Jiang v Auckland Auto Collection Limited t/a Easyauto123 - Reference No. MVD 502/2024 [2024] NZMVDT 326 (16 December 2024)

Last Updated: 22 January 2025

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 502/2024 [2024] NZMVDT 326 BETWEEN XU JIANG Applicant AND AUCKLAND AUTO COLLECTION LIMITED TA EASYAUTO123 Respondent

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

C Euden – Adjudicator

S Gregory – Assessor

APPEARANCES

X Jiang, Applicant

C Churchward, General Manager, for the Respondent

J Hu, Assistant Manager, for the Respondent

DATE OF DECISION 16 December 2024

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DECISION OF THE TRIBUNAL

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A Ms Jiang’s application to reject the vehicle is dismissed.

2. Auckland Auto Collection Limited must, within a reasonable time, install the missing rear crossmember to the vehicle.

100. Auckland Auto Collection Limited must also, within a reasonable time, repair the damage to the vehicle’s rear signal acquisition module control unit and rear fuse box.

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REASONS

Introduction

• [1] Ms Jiang purchased a 2017 Mercedes-Benz C-Class for $40,889 from Auckland Auto Collection Limited trading as Easyauto123 (Easyauto123) on 12 November 2021.
• [2] Ms Jiang wishes to reject the vehicle because she says Easyauto123’s work on the vehicle to remove its tow bar made the vehicle unsafe and caused damage to the vehicle’s boot.
• [3] Easyauto123 says the vehicle was in excellent condition when it was sold and considers that Ms Jiang should not be able to reject the vehicle.

The issues

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

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

(b) Has Easyauto123 refused, neglected, or failed to rectify the vehicle’s defects within a reasonable time?

(c) Has Ms Jiang lost the right to reject the vehicle?

(d) What remedy, if any, is Ms Jiang entitled to under the CGA?

Relevant background

• [5] Ms Jiang purchased the 2017 vehicle on 12 November 2021 for $40,889. At the time of purchase, the vehicle’s odometer read 40,242 km.
• [6] As part of the purchase, Ms Jiang traded in her 2006 BMW 523I for a trade in value of $4,889. This left Ms Jiang with a balance of $36,000, which she paid using a loan from Heartland Bank Limited trading as Marac.
• [7] As part of the purchase Easyauto123 agreed to remove the vehicle’s tow bar. Easyauto123 initially said it was unable to do so until December 2021, and later said due to the busy Christmas period it would not be able to do so until January 2022.
• [8] On 18 January 2022 Ms Jiang returned the vehicle to Easyauto123 and the tow bar was removed the same day.
• [9] Two and a half years after she purchased the vehicle, Ms Jiang noticed that both indicator lamps started flashing fast, warning lights appeared for both indicators and there was a burnt smell coming from the vehicle. She took the vehicle to Mercedes-Benz Auckland on or about 24 July 2024 for diagnosis. It noted the following issues with the vehicle:

(a) short circuit stored fault codes for both rear tail lights;

(b) rear boot not opening;

(c) water in the rear boot;

(d) rear crash bar with bolts missing – water entering the vehicle through the missing bolts;

(e) crossmember removed causing water to gain entry;^[1]

(f) rear signal acquisition module (SAM) damaged – water inside the boot lid;

(g) wiring to rear SAM and fuse box needing repair; and

(h) cracked righthand taillight.

