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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 15 November 2012
Decision No: AK 82 /2012
Reference No. MVD 142/12
IN THE MATTER of the Motor Vehicle Sales Act 2003
AND
IN THE MATTER of a dispute
BETWEEN MARIANO GERALDO DAVID DELLABARCA
Purchaser
AND ANTONY SOLEN BASTURKMEN T/A NO RESERVE CARS
Trader
BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr S D Gregory,
Assessor
HEARING at AUCKLAND on 8 October 2012
APPEARANCES
Mr M G D Dellabarca, the purchaser
DECISION
Background
[1] On 3 August 2012 Mr Dellabarca (“the purchaser”) agreed to buy a 1994 Landrover Discovery registration SZ8448 (“the vehicle”) sight unseen from Antony Solen Basturkmen trading as No Reserve Cars(“the trader”) for $5,350 delivered to Picton. The purchaser claims that the trader both misrepresented the quality of the vehicle to him and supplied a vehicle which was not of acceptable quality. The purchaser seeks to obtain a refund of his purchase price and a refund of money he has spent on the vehicle.
[2] The trader denies that he misrepresented the vehicle to the purchaser but says he is willing to refund the purchaser with his purchase price.
[3] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal has appointed Mr Gregory as expert assessor to assist in the determination of the complaint. Mr Gregory took the oath required by clause 10(2) of Schedule 1 to that Act. As an assessor Mr Gregory assisted the adjudicator but the application was determined by the adjudicator alone.
Facts
[4] The purchaser is a miner. He lives in Nelson and works in Westport. He
told the Tribunal he had been looking to buy a cheap
4WD diesel truck for
several months to enable him to drive to work in Westport and back to his home
in Nelson each week; a round
trip of 460kms. He saw the vehicle advertised on
TradeMe by the trader who operates from premises in Onehunga, Auckland. The
purchaser
did not keep a copy of the trader’s advertisement but a copy of
it was sent to him by TradeMe. The copy he produced to the
Tribunal
states:
“Asking price; $5350
On road costs:
included
Kilometres: 221,000km
Body: Blue,
RV/SUV
Fuel type: Diesel
Engine: 2500cc, Manual,
4WD
Import history: NZ new
Registration expires: Sep
2012
WOF expires: Feb 2013
Stereo description: JVC nice
stereo
Look at the photos
Very rare to find a diesel turbo
manual discovery.
These trucks have excellent performance, plenty of
grunt and very economical to run. Very reliable wagon previous ones have never
(sic) longer than a week for sale
Come view and take it for a
spin.
-brand new wof till feb 2013
-ruc in
credit
-2500cc diesel turbo
-manual
-kiwi
new
-7 seater
-after market springs & shocks,
bonus!
-jvc stereo system
-starts first
pop
-drives nicely
-very reliable
The list goes
on..
This is a nice truck, body is pretty good for its
age
Looks good and mechanically she goes very well
Excellent
to drive on the open road
Perfect for any job
0272 966 801-
can arrange shipping nationwide
Give me a bell to have a
chat
Thanks”
[5] On 3 August the purchaser
telephoned the trader and agreed to buy the vehicle for the trader’s
asking price of $5,350 on
the trader’s agreement to pay the cost of
transporting the vehicle to Picton. The purchaser told the trader he would
arrange
a loan through Motor Trade Finance (“MTF”).
[6] The trader says the purchaser telephoned him on 6 August. He says the purchaser was angry because the vehicle was not in Picton and he wanted to know when it would be delivered to Picton. The trader says he had not received payment for the vehicle and would not send the vehicle to the purchaser until he received an assurance of payment from MTF.
[7] The trader sent an e-mail to the purchaser on 6 August in which he
advised the purchaser that it might take until Friday [10 August]
to get to
Picton. The e-mail continues:
“Just to make sure there is no
misleading etc, I went down and checked over the car.
