Lesser v Universal Imports 1998 Ltd - Reference No. MVD 337/2024 [2024] NZMVDT 184 (9 October 2024)

Last Updated: 29 December 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 337/2024 [2024] NZMVDT 184 BETWEEN GARREN LESSER Applicant AND UNIVERSAL IMPORTS 1998 LIMITED Respondent

HEARING at AUCKLAND on 3 October 2024 (by audio-visual link) MEMBERS OF TRIBUNAL

C Euden – Adjudicator S Haynes – Assessor

APPEARANCES

G Lesser, Applicant

C Peck, for the Respondent

DATE OF DECISION 9 October 2024

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DECISION OF THE TRIBUNAL

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A Garren Lesser’s application to reject the vehicle is allowed.

2. Universal Imports 1998 Limited shall, within 10 working days of the date of this decision, pay $12,262.73 to Mr Lesser.

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REASONS

Introduction

• [1] Mr Lesser purchased a 2011 Volvo V60 T4 from Universal Imports 1998 Limited (Universal Imports) on 24 January 2024. The odometer read 98,000 km when purchased.
• [2] The vehicle cost $10,499 and Mr Lesser also purchased a two-year mechanical breakdown insurance policy for $1,200 (via Protecta but arranged by Universal Imports). Mr Lesser traded in his Mazda Demio for $5,500 at the time of purchase, leaving a balance of $6,199 which Mr Lesser paid.
• [3] Mr Lesser says the vehicle has had a persistent oil leak since purchase and he wishes to reject the vehicle.
• [4] Universal Imports says it wants a further opportunity to repair the oil leak.

Evidence

• [5] Mr Lesser appeared at the hearing. For Universal Imports, evidence was given by Christopher Peck, its Sales Manager.
• [6] Written material was supplied by both parties before and after the hearing.

The issues

• [7] 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 Universal Imports refused or failed to rectify the vehicle’s defects within a reasonable time?

(c) Has Mr Lesser lost the right to reject the vehicle?

(d) What, if any, remedy is Mr Lesser entitled to under the CGA?

Relevant background

• [8] On 24 January 2024 Mr Lesser purchased a 2011 Volvo V60 T4 from Universal Imports. He took possession of the vehicle the same day.
• [9] Approximately two weeks later the vehicle’s windscreen seal came out. Mr Lesser asked Universal Imports to replace it, which it did.
• [10] By 24 March 2024 Mr Lesser had noticed that the vehicle had a substantial oil leak. He said that he first noticed the oil leak from oil stains on his friend’s driveway after he visited his friend. Mr Lesser contacted Universal Imports as well as his mechanical breakdown insurer (Protecta) about the leak. Protecta advised that Mr Lesser should take the vehicle to a mechanic for inspection.
• [11] On 26 March 2024 Mr Lesser took the vehicle to Mychanics Limited (Mychanics) to have the oil leak inspected. That inspection cost Mr Lesser $69 and it identified that there was a “leak coming from rocker cover area, turbo area and turbo drain”.
• [12] On 27 March 2024 Mr Lesser says he contacted Universal Imports about the leak and was told to return the vehicle to Universal Imports for inspection.
• [13] On 4 April 2024 Mr Lesser took the vehicle to Universal Imports for repair. Universal Imports had the leak inspected and repaired by Turner Automotive Mobile Auto Repairs Limited (Turner Automotive). It was not until 26 April 2024 that Mr Lesser was advised that the vehicle was ready for collection; Mr Peck stated that the delay was due to sourcing necessary parts for the repair. In the period Universal Imports had the vehicle for repairs, the vehicle was driven approximately 400 km.
• [14] On 8 May 2024 Mr Lesser returned to Mychanics as the vehicle continued to smell of burning oil. Mychanics advised him by email the next day that “there is still a lot of oil evident around the turbo area, as well as all around the rocker cover. The leak is considerable and does need to be rectified as it could pose a fire hazard”.
• [15] On 9 May 2024 Mr Lesser messaged Universal Imports explaining that Mychanics had advised that the leak had not been fixed and that the problems were worse. Mr Lesser asked to return the vehicle for a refund. Mr Peck rang Mr Lesser in response and asked him to return the vehicle for a further repair. By further message that day, Mr Lesser told Mr Peck “We’ll go ahead with the repair but please make sure it’s done properly this time. I can’t keep bringing the car back every 2 weeks to get it repaired”.
• [16] Mr Lesser returned the car to Universal Imports for a second attempt at repairs on 13 May 2024. Universal Imports then sourced a rocker cover and turbo oil line from Volvo Archibald & Shorter (VAS) and Turner Automotive installed them.
• [17] On 30 May 2024 Mr Lesser collected the vehicle from Universal Imports. Within the week Mr Lesser noticed the vehicle continued to smell like burning oil and the leak was still present.
• [18] On 7 June 2024 Mr Lesser again messaged Mr Peck regarding the continued leak:

  It has been about a week since I got the car back and after it has spent nearly a month getting repaired, the same problem still persists. I have taken it back to a mechanic and the problem has become worse now. I don’t appreciate that the issues weren’t addressed at all and am therefore going to ask for a refund of the car.

