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Reference No. MVD 141/2006 (AK) [2006] NZMVDT 131 (24 August 2006)

[AustLII] Motor Vehicle Disputes Tribunal of New Zealand

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Reference No. MVD 141/2006 (AK) [2006] NZMVDT 131 (24 August 2006)

Last Updated: 27 November 2007

Decision No. AK 89/2006


Reference No. MVD 141/2006


IN THE MATTER of the Motor Vehicle Sales Act 2003


AND


IN THE MATTER of a dispute

BETWEEN **************************

Purchaser



AND **************************

Trader


BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL


Mr H T D Knight, Barrister, Adjudicator.
Mr R G Lewis, F.A.I.N.Z. R.E.A. S.A.E. (International) Member


HEARING at AUCKLAND on 3 August 2006


APPEARANCES


The Purchaser appeared in person.
Mr *********** appeared on behalf of the Trader.


DECISION


[1] Attached to this decision is a Memorandum marked with a letter 'A' as to the practice and procedure used by the Tribunal.

[2] Pursuant to the provisions of Clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003, the Tribunal has appointed Mr R G Lewis as its expert assessor to assist it in its determination of this complaint. Attached hereto and marked with a letter 'B' is a memorandum as to his qualifications and experience.

[3] Pursuant to Section 89 of the Motor Sales Act 2003, the Tribunal has jurisdiction to inquire into and determine applications or claims between a Registered Motor Vehicle Trader, or a person who holds himself out as being a Motor Vehicle Trader, and the purchaser of a motor vehicle. In attending to such disputes the Tribunal may apply the provisions of the Sale of Goods Act 1908, the Fair Trading Act 1986, or the Consumer Guarantees Act 1993, as applicable to the circumstances of the specific case.

[4] Also attached and marked with a letter ‘C’ is a memorandum as to the law in respect of the Consumer Guarantees Act 1993 and the Fair Trading Act 1986 as applied by the Tribunal.

Transaction


[5] This dispute arose out of the sale and purchase of a 2004 Mazda Atenza 6 motor car, registered number *********. It was a 2269 cc vehicle, one which had been imported from overseas as a vehicle which had previously been an ex-demonstration vehicle – certainly that is the basis on which it was sold. The vehicle was sold on 23 March 2005 at an odometer reading of 695 kilometres for a price of $35,000, which the Purchaser paid to the Trader as a cash transaction, although she had borrowed funds in order to make the purchase.

[6] The Purchaser’s allegation and complaint was that the vehicle was one which had previously been in a flood somewhere and would certainly have been, according to the Purchaser, immersed in water, and was hence what is commonly known as a “flood damaged vehicle”.

Trader’s First Defence – not a registered trader


[7] The Trader’s initial defence was that he had received legal advice and that as he was not registered at the time of the transaction, he was not liable because he was not a registered trader.

[8] The Tribunal notes that the Trader held himself out as being a performance parts specialist as shown on the card which he produced to the Tribunal, which showed him as dealing in “tyres.mags.car audio.body kits.suspension. car alarms.accessories.finance.”

[9] The Trader explained to the Tribunal that he was aware of other people in the same line of business as himself who started to import second-hand vehicles into the country for sale.

[10] In respect of the Trader’s position as a registered trader, the search carried out by the Ministry of Justice noted the following:

Trader first registered as a Trader on 23 May 2005.
That registration expired 23 May 2006.


[11] The Trader explained to the Tribunal that he was pressured by the Commerce Department into registering because he was being threatened with prosecution and significant fines if he continued to trade without registering. It was clear from the Trader’s evidence that he had indeed imported cars from overseas and this appears to have been what brought him to the Commerce Commission’s attention.

[12] The Trader was asked to produce the correspondence which he had received from the Commerce Commission but he was unable to do so because he said that he had lost it. The only correspondence between himself and the Commission was a series of emails which were all after the time he had actually registered.

