Sutcliffe v Moyes Motor Group Limited - Reference No. MVD 251/11 (Auckland) [2012] NZMVDT 8 (10 February 2012)

Last Updated: 21 March 2012

Decision No. AK 8 /2012

Reference No. MVD 251/11

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN JAMES MARK SUTCLIFFE

Purchaser

AND MOYES MOTOR GROUP LIMITED

Trader

BEFORE THE AUCKLAND MOTOR VEHICLE DISPUTES TRIBUNAL

Mr C H Cornwell, Barrister & Solicitor, Adjudicator
Mr S Gregory, Assessor

HEARING at Auckland on 7 February 2012

APPEARANCES
Mr J M Sutcliffe, the purchaser
Mr M Siailis, Sales Manager representing the trader
Mr M Muriwai, Assistant Manager, witness for the trader

DECISION

Background

[1] On 27 November 2011 Mr Sutcliffe (“the purchaser”) agreed to purchase a 2009 Holden Commodore SV6 registration number FDR905 (“the vehicle”) for $36,995 from Moyes Motor Group Limited (“the trader”) The purchaser wishes to reject the vehicle because he alleges that he was misled by the trader as to the distance the vehicle had travelled.

[2] The trader admits that it inserted an incorrect odometer reading for the vehicle in both the vehicle offer and sale agreement and the consumer information notice but claims that the purchaser was told the true distance the vehicle had travelled before he bought the vehicle.

[3] Prior to the commencement of the Tribunal’s inquiry, the Tribunal appointed Mr Gregory 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 Gregory assisted the adjudicator but the application was determined by the adjudicator alone.

Facts

[4] The purchaser gave evidence that he, his wife and a friend, Mr Pryce travelled from Napier to Auckland on 27 November 2011 to buy a late model Holden vehicle. The purchaser says his criteria were that the vehicle have less than 60,000kms on its odometer and, allowing for a trader-in of his 2005 Holden Astra, paying no more than an additional $20,000 in cash. The purchaser says he visited a number of motor vehicle traders specialising in Holden vehicles around Auckland and finally visited the trader.

[5] The purchaser says he informed Mr Munn the trader’s salesman of his requirements. He then test drove a 2008 Holden Calais which had 68,000kms on its odometer before test driving the vehicle. The purchaser says he relied on “the paperwork” in particular the Consumer Information Notice displayed in the vehicle which he signed and produces which shows the vehicle’s odometer was 60,606kms.

[6] The purchaser says that in the course of test driving the vehicle he did not activate the stalk control which displays various information in the instrument panel including the current odometer; had he done so the vehicle’s odometer would have been immediately obvious to him. He also denies that in the course of inspecting the vehicle which he did on both 27 November and the following day when he went back to the trader’s premises to collect the vehicle that he did not notice, on opening the door, the odometer which then appears in the vehicle’s instrument panel.

[7] The purchaser agreed on 27 November to purchase the vehicle for $36,995 with the trader agreeing to pay the purchaser $18,745 for his Holden Astra leaving a balance, with a $20 registration fee of $18,270. The purchaser paid a deposit by eftpos of $2,000 on 27 November and returned on 28 November and paid the trader the balance of $16,270. On 27 November when he signed the Vehicle Offer and Sale Agreement (“VOSA”) and the Consumer Information Notice (“CIN”) the purchaser acknowledged in both documents the odometer was 60,606kms. The parties also signed a Promise Sheet by which the trader agreed to fix impact damage on the front offside wheel, provide a new warrant of fitness, groom the vehicle and service it. No agreement was apparently made as to what work was to be done as part of the service.

