Knofflock v Monaco Motors Limited - Reference No. MVD 024/2023 [2023] NZMVDT 97 (26 May 2023)

Last Updated: 17 July 2023

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 024/2023 [2023] NZMVDT 097 BETWEEN DAVID KNOFFLOCK Applicant AND MONACO MOTORS LIMITED Respondent

HEARING at CHRISTCHURCH on 6 April 2023 (By Microsoft Teams) MEMBERS OF TRIBUNAL

D M Jackson, Barrister – Adjudicator S D Gregory – Assessor

APPEARANCES

D Knofflock, Applicant

J Thompson, Director for the Respondent

DATE OF DECISION 26 May 2023, reissued on 29 May 2023

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DECISION OF THE TRIBUNAL

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1. Within ten working days of the date of this decision Monaco Motors Limited is to pay Mr Knofflock $2,385.87.

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REASONS

Introduction

[1] On 12 December 2022 Mr Knofflock purchased a 2016 Toyota Highlander from Monaco Motors Limited (MML) for $24,990. At the time of purchase the vehicle’s odometer read 178,998 kms. At the time of sale, the parties agreed that the vehicle had an oil leak, which would be repaired before its collection. This item was documented in the Vehicle Offer & Sale Agreement (VOSA). Mr Knofflock, who lives in New Plymouth, collected the vehicle from Christchurch and drove it home. However, upon returning home he discovered an oil leak on his driveway, which appeared to come from the same place as that identified in the VOSA.
[2] Mr Knofflock complained to MML and produced quotes from local workshops for the repairs. MML has refused to repair or pay for the repairs as quoted. It criticised the quotes as being dishonest or exaggerated. It accused one repairer of fraud, who refused as a result to have anything further to do with the vehicle. Mr Knofflock resolved to have the repair dealt with by a Toyota specialist repairer. MML refused to pay for the repair. Mr Knofflock proceeded and spent $2,385.87 on having the oil leak repaired. MML refuses to pay for the repair and persists in accusing Mr Knofflock or his repairer of acting dishonestly.

The issues

[3] 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 MML refused or failed to rectify the vehicle’s defects within a reasonable time?
• (c) What remedy is Mr Knofflock entitled to under the CGA?

Issue 1: Did the vehicle fail to comply with the guarantee of acceptable quality?

[4] 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”.
[5] “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.

(2) Where any defects in goods have been specifically drawn to the consumer’s attention before he or she agreed to the supply, then notwithstanding that a reasonable consumer may not have regarded the goods as acceptable with those defects, the goods will not fail to comply with the guarantee as to acceptable quality by reason only of those defects.

(3) Where goods are displayed for sale or hire, the defects that are to be treated as having been specifically drawn to the consumer’s attention for the purposes of subsection (2) are those disclosed on a written notice displayed with the goods.

...

(5) A reference in subsections (2) and (3) to a defect means any failure of the goods to comply with the guarantee of acceptable quality.

[6] Whether a vehicle is of acceptable quality is considered from the point of view of a reasonable consumer who is fully acquainted with the state and condition of the vehicle, including any hidden defects.
[7] Mr Knofflock outlined the circumstances in which he purchased the vehicle via a TradeMe advertisement. Mr Knofflock had his brother-in-law inspect the vehicle in Christchurch. During the inspection an oil leak from the bell housing was identified as needing repair. Mr Knofflock was informed and proposed that if MML repaired the oil leak, he would purchase the vehicle. A deal was struck and documented, the VOSA dated 6 December 2022 expressly recording MML would “inspect/repair oil leak”.
[8] On 9 December 2022 MML confirmed the repair had been carried out. Mr Knofflock paid for the vehicle on 12 December 2022 and collected the vehicle from Christchurch on 14 December 2022. He says that when he got home, he noticed there was oil dripping from the vehicle at the bell housing area. He called MML and sent Mr Thompson a text message with a photograph of the oil leak.
[9] Mr Knofflock then took the vehicle to his local mechanic who diagnosed the rear main seal was leaking and required replacement. MML was informed by text message and Mr Thompson called for the repairer’s quote, which Mr Knofflock duly provided (in the amount of $1,509.44). Mr Knofflock made it clear to MML that he did not accept the vehicle with the oil leak. He then followed up with Mr Thompson several times only to be told, eventually, that Mr Thompson believed the repair quote to be fraudulent and would not pay for the repair. Mr Thompson denied there was a leak. The repairer refused to deal with the vehicle further having been accused of dishonesty by Mr Thompson.
[10] So, Mr Knofflock took the vehicle to a Toyota dealership, who quoted for the repair in the amount of $3,152.15. Mr Knofflock sent the quote to MML and gave it two options: refund the purchase price or pay for the repair. MML refused either option.
[11] MML says Mr Knofflock had the vehicle inspected by his brother-in-law, whom it described as a mechanic, and then by MML’s mechanic. All repairs necessary were identified during that pre-purchase inspection and were completed by MML prior to collection by Mr Knofflock. MML refused to repair or pay for any of the repairs quoted further.
[12] Mr Knofflock issued this claim and then had the repair carried out, which cost $2,385.87 and involved (according to the repairer’s invoice dated 8 February 2023):

“JOB 1 REMEDY OIL LEAK - REAR MAIN SEAL

Drained and saved fluids De-gas air con.

