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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 14 February 2008
Decision No. AK 183 /2007
Reference No. MVD 272/07
IN THE MATTER of the Motor Vehicle Sales Act 2003
AND
IN THE MATTER of a dispute
BETWEEN XXXXX
Purchasers
AND XXXXX
Trader
BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr G Burkett,
Advanced Trade Mechanical Member, Assessor
HEARING at AUCKLAND on 17 December 2007
APPEARANCES
Mr XXXXX, the purchaser
Mr XXXXX, witness for the purchaser and purchaser’s employer
Mr XXXXX, representing the trader
DECISION
Introduction
[1] On 1 November 2007 Mr
XXXXX (“the purchaser”) agreed to purchase a 1996 Honda Integra 1800
cc car registration number
XXXXX (“the vehicle) from XXXXX (“the
trader”) for $12,000. On 9 November 2007 the purchaser sent the trader a
letter rejecting the vehicle because he claims the vehicle is defective,
unregistered, was overpriced and the purchaser was misled
as to the number of
previous owners and manipulated by the trader into taking a loan from ASB Bank
to purchase the vehicle. He seeks
a refund of $9,805 being part of the purchase
price which he has paid to the trader.
[2] Pursuant to clause 10 of Schedule
1 of the Motor Vehicle Sales Act 2003 the Tribunal has appointed Mr G Burkett,
as expert assessor
to assist in the determination of the complaint. Prior to
the hearing Mr Burkett took the oath required by clause 10(2) of Schedule
1 to
that Act.
The purchaser’s evidence
[3] The following is the evidence of Mr XXXXX. It is assessed later in this decision. He says that he agreed to purchase the vehicle for $12,000 and signed a Vehicle Offer and Sale Agreement to buy it for that sum on 1 November 2007. The agreement records that he paid a deposit of $2000 on signing the agreement but he acknowledges that he did not do so. The balance of the purchase price was to be financed by a personal loan to the purchaser from ASB Bank and although ASB Bank made him a personal loan of $10,000 the bank deducted fees of $195 from the advance so that the amount which was direct credited to the trader’s bank account by ASB Bank was only $9,805.
[4] The trader arranged for a new warrant of fitness to be issued for the vehicle on 1 November but the new warrant of fitness sticker was not attached to the vehicle’s windscreen and the vehicle was not registered. The purchaser, in spite of not having paid the full purchase price for the vehicle was permitted by the trader to take the vehicle away on Friday 2 November to use over the weekend. The trader put a set of dealer plates on the vehicle on the understanding that the purchaser would return the vehicle on Monday 5 November so that it could be registered and the dealer plates removed.
[5] On Saturday 3 November he had difficulty starting the vehicle and he says he rang and left a message with the trader about this problem. On Monday 5 November the trader did not contact him regarding the vehicle but on Tuesday 6 November the trader came to his home and collected the keys for the vehicle but was unable to start it. He expected the trader to come and collect the vehicle with a tow truck the next day but when he did not turn up he rang Mr XXXXX and asked him to meet him at a coffee bar in Manukau City. At the meeting he told Mr XXXXX he wanted his money back and subsequently sent the trader a letter rejecting the vehicle the same day. The trader refused to refund him his money.
[6] In reply to the Tribunal he says he does not know what the fault with the vehicle is and he has not had the vehicle assessed by a mechanic to find out.
Mr XXXXX’s evidence
[7] Mr XXXXX says that he is the purchaser’s employer and that the purchaser who is a contract wheel clamper bought the vehicle to enable him to get to work. He says the purchaser is only 18 years of age. He says he became involved in the dispute between the parties when he had to arrange to collect the purchaser for work because the purchaser’s vehicle would not start.
[8] He says that he became concerned when he found that the trader had only been in business since May 2007 and had a former company which had gone into liquidation and the trader had the purchaser’s money. He thought the purchaser might lose his money.
The trader’s evidence
[9] The trader’s evidence is presented by Mr XXXXX. It is assessed later in this decision. He produces a bundle of documents containing the trader’s submissions, the Vehicle Offer and Sale Agreement, Supplier Information Notice, copies of internet advertisements for Honda Integra cars, correspondence to the purchaser and a chronology of events (Exhibit A). He says he became involved in the transaction with the purchaser when the trader’s salesman Mr XXXXX fell ill. Initially the purchaser wanted to buy a late model Ford Explorer V8 but on the purchaser’s income the maximum personal loan from the ASB Bank would likely be limited to $10,000.