  I believe this is the best resolution considering the frustration and inconvenience all this has caused. Please contact me as soon as possible so we can start the refund process.

• [19] Mr Peck refused the refund and asked Mr Lesser to return the car for further repairs. Mr Lesser did so on 13 June 2024.
• [20] Mr Peck says Universal Imports arranged for Turner Automotive to inspect the vehicle for a third time. He says Turner Automotive advised that the vehicle no longer had a leak. On that basis, on 20 June 2024 Mr Peck advised Mr Lesser that the vehicle was ready for collection and that there was no oil leak. At the same time, Mr Peck advised Mr Lesser that the vehicle was veering to the left and suggested he have the wheels aligned. Mr Peck said at the hearing that he had noticed the left front tyre had been curbed “really badly” which might have been the reason the vehicle was veering to the left.
• [21] Mr Lesser collected the vehicle from Universal Imports on 23 June 2024. He says that when he got home, he observed fresh oil on the engine bay.
• [22] On 26 June 2024 Mr Lesser took the vehicle to Tony’s Tyre & Auto Care (Tony’s Tyre) for a wheel alignment. At the hearing Mr Lesser accepted that he had scraped the rim of the left front tyre, but noted that Tony’s Tyre’s video, taken at the time of the wheel alignment, recorded Tony’s Tyre’s view that the vehicle was likely veering left because all four of the tyres are out of shape. Mr Haynes, the Tribunal’s Assessor, advised that Tony’s Tyre’s video does not show any particular damage to the left front wheel area other than usual wear and tear from normal use.
• [23] On or about 27 June 2024 Mr Lesser again took the vehicle to Mychanics for an inspection. By invoice dated 3 July 2024 Mychanics advised that there were “oil leaks apparent from underneath vehicle... Looks like vehicle still leaking from rocker cover and turbo area”. Mychanics charged $160.43 for the inspection.
• [24] Mr Lesser filed his claim with this Tribunal on 15 July 2024.
• [25] On 26 July 2024 Mr Lesser took the vehicle to VAS for a full diagnostic and quote for repairs to fix the oil leak. VAS’s quote for repair notes that it “found traces of oil leak on engine + exhaust. Recommend replace gasket and re-check for leak. Also, gasket needs to be replaced before we can carry out the campaign”. VAS quoted $296.52 to replace the injector seals (four will need replacing) and $902.68 to replace the valve cover gasket (totalling $1,199.20).
• [26] Mr Lesser no longer uses the vehicle; it is permanently parked at his parent’s house.
• [27] Mr Lesser was asked during the hearing how much oil the vehicle used in the time he drove it. It was established that the vehicle used approximately three litres of oil across about 2,000 km and predominantly leaked oil after it had been running. Mr Haynes advised that three litres is an excessive amount of oil to be consumed by the vehicle across that distance, but also noted that if the vehicle was using that much oil then he would have expected a lot more oil to be present on the ground than what Mr Lesser reported.
• [28] Universal Imports offered to cover the costs for Mr Lesser to have the leak repaired at his own mechanic. Mr Lesser refused that offer; he says he has lost confidence in the vehicle and wishes to reject it.

Issue 1: Has the vehicle been of acceptable quality?

• [29] 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”.
• [30] “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.

• [31] 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.
• [32] A reasonable consumer should have realistic expectations about the quality and durability of a $10,499, 13-year-old Volvo V60 with an odometer reading of almost 100,000 km. A purchaser of such a vehicle should understand that the vehicle may have wear and tear consistent with its age and mileage and that ongoing maintenance will be required.
• [33] Despite the realistic expectations Mr Lesser must have for a vehicle of this price, age and mileage, I find that the vehicle has not been of acceptable quality because of the oil leak. The evidence shows that the oil leak was observed two months into Mr Lesser’s ownership of the vehicle. The leak meant the vehicle has not been as free of minor defects or as durable as a reasonable consumer would consider acceptable so soon after purchase.