[13] However, the question of whether or not the Trader is registered, matters not, particularly in the circumstances of this particular case. The Tribunal’s jurisdiction is to be found in the Motor Vehicle Sales Act 2003. That Act defines the meaning of a Motor Vehicle Trader in Section 7, which reads as follows:

“In this Act, motor vehicle trader ¾

(a) means any person who carries on the business of motor vehicle trading (whether or not that person carries on any other business); and

(b) includes ¾

In Section 8, there is a provision as to who is to be treated as a motor vehicle trader.


“(1) A person is treated as carrying on the business of motor vehicle trading for the purposes of this Act if ¾


(a) the person holds out that the person is carrying on the business of motor vehicle trading; or
(b) in any specified period, the person sells more than 6 motor vehicles, unless that person proves that those motor vehicles were not sold for the primary purpose of gain; or
(c) in any specified period, the person imports more than 3 motor vehicles, unless that person proves that those motor vehicles were not imported to be sold for the primary purpose of gain.

(2) For the purposes of subsection (1)(a), a person holds out that the person is carrying on the business of motor vehicle trading if that person ¾


(a) advertise or notifies or states that the person carries on the business of motor vehicle trading; or
(b) in any way represents that the person is ready to carry, or is carrying, on the business of motor vehicle trading;

(3) This section deals with various exceptions to the general rule, such as a trustee corporation.”


[14] The Trader accepted that he had been required to register by the Commerce Department because of the number of vehicles which he had been imported.

[15] In addition, the Purchaser in this matter worked at a local bank where another member of the staff had already purchased a Toyota Caldina motor car from the Trader who sold the vehicle to the Purchaser. The Purchaser actually drove her work acquaintance down to the Trader’s business premises so that she could uplift her car which she had just bought. At that time the Purchaser noticed this particular 2004 Mazda. It was a bright red colour which she liked, and she asked the Trader if she was able to buy it and there was then a discussion about how it was an ex-demonstration vehicle.

[16] The Trader may not have been registered at the time, but in the Tribunal’s respectful opinion, he was clearly holding himself out as a person selling motor vehicles. He had clearly imported this vehicle for the purpose of selling it in the New Zealand market, and prior to discussing the sale of this vehicle with this purchaser, he had just completed selling another vehicle to a work-mate of hers. In these circumstances the Tribunal is quite satisfied that the person in this matter, who has been described as a Trader, was indeed a person within the definition of a ‘motor vehicle trader’ as set out in Sections 7 and 8 of the Motor Vehicle Sales Act 2003.

[17] Therefore, with the greatest of respect to the Trader, that initial defence is not accepted.

[18] The Tribunal now proceeds to deal with the actual complaint and the Purchaser’s allegation that this vehicle which she bought was a ‘flood damaged vehicle’.

Purchaser’s Evidence


[19] The Purchaser’s evidence was that there was a discussion with the Trader who explained that he had recently imported the vehicle, which was a good vehicle, and he would be selling it. He could not sell it as it was then because the interior panels were off and the interior carpets (which the Purchaser noticed and discussed with the Trader) had been moved out exposing the floor panel. The Purchaser asked the Trader why the vehicle was in that condition and he said that he was getting it ready for Compliance. He said it was a new car, ex demo, and “it’s off the showroom floor in Japan”.

[20] It was the Purchaser’s evidence that she specifically asked about whether or not the vehicle had been in a flood in Japan. The evidence that she gave was that she had shown the vehicle to her family and the family had raised the issue with her because her brother, who had also been involved in importing cars, was intrigued as to why such a ‘like new’ vehicle was being sold in New Zealand. He (her brother) queried this with her and she in turn queried it with the Trader, as to whether or not the vehicle had been in a flood. In answer to that question the Trader explained as follows:

“What happens when you buy a car it has to come through check procedures; there are registers and if it has been damaged it would be noted on the register and there was not any damage on the register.”


However, for her ‘peace of mind’ he said that he would go half with the Purchaser for a vehicle warranty and the two of them did share the cost of an AA Warranty. The Trader also explained because he was concerned about the Purchaser’s decision, that he would put an alarm in entirely at his expense. He also stated that she would be able to bring the vehicle back to him for a 10,000 oil and lube change over the next 12 months.


