Thompson v Autosave 2021 Ltd - Reference No. MVD 321/2024 [2024] NZMVDT 177 (1 October 2024)

Last Updated: 29 December 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 321/2024 [2024] NZMVDT 177 BETWEEN JONATHAN THOMPSON Applicant AND AUTOSAVE 2021 LIMITED Respondent

MEMBERS OF TRIBUNAL

D Watson, Adjudicator

S Haynes, Assessor

HEARING at Auckland on 26 September 2024 (by audio-visual link)

APPEARANCES

J Thompson, Applicant

O Ishina, for the Respondent

DATE OF DECISION 1 October 2024

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DECISION OF THE TRIBUNAL

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1. Jonathan Thompson’s application for rejection of his vehicle is upheld.
2. Autosave 2021 Ltd must pay Jonathan Thompson $6,285 within 10 working days of the date of this decision.

100. Once the sum of $6,285 is paid to Jonathan Thompson, Autosave 2021 Ltd must make arrangements to uplift the vehicle at a time, date and place convenient to Jonathan Thompson.

4. Leave is granted to the parties to seek additional orders if there are any difficulties implementing the foregoing orders.

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REASONS

Introduction

• [1] Jonathan Thompson purchased a 2014 Holden Barina^[1] from Autosave 2021 Ltd (ASL) on 29 February 2024 for $5,490 plus $795 for a mechanical breakdown insurance (MBI) policy. The vehicle had then travelled 124,032 km. He claims that the vehicle suffered from a faulty torque converter on the day of purchase and that this was a failure of a substantial character. He is seeking rejection of the vehicle.
• [2] ASL wants the opportunity to repair the vehicle.

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 ASL failed to repair the fault within a reasonable time?

(c) What remedy is Mr Thompson entitled to under the CGA?

Relevant background

• [4] As Mr Thompson was driving away from the ASL car yard on the day of purchase he noticed that while driving at approximately 50 km/h speed, the vehicle would jerk and shudder.
• [5] The vehicle was still driveable, but Mr Thompson felt there was clearly something wrong with it, so he arranged for it to be returned to ASL on 4 March 2024 so that the issue could be fixed.
• [6] On 6 March 2024, ASL advised Mr Thompson that it had flushed the transmission fluid and that it might take 1,000 km to notice an improvement.
• [7] Mr Thompson picked up his vehicle on 6 March but noticed on the way home that the jerking and shuddering was still there. He conducted some research online and discovered that if a transmission flush was to make an improvement it would be noticeable within a day. He therefore arranged for the vehicle to be returned to ASL on 19 March 2024 to have the problem fixed a second time.
• [8] On this occasion, the salesman he had been dealing with, Sylas, told him to make a claim on his MBI policy to rectify the issue and said that ASL would pay the excess.
• [9] Mr Thompson did not want to make a claim under his MBI policy because he took the view the issue was pre-existing and therefore that pre-existing conditions would not be covered. He texted Sylas to say he did not want to do that and explained why.
• [10] Mr Thompson asked for a refund or replacement, but ASL was not prepared to agree to this.
• [11] Having received advice from ASL that he should make a claim on his MBI policy, Mr Thompson next took the vehicle to Kaspa Transmissions, a transmission specialist, on the recommendation of ASL. The transmission specialist there said he was not sure what the fault was, that it could be a torque converter although he could not guarantee that. The mechanic told him it would cost between $2,300–$2,500 plus GST to replace a torque converter. A written estimate was provided which recorded:

  Transmission intermittently surging on light throttle. Suspect faulty torque converter assembly. Cannot confirm if torque converter is faulty until removed & inspected.

