Reference No. MVD 70/08 (WN) [2008] NZMVDT 107 (13 June 2008)

Last Updated: 3 September 2008

Decision No. WN 22/2008

Reference No. MVD 70/08

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN XXXX

Purchaser

AND YYYY

Trader

BEFORE THE WELLINGTON MOTOR VEHICLE DISPUTES TRIBUNAL

N J Wills - Barrister, Adjudicator
J R Harcourt - Assessor

HEARING at DUNEDIN on 21 May 2008

APPEARANCES

Mr XXXX, purchaser
Mr AAAA, general manager for trader
Mr BBBB, Mercedes Benz brand manager, for trader

DECISION

Background

[1] On 31 October 2007 XXXX (the purchaser) purchased a 2007 Mercedes Benz ML320CEI from YYYY (the trader). The purchaser paid $90,499.00 for the vehicle in an agreement which included trade in of his current vehicle.

[2] The purchaser alleges he has been misled about the value of the vehicle and that this affected his negotiations with the trader. The purchaser says he was misled about the price of the vehicle because he was told it was $122,200.00 whereas in fact it was $110,000.00.

[3] The trader on the other hand says that the price of the vehicle is $121,940.00 plus on road costs and that the purchaser has not been misled.

[4] Prior to the commencement of the Tribunal’s inquiry Mr J R Harcourt took the oath required of an assessor by Schedule 1, clause 10(2) of the Motor Vehicle Sales Act 2003. As an assessor appointed pursuant to the Motor Vehicle Sales Act 2003 Mr Harcourt assisted the adjudicator but the application was determined by the adjudicator alone.

The Facts

[5] On 31 October last year, the purchaser took his car into the trader's premises for a routine service. When he arrived at the showroom he spotted the vehicle on display and decided to purchase it. There is some dispute between the purchaser and the trader's witness Mr BBBB as to how the purchaser came to be informed of the retail price of the vehicle but both agree that the purchaser was told the purchase price was in the vicinity of $122,000.00.

[6] The purchaser’s best recollection is that he was told the price of the vehicle was $122,200.00 but he was not entirely certain about that. Mr BBBB, the salesperson for the trader who sold the vehicle to the purchaser gave evidence that a print out of recommended retail price of $121,940.00 was displayed next to the vehicle and that when queried by the purchaser as to the price, he looked at this and read it out. He also said that because the vehicle was new, on road costs would have been payable in addition to the purchase price. The purchaser did not recall seeing any price displayed on the vehicle: his recollection was that he was simply told the price. His understanding was that the price was exclusive of on road costs (and for that reason references to price in this decision are references to price exclusive of on road costs).

[7] The purchaser decided he wanted to buy the vehicle and made an offer of $86,000.00 plus his vehicle as a trade in. There was some negotiation and ultimately it was agreed that the purchaser would pay $90,499.00 comprised of $90,000.00 to purchase the vehicle plus $499.00 on road costs.

[8] When the purchaser came to sign the documentation he signed where indicated and subsequent to signing noted that although the amount he was obliged to pay was recorded as $90,499.00, the purchase price of the vehicle was recorded as $110,000.00 instead of the $122,000.00 odd he had been advised was the purchase price. The trade in price of his vehicle was recorded as $20,000.00. The purchaser also noted that insurance had been arranged by the trader with the amount of cover specified as $110,000.00. When he raised this with the trader’s staff member who was taking him through the paperwork, he was told “you don’t want to over-insure it do you?” or words to that effect.

[9] The purchaser now seeks reimbursement for $12,200.00 being the difference between the price of the car as represented to him and that recorded on the vehicle offer and sale agreement. He says that the price of the vehicle is that recorded on the vehicle offer and sale agreement and so he was misled. In addition he seeks $1,026.43 being the costs he has incurred obtaining advice from his lawyers in regard to the dispute. He also seeks to recover his reasonable costs and interest.

[10] The trader's position is that the recommended retail price of the vehicle was $121,940.00 and the trader produced a specification for this particular vehicle that was provided to them by CCCC confirming that amount.