[21] In answer to the actual allegation that there had been a discussion as to whether or not the vehicle was ‘flood damaged’, the Trader explained that he could not recall such a conversation. The matter was discussed with the parties by the Tribunal on more than one occasion. The Trader’s reply was still the same. The Tribunal has carefully assessed that particular piece of evidence and is satisfied that the Purchaser is an entirely truthful witness and that that conversation did take place between them.

[22] The transaction was completed between the parties but without any documentation being entered into. There was no Supplier Information Notice displayed on the vehicle, nor signed or handed to the Purchaser. In fact there was not even a Vehicle Offer and Sale Agreement. The Purchaser simply transferred from her bank account (at the branch where she and the Trader each banked) into the Trader’s ASB bank account on 24 March 2005 the sum of $35,000. Her work acquaintance, who also gave evidence before the Tribunal, stated that this was exactly the same method of settling the transaction which had been used when she had purchased the Toyota Caldina from the ‘Trader’.

After sale and delivery problems


[23] The Purchaser’s evidence was that having bought this vehicle at the end of March 2005, in August 2005 she started to have problems with the car, particularly because the engine light came on and would not go off. The Purchaser rang the Trader and he referred her to ********************, the *********** franchise agent for the vehicle.

[24] The Purchaser’s evidence was that this particular problem with the engine light coming on and staying on continued on a number of occasions until May 2006. The Purchaser produced to the Tribunal several workshop invoices from *************** and these are now listed in date order with emphasis in each case added.

1. Invoice from *************** dated 26 August 2005


Engine light on
Road Test, engine light on, carried out WDS test
No codes apparent, carried out visual test, check battery
OK checked for air leaks, ok
Can’t fault at this stage


Labour $70.00
GST $8.75


Total $78.75


  1. Engine running leanengine light on – refer Ian – 7 September 2005

Check engine light on checked for dtc found engine
To be running lean check 02 sensor ok
Checked for catalytic convertor
Suspect pcm to be faulty


Labour $123.00
GST $15.38


Total $138.40


  1. 21 February 2006

Carried out 10 k service
Customer Instructions:
Carried out service as per the manufacturers specifications.


Check engine light on dash


Need more time to sort idle and check light fault.
Need to carry out thorough investigation which
could be labour intensive.


Labour $164.00
Parts $70.72
Total Misc $49.99
GST $35.59


Total $320.30


  1. 30 March 2006

1. Engine light on all time and recommend
last service – would need to be in for 2 days. $287.00


Checked on engine light being on. Connected IDS for diagnostic test which showed 2 fault codes. Both oxygen sensors faulty. Removed and replaced sensors and tested. Fault codes still occuring. (sic). P.C.M. faulty and in need of replacing new P.C.M. Ordered from out of Japan, covered by Mechanical Insurance Policy. Will ring customer when PCM arrives.


2. Cust says it is idling rough

Checked on engine running rough and missfiring, removed intake manifold and noticed breather hose fitted was too big. Supplied and fitted correct size hose and refitted intake manifold. Road tested vehicle. OK operating normally.


3. Carry out Warrant of Fitness


Carried out Warrant of Fitness Inspection – issued pass.


Labour $491.00
Parts $19.16
Total Misc 0.02
GST $63.77


Total $573.95
5. 11 May 2006


Interior lights are not working and most other electrics are cutting in and out.
Spoke to AA Insurance. They said that whilst they do cover wiring under the
vehicle’s insurance policy, they do not cover corrosion damage.


Checked on interior lights not working. Found wiring plug on. NB. Fuse box to be corrodedsuspect water damage. Removed and tested front and rear map lights. No power found. Removed left rear side panels to find electrical plug. Test plug. No power found. Ran wire from room fuse straight to front map light. Tested – all lights working. Removed left front kick panels. Plug removed from fuse box to test for power. Found power wire loose and plug heavily corroded. Used electrical cleaner to clean plug. Fitted second-hand wire lug. Repaired wire. Refitted all plugs, lights and fittings. Tested interior lights – all ok, found normal operation.


Labour $520.00
GST $65.00

Total $585.00


[25] The Purchaser explained that after the engine light problems in August 2005, she then had difficulties with the vehicle on a number of occasions running through to May 2006, and in that time she was consulting *************. Finally, in May 2006, a new computer was installed under the Warranty.

