Reference No. MVD 104/09 (AK) [2009] NZMVDT 100 (11 September 2009)

Last Updated: 1 October 2009

Decision No. AK 76 /2009

Reference No. MVD 104/09

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 MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr G Burkett, Assessor

HEARINGS at AUCKLAND on 10 August and 8 September 2009

APPEARANCES

Dr XXXX, the purchaser

Mr AAAA, CEO for the trader
Mr BBBB, witness for the trader
Mr CCCC, support person for the trader (at 8 September hearing only)

DECISION

Background

[1] On 1 March 2009 Dr XXXX (“the purchaser”) purchased a 2006 Mercedes-Benz S 55 V8 Kompressor registration number RRRR (“the vehicle”) for $79,995 from YYYY (“the trader”). The vehicle’s odometer at the time of sale was 42,853 miles.

[2] The purchaser claims that the trader misrepresented the vehicle to him as having been manufactured in 2006 and also misrepresented that it had a Global Positioning System (“GPS”) fitted to the vehicle. The purchaser says that he has since discovered that the vehicle was manufactured in 2002 and that its GPS system does not operate because the CD containing the software to operate it is unavailable.

[3] The trader says that the vehicle was sold to the purchaser subject to a condition that the year of the vehicle was the year of first registration in New Zealand or overseas. The vehicle was an import which had been first registered in NZ in 2006 and the trader says it did not represent that the vehicle had been manufactured in 2006. The trader also denies that it represented the vehicle as having a GPS system.

[4] 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. Mr Burkett took the oath required by (2) of Schedule 1 to that Act. As an assessor Mr Burkett assisted the adjudicator but the application was determined by the adjudicator alone.

Facts

[5] The purchaser says that he approached the trader regarding the vehicle and on 1 March went to the trader’s yard and spoke to its manager Mr BBBB. In the course of those discussions he says Mr BBBB told him the vehicle was only 3 years old and probably only 2 years old when he had that discussion at the beginning of March 2009. The purchaser also claims he asked if the vehicle had a GPS and was told it had that feature.

[6] When the purchaser went for a test drive in the vehicle he says he noticed a thumping noise coming from the CD player and an indicator light lit up. Mr BBBB promised him that these two faults would be fixed. He says he did not test the GPS system before buying the vehicle because the trader did not have the CD to operate it. He says he also asked about a spare key for the vehicle and the trader’s salesman said that there was one in the office. The trader promised to find the CD to operate the vehicle’s GPS system which was inoperable without the CD. The trader has however failed to find the CD and the GPS system installed in the vehicle will not operate without it.

[7] The purchaser agreed to buy the vehicle for $79,995 on 1 March 2009. He received an allowance of $14,995 for a 1997 Mercedes Benz E200 which he traded in. He asked the trader’s manager to complete the Vehicle Offer and Sale Agreement (“VOSA”) by naming the purchaser as his company, DDDD, because he says he bought the vehicle for business purposes. The purchaser says he understands and accepts that he agreed in writing to a term in the VOSA that because he was acquiring the vehicle for business purposes the Consumer Guarantees Act 1993 would not apply to the sale.

[8] The purchaser produces his original part of the VOSA (Exhibit 2) which he and the trader’s manager Mr BBBB signed and dated 1 March 2009. At the foot of the VOSA Mr BBBB wrote the words “Paid in Full $65,000” and signed adding his name in brackets. The VOSA describes the vehicle as a “2006 Mercedes-Benz S55 V8 Kompressor in Blue” and includes both the VIN and Chassis numbers of the vehicle (both the same) as SSSS and states the odometer is “42,835 Km”.

[9] The purchaser also produces a photocopy of the Consumer Information Notice (“CIN”) (Exhibit 1) that the parties signed which also records the vehicle year as “2006” and the actual distance the vehicle has travelled as “42,835 Km”.

[10] The purchaser says that the VOSA he signed was the one page document he produced to the Tribunal. He says that he did not sign any other pages and that his signature is not that which appears on two pages of terms and conditions which were produced by Mr AAAA (Exhibit B). The unnumbered terms and conditions include the following clauses which appear to be relevant to the purchaser’s application are as follows:

“Consumer Guarantees Act
This document constitutes the entire Agreement between the parties and the Purchaser acknowledges that the Purchaser has not relied upon any representation made by the Trader in entering into this Agreement having undertaken their own independent inquiries into the vehicle and in making the decision to purchase the vehicle.
To the extent there is a legal liability to do so the parties agree that the provisions of the Consumer Guarantees Act, the Fair Trading Act and the Sale of Goods Act shall not apply to this Agreement.”

