the details due to the timeframe. Mr Cate did not think he had seen Mr Smith since about 1997. He confirmed he had never traded or been associated in business with Mr Smith in any capacity.
[36] I accept it would have been preferable to give the parties more notice of Mr Cate’s disclosure of his previous contact with Mr Smith. Unfortunately, that was not possible without adjourning the hearing, as Mr Cate’s recollection of the association was only triggered by seeing Mr Smith in person.
[37] In view of the historical and relatively limited nature of the association between Mr Cate and Mr Smith, I confirm my view that:
- (a) a fair-minded observer would not reasonably apprehend that Mr Cate would not give impartial advice or that the Tribunal might not decide the case impartially; and
- (b) it was appropriate to continue with the hearing.
[38] In the document filed after the hearing, Kenneth also asserted there are genuine grounds to suspect a potential conflict of interest which Mr Cate ought to have disclosed if certain inferences Kenneth had made were correct.
[39] Kenneth asserted there were reasonable grounds to believe that a former director of a former company with a similar name to a company of which Mr Cate is director and shareholder, and which company was associated with the same business, is a relative of Karl Holmes, the warrant of fitness inspector who carried out an inspection on the vehicle that was discussed within the hearing and in respect of which Mr Cate provided advice to the Tribunal. Kenneth also submitted that Mr Cate’s business appeared to share various characteristics with Mr Holmes’s business, including in the respective businesses’ signage the use of a similar caricature picture of a red car coupled with a mechanic wearing “characteristic blue overalls” and “somewhat uncharacteristic brown shoes”. Based on these apparent (to Kenneth) similarities, Kenneth submitted there is a reasonable suspicion that Mr Holmes and Mr Cate may:
... be known to one another within what is likely to be both an inherently personal and commercial capacity ... and that it may be reasonable to perceive a real degree of risk to arise within the mind of the objective person, who I contend would justifiably perceive a predisposition of bias to arise within Mr Cate’s mind towards an individual relevant to this dispute and for whom I believe to be a first relation of Mr Cate’s business’ founder.
[40] I asked Mr Cate to indicate the extent to which he had any association or relationship with Karl Holmes (present or past). Mr Cate said he had none.
[41] Again, I conclude that a fair-minded observer would not reasonably apprehend that Mr Cate would not give impartial advice or that the Tribunal might not decide the case impartially.
[42] Kenneth also raised several concerns about Mr Cate’s conduct at the hearing. In summary, these concerns related to comments made in the hearing room and during the inspection of Kenneth’s vehicle, which Kenneth perceived as showing a lack of support for the claim but rather more support for the trader’s side of the argument.
[43] Kenneth proposed various solutions to these concerns including for there to be:
- (a) a new hearing with an alternative assessor;
- (b) a hearing with Mr Jones summed as a witness;
- (c) appointment of an additional assessor to review the recording of the hearing and to provide independent advice to the Tribunal in place of the matters referred to the Tribunal by Mr Cate; or
- (d) an opportunity for Kenneth to be provided with written submissions relating to all matters referred to Mr Cate and relied on by me for the purposes of assisting the Tribunal’s determination so that Kenneth could provide written submissions to be read alongside Mr Cate’s submissions.
[44] I do not propose to adopt any of Kenneth’s proposed solutions because, as indicated, I do not consider that Kenneth has established any presumptive or apparent bias on the part of Mr Cate. Even if I had concerns in this regard, having heard Kenneth’s application I do not now have any powers to order a rehearing of this matter with a different assessor.[3]
[45] If Kenneth wishes to take these concerns further, there is a right to appeal my decision to the District Court. On an appeal, Kenneth will be able to raise these concerns about bias, including the allegation that Mr Cate demonstrated bias at the hearing, for the District Court’s consideration.
Kenneth says there are discrepancies in warrant of fitness check sheet
[46] Kenneth sought to establish that there were other discrepancies in relation to the warrant of fitness check sheet dated 26 July 2021, implying that it had been tampered with by Mr Smith. I have carefully examined Kenneth’s claims in relation to these discrepancies. However, I am not persuaded that the check sheet has been tampered with in any relevant and material way, apart from some explanatory material that Mr Smith confirmed at the hearing that he had added as a record of his response to the findings of the inspection.
[47] Rather, it seems that some information from another vehicle’s check sheet has been incorporated in the documents submitted by Euroland which has led Kenneth to mistakenly infer the documents have been tampered with.
Substantive issues for Tribunal’s resolution
[48] Turning to the substantive issues for the Tribunal’s resolution, it seems to me that the following are the primary issues remaining for the Tribunal to determine:
- (a) Did the vehicle fail to comply with the guarantee of acceptable quality in s 6 of the CGA?
- (b) What, if anything, is the appropriate remedy?
[49] In extensive written submissions, Kenneth also alleged a breach of s 9 of the CGA (failure to comply with description) and s 8 of the CGA (breach of the guarantee of fitness for a particular purpose). I will briefly address these submissions as additional issues below, but my conclusion is that they do not add anything to the claims upon which, as I will explain, Kenneth succeeds. Nor do I consider that those additional grounds would provide any fruitful alternative remedy in respect of the claims in which I find that Kenneth does not succeed.
[50] Kenneth also sought to argue breach of warranty by Euroland under s 132 of the Contract and Commercial Law Act 2017. However, as I explained to Kenneth at the hearing, the Tribunal does not have jurisdiction to make any orders under this section of the Contract and Commercial Law Act 2017.[4] Accordingly, I do not consider that aspect of the claim further.
Issue 1: Did the vehicle fail to comply with the guarantee of acceptable quality?
[51] 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”. According to s 2 of the CGA, “goods” includes vehicles.
[52] “Acceptable quality” is defined in s 7 of the CGA (as far as is relevant) as follows:
- 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.
...
[53] 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.
