Singh v Fuzhou Holding Co Ltd t/a Great Motors - Reference No. MVD 157/2024 [2024] NZMVDT 310 (11 December 2024)

Last Updated: 23 January 2025

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 157/2024 [2024] NZMVDT 310 BETWEEN HARPREET SINGH Applicant AND FUZHOU HOLDING CO. LIMITED (T/A GREAT MOTORS) Respondent

HEARING at AUCKLAND on 18 July 2024 (by audio-visual link) MEMBERS OF TRIBUNAL

G M Taylor – Adjudicator S Haynes – Assessor

APPEARANCES

H Singh, Applicant

Y (Nick) Lin, for the Respondent

S Tam, Mandarin Interpreter DATE OF DECISION 11 December 2024

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DECISION OF THE TRIBUNAL

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1. Within five working days of the date of this decision, Fuzhou Holding Co. Limited (T/A as Great Motors) is to pay Harpreet Singh the total sum of $400.

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REASONS

Introduction

• [1] On 26 February 2024,^[1] Harpreet Singh (the Applicant) who lives in Christchurch, purchased a 2017 Jeep Wrangler Limited for $41,000 from Fuzhou Holding Co. Limited (trading as Great Motors) (the trader) in Auckland. The odometer reading was recorded as 58,000 km. After purchase but before returning to Christchurch, the Applicant had the vehicle modified.
• [2] The Applicant seeks to reject the vehicle and to obtain a refund of the purchase price of $41,000 and compensation totalling $13,287.72 comprising: $11,450 for accessories he had purchased for the modification, $1,050 for a bonnet paint and front lights installation, $297.84 for an Inter Islander ticket, and $489.88 for fuel from Auckland to Christchurch.
• [3] The trader’s position initially was that it was selling the vehicle on behalf of the owner, but it acknowledged and I accept that the trader sold the vehicle to the purchaser as shown in the Vehicle Offer and Sale Agreement and associated Consumer Information Notice (CIN).
• [4] The trader’s position is that it had initially offered to remedy the suspension but not the tyres as these were modified by the purchaser. But it then found it was not cost effective and nor was there a new differential available. So, it offered and continues to offer a full refund of the purchase price, but it had initially required the purchaser to return the vehicle. At the hearing it also disputed any liability for the cost of the modifications, fuel or ferry ticket.
• [5] After the hearing, the parties submitted additional evidence, including:

(a) A second New Zealand Transport Agency (NZTA) report dated 19 June 2024 (NZTA Report 2) which identified four faults present at the time of the warrant of fitness.

(b) Copies of communications regarding remedial work, which included the trader’s offer to “pay for [the] cars return and will fix all the issues including chassis crack.”

(c) Subsequently the purchaser agreed to the trader collecting the vehicle for remedial repairs, but confirmed his claim had not been resolved, as he wanted an independent warrant of fitness (WoF) inspection of the repairs by the AA or VTNZ.

(d) The trader has provided a copy of the post remedial repair WoF inspection by Drivesure and repair invoices.

The issues

• [6] The issues requiring the Tribunal’s consideration in this case are:

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

(b) If not, what, if any, remedy is the purchaser entitled to under the CGA?

(c) Has the trader engaged in misleading conduct in breach of s 9 of the Fair Trading Act 1986 (FTA)?

(d) If so, what remedy, if any, is the purchaser entitled to under the FTA?

Relevant background

• [7] The two New Zealand Transport Agency (NZTA) investigation reports^[2] (the NZTA report 1 and 2) provide a timeline of events. In brief, NZTA Report 1 records that based on LANDATA records^[3] on 28 June 2023, the vehicle had been inspected at the border and no damaged was flagged. The odometer reading was recorded as 56,971 km. On 11 August 2023, a VIN was assigned to the vehicle and the odometer reading was 56,990 km.
• [8] On 14 August 2023, the vehicle failed its initial entry inspection. Additional failure notes recorded were “LHF TRAIL ARM MOUNT WELDED ON DIFF. REPL OR SUPPLY REP CERT, PAN HARD ROD LOOSE.”^[4]
• [9] On 11 September 2023 additional failure notes recorded in LANDATA:^[5]

- “REMEDY PLAY BOTH FRT WHEELS, MACHINE REAR ROTORS WITHIN SPECS”

- ‘FRONT DIFF HOUSING REPLACED ON RECHECK”

- “PASSED.”

• [10] On 11 September 2023, the vehicle was rechecked and passed, and a MR2A and WOF were issued. The recorded odometer reading was 57,061 km.^[6]
• [11] On 4 January 2024, the trader listed the vehicle on Trade Me, although the vehicle was registered on 23 February 2024 to Carwebs Limited.
• [12] On 23 February 2024, the vehicle passed a WOF inspection performed by EB Motors Limited (trading as Eastern Beach Motors).
• [13] On 26 February 2024, Mr Singh purchased the vehicle from the trader.
• [14] On 27 February 2024, Mr Singh modified the vehicle. He had an aftermarket front bumper, bonnet, suspension springs and shock absorbers installed (a suspension lift kit) and larger wheels and tyres fitted. After uplifting the vehicle he started his drive home to the South Island.
• [15] On 28 February 2024, in Wellington, the NZ Police issue a non-operation order (a “green sticker”) because the vehicle had oversize wheels and tyres. On 29 February 2024 Mr Singh says he remedied this fault by having fender flares installed to cover the wheels. But when he took the vehicle for a reinspection at VTNZ on 2 March 2024,^[7] so that the green sticker could be removed, it failed for four reasons:

Front steering Drag Link Play Left and Right.