Stone chip on
windscreen, saggy roof lining, plastic part half of it missing around ignition,
driver door on inside you sometime have
to pull it 2 times to open, and general
other wear & tear. Please confirm you have read this and reply to it that
you are happy.
Please note the vehicle is nearly 20 years old and done
220kms. We are selling it in original traded in condition.
Let us
know if you want the vehicle
Thanks”
[8] Neither party produced a copy of the purchaser’s reply to the trader’s e-mail of 6 August but the Tribunal understands the purchaser agreed to continue with the purchase of the vehicle. The trader says that he received an assurance that payment for the vehicle would be made to him a day or two later and he sent the vehicle from Auckland to Picton about 8 August and it arrived there on 10 August.
[9] The purchaser arranged for his wife and a neighbour to drive from Nelson
to Picton to collect the vehicle because he was working.
He admits he was
naïve in buying the vehicle sight unseen but says he was amazed at the
dirty and poor condition of the vehicle.
He says the vehicle had the following
faults when he received it:
(a) two bald front tyres and the other tyres were
mismatched;
(b) the windscreen had two large chips in the critical visual
area;
(c) the steering column cover was missing;
(d) the head lining was
sagging so badly that it blocked visibility out of the rear window;
(e) there
was rust in the firewall and ‘B” Pillars on both sides of the
vehicle and rust in the engine compartment and
there was rust around the
bodywork at each window rubber;
(f) the air conditioning system did not work
although the purchaser says he was not concerned by that;
(g) there was a
large dent in the back door;
(h) the back door would not close;
(i) the
petrol gauge did not work.
[10] The purchaser says he tried to telephone and text the trader but was unable to make contact with the trader and the messages he left the trader to contact him were not returned. The only evidence the purchaser produced of his attempts to contact the trader was copies of e-mails dated 28 August 2012 asking the trader to telephone him.
[11] On 13 August the purchaser replaced the front tyres at a cost of $500 and he produces a letter from Tyres and More of Nelson dated 17 August confirming they fitted two tyres to the vehicle because they were not in a warrantable state and the other tyres were mismatched. On the same date the purchaser also bought headlining material for $86 and replaced the headlining.
[12] The purchaser produces an undated letter from Novus Auto Glass confirming that on 14 August 2012 they found two stone chips in the CVA that were beyond repair and replaced a new windscreen at a cost of $375 plus GST. The purchaser claimed $375 for the windscreen but admitted that he had made a claim on his insurer who had paid for the replacement of the windscreen.
[13] On 14 August the purchaser sent the trader an e-mail in which he described the faults he had found in the vehicle when he received it. He claimed the vehicle was not of merchantable quality and that the trader had failed to mention the “larger than dinner plate size dent” in the back door. The purchaser said in his e-mail to the trader that he wanted $1,500 back or he would go to the “small claims Tribunal and then to the MTA”.
[14] On 16 August the purchaser took the vehicle to Nelson Independent Land
Rover Centre Ltd for the engine to be inspected for a
lack of power and a
service. They replaced the oil and filter, renewed the gear box oil and coolant
and confirmed the vehicle’s
turbo was working. They cleaned the fuel
sediment filter and replaced the fuel filter and confirmed the lift pump was
working.
The purchaser was charged $589.40 for that service work.
.
[15]
On 20 August the purchaser took the vehicle to VTNZ in Nelson and the purchaser
says that an inspector there, Mr Colin Gillespie,
wrote on a scrap of paper
which the purchaser produced that he had viewed the vehicle and there was rust
in both ‘A’
Pillars requiring repairs to bring the vehicle to WOF
standard. The purchaser told the Tribunal that he did not want to have a WOF
inspection done on the vehicle by VTNZ because if it failed a WOF, as he was
sure it would, he would not be able to continue to use
the vehicle.
