Hareti v Geneva Enterprises Ltd t/a Mangere Car Centre - Reference No. MVD 183//2024 [2024] NZMVDT 307 (11 December 2024)

Last Updated: 23 January 2025

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 183//2024 [2024] NZMVDT 307 BETWEEN RUTERA HARETI First Applicant AND MALIA HARETI Second Applicant AND GENEVA ENTERPRISES LIMITED (T/A MANGERE CAR CENTRE) Respondent

HEARING at Auckland on 8 August 2024 (by audio-visual link) MEMBERS OF TRIBUNAL

G M Taylor, Adjudicator

S Haynes, Assessor

APPEARANCES

R Hareti, Applicant

M Hareti, Applicant

V Dewan, for the Respondent

DATE OF DECISION 11th December 2024

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

1. The claim to reject the vehicle is allowed.
2. Mr Hareti’s rights and obligations under the collateral credit agreement with Finance Now dated 21 January 2024 are assigned to Geneva Enterprises Limited from the date of this decision.

100. Geneva Enterprises Limited must, within five working days of the date of this decision, pay $1,349.07 to Mr Hareti.

4. Once the sum of $1,349.07 is paid to Mr Hareti, Geneva Enterprises Limited must arrange, at its cost, to uplift the vehicle at a time, date, and place convenient to Mr Hareti.

_________________________________________________________________

REASONS

Introduction

• [1] On 21 January 2024 Rutera Hareti purchased a 2005 Subaru Impreza from Geneva Enterprises Limited trading as Mangere Car Centre (the Trader) for $3,995.00. He also purchased mechanical breakdown insurance^[1] with the vehicle, at an added cost of $995.00, for a total price of $4,990. The odometer reading on the vehicle at that date was 218,995 km. At the time of the claim the odometer was given as 221,690 km.
• [2] The vehicle was purchased as a family car, and so I joined Mr Hareti’s wife, Malia Hareti who was present at the hearing as a Second Applicant as I consider she has a sufficient connection with the claim.
• [3] Mr and Mrs Hareti (the Applicants) want to reject the vehicle, which they claim has suffered from a number of faults.
• [4] The trader says it has repaired the vehicle and that the Applicants should not be able to reject it.

The issues

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

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

(b) Has the trader refused, neglected, or failed to rectify the vehicle’s defects within a reasonable time, or are the vehicle’s defects a failure of a substantial character?

(c) What remedy, if any, are Mr and Mrs Hareti entitled to under the CGA?

Relevant background

• [6] On 24 December 2023, the vehicle with aftermarket tyres installed passed its warrant of fitness inspection.
• [7] The Applicants purchased the vehicle on 21 January 2024 for a total purchase price of $4,990. Mr Hareti funded the full purchase price by entering into a consumer credit contract with Finance Now Limited (Finance Now).
• [8] About three weeks after the purchase, on 15 February 2024, the Applicants experienced a fault with the vehicle, where it started cutting out while driving, and emailed the trader about it:

  ... bought the 2005 Impreza on the 20th January & a fault has appeared today. The car is cutting out while driving after second gear & struggling to drive. We haven’t driven much hours, could you please assist us in this matter. Hope to hear from you soon.

• [9] The trader diagnosed the fault with the vehicle as being a spark coil misfire. The trader’s internal invoice, dated 15 February 2024, noted that it replaced the vehicle’s faulty spark plugs and coil pack.
• [10] Less than a week later, on 20 February 2024, the Applicants messaged the trader to advise that they had returned the vehicle to the trader as both rear wheels scraped the wheel guards when passengers were seated in the back of the vehicle and they wanted the trader to investigate the issue. The Applicants emailed the trader the same and added:

  ... We are disappointed with the faulty as it is only a month that we have bought the car and there’s already a few faulty and I am very concern if there will be another problem with the car in the near future. Would You able to look into this again please, i can have someone drop it off. Hope to hear from you soon.

• [11] On 22 February 2024, the Applicants emailed the trader again, requesting to reject the vehicle:

  ... Just email to let you know my brother had driven the car to his work at Otahuhu today 22/02/24 and it was smoking up from the front Bonnet , there’s water coming out from a hose underneath. He opened the Bonnet to let it cool down before parking it to a safe place at his work and he us too scared to drive it back home.