• [10] In summary, Mercedes-Benz Auckland diagnosed that water had caused damage to the vehicle’s rear SAM control unit and rear fuse box. It quoted $8,492.08 to remedy the damage (including damage relating to the taillight).
• [11] Ms Jiang says she told Mercedes-Benz Auckland that she had never been in an accident which required any panel beating work done, so Mercedes-Benz Auckland suggested water ingress could have occurred when the tow bar was removed and the crossmember was not put back (because it would have left holes and water may have entered the boot through those holes). Ms Jiang says she was advised that the failure to install the crossmember is a major structural change to the vehicle and its absence makes the vehicle unsafe.
• [12] Ms Jiang says she has not had any significant accidents in the vehicle or had any panel work done to it. Ms Jiang provided evidence from her insurance company, IAG New Zealand Limited, which confirmed that Ms Jiang did not make any claims against her vehicle insurance in the relevant period.
• [13] At the hearing Ms Jiang explained that last year, her vehicle was scratched by another car reversing while it was parked at a restaurant. The evidence corroborates this – photographs provided by Easyauto123 show that the vehicle’s rear right-hand side has had a minor repair followed by some cosmetic painting. At the hearing, Ms Jiang said she did not make a claim through her insurance as it was an easy and inexpensive repair. Mr Gregory, the Tribunal’s Assessor, advises me that the photographs show that the repairs have been carried out poorly, with body filler and sanding marks visible under the paint.
• [14] As of 1 December 2024, the vehicle’s odometer read 86,095 km meaning Ms Jiang has travelled 45,853 km in the three years she has owned the vehicle.
• [15] At the Tribunal’s request, after the hearing Ms Jiang provided photographs of the vehicle’s boot taken by Mercedes-Benz Auckland when it diagnosed the vehicle. Relevantly, the photographs show:

(a) a water tide mark;

(b) no signs of mould or corrosion around any of the metal seams or machine hole points;

(c) clean wiring; and

(d) the SAM and fuse box are likely to have shorted (there are burn marks on both).

Easyauto123’s position

• [16] Easyauto123 inspected the vehicle after Ms Jiang advised it of Mercedes‑Benz Auckland’s quote.
• [17] Easyauto123 says when it inspected the vehicle it noted that the vehicle’s rear bumper was not in the condition it was when it was sold to Ms Jiang in November 2021. It says that the vehicle has clearly suffered a rear impact and provided photographs which it says show signs of filler, sand marks, and poor-quality paint respray, as well as a damaged tail lamp and poor bumper alignment. Easyauto123 therefore refused to repair the boot damage because it considered it was caused by the rear impact.
• [18] Easyauto123 provided photographs of the vehicle’s bumper when it was advertised and sold to Ms Jiang; I accept that they do not match the current condition of the bumper.
• [19] Easyauto123 also suggested that the crossmember may have been fitted to the vehicle at the time of sale, but since removed. Consistent with this, Easyauto123 says the vehicle would not have passed its two warrant of fitness (WOF) inspections since it was sold if it did not have a crossmember.

Issue 1: Has the vehicle been of acceptable quality?

• [20] Ms Jiang has applied to this Tribunal to reject the vehicle; the CGA may allow her to do so if:

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

(b) Easyauto123 refused, neglected, or failed to rectify the vehicle’s defects within a reasonable time.

• [21] 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”.
• [22] “Acceptable quality” is defined in s 7 of the CGA (as far as is relevant) as follows:
  7. Meaning of acceptable quality

(1) For the purposes of section 6, goods are of acceptable quality if they are as—

(a) fit for all the purposes for which goods of the type in question are commonly supplied; and

(b) acceptable in appearance and finish; and

(c) free from minor defects; and

(d) safe; and

(e) durable,—

as a reasonable consumer fully acquainted with the state and condition of the goods, including any hidden defects, would regard as acceptable, having regard to—

(f) the nature of the goods:

(g) the price (where relevant):

(h) any statements made about the goods on any packaging or label on the goods:

(ha) the nature of the supplier and the context in which the supplier supplies the goods:

(i) any representation made about the goods by the supplier or the manufacturer:

(j) all other relevant circumstances of the supply of the goods.

• [23] 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 would understand a supplier’s obligations under s 6 of the CGA are finite and, at some point, the risk of the vehicle developing defects must transfer from the supplier to the purchaser. The point in time at which that risk transfers is determined with reference to the factors in s 7(1)(f) to (j) of the CGA.
• [24] It is for Ms Jiang to prove her case on the balance of probabilities. This means that she must establish that what she is claiming is more likely than not. Independent witnesses, corroborating documents, reports, and photographs can be an important part of discharging this burden. Ultimately, Ms Jiang must provide the evidence necessary to prove her case. As to the degree of evidence required to discharge the burden of proof, in the words of Denning J in Miller v Minister of Pensions:^[2]

... That degree is well settled. It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say: “We think it more probable than not,” the burden is discharged, but if the probabilities are equal it is not.