[16] On 20 August the purchaser took the vehicle to Quality Paint & Panel for a quotation to rectify the rust. The quotation notes there is rust in the left hand and right hand bulkheads, surface rust around tops of ‘B’ Pillars, rust around roof glass on both sides. The cost to rectify is quoted as $3, 587.14 inclusive of GST for the removal and replacement of panels, trim and carpets, panel work and paint. The purchaser also produces ten colour photographs of the rust affected areas.
[17] The purchaser says he used the vehicle to travel to and from his work and he estimates he drove about 2,000kms in the vehicle before it overheated and broke down on 10 September near Murchison. The vehicle was towed to Murchison Mechanical. The purchaser has not had the vehicle assessed to find out what is wrong with it and what it will cost to repair and the vehicle has been abandoned by the purchaser at Murchison Mechanical because he is unwilling to pay the cost to have it towed to Nelson.
[18] The trader says he sent the purchaser an e-mail on 13 September following a conversation the previous week in which he offered to refund the purchaser the $1500 he requested in his e-mail of 13 August or in the alternative the trader says he offered to refund the full purchase price of the vehicle. The purchaser had rejected that offer.
[19] In reply to questions from the Tribunal Mr Basturkmen said that he had not brought a copy of the WOF check sheet issued by Supercheap Tyres requested of him in writing by the Tribunal on 26 September. He gave no reason for not doing so.
The issues before the Tribunal
[20] Having considered the facts, the Tribunal concludes that the following
issues require consideration:
[a] Whether the trader misrepresented the
vehicle to the purchaser?
[b] If so what remedy is appropriate?
[c]
Whether the vehicle complied with the guarantee of acceptable quality in s.6 of
the Consumer Guarantees Act 1993?
[d] If not, is the failure to comply with
the guarantee of acceptable quality one of substantial character?
[e] If the
failure is of substantial character is the purchaser entitled to reject the
vehicle?
Legal Principles
[21] 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. In this application both the Fair Trading Act and the Consumer Guarantees Act are applicable.
Issue [a]: Whether the trader misrepresented the vehicle to the purchaser?
[22] The Fair Trading Act 1986 s9 reads as follows:
“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.”
[23] The appropriate approach to determining whether conduct is misleading
and deceptive has been considered by the Supreme Court
in Red Eagle
Corporation Ltd v Ellis [2010] NZLR 492. The judgement of the Court was
delivered by Blanchard J:
“It is, to begin with, necessary to decide
whether the claimant has proved a breach of s 9. That section is directed to
promoting
fair dealing in trade by proscribing conduct which, examined
objectively, is deceptive or misleading in the particular circumstances.
Naturally that will depend upon the context, including the characteristics of
the person or persons likely to be affected. Conduct
towards a sophisticated
businessman may, for instance be less likely to be objectively regarded as
capable of misleading or deceiving
such a person than similar conduct directed
towards a consumer or, to take an extreme case, towards an individual known by
the defendant
to have intellectual difficulties ... The question to be answered
in relation to s 9 in a case of this kind is accordingly whether
a reasonable
person in the claimant’s situation – that is, with the
characteristics known to the defendant or of which
the defendant ought to have
been aware – would likely have been misled or deceived. If so, a breach
of s 9 has been established.
It is not necessary under s 9 to prove that the
defendant’s conduct actually misled or deceived the particular plaintiff
or
anyone else. If the conduct objectively had the capacity to mislead or
deceive the hypothetical reasonable person, there has been
a breach of s 9. If
it is likely to do so, it has the capacity to do so. Of course the fact that
someone was actually misled or
deceived may well be enough to show that the
requisite capacity existed.”
[24] The essence of the purchaser’s claim is that the trader, whilst informing him of some of the vehicle’s faults in the e-mail the trader sent to the purchaser on 6 August 2012, failed to disclose that the vehicle had serious rust issues.