Removed engine/trans subframe, seperate engine to inspect oil leak.

Removed rear main seal housing and cleaned, reinstalled with new seal.

Reassembled in reverse order. Repair snapped exhaust stud, refit with new

nuts.

Replace right hand inner cv boot clip.

Regass air conditioning and reuse all old fluids

Topped up engine oil.

Replace missing cover off battery, bleed cooling system,

Test drive - All OK”

[13] I note the repair was cheaper than the initial quote of $3,152.15 including GST.
[14] Despite this, MML says the repair is too expensive and Mr Knofflock should not have gone to a Toyota dealership. It says the leak referred to in the VOSA was a leak in the transmission. It says the leak now complained of is in a different area and was not present at the point of sale or collection by Mr Knofflock. MML engaged Mr Jamie Hansen of Christchurch Mobile Mechanic to look at the pre-purchase issues identified. MML has also provided a letter from Mr Hansen who “found one leak that had been fixed and had some uncleaned residue left and it was unrelated to the rear main seal". MML further produced a letter from the previous owner of the vehicle who said the vehicle suffered no oil leaks during her tenure.
[15] Mr Gregory, the Tribunal’s Assessor, has reviewed all of the evidence available and heard from both parties. He considers the photographs supplied by Mr Knofflock show an excess of oil, which would be consistent with the rear seal failure later diagnosed and repaired. Mr Gregory considers the evidence to be clear that the rear main seal, which seals the crankshaft as it exits the engine, was failing. Mr Gregory does not consider the repair carried out to be too expensive or that its methodology was flawed. Rather, as Mr Knofflock confirmed during the hearing – the repair has been a success.
[16] I find the vehicle had an oil leak resulting from the defective rear main seal. The evidence is that that problem arose early in Mr Knofflock’ s ownership of the vehicle, if not beforehand. The VOSA records the need to inspect and repair an oil leak. The vehicle arrived in New Plymouth with an oil leak. Whether it was the same oil leak or not is not the issue. The rear main seal failed almost immediately and with no more than a trip from Christchurch to New Plymouth under its belt. Mr Gregory accepts that the initial oil leak noticed in December 2022 was likely the same oil leak that, in January 2023, required replacement of the rear main seal. As this fault began to occur so early in Mr Knofflock’s ownership of the vehicle (if not before as above), I accept that this amounts to a failure to comply with the guarantee of acceptable quality. That is because I do not consider that a reasonable consumer would regard such a fault as acceptable in light of the age, mileage and price of this vehicle and the length of time Mr Knofflock had owned it for, when the problem first arose.
[17] Accordingly, I conclude that the defective rear main seal, causing the vehicle to leak engine oil, was a failure to comply with the guarantee of acceptable quality in breach of s 6 of the Act.

Issue 2: Has MML refused or failed to rectify the vehicle’s defects within a reasonable time?

[18] Section 18(2)(b)(i) 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.
[19] 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.

[20] I am satisfied that MML has both refused and failed to repair the vehicle within a reasonable time. It accepted there was an oil leak at the point of sale and agreed to repair it. Within a short time of collecting the vehicle, Mr Knofflock found the vehicle was leaking oil and a rear main seal failure was diagnosed. Whether the first (pre-purchase) leak was a transmission leak or not is irrelevant because the second leak was caused by a rear main seal failure, which I have found was too early in Mr Knofflock’s ownership.
[21] MML did not engage with Mr Knofflock and alleged his claim for a repair to be dishonest. That allegation, unsubstantiated by MML then or now, saw the original repairer walk away from the repair. That Mr Knofflock then went to a specialist Toyota repairer for a diagnosis and quote was both understandable and reasonable. He wanted Mr Thompson to take his complaint seriously. Rather than do so, MML doubled-down and refused to engage further alleging there was no leak or otherwise that the Toyota repairer’s quote was exaggerated. Mr Knofflock did not want to reject the vehicle and gave MML the option of rejection or repair. When it refused either option, Mr Knofflock chose to repair it and sue for recovery of the cost. That repair came in cheaper than that quoted by the Toyota repairer and has been a success. MML had more than a reasonable time to repair the fault but chose not to. Mr Knofflock was entitled to act as he did and to have the repair carried out elsewhere.
[22] For these reasons I find that MML failed or refused to repair the fault within a reasonable time.

Issue 6: What remedy is Mr Knofflock entitled to under the CGA?

[23] The relevant remedies are set out in s 18 of the CGA (refer [19] above).
[24] Section 18(2)(b)(i) applies. Mr Knofflock is entitled to the cost of the repair carried out to his order following the failure or refusal of MML to repair in the amount of $2,385.87.

Outcome

[25] Within ten working days of the date of this decision MML is to pay Mr Knofflock $2,385.87 pursuant to s 18(2)(b)(i) of the CGA.

D M Jackson
Adjudicator