  I have emailed you few days ago in regards to wheels Scraping but no response. Could you please get back at me so we can discuss these issues ... I will get in touch with the insurance company and also the finance department to see what my options now. My brother feels unsafe driving the car around knowing there’s still issues with the car.

  Due to these ongoing issues I am very concern about the car and our safety driving it. Therefore I would like a replacement or a refund as I don’t want to deal with any future issues. It’s only been a month since we bought the car and having issues already. ...

• [12] At the hearing Mr Hareti said the trader told him that the tyres were scraping the wheel guards due to the vehicle having aftermarket mag wheels. Mr Hareti said he was also told by the trader that it was not a mechanical issue, so would need to be sorted by Mr Hareti himself. Mr Dewan, Director of the trader, said that when the vehicle passed its warrant of fitness on 24 December 2023, it had the aftermarket tyres.
• [13] Mr Hareti also said at the hearing that at this point, given his own experience with vehicles he considered there was something seriously wrong with the vehicle, like the radiator or head gasket, which is why he sought to reject the vehicle. He also suggested that this fault was likely the cause of the first fault; Mr Dewan did not think so.
• [14] An internal invoice for the trader, dated 22 February 2024, records that the vehicle’s radiator top hose was leaking and that it fitted a new hose and added coolant. Mr Haynes’, the Tribunal’s Assessor, advice is that if this vehicle had a slow leak, it would take some time to show up as an overheating issue.
• [15] The Applicants uplifted the vehicle and stated that it seemed to be fine for a month until 30 March 2024 when the temperature gauge entered the red zone and it was overheating and a burnt smell came from the bonnet.
• [16] On 30 March 2024 the Applicants messaged the trader (the second rejection):

  Hi just informing you the subaru impreza is overheating & we have brought the car to your workshop. I want to impress how disappointed I am with the car just problem after problems. We only just purchased the car 2 months ago and fault after fault. Unfortunately we a refund or replacement as we are unable to cope with such disappointment. Hope to hear from you soon.

• [17] The Applicants emailed the trader the same day; amongst other things they noted:

  Today 30/03/2004 the car was overheating and it smelt burnt (see attached photo) and we took the car to your shop ...

  I would like to Express how stressful and frustrating not only with the faulty but we don’t have any other transport to use. Me my husband and my kids have no ride home ...

  Therefore as a customer rights we would like to discuss this matter.

  Our first option is to come back to you and cancel the contract as already paid in full. Secondly any possible swap of a car with same value. Me and my husband both agree that we not taking he car back with us due to ongoing faulty.

• [18] The trader provided two invoices for work it says was conducted on the vehicle on 2 April 2024. The first was an internal invoice and the second was an invoice from Starmotors Automotive Workshop Limited, when the vehicle had an odometer reading of 221,749 km.
• [19] The trader’s invoice noted:

  check motor vehicle for fan and temperature fluctuation

  Check all fluid level

  top up coolant 1ltr

  test drive ... on motor way 15 kms

  No sign of temp over heating

  carried out radiator pressure test ...

  Flush radiator – top up correct coolant

  Diagnosis

  R/flush coolant

• [20] Starmotors Automotive Workshop’s invoice noted:

  We externally examine the radiator, hoses, pump, fan and belt, engine cylinder head and block, for signs of deterioration and leakage. The radiator pressure cap is visually inspected for corrosion and damage. We did Cooling system pressure test to see if there is any leakages, No leakages were found. We also inspected radiator cooling fan – which worked as per manufacture specification.

  We did approximately 20mins test drive & found NO SIGNS of overheating.

