Van Rensburg v Motor Barn Limited - Reference No. MVD 218/2024 [2024] NZMVDT 263 (25 November 2024)

Last Updated: 21 December 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 218/2024 [2024] NZMVDT 263 BETWEEN HEINO DIRK JANSEN VAN RENSBURG Applicant AND MOTOR BARN LTD Respondent

HEARING at AUCKLAND on 6 August 2024 (by audio-visual link) MEMBERS OF TRIBUNAL

G M Taylor – Adjudicator S Gregory – Assessor

APPEARANCES

H Van Rensburg, Applicant H A Van Rensburg (senior), Support person for the Applicant

U (Ray) Yang, Director for the Respondent J Shin, Mandarin Interpreter

DATE OF DECISION 25 November 2024

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DECISION OF THE TRIBUNAL

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A Mr Van Rensburg’s application to reject the vehicle is dismissed.

2. Motor Barn Ltd (MBL) must uplift the vehicle from where it is currently located at its cost and remedy the following faults within a reasonable time of the date of this decision:
   1. The faulty turbocharger, and the repairer should also inspect and replace the other turbocharger if it is also faulty.
   2. The cracked cam cover.
   3. The fault causing the oil leak.

100. Once these repairs are complete, MBL must, at its cost, arrange for the vehicle to be delivered back to Mr Van Rensburg.

4. MBL must also pay Mr Van Rensburg the total sum of $405.29 within 10 working days of the date of this decision.

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REASONS

Introduction

• [1] Heino Dirk Jansen Van Rensburg purchased a 2007 BMW 335i Twin Turbo from Motor Barn Ltd (MBL) for $13,995 on 22 February 2024. The vehicle had then travelled 140,747 km, according to the vehicle offer and sale agreement. He claims that the vehicle has suffered from a number of faults and wants to reject it.
• [2] MBL says that it is not liable because this was an older European vehicle with high mileage at the time of purchase. It also claims that Mr Van Rensburg has caused any faults himself by hard driving the vehicle and by modifying it.

The issues

• [3] The issues requiring the Tribunal’s consideration are:

(a) Was the vehicle of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA)?

(b) Are the vehicle’s defects a failure of a substantial character?

(c) What remedy, if any, is Mr Van Rensburg entitled to under the CGA?

Relevant background

• [4] Mr Van Rensburg claims that on the day he took possession of the vehicle, MBL’s mechanic told him that the bushes were worn.
• [5] He claims that after taking possession, the vehicle suffered from some initial issues including smoke and a burning oil smell coming out of the engine bay and misfiring only one week after purchase.
• [6] Mr Van Rensburg then went to the mechanic of MBL and a mechanic asked him if he was told about the rocker cover gasket leaking.
• [7] MBL then undertook remedial action including replacing the coil packs and topping up the oil.
• [8] After this repair the misfiring issue was fixed. Regarding the oil leak, Mr Van Rensburg claims that he was told to come back later for it to be repaired. Mr Van Rensburg did not take his vehicle back for any further repair because no date was confirmed.
• [9] In early April 2024, Mr Van Rensburg purchased Dual Cone Intake (DCI) performance air filters and installed these in the vehicle.
• [10] Since owning the vehicle, he has variously used 91 and 95 octane fuel.
• [11] On 27 April 2024, Mr Van Rensburg claims that on his way home from visiting a friend at about 8 pm at night he saw smoke coming from the exhaust and heard an air gushing noise as he was driving out of a roundabout. He claims there were no warning lights immediately preceding that event and the vehicle was performing well up until then, with no hard accelerations.
• [12] He then stopped driving the vehicle and saw oil coming from the exhaust. He sent a message to MBL’s mechanic to advise that the turbos had blown up and that he had had the vehicle towed to his workshop, at a cost of around $150.
• [13] At this point Mr Van Rensburg advised MBL he was rejecting the vehicle due to the worn bushes, the faulty rocker cover gasket, the misfiring and the blown turbos.
• [14] About a week after he dropped the vehicle with MBL’s mechanic, Mr Van Rensburg purchased a new vehicle. He claims he needed a new vehicle for work. He incurred the cost of repairs for the replacement vehicle and claimed those costs.
• [15] At the hearing of this matter, the Tribunal identified that no diagnosis had been undertaken to identify the cause of the alleged faults. The Tribunal directed that Mr Van Rensburg arrange for the vehicle’s turbo’s to be inspected by an appropriate repairer to determine if either has failed and to obtain a report. The repairer was also directed to carry out a compression test and if that test failed the repairer was requested to bore scope the low reading cylinder to determine the cause of the low compression.
• [16] Mr Van Rensburg was requested to submit that report to the Tribunal within two weeks of 8 August 2024, being the date of the Tribunal’s direction. MBL was directed to send any response to the Tribunal within two weeks of receiving a copy of that report. From there, the Tribunal indicated that it would determine the matter.