Front axle modified LVV Required

Left front Park Lights Not Working

All Tyre Tread Mismatched

• [16] On or about 6 March 2024, the purchaser contacted the trader and was told it would remedy the issue with a LVV certificate.
• [17] On 26 March 2024, the trader reported that it was exploring repair options in Christchurch. But on 4 April 2024, it signalled that the price and availability of a new differential axle ruled out this option and that it might be an option for the purchaser to return the vehicle for a refund of the purchase price. The purchaser identified it could not return the vehicle due to the green sticker and that he had also incurred the expense of the modifications and travel.
• [18] On 5 April 2024, the trader stated it could only offer a full refund if the purchaser returned the vehicle.
• [19] In March 2024, the purchaser lodged a complaint with NZTA and the certification officers performed inspections and conducted investigations, including with the original owner who imported the vehicle, and those who had worked on the vehicle. The NZTA report records that the original owner said:

there was a crack on a bracket on the diff and they [Wicked Customs] replaced the diff. The compliance was all good, but he found that it was not going into 4-wheel drive. The 4x4 specialist [Wicked Customs] refitted his old diff with upgraded mountings.

• [20] The report records that on 1 May 2024, the certifying officer visited Mag Warehouse and spoke with a technician who had worked on the vehicle. It records:

... He noticed the welding on the diff. He thought that the vehicle may have been in an accident and was surprised that it was not an insurance write off, or LVV certified for the differential modification. He also noticed the black silicone on the side of the engine.

• [21] The report concludes in part that since the vehicle was certified for entry it has undergone both repair and modification and has travelled 1,686 km. It also found that the suspension lift kit may have contributed to the extra strain on the steering drop arm ball joint. So, ultimately it recommended that the complaint not be upheld as it was unable to determine whether the issues found were present when the vehicle was certified for entry. But it found that “based on my findings I believe the faults would have been present when the WOF was issued by VI ... on the 23^rd of February 2024. An additional complaint investigation should be undertaken.”
• [22] On 19 June 2024, NZTA Report 2 was produced. It concluded there were four faults present at the time of the pre-purchase WoF inspection on 23 February 2024, namely:

  1.Body mount cracking on left hand side of chassis and securing mount bent

  2.Front trailing arm mounts modified

  3.Play in the steering drop arm

  4. Registration plate illumination lamps not fitted.

• [23] As stated above, since that time, the trader has collected the vehicle.
• [24] On 30 October 2024, the Wicked Customs invoice records that repairs at a total cost of $1,773.60 to the vehicle as follow:

  Sump replacement

  Tie rod end replacement

  Diff swap front and rear x 2

  Set new diff ratio ECU

• [25] On 16 October 2024, the Drivesure WoF inspection sheet records the vehicle is compliant apart from two reasons for rejection, namely: the front registration plate is not displayed and all tyres are too wide. The Tribunal’s Assessor Mr Haynes has advised and I accept that the vehicle is legally compliant apart from those two reasons which relate to the owners modifications and are unrelated to the remedial repairs. He also confirms that Drivesure is an independent inspection agency.

Was the vehicle of an acceptable quality?

• [26] 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”.
• [27] “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.

(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] 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.

• [29] On balance, I find that the vehicle was not of an acceptable quality. I say that principally as after considering the evidence, including the photographs subsequently provided and the NZTA report, I accept the advice from Mr Haynes, the Tribunal’s Assessor that the vehicle would not pass a WoF because there has been a modified repair to the suspension arm on the chassis rail without a Low Volume Vehicle (LVV) Certificate having been obtained and the work breaches the following NZTA Vehicle Inspection Requirements Manual (VIRM) requirements:

(a) The suspension of the vehicle is not a factory component and has visible poor repairs that have not returned the structure to within a safe tolerance of when it was manufactured, without a Low Vehicle Volume certificate;^[8]

(b) Chassis rails have been heated as part of the repair and evidence that this process has been carried out to the manufacturer’s temperatures and time limits has not been documented, or alternatively heat has been applied to a chassis rail where this is not permitted in the manufacturer’s instructions;^[9]

(c) A suspension component shows signs of welding or hearing after original manufacture. ^[10]

• [30] I also accept the VTNZ report failures of front steering drag link play on both sides, and that the left front lights were not working.

If not, what, if any, remedy is the purchaser entitled to under the CGA?

• [31] 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.

• [32] 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.