• [21] However, Mr Haynes advises that at this point if the thermostat was stuck in the open position, then it would not show up as an overheating fault, and so the only way to test the thermostat would have been to remove it and heat it up slowly to see if it opens and closes.
• [22] On 2 April 2024, the Applicants uplifted the vehicle.
• [23] On 9 April 2024, the Applicants messaged the trader to advise that the vehicle continued to overheat (the third overheating). They said they had been advised by their insurance company to have a different mechanic inspect the vehicle and then return it to the trader as it had not yet been three months since they purchased it.
• [24] AK Hydraulics Limited diagnosed the vehicle for the Applicants. It diagnosed that the vehicle was overheating because the “radiator top hose is heating and bottom is not heating therefore thermostat is not working, which needs to be replaced”. The diagnosis cost the Applicants $45; they wish to be reimbursed that cost.
• [25] The Applicants also emailed the trader on 9 April 2024. In this email the Applicants said the trader had not yet fixed the issues with the car and had only claimed to do so. Specifically, they stated:

  At the time of the first fault my husband Rutera ask you to test the thermostat as he has mechanical engineering experience & advised you of the potential problem so you have claimed to have tested it. Taking the vehicle to another professional mechanic has revealed that you either didn’t test the thermostat as requested or failed to detect any fault which has resulted in our 4th time returning the vehicle to you in less than 3 months of purchase. ... time & time again you fail to remedy the problem aswell as saying we should have expected this due to the cars pricing, make/model & being second hand.

• [26] On 10 April 2024, the trader replied to the Applicants. He said he would repair the issues identified on AK Hydraulics’ report. Mr Hareti says he told the trader that he did not want the vehicle repaired and instead wanted to reject it, but the trader insisted that he was entitled to repair the vehicle. (The third rejection)
• [27] The trader’s internal invoice for its work on the vehicle dated 10 April 2024 notes that it supplied and fitted a new thermostat and added one litre of coolant. It also notes that the trader extensively test drove the vehicle after the thermostat replacement, for 15 kms at a maximum speed of 100 km per hour, and all radiator hoses were at the same temperature afterwards.
• [28] On 11 April 2024, the trader emailed the Applicants to advise on the radiator replacement and a further complication with the vehicle, namely a blown head gasket, which it considered was likely due to the vehicle being driven while overheated. The trader said he would advise when the head gasket had been replaced. The Applicants responded the same day, stating that they did not want the vehicle returned (the fourth rejection) and would be pursuing a claim with the Tribunal and the claim was filed in this Tribunal that day. Mr Haynes’ advice is that a head gasket can blow for many reasons.
• [29] Between 23 April 2024 and 2 May 2024, the trader purchased the following parts for the vehicle:

(a) a rocker cover gasket for $87.34,

(b) an ignition coil for $83.95.

(c) a Subaru Impreza engine for $902.75.

(d) an ignition lead kit and timing kit for $653.20.

• [30] On 2 May 2024, the trader’s internal mechanic’s invoice records that it performed work totalling $2,961.13 for 10 hours labour and parts including:

  Remove and refit with 2^nd hand motor 785.00

  Rocker Cover Gasket @ 2 @ 75.95 151.90

  New timing belt kit 372.00

  New ignition leads 196.00

• [31] On 2 May 2024, a relative of the Applicants then uplifted the vehicle and has been driving it. Mr Hareti said that he understands the vehicle has been driving fine in this limited time. The Applicants still wish to reject the vehicle.

Was the vehicle of an acceptable quality?

• [32] The Applicants applied to this Tribunal to return the vehicle. In the circumstances, s 18 of the CGA will allow this, if:

(a) the vehicle did not comply with the guarantee of acceptable quality; and

(b) The trader has refused, neglected, or failed to rectify that failure within a reasonable time, or the failure is of a substantial character as defined in s 21 of the CGA.

• [33] 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”. “Acceptable quality” is defined in s 7 of the CGA 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.

• [34] 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. A reasonable consumer must have realistic expectations as to the quality and durability of a vehicle taking into account its price, age and mileage. The Applicants purchased a 19-year-old vehicle, which had travelled 218,955 km, for $3,995.^[2] It was an old vehicle that had been heavily used and its price reflected that history. When considering whether the vehicle was of acceptable quality, I must take those factors into account.
• [35] The evidence shows that the vehicle had three faults:

(a) the first fault related to the vehicle’s spark plugs and occurred within three weeks of the vehicle’s purchase;

(b) the second fault related to the lowered suspension resulting in the vehicle’s tyres scraping its rear guards; it presented within one month of the vehicle’s purchase; and

(c) the third fault related to overheating, which first presented a month after the vehicle’s purchase.