[10] He says he spoke to the ASB Bank and made an appointment for the purchaser to be interviewed by a loan officer and complete the bank’s application forms and also took the purchaser to ASB Bank’s Botany Downs office for an interview following which the purchaser signed the Vehicle Offer and Sale Agreement and Supplier Information Notice copies of which he produces. He says that this was the extent of his assistance to the purchaser in arranging finance.
[11] He says that the ASB bank transferred $9,805 to the trader’s bank account leaving a balance of $2,195 of the purchase price owing. He says he allowed the purchaser to borrow the vehicle over the weekend although it was not registered at the time but had passed a warrant of fitness inspection on 1 November 2007 and he produces a copy of the warrant of fitness checksheet.
[12] He says he was to contact the purchaser on Monday 5 November to arrange for the vehicle to be registered but on Monday he discovered that the Police had stopped the purchaser at 3-45am on Sunday 4 November whilst he was driving the vehicle. He says he understands the purchaser was stopped because he was suspected of driving the vehicle whilst under the influence of alcohol and the dealer plates had been removed at that time from the vehicle by the Manurewa Police from whom he had to retrieve them that day.
[13] He says that on Tuesday 6 November he obtained the keys to the vehicle from the purchaser’s home but the vehicle would not start and he did not think it was a battery problem because he had taken a starter kit with him. He says he took an auto electrician back with him to the vehicle on Friday 9 November and the auto electrician was unable to start the vehicle. It appeared the reason was that some cables relating to the alarm and immobiliser had been removed. He was unable to tow the vehicle to have it repaired because a white van was parked directly behind the vehicle and a person at the purchaser’s home claimed that he did not know who owned the white van nor could he move it. The trader sent the purchaser a letter dated 9 November asking that the vehicle be parked so that a tow truck could have access for loading it and the letter also asked when the purchaser would complete his obligations to pay the balance of the purchase price under the Vehicle Offer and Sale Agreement.
[14] After receiving the purchaser’s letter of 9 November rejecting the vehicle the trader sent a reply dated 15 November a copy of which is produced addressing each of the points raised by the purchaser in his letter of 9 November and again reminding the purchaser that his obligations under the Vehicle Offer and Sale Agreement had not been completed. The trader promised to complete the registration process when it got possession of the vehicle.
[15] He says that the trader went back to the purchaser’s address on 12, 13 and 14 November and found the vehicle was still blocked in and on 14 November wheel clamps had been attached to both front wheels. He says that the vehicle continued to be in that state until 27 November when he went overseas.
[16] He says that on Thursday last week (13 December) the wheel clamps had been removed and the trader had a tow truck collect the vehicle and take it to the trader’s yard after speaking to people at the house. He says the vehicle has travelled 542 kilometres since it was sold to the purchaser. He has arranged for an auto electrician to come to the trader’s premises on 18 December to get the vehicle started. The balance of the purchase price of $2,195 remains unpaid.
[17] He says the trader is quite happy to fix the vehicle but there seems to have been a reluctance by the purchaser to return the vehicle to enable this to be done.
Legal Principles
[18] In terms of s.89 of the Motor Vehicle Sales Act 2003 the Tribunal has jurisdiction to inquire into and determine applications or claims between a Motor Vehicle Trader and the purchaser of a motor vehicle. In doing so, it 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 case. The Tribunal considers that the Consumer Guarantees Act 1993 and the Fair Trading Act 1986 are relevant to the facts of this application.
The Consumer Guarantees Act 1993
[19] Section 6 of the Act imposes on a supplier (in this case the trader) "a guarantee that the goods are of acceptable quality." Section 2 of the Act defines "goods" as including "vehicles". A supplier may only contract out of the Act if the provisions of s.43(2) are satisfied and an offence against s.13(i) of the Fair Trading Act 1986 is created by any supplier who attempts to contract out of the Act other than in accordance with subsection 43(2),or s.43A (which does not apply to this application).
[20] The expression "acceptable quality" is defined in Section 7 as follows:
“(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, ¾
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 ¾
(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:
(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) of this section 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 maintain 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) of this section to a defect means any
failure of the goods to comply with the guarantee of acceptable quality.”
