Wronged car-buyers have recourse

17:00, Jun 28 2014
Car broken down
WHAT NOW? Most New Zealanders do not even know we have a Motor Vehicle Disputes Tribunal.

Car dealers get a terrible rap. People contacted by Readers Digest and asked to rank them among 50 professions in order of trust ranked them 48th of 50.

While there is an element of frivolity about the survey (asking people to say whether they trust miners more than bankers is inherently silly), it does give a general picture of how car dealers are regarded.

Though their reputation is poor, relatively few - just over 200 a year - have cases taken against them to the Motor Vehicle Disputes Tribunal by irate Kiwi customers who felt they had been sold a pup. That's a tiny number compared to the number of new and used cars dealers sell to the public.

In March alone, Turners Auctions' figures show 16,925 cars sold to the public by dealers, though the tribunal also covers motorbikes and trucks.

The Ministry of Justice says there are no figures to show what proportion of the population knows the tribunal exists, but a month in the life of the tribunal shows the value it can provide to unhappy vehicle buyers and the way it goes about its work.

The 12 cases published by the tribunal in April cost the 12 claimants $50 each in filing fees per case, or $600 in total for all of them. But the cases resulted in them being awarded just over $47,250 in payments, mostly their money back or the cost of repairs.


Faulty cars can seriously dent an owner's personal finances and, legally, dealers have a duty to supply cars and motorbikes that are fit for use.

The standards of reliability and durability expected of vehicles though varies depending on factors like their age and the distance they have travelled.

That means buyers whose cars need fixing soon after purchase - and soon can mean more than a year for a new car - are within their rights to go back to a dealer and demand they repair them.

If the car can't be repaired in a reasonable time frame, the buyer is, by law, allowed to "reject" it, a term meaning to tell the dealer to take back the car and return his money.

The cases from April give an insight into how wronged car-buyers should set about fighting for their rights.

There is no automatic right to reject a car:

A man bought a Japanese import 2004 BMW 545i registration for $28,000 and, after electronics problems, a leaking water pump and oil leaks, "rejected" it claiming it was not of an acceptable quality. The dealer refused to return the purchase price, so the buyer asked the tribunal to make a ruling. The buyer, who did not test-drive the car or get it lemon-checked, also bought a 24-month mechanical breakdown warranty paying a single premium of $1495. The problems the car had were "not uncommon in Japanese-imported European cars," the tribunal found, but showed the car "lacked durability". The buyer couldn't "reject" it, however, as the dealer had a right to fix the pump, so that is what the tribunal ordered.

Expect some "wear and tear" in older vehicles:

In July 2013 a woman bought a 2005 Nissan Lafesta for $8400. She asked the tribunal to order the dealer to pay the $1159 she had paid to replace five damaged engine mounts. The trader said the woman did not give it time to make the necessary repairs, and argued that worn engine mounts are fair wear and tear on an older vehicle. It had sold the car seven months before the mount had to be replaced. The tribunal found that the gearbox engine mount - one of the five replaced - was probably not as durable as a reasonable consumer would regard as acceptable. A reasonable consumer wouldn't expect in an $8400 vehicle to have an issue with a noisy gearbox mount within three months of buying it. But, because the buyer did not bring in the other mounts, the tribunal would not rule they needed replacing. The dealer was order to pay $279.45, the cost of replacing the mount.

Beware buying by "sight unseen" auction:

Buying "sight unseen" by auction online is a growing source of problems. One woman bought a 1998 Nissan Sentra for $2260 that way. The auction blurb said the vehicle had a new clutch. However, it had only a new clutch plate fitted, and the woman had clutch problems from when she took delivery. Giving evidence by phone, a mechanic for the buyer told the tribunal the cost of replacing the clutch was $650 to $750. The tribunal found the dealer's advert was misleading and ordered it to pay the woman $620.

