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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 29 March 2024
IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA
MVD
470/2023
[2024] NZMVDT 015
UNDER APPEAL
BETWEEN ROBERT BARON KNUDSEN
Purchaser
AND MERCHANTS LIMITED TA MERCHANT MOTORS
Trader
HEARING at AUCKLAND on 26 January 2024
MEMBERS OF
TRIBUNAL
J S McHerron, Barrister – Adjudicator
S D Gregory –
Assessor
APPEARANCES
R B Knudsen, Purchaser
J P Knudsen, Purchaser’s support person
S
Merchant, Buyer Manager for Trader (by AVL)
DATE OF DECISION 7 February 2024
___________________________________________________________________
DECISION OF THE TRIBUNAL
___________________________________________________________________
___________________________________________________________________
REASONS
Introduction
[1] The parties to this dispute have not been able to agree on arrangements for fixing defective blackout paintwork on Robert Knudsen’s Holden Colorado. In this decision, the Tribunal:
- (a) makes orders for the parties to proceed to get this work completed;
- (b) dismisses Mr Knudsen’s claim for additional compensation.
Background
[2] On 21 July 2022, Mr Knudsen purchased a 2016 Holden Colorado from Merchants Ltd for $32,494. The purchase price included a 36-month mechanical breakdown insurance policy.
[3] Originally, the vehicle had chrome trim on various parts including the radiator grille, fog light covers, rear bumper bar, wheels, wing mirrors, badges on the tailgate, and door handles. However, before Mr Knudsen purchased it, Merchants had arranged for these chrome parts to be repainted with blackout paint.
[4] Mr Knudsen was initially very happy with the vehicle, but within a few months it became apparent that the blackout paint job was a failure, as it started peeling off. The condition of the black paintwork has progressively worsened.
[5] Merchants accepts that the repainting of the chrome with black paint was a failure and needs to be redone. It is prepared to meet the cost of this work. However, the parties have not been able to agree on how this repainting should occur. Merchants attempted to arrange for the affected parts on the vehicle to be repainted, but the parties could not agree on the details of the repainting arrangement. Merchants then offered Mr Knudsen $1,500 so that he could get the repainting done himself. At the hearing of this matter, Merchants’ buyer manager, Mr Merchant increased his offer to $2,000. However, Mr Knudsen does not consider that this will be enough, given the extensive work that is required. He has produced a quote for repairs from Armstrong’s Autobody for $2,620. In addition to the cost of repairs, Mr Knudsen seeks compensation for:
- (a) what he says are deep scratches in the original chrome caused by inadequate preparation. He is concerned they may rust;
- (b) the possibility that he may have to replace the paint again, due to the difficulty in ensuring the paint maintains its adhesion to the chrome; and
- (c) alleged reduction in the value of his vehicle due to the defective paintwork.
[6] In terms of quantum, Mr Knudsen referred to his initial claim in the Disputes Tribunal, from which this proceeding has been transferred,[1] for $9,500 compensation.
[7] From this background, the following issues arise for the Motor Vehicle Disputes Tribunal to determine:
Issue 1: Did the vehicle fail to comply with the guarantee of acceptable quality?
[8] Section 6(1) of the Consumer Guarantees Act 1993 (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.
[9] “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.
...
[10] 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.
[11] There was no dispute in the present case that the blackout paintwork on the vehicle has not been of acceptable quality because it was insufficiently durable. Accordingly, I uphold Mr Knudsen’s claim that the vehicle has not been of acceptable quality.
Issue 2: Did the trader refuse to remedy the failure?
[12] No evidence was presented that Merchants ever refused to remedy the defective paintwork. However, Mr Knudsen is not satisfied that the repair work Merchants is offering will be carried out to a sufficiently high standard.
[13] Mr Knudsen’s claim in the Disputes Tribunal led to the parties agreeing to send the vehicle to an AA/MTA approved auto painter for repairs at Merchants’ expense.
[14] However, the agreement fell apart before the repair work began. The Disputes Tribunal then transferred the proceeding to the Motor Vehicle Disputes Tribunal after the settlement agreement collapsed.
Issue 3: What is the appropriate remedy?
[15] 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.
[16] 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) and allows the consumer to require the supplier to remedy the failure within a reasonable time.
[17] From the correspondence supplied by Mr Knudsen, I cannot see any evidence that Merchants refused or neglected to remedy the vehicle’s paintwork. Although it has taken an unreasonably long time to get the repair carried out, I am not prepared to attribute blame to Merchants for the delay. On my assessment of the negotiations between the parties about repairs, Merchants appears to have been reasonably flexible as to the repair arrangements, to accommodate Mr Knudsen’s wish that the repair be carried out by an AA/MTA approved auto painter.