• [12] Mr Thompson had further communications with Sylas, who confirmed that he should make a claim on his MBI policy and that ASL would meet the excess.
• [13] Mr Thompson rejected the vehicle on 26 March 2024.
• [14] Mr Thompson filed a claim in the Disputes Tribunal on 26 March 2024 which was later transferred to the Motor Vehicle Disputes Tribunal.
• [15] On 20 June 2024, Mr Thompson took the vehicle to Firstgearboxes Ltd. It found that the torque converter “seems to have a lock up issue so to fix the issue its [sic] remove the transmission and send the torque converter away to be checked”. It estimated $2,127.50 to rebuild the converter and replace fluids.
• [16] The vehicle’s odometer reading is currently 126,148 kms.

The position of ASL

• [17] ASL apologises to Mr Thomspon for its handling of this matter, which it accepts was not well handled at the outset. It is willing to fix the vehicle at its cost, or to replace the vehicle. It does not offer any substantive defence to the application.

Issue 1: Was the vehicle of acceptable quality?

• [18] Section 6 of the CGA imposes on suppliers and manufacturers of consumer goods, a guarantee that the goods are of acceptable quality. Section 2 of the CGA defines “goods” as including vehicles.
• [19] The expression "acceptable quality" is defined in s 7 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.

(4) Goods will not fail to comply with the guarantee of acceptable quality if—

(a) the goods have been used in a manner, or to an extent which is inconsistent with the manner or extent of use that a reasonable consumer would expect to obtain from the goods; and

(b) the goods would have complied with the guarantee of acceptable quality if they had not been used in that manner or to that extent.

(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.

• [20] In considering whether or not goods meet the guarantee of acceptable quality, the Tribunal must consider the quality elements as set out in s 7(1)(a)–(e) of the CGA as modified by the factors set out in s 7(1)(f)–(j), from the perspective of a “reasonable consumer”. The test is an objective one; it is not a view of those factors from a purchaser’s subjective perspective.
• [21] Mr Haynes, the Tribunal’s Assessor, advises that this vehicle has a fault which is causing it to jerk and shudder at a speed of 50 km. He agrees with the diagnosis of Kasper and Firstgearboxes Ltd to the effect that the fault may well be a torque converter, however, he agrees that this could not be confirmed until the repairs are underway.
• [22] This was a high mileage and relatively inexpensive vehicle however I do not consider a reasonable consumer would expect to encounter such a fault so soon into their ownership of the vehicle. Mr Thompson has not been able to drive the vehicle while it needs these repairs. The relevant repair is very expensive in comparison with the value of the vehicle. Given the age, price and mileage of the vehicle and the fact that clearly this fault has been pre-existing, I do not consider that a reasonable purchaser would find this fault acceptable.
• [23] The fault that is causing the vehicle to jerk and shudder at speeds of 50 km/h has meant that the vehicle fails the guarantee of acceptable quality.

Issue 2: Did ASL fail to repair the fault within a reasonable time?

• [24] Mr Thompson will be entitled to reject the vehicle under s 18(2)(b)(ii) of the CGA if ASL has failed to repair the fault within a reasonable time.
• [25] 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.

• [26] I find that ASL was required to remedy the fault on two occasions. The first occasion, the fault was not remedied. On the second occasion, ASL said that Mr Thompson would need to make a claim under his MBI policy in order for the fault to be repaired. That was tantamount to a refusal to repair in my view.
• [27] I find that ASL refused and failed to repair the fault within a reasonable time of request.

Issue 3: What remedy is Mr Thompson entitled to under the CGA?

• [28] Mr Thompson is entitled to an order for rejection of the vehicle pursuant to s 18(2)(b)(ii) of the CGA.
• [29] He is entitled to a refund of all amounts paid in respect of the vehicle,^[2] which in this case is the purchase price and the cost of the mechanical breakdown insurance policy, a total of $6,285.
• [30] ASL must pay the sum of $6,285 to Mr Thompson within 10 working days of the date of this decision. Once those funds have been paid to him, it must make arrangements for the vehicle to be uplifted at a time, date and place convenient to Mr Thompson.

DATED at AUCKLAND this 1st day of October 2024

D Watson
Adjudicator

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^[1] Registration number: QKC452

^[2] Consumer Guarantees Act 1993, s 23(1)(a).