Buyer bears the burden of proof:

The buyer has to provide evidence that establishes "on the balance of probabilities" they were sold a duff vehicle. A man bought a truck that he later found to be rust-riddled and that the juddering when it reversed was not "expected and normal" as the dealer had said. The tribunal can order compensation for "consequential losses" (the cost of towing, or an expert to report on why a vehicle failed, etc). In this case, it awarded compensation for the "loss of opportunity" beause the owner had to sell the truck soon after buying it. This was determined by subtracting the truck's value at the end of 2013 from what it was worth in November 2010, the period the buyer owned it for. Both dealer and buyer presented valuations for the truck at the start and end of that period and the tribunal accepted the dealer's valuation. He still had to pay $4000 compensation to the buyer. Her valuations showed a difference of more than $30,000.

Dealer ordered to repair:

In August, a man bought a 2006 Japanese import Volvo for family use, though used his business to buy it "for tax purposes". He rejected the vehicle in February, claiming the trader had failed to remedy the vehicle's faults within a reasonable time. The dealer had to repair faulty brakes within a month, and a "clunk" in the suspension developed, and was fixed, but later returned. Then the air conditioning failed, and was fixed. The tribunal found the $23,990 vehicle was not, as represented, free of minor faults nor as durable as a reasonable consumer would regard as acceptable. The trader had to pay compensation of the cost of fixing the clunk - $1950.77 for parts, labour and GST.

"Recall" no reason to reject:

Just because a manufacturer recalls cars to replace a faulty component does not entitle an owner to hand back the keys and get their money back. In September 2011, a couple bought a new Holden Cruze but, after a litany of electronics problems, including a keyless locking system and ignition that often failed, rejected the vehicle in December 2013. They said it was unsafe, after Holden issued a recall to replace a micro-switch. The tribunal was satisfied the vehicle was not unsafe, and the couple could not reject it.

Don't fix it yourself:

Don't fix a car and then expect the dealer to repay you. In August, a man bought a 2002 Toyota Alteeza Gita for $5995 but rejected it in December. He asked the tribunal to make the dealer refund the purchase price and $880.44 he spent in replacing the timing belt and other engine parts in November. The trader said the buyer did not consult him before getting the repairs done and allowing him a chance to fix it. The tribunal found the faults were substantial, and the buyer entitled to reject the car and get a refund but, because he had not given the dealer the opportunity to fix the car, he was not entitled to be refunded the repair costs.

Old cars should still be roadworthy:

In October, a woman bought a 2000 Toyota Altezza for $7000 she had seen advertised on Trade Me with a warrant of fitness expiry date of April 2014. But the warrant had already expired. The trader, who said he advertised it as having a warrant because he had intended to get one, offered her a choice of paying $7500 with a new warrant or $7000 without one. The dealer assured her the car would "fly through" a warrant inspection. It didn't. The buyer provided a mechanic's report estimating the cost of remedying faults to be $2000 but the trader put the costs at $900. He felt that as the car had 250,000km on the clock, a reasonable consumer would expect to do major work on it. The tribunal found, even for its age, there was a substantial failure and the buyer entitled to reject the car.

The tribunal expects dealers to show:

Two traders failed to show before the tribunal when required in April. In January, a man bought a 2001 Nissan Skyline for $10,000 but it failed a warrant check three months later and needed substantial repairs. The trader told the woman he'd pay, but never did. The tribunal considered that the car was probably not of acceptable quality at the time of sale, especially as the headlights were misaligned and tyres substantially worn. The trader had to pay repair costs of $625 and $500 for failing to turn up to the hearing.

If a failure's bad enough, the right to reject trumps the dealers' right to repair:

In March, a man bought a 2011 Suzuki Swift for $13,900. Within five days, the vehicle's transmission developed a fault. He was quoted $18,150 plus GST to rectify the fault. The trader said it could be fixed for $3950 but the buyer refused that offer and demanded a refund. The tribunal found the failure was one of substantial character and ordered the trader to refund the full purchase price.

Sunday Star Times