Warrant of fitness inspection
[54] On or around 17 February 2022, just over six months after purchasing the vehicle, Kenneth took it for its warrant of fitness inspection at Vehicle Testing NZ (VTNZ) in Adelaide Road. The vehicle failed the inspection for the following reasons (emphasis added):
Right Front Interior Dangerous Fitting Exposing Check Manufacturers Spec
Right Front Seat Belt Buckle Insecure
Middle Exhaust System Leaking
Rear Inner Guard Structure Damaged Panelbeaters Report Rqrd
Left Front Exterior Mirror Insecure
[55] The following matters were also listed on the check sheet under the heading “For Your Assistance” (but the vehicle did not fail the inspection in respect of these matters):
Right Front Steering Column Exposing Borderline
Brakes Imbalance Borderline
Brakes Imbalance Requires Attention Soon
All Floor Structure Corroding Borderline
Front Suspension Bump Stop Damaged Both
Front Engine Oil Leaks Requires Attention Soon
Front Windscreen Wiper Arm Play Developing Both
[56] Kenneth did not include the first two fail items (or the other maintenance issues that were provided under the heading “For Your Assistance”) in the claim, noting that “the other issues that required remedy in order to bring the vehicle to WOF standard were minor and able to be quickly addressed by [Kenneth]”.
[57] However, the third, fourth and fifth items in respect of which the vehicle failed (highlighted in bold text above) were included in Kenneth’s claim that the vehicle failed to comply with the guarantee of acceptable quality.
[58] At first, Euroland’s response to Kenneth’s Tribunal application focused on a submission that Euroland Motor Company Ltd is no longer a trading entity with no assets, income, or motor trader licence. However, Euroland’s current trading or asset position is not relevant to the Tribunal’s hearing process. Kenneth’s application relates to a vehicle purchased from Euroland when it was in operation and registered as a motor vehicle trader. Mr Smith also provided evidence of his response to Kenneth’s application in the Disputes Tribunal, including various without prejudice settlement proposals in the context of that proceeding. On an open basis, at the hearing of the current proceeding, Mr Smith reiterated that he offered to purchase the vehicle back from Kenneth at the original purchase price, an offer which still remains open.
Exhaust leak
[59] In relation to the first of the warrant of fitness items in respect of which Kenneth is claiming, the exhaust leak, Midas Newtown replaced a leaking exhaust flexi joint on 3 March 2022. The cost of the repair was $253.09. The vehicle’s odometer reading is recorded on Midas’s invoice as 285,280 km, about 7,500 km more than when Kenneth purchased the vehicle.
[60] It is not possible to say with certainty how long this fault had existed. However, Kenneth viewed the leaking flexi joint at Midas and said that it appeared black and disintegrated with part of its mesh missing. In addition, Kenneth says that the exhaust repair has resulted in improved engine performance and that an echoing sound Kenneth previously heard while passing cars or reflecting from the concrete barriers in the middle of the road (for example before entering the Terrace Tunnel) has now gone.
[61] Having regard to Kenneth’s evidence, I consider that it is likely that the vehicle’s exhaust was defective at or soon after Kenneth purchased the vehicle. Kenneth is right to point out that a leaking exhaust can be a safety issue if fumes enter the cabin. For that reason, a vehicle will fail its warrant of fitness inspection if a leaking exhaust is detected. In addition, the fact that a warrant of fitness item such as an exhaust leak arose within the first six months of Kenneth’s ownership of the vehicle demonstrates the vehicle was not as durable as a reasonable consumer would regard as acceptable.
[62] For these reasons, I conclude that the vehicle’s leaking exhaust amounts to a failure to comply with the guarantee of acceptable quality.
Rear Inner Guard Structure Damaged
[63] The warrant of fitness check sheet refers to damage to the rear inner guard structure. When referring to the parts of a motor vehicle, “inner guard” typically refers to the inner surround of the wheel well. No indication is given on the check sheet as to whether it is the right rear inner guard or the left rear inner guard that is affected. A warrant of fitness structural check profile sheet was provided with the check sheet. The profile sheet contains a number of exploded-view line drawings representing all of the vehicle’s structural components. The inspector has drawn a ring around the picture representing the rear bumper region of the vehicle underneath its tailgate. The inspector has indicated that in this region of the vehicle, there is structural damage requiring repair. On the diagram, there is no indication of any structural damage in any other part of the vehicle (including in the region of its inner guards).
[64] In written submissions, Kenneth referred to photographs of the vehicle displayed at the time of sale showing a bent rear outer step panel. These, Kenneth said, indicated the vehicle had sustained rear impact damage prior to Kenneth’s purchase, causing the structural defect resulting in its warrant of fitness inspection failure.
[65] Mr Cate and I inspected the vehicle at the hearing. Mr Cate confirmed that, there appears to have been impact damage to the rear of the vehicle causing structural deformation in the rear bumper and boot floor area that has affected the vehicle’s structural integrity and that needs to be repaired so that the vehicle will comply with the VIRM.[5] Mr Cate agreed with Kenneth’s interpretation of the photos of the vehicle displayed on Trade Me as showing that this damage is likely to have occurred before the vehicle was sold to Kenneth.
[66] In Mr Cate’s view, the vehicle ought not to have been given a warrant of fitness in the state in which it was sold. This is despite the fact that the vehicle was given a new warrant of fitness prior to being sold to Kenneth and that Kenneth has also been able to successfully renew the vehicle’s warrant of fitness on more than one occasion since purchasing it.
[67] For this reason, I do not consider that a reasonable consumer would have regarded the vehicle as acceptable in the state in which it was sold. In this respect, Kenneth has established that the vehicle did not comply with the guarantee of acceptable quality in respect of the structural damage identified under the vehicle’s boot floor and rear bumper area.