The spark plugs

• [36] I consider that the vehicle’s fault relating to its spark plugs was a failure of the guarantee of acceptable quality. It affected the vehicle’s driving and given how quickly the fault appeared, it was clearly a pre-existing issue. On that basis, I find that the vehicle was not as free of minor defects as a reasonable consumer would consider acceptable so soon after purchase, even taking into account the vehicle’s age, mileage, and price.

The tyres and rear guards

• [37] I do not have adequate evidence regarding the alleged fault relating to the vehicle’s tyres and rear guards. Aside from the Applicants’ text message and email to the trader on 20 February 2024, and the parties’ oral evidence provided at the hearing, there is no other evidence or diagnosis confirming the alleged fault. I also gave weight to the trader’s evidence that the vehicle had passed the warrant of fitness prior to purchase with those after market tyres and guards. So, I do not accept that the alleged fault is a failure of the guarantee of acceptable quality.

The overheating

• [38] Mr Haynes advised that ultimate failure of a blown head gasket can arise for a variety of reasons. However, I accept his advice that in this case, it was the consistent overheating arising from the accumulated “overheating” occurrences and continued driving which ultimately more likely than not caused the head gasket to blow in this case, particularly when the vehicle had only travelled 2,000 km.
• [39] I accept Mr Haynes’ advice that the vehicle cooling system was likely not maintained well prior to purchase, and this is consistent with the first fault with the radiator hose on 22 February 2024, one month after purchase, and the subsequent thermostat fault on 30 March 2024. While the trader found no fault at that time, I find this was a thermostat failure, as I accept Mr Haynes’ advice that the external check was inadequate to identify it, and the faulty thermostat was also confirmed by the AK Hydraulics Limited report of 9 April 2024, which the trader acknowledged.
• [40] I have then considered whether Mr Hareti caused the blown head gasket fault (which the trader identified on 11 April 2024) due to continuing to drive the vehicle. As he had been advised on two occasions by the trader that the overheating issue had been fixed (on or after 22 February and 2 April 2024), I do not consider it unreasonable that Mr Hareti continued to drive the vehicle. So, I do not accept that Mr Hareti is responsible for the blown head gasket.
• [41] So, considering the importance of the vehicle’s cooling system, and how quickly faults with it appeared, I accept the vehicle’s accumulated faults with this system to be a breach of the guarantee of acceptable quality. I also consider the subsequent blown head gasket which I have found to have been caused by the consistent overheating to be a breach of the guarantee of acceptable quality. A head gasket is extremely crucial for the proper functioning of an engine. It serves as a critical sealing component between the engine block and the cylinder head.
• [42] These failures meant that the vehicle was not as free from minor defects or as durable as a reasonable consumer would expect, even considering its age, mileage, and price. Even if the vehicle is old and heavily used, it should still last longer than three months before such critical parts fault.

Has the trader refused, neglected, or failed to rectify the vehicle’s defects within a reasonable time or is the failure of a substantial character ?

• [43] As I have found that the spark plugs and cooling system faults are a failure of the guarantee of acceptable quality, I must consider whether the trader has refused, neglected, or failed to rectify the failures within a reasonable time under s18(2)(b)(ii) of the CGA, or alternatively whether under s18(3) of the CGA, the failure is of a substantial character as defined in s 21 of the CGA, as it is only in those circumstances that a consumer is entitled to reject goods where the failure is capable of being remedied. 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.

• [44] I find that the trader remedied the fault with the vehicle’s spark plugs within a reasonable time, and I was presented with no other evidence to suggest otherwise.
• [45] In respect of the overheating fault, the evidence shows:

(a) The trader was first advised of a fault on 22 February 2024 when the vehicle was smoking from the front bonnet;

(b) It had an opportunity to repair. It repaired the radiator hose on or around that date (the first repair attempt);

(c) It was advised on 30 March 2024 that the overheating/burnt smell fault persisted;

(d) On 2 April 2024, the trader conducted further tests and found no leaks or signs of overheating. (the second repair attempt);

(e) The trader was advised on 9 April 2024 that this fault persisted and was presented with the report from AK Hydraulics confirming the thermostat was not working and needed to be replaced; and

(f) The trader conducted further repairs on or around 10 April 2024, including supplying and fitting a new thermostat and water pump and coolant (the third repair attempt).