[26] Also in May, after the new computer had been installed, the Purchaser was driving home one night when she lost her lights, ABS brakes, air-conditioning and radio. The effect was that the vehicle had broken down completely. The Purchaser got the AA out who installed a new battery and had to follow her home with their lights flashing.

[27] It was shortly after that incident that the Purchaser, who had ************** back on the job, was called to a meeting on 11 May 2006. The vehicle was there on display and the ************ staff had all the doors open, interior panels off, the boot up, and present was the Manager of the firm, a person who was a Mazda Specialist, and a member of the staff took notes. At that meeting the Purchaser was advised that the *************** staff were of the opinion that the vehicle had been ‘flood damaged’. Following that statement the Purchaser was advised that she should not be driving the vehicle.

[28] Following that revelation to the Purchaser she contacted the ‘trader’ and he was to advise her that he was not responsible, that it would be VTNZ who had inspected the car and complied the vehicle.

[29] He took the attitude then, as he did before the Tribunal, that he paid to have the vehicle complied, and therefore the responsibility for the condition of the vehicle was laid directly at the Compliance firm.

[30] With that denial received from the Trader the Purchaser followed up and had various discussions with VTNZ who, in turn, referred her to an independent repair consultant, who reported as follows:

“*************************
May 28, 2006 *****************
******************
**********************


To Whom it may concern,
On 22 May 2006 I was asked by VTNZ to inspect the above vehicle for signs of water damage as the owner had been experiencing electrical problems with the vehicle.


I found that the speaker terminals in the doors had corroded more than normal. There was corrosion breaking out on metal parts under the seats and under the center consol. At this point the corrosion was minor and indicated moisture was present, but I couldn’t say for sure that the vehicle had been submerged. I then removed the head rests from the front seats and inserted an endoscope inside both front seats which showed corrosion on the springs inside the seats up to a level about half way up the seat back. This was not consistent with condensation but more consistent with being submerged. NB The rear seats had been removed for inspection and showed the under side of the seats had been painted black to cover up corrosion. Pulling the springs and upholstery away from the underside of the seat revealed a stencil affect, showing white on the foam under the seats where the springs and upholstery had covered the foam.


In my professional opinion, the vehicle had been submerged to a level about half way up the doors. The vehicle had been very well cleaned up and any signs that would alert a VCC had been very cleverly disguised. In 2005, at the time of the compliance check there would have been no signs to alert the VCC.


Yours truly
**************
LTNZ Specialist Certifier”


[31] Following that report on 28 May 2006, VTNZ reported on 3 June 2006 as follows:

“Vehicle Testing NZ Ltd
PO Box 10057
Wellington 3rd June 2006


***************
*****************
**************


VTNZ Complaint Number: *************
Re: Mazda S/W Vin No.**********************


Dear **************


Thank you for arranging to leave your vehicle with VTNZ on Monday, 22nd May 2006 for partial stripping and assessment.


No clear evidence of flood damage or silt build up was visible, however it was noted that a number of areas where bare metal was evident had started to show signs of corrosion, for example mechanisms under seats and some electrical connectors. These areas of corrosion would not have been evident fourteen months prior, when VTNZ complied the vehicle.


As a result of this inspection it was unclear in our opinion as to what had exactly taken place with this vehicle and as a result I requested a Land Transport New Zealand approved specialist certifier to independently inspect and report on this vehicle. I have included a copy of the specialist certifier’s report for your information.


In conclusion VTNZ is firmly of the opinion that at the time of certification fourteen months ago the inspection was carried out with all reasonable care and diligence by an experienced inspector, within Land Transport New Zealand’s guidelines and no signs of flood damage would have been evident to him.


It is also of interest to note that no signs of flood damage were recorded at the border check inspection by the Government authorities.


We believe your recourse lies with the importer and vendor of this vehicle. It needs to be determined if he has knowingly purchased it as a flood damage vehicle and as mentioned in the specialist certifiers report “very cleverly disguised it”.


