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Buyer’s old Delica van was not free of defects at the time of sale

The Motor Vehicle Disputes Tribunal hearing outcome regarding Alisha Hart and Auckland Budget Campervan Limited trading as D&M.

Background

Alisha Hart bought a 1996 Mitsubishi Delica van with 200,135kms on the odometer for $4,750 from Auckland Budget Campervan Limited trading as D&M on September 1, 2016.

Hart told the trader that she wanted a camper van for a two-month tour of the South Island. Hart said the trader assured her the vehicle was suitable for that purpose.

The contract of sale was recorded in a one-page agreement, under which the trader wrote that the van was sold “as trade-in condition” and the sale was a “private sale on “as is, where is” basis”.

The agreement also stated Hart agreed she had “no recourse for this vehicle once the sale was complete” and that “the Consumer Guarantees Act & the Fair Trading Act do not apply to this Purchase”.  The trader provided a “7-day mechanical warranty”.

The case

Hart said 10 minutes after leaving the trader’s premises, the vehicle started shaking, lurched when shifting gears and the oil light flickered. She returned the Delica to the trader. It worked on the van and returned it to her that afternoon. Hart said the van continued to shudder, the oil light flickered and the engine temperature would “shoot up” when the vehicle’s windows were closed.

She again returned the Delica to the trader on September 7. The trader said the van’s problems were normal and related to “the power draw” but fixed an idling issue.

Hart said the van’s performance improved, although it continued to shudder and the oil light flickered. On two occasions the engine temperature rose as the vehicle drove uphill, subsequently dropping downhill.

But she did not raise these issues with the trader because the mechanical warranty had expired.

In October, Hart left Auckland in the Delica for the South Island. She stopped in Hamilton because the van’s temperature gauge was “very high” and it overheated again the next day in Piopio. She took it to Grainger Motors Limited which checked the cooling system, removed the thermostat housing, found no thermostat was fitted and refilled and bled the cooling system. Hart said Grainger Motors also identified a leaky hose and a “dodgy pipe” connection to the radiator. Grainger Motors told Hart it was unable to repair the van and charged her $39.10.

Hart took the Delica to New Plymouth’s Strandon Automotive Limited, which installed a new thermostat, and replaced the clutch fan hub and leaky radiator hose, costing $581.52.

Hart said the van continued to overheat but she could not afford further repairs.

After researching into her legal rights, Hart spoke with the trader’s director Daryosh Marjomaki, and asked for a remedy under the CGA.

She said Marjomaki stated the Delica had a seven-day warranty but paid her $375 for repair costs. She said Marjomaki told her the trader had done everything required under the law.

Hart continued to experience problems with the Delica and on December 9, she had trouble starting it.

On December 16, Hart rejected the van saying it had significant faults and was not fit for purpose. The trader said the CGA did not apply to the purchase of the Delica as it was a “park to sell” and private sale.

On advice from the tribunal, Hart had Caltex Blockhouse Bay, an MTA certified repairer, inspect the van in March 2017. It recommended the radiator unit and thermostat be replaced, a cost of $695 + GST, and charged $80.50 for the assessment.

The finding

The tribunal said the trader was also a supplier under the CGA. It sold vehicles on behalf of others. It also supplied goods to a consumer – it transferred ownership and possession of the vehicle to the purchaser therefore the CGA applied to the transaction.

The tribunal said the trader’s attempt to exclude the CGA was likely a breach of the FTA, which prohibited false or misleading representation about the existence of rights.

The tribunal ruled the van didn’t comply with the CGA’s guarantee of acceptable quality because it was not free of defects at the time of sale nor durable because it had almost immediate problems with overheating.

A reasonable consumer would not expect an old, cheap van with high mileage to be free of all defects. However, a reasonable consumer would not expect the defects to affect the vehicle’s performance at the time of purchase or lack durability.

The trader had been aware of the faults since September 7 and had a reasonable opportunity to repair them but failed to do so which gave Hart the right to reject the vehicle under the CGA. 

However, that right to reject can be lost through delay and the tribunal ruled Hart took too long to exercise her right to reject the vehicle.

The tribunal said that had Hart not been misled about the existence of her rights under the CGA, she would likely have rejected the vehicle before departing for the South Island.

However, the tribunal ruled Hart was entitled to a remedy under the CGA because the vehicle was not of an acceptable quality at the time of sale and she had paid for repairs even though the trader had a reasonable opportunity to fix the faults.

 The orders

The trader must refund Hart for repairs to the vehicle, less the $375 paid, and replace the radiator and thermostat.

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Sorento rejection dismissed because claim was against manufacturer

 

The Motor Vehicle Disputes Tribunal hearing decision regarding Michael Griffin and Kia Motors New Zealand Limited

Background

Michael Griffin bought a used 2008 Kia Sorento with 17,025kms on its odometer for $39,795 from Winger Motors Limited on May 12, 2009. The car was first registered on May 13, 2008, and Griffin obtained the unexpired term of the manufacturer’s five-year warranty.