Report from BM Workshop

• [17] Following the hearing Mr Van Rensburg took the vehicle to BM Workshop for a diagnosis and report. That report was then provided to the Tribunal and MBL had the opportunity to comment on it.
• [18] The report records that BM Workshop removed the turbo intake pipe to visually inspect the turbochargers and found that the turbo impeller had come loose and was badly damaged. It recommended replacement of both turbochargers and gave an estimate of costs for that work.
• [19] BM Workshop also carried out a compression test and its report records that all compressions were good. It advised that the cam cover assembly was cracked and leaking oil and gave an estimate of costs to replace the cam cover assembly.
• [20] It charged $255.29 for that diagnosis. Its invoice records the then odometer reading at 143,544 km.
• [21] Mr Van Rensburg had initially claimed for cost for uber rides to and from work and for the cost of a replacement car, but during the hearing, he confirmed he was not claiming for those losses.

Position of the trader

• [22] MBL arranged for the coil packs to be replaced and the oil to be topped up when Mr Van Rensburg brought the vehicle back shortly after purchase.
• [23] MBL claims that Mr Van Rensburg has caused the most recent problem by installing a Dual Cone Intake (DCI) performance filter in the vehicle. MBL claims this is a modification that altered the air intake system to the engine, and that it could well have led to the current fault.
• [24] It also claims that this is an older second hand vehicle and that it should not be held liable for any further faults that this vehicle has. The vehicle was nearly 17 years old at the time of purchase.
• [25] It claims that Mr Van Rensburg must have been driving the vehicle “hard”, causing the turbos to fail, but this manner of driving was denied by Mr Van Rensburg.

Was the vehicle of acceptable quality for the purposes of s 6 of the CGA?

• [26] 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.
• [27] 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.

• [28] 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.

Burden of Proof

• [29] Before I go on to consider what faults this vehicle has had, I begin by noting that the Tribunal applies the usual civil law standards and expectations regarding proof. That means that it is for the party bringing the application to establish their claims “on the balance of probabilities”. They must establish that what they are claiming is more probable than not.
• [30] This is referred to as the “burden of proof”. Independent witnesses, corroborating documents, reports and photographs can be an important part of discharging this burden.
• [31] Ultimately however, it is for the party making the application to decide what evidence to put before the Tribunal. As noted in Kaipo v Clarke, in practical terms this means that:^[1]

...[L]ike anyone who brings an application before a Tribunal or Court, it is incumbent upon the applicant to provide the evidence necessary to prove the case. If the applicant fails to do that, then their application will be dismissed whether it has merit or not because it is up to the applicant to provide the necessary evidence. It is not up to the other parties, and it is certainly not up to the Tribunal to extract evidence.

Cracked cam cover

• [32] Mr Gregory advises that this vehicle has a cracked cam cover and that this was likely the cause of the vehicle leaking oil onto the exhaust.
• [33] The vehicle has travelled only approximately 3,000 km by the time this fault was diagnosed by BM Workshop.
• [34] Mr Van Rensburg has purchased a European vehicle that was 17 years of age and with high mileage at the time of purchase. A reasonable consumer purchasing a vehicle of this price, age and mileage would understand that defects that would not be present in a new vehicle may arise due to its age and mileage. They would expect to encounter the need for ongoing maintenance and repair, potentially of an expensive nature. They would be alive to the potential for faults to arise in the normal wear and tear of a vehicle.
• [35] However, this fault has arisen so close to the time of purchase that I consider it was likely pre-existing. I consider that the cracked cam cover has meant that the vehicle fails the guarantee of acceptable quality. The vehicle has not been as durable or as free from minor defects as would be expected by a reasonable consumer.