Yours sincerely


*************
Technical Operations Advisor – ****************
Vehicle Testing NZ Ltd”


[32] The Tribunal notes that that is indeed an exculpatory report by Vehicle Testing New Zealand as to why the flood damage hadn’t been picked up earlier, but the Tribunal notes that the flood damaged vehicle had been very ‘cleverly disguised’.

[33] On 15 June 2006 the Purchaser wrote a formal letter to the Trader, rejecting the vehicle, which read as follows:

“15 June 2006


*****************
Attn: ************
****************
***************
*****************


Re: 2004 MAZDA ATENZA PURCHASED FROM YOU 23/03/05 for $35,000.00.


As you are aware from my phone calls to you I started having problems with the vehicle in August 2005. It started with the engine light coming on and staying on in the vehicle, as you suggested I took the car to ******************* who are Mazda specialists and they tried to fix the problem, however from this time until May 06 it continued to occur even after they installed a new computer. Finally the vehicle stopped all together and the electrics failed. A portion of the repairs conducted were covered by the mechanical warranty, however I have personally had to cover $1700.00 of repairs.


Upon the last investigation in May 06 by **************** it was suspected the car had water damage, hence the problems incurred. I then contacted VTNZ who you had issue the car compliance, they along with an independent consultant inspected the car and completed a further report confirming that the vehicle had been submerged in water.


When I purchased the vehicle I expressly asked you, on more than one occasion, whether the car had been involved in a flood. You assured me that it had not, I now have reason to believe that you were aware of the water damage to the car and that consequently you are in breach of The Fair Trading act 1986.


I seek from you a full refund of the purchase monies and other costs incurred to repair the vehicle to date.


I have sought legal advice on this matter and have been advised that if I do not have a response from you within 5 days I will have no choice but to commence action in Court without further notice to you.


Yours faithfully


*******************
*********************
**************
************
Ph: *************”


[34] It is to be noted that raised, amongst various other matters, in that letter by the Purchaser, is the fact that she had been assured that the vehicle had not been involved in a flood.

[35] The Purchaser had also produced in support of her claim a quotation from *******************, dated 20 June 2006, which states as follows:

“********************
20 June 2006
Estimate/Quote:
04 Mazda Atenza 2.3L Wgn


*Labour charted out @ $87.50 + GST an hour.
Job Description: Replace all wiring looms
*New wiring looms required:
- Front lamps $1790.00
Interior lamps $42.67
High stop light $124.20
Engine $355.39
Injectors $193.00
Dashboard $1067.82
Instrument cluster $875.00
Fuse Block $413.00
Main fuse Block $323.98
Right hand front door $116.45
Left hand front door $71.69
Right hand rear door $55.46
Left hand rear door $52.68
Total parts $5,481.34
30 hrs labour to re-wire vehicle $2,625.00
Sub total $8,106.34
GST $1,013.29


Total $9,119.63


[36] The Tribunal notes that this quotation is just an estimate for repair and the final amount payable could be more. In this respect the Purchaser gave evidence that she approached another independent auto-electrician for a second opinion, but he refused to quote on it because of the uncertainty as to the extent of the work involved.

[37] The Tribunal itself notes that that quotation is just for wiring – it does not take into account damage to any other part of the vehicle.

[38] The Purchaser claimed from the Trader the following amounts:

“Costs incurred for 2004 Mazda Atenza 6 – regist ************
Purchase of Mazda Atenza from Kiwi Performance 23/03/05 $35,000.00
1st invoice for ************* – ************ Branch,
cost to inspect engine light problem, 26/08/05. $78.75


2nd Invoice for ************ – ********* Branch, cost to inspect
engine light problem which is reocurring, 8/09/05 $138.40


3rd invoice for *************** – *************, cost to inspect
reoccurring engine light issue and idle problem, 21/02/06 $156.30


4th invoice for ****************** – *********** Branch, cost to inspect
reoccuring engine light issue and car running rough. 30/03/06 $573.95


5th invoice for *********** – ************ Branch, cost to inspect
electrical issue as car broke down completely and all electrics in the
car failed, 11/05/06 $585.00


