Lotfollahi v Buy Right Cars Limited - Reference No. MVD 244/11 (Auckland) [2012] NZMVDT 5 (3 February 2012)

Last Updated: 20 February 2012

Decision No. AK 5 /2012

Reference No. MVD 244/11

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN MAJID LOTFOLLAHI

Purchaser

AND BUY RIGHT CARS LIMITED

Trader

BEFORE THE AUCKLAND MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Auckland on 31 January 2012

APPEARANCES
Mr M Lotfollahi, the purchaser
Mr V Bhatnagar, Sales Manager representing the trader

DECISION

Background

[1] On 9 November 2011 Mr Lotfollahi (“the purchaser”) purchased a 2007 Suzuki Swift registration number DWC711 (“the vehicle”) for $10,250 from Buy Right Cars Limited (“the trader”) The purchaser wishes to reject the vehicle first, because he says the vehicle fails to comply with the guarantee of acceptable quality and that such failure is one of substantial character under the Consumer Guarantees Act 1993 (“the Act”) Secondly, the purchaser alleges that he was misled by the trader as to the history and condition of the vehicle.

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

Facts

[3] On 5 or 6 November 2011 the purchaser says he visited the trader’s premises because he was looking to replace his 1995 Saab with a better car. The purchaser was approached by Oliver Siaea, the trader’s salesman and invited to take a test drive in the vehicle following which Mr Siaea invited the purchaser into the trader’s office and asked him to make an offer for the vehicle. The purchaser says he offered $8,000 including $3,000 as a trade in for his Saab. The trader declined that offer. Mr Siaea then repeatedly asserted that the vehicle was a very good car, was New Zealand new and would last a long time. The purchaser says he repeatedly asked Mr Siaea if the vehicle had been damaged or been in an accident and says he made it clear to Mr Siaea that he did not want an accident damaged car. Mr Siaea categorically assured the purchaser that the vehicle was not damaged and had not been in an accident. The purchaser told Mr Siaea that he had no more money to offer and left the premises.

[4] On 9 November Mr Siaea telephoned the purchaser to invite him to go to the trader’s premises to discuss the vehicle and other cars. The purchaser went to the trader’s premises and was introduced to Mr Bhatnagar the trader’s Sales Manager who assured him all the trader’s vehicles were good quality and had been pre-checked before being placed on the trader’s premises. The purchaser and Mr Siaea went for another drive in the vehicle and the purchaser says he repeated his request to Mr Siaea to tell him if the vehicle had been in an accident or was damaged. The purchaser says he emphasised to Mr Siaea that he wanted to buy a safe car. In reply Mr Siaea told the purchaser that if he was buying a vehicle for his daughter he would buy the vehicle. The purchaser says he trusted and believed Mr Siaea’s assurance that the vehicle was undamaged and had not been in an accident.

[5] The purchaser says that on returning to the trader’s premises he agreed to buy the vehicle for $10,250 with the trader allowing $3,000 for his trade-in car; the price to include a service, a groom, a new warrant of fitness and 12 months registration. The vehicle had travelled 143,418kms at the time of sale according to the Consumer Information Notice signed by the parties.

[6] On 10 November 2011 the purchaser collected the vehicle from the trader. He requested a second key for the vehicle but was told that only one key had been supplied when the trader bought the vehicle at auction. The vehicle had not been groomed. The warrant of fitness check sheet given to the purchaser showed the vehicle had been taken for a warrant when its odometer was 143,489kms and there was a warrant of fitness in the windscreen but the purchaser subsequently discovered that the vehicle had failed a warrant on 10 November 2011 for two reasons; the right front park lamp was inoperative and the registration lamp was inoperative and over sprayed with paint. The trader or its repairer I & J Compliance Ltd had not rectified those faults and resubmitted the vehicle for a WOF but had simply left the previous WOF issued on 10 May 2011 on the windscreen without disclosing to the purchaser either that the vehicle had failed its WOF or that the trader’s repairer had failed to remedy the WOF faults.
[7] On 20 November the purchaser says he noticed the underside at the rear of the vehicle was painted roughly and on opening all the doors noticed signs of serious crushing and damage. On 22 November the purchaser took the vehicle back to the trader and asked both Mr Siaea and Mr Bhatnagar to explain the serious damage to the vehicle in the light of the purchaser’s stipulation that he did not want a damaged car. Mr Bhatnagar claimed it was a design feature of the vehicle. In the course of the hearing Mr Bhatnagar acknowledged that he was wrong to make that claim. The trader then offered to repair the damage at its cost and the purchaser and Mr Siaea went to I & J Compliance Ltd, the trader’s panel beater who asked the purchaser to leave the vehicle or bring it back on another day. The purchaser says he decided not to do so.