[8] On 28 November the purchaser, his wife and friend returned to the trader’s premises in the early afternoon at a time the trader had promised to have the vehicle ready for collection. Apparently the vehicle was not ready, the back seats had not been groomed and the vehicle’s air filter was inspected by the purchaser and found to be dirty. The vehicle was eventually delivered to the purchaser who says that whilst driving it back to Napier he discovered, after driving for an hour to 90 minutes and whilst experimenting with the digital display that the true mileage of the vehicle was 65,408kms. He says he would never have purchased the vehicle had he known that was the true mileage.
[9] The purchaser says he thinks that he tried to contact Mr Munns the trader’s salesman the next day but Mr Munns was unavailable. This is disputed by the trader who claims he did not contact it until 1 December to inform it that the odometer was not correctly recorded on the VOSA and CIN. At that time there was a discussion between the purchaser and the trader’s assistant sales manager Mr Muriwai as to what the purchaser wanted. The purchaser says that Mr Muriwai offered him a $200 MTA voucher and a free vehicle service. The purchaser says he was not happy with that offer and told Mr Muriwai he would need to discuss it with his wife.

[10] The purchaser says he had further telephone conversations with Mr Muriwai in the first week of December in which he was orally offered $1000 by the trader and made a counter-offer of $4,000 as compensation. He then says there were several email exchanges with the trader in which the trader claimed, for the first time in an email to him on 5 December that its salesman Mr Munns told the purchaser the actual kilometres travelled although the salesman had by oversight not corrected the paperwork. The next day Mr Muriwai also wrote an email to the purchaser saying that its sales manager Marios Siailis had advised the purchaser of the kilometres of the two vehicles he had inspected. The purchaser denied in an email dated 6 December to the trader that Mr Munns or Mr Siailis had ever pointed out the incorrect odometer reading.

[11] The purchaser says he was told by the trader that it had sold his trade in vehicle the next day. He wants a refund of his purchase price because he says he would not have purchased the vehicle had he known it had travelled 65,000kms because he wanted a vehicle with only about 60,000kms on its odometer. Prior to the hearing the Tribunal sent a direction to the purchaser asking him to provide two written valuation reports from Holden dealers as to the difference between a 2009 Commodore SV6 with 60,606kms and the same car with 65,408kms on the odometer. The purchaser chose not to do so. The purchaser says the vehicle’s certificate of registration which he produces shows that on 1 September 2011 the vehicle had travelled only 54,694kms so between the time it was purchased by the trader and sold to him it had travelled 10,714kms in a little more than 2 months.

[12] In reply to questions from the Assessor the purchaser says he did not arrange for a pre purchase check of the vehicle and says he may have been naïve but he had no reason to disbelieve what was on the CIN. He agrees that he was willing to purchase a vehicle with over 60,000kms because the CIN showed the vehicle as having travelled 60,606kms but says that he would not have purchased a vehicle over 61,000kms. The purchaser says he neither checked the vehicle’s service handbook nor the service sticker on the vehicle’s windscreen both of which would have indicated when the next service was due.
The purchaser says he is still using the vehicle which has now travelled 67,400kms.

[13] Mr Siailis the trader’s sales manger says the trader made a genuine mistake in not updating the vehicle’s CIN after putting the vehicle on its yard in September. He admits that it got the paper work wrong and that CINs are regularly checked to ensure they are accurate and that it is the salesman’s job to check to see they are accurate when the vehicle is sold. He agrees that this could not have happened in the case of the vehicle sold to the purchaser which he also agrees was a vehicle driven by staff.

Issues

[14] The facts raise the following issues:
[a] Whether the trader misrepresented the vehicle to the purchaser?
[b] If so, what remedy is appropriate?

The Fair Trading Act – misleading conduct

Issue [a]: Whether the trader misrepresented the vehicle to the purchaser?

[15] 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.”

[16] 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)).

[17] 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.”

[18] 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.”

[19] The purchaser’s evidence was that the trader had omitted to update the CIN it placed on the vehicle to show its accurate mileage at the time the vehicle was displayed for sale. That the purchaser, believing he was dealing with a reliable trader relied on the accuracy of the contents of the CIN and was misled into thinking the vehicle had only travelled 60,606kms whereas it is common ground that the vehicle had travelled 65,408kms. The purchaser says he would not have bought the vehicle had he known its true distance travelled because the parameters he had set himself were to buy a vehicle with about 60,000kms on its odometer. The trader does not deny that the CIN was wrong but claims first that the purchaser should have seen what the odometer was and also says that Mr Munns and Mr Siiailis told him what the vehicle’s correct odometer was.