• [33] While I find that the structure of a vehicle is important, I accept that the faults are not a failure of a substantial character, as I accept Mr Haynes’ advice that the defects were capable of being easily remedied, and indeed have now been remedied as demonstrated by the Wicked Customs repair invoice and the Drivesure WoF inspection sheet.
• [34] Where a failure is not of a substantial character then the purchaser must first give the trader a reasonable time in which to remedy a fault. How a trader remedies a fault is its choice. It can perform a repair or it can choose to refund or replace the goods.^[11] In this case, I accept that the trader investigated obtaining a replacement differential but when this was unsuccessful it offered a full refund. The two sticking points were that the purchaser lived in Christchurch and bought the vehicle from the trader in Auckland and no agreement could be reached on transportation costs, and the second was that the purchaser had modified the vehicle.
• [35] However, the trader then agreed to pay the transportation costs, which I accept is reasonable, as the vehicle could not be lawfully driven to enable the purchaser to return it for the remedial action, and the trader also agreed to remedy all other faults.
• [36] By modifying the vehicle after purchase, the purchaser has also exposed himself to the risk that he has lost the right to reject the vehicle.
• [37] 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.

• [38] Damage can include a modification, if it cannot be easily reversed so that the vehicle can be returned to the condition it was in prior to the sale. The purchaser’s evidence is that the ‘original’ vehicle parts being the bonnet and grill and original tyres are still available and so the vehicle can be fully restored. At this stage, it is not necessary to establish if this is the case, because I do not accept that he is entitled to reject the vehicle under the CGA.
• [39] As stated above, I accept Mr Haynes’ advice that the faults have now been remedied as demonstrated by the Wicked Customs repair invoice and the Drivesure WoF inspection sheet.
• [40] As the remedial action has been taken, the only issue left to address is whether the Applicant has suffered any reasonably foreseeable consequential losses under s 18(4) of the CGA.
• [41] As the trader has collected the vehicle for remedial action and returned it at its cost, I find that no such losses have been incurred. The Applicant’s fuel and ferry tickets were costs incurred as part of his initial delivery to the South Island.

Did the trader engage in misleading or deceptive conduct under the FTA?

• [42] Section 9 of the FTA provides:
  9. Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

• [43] The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corp Ltd v Ellis:^[12]

The question to be answered in relation to s 9 ... is ... whether a reasonable person in the claimant’s situation – that is, with the characteristics known to the defendant or of which the defendant ought to have been aware – would likely have been misled or deceived. If so, a breach of s 9 has been established. ...

Then, with breach proved and moving to s 43, the court must look to see whether it is proved that the claimant has suffered loss or damage “by” the conduct of the defendant.

• [44] The purchaser’s principal submissions are fourfold:

(a) That the trader mislead him when it sold the vehicle with a WoF, as it ought not to have passed as the vehicle had uncertified repair work.

(b) That the trader’s conduct was misleading because he says the vehicle ought not have passed its entry compliance checks.

(c) That the vehicle was unsafe and had been in an accident.

(d) His most recent claim that the repairs performed since the hearing are not lawfully complaint.

• [45] On balance, I accept that the trader’s conduct prior to sale would have mislead a reasonable consumer to believe that the vehicle was legally compliant, when it was clearly not the case, and this is supported by the NZTA Report 2. However, with one exception, related to stress, I saw no evidence of additional loss suffered which would entitle him to a remedy under s 43 of the FTA, when the vehicle has been remedied under the CGA as stated above.
• [46] I do however accept that naturally the Applicant has suffered stress and inconvenience arising from the misleading conduct, and that he has made a considerable effort to pursue the investigation with NZTA to establish non-compliance. In the circumstances I find that he is entitled to $400 compensation for stress and inconvenience.

Outcome

• [47] Within five working days of the date of this decision, the trader is to pay the Applicant the total sum of $400.

G M Taylor
Adjudicator

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^[1] The Vehicle Offer and Sale Agreement (VOSA) is dated 22 February 2024, but the trader signed on 26 February 2024
^[2] NZ Transport Agency (NZTA) “Complaint Investigation Report” (13 May 2024) (NZTA Report 1) into Mr Singh’s complaint and the NZTA “Investigation Report” (19 June 2024) (NZTA Report 2)

^[3] The name for the vehicle inspection electronic database.

^[4] NZTA Report 1.

^[5] NZTA Report 1.

^[6] NZTA Report 1.

^[7] Odometer reading of 58,634 km.
^[8] NZTA Vehicle Inspection Requirements Manual (In-service certification (WoF and CoF), general vehicles at 3-1-1-g (vehicle structure – structure (incl. frontal impact)).
^[9] NZTA VIRM (Light vehicle repair certification), vehicle structure at 2-2-6 and 2-2-7 (body-over-frame chassis rails).
^[10] NZTA VIRM (In-service certification (WoF and CoF), general vehicles at 9-1-7-c (steering and suspension systems).

^[11] Consumer Guarantees Act 1993, s 19(1).

^[12] Red Eagle Corp Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].