The twin turbos

• [36] BM Workshop’s inspection has revealed that the turbo impeller has come loose and is badly damaged. It recommends replacement of both turbochargers.
• [37] Mr Gregory advises that he agrees that one of the turbochargers has failed and that this is clear in the photographs provided to the tribunal.
• [38] The question then is whether the turbochargers have perished due to wear and tear over time or whether the modification made by Mr Van Rensburg has caused or contributed to this failure?
• [39] Mr Gregory advises that the modifications to the air filters is unlikely to have impacted on the turbocharger because they are only allowing a slightly greater volume of air into the engine. Also, Mr Van Rensburg had installed the filters less than a month before the turbos failed. In that time he has undertaken only a limited amount of driving.
• [40] Mr Gregory advises that the turbo ought not to have failed two months after purchase. He states that a turbo can fail at any time at the mileage this vehicle has travelled, but the type of failure where the turbo’s impeller has come loose is quite unusual and may point to a previous failed repair.
• [41] I accept Mr Gregory’s advice and find that at least one turbo was faulty and that this was likely a pre-existing condition, not wear and tear and not caused by the modification. So, I accept that the vehicle has not been as free from minor defects or as durable as would be expected by a reasonable consumer. Even though this is an older vehicle with high mileage, I consider that a reasonable consumer would not expect to encounter this sort of fault so soon in their ownership of the vehicle, so this failure is also a failure of acceptable quality.

The remaining faults

• [42] Mr Van Rensburg pointed to other alleged faults as well such as the worn bushes and a shaking when driving at 100 km/h. There has been no diagnosis provided to the Tribunal that corroborates such faults or explains how they may have arisen.
• [43] I am not prepared to make any finding about any additional faults because I find that none have been proven.

Are the vehicle’s defects a failure of a substantial character?

• [44] Under s 18(3) of the CGA, Mr Van Rensburg may reject the vehicle if its defects amount to a failure of a substantial character. A failure of a substantial character is defined in s 21 of the CGA:
  21. Failure of substantial character

For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where—

(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or

(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.

• [45] Section 21(a) of the CGA applies to this case. The question I must answer is whether the faults that this vehicle has, are such that a reasonable consumer, fully acquainted with the true nature and extent of the faults, would not have purchased the vehicle.
• [46] Not all pre-existing defects are a failure of a substantial character. The Tribunal regularly encounters cases where vehicles are supplied with pre-existing defects, indeed, the Tribunal notes that in this case, Mr Van Rensburg was still prepared to buy the vehicle after being told it had worn bushes. A common feature of such cases is that the purchasers are often prepared to allow the supplier to rectify certain defects, particularly where the repairs are straightforward, and the defect is unlikely to return once repairs are affected.
• [47] In this case, the primary fault was the failed turbo and cracked cam cover. I accept Mr Gregory’s advice that turbos commonly fail and are reasonably easy to replace, so I do not accept that this fault is a failure of a substantial character as I am not satisfied that a reasonable consumer fully acquainted with the true nature and extent of the faults would have declined to purchase the vehicle. Likewise I accept that the cam cover can be easily replaced.

What remedy, if any, is Mr Van Rensburg entitled to under the CGA?

• [48] The relevant remedies for a failure of a guarantee relating to goods 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.