[21] Under Section 18 of the Act, where a consumer has a right of redress against the supplier in accordance with Part 2 of the Act as a result 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 ¾
(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,
¾
(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 ¾
(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."
[22] In Stephens v Chevron Motor Court Limited [1996] DCR1, the
District Court held that the correct approach to the Act was first to consider
whether the vehicle was of “acceptable
quality”. If the vehicle was
not of acceptable quality, the next point to consider was whether the purchasers
required the
trader to remedy any faults within a reasonable time in accordance
with Section 19 of the Act. If the failure to comply with the
guarantee of
acceptable quality was of a “substantial character” within the
meaning of Section 21, or if the faults cannot
be remedied, the Tribunal is
directed to ask whether the purchasers have exercised their right to reject the
vehicle within a reasonable
time.
Tribunal’s
Assessment
[23] The Tribunal has no evidence as to the cause of the fault which the purchaser claims prevents the vehicle being started. The purchaser produced no evidence of the cause of the starting problem and the trader, having only recovered the vehicle on 13 December (through no fault on its part) does not yet know why the vehicle will not start. Hence the Tribunal is unable to decide if the guarantee of acceptable quality in s.6 of the Act has or has not been complied with.
[24] The Tribunal considers the purchaser’s purported rejection of the vehicle on 9 November was premature and therefore invalid because the purchaser did not, as he is required to do by s.18 (2)(b) of the Act, allow the trader to repair the defect within a reasonable time.
[25] The trader told the Tribunal it was having the vehicle inspected on 18 December by an auto electrician and the Tribunal would expect it should be repaired by 14 January 2008 at latest allowing a reasonable period to assess and remedy the cause of the fault; allowing sufficient time to get the vehicle repaired by skilled tradesmen over the holiday period. The Tribunal considers that if it is not repaired by 14 January 2008 the purchaser would then be in the position to either have the vehicle repaired elsewhere and recover all reasonable costs from the trader, or, subject to s.20, to reject the vehicle under s.18(2)(b)(ii) of the Act.
The Fair Trading Act 1986
[26] Section 9 of the Fair Trading Act reads:
9 Misleading and deceptive conduct generally
No person
sXXXXX, in trade, engage in conduct that is misleading or deceptive or is likely
to mislead or deceive.”
[27] Section 13(a) of the Act appears to be relevant and reads:
“13 False or misleading representations
No person
sXXXXX, in trade, in connection with the supply or possible supply of goods or
services or with the promotion by any means
of the supply or use of goods or
services,---
a) make a false or misleading representation that goods
are of a particular kind, standard, quality, grade, quantity, composition,
style, or model, or have had a particular history or particular previous use; or
..
[28] The essence of the purchaser’s claim is that the trader’s conduct breaches section 13(a) of the Act because it was misleading for the trader to state on the Supplier Information Notice displayed on the vehicle that the vehicle was registered and warranted when, according to the purchaser, it was not, and to claim that the vehicle had two previous owners when it had four previous owners.
[29] The authorities note that an intention to mislead need not be proved. A useful test for determining whether conduct falls within s.9 being that adopted by Tipping J in the Court of Appeal in AMP Finance Ltd v Heaven (1997) 8 TCLR 144; (1988) 6 NZBLC 102, 414 (Court of Appeal) when he said that it was necessary to ask:
[a] Whether the conduct was capable of being misleading;
[b] Whether the
people concerned were in fact misled by the relevant conduct; and
[c] Whether
it was in all the circumstances, reasonable for them to have been misled. In
considering this question the Tribunal must
consider whether the reasonable
person, in the shoes of the person who was misled and possessing their knowledge
actual and implied,
would have been misled.
[30] The words “mislead” and “deceive” are not defined in the Act but the Concise Oxford Dictionary defines “mislead” as “cause (a person) to go wrong, in conduct belief, etc” and “lead astray or in the wrong direction”. “Deceive” is defined as “make a person believe what is false, mislead purposely.”
[31] Conduct cannot be categorised as misleading or deceptive, or likely to be misleading or deceptive for the purposes of s.9 unless it contains or conveys a misrepresentation: Taco Co of Australia Pty Inc v Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177; 4 ATPR 40-303
[32] It is not sufficient to amount to misleading or deceptive behaviour if the consumer realises after the event that they misunderstood a true representation see Nesbit v Porter (1988) 8 TCLR 493
The Tribunal’s Assessment
a) Was the trader’s conduct capable of being misleading?