Receipt from AA Breakdown for replacement battery, caused by
electrical failure, 5/05/06 $144.00


Filing fee for motor Vehicle Dispute 22/06/06 $50.00


½ share of AA Warranty 24/03/05 $575.00

Total costs incurrred $36,726.40

$37,301.40
****************
****************
************
**************”


Trader’s defence


[39] The Trader’s defences were as follows:
  1. He had obtained legal opinion that because he was not a registered trader he was not liable. The Tribunal has already dealt with that defence above.
  2. That the vehicle had been brought into the country by him, he had paid for it to be cleared at the border and complied. If anybody was responsible it was VTNZ or Customs who had cleared the vehicle. In this regard he stated that particular note was taken of whether the vehicle was flood damaged or not. The Tribunal, from its experience, does not accept that as a correct statement. In any event the Purchaser explained that the vehicle was described to her by the Trader as a good car.
  3. He did not recall any discussion with the Purchaser as to whether or not the vehicle was flood damaged. As indicated above, the Purchaser has got a clear recollection on that matter and her evidence is accepted.
  4. The flood damage which may have occurred to the vehicle occurred after the vehicle had been landed in New Zealand and has been delivered to the Purchaser.
  5. In any event, the Purchaser had had the vehicle checked by the AA to whom she should look to for redress. (However, that information does not absolve the Trader).
[40] The Tribunal, in dealing with the Trader’s defences under the Fair Trading Act, notes that he described the vehicle as “a good vehicle”, and that “It’s a new car, ex demo” and “it’s off the showroom floor in Japan.”

[41] Again, in answer to the Purchaser’s specific question as to whether or not the vehicle had been in a flood, he explained as set out in para 20 above, that the vehicle was taken through “a thorough check” procedure and “any damage is noted on a register.”

[42] The Tribunal notes that it is not aware of a specific test at the Border for flood damage. It is aware that at the time this vehicle was imported there was a general warning published by the Ministry as to the fact that some Japanese vehicles had been flood damaged.

[43] The Trader clearly assured the Purchaser that it was unlikely that this was a flood damaged vehicle.

[44] So in response to the Trader’s defence that the flood damage occurred to the vehicle while in the Purchaser’s possession:

(That denial is accepted).


(ii) The Purchaser’s clear evidence as emphasised by the Tribunal and corroborated in the reports from **************, and the Land Transport New Zealand Specialist Certifier, is that the discovery of the flood damage was gradually unfolded.

(iii) Eventually even VTNZ themselves accepted the vehicle as one which had been flood damaged - “although cleverly disguised.”

(iv) The ************* report showed the corrosion under the seats and to springs and to the underside of seats, which had been covered up by painting and other steps. In fact “very cleverly disguised”.

[45] In any event, the Tribunal does not accept that this Purchaser was involved in those very careful and deliberate cover-up steps.

[46] Returning to the Purchaser’s claim, the Tribunal deals with the claim as listed above:

1. Purchase price $35,000.00


  1. Inspection of engine light problem –

(1st invoice) accepted. $78.75


  1. 2nd invoice $138.40

Inspection of engine light problem - accepted.


4. 3rd invoice – accepted at $156.30 (after deduction of the Service cost)


5. 4th invoice in respect of the engine light problem
and the car running rough – accepted $573.95


6. 5th invoice following the breakdown of all
electrical components – accepted $585.00


7. AA breakdown for replacement battery - accepted $144.00


8. ½ share of the Warranty - accepted $575.00


9. Filing fee to Ministry of Justice - accepted $50.00


Total $37,301.40


[47] The Tribunal notes that the Purchaser has borrowed the funds required to purchase the car. The Trader will be ordered to pay interest on the amount found to be outstanding as from 15 June 2006, being the date of the formal rejection letter, until the date of actual payment.