• [49] Given my finding that the failure was not of a substantial character, Mr Van Rensburg could only reject the vehicle under s 18(2)(b)(ii) of the CGA where MBL had failed to repair the vehicle’s faults within a reasonable time.
• [50] Generally, the obligation of a supplier to remedy a fault with a motor vehicle is triggered once there is sufficient diagnostic or other information to prove the existence of a fault. Often, the cause of a fault will be readily obvious once a suitably qualified mechanic undertakes a diagnostic assessment. Sometimes, however, a vehicle might display symptoms of a fault, but the precise cause of those symptoms is difficult to diagnose. In cases such as that, the question is whether a purchaser has done enough to prove the existence of some sort of fault to trigger the supplier’s obligation to repair. In those sorts of cases, mechanical evidence as to what may be wrong with the vehicle may not conclusively point to the cause of the fault but will nevertheless corroborate the existence of the symptoms that the vehicle is experiencing.
• [51] In this case, Mr Van Rensburg did not obtain any evidence diagnosing the faults that I have found above until directed by the Tribunal. Also, the trader has not, following receipt of that report, yet been requested to repair.
• [52] MBL has not failed to remedy the faults that I have accepted are present with the vehicle within a reasonable time, because it has not been asked to do so.
• [53] Consequently, Mr Van Rensburg does not have the right to reject the vehicle. As a result, it is not necessary to determine whether he would have lost that the right, because he modified the vehicle. But for completeness, I address this briefly.
• [54] Section 20 of the CGA sets out the circumstances in which a purchaser loses the right to reject a vehicle. Relevant to this case, s 20(1)(c) of the CGA states:

20 Loss of right to reject goods

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

...

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

• [55] I accept that the vehicle was modified, however Mr Gregory advises that the modification is easily reversed where the standard air box has been retained, which Mr Van Rensburg said was the case. So, on balance, had he been entitled to reject the vehicle, it is unlikely in these circumstances that he would have lost the right to reject owing to “damage” for the purposes of s 20 of the CGA.
• [56] While Mr Van Rensburg is not entitled to reject the vehicle, he is entitled to the remedy of repair. I find that MBL must uplift the vehicle from where it is currently located at its cost and remedy the following faults within a reasonable time of the date of this decision:

(a) the faulty turbocharger, and the repairer should also inspect and replace the other turbocharger if it is faulty.

(b) the cracked cam.

• [57] Once these repairs are done, MBL must, at its cost, arrange for the vehicle to be delivered back to Mr Van Rensburg.

The tow truck invoice and the diagnostic charge of BM Workshop

• [58] I accept Mr Van Rensburg’s evidence that he incurred a tow truck fee of $150. Even though no documentary evidence was provided corroborating this, it is roughly within the range of costs the Tribunal sees for this sort of item. Mr Van Rensburg also paid BM Workshop $255.29 for its diagnosis.
• [59] Pursuant to s 18(4) of the CGA, Mr Van Rensburg is entitled to damages for any loss or damage resulting from the failure which was reasonably foreseeable as liable to result from the failures. I consider that the towing fee and the BM Workshop fee to be losses resulting from the failures which was reasonably foreseeable as liable to result from them.
• [60] MBL must therefore pay Mr Van Rensburg the sum of $405.29 within 10 working days of the date of this decision.

Cost of car insurance

• [61] Mr Van Rensburg also seeks to recover the cost of keeping the vehicle insured. I am not satisfied that he has suffered loss in insuring the vehicle. The vehicle has remained insured, to his benefit, throughout his ownership. The cost of insurance in these circumstances is not recoverable under the CGA.

Finance payments to Avanti finance

• [62] Mr Van Rensburg financed his vehicle with borrowings from Avanti Finance.
• [63] As I have found that Mr Van Rensburg is not entitled to reject the vehicle, he remains contractually liable for the cost of the purchase financed through his loan, so I do not consider this to be a loss.
• [64] Mr Van Rensburg withdrew his claim for other expenses at the hearing.

Outcome

• [65] Mr Van Rensburg’s application to reject the vehicle is dismissed.
• [66] Instead, MBL must uplift the vehicle from where it is currently located at its cost and remedy the following faults within a reasonable time of the date of this decision:

(a) The faulty turbocharger, and the repairer should also inspect and replace the other turbocharger if it is also faulty.

(b) The cracked cam cover.

(c) The fault causing the oil leak.

• [67] Once these repairs are done, MBL must, at its cost, arrange for the vehicle to be delivered back to Mr Van Rensburg.
• [68] MBL must also pay Mr Van Rensburg the total sum of $405.29 within 10 working days of the date of this decision.

G M Taylor
Adjudicator

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^[1] Kaipo v Clarke DC Waitakere TT233/02, 12 April 2002 at [7].