Left front exterior mirror insecure
[68] Kenneth claims that the vehicle’s left wing-mirror was “wobbly” at the time of sale but was unaware at the time of sale that this was a warrant of fitness concern.[6]
[69] I am not satisfied that Kenneth has established that the left front exterior mirror was insecure at the time of purchase. By contrast to the structural damage at the rear of the vehicle there is no photographic evidence corroborating Kenneth’s complaint in respect of the mirror. Nor do I consider that a loose wing mirror on an old high mileage vehicle such as this, arising some time (perhaps six months) after purchase amounts to a failure to comply with the guarantee of acceptable quality.
[70] In addition to these three failed items from the warrant of fitness inspection, Kenneth alleges the vehicle had the following defects:
- (a) missing spare tyre cage underneath the boot compartment;
- (b) rust near the boot latch;
- (c) rust above the left front light fitting;
- (d) uneven tyre wear;
- (e) air-conditioning faults;
- (f) internal lighting faults.
[71] I will now assess each of these alleged defects in turn.
Spare wheel cage and spare tyre
[72] When Kenneth purchased the vehicle, the cage for storing the spare wheel underneath the vehicle had been removed. Instead, the spare tyre had been left unsecured in the van’s cargo space.
[73] Kenneth says that the fact that the spare wheel cage is missing was not disclosed in the vehicle’s Trade Me listing description. This is a significant issue for Kenneth because it means that a spare wheel cannot be safely carried in the vehicle. When Mr Cate and I inspected the vehicle, we observed that Kenneth appears to have built a compartment for the spare wheel in the back of the vehicle. The compartment was not completely closed, but was open at the top.
[74] When Kenneth purchased the vehicle, the spare wheel was apparently loose in the back. Kenneth said this contravenes the VIRM requirement that a spare tyre, if carried, must be securely attached by a device that is in good condition and correctly applied or stowed in a closed compartment separate from the occupant space (if the manufacturer’s attachment device is missing or faulty).[7]
[75] The warrant of fitness check sheet for the inspection on 26 July 2021, just before the vehicle was sold to Kenneth, indicates that the only reason the vehicle failed the inspection was because the spare wheel bracket needed to be secured. Mr Smith subsequently annotated the check sheet to indicate “spare wheel bracket was secured and vehicle passed 26/7/21”. However, this is at odds with the fact that the vehicle was sold to Kenneth with no spare wheel bracket underneath the vehicle and with the spare wheel loose in the back of the vehicle. Rather, contrary to Mr Smith’s annotation, it appears that the spare wheel bracket was actually removed (rather than secured) prior to sale of the vehicle to Kenneth.
[76] Although, from the perspective of the VIRM, a spare wheel is not a compulsory item, it seems to me that if a vehicle is sold with a spare wheel then it should be supplied in a manner that complies with the VIRM’s requirements for secure attachment or safe storage of the spare wheel. This did not occur in respect of the vehicle sold to Kenneth. Therefore, I consider that the vehicle failed to comply with the guarantee of acceptable quality in respect of the inadequate attachment of the spare wheel to the vehicle.
Rust near boot latch
[77] Kenneth alleges that the vehicle was sold with rust within 150 mm of the boot latch in the vehicle’s tailgate. If so, then this would have been a ground for it to fail its warrant of fitness inspection (although this was not a matter in respect of which the vehicle actually failed the warrant of fitness prior to sale to Kenneth or subsequently).[8]
[78] Again, in respect of this allegation, Kenneth pointed to the photograph of the vehicle taken from the Trade Me listing showing bubbles in the paintwork directly above the boot latch. Kenneth has subsequently scratched away at the paintwork to reveal rust that has pitted through the metal leaving holes. Kenneth has not had these holes professionally repaired, but has instead covered them with body filler and sealed the paint.
[79] In my and Mr Cate’s view, Kenneth has established that, at the time the vehicle was sold, it had rust within 150 mm of the boot latch and the vehicle’s tailgate. Although this aspect was not identified in the most recent warrant of fitness for the vehicle prior to sale, it clearly failed to comply with the requirements of the VIRM and should not have been given a warrant of fitness in this condition, before it was sold to Kenneth. I do not consider that a reasonable consumer would regard this to be acceptable. Therefore, in respect of the rust near the tailgate latch, I conclude that Kenneth has established a further breach of the guarantee of acceptable quality.
Rust above left front light fixture
[80] Kenneth also provided a post-sale photo showing corrosion damage at the front of the vehicle immediately above the left light fixture. By the time Mr Cate and I inspected the vehicle, Kenneth had filled this area in with filler so it was not straightforward to measure the size of the corrosion damage area. In Mr Cate’s assessment, however, it was less than 50 mm. The significance of this measurement is that corrosion damage that is individually larger than 50 mm in diameter is a reason for rejection under the VIRM.[9] Even if Mr Cate’s measurement were incorrect, however, there was insufficient evidence to establish the size of the corrosion damage area was greater than 50mm when the vehicle was sold to Kenneth. One of the Trade Me photos revealed this corrosion damage at the time of sale of the vehicle. Unlike the boot latch corrosion, it was not obscured by paint and would have been hard for the inspector to miss. While it is not possible to be conclusive about the size of the area of corrosion damage, I find that Kenneth has not established it to be 50 mm or more at the time the vehicle was sold. As Kenneth has not established this to be a pre-sale contravention of the VIRM for warrant of fitness purposes, nor any post-sale inability of the vehicle to pass a warrant of fitness inspection because of this defect, I conclude that this corrosion damage is consistent with the vehicle’s age and mileage.
[81] It follows that Kenneth has not established a further breach of the guarantee of acceptable quality in respect of the corrosion at the front of the vehicle.
Uneven tyre wear
[82] Kenneth alleges that the front right tyre has uneven tread wear, with the inner side wall wearing out disproportionately quickly compared to the other three tyres. Kenneth wonders whether this greater wear is attributable to the structural damage underneath the vehicle and which may have resulted in contortion of the vehicle such that the tyres’ contact with the road is affected. Kenneth has attempted to spread the tyre wear more evenly by rotating the tyres.