[8] Following three fruitless visits by the purchaser to the trader’s premises on 23, 24 and 28 November to discuss either the swapping of the vehicle for another or a refund of the purchase price the purchaser sought advice from the Citizens Advice Bureau and spoke to the Tribunal’s Case Manager. He then obtained a report from Brown & Goldfinch Panel and Paint Ltd dated 1 December 2011 in which they state:
“On inspection we found vehicle had been structuly (sic) damage in the rear & had a poor standard of repair that will compromise the safety of vehicle & would be unable to pass a WOF for structual damage.
The r h sill also has damage at front of sill, the l h side has been painted & has excessive orange peel also the underside of rear has been over sprayed due to paint being applied with out any masking
Regards Stephen Brown
Director”
Brown & Goldfinch gave the purchaser an estimate of $3,896.20 to repair the vehicle based on a visual inspection.

[9] On 1 December 2011 the purchaser sent the trader a copy of the Brown & Goldfinch report with a letter rejecting the vehicle claiming it had a serious fault; namely that it has been in a crash. He also claimed that the vehicle was not safe and did not meet his specification that he only wished to buy a vehicle that had not been in a crash. The letter of rejection was dated 30 November but the purchaser says it was not sent to the trader until he received the Brown & Goldfinch report and repair quotation on 1 December 2011. The trader has not responded to the purchaser’s letter of rejection.

[10] On 12 December the purchaser filed his application with the Tribunal a copy of which was sent to the trader by the Tribunal with the standard request under the Motor Vehicle Sales Act 2003 reminding the trader of its statutory obligation to attempt to mediate the dispute with the purchaser within 14 days of the date of receipt of the purchaser’s application. Mr Bhatnagar admitted that the trader has made no attempt to do so because he had been on holiday overseas from mid December 2011 to mid January 2012.

[11] On 16 January 2012 the purchaser obtained a pre purchase inspection report from the AA a copy of which he produces which states under “Inspectors Comments”: “water in boot”. The AA report also records that the ABS warning lamp remains on, the central locking remote does not work, all rims are scrapped and the rear windscreen wiper blade is split. The body condition report notes evidence of collision damage, dented sill panel and paint repairs in bumper.

[12] On 23 January 2012 at the request of the Tribunal the purchaser obtained a written report from VTNZ which confirms the last warrant issued for the vehicle was by Carson Taylor Ford on 10 May 2011 which expires on 10 May 2012. The VTNZ report states that VTNZ performed a WOF inspection on the vehicle on 23 January 2012 and they found three defects that would prevent the vehicle from being issued with a WOF, two of which relate directly to the structure of the vehicle. The three faults are:
“Left front headlight aim incorrect
Damage to the boot area (inside/outside)
Right front sill damage (by front door).”
The WOF check sheet also records that the rear wiper blade is torn, the right rear tie down is bent/damaged, and there is cosmetic damage to the sill rails. The vehicle’s odometer is recorded on the WOF check sheet as 144,250kms.

[13] The purchaser also obtained a more detailed quotation from Brown & Goldfinch dated 23 January 2012 which he produces and which totals $4,804.70.

[14] Mr Bhatnagar for the trader says he was not aware the vehicle had been sold without a warrant of fitness that had been issued within 30 days prior to the date of sale. He says that when he saw the WOF sticker on the windscreen he thought the vehicle had passed a fresh WOF. He only became aware a day or two before the hearing that I & J Compliance Ltd had not repaired the vehicle’s WOF inspection faults identified on 10 November 2011 and resubmitted the vehicle for a recheck.