The missing crossmember

• [25] The parties accept that the vehicle does not currently have a crossmember. Ms Jiang suggests the crossmember was removed when the tow bar was removed and then not reinstalled. Easyauto123 says its notes record that it only removed the tow bar.
• [26] I am advised by Mr Gregory that the vehicle’s crossmember will have been removed when the tow bar was first placed on the vehicle (prior to Ms Jiang’s purchase). Mr Gregory says that with this vehicle model, it is not possible for the vehicle to have had both the tow bar and crossmember fitted at the same time. Therefore, Easyauto123 would not have removed the crossmember when it removed the tow bar.
• [27] However, Mr Gregory also advises me that a reasonable and competent removal would have included installing a crossmember to replace the tow bar. That is because the crossmember maintains the integrity of the rear chassis and ensures the proper alignment of components like the suspension and rear axle. Relevantly, failure to have the crossmember also leaves holes in the vehicle which can lead to water intrusion.
• [28] Given the importance of the crossmember, I find that when the tow bar was removed and Easyauto123 failed to install one, it meant that the vehicle was not as free of minor defects as a reasonable consumer would consider acceptable in the circumstances. The failure to install a crossmember, when removal of the tow bar was part of the purchase of the vehicle, was therefore a breach of the guarantee of acceptable quality.
• [29] For completeness I note that Easyauto123 submitted that the vehicle must have had a crossmember because it has passed two WOFs since it was sold and would not have passed without a crossmember. I do not accept this submission as I am advised by Mr Gregory that the crossmember is not visible to the WOF inspector and would be easily missed during an inspection.

The water damage in the boot

• [30] Ms Jiang claims that the water damage in the boot is a result of the vehicle not having a crossmember. As noted above at [24], it is for Ms Jiang to prove on the balance of probabilities that what she claims is more likely than not.
• [31] As noted at [15] above, the photographs taken by Mercedes-Benz Auckland relevantly show a water tide mark and a shorted SAM and fuse box, but otherwise show clean wiring and no signs of corrosion or mould. Mr Gregory advises me that the water tide mark indicates that there has certainly been water ingress into the boot, which has then caused damage to the SAM and fuse box. He also advises that the lack of any corrosion or mould means that the water ingress is relatively recent.
• [32] With the water ingress established, Ms Jiang must prove on the balance of probabilities where the water entered the vehicle from and what caused the ingress.
• [33] There is no evidence that the water entered from the top of the vehicle, and I find that it is more likely than not that the water entered the vehicle from the bottom. Ms Jiang gave evidence that she had never observed the boot being wet, which she likely would have noticed if the water had been coming from the top. I accept her evidence on this point.
• [34] As there is no evidence that the water entered from the top, it is also more likely than not that the water entered from the bottom through the holes left by the missing crossmember bolts.
• [35] As noted at [9](d) to (f), Mercedes-Benz Auckland diagnosed that the water ingress wa[3] caused by the lack of crossmember.³ It specifically diagnosed that water had entered the boot through the holes left by the missing crossmember bolts. Easyauto123 on the other hand suggested that the water instead entered the vehicle due to damage caused by a rear impact.
• [36] I find it more likely than not that the water entered the boot via the crossmember holes. That is because there is no evidence that the vehicle has been in an accident which would have caused the type of damage that would allow water to enter the vehicle. There was minor damage done to the vehicle last year (see [13] above), but it was cosmetic, and I am advised by Mr Gregory that it could not have caused the water ingress. In the absence of any other plausible explanations for the water ingress, I find that the water ingress was most likely caused by water entering the holes left by the missing crossmember bolts.

Issue 2: Has Easyauto123 refused, neglected, or failed to rectify the vehicle’s defects within a reasonable time?

• [37] Section 18(2)(b)(ii) of the CGA enables a consumer to reject goods where a supplier has been required to remedy a failure but refuses, fails, or does not succeed in doing so within a reasonable time.
• [38] 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.

The missing crossmember

• [39] I find that Easyauto123 has not yet refused, neglected, or failed to address the missing crossmember breach. This is because the remedy required under the CGA involves installing a crossmember, and Easyauto123 has not yet been asked to do so.

The water damage in the boot

• [40] Ms Jiang asked Easyauto123 to remedy the water damage in the boot caused by the missing crossmember. It refused to do so when it said the water ingress was caused by damage from a rear collision (see [17] above).
• [41] Ms Jiang is therefore entitled to the remedies under section 18(2)(b) because Easyauto123 refused to rectify the water damage in the boot within a reasonable time.