[18] Indeed, as a result of the Disputes Tribunal process, Merchants arranged for the repainting work to be carried out by Smart Auto Centre in Ōtāhuhu at an estimated cost (discounted at trade rates) of $1,725. Smart Auto Centre’s estimate states that it fits with Mr Knudsen’s criteria of being MTA assured and an AA approved repairer. In addition, Merchants agreed to provide Mr Knudsen with a loan vehicle for the estimated five-to-six-day period that his own vehicle would be at Smart Auto Centre.
[19] Mr Knudsen’s criticisms of the proposed repair process (to which, according to the Disputes Tribunal order, he seems earlier to have agreed) mainly seem to stem from a breakdown in trust between him and Merchants.
[20] From the evidence I have seen, I am not persuaded that Mr Knudsen is justified in his loss of trust in Merchants. It seems to me that Merchants has taken reasonable steps to reach a settlement of this dispute, consistent with its responsibilities under the Motor Vehicle Sales Act 2003 and the CGA. Moreover, Merchants was willing to pay Mr Knudsen a financial contribution instead of the arrangement with Smart Auto Centre to allow him, if he preferred, to get the repairs done by an auto painter of his choice. That option presumably still remains open.
[21] In my view, the position reached by agreement of the parties in the Disputes Tribunal remains the correct remedy under the CGA. My decision is to embody the parties’ earlier agreed position in a Tribunal order, because:
- (a) Merchants is prepared to repair the vehicle as it had earlier agreed to do;
- (b) Mr Knudsen has not provided me with any compelling reason for departing from that arrangement; and
- (c) in particular, on my assessment of the evidence, Mr Knudsen has not yet given Merchants an adequate opportunity to repair the defective paintwork, as he is required to do under s 18(2)(a) of the CGA.
[22] Mr Knudsen should now let Merchants comply with its CGA obligations.
No additional compensation is warranted
[23] I do not consider that Mr Knudsen is entitled to any additional monetary compensation, because:
- (a) Mr Knudsen has not presented sufficient evidence to support his claim that there are deep scratches in the original chrome. These scratches are not evident in the photos produced by Mr Knudsen. Nor is there any reference to scratches in the Armstrong’s Autobody quote for repairs produced by him.
- (b) There is no justification for compensating Mr Knudsen for the possibility that he may have to replace the paint yet again, if the proposed repair is unsuccessful or not durable. Until such need actually arises, there is no basis for making an anticipatory order of compensation. In terms of the language in s 18 of the CGA, there is no “failure” yet to be remedied. Nor do I consider that there is any reasonably foreseeable loss or damage that is liable to result from the current failure. Repairs to the paintwork will themselves be covered under the CGA, but Mr Knudsen will first have to establish that the repaired paintwork itself has a defect. That circumstance has not yet arisen. And Merchants appeared to be confident that it will not arise, because the repainting will be carried out to an acceptable standard, if Smart Auto Centre is given an opportunity to carry out the repair.
- (c) Mr Knudsen has not established that, if the defective paintwork is properly repaired, there will be any reduction in the value of his vehicle.
Result
[24] Accordingly, I order Merchants Ltd to repair the defective paintwork on Mr Knudsen’s vehicle to a tradesperson-like standard, ensuring that the paintwork will be durable. The repair is to be carried out by Smart Auto Centre in accordance with its estimate #66500. The parties are to make arrangements for the vehicle to be booked into Smart Auto Centre for the repairs to be carried out as soon as is practicable at Merchants’ expense.
[25] As agreed by Mr Merchant at the hearing, Merchants is to provide Mr Knudsen with a loan vehicle while his own vehicle is being repainted. However, it is appropriate that Mr Knudsen drop his own vehicle off at Smart Auto Centre and collect Merchants’ loan vehicle from there.
[26] I trust the parties will now be able to work together to implement these repairs. Mr Knudsen should rest assured that the repairs will also be covered under the CGA, leaving him with a further remedy if the repairs are not of acceptable quality. However, it is to be hoped that in, accordance with this Tribunal’s orders, the repairs will now be carried out to an acceptable standard.
J S McHerron
Adjudicator
This decision has been appealed. The outcome of that appeal was unknown at the date of the publication of this decision.
[1] Knudsen v Merchants Ltd Disputes Tribunal North Shore CIV-2023-044-000350, 10 October 2023.
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