[15] Mr Bhatnagar says the sales consultant Mr Siaea is no longer employed by the trader and he acknowledges that the purchaser should not have been told by Mr Siaea that the vehicle had not been in an accident and was not damaged because not only was that statement untrue but Mr Siaea had no way of knowing the vehicle’s history.

[16] The trader was requested before the hearing by the Tribunal to produce all receipts and invoices for work done on the vehicle whilst in the trader’s ownership but Mr Bhatnagar was unable to produce the receipt to show the vehicle had been serviced before being supplied to the purchaser. He says the front and rear bumpers had been painted before the vehicle was displayed for sale for cosmetic reasons but he was unable to produce the receipt for that work either.

Issues

[17] The facts raise the following issues:
[a] Whether the vehicle was of “acceptable quality” at the time of sale?
[b] If not, whether the failure is one of substantial character?
[c] If so, whether the purchaser is entitled to reject the vehicle?
[d] Whether the trader misrepresented the vehicle to the purchaser as undamaged?
[e] If so, what remedy is appropriate?

The Consumers Guarantee Act 1993 (“the Act”)

Issue [a]: Whether the vehicle was of “acceptable quality” at the time of sale?

[18] 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.”

[19] The expression "acceptable quality" is defined in s 7 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.”

[20] The guarantee of acceptable quality is in three parts. A set of quality elements set out in s. 7(1)(a) to (e), a reasonable consumer test which applies a consumer’s objective evaluation of those quality elements and a set of factors in s.7(1)( f) to (j) which are to be taken into account by the reasonable consumer to modify his or her assessment of the quality of the goods.

[21] 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/her right to reject the vehicle within a reasonable time.
[22] The vehicle the subject of this dispute was a New Zealand new 2007 Suzuki Swift which had been purchased by the trader at auction and sold to the purchaser for $10,250. Its odometer at the date of sale was 143,418kms according to the CIN but stated to be 1078kms less on the Vehicle Offer and Sale Agreement. The trader said this occurred through its oversight in not updating the figure in the VOSA at the time of sale. The vehicle was represented by the trader’s salesperson as being undamaged and as not having been in an accident. It was sold without a warrant of fitness issued within 30 days prior to the sale date and the last WOF had been issued on 10 May 2011 when the odometer was 123,455kms or 19,963kms before the vehicle was sold to the purchaser. The purchaser has driven only 832kms in the vehicle since purchasing it.

[23] The Tribunal is satisfied on the basis first, of the Brown & Goldfinch report of 1 December 2011, second, the AA report of 16 January 2012 and third, the VTNZ report dated 23 January 2012 that the vehicle has several structural faults caused by accident damage which make it unsafe to be on the road. The Tribunal finds that the structural damage to the vehicle was present at the time of sale and accordingly that the vehicle does not comply with the guarantee of acceptable quality. Significantly the trader’s Sales Manager made no claim at the hearing that the vehicle was of acceptable quality.

Issue [b]: Whether the failure was one of substantial character?

[24] 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 section 18(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."

[25] The Tribunal is satisfied for the reasons given in paragraph 23 (above) that the vehicle is not safe and furthermore that no reasonable consumer aware of the structural damage to the vehicle would have bought it. The quoted cost to repair the vehicle is equivalent to 47% of the cost price of the vehicle. The Tribunal therefore finds the failure to comply with the guarantee of acceptable quality is one of substantial character.

Issue [c]: Is the purchaser entitled to reject the vehicle?

[26] The Tribunal, having found that the failure is one of substantial character is required to consider if the purchaser is entitled to reject the vehicle and obtain a full refund of his purchase price. The Tribunal is satisfied the purchaser complied with his obligation under s 22 (1) of the Act by exercising the right to reject the vehicle by notifying the trader of his decision to reject in his letter dated 30 November 2011 delivered with the Brown & Goldfinch report dated 1 December and he provided the trader with his grounds for rejection: the damaged condition of the vehicle. The Tribunal is also satisfied that the purchaser exercised his right of rejection within a reasonable time of the time of supply. The vehicle was supplied to him on 10 November 2011 and he rejected it on 1 December 2011, within a day of obtaining confirmation from Brown & Goldfinch of the serious damage to the vehicle. The Tribunal will order the trader to refund the full purchase price paid by the purchaser of $10,250.