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

• [34] Section 18(2)(b)(ii) 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. Mr Lesser will be entitled to reject the vehicle if Universal Imports has failed to succeed in rectifying the vehicle’s oil leak within a reasonable time.
• [35] 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.

• [36] To determine whether Mr Lesser is entitled to reject the vehicle, I need to consider whether Universal Imports has:

(a) succeeded in remedying the leak; and

(b) done so in a reasonable time.

Has Universal Imports succeeded in remedying the leak?

• [37] The evidence shows Universal Imports has had three opportunities to rectify the vehicle’s oil leak:

(a) Between 4 April 2024 and 26 April 2024.

(b) Between 13 May 2024 and 30 May 2024.

(c) Between 13 June 2024 and 23 June 2024.

• [38] During the hearing Mr Peck gave evidence that Universal Imports used Turner Automotive to rectify the vehicle’s oil leak on all three occasions. The only evidence submitted prior to the hearing regarding Turner Automotive’s involvement was an email from Turner Automotive dated 26 September 2024 in which it advised that it had replaced the vehicle’s rocker cover and turbo oil line on 28 May 2024.
• [39] At the hearing I asked Mr Peck to provide the Tribunal with any invoices from Turner Automotive for any work conducted on the vehicle. After the hearing Mr Peck provided the Tribunal with a copy of an invoice from Turner Automotive dated 26 April 2024. Mr Lesser queried the validity of the invoice as its metadata indicates it was created on 3 October 2024.
• [40] I agree that the Turner Automotive invoice was likely created on 3 October 2024. Although it is dated 26 April 2024, it notes work conducted on or about that date as well as subsequent work performed on 28 May and 20 June 2024. On that basis, I consider it more likely than not that it was created by Turner Automotive following the hearing. Nonetheless, I am satisfied that the invoice reflects actual remedial work conducted by Turner Automotive on the vehicle on the three occasions. I found Mr Peck’s evidence on this during the hearing persuasive and accept that Turner Automotive invoices Universal Imports on a cumulative basis and there would not have been specific invoices for work done on the vehicle at the relevant time. The recent invoice is also supported by the evidence that Turner Automotive submitted by email prior to the hearing.
• [41] Unfortunately, despite its three attempts to rectify the vehicle’s oil leak with Turner Automotive’s assistance, Universal Imports has not yet successfully remedied the oil leak. Whilst I am of the view that Universal Imports made reasonable efforts to repair the vehicle on all three occasions, I still find that the leak has not been successfully resolved.

Has Universal Imports had reasonable time to remedy the leak?

• [42] As I have found that Universal Imports has not yet successfully addressed the leak, I now need to consider whether it has had reasonable time to do so.
• [43] As noted at [37], Universal Imports had three opportunities to remedy the leak over a period of almost three months. In that time, Universal Imports had the vehicle for a total of 49 days.
• [44] Mr Haynes advises that the leak appears to be coming from the initial identified area and should really have been rectified after the first and/or second attempts. During the first attempt at repair, while the car was with Universal Imports it was driven approximately 400 km. Mr Haynes advises that the distance that was travelled would have been far enough to confirm whether the oil leak had been correctly rectified before handing the vehicle back to Mr Lesser. Further, the leak was not rectified after the second attempt and to compound matters, after it was returned to Universal Imports for the third time, Mr Lesser was told that there was no longer any oil leak.
• [45] While I am satisfied that Universal Imports has reasonably used the services of Turner Automotive and has not attempted to avoid its obligations to remedy the oil leak, I find that it had ample opportunities across a reasonable period to remedy the leak. I therefore find, under s 18(2)(b)(ii) of the CGA, Mr Lesser is entitled to reject the vehicle.

Issue 3: Has Mr Lesser lost the right to reject the vehicle?

• [46] As I have found that Mr Lesser is entitled to reject the vehicle under s 18(2)(b)(ii) of the CGA, I must consider whether he has lost the right to reject the vehicle.
• [47] The law relating to the loss of the right to reject goods is set out in s 20 of the CGA, which states:

20 Loss of right to reject goods

(1) The right to reject goods conferred by this Act shall not apply if—

(a) the right is not exercised within a reasonable time within the meaning of subsection (2); or

(b) the goods have been disposed of by the consumer, or have been lost or destroyed while in the possession of a person other than the supplier or an agent of the supplier; or

(c) the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply; or

(d) the goods have been attached to or incorporated in any real or personal property and they cannot be detached or isolated without damaging them.

(2) In subsection (1)(a), the term reasonable time means a period from the time of supply of the goods in which it would be reasonable to expect the defect to become apparent having regard to—

(a) the type of goods:

(b) the use to which a consumer is likely to put them:

(c) the length of time for which it is reasonable for them to be used:

(d) the amount of use to which it is reasonable for them to be put before the defect becomes apparent.