(g) Then on 11 April 2024, it identified the blown head gasket, and between 23 April and 2 May it purchased parts and on 2 May it refitted a new engine.

• [46] I accept that the vehicle’s overheating faults were finally repaired on 2 May 2024, and that since then the Applicants reported that the vehicle now drives fine. I also accept Mr Haynes’ advice that the first repair attempt to the radiator hose was not an unreasonable first step in the diagnosis process, and indeed this appeared to resolve the issue for one month. However, on balance, I accept Mr Haynes’ advice that the checks performed on 2 April were inadequate to identify the thermostat issue, which I accept was present at that time, and as a result the third overheating event occurred on 9 April and ultimately was not remedied until 2 May 2024, another month later. So, on balance I find that the overheating problem was not remedied within a reasonable time.
• [47] It is not therefore necessary to address whether there was a failure of a substantial character which justified rejection, however for completeness I do so.

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

• [48] Section 21 of the CGA will allow Mr Hareti to reject the vehicle if the vehicle’s failures of acceptable quality are a failure of a substantial character.
• [49] 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.

• [50] In Cooper v Ashley & Johnson Motors Ltd, the District Court found that a purchaser may reject a vehicle where there had been an accumulation of defects, even if those defects could not in themselves be described as substantial.^[3] The Court noted that a point will eventually be reached where the purchaser could “say convincingly that he or she had no confidence in the reliability of the vehicle”.^[4]
• [51] Since purchase, the vehicle has had defects that breach the guarantee of acceptable quality, being the spark plugs fault, and the cooling system faults and the blown head gasket. The cooling system fault was significant, requiring three repair attempts and causing enough damage to the vehicle’s head gasket to require its replacement.
• [52] I am therefore satisfied that the vehicle’s accumulated faults with the cooling system, which lead to the head gasket failure was a failure of a substantial character. I consider a reasonable consumer would not have purchased the vehicle, even given its age, mileage, and price if they had been aware of those issues and that they would occur so soon after purchase. I also consider a reasonable consumer would have lost confidence in the ongoing reliability of the vehicle by the time of the final repair, particularly as by then the vehicle’s head gasket had also blown.

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

• [53] Even if the failures were remedied within a reasonable time under s18(2)(b)(ii), and on balance by a margin, I have found that they were not, under s 18(3)(a) of the CGA, Mr Hareti is entitled to reject the vehicle because the vehicle’s defects are a failure of a substantial character.
• [54] I have considered whether Mr Hareti has lost his right to reject the vehicle, because after the repair he took the vehicle back. The law relating to the loss of the right to reject goods is set out in s 20 of the CGA. Under s 20(1)(a) of the CGA, Mr Hareti 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.
• [55] In Nesbit v Porter, the Court of Appeal shed some light on the statutory words in s 20(2) of the CGA.^[5] The Court observed that:^[6]

  ... 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.

• [56] In this case, the Applicants rejected the vehicle for cooling system failure on three occasions. On the second occasion on 30 March 2024, they made it clear that they “would not be taking the vehicle back” although they did. On 10 April 2024 (the third occasion) they made it very clear, and this was reinforced on 11 April 2024. Despite this, the trader then proceeded to order parts and to perform substantive repairs. While the starting point is that a trader is entitled to remedy a fault, where the fault is also a failure of a substantial character, then the consumer has the right to choose whether to reject or to require the failure to be remedied, and in order to make an informed decision, it must also be fully aware of the extent of the defect. In this case, I find that the trader not only failed to identify the extent of the problem until much too late in April, but then having received very clear rejection instructions right up to 11 April, when the serious head gasket fault was apparent, it then continued with the repair, and refused to accept the Applicants’ rejection.
• [57] For all these reasons, I find that the Applicants have not lost their right to reject the vehicle.
• [58] As Mr Hareti is entitled to reject the vehicle, under s 23(1)(a) of the CGA he is also entitled to a full refund of all amounts he has paid in respect of the vehicle.
• [59] As set out at [7] above, Mr Hareti funded the purchase price by entering into a loan with Finance Now. According to Finance Now’s loan statement provided to Mr Hareti, he has paid a total sum of $1,936.43 by 41 instalments of $47.23. Over the period of the loan, $690.52 in interest has accrued, and the loan account has been charged $22.50 in monthly account fees.
• [60] The Applicants have travelled 6,705 km since the vehicle was purchased with about 8 months of use. In these circumstances, the applicant is entitled to recover the capital components of all amounts paid with respect to the vehicle (i.e. all payments less interest and fees imposed) given they have received the benefit of the vehicle, however I exclude one interest payment of $80.66 from the deduction of interest in this calculation.
• [61] So, in total the trader must pay the Applicants the total sum of $1,304.07, within five working days of this decision in respect of the payments made on the loan.