[27] The vehicle is not in a safe condition to be returned to the trader by the purchaser and the Tribunal will therefore order the trader to uplift the vehicle at its expense after it has refunded the purchaser his full purchase price and consequential losses.

[28] The purchaser is entitled by s 18(4) of the Act to recover from the trader damages for any loss or damage resulting from the failure which was reasonably foreseeable as liable to result from the failure. The Tribunal considers the following items fall into that category:
(a) Fees paid to Brown & Goldfinch for their reports $40.00
(b) Inspection report by AA $147.00
(c) VTNZ WOF fee $51.00
Total $238.00

The Fair Trading Act – misleading conduct

Issue [d]: Whether the trader misrepresented the vehicle to the purchaser as undamaged?

[29] Section 9 of the Fair Trading Act 1986 (FTA) provides:
“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.”

[30] In order to breach s.9 there is no requirement that there be an intention to mislead or deceive. (Taylor Bros Limited v Taylors Textile Services Auckland Limited (1987) (2TCLR 415, at 447)).

[31] For the purposes of s 9 engaging in conduct includes: ‘omitting to do an act” (see s 2(2) of the FTA. In Smythe v Bayleys Real Estate Ltd (1993) 5 TCLR 454 Thomas J held that:
“A defendant’s failure to communicate certain facts or matters is part of a defendant’s conduct and that conduct must be considered as a whole. If, in the circumstances of the particular case, the silence of the defendant is, or is likely to be, misleading or deceptive, his or her omission to communicate the relevant fact is part of the conduct which will fall to be examined under s 9.”

[32] The appropriate approach to determining whether conduct is misleading and deceptive has been recently 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 tot show that the requisite capacity existed.”

[33] The Tribunal has carefully reviewed the purchaser’s evidence about the discussions that he and Mr Siaea had about the vehicle prior to the purchaser agreeing to buy it. The purchaser’s evidence was that on a number of occasions he specifically asked Mr Siaea if the vehicle was damaged and whether it had been in an accident. The Tribunal found the purchaser to be a careful and credible witness and accepts his account of what was said by him to Mr Siaea and Mr Siaea’s replies. The Tribunal, in the absence of any evidence from the trader to the contrary accepts that when asked those two questions Mr Siaea answered that the vehicle was not damaged and that it had not been in any previous accidents. The trader’s representative Mr Bhatnagar told the Tribunal by way of explanation that Mr Siaea should not have told the purchaser that the vehicle was undamaged and that he is no longer employed by the trader.

[34] The purchaser made it clear to the Tribunal that he wanted to upgrade his existing vehicle to a safe accident free undamaged vehicle and he made it very clear that he would not have purchased the vehicle had he known it was accident damaged.

[35] The Tribunal considers that Mr Siaea engaged in misleading conduct by failing to advise the purchaser that the vehicle had in fact been involved in an accident and was damaged. In reaching that conclusion, the Tribunal is satisfied that in the circumstances a reasonable person would have been misled in that situation.

Issue [e]: What remedy is appropriate?

[36] The remedies available for a breach of the Fair Trading Act are discretionary. They are set out in section 43 of the 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."

[37] The Red Eagle case 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?

[38] The Tribunal is satisfied that the purchaser was misled. He gave clear and credible evidence that he was misled that the vehicle had not been accident damaged. As soon as he discovered that the vehicle was damaged he returned the vehicle to the trader and asked Mr Siaea and Mr Bhatnagar for an explanation. On that occasion the trader’s Sales Manager Mr Bhatnagar attempted to deceive the purchaser by telling him that the vehicle was designed like that. The purchaser is clearly not a sophisticated consumer but the untruthfulness of that claim by the trader’s Sales Manager was immediately obvious to him. The trader then offered to have its repairer fix the damage and when the purchaser declined that offer they attempted to swap him out of the vehicle into another. The purchaser’s actions once he learned that the vehicle was damaged are consistent with his claim that he would never have bought the vehicle had he known it was accident damaged.

[39] 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.

[40] The Tribunal has considered whether the purchaser’s actions have contributed to the loss. In other words, did the purchaser do enough to find out for himself whether the vehicle was accident damaged. The Tribunal is satisfied that he did. He asked Mr Siaea and Mr Bhatnagar also assured him the trader’s vehicles were checked before being put on the trader’s yard.