[83] Apart from these submissions, no evidence was produced to support the existence of this alleged tyre wear discrepancy or to link it with the structural damage underneath the vehicle. Nor was any evidence presented in the form of a workshop report establishing a fault and any corrective measures that might be required.
[84] I am not persuaded that Kenneth has established an additional breach of the acceptable quality guarantee in respect of uneven tyre wear. There are a range of factors which cause uneven tyre wear. Generally, tyre wear is an aspect of ordinary wear and tear which any reasonable consumer would expect to arise as an ordinary part of vehicle ownership.
Air-conditioning
[85] Kenneth alleges that the vehicle has had no operational hot or cool air-conditioning, since the time of purchase. In addition, Kenneth says the fan only operates on two out of three settings. As a result, Kenneth says, the vehicle’s ability to de-fog the windshield is negatively affected, compromising safety.
[86] Again, there was no evidence presented to establish the existence or duration of any fault with the vehicle’s heating or air-conditioning system. Nor was any evidence presented in the form of a workshop report indicating what, if any, corrective remedy might be required.
[87] In the absence of such evidence, I am unable to find that Kenneth has established a further breach of the guarantee of acceptable quality in respect of the air-conditioning and heating system.
Internal lighting
[88] Kenneth alleges that the vehicle has, since the time of sale, had no operational above-head cabin lighting. This, according to Kenneth, creates a difficulty at night time in respect of viewing the inside of the vehicle both within the driver and passenger seats and within the cabin space at the rear of the vehicle.
[89] Again, no evidence was presented as to the existence or duration of this fault or what if any corrective remedy would be required. In the absence of such evidence, I am not prepared to find that Kenneth has established a further breach of the guarantee of acceptable quality in respect of the vehicle’s internal lighting.
Summary of conclusions in respect of acceptable quality guarantee
[90] I have found that Kenneth has established the vehicle failed to comply with the guarantee of acceptable quality in respect of:
- (a) the exhaust leak;
- (b) the structural damage identified under the vehicle’s boot floor and rear bumper area;
- (c) the inadequate securing of the spare wheel to the vehicle;
- (d) the corrosion above the boot latch area on the tailgate.
Issue 2: Did the vehicle fail to comply with its description?
[91] Section 9 of the CGA confers a guarantee that goods correspond with the description by which they are supplied.
[92] Kenneth argues that the vehicle did not comply with the description in the Trade Me listing which stated:
TRADE-In Special And Must Be Sold...
Perfect workhorse for the tradie on a budget and sure to have a few more years of service to give.
Fresh WOF, RUC up to date. A few scuffs dings dents and scratches around the body and bumpers but mechanically seems fine and runs very well.
[93] Kenneth takes issue with this description as the vehicle was not of warrantable standard due to it being structurally unsound, despite having a fresh warrant of fitness at the time of sale. Kenneth says the vehicle was therefore unable to give “years of service” in the condition that it was sold. For this reason, Kenneth argues the vehicle’s condition was misrepresented by Euroland, as the vehicle did not comply with Euroland’s description of its quality. Further, Kenneth submits the van was not mechanically fine due to its missing wheel cage, the performance of the engine was negatively affected by the exhaust leak and the structural integrity and safety of the vehicle was compromised by the rust near the boot latch and the rust at the front of the vehicle.
[94] As indicated above, these complaints are more appropriately dealt with as raising concerns in respect of the guarantee of acceptable quality. There is nothing specific about the general description of the vehicle in the Trade Me listing that I consider to be misleading or in respect of which the vehicle did not comply. I dismiss this aspect of Kenneth’s claim.
Issue 3: Was there a breach of the guarantee of fitness for a particular purpose?
[95] Section 8 of the CGA provides (among other things) a guarantee that goods are “reasonably fit for any particular purpose that the consumer makes known, expressly or by implication, to the supplier is the purpose for which the goods are being acquired by the consumer”. Section 8 also provides a guarantee that goods are reasonably fit for any particular purpose for which the supplier represents that they are or will be fit.
[96] Kenneth argues that this guarantee was breached as the van was unfit for the purpose of usage as a private passenger vehicle.
[97] Kenneth also argues that, before paying for the vehicle, Kenneth made known to Euroland Kenneth’s intention to fit-out the van for self-contained travel and extensive road-trips over the summers. Kenneth alleges making known to the respondent that Kenneth was a student with an upcoming summer holiday period between semesters. This occurred as the paperwork was being prepared and while discussions were being had prior to payment as to why Kenneth was collecting and paying for the vehicle rather than Kenneth’s mother, who had successfully bid for the vehicle on Trade Me.
[98] In terms of Kenneth’s first argument, there was no evidence either that Kenneth or Euroland specified that the van was to be used for or was suitable for use as a private vehicle. Kenneth submits that this is implicit. That may well be so, but even if this is correct it does not seem to fit within the terms of s 8, which requires a particular purpose to be made known or represented.
[99] In terms of Kenneth’s second argument, the terms and conditions on Trade Me’s website indicate that placing the winning bid creates a legal contract between the buyer and the seller in which the buyer agrees to complete the trade.[10] There was no evidence that Kenneth specified the self-contained travel and extensive road-trip purpose prior to entering into a legal contract with Euroland to purchase the vehicle over the Trade Me platform. Therefore, again, s 8 does not seem to apply.
[100] In any event, I do not consider that Kenneth has established that the vehicle has not been fit for purpose either as a private vehicle or for use for road trips as a van for self-contained travel. Kenneth freely admitted continuing to use the vehicle despite its defects and driving it several thousand kilometres since purchasing it.