[11] The trader explained that the vehicle offer and sale agreement recorded the purchase price as $110,000 and the trade in figure as $20,000 because the trader did not want the price recorded as being greater than its retail value. The trader explained this as a swap in margins where profit is transferred out of a new vehicle and into the trade vehicle to justify the retail price of the trader vehicle so as to achieve a margin for the yard. In essence the trader is saying that the vehicle offer and sale agreement does not accurately record the purchase price of the vehicle.

[12] The trader noted that the purchaser did not raise the matter at the time and that the purchase price by the amount paid the purchase was $90,499.00 as agreed.

[13] The trader's representative was firm in his view that the vehicle had a value as per the recommended retail price of $121,940.00.

The Fair Trading Act 1986

[14] Section 9 of the Fair Trading Act 1986 provides:

"9 Misleading and deceptive conduct generally

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

[15] Section 13 of the Fair Trading Act 1986 provides:

"13 False [or misleading] representations

No person shall, 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,—

...

(g) Make a false or misleading representation with respect to the price of any goods or services; ..."

[16] In AMP Finance NZ Limited v Heaven (1997) 8T0144 (CA), Tipping J set out a three part approach to determining whether there had been a breach of s.9. The three steps are:

• [a] To ask whether the conduct is capable of misleading;
  
• [b] Decide whether the plaintiffs were in fact misled by that conduct; and
  
• [c] Decide whether it was reasonable for the plaintiff to have been misled by that conduct.
  

Was the conduct capable of being misleading?

[17] There is no real difference between the evidence of the purchaser and the trader as to what the purchaser was told about the price of the vehicle. The Tribunal is satisfied that the purchaser was told the purchase price of the vehicle was in the vicinity of $122,000 plus on road costs.

[18] The purchaser says he was misled because the purchase price was not in the vicinity of $122,000 plus on road costs but rather was $110,000 plus on road costs (the purchaser accepted that he elected number plates that were more expensive than normal increasing the on road costs to $499). The purchaser says that the evidence that the purchase price of the vehicle was in fact $110,000 is the vehicle sale and offer agreement which records the purchase price as $110,000.

[19] The Tribunal does not accept this. The Tribunal finds that the $110,000.00 recorded in the agreement for sale and purchase is not evidence of the price of the vehicle. In that regard the Tribunal accepts the evidence of the trader that the figures recorded in the vehicle offer and sale agreement were recorded that way for the purposes of internal accounting practices and did not accurately represent the price of the vehicle which was $121,940 plus on road costs. This is supported by the specification sheet supplied by CCCC.

[20] Contrary to this, the purchaser relied on the fact that insurance for the vehicle was initially obtained at the level of $110,000.00. The trader has said that this was a mistake that was rectified as soon as the trader was aware of it. The Tribunal accepts that this was the case and therefore does not accept that this evidence supports a finding that the price of the vehicle was $110,000.

[21] The purchaser was not misled. He was told that the purchase price was in the vicinity of $122,000 plus on road costs and it was. This is perhaps best summed up by the purchaser's statement when he said that in his mind he bought the car when he shook hands. At that point he had reached a decision on the amount that he was prepared to offer to purchase the vehicle on the basis of being told that the recommended retail price was some $122,000.00 and his decision as to what his car was worth as a trade-in. On that basis he offered to trade in his vehicle and pay $90,499.00. The fact that the vehicle Offer and Sale Agreement recorded the purchase price as being $110,000.00 does not mean that was the vehicle's recommended price; it simply means that that was how the sale was recorded.

[22] If any misleading representation could be said to have been made, it was the representation in the vehicle offer and sale agreement that the purchase price was $110,000 when it was not. The purchaser has not however suffered any loss as a result of that representation. As he said at the hearing, his mind was made up when he shook hands with the salesperson – as far as he was concerned he had concluded the deal at that point. So when he concluded the deal he thought the purchase price was in the vicinity of $122,000 plus on road costs and it was. He did not rely in any way on the inaccuracy as to price recorded in the vehicle offer and sale agreement.

[23] For the reasons set out above the applicant's claim is dismissed.

DATED at WELLINGTON this 13th day of June 2008

___________________
N Wills
Adjudicator