[33] The purchaser claimed in his application and letter to the trader of 9 November that the trader had misrepresented the fact that the vehicle was registered, had a warrant of fitness and only had two previous owners. The Tribunal, having listened to the evidence of the trader is satisfied first that the vehicle had a new warrant of fitness issued on 1 November 2007 although the warrant of fitness sticker does not appear to have been attached to the vehicle’s windscreen at that time. It is therefore not satisfied that the trader’s conduct with regard to the warrant of fitness was misleading. Second, the Tribunal is not satisfied, on a balance of probabilities that the trader misrepresented the number of previous owners. The Tribunal noted that the purchaser, in giving his evidence did not even refer to the claim of misrepresentation as to the number of previous owners. Third, the Tribunal notes that the Supplier Information Notice confirms that the vehicle was a registered vehicle. The Tribunal accepts the trader’s explanation that he fully intended to have the vehicle registered when he received it back from the purchaser to whom it was lent over the weekend of 2 to 5 November and would have done so as soon as he obtained possession of the vehicle. However the Tribunal finds that, regardless of the trader’s intention, his conduct in stating on the SIN card that the vehicle was registered was capable of being misleading.
b) Was the purchaser in fact misled by the relevant conduct?
[34] Although the purchaser understood, he said in answer to the Tribunal that the vehicle was fitted with dealer plates to enable him to drive it over the weekend of 2 to 5 November he claimed not to understand that this was a temporary measure to ensure that the trader had insurance cover for the vehicle whilst it was being driven by the purchaser. The Tribunal had difficulty in accepting that part of the purchaser’s evidence and does not think that he was in fact misled by the SIN card; the Tribunal considers it improbable that the purchaser, in spite of the fact that he is only 19 years of age (not 18 years as claimed by Mr XXXXX) did not realise that the dealer plates were a temporary measure to enable him to drive the vehicle over the weekend and would be replaced with ordinary plates when the vehicle was registered which was the reason the trader needed it back the following week. Accordingly, the Tribunal is not satisfied that the purchaser was misled about any of the warrant of fitness, registration, or number of previous owners.
The price paid by the purchaser for the vehicle
[35] The purchaser claimed in his letter of 9 November that he had overpaid the trader for the vehicle and that the “average market value as per State Insurance is $9000”. He produced no evidence to support this statement. On the other hand the trader produced 9 copies of advertisements for Honda Integra Type R Coupe vehicles, seven of which were 1996 models and two were 1997 models. The asking prices ranged from $8,990 to $18,800. The Tribunal was not satisfied that the purchaser had established that the trader had misled him in any respect regarding the price which he agreed to pay for the vehicle.
Conclusion
[36] The Tribunal is not satisfied that the trader has either supplied a vehicle which fails at this time to comply with any of the guarantees in the Consumer Guarantees Act 1993 or that the trader’s conduct breached any of the provisions of the Fair Trading Act 1986. As earlier stated the trader must be given a reasonable time to repair whatever fault prevents the vehicle from being started and the purchaser has remedies if the trader does not do this within a reasonable time. The trader for its part has remedies at common law against the purchaser if he fails to pay the unpaid balance of the purchase price for the vehicle. The Tribunal considers that the most equitable course of action is for it to adjourn the purchaser’s application. It may be brought on at any time after 14 January 2008 by written application to the Tribunal if the vehicle is not repaired, registered, and the warrant of fitness sticker showing the vehicle is warranted until 31 May 2008 is not affixed and the purchaser is notified by that date that the vehicle may be uplifted on payment of the balance of the purchase price .
Tribunal’s Orders
(1) That the purchasers’ application is dismissed in so far as it claims the trader’s conduct breached the Fair Trading Act 1986.
(2) The purchaser’s application in so far as it claims the trader has failed to comply with the Consumer Guarantees Act 1993 is adjourned with leave granted to the purchaser to make a written request to the Tribunal for a further hearing if the outstanding matters between the trader and purchaser are not resolved by 14 January 2008.
DATED at AUCKLAND this 19th day of December 2007
C.H.Cornwell
Adjudicator
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2007/237.html