[25] The trader also described the vehicle’s body in its advertisement on TradeMe, which the purchaser read and appears to have put reliance on as “pretty good for its age”. On the basis of first, the photographs produced by the purchaser, and second, the written quotation of Quality Paint & Panel, the Tribunal finds the vehicle’s body work was most certainly not “pretty good for its age” but that the rust in the ‘B” Pillars makes the vehicle so unsafe that it should not have passed a warrant of fitness inspection. The Tribunal is satisfied that the trader misrepresented the condition of the vehicle’s bodywork to the purchaser. In coming to this conclusion the Tribunal has placed no weight on the scrap of paper produced by the purchaser said to have been written by a VTNZ inspector, Mr Gillespie, which refers to rust in the ‘A’ Pillars because either Mr Gillespie wrote his opinion carelessly and in haste or he does not know the difference between an ‘A’ and a ‘B’ Pillar. In either case his opinion is unreliable and the Tribunal does not accept it as evidence.
[26] The Tribunal is satisfied on the facts of this case that the purchaser was actually misled and deceived by the trader into thinking the body work of the vehicle he was about to buy from the trader was of acceptable condition for its age and the Tribunal also accepts the purchaser’s evidence that had he known that the vehicle had serious rust he would not have bought it.
Issue [b]: What remedy is appropriate?
[27] The remedies available for a breach of the Fair Trading Act are
discretionary. They are set out in section 43 of that Act:
"43 Other
orders
(2) For the purposes of subsection (1) of this section, 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) of this section 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) of this section 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) of this section 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) of this section at that person's own expense, to repair, or 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) of this section at that person's own expense, to supply specified services to the person who suffered, or is likely to suffer, the loss or damage."
[28] The Supreme Court in Red Eagle sets out the approach to be taken in applying s 43. The Tribunal must consider whether:
[a] the purchaser was in fact misled or deceived; and
[b] If so, was the trader’s conduct the effective cause or an effective cause of the purchaser’s loss or damage?
[29] The Tribunal is satisfied that the purchaser was misled and that the trader’s conduct was the effective cause of the purchaser’s loss or damage.
[30 ] In order for the Tribunal to consider making an order pursuant to s 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 that such a nexus exists in this case because the purchaser’s decision to purchase the vehicle has resulted in his receiving a vehicle which the Tribunal finds, on the basis of the Quality Paint & Panel Report will cost $3,587 to repair.
[31] The purchaser wants to reject the vehicle and to receive a refund of the purchase price.
[32] In this application the Tribunal considers that the appropriate remedy is to make an order that the contract for the purchase of the vehicle is void and that all monies paid by the purchaser to the trader should be refunded to the purchaser.
Issue [c]: Whether the vehicle complied with the guarantee of acceptable quality in s.6 of the Consumer Guarantees Act 1993 (“the Act”)?
[33] Section 6 of the Act imposes on a supplier and the manufacturer of consumer goods "a guarantee that the goods are of acceptable quality." Section 2 of the Act defines "goods" as including "vehicles.”
[34] The expression "acceptable quality" is defined in s7 of the Act
as follows:
“7 Meaning of acceptable quality
(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.”
[35] In considering whether or not goods meet the guarantee of
acceptable
quality, the Tribunal must consider the quality elements as set
out in s7(1)(a) to (e) of the Act as modified by the factors set out
in section
7(1)(f) to
(j) from the perspective of a “reasonable consumer”.
The test is an objective
one; it is not a view of those factors from the
purchasers’ subjective perspective.
[36] 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 purchaser required the trader to remedy any faults within a reasonable time in accordance with s19 of the Act. If the failure to comply with the guarantee of acceptable quality was of a “substantial character” within the meaning of s21, or if the faults cannot be remedied, the Tribunal is directed to ask whether the purchaser exercised his right to reject the vehicle within a reasonable time.