Issue 3: Has Ms Jiang lost the right to reject the vehicle?

• [42] As Ms Jiang has asked to reject the vehicle, and section 18(2)(b)(ii) allows her to do so, I must consider whether she has lost her right to reject the vehicle.
• [43] The law relating to the loss of the right to reject goods is set out in s 20 of the CGA, which states:

20 Loss of right to reject goods

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

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

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

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

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

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

(a) the type of goods:

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

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

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

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

Is the vehicle damaged?

• [44] ‘Damage’ as referred to in s 20(1)(c) is not defined in the CGA.
• [45] In Joden Finance Ltd v Prerssilp,^[4] Judge Harrison found that to qualify as ‘damage’, for the purposes of s 20(1)(c) of the CGA, the damage must amount to some loss in value of the vehicle, or reasonably significant cost of repair, justifying a finding that damage greater than wear and tear has occurred. On appeal to the High Court, Katz J held that the District Court was right to find that minor damage to goods, such as that associated with fair wear and tear, would not result in the purchaser losing their right to reject.^[5]
• [46] I find that Ms Jiang lost the right to reject the vehicle when the vehicle was scratched last year (see [13] above) and repaired poorly. That is because Mr Gregory advises me that the poor-quality repairs will have caused a loss in value to the vehicle, and a loss in value to the vehicle is sufficient grounds for ‘damage’ under s 20(1)(c).

Issue 4: What remedy, if any, is Ms Jiang entitled to under the CGA?

• [47] The relevant remedies are set out in s 18 of the CGA, set out at [38] above.
• [48] Ms Jiang is not entitled to reject the vehicle because it has been damaged. Instead, under s 18(2)(a) of the CGA she is entitled to have the defects that breach the guarantee of acceptable quality rectified within a reasonable time. I therefore find that Easyauto123 must install a crossmember and repair the damage caused by the water ingress.

Outcome

Findings

• [49] In summary, I have found that:

(a) Easyauto123 failing to install a crossmember, when the tow bar was removed as part of the purchase of the vehicle, was a breach of the guarantee of acceptable quality;

(b) the boot damage is the result of the breach of the guarantee of acceptable quality;

(c) Easyauto123 has not refused, neglected, or failed to install a crossmember;

(d) Easyauto123 has refused to remedy the boot damage;

(e) Ms Jiang is not entitled to reject the vehicle because it has been damaged; and

(f) Ms Jiang is entitled to have the defects that breach the guarantee of acceptable quality rectified within a reasonable time.

• [50] For the avoidance of doubt, Ms Jiang is not entitled to have the cracked righthand taillight repaired (noted by Mercedes-Benz Auckland as requiring repair).^[6] That is because the cracked righthand taillight was not caused by the missing crossmember.
• [51] Finally, I have also considered Ms Jiang’s claim that she should be able to reject the vehicle because it is unsafe. I am advised by Mr Gregory that the missing crossmember does not make the vehicle unsafe. While crossmembers contribute to collision protection, they are not the only components that contribute to safety during an impact. A missing crossmember would not necessarily render the vehicle unsafe for normal use. In any event, if this incorrect Ms Jiang has nevertheless lost her right to reject the vehicle (see [44] to [46] above).

Orders

• [52] Ms Jiang’s application to reject the vehicle is dismissed.
• [53] Easyauto123 must, within a reasonable time, install the missing rear crossmember to the vehicle.
• [54] Easyauto123 must also, within a reasonable time, repair the damage to the vehicle’s rear SAM control unit and rear fuse box.

C Euden
Adjudicator

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^[1] A crossmember is a structural component located underneath the vehicle, running across the chassis to provide support and rigidity.

^[2] Miller v Minister of Pensions [1947] 2 All ER 372 (KB) at 373–374.
^[3] While Mercedes-Benz Auckland refers to both a crash bar and a crossmember, I am advised by Mr Gregory that crash bar is another name for the crossmember.
^[4] Joden Finance Ltd v Prerssilp [2020] NZDC 12239.

^[5] Joden Finance Ltd v Auckland District Court [2021] NZHC 823, (2021) 16 TCLR 75.

^[6] See [9] above.