Kerr v Hamish's Vehicle Sales Limited t/a HVS - Reference No. MVD 050/2024 [2024] NZMVDT 81 (20 May 2023)

Last Updated: 19 June 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 050/2024 [2024] NZMVDT 081 BETWEEN ANTHONY KERR Applicant AND HAMISH’S VEHICLE SALES LIMITED trading as HVS Respondent

HEARING at CHRISTCHURCH on 4 April 2024 (by audio-visual link) MEMBERS OF TRIBUNAL

D M Jackson, Barrister – Adjudicator S Cousins – Assessor

APPEARANCES

A Kerr, Applicant

H Gardyne, Director for the Respondent

DATE OF DECISION 20 May 2023

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DECISION OF THE TRIBUNAL

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Mr Kerr’s application is dismissed.

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REASONS

Introduction

[1] On 2 August 2022 Mr Kerr purchased a 2015 Nissan X-trail Hybrid from Hamish’s Vehicle Sales Limited trading as HVS (“HVS”) for $23,300. The vehicle had travelled 98,000 kms at the time of sale but by the time of this application its odometer read just over 125,000 kms.
[2] In December 2023, the vehicle suffered what Mr Kerr describes as a major transmission failure. Mr Kerr no longer wants the vehicle and says he ought to be refunded his purchase price. He says the vehicle is not of ‘acceptable quality’ having regard to its type, price, age, description, and condition at the time of sale. He contends that this means he should expect the vehicle to last a reasonable amount of time without significant issues.
[3] HVS says the transmission failure is unfortunate but is not its responsibility; Mr Kerr having owned the vehicle for too long and travelled too far to claim under the statutory guarantee of acceptable quality.

The issue

[4] The issue requiring the Tribunal’s consideration in this case is:

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

Issue: Has the vehicle been of acceptable quality?

[5] 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”.
[6] “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.