Griffin rejected the Sorento in May 2016 claiming it had a failure of substantial character, which he said was an ongoing loss-of-power issue, that made it unsafe under the terms of the Consumer Guarantees Act and filed an application against Kia Motors New Zealand Limited (the manufacturer).

Kia Motors said the vehicle’s fault was caused by contaminated diesel fuel which was not a failure on its part to comply with the act’s guarantee of acceptable quality. Kia Motors said that under the act, the right to reject a vehicle can only be exercised against the supplier not the manufacturer.

The case

Griffin said in August 2009, the car lost power during acceleration from an intersection. He stopped the Sorento and restarted the vehicle successfully. The car performed satisfactorily until it lost power again five months later. Waikato Kia scanned the vehicle’s ECU but was unable to find any fault codes. Griffin said that after January 2010, the loss-of-power issue occurred every two months at low speed. Griffin said he was not greatly troubled by the car’s fault because it was covered by the manufacturer’s warranty and he was confident the trader would fix it.

In 2013, Waikato Kia told Griffin it would continue the warranty cover for the loss-of-power fault. Griffin said the Sorento was returned to Waikato Kia on numerous occasions but it failed to diagnose the cause of the fault.

In January 2016, Griffin said he was driving the Sorento when it lost power and almost collided with another vehicle. Waikato Kia replaced the car’s fuel pick up assembly but about three weeks later the fault reoccurred.

Griffin told Kia Motors in May 2016 that he wanted to reject the vehicle. Kia Motors offered Griffin a deal to buy a replacement vehicle but he rejected the offer.

On October 4, Griffin’s legal adviser sent a letter to Kia Motors rejecting the vehicle on his behalf. The manufacturer’s lawyers replied explaining that under the act, the right to reject a vehicle can only be exercised against the supplier.

 The finding

At the start of the hearing, the tribunal’s adjudicator explained the remedies which the act provided to a consumer to make a claim against a manufacturer and gave Griffin the opportunity to apply for an adjournment so he could take legal advice. However, Griffin decided to continue with the hearing.

The tribunal heard that in February 2012, the manufacturer instructed Waikato Kia to replace the turbo and radiator assembly based on information of known components that caused intermittent loss of power.

On March 4, 2013, Griffin told Waikato Kia the vehicle was losing power under load. A scan found no fault codes. Waikato Kia removed the fuel pump and reported finding debris in the fuel swirl pot.

Waikato Kia rechecked the vehicle for intermittent loss of power from February 2016 to June 2016 and a fault code P1186 (fuel pressure monitoring too low) was recorded. The manufacturer said that code confirmed a fuel system component failure from the fuel contamination identified by Waikato Kia in March 2013 and recommended replacing all components in the fuel system, an estimated at $18,062.

In determining whether the vehicle complied with the guarantee of acceptable quality at the time of sale, the tribunal considered the Sorento’s age, mileage and sale price.

The tribunal accepted Griffin’s evidence that the Sorento lost power three months following purchase and the fault was intermittent and ongoing.

The manufacturer’s claim that it was not responsible for the loss of power fault because there was debris in the fuel swirl pot in March 2013 was not accepted by the tribunal because it did not explain the loss-of-power failures in August 2009 and January 2010. The tribunal’s assessor said a small amount of debris might reasonably be expected in the fuel swirl pot in a diesel vehicle after seven years and 84,175kms and should not cause the intermittent loss of power described by the buyer.

The assessor said the fault was likely to be caused by the control module or an earth loom issue and possibly a high-pressure voltage problem.

The tribunal found that the Sorento failed to comply with the act’s guarantee of acceptable quality because it lacked the durability which a reasonable consumer would regard as acceptable for the vehicle’s age, price and mileage.

However, under the terms of the act, the buyer’s redress against the manufacturer was limited to damages for any reduction in the value of the goods below the price he paid because the vehicle had an intermittent loss of power fault. The buyer was also entitled to any consequential losses that met the test of foreseeability under the act. Griffin told the tribunal he had no idea what those damages would be.

 Order

Griffin was unable to reject the car because his claim was against the manufacturer of the vehicle and not the supplier, and because he failed to offer evidence of any reduction in the car’s value as a result of the loss-of-power issue, his application was dismissed.

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New disputes adjudicator appointed

Auckland barrister Brett Carter has been appointed as a motor vehicle disputes tribunal adjudicator by the Governor-General for a five year term beginning February 15.

Carter is formerly a chief adviser at the Commerce Commission, where he worked for 10 years.

“Mr Carter’s extensive legal background and experience in fair trading, credit and consumer laws will be particularly valuable to the Tribunal, which hears disputes between consumers and car dealers or other registered and unregistered motor vehicle traders,” said Jacqui Dean, the minister of commerce and consumer affairs.

Carter will mostly hear cases in Auckland and the Northern North Island. He takes the role of Christopher Cornwell, who recently stepped down as an adjudicator after more than 10 years in the role. Dean also acknowledged Cornwell’s service in her statement.

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