[41] The purchaser wants to reject the vehicle and to receive a refund of the purchase price. In essence he wants the agreement to purchase the vehicle to be un-wound (in legal terms declared void ab initio – ie to be as if it never existed).

[42] In Smith v Tuskers (Yaldhurst Road) Ltd (2002) 10 TCLR 417, Pankhurst J considered the circumstances in which it was appropriate to declare a contract void ab initio. The case concerned the sale of a commercial property. The purchasers had been misled about both the financial position of the tenant and the return on investment that could be expected from the property:

“To my mind whether avoidance of a transaction is the appropriate relief as opposed to

damages will depend upon an assessment of all the circumstances of the particular

case. The starting point is the causative effect of the conduct in question. If the

Smiths had not been misled would they still have purchased the property? I very

much doubt it. The understanding that the tenants were sound is pivotal, I accept, in

their decision to buy this property”

[43] Other factors Pankhurst J went on to consider included the fact that the Smiths were prompt in bringing proceedings and the fact that there were ongoing risks in relation to the investment in the property. Bearing those factors in mind, His Honour exercised his discretion to declare the agreement void ab initio.

[44] In this application the Tribunal intends to exercise the discretion available to it and declare the sale void ab initio. The effect of that order will be that the vehicle is returned to the trader and the purchaser will be refunded the purchase price and his consequential damages of $238 as specified in paragraph 28 (above). Factors the Tribunal has taken into account in deciding to exercise its discretion in that way is that the Tribunal is persuaded that had the purchaser known that the vehicle was accident damaged he would never have purchased it and after he discovered that he had been misled, he took immediate action to return the vehicle to the trader and seek to obtain a refund.

Costs
[45] The Tribunal has limited power to make an award of costs to or against a party to any proceedings under clause 14(1) of Schedule 1 to the Motor Vehicle Sales Act 2003. The relevant provision is as follows:

“14 Disputes Tribunal may award costs in certain circumstances

(1) The Disputes Tribunal may award costs to or against a party to any proceedings before it only if,-

• (a) in the opinion of the Disputes Tribunal,-
  

(i) the proceedings are frivolous or vexatious or ought not to have been brought:

(ii) the matter ought reasonably to have been settled before proceeding to a hearing but that the party against whom an award of costs is to be made refused, without reasonable excuse, to take part in the discussions referred to in clause 5(1)(b) or acted in a contemptuous or improper manner during those discussions; or

(b) any applicant to the Disputes Tribunal, after receiving notice of the hearing, fails to attend the hearing without good cause.
(2) In any case to which subclause (1) applies, the Disputes Tribunal may order a party to pay---

• (a) to the Crown either or both of the following:
  • (i) the reasonable costs of the Disputes Tribunal hearing:
  • (ii) the fees and expenses of any witness that have been paid or are payable by the Crown; or

(b) to another party the reasonable costs of that other party in connection with the proceedings.”

[46] The Tribunal accepts the evidence of the purchaser that the trader did not make any effort to contact the purchaser after his application to the Tribunal was filed to take part in the discussions referred to in clause 5(1)(b) of the Schedule to the Motor Vehicle Sales Act 2003. The Tribunal considers that the matter ought to have been settled by the trader before proceeding to a hearing and will therefore order the trader to pay the Tribunal’s reasonable costs of the hearing of $550.

Orders

1. The purchaser’s rejection of the vehicle under the Consumer Guarantees Act 1993 on 1 December 2011 is upheld.

2.The trader shall pay the purchaser the sum of $10,488 by Bank Cheque made up as follows:
(a) the purchase price of $10,250.00.
(b) consequential damages of $238.00.

3. The trader shall as soon as it has made payment of the sum of $10,488 to the purchaser arrange to collect the vehicle from the purchaser’s home at the trader’s cost.

4. The trader shall within 14 days of the date of this order pay to the Crown at Auckland District Court, Albert Street, Auckland the Tribunal’s reasonable hearing costs of $550.00.

DATED at Auckland this 3rd February 2012.

C.H.Cornwell
Adjudicator