Hornblow v NZ4X4S Ltd - Reference No. MVD 320/2024 [2024] NZMVDT 190 (14 October 2024)

Last Updated: 29 December 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 320/2024 [2024] NZMVDT 190 BETWEEN DANIEL JAMES HORNBLOW Applicant AND NZ4X4S LIMITED Respondent

MEMBERS OF TRIBUNAL

D Watson, Adjudicator

S Gregory, Assessor

HEARING at Auckland on 9 October 2024 (by audio-visual link)

APPEARANCES

D Hornblow, Applicant

S Faqeeri, for the Respondent

DATE OF DECISION 14 October 2024

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

1. NZ4X4S Ltd must uplift the vehicle, at its cost, from Daniel Hornblow and perform the following repairs:

(i) replace the engine sump, and

(ii) treat all of the corrosion on the chassis and underbody of the vehicle, including the front radiator support panel and the crossmember, by sandblasting and removing all rust, followed by treating and undersealing these areas.

2. These repairs must be undertaken within a reasonable period of time of this decision and, upon completion, the vehicle must then be returned to Daniel Hornblow, at the cost of NZ4X4S Ltd.

100. NZ4X4S Ltd, must pay Daniel Hornblow the sum of $81.94 within 10 working days of the date of this decision.

4. The parties have leave to apply to the Tribunal further if there is any clarification required about the implementation of these orders.

_________________________________________________________________

REASONS

Introduction

• [1] Daniel James Hornblow purchased a 2012 Toyota Hilux on 5 March 2024 for $43,632.00 from NZ4X4S Ltd (NZL). The vehicle’s odometer reading was then 127,000 kms. He claims the vehicle suffers from significant underbody rust and that it needs a new engine sump. He is willing to accept the remedy of repair.
• [2] NZL claims that any current faults with the vehicle are not its responsibility. It says that the engine sump was damaged by Mr Hornblow and denies that the rust is significant.

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) What remedy is Mr Hornblow entitled to under the CGA?

Relevant background

• [4] Mr Hornblow claims that not long after purchase there were two problems with the vehicle. The first was that the left front passenger seat rail failed and the seat would not lock in on one side. This meant it wobbled and slid on that side. The next issue was that the right front brake caliper fell off and the brake hose broke whilst Mr Hornblow was driving.
• [5] Both of these issues were repaired by NZL.
• [6] In May 2024, Mr Hornblow noticed excessive oil leaking underneath the vehicle. He traced the oil leak to the engine sump. He took the vehicle to Keeling Automotive. It also traced the leak to what it described as a very rusty engine sump. It also found that the front crossmember was very rusty and that there were other rust spots as well. It took photographs and these were provided to the Tribunal. In its report, dated 20 May 2024, it concluded: “Underbody has been painted to cover rust”. It charged $81.94 for that diagnosis. Its report records that the then odometer reading is 128,553 kms.
• [7] It later provided an estimate of $3,180.31, to replace the rusty engine sump.
• [8] Mr Hornblow obtained an estimate from Turin Panel & Paint Ltd to treat the rust of $1,932.00. The estimate records that this would involve sandblasting the complete chassis underbody and priming and painting the chassis underbody.
• [9] After receiving the diagnosis about the engine sump and the rust, Mr Hornblow contacted Mr Shirzay Faqeeri, a director of NZL and the sales person he had dealt with when buying the vehicle. According to Mr Hornblow, Mr Faqeeri accused him of lying. At this point Mr Hornblow became angry and hung up.
• [10] Mr Hornblow says that the current odometer reading on the vehicle is 130,111 km.
• [11] Mr Hornblow said he would accept the remedy of repair.

The position of NZL

• [12] Mr Faqeeri gave evidence on behalf of NZL.
• [13] He says that this vehicle, like all NZL vehicles, are subject to Vehicle Testing New Zealand (VTNZ) inspections before they are supplied to consumers. He says that there was certainly no leak in the vehicle when it was purchased. He claims that Mr Hornblow wanted a lot of things done to the vehicle before he would agree to buy it, including removal of a bulbar and canopy. This came at an added expense to NZL. He believes NZL has already done a lot for Mr Hornblow, given the repairs post sale.
• [14] In relation to the diagnosis of rust, NZL claims that the rust shown in the photographs is only surface rust.
• [15] Regarding the sump, Mr Faqeeri said that this is a low-lying component and has been damaged by Mr Hornblow, and this is why it started leaking.

Issue 1: Was the vehicle of acceptable quality?

• [16] 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.
• [17] 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.

• [18] 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.

The left front passenger seat rail and the right front brake caliper

• [19] I am satisfied that these early faults that occurred with the vehicle were a failure of the guarantee of acceptable quality. I consider that a reasonable consumer of this vehicle would not expect to encounter such faults so soon into their ownership of the vehicle. Both these faults gave rise to real safety issues. The sliding left front passenger seat rail was a potential warrant of fitness (WOF) fail. The brake issue occurred while Mr Hornblow was driving the vehicle. These faults have meant the vehicle failed the guarantee of acceptable quality because the vehicle was not as safe and/or as durable as a reasonable consumer would have expected.

The underbody rust and the faulty engine sump

• [20] Mr Gregory, the Tribunal’s Assessor, advises that he agrees with the diagnosis of Keeling Automotive and Turin Panel & Paint Ltd. He advises that the vehicle has corrosion across the chassis and underbody including around the front radiator support panel, sump and the front crossmember. Mr Gregory advises that the photos show that there has been paint recently applied to the underbody, likely as recently as only five months ago.
• [21] Mr Gregory advises that the extent of the rust has meant that the engine sump has gradually corroded and a leak from the engine sump has eventually emerged from a rusted area of the engine sump. He advises that there is no sign of any deliberate or accidental damage to the engine sump which may have caused the leak.
• [22] I accept the advice of Mr Gregory and I do not agree with NZL’s submission that the damage to the engine sump has been caused by Mr Hornblow. This is pure speculation and there is no evidence of it at all.
• [23] Although a reasonable consumer would understand that vehicles of this price, age and mileage can develop defects and require ongoing maintenance that can sometimes be expensive to repair or perform, I consider that they would not expect to encounter these faults so soon into their ownership of the vehicle. The vehicle has not been as durable as would be expected by a reasonable consumer, given the age, price and mileage of this vehicle.
• [24] NZL’s submission that it did a lot to prepare the vehicle for purchase by Mr Hornblow has no bearing on the issues that I must decide. This is because the fact that it removed a bulbar and canopy in order to secure the sale does not derogate from its obligations under the CGA. These were simply steps it took to conclude the purchase.
• [25] The fact that the vehicle sold with a recent VTNZ inspection and with no evidence of leaks likewise does not derogate from a trader’s ongoing obligations under the CGA where faults emerge after purchase. Such faults can still amount to a failure of the guarantee of acceptable quality, as indeed I have found above.

Issue 2: What remedy is Mr Hornblow entitled to under the CGA?

• [26] The relevant remedies are set out in s 18 of the CGA, which 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.

• [27] I have found that the vehicle has a leaking engine sump due to corrosion and has rust across the underbody, around the radiator support panel and along the crossmember.
• [28] Mr Hornblow said he would accept the remedy of repair, and I find therefore he is entitled to that remedy. The repairs I have ordered above must be completed within a reasonable time of the date of this decision.
• [29] Pursuant to s 18(4) of the CGA, Mr Hornblow is entitled to reimbursement of the diagnostic charges incurred with Keeling Automotive. This sum, as ordered above, must be paid within 10 working days of the date of this decision.

DATED at AUCKLAND this 14^th day of October 2024

D Watson
Adjudicator