[7] 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. The test is an objective one; it is not a view of those factors from a purchaser’s subjective perspective.
[8] Mr Kerr gave evidence that he serviced the vehicle at 15,000 kms and that it was looked after by him and his family. He advised that it is due for its 10,000 km service. However, on 20 December 2023 at 125,435 kms, it broke down, shaking (violently at a standstill and during acceleration) and came shuddering to a halt, in heavy traffic. Given the time of year, Mr Kerr parked the vehicle for the Christmas holiday period and in the New Year had it inspected by a Nissan specialist dealer. That repairer diagnosed that the vehicle had suffered major damage to the vehicle’s transmission; the result of a hydraulic clutch and bearing failure.
[9] A local transmission specialist was consulted, which estimated expensive and lengthy repairs were required. Mr Kerr was informed that this particular make and model of vehicle is known for this particular failure.
[10] On 15 January 2024, Mr Kerr notified HVS of the problem and it had the vehicle inspected by its favoured repairer. Whilst it appears HVS offered to contribute to the repairs, it did not accept liability for them. The parties fell into dispute over who was responsible for the repairs, so on 1 February 2024 Mr Kerr gave HVS notice of rejection.
[11] It appears that a definitive diagnosis is not available because of the time and expense involved in having the transmission being removed and stripped to find the true cause of the failure. Mr Gardyne did not dispute that there is a fault with the vehicle. The issue, he says, is that the fault is unknown as is the extent of the repair required and on whose shoulders that cost should fall. He says that after 17 months and 27,000 kms trouble free motoring, the vehicle is not HVS’s responsibility anymore. Further, he acknowledges that this particular model is known to have had a transmission problem and he has seen an improvement in the Nissan transmission in later models of the same vehicle. That is, an improved transmission in the Nissan X-trail.
[12] Mr Cousins, the Tribunal’s Assessor,[1]has reviewed the whole of the evidence. In Mr Cousins’ opinion, Mr Kerr has not established that there is, in fact, a transmission fault. Mr Cousins notes that the specialist Nissan repairer could not confirm that the vehicle had a transmission fault. He opines that the fact that the repairer was able to go for a road test in the vehicle suggests the failure is not catastrophic at this point; the vehicle remains driveable. In addition to that, Mr Cousins notes that the specialist Nissan repairer could not confirm the fault was with the transmission after that road test. In Mr Cousins’ opinion, if a vehicle has a significant or even minor transmission fault, it should be diagnosable on a road test without the need for additional diagnosis.
[13] The specialist transmission repairer, who gave an estimate of repair, did not inspect, drive, or diagnose the vehicle.
[14] But for Mr Gardyne’s acknowledgement that this particular make and model is known to have experienced a transmission problem, Mr Cousins opines that Mr Kerr has not proven cause.
[15] I agree. The true cause of the failure cannot be diagnosed on the state of the evidence before the Tribunal. Mr Kerr has been advised, properly, by those repairers engaged by him, that the cost of diagnosis and the process required in order to do so is so labour intensive that it is uneconomic. I did not understand Mr Gardyne to disagree. Mr Cousins opines that the assessments provided are sufficient to show that the vehicle has more likely than not suffered a transmission failure, even if the damage suffered or exact cause of the fault is unknown.
[16] The repair costs estimated to Mr Kerr for reconditioning of the transmission or its replacement are more than $10,000. Mr Gardyne considers his preferred repairer could carry out the repairs for less (hence his offer that HVS contribute $7,000 to the repairs). Again, Mr Cousins opines that these estimates are in the likely “ballpark” of what will be required to recondition or replace the transmission, likely more, if necessary. That is, Mr Cousins is not sure such extensive repairs are necessary on the face of the evidence.
[17] I am left then with apparent agreement that the vehicle has likely suffered a transmission failure which requires repair or replacement, the extent of which remedial works is unknown.
[18] However, that is not the end of my inquiry and I must have regard to the vehicle’s age, mileage and price and how long Mr Kerr owned the vehicle before the transmission failure. The evidence is that the vehicle has travelled approximately 27,000 kms since purchase in 17 months.
[19] This was a seven-year-old Japanese vehicle with reasonable mileage at a purchase price of $23,300. A reasonable consumer of such a vehicle would understand that vehicles with these characteristics can develop defects and require ongoing maintenance of a sometimes unplanned and expensive nature. They would also understand that 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.
[20] This is a case where the true issue is the duration of the guarantee. This is influenced by the reasonable expectations of durability and performance of a vehicle of this age, price, and mileage at purchase (inclusive of any hidden defects). I am not satisfied the guarantee extends to 27,000 kms use and 17 months ownership. The statutory guarantee does not last indefinitely and must be judged through the lens of a reasonable consumer (and not the subjective lens of Mr Kerr). I am not satisfied that a reasonable consumer would not regard the vehicle as being as durable as was reasonably expected, given the age, price, and mileage of the vehicle. I find that the risk of the vehicle developing defects transferred from HVS to Mr Kerr prior to the transmission failure. Indeed, it appears from the 15,000 km service invoice that no issues were identified then and I find that that is the point in time when risk transferred.
[21] This will disappoint Mr Kerr but I cannot find for him, having regard to the 27,000 kms travelled by him without incident prior to the transmission failure. I find that the breach of the guarantee of acceptable quality has not been proven by him on the balance of probabilities. He has owned the vehicle for too long and travelled too far to call on HVS for its repair or other remedy.
[22] It follows that Mr Kerr’s application is dismissed.

D M Jackson
Adjudicator

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[1] Assessors are appointed by the Minister of Commerce and Consumer Affairs under s 88(2) of the Motor Vehicle Sales Act 2003, having regard to the Assessor’s personal attributes, qualifications and skills and knowledge of, or experience in, the different aspects of matters likely to come before the Tribunal. Under sch cl 10 of Sch 1 cl 10of the Motor Vehicle Sales Act, an Assessor sits as a member of the Tribunal and has a duty to assist the Adjudicator in the determination of the claim, although the Adjudicator alone determines the claim.