The collateral credit agreement

• [62] Mr Hareti is also entitled to have his ongoing rights and obligations under his collateral credit agreement with Finance Now assigned to the trader.
• [63] The relevant provisions are set out in ss 89(2) and (3) of the Motor Vehicle Sales Act 2003 (the MVSA), which state:
  89. Jurisdiction of Disputes Tribunal

...

(2) A Disputes Tribunal may order that the rights and obligations of the buyer of a motor vehicle under a collateral credit agreement vest in a motor vehicle trader if—

(a) the collateral credit agreement is associated with the contract for the sale of that motor vehicle; and

(b) the motor vehicle trader is a party to that contract for sale; and

(c) either one of the following circumstances applies:

(i) the buyer exercises the right conferred by the Consumer Guarantees Act 1993 to reject that motor vehicle and, on a claim by the buyer under section 47(1) of that Act, the Disputes Tribunal orders the motor vehicle trader to refund any money paid, or other consideration provided, for that motor vehicle; or

(ii) the Disputes Tribunal finds that the buyer has suffered, or is likely to suffer, loss or damage by the conduct of the motor vehicle trader that constitutes, or would constitute, any of the conduct referred to in section 43(1) of the Fair Trading Act 1986 and the Disputes Tribunal makes an order under section 43(2) of that Act declaring the whole or any part of the contract for sale to be void.

(3) For the purposes of subsection (2), collateral credit agreement, in relation to a contract for the sale of a motor vehicle, means a contract or agreement arranged or procured by the motor vehicle trader or the buyer for the provision of credit by a person other than by the motor vehicle trader to enable the buyer to pay the price reserved by the contract for sale in respect of the motor vehicle.

• [64] The criteria in s 89(2) of the MVSA for the assignment of rights and obligations under a collateral credit agreement are all met in this case:

(a) The agreement between Mr Hareti and Finance Now is a collateral credit agreement for the purposes of s 89(2) of the MVSA. The agreement was procured by Mr Hareti for the provision of credit by Finance Now to enable him to purchase the vehicle.

(b) The trader sold the vehicle to Mr Hareti, so it is a party to the contract to purchase the vehicle.

(c) Mr Hareti has exercised the right conferred by the CGA to reject the vehicle and the Tribunal has ordered that the trader must refund any money paid, or other consideration provided, for that vehicle.

Diagnostic costs

• [65] Finally, Mr Hareti is entitled to recover the costs he paid to AK Hydraulics Limited ($45) for its diagnosis of the continuing radiator fault. Those costs were reasonably foreseeable as a result of the vehicle’s failure of a substantial character and were incurred to prove the nature and extent of the vehicle’s defects.

Outcome

• [66] The Applicants’ claim is allowed and the Tribunal orders that:

(a) Mr Hareti’s rights and obligations under the collateral credit agreement with Finance Now dated 21 January 2024 are assigned to the trader from the date of this decision.

(b) The trader must pay Mr Hareti, $1,349.07 within five working days of this decision.

(c) Once this sum of $1349.07 is paid to Mr Hareti, the trader must, at its cost arrange to uplift the vehicle at a time, date, and place convenient to Mr Hareti.

DATED at AUCKLAND this 11^th day of December 2024

G M Taylor
Adjudicator

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^[1] Provided by Janssen Insurance Limited.

^[2] Excluding the cost of the MBI policy.

^[3] Cooper v Ashley & Johnson Motors Ltd (1996) 7 TCLR 407 (DC).

^[4] At 417.

^[5] Nesbit v Porter [2000] NZCA 288; [2000] 2 NZLR 465 (CA).

^[6] At [39].