[37] The factors to be considered by the Tribunal in deciding if the vehicle was of acceptable quality at the time of sale are that the vehicle is an 18 year old Landrover Discovery truck, it has travelled almost a quarter of a million kilometres and was sold for $5,350 delivered to the South Island. The vehicle is thus old, well used and near the end of its economic life. The purchaser bought it knowing from the e-mail sent by the trader on 6 August that the trader’s glowing description of the vehicle in his TradeMe advertisement that it was“a nice truck” had to be qualified by the fact that it had a chipped windscreen, saggy roof lining, a broken steering column cover, faulty doors and other faults which the trader described as “other general wear and tear”. However the Tribunal is also satisfied that the vehicle had serious rust in its ‘B’ Pillars and should not have been issued with a warrant of fitness. The Tribunal therefore finds that the vehicle was not of acceptable quality at the time of sale because it was not safe in terms of s7(1)(d) of the Act.
Issue (d): Is the failure to comply with the guarantee of acceptable quality one of substantial character?
[38] Section 21 of the Act defines the circumstances in which a failure to comply with the guarantee as to acceptable quality will be regarded as being a failure of a substantial character for the purposes of s18(3). Section 21 provides as follows:
“ 21 Failure of substantial character
For the
purposes of section 18(3), a failure to comply with a guarantee is of a
substantial character in any case where ¾
(a) the goods would not have been acquired
by a reasonable consumer fully acquainted with the nature and extent of the
failure; or
(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or
(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or
(d) the goods are not of acceptable quality within the meaning of section 7
because they are unsafe."
[39] The Tribunal is satisfied that the presence of rust in the ‘B’ Pillars of the vehicle makes it unsafe. The Tribunal therefore finds the failure was of substantial character in terms of s.21(d) of the Act
Issue (e): Whether the purchaser is entitled to reject the vehicle and have a refund of his purchase price?
[40] The purchaser notified the trader of the presence of rust in the vehicle in his e-mail on 14 August a few days after he received the vehicle from the trader. The purchaser initially sought compensation of $1,500 from the trader but does not appear to have had any response from the trader until 13 September when the trader offered to pay him the $1,500 he had previously asked for or to give him a full refund of his purchase price. However the purchaser had by then spent money on the vehicle that he wanted to recover from the trader, in addition to the purchase price. He notified the trader accordingly on the 13 September which the Tribunal regards as his letter rejecting the vehicle.
[41] The purchaser claimed he had incurred $500 for replacing the tyres and $86 for headlining material. Unfortunately the purchaser did not offer any evidence to show that he had complied with s18(2)(a) of the Act by requiring the trader to remedy the faulty tyres and headlining before he incurred the cost of replacing the two front tyres and buying the headlining material.
[42] The purchaser also claimed $589.40 for work done when the vehicle was put in to be repaired for a lack of power. It subsequently turned out to be only poor servicing causing the issue and so the vehicle was given a full service. The sum spent in servicing the vehicle was incurred by the purchaser as a normal maintenance item which any prudent vehicle owner buying a vehicle without a service history would incur. The Tribunal does not propose to order the trader to pay the cost of that service.
[43] The purchaser also claimed $130 for a new battery and $375 for a windscreen. The purchaser admitted to the Tribunal that he had made a claim on his insurance policy for the damaged windscreen which the insurance company had paid. The purchaser did not produce a receipted invoice for the battery hence those two sums are also disallowed.
[44] Unfortunately there are two other costs the purchaser has incurred which the Tribunal does not consider it can reasonably order the trader to pay. These are the cost of filing the application of $51.11 and the cost the purchaser incurred in travelling to Auckland for the hearing of $523.
[45] The trader will be required to collect the vehicle at its expense from Murchison Mechanical because the cost of transporting it back to the trader in Auckland will incur the purchaser in a significant cost.
1. The purchaser’s rejection of the vehicle under the Consumer Guarantees Act 1993 is upheld.
2. The trader shall pay the purchaser the sum of $5,350.
3. As soon as the trader has refunded the purchaser the sum of $5,350 the trader shall arrange at its expense to uplift the vehicle from Murchison Mechanical, Waller Street Murchison and pay any storage charges to Murchison Mechanical.
DATED at AUCKLAND this 11 October 2012
C.H Cornwell
Adjudicator
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