[48] Pursuant to Section 89 of the Motor Vehicle Sales Act 2003, the Tribunal has jurisdiction on the application of any party to enquire into claims under various other Acts, including The Fair Trading Act 1986 and the Consumer Guarantees Act 1993. Section 9 of The Fair Trading Act 1986 provides that ¾

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


The enquiry pursuant to that section is not whether the conduct is intentionally misleading and deceptive, but whether there was conduct that was misleading or deceptive. In the Court of Appeal case of AMP Finance NZ Ltd v Evans ATCL 144 P152 under the heading 'Misleading Conduct' Justice Tipping put the matter this way:


"We consider the question of whether there was a breach by AMP of S9 should be addressed in three steps. The first step, which focuses on the conduct in question, is to ask whether that conduct was capable of being misleading. The second step is to consider whether the Evans were in fact misled by the relevant conduct. This step focuses on the effect of the relevant conduct on the Evans' minds. The third step requires consideration of whether it was, in all the circumstances, reasonable for the Evans to have been misled. This is where, as with the first step, the objective dimension comes in. It is not enough for them to show that the Evans were misled if reasonable people in their shoes would not have been misled."


[49] Dealing with those three steps identified by Justice Tipping, the Tribunal is satisfied in respect of the first step, that the Trader’s conduct was capable of being misleading when he explained to the Purchaser that the vehicle “which was a good one” had been inspected and there was “no question of it having been exposed to flood damage”. In respect of the second step, the Tribunal is satisfied that the Purchaser was misled by the answers given to her by the Trader. In respect of the third step, which requires objective consideration, the Tribunal is indeed satisfied that a reasonable person in the Purchaser’s shoes would have been misled with the answers given by the Trader in response to her questions.

[50] In respect of the Consumer Guarantees Act, the issue is as set out in the attached memorandum, as to whether or not this vehicle as sold and delivered was in fact a vehicle of ‘acceptable quality’. The Tribunal is of the clear view that it is not possible for a flood damaged vehicle to be a vehicle of ‘acceptable quality’ to the reasonable purchaser. Therefore, the Tribunal finds that the Trader would be responsible to the Purchaser under both of those Acts.

[51] The Purchaser having suffered loss or damage as a result of the Trader’s conduct, and in accordance with Section 43 of the Fair Trading Act 1986, the Tribunal orders the Trader to refund the money paid by the Purchaser for the vehicle which she purchased, and in addition the Trader pays to the Purchaser the loss or damage identified in this decision.

[52] There is considerable doubt in this case as to exactly who sold the vehicle, particularly as there were no documents involved at all, certainly no Vehicle Offer and Sale Agreement, nor a Supplier Information Notice. The Tribunal accepts that the Trader is normally in trade in his company name as a Parts Specialist.

[53] However, in this particular case, he was personally involved in the misleading conduct or, at the very least, aided and abetted the trading company in that conduct. Therefore there will be a further order, pursuant to Section 43(b) of the Act, that not only the company but also the trader personally, will be liable to the Purchaser for ‘aiding and abetting’ or procuring the contravention of the Fair Trading Act.

[54] In respect of the Consumer Guarantees Act, there has been a rejection of the vehicle by the Purchaser and the formal order of the Tribunal is as follows:

[55] The Purchaser, having in the Tribunal’s opinion, appropriately and justifiably cancelled the contract and rejected the vehicle sold to her by the Trader, the Tribunal hereby orders:

(a) That the Purchaser return the vehicle to the Trader forthwith.

(b) That the Trader, *********************** (and also) ************* *******************, ************, ************, Director, hereinafter called “the Respondents” refund and/or pay to the Purchaser the consideration passed by the Purchaser to the Trader, namely:


(i) The sum of $35,000.00, being the amount paid by the Purchaser for the motor vehicle.

(c) The Tribunal makes further and consequential orders as follows:

(i) That the Purchaser be entitled to receive whatever moneys may be available by way of a refund upon cancellation of the vehicle insurance.


(ii) That the Purchaser receives from the Respondents forthwith, by way of compensation for and/or reimbursement in respect of the moneys outlined in paragraph 46 above, the amount of $2,301.40.


(iii) The total amount including the refund of the purchase price and compensation to be paid to the Purchaser by the Respondents is $37,301.40 together with interest at 11% per annum from the 15th day of June 2006 until the actual date of payment.


DATED at AUCKLAND this day of 2006


__________________
H T D Knight
Adjudicator


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