[101] Moreover, Kenneth has obtained certification of the vehicle as self-contained. This appears to demonstrate its suitability for off-road camping trips. Although Kenneth has established that the vehicle has various defects, a remedy for those is available in respect of the established breaches of the acceptable quality guarantee, rather than the guarantee of fitness for purpose.
Issue 4: Did Euroland breach the Fair Trading Act 1986?
[102] Kenneth also alleges the following breaches by Euroland of the Fair Trading Act 1986 (FTA).
Making a false or misleading representation that the vehicle has had particular history or previous usage – s 13(a) of the FTA
[103] Kenneth alleges that Euroland made a false or misleading representation about the vehicle’s history and usage by:
- (a) omitting to disclose in the advertisement of the vehicle the circumstances which brought about the requirement to secure the spare wheel cage in order for the vehicle to pass its warrant of fitness inspection under Euroland’s ownership and for which Kenneth suggests relates to Euroland’s knowledge of the structural damage;
- (b) neglecting to provide the warrant of fitness check sheet requested by Kenneth in February 2022 until 1 June 2022 at the Disputes Tribunal hearing and without having provided that evidence to Kenneth in advance of that hearing;
- (c) claiming to have procured a spare wheel for the vehicle when the circumstances suggest otherwise in submitting that claim before the Tribunal as evidence in support of Euroland’s claim.
[104] I do not uphold Kenneth’s allegation that Euroland made a false or misleading representation in respect of the vehicle’s history and usage in any of these respects.
[105] I do not consider that Euroland had any proactive obligation to disclose the repairs that were needed to carry out to obtain a warrant of fitness for the vehicle before selling it to Kenneth.
[106] Ironically perhaps, in light of the requirements in the VIRM, Euroland would have escaped liability in this proceeding in respect of the spare wheel cage if it had not supplied a spare wheel in the vehicle at all. There is no obligation in general terms as a matter of law to provide a spare wheel with a vehicle. It is not an item in respect of which vehicle will fail to pass a warrant of fitness inspection if it is missing a spare wheel. Indeed, many modern vehicles do not have spare wheels at all.
[107] However, as I have determined earlier in this decision, Euroland’s error was to supply a spare wheel in the vehicle but in a manner that did not comply with the requirements in the VIRM because the spare wheel was not adequately secured or stored.
[108] As to Kenneth’s complaint about Euroland’s delay in providing the warrant of fitness check sheet, that allegation appears to relate to an earlier proceeding before a different Tribunal. I decline to embark on any review of the parties’ compliance with procedural obligations in respect of that proceeding.
[109] As to Kenneth’s allegation that Euroland misrepresented the circumstances in which it supplied the spare wheel, I am unable to resolve that dispute on the evidence and so I refrain from making any findings in that regard except to conclude that Kenneth has not established any breach of the FTA in that respect.
Unsubstantiated representations – s 12A(1) of the FTA
[110] Kenneth submits that Euroland’s statements that “someone is going to get a bargain”, that the vehicle was “the perfect workhorse for the [individual] on a budget” and that it was “sure to have a few more years of service to give” and that the vehicle had only superficial damage but was “mechanically fine” and running “very well” were unsubstantiated representations in breach of s 12A(1) of the FTA.
[111] Section 12A of the FTA provides:
12A Unsubstantiated representations
(1) A person must not, in trade, make an unsubstantiated representation.
(2) A representation is unsubstantiated if the person making the representation does not, when the representation is made, have reasonable grounds for the representation, irrespective of whether the representation is false or misleading.
(3) This section does not apply to a representation that a reasonable person would not expect to be substantiated.
(4) In this section and sections 12B to 12D, representation means a sake
(a) in respect of goods, services, or an interest in land; and
(b) in
connection with—
(i) the supply or possible supply of the goods or
services; or
(ii) the sale or grant or possible sale or grant of the
interest in land; or
(iii) the promotion by any means of the supply or use
of the goods or services or the sale or grant of the interest in land.
[112] I do not consider that Kenneth has established that any of the representations listed above at [110] were unsubstantiated in the sense intended by s 12A of the FTA. In other words, I do not consider that Kenneth has established that any of those representations lack reasonable grounds. On my assessment of the evidence relating to this vehicle and the defects that have been established, none of these representations strike me as being unsubstantiated or otherwise misleading. Rather, in general terms, they appear to be an accurate description of the vehicle.
Engaging in misleading conduct in relation to the suitability of the vehicle for the particular purpose of use as a consumer vehicle: s 10 of the FTA
[113] Kenneth alleges that Euroland engaged in misleading conduct as to the suitability of the vehicle for the purpose of use as a consumer vehicle. For the same reason as I rejected Kenneth’s allegation that the vehicle did not comply with the guarantee as to fitness for a particular purpose, I reject this allegation also. I am not persuaded that Kenneth has established that the van lacked suitability for the purpose of use as a consumer vehicle (having due regard to its age, mileage and price).
[114] Under this heading, Kenneth also submits that Euroland ought to have been transparent about the “issues” relating to the vehicle. Here again, Kenneth refers to the placement of the spare wheel in the vehicle’s boot rather than its appropriate underbody location in a wire cage and its failure to “appropriately rectify” the issue that required the removal of the spare wheel cage but leaving the vehicle’s structural damage to remain.
[115] I reject this allegation. As I have already found, Euroland had no obligation to proactively inform Kenneth as to the removal of the spare wheel cage. Nor, in my view, did the removal of the spare wheel cage render the vehicle unsuitable for use as a consumer vehicle or in any significant way compromise its roadworthiness. This is apart from my finding that a breach of the guarantee of acceptable quality has been established in respect of the spare wheel and in respect of which Kenneth is entitled to an appropriate remedy, as I will shortly go on to determine.