“Purchasers Inquiries
The Trader has relied upon information from agencies and databases operated and maintained by the government of New Zealand through various agencies including but not limited to NZ Transport Agency, Ministry of Economic Development and other government departments and/or agencies. The trader nor any agency licensed to supply information from the government databases has verified the accuracy of the information contained within such databases nor does the government and its agencies, the Trader and/or any agency or entity providing information to the Trader warrant and /or certify that the information recorded or that the information is accurately recorded or that the databases accurately reflect what the information contained on them purports to represent (whether as to any matter of fact or otherwise). The Purchaser has made their own inquiries into all matters contained on the register including but not limited to the description of the vehicle outlined in this Agreement for Sale and Purchase and/or any detail, specification and/or information concerning the vehicle (including but not limited to the year of first registration of the vehicle, its odometer reading and/or otherwise).
The reference to the year of the vehicle is the year of first registration in New Zealand and/or overseas where the vehicle is imported into New Zealand. It does not purport to warrant the year in which the vehicle was assembled nor the age of the vehicle in question.”

[11] The purchaser says that on 1 March he was persuaded by Mr BBBB to leave his trade in with the trader, and was given a loan car to drive. The following day Mr BBBB told him it would take some time to fix the faults with the vehicle. He agreed to accept the vehicle and pay for it on 2 March 2009 with the faults not having been repaired and also without the vehicle having been issued with a new warrant of fitness within a month prior to the date of sale.

[12] When he received the vehicle the purchaser was unable to operate all the vehicle’s functions because it was supplied without a manual. The trader promised to send its mechanic to the purchaser’s home to repair the vehicle and the mechanic sent by the trader taught the purchaser the functions of the various switches but also discovered that a switch on the steering wheel for gear shifting was not working and a dashboard light was fused. The trader went back to the trader on 8 March and its salesman promised to fix the audio system, the GPS system, the light on the dash, the wheel alignment, the gear switch on the steering wheel and supply a manual and a spare ignition key. The purchaser then sent the trader a letter dated 10 March giving the trader a week within which to remedy the defects.

[13] On 21 March the purchaser wrote to the trader complaining of further defects with the vehicle’s brakes and advised that he had the vehicle assessed by EEEE who had estimated the cost of repairing the vehicle as $16,534 which did not include the cost of repairing the faults agreed to be repaired by the trader on 8 March and itemised in the purchaser’s letter of 10 March. The purchaser claimed he had been deceived by the trader as to the quality of the vehicle and he gave the trader 3 days to refund his purchase price and return the trade in.

[14] When he took the vehicle for a warrant of fitness (“WOF”) inspection on 31 March the purchaser discovered that the vehicle had a number of safety faults which resulted in it failing the WOF. The purchaser also obtained an FFFF report on the vehicle on 1 April which also confirmed the faults identified by the WOF inspection. The purchaser sent the trader yet another letter dated 2 April informing it the vehicle had failed a warrant of fitness and was not safe to drive on the road with missing bolts from the wheels. The purchaser’s letter listed 18 repairs it required the trader to agree to having remedied. The trader subsequently arranged to uplift the vehicle on 8 April and had most of the faults repaired by 17 April although the GPS was not made operational because there was no CD to make it work and the trader did not provide a spare key.

[15] On 30 June the purchaser wrote to the trader claiming that the Consumer Information Notice displayed with the vehicle had falsely claimed it was manufactured in 2006 whereas the purchaser had discovered it was manufactured in August 2002 and was a 2003 model. The purchaser says he would never have bought the vehicle if he had known it was manufactured in 2002. He claims the current value is $45,000 not the $79,995 he paid for it. The purchaser gave the trader 48 hours to refund the total amount paid and take the vehicle back or pay him $34,995.

[16] The purchaser produced an email from GGGG, Sales & Logistics Coordinator of HHHH confirming the vehicle was manufactured in 2002 for the Great Britain market and that it seemed to have been imported to Japan and was first registered in New Zealand in May 2006. The purchaser also produces a photocopy of a document (Exhibit 9) headed “Datacard” which he obtained from HHHH which shows the vehicle’s VIN number and lists the equipment which was fitted to the vehicle at the time of sale one of the items listed being
“461 Instrument with miles ind. And English legend”. The datacard shows the vehicle’s delivery date as “28 08 2002”

[17] The purchaser also produces as evidence of the value of a 2002 Mercedes Benz S55 AMG Sedan 5.5V8 Kompressor a valuation from JJJJ of $55,000, KKKK of $50,000, and LLLL of $47,000. He says he has had to buy a Tomtom GPS at a cost of $585 for which he produces an invoice dated 1 May 2009.