(3) This section applies notwithstanding section 170 of the Contract and Commercial Law Act 2017.

Delay

• [48] Under s 20(1)(a) of the CGA, Mr Lesser will lose the right to reject the vehicle if he did not exercise that right within a reasonable time. For the purposes of s 20(1)(a) of the CGA, a "reasonable time" is a period from the time of supply of the goods in which it would be reasonable for the defect to become apparent, having regard to the factors set out in s 20(2)(a)–(d) of the CGA.
• [49] In Nesbit v Porter, the Court of Appeal shed some light on the statutory words in s 20(2) of the CGA.^[1] The Court observed that:^[2]

  ... A reasonable time under s 20 must accordingly be one which suffices to enable the consumer to become fully acquainted with the nature of the defect, which, where the cause of a breakage or malfunction is not apparent, the consumer can be expected to do by taking the goods to someone, usually and preferably the supplier, for inspection.

• [50] Mr Lesser first attempted to reject the vehicle on 9 May 2024 (after the first repair attempt) and again on 7 June 2024 (after the second repair attempt). Mr Lesser first tried to reject the vehicle only a few weeks after he had identified the leak and within a couple of weeks of Universal Imports’ first repair attempt. In those circumstances, I am satisfied that Mr Lesser tried to reject the vehicle within a reasonable time.
• [51] I therefore find that Mr Lesser has not lost the right to reject the vehicle under s 20(1)(a) of the CGA.

Damage

• [52] Under s 20(1)(c) of the CGA, Mr Lesser will lose the right to reject the vehicle if he has damaged it.
• [53] In Joden Finance Ltd v Prerssilp,^[3] Judge Harrison found that in order to qualify as “damage”, for the purposes of s 20(1)(c) of the CGA, the damage had to amount to some loss in value of the vehicle or reasonably significant cost of repair, justifying a finding that damage greater than wear and tear has occurred.^[4]
• [54] As noted at [20] and [22] above, the possibility that the vehicle may have been damaged from curbing the front left-hand tyre was discussed during the hearing. I am satisfied based on the video evidence from Tony’s Tyre and the advice from Mr Haynes that the front left-hand tyre area shows typical wear and tear expected from Mr Lesser’s reasonable use of the vehicle.
• [55] I therefore find that Mr Lesser has not lost the right to reject the vehicle under s 20(1)(c) of the CGA.

Issue 4: What remedy, if any, is Mr Lesser entitled to under the CGA?

• [56] The relevant remedies are set out in s 18 of the CGA, set out at [35] above.
• [57] As the vehicle was not of acceptable quality and because Universal Imports has failed to rectify the vehicle’s oil leak within a reasonable time, I find Mr Lesser is entitled to reject the vehicle under s 18(2)(b)(ii) of the CGA.
• [58] Mr Lesser is entitled to a full refund of the purchase price, together with the cost of the two-year mechanical breakdown insurance.

Diagnostic costs

• [59] Mr Lesser paid $563.73 for diagnostic work relating to the oil leak as follows:

(a) $69 to Mychanics on 27 March 2024.

(b) $160.43 to Mychanics on 3 July 2024.

(c) $334.30 to VAS on 26 July 2024.

• [60] Under section 18(4) of the CGA, Mr Lesser is entitled to recover those diagnostic costs. The oil leak breached the guarantee of acceptable quality, and the diagnostic costs were a reasonably foreseeable consequence of the vehicle’s failure to comply with the guarantee.
• [61] Mr Lesser has also claimed to be reimbursed $120 which he spent at Tony’s Tyre on 26 June 2024 for wheel alignment. I find those costs to be unrelated to the oil leak and therefore not recoverable. Mr Lesser’s claim to be reimbursed the $120 is dismissed.

Outcome

• [62] Mr Lesser’s application to reject the vehicle is allowed.
• [63] Universal Imports shall, within 10 working days of the date of this decision, pay $12,262.73 (being the total purchase price of $11,699 plus diagnostic costs of $563.73) to Mr Lesser. After the payment is made, the vehicle becomes the property of Universal Imports and Mr Lesser must make the vehicle reasonably available to be collected by Universal Imports.

C Euden
Adjudicator

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^[1] [2000] NZCA 288; [2000] 2 NZLR 465 (CA).

^[2] At [39].

^[3] [2020] NZDC 12239.
^[4] On appeal, Katz J held that the District Court was right to find that minor damage to goods, such as that associated with fair wear and tear, would not result in the purchaser losing their right to reject.