Making a false or misleading representation concerning the existence, exclusion or effect of a condition, warranty, guarantee, right or remedy, including those available under the CGA – s 13(i) FTA
[116] Kenneth alleges that Euroland’s defence to Kenneth’s claim, in particular its submission that a reasonable consumer would expect faults such as those which have arisen in respect of a vehicle of this age, mileage and price to be a false and/or misleading representation about the warranty, guarantees, rights and remedies available to Kenneth and thus a breach of s 13(i) of the FTA.
[117] I reject Kenneth’s allegation in this regard. Kenneth seems to be suggesting that it is not open to a trader to make arguments in the context of a dispute in the Tribunal in respect of the extent of application of guarantees under the CGA. This is an unrealistic submission. The FTA provides for certain remedies in respect of misleading and/or deceptive representations in trade. “Trade” is defined by reference to the supply of goods. I consider it would be stretching that definition beyond its proper boundaries to find that the FTA inhibits a trader from making reasonable submissions about the application of the FTA in the context of a dispute in the Tribunal. I have already made findings in respect of Kenneth’s rights under the CGA, some of which involve rejecting the trader’s arguments as to the extent of application of those rights. That, in my view, is a sufficient vindication for Kenneth.
Unconscionable conduct – s 7(1) FTA
[118] Kenneth alleges Euroland engaged in the following unconscionable conduct:
- (a) removing the damaged spare wheel cage for the purposes of obscuring the extent of the damage in seeking to pass a structurally damaged vehicle at warrant of fitness inspection;
- (b) placing the spare wheel in the boot of the vehicle despite the requirements of the VIRM;
- (c) advertising the vehicle and representations made in the advertisement;
- (d) refusal to engage with Kenneth in correspondence;
- (e) refusal to inspect or assess the vehicle;
- (f) requesting that Kenneth not contact Euroland again despite an ongoing dispute;
- (g) refusing to engage in private dispute resolution outside of the “realm” of the Disputes Tribunal;
- (h) refusing to provide Kenneth with Euroland’s warrant of fitness sheet when Kenneth brought the issues to the attention of Euroland for the purposes of “achieving remedy”;
- (i) making amendments to the warrant of fitness check sheet;
- (j) claiming that the spare wheel was obtained by the respondent following the warrant of fitness and for Kenneth’s benefit or another prospective buyer; and
- (k) seeking to influence the Tribunal by making reference to an unrelated claim already settled and for which Kenneth was successful against Euroland four years earlier.
[119] In making these allegations, Kenneth seeks to rely on s 7 of the FTA which, since 16 August 2022, has provided:
7 Unconscionable conduct
(1) A person must not, in trade, engage in conduct that is unconscionable.
(2) This section applies whether or not—
(a) there is a system or pattern of unconscionable conduct; or
(b) a
particular individual is identified as disadvantaged, or likely to be
disadvantaged, by the conduct; or
(c) a contract is entered into.
(3) This section is not limited by any rule of law or equity relating to unconscionable conduct.
[120] Section 8 came into force on the same date as s 7. It provides a long list of factors that the Tribunal may take into account in assessing whether a person’s conduct is unconscionable under s 7. As ss 7 and 8 are both in pt 1 of the FTA, the remedies in s 43 are available if a breach of s 7 is established.
[121] As mentioned, the commencement date of these new provisions was 16 August 2022. They do not operate retrospectively. However, most of the alleged conduct under this heading of Kenneth’s claim occurred prior to the provisions’ commencement date. To the extent that the alleged conduct occurred after that date, it seems largely to relate to Euroland’s conduct in response to Kenneth’s claim in the Tribunal or his predecessor claim in the Disputes Tribunal.
[122] For the same reason as I have rejected Kenneth’s claim under s 13(i) of the FTA (see [117] above) I also reject Kenneth’s claim under s 7 of the FTA, to the extent it does not refer to matters alleged to have occurred before the date of commencement of that provision. This provision relates to unconscionable conduct in trade, in other words in relation to the supply of the vehicle, not in relation to the trader’s conduct in responding to a dispute. I reject those aspects of Kenneth’s allegations that predate the commencement s 7 because that section does not apply in respect of conduct predating its commencement.
Issue 5: What is the appropriate remedy?
[123] The remedies available to a consumer where a vehicle does not comply with the guarantee of acceptable quality are set out in s 18 of the CGA, which provides:
- 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.
[124] The primary remedy available to a consumer where a vehicle fails to comply with the guarantee of acceptable quality is set out in s 18(2)(a) of the CGA and allows the consumer to require the supplier to remedy the failure within a reasonable time.
[125] Kenneth politely asked Euroland to inspect and address the structural damage underneath the vehicle as well as the rust near the boot latch and the exhaust leak. Euroland refused to do so and told Kenneth that all further dealings would be at the Disputes Tribunal. Mr Smith asked Kenneth not to contact him again.
[126] On that basis, Kenneth may have been entitled to reject the vehicle and obtain a full refund of the purchase price.[11] However, Kenneth does not want to reject the vehicle, especially in light of the modifications made to it since purchase, which Kenneth considers have added value.
[127] Under s 18(2)(b)(i), Kenneth is entitled to have the vehicle remedied elsewhere and obtain from Euroland all reasonable costs incurred in having the failures that I have upheld remedied.
[128] In respect of the exhaust, Kenneth has already had this repaired by Midas at a cost of $253.09. I order Euroland to reimburse Kenneth for that sum.
[129] However, in respect of the structural damage underneath the vehicle and respect of the tailgate rust, Kenneth has not had those items repaired.
[130] Kenneth has, however, obtained several quotes ranging from $2,198.27 to $5,276.55 from various panel beaters which is said to represent the work required to allow the vehicle to obtain warrant of fitness certification according to the requirements of the VIRM in respect of the structural damage to the vehicle’s underbody.