[18] Mr AAAA for the trader says that the trader purchased the vehicle from MMMM at auction on 17 January 2009 for $50,185 and he produces the buyers tax invoice (Exhibit A) which records the vehicle as a 2006 Mercedes-Benz S55 Kompressor. Its odometer was recorded on MMMM’s invoice as 43,835 Kms. Mr AAAA says the trader bought and sold the vehicle in good faith believing it to be a 2006 vehicle. He says that from enquiries he has made the vehicle was imported from Japan and this was clearly disclosed to the purchaser on the CIN and the purchaser knew he was buying an imported vehicle. He says the vehicle was complied in May 2006 as appears from the Vehicle Information Report (“VIR”) which shows the vehicle was imported by one NNNN when its odometer was recorded as 4,318km. The VIR shows the vehicle was first registered in Japan in March 2006 and from photocopies of the deregistration export certificate was deregistered in April 2006 before being exported to NZ.

[19] Mr AAAA says that the trader cannot guarantee the vehicle’s year and relied on information provided by MMMM and from the Land Transfer database. He says that the trader was selling to a professional person and that he had not implied that the vehicle was two or three years old.

[20] Mr BBBB the trader’s manager gave evidence that the purchaser had visited the trader’s yard on two occasions at weekends to look at the vehicle and he had given the purchaser a demonstration of its features without a test drive. On 1 March when the purchaser returned to the trader’s premises he told Mr BBBB he would like to have his wife see the vehicle and Mr BBBB and the purchaser drove to PPPP to take Mrs XXXX for a test drive. The purchaser expressed interest in buying the vehicle and after an appraisal of the trade in by Mr AAAA and negotiations the purchaser agreed to buy the vehicle. Mr BBBB says that there was no “depth of conversation” and he denies that he told the purchaser that he was buying a three year old car which might be only 2 years old. He says he did tell the purchaser the vehicle was an import.

The issues before the Tribunal

[21] Having considered the facts, the Tribunal concludes that the following issues require consideration:
[a] Whether the trader misled the purchaser about the vehicle’s year and /or its odometer ?
[b] Whether the trader misled the purchaser about the GPS?
[c] If so what remedy is available to the purchaser?

Legal Principles

[22] In terms of s.89 of the Motor Vehicle Sales Act 2003 (“MVSA”) 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. In this case the facts and the issues raised require consideration of the Fair Trading Act. Section 90 of the MVSA limits the Tribunal’s jurisdiction to a claim not exceeding $50,000 without the consent in writing of both parties. The purchaser acknowledged in writing to the Tribunal before the hearing that he was not seeking an order for rescission of the purchase contract, but only damages and the Tribunal agreed to hear the purchaser’s claim on that basis and after advising the purchaser to take legal advice.

The Fair Trading Act

[23] Section 9 of the Fair Trading Act 1986 reads:

“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.”

[24] The essence of the purchaser’s claim is that the trader’s conduct breaches s.9 of the Fair Trading Act by misrepresenting to him that the vehicle was only three years old and that it had a GPS that worked whereas he says he has since discovered that the vehicle was manufactured in Germany in 2002 for the UK market. It was transported to Japan but not registered in Japan until March 2006 when it was almost immediately deregistered and exported to NZ where it was complied and registered in May 2006. He therefore claims the vehicle was not a 3 year old vehicle as he was told by Mr BBBB, the trader’s manager, but a 7 year old vehicle at the time he bought it. He also says that the trader told him the vehicle had a GPS and there is a screen in the instrument consol to display GPS data but was not supplied with a CD to enable the GPS to function and thus he says that the trader’s promise of GPS functionality was misleading.

[25] The authorities note that an intention to mislead need not be proved, Taylor Bros Limited v Taylors Textile Services Auckland Limited (1987) 2 TCLR 415, at 447. and a useful test for determining whether conduct falls within the section 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.

Issue (a) Was the purchaser misled by the trader regarding the vehicle year and odometer?

[26] The evidence that the purchaser was misled regarding the year of the vehicle comprised the VOSA and CIN both of which describe the vehicle as a 2006 vehicle and both also refer to its odometer and actual distance travelled as “42,835 Km” whereas the vehicle, because it has an English odometer had actually travelled 42,835 miles. The purchaser also claims that he was misled by Mr BBBB’s statement that the vehicle was only 3 years old and probably only 2 years old. The purchaser says he would not have bought the vehicle if he knew it was 7 years old because he wanted a vehicle that was three years old.

[27] In its defence the trader says it provided information to the purchaser on the VOSA and CIN in good faith. The Tribunal accepts that, but that in itself is not sufficient to avoid liability although in certain circumstances the mere passing on of information will not amount to misleading conduct on the part of the person passing it on. The High Court of Australia in York v Lucas [1985] HCA 65; (1985) 158 CLR 661 (at page 666) said:
“That does not , however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct which is misleading or deceptive.”

[28] The information regarding the vehicle’s year and odometer reading in kilometres was provided to the trader by MMMM and initially by VTNZ who undertook compliance testing of the vehicle in May 2006. The question for the Tribunal is whether in including that information in the VOSA and CIN the trader adopted this information and added to it or whether it was merely passing it on. The Tribunal considers that the trader, and in particular its manager Mr BBBB probably asserted that the vehicle was a good buy because it was only 3 years old and perhaps only 2 years old, as the purchaser says Mr BBBB stated, and thus the Tribunal considers the trader adopted the information and is therefore liable for it.