[20] The Tribunal considers that the trader engaged in misleading conduct by falsely stating on the CIN the vehicle’s odometer and understating its true odometer reading by approximately 4,800kms. The Tribunal prefers the evidence of the purchaser that he was not told what the true odometer was to the evidence given by Mr Siailis which lacked any credibility. Significantly the trader chose not to have Mr Munns present at the hearing to give evidence on its behalf. In reaching that conclusion, the Tribunal is satisfied that in the circumstances a reasonable person would have been misled.

[21] The trader produced, as evidence of the loss or damage the purchaser may have incurred, an email dated 4 February 2012 from Mr Sheppard the Dealer principal of Ebbett Pukekohe in which Mr Sheppard states “I believe the difference in trade value between 60,000km and 65,000km would be roughly $1000 depending on condition and the market at the time”.

Issue [b]: What remedy is appropriate?

[22] 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."

[23] 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?

[24] The Tribunal is satisfied that the purchaser was misled and that the trader’s conduct was an effective cause of the purchaser’s loss or damage.

[25] 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.

[26] The Tribunal is also required to consider whether the purchaser’s actions have contributed to the loss. In other words, did the purchaser do enough to find out for himself what the vehicle’s odometer was before he agreed to buy the vehicle? The Tribunal is satisfied that he did not. He took the vehicle for a test drive after spending time that day looking at similar vehicles at other trader’s yards. Although telling the Tribunal that his goal was to buy a vehicle with less than 60,000kms on its odometer he failed to activate the vehicle’s display screen controller by pressing a stalk on the side of the steering wheel which would have immediately shown the odometer reading. He failed to observe the odometer reading which is visible when the vehicle’s door is opened. He failed to enquire of the trader as to what the vehicle’s odometer reading was. He also failed to check what the odometer reading was before he signed his agreement to the details in the VOSA and CIN. The Tribunal considers that any reasonable purchaser who was determined to buy a vehicle with less than 61,000kms would have paid a great deal more attention to the vehicle’s odometer and made a point of checking it rather than simply relying on the CIN.

[27] 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).

[28] 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”

[29] 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.

[30] In this application the Tribunal does not consider that it is appropriate to exercise the discretion available to it and declare the sale void ab initio and that the more appropriate remedy is damages. The Tribunal’s reasons are first, that the purchaser has suffered only nominal loss by the incorrect odometer reading and did not provide, as the Tribunal requested he do, evidence to support the difference in value between a vehicle of this age and type with 60,606kms on its odometer and one with 65,408kms on its odometer. Secondly, the purchaser contributed to his loss by failing to take reasonable steps to satisfy himself as to what the correct odometer reading of the vehicle was. Third, the Tribunal was not persuaded that had the purchaser known that the vehicle’s odometer was 4,802kms more than was printed on the VOSA and CIN he would not have purchased it. The Tribunal has decided to make an order for damages.

[31] In the absence of any evidence submitted by the purchaser as to the difference in value between a 2009 Holden Commodore SV6 with 65,408kms on its odometer and the same vehicle with 60,606kms on its odometer the Tribunal accept the evidence tendered by the trader from Mr Sheppard of Ebbett Pukekohe that the difference would be roughly $1,000. The Tribunal has therefore decided that the trader should pay the purchaser the sum of $1,000 as damages reduced by 25% for the purchaser’s contributory negligence. The trader will therefore be ordered to pay the purchaser the sum of $750.

[32] After the hearing the purchaser sent the Tribunal a claim for his travelling expenses to attend the hearing totalling $327.52 and a claim for the filing fee of $51.11. The Tribunal’s has a limited ability to make an order for costs under cl 14 of Schedule 1 to the Motor Vehicle Sales Act 2003. The Tribunal has discretion to award costs where, in its opinion the matter ought reasonably to have settled but the party against whom an award of costs is to be made refused, without reasonable excuse, to take part in mediation discussions. In this application the Tribunal thinks the trader was willing to mediate but the purchaser insisted on returning the vehicle. The Tribunal has therefore decided it is unable to award the purchaser his travelling costs or filing fee.

Order

The trader shall pay the purchaser $750.

DATED at Auckland this 10th February 2012.

C.H.Cornwell
Adjudicator