[131] Mr Cate considers that all of these quotes are in excess of what ought to be required to remedy the structural damage he observed to ensure the vehicle complies with the VIRM. In Mr Cate’s view, if Kenneth were to shop around, and clearly request the minimum work required to comply with the VIRM’s structural integrity requirements then a reasonable cost of repairs is likely to be in the order of $1,300.
[132] Mr Cate considered that the quote for repairs to the tailgate ($575) is reasonable.
[133] Rather than direct Kenneth to obtain more quotes for the work, I consider the appropriate thing to do is to order Euroland to take steps to repair the underbody structural damage and the tailgate, and to provide a mechanism for securing the spare wheel either underneath the vehicle or within the cabin in accordance with the requirements of the VIRM, all at Euroland’s cost. Specifically:
- (a) The tailgate/rear door catch area is to be repaired in a tradesperson-like fashion, with a proper welded in repair that restores the integrity of the door retention system back to similar condition as OEM (original equipment manufacturer) and fully satisfies the requirements of the VIRM.
- (b) The rear bumper step reinforcement panel behind the rear bumper skin is to be replaced, and the area of deformation of the underside (sometimes referred to as the “rollpan”) is to be formed back into a suitable structural state as to bring it back within the deformation limits as set out in the VIRM.
- (c) The spare wheel is to be secured in a fashion that it cannot in the event of accident, or normal driving move around the vehicle and cause injury, distraction or interference to the driver or occupants of the vehicle.
[134] If, however, these repairs cannot be achieved within a reasonable timeframe, then I will allow Kenneth to return to the Tribunal to seek an order for reimbursement of the reasonable costs of those repairs.
Issue 6: Is Kenneth entitled to recover any other compensation?
[135] Kenneth has made a number of other claims for compensation. I reject all of these compensation claims, for the following reasons.
Body filler, paint and sundries - $75
[136] Kenneth is not entitled to recover the costs of body filler, paint and sundries in respect of repairs Kenneth already carried out on the vehicle. Mr Cate’s view is that these repairs are inadequate and unprofessional. The vehicle needs to be repaired properly by a professional in accordance with the requirements of the VIRM. This decision outlines the way in which these repairs should now occur and who should pay.
VTNZ inspection fee ($72) and insurance expenses ($353.64)
[137] Kenneth is not entitled to recover costs associated with the VTNZ inspection fee or insurance costs associated with the vehicle. These costs are ordinary incidents of vehicle ownership and would have been incurred anyway regardless of the present dispute. It is important to recognise that Kenneth has had the use of the vehicle since purchasing it, during which time Kenneth has driven more than 12,000 km in it.
Taxi and Uber expenses ($348.99)
[138] Kenneth is not entitled to recover any taxi or Uber charges. No receipts were provided for these alleged expenses. And, I am not persuaded that there has been any material period during which Kenneth has been unable to use the vehicle due to the defects that the Tribunal has found are a breach of the acceptable quality guarantee.
Application fee ($90)
[139] Kenneth is not entitled to recover the application fee for this Tribunal or in the Disputes Tribunal. Costs associated with the Tribunal proceeding are only recoverable in the circumstances outlined in cl 14 of the Schedule to the Motor Vehicle Sales Act 2003, namely the failure by a party to attend the hearing without cause or failure to take part in settlement discussions or acting in a contemptuous or improper manner during those discussions. These conditions are not met in the present case.
Damages for stress and inconvenience - $4,000
[140] Kenneth is not entitled to recover damages for stress and inconvenience, claimed in the sum of $4,000. Kenneth refers to the Tribunal’s decision in Codlin v Trail Lite Caravans Ltd.[12] In Codlin, the Tribunal awarded $2,000 compensation for stress and inconvenience suffered by Mr Codlin in respect of his plans to live in a motorhome and travel around the country in the summer of 2020/2021, which were upset due to the absence of a working 3-way fridge/freezer in the motorhome. In making this award of compensation, the Tribunal relied on the decision of the District Court in Auckland Property Restoration Ltd v Blackford.[13] In that case, the Court awarded $1,000 for general damages for stress as a result of failure to effectively carry out remedial work to fix a leaky home.
[141] However, that District Court decision did not refer to the Court of Appeal’s decision in Bloxham v Robinson[14] in which the majority adopted the statement by Bingham LJ in Watts v Morrow [1991] EWCA Civ 9; [1991] 4 All ER 937 at 959-960 that:
A contract-breaker is not in general liable for any distress, frustration, anxiety, displeasure, vexation, tension or aggravation which his breach of contract may cause to the innocent party. This rule is not, I think, founded on the assumption that such reactions are not foreseeable, which they surely are or may be, but on considerations of policy.
But the rule is not absolute. Where the very object of a contract is to provide pleasure, relaxation, peace of mind or freedom from molestation, damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead. If the law did not cater for this exception category of case it would be defective.
[142] It is important to distinguish the situation applying in respect of claims for damages under s 43 of the FTA. As the Court of Appeal held in AMP Finance Ltd v Heaven,[15] there is no reason why stress damages should not be available in appropriate cases under that Act. But Kenneth’s FTA claims have failed and so there is no need to consider the availability of stress damages for breach of the FTA in the present case.