[29] In reaching this conclusion the Tribunal notes that in general clauses which purport to disclaim or exclude liability are ineffective against the operation of the Fair Trading Act 1986 see Smythe v Bayleys Real Estate Ltd (1993) 5 TCLR 454. Hence even if the purchaser had seen and agreed to the trader’s terms and conditions, which, in spite of the trader’s claim that his signature appears on them, the Tribunal considers no more than a possibility, the terms and conditions would be ineffective in defending the purchaser’s claim of misleading conduct relating to the specific year and odometer of the vehicle. For that reason those clauses have not been taken into account by the Tribunal in reaching its decision.

Issue (b) Was the purchaser misled by the trader about the GPS?

[30] The purchaser says that one of the features that attracted him to buy the vehicle was the GPS system fitted to the vehicle. The purchaser says that he had an after market GPS fitted to his previous vehicle and found that useful. The Tribunal heard evidence form the purchaser that a working GPS was one of the features which attracted him into buying the vehicle from the trader and the Tribunal accepts as very probable that the trader promised the vehicle had was GPS and that Mr BBBB promised the purchaser before he agreed to buy the vehicle that he would locate the CD so as to make the GPS work. The Tribunal finds that the trader failed to provide the CD and hence the trader’s conduct in promising to provide the CD to operate the GPS was misleading and deceptive and that the purchaser was misled by the trader in that regard. The purchaser has since purchased an after market Tomtom GPS at a cost of $585.

Issue (c): what remedy is available to the purchaser?

[31] The Tribunal has jurisdiction to make orders pursuant to section 43(2) of the Fair Trading Act 1986. Section 43(2) provides:

“(2) For the purposes of subsection (1), the Court may make the following orders-

(a) an order declaring the whole or any part of a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the conduct referred to in subsection (1) or of a collateral arrangement relating to such a contract, to be void and, if the Court thinks fit, to have been void ab initio or at all times on and after such date, before the date on which the order is made, as is specified in the order”
(b) an order varying such a contract or arrangement in such manner as is specified in the order and, if the Court thinks fit, declaring the contract or arrangement to have had effect as so varied on and after such date, before the date on which the order is made, as is so specified:
(c) an order directing the person who engaged in the conduct, referred to in subsection (1) to refund money or return property to the person who suffered the loss or damage:
(d) an order directing the person who engaged in the conduct, referred to in subsection (1) to pay to the person who suffered the loss or damage the amount of the loss or damage:
(e) an order directing the person who engaged in the conduct, referred to in subsection (1) at that person’s own expense to repair, or to provide parts for, goods that had been supplied by the person who engaged in the conduct to the person who suffered, or is likely to suffer, the loss or damage:
(f) an order directing the person who engaged in the conduct, referred to in subsection (1) at that person’s own expense, to supply specified services to the person who suffered, or is likely to suffer, the loss or damage.”

[32] In order for the Tribunal to consider making an order pursuant to section 43, the person in whose favour the order is contemplated must have suffered or be likely to suffer loss or damage as a result of the misleading conduct. The misleading conduct need not be the sole cause of loss- Phyllis Gale Ltd v Ellicott (1997) 8 TCLR 57. It is sufficient that there is a clear nexus between the misleading conduct and the purchaser’s decision to proceed with the purchase of the vehicle. The Tribunal is satisfied such a nexus exists in this application.

[33] In this case the Tribunal considers that the appropriate remedy is to make an order under section 43(2)(d) that the trader shall pay to the purchaser the amount of the loss or damage suffered by the purchaser. The Tribunal is satisfied on the basis of the valuations provided by the purchaser that the probable retail value of the vehicle at the time of sale was $50,000 and the damage through not having a functional GPS was a further $585. The Tribunal will therefore order the trader to refund the difference between the price paid of $79,995 and $50,000; or $29,995 and $585 for the GPS ; a total of $30,580 to the purchaser.

Order
.
The trader shall pay the purchaser the sum of $30,585.

DATED at AUCKLAND this 11th September 2009

C.H.Cornwell
Adjudicator
DIRECTION TO THE CHIEF EXECUTIVE, MINISTRY OF JUSTICE

Section 94 of the Motor Vehicle Sales Act 2003 provides that if an application is made to this Tribunal which falls within its jurisdiction and that in determining the application the Tribunal decides against a motor vehicle trader, the Tribunal must direct the Chief Executive of the Department for Courts (now Ministry of Justice) to publish a notice in the Gazette containing the particulars set out in subs.(2). The notice is only to be published once the circumstances described in subs.(3) have occurred. The Chief Executive is directed accordingly.