[143] Nor, in my view, is it entirely clear whether general damages for stress are even available for breach of the CGA (as damages for reasonably foreseeable consequential loss under s 18(4)). They were awarded by the District Court in Hosking v The Warehouse Ltd[16] where the District Court awarded $7,500 for stress and inconvenience (on top of an agreed sum of $50,000 plus interest) when a faulty electric blanket caused a house fire. By contrast, and much more recently, the District Court, in an appeal from a decision of this Tribunal, expressed doubts as to whether the Tribunal has jurisdiction to consider a claim for stress damages.[17] Citing the Court of Appeal’s decision in Mouat v Clark Boyce, the District Court held that stress damages are not available for breach of a commercial contract.[18] Secondly, the Court held that the fact the purchaser might suffer stress damages was by no means a reasonably foreseeable consequence of a breach by the trader of any provision of the contract of sale or of any statutory duty.[19]
[144] When the Tribunal has previously considered awarding damages under the CGA for stress and inconvenience it has tended to indicate that compensatory damages for stress and anxiety are to be reserved for exceptional cases. Claims involving defective motor vehicles are inherently stressful and time consuming and the circumstances of this case are similar to many of the cases that come before the Tribunal where a consumer spends time, effort and emotional energy attempting to resolve the issues they have with a vehicle.[20]
[145] Kenneth claimed to have suffered stress and inconvenience arising from the vehicle’s defects between February 2022 and February 2023 that has restricted Kenneth’s freedom and enjoyment in respect of travel to university, the supermarket, to visit friends and play sport as well as to travel and stay in the vehicle in self-contained permitted areas over significant periods as intended and expressed as desired by Kenneth.
[146] Even assuming the Tribunal has jurisdiction to award general damages under s 18(4) of the CGA for stress, I am not persuaded that there was any material stress and inconvenience associated with this vehicle’s defects to justify an award of general damages to Kenneth. In particular, as mentioned, Kenneth admitted at the hearing being able to secure a warrant of fitness for the vehicle on more than one occasion, despite the initial VTNZ failure. Moreover, the evidence shows that Kenneth has driven more than 12,000 km in the vehicle since purchasing it. Kenneth’s claim for stress and inconvenience due to inability to use the vehicle as intended is not persuasive in light of the fact that the evidence showed that the vehicle has remained largely operational and usable by Kenneth.
Conclusion
[147] Kenneth’s claim succeeds to the extent of the three established breaches of the acceptable quality guarantee outlined above. The Tribunal’s formal orders are set out at the beginning of this decision.
J S McHerron
Adjudicator
[1] This proceeding was transferred to the Motor Vehicle Disputes Tribunal by the Disputes Tribunal. Kenneth Tyree's claim against Euroland was determined by the Disputes Tribunal on 8 June 2022 (Tyree v Euroland Motor Company Ltd CIV-2022-085-000206). Kenneth successfully sought a rehearing of that proceeding and the Disputes Tribunal's 8 June 2022 order was set aside on 17 August 2022. On 19 September 2022, instead of conducting the rehearing that had been ordered, the Disputes Tribunal ordered that the proceedings be transferred to the Motor Vehicle Disputes Tribunal. However, it appears the Motor Vehicle Disputes Tribunal did not receive any documentation relating to the application until Kenneth sent it in on 8 February 2023.
[2] Motor Vehicle Sales Act 2003, sch 1, cl 7.
[3] The Motor Vehicle Disputes Tribunal has no equivalent to the Disputes Tribunal’s power to rehear matters: Disputes Tribunal Act 1988, s 49.
[4] Motor Vehicle Sales Act 2003, s 89(1)(b)(iv).
[5] Waka Kotahi Vehicle Inspection Requirements Manual (as at 13 April 2023), In-service certification (WoF and CoF) General Vehicles at 3 Vehicle Structure 3-1 Structure (incl frontal impact), reason for rejection 1(a).
[6] Waka Kotahi Vehicle Inspection Requirements Manual (as at 13 April 2023), In-service certification (WoF and CoF) General Vehicles at 2 Vehicle exterior 2-1 External projections, reason for rejection 4.
[7] Waka Kotahi Vehicle Inspection Requirements Manual (as at 13 April 2023), In-service certification (WoF and CoF) General Vehicles at 10 Tyres, wheels and hubs 10-1 tyres and wheels, reason for rejection 20.
[8] Waka Kotahi Vehicle Inspection Requirements Manual (as at 13 April 2023), In-service certification (WoF and CoF) General Vehicles at 6 Entrance and exit 6-1 Door and hinged panel retention systems, reason for rejection 8 (corrosion damage within 150 mm of the latch of the door or other hinged panel).
[9] Waka Kotahi Vehicle Inspection Requirements Manual (as at 13 April 2023), In-service certification (WoF and CoF) General Vehicles at 3 Vehicle Structure 3-1 Structure (incl frontal impact) reason for rejection 1 (d).
[10] Trade Me site “terms and conditions” <https://help.trademe.co.nz/hc/en-us/articles/360007001532-Trade-Me-site-terms-and-conditions>, at 5.1 bidding and buying.
[11] Consumer Guarantees Act 1993, s 18(2)(b)(ii).
[12] Codlin v Trail Lite Caravans 1980 Ltd [2021] NZMVDT 121.
[13] Auckland Property Restoration Ltd v Blackford DC Auckland NP 3852/97, 25 November 1998 overturned on appeal but not in relation to the award of general damages in Blackford v Auckland Property Restoration Ltd HC Auckland AP 9/99, 3 May 1999.
[14] Bloxham v Robinson (1996) 7 TCLR 122 at 24. See also Pier v Imation Holdings Ltd HC Auckland CIV-2005-404-503, 5 December 2006 at [33]. In that case, the Court held that general damages could not be awarded because the object of the contract – being the construction of a vessel (albeit a pleasure craft) – was not to provide pleasure, relaxation, peace of mind or freedom from molestation.
[15] AMP Finance NZ Ltd v Heaven (1998) 6 NZBLC 102,414 (CA).
[16] Hosking v The Warehouse Ltd DC Auckland NP1476/97, 4 October 1998 - unsuccessfully appealed on other grounds: A & W Holdings (New Zealand) v Hosking, HC Auckland HC191/98, 14 April 1999.
[17] Talakai v Easy Driver Ltd [2021] NZDC 7786 at [13].
[18] Mouat v Clark Boyce [1992] 2 NZLR 559 (CA).
[19] Talakai (above n 17 at [15]).
[20] See, for example, Keys v Motoka Ltd [2023] NZMVDT 39 at [47].
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