Barnett v Robert Allen Wholesale Limited - Reference No. MVD 141/13 (Auckland) [2013] NZMVDT 114 (17 October 2013)

Last Updated: 18 November 2013

Decision No. AK 96 /2013

Reference No. MVD 141/13

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN JARED ROSS BARNETT

Purchaser

AND ROBERT ALLEN WHOLESALE LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at AUCKLAND on 14 October 2013

APPEARANCES
Mr J R Barnett, the purchaser
Mr S Barnett, support person for the purchaser
Mr R V Allen, director for the trader

DECISION

Background

[1] On 9 February 2013 Mr Barnett (“the purchaser”) bought, sight unseen by auction a 1993 Isuzu Big Horn registration number WB2961 (“the vehicle”) from Robert Allen Wholesale Limited (“the trader”) for $3,300.

[2] The vehicle was advertised by the trader as being “sold with a new WOF” and with “RUC up to date”. After taking delivery of the vehicle the purchaser noticed a number of faults with the vehicle and on 13 February 2013 lodged a complaint with NZ Transport Agency (“NZTA”) against the issuer of the warrant of fitness, Gee J Auto Services & Tyres.
[3] The vehicle was inspected by the NZTA on 25 February 2013. The investigation concluded that the vehicle failed to comply with the requirements for the issue of a WOF and therefore the certification should not have been issued and NZTA took action against Gee J Auto Services & Tyres.

[4] The purchaser seeks to recover from the trader the sum of $992.85 he claims he will need to pay to repair the vehicle to a condition that it will pass a WOF inspection. The purchaser acknowledges that the trader has already paid him $100 towards the cost of replacing a frayed seat belt and $65 for road user charges that were due at the time of sale.

[5] The trader claims first, it was not responsible for issuing the WOF and should not therefore be liable to the purchaser for the costs of bringing it to a WOF standard. Second, the trader says it paid and the purchaser accepted $165 in settlement of the dispute on 14 February 2013 which the purchaser’s agent acknowledged and the trader should not have to pay anything further to the purchaser.

[6] 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.

Issues

[7] The issues are:
[a] Did the trader misrepresent the vehicle to the purchaser?
[b] If so, what remedy is appropriate?
[c] Did the parties agree to settle their dispute?

[8] In terms of s.89 of the Motor Vehicle Sales Act 2003 the Tribunal only 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. The Consumer Guarantees Act 1993 does not apply because the sale of the vehicle took place by auction and s41(3)(a) of the Consumer Guarantees Act excludes that Act from applying to sales by auction.

Issue (a): Did the trader misrepresent the vehicle to the purchaser?

Relevant law

[9] The Fair Trading Act 1986 s 9 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.”

[10] 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.”

Facts
[11] The purchaser claims that the trader misrepresented the vehicle by advertising it on TradeMe as “sold with a new WOF” when in fact the vehicle, although sold with a WOF has since been found not to have met warrant of fitness standards and should not have been issued with a WOF and now no longer has a WOF.

[12] The purchaser says he read the trader’s advertisement on TradeMe before bidding for the vehicle on a “no reserve” internet auction which closed on 7 February 2013. He wanted a vehicle suitable for towing his boat and the fact that the vehicle came with a WOF was important to him. He says he collected the vehicle on 9 February from the trader’s premises in Auckland, paid the $3,300 purchase price and drove it back to Palmerston North. The vehicle had a new warrant of fitness issued by Gee J Auto Services & Tyres on 1 February 2013. The vehicle’s odometer at the time the purchaser bought it was 333,000kms. He says the vehicle drove alright but was “fumey” and he noticed on lifting the bonnet that that there was a leak in the manifold and the exhaust flange was leaking and missing a bolt. He also noticed that the power steering pump was leaking, the tyres exceeded the guards and the driver’s seat belt was frayed. The purchaser lodged a complaint with the NZTA regarding the issue of the WOF which has been upheld. NZTA found when they inspected the vehicle in Palmerston North:
1. The driver’s seat belt was frayed approximately 300mm along the edge of the belt.
2. The power steering has a fluid leak.
3. There is a leak of exhaust fumes from the exhaust system. There is a missing bolt on the flange joint.
4. All the tyres have their tread pattern sitting outside of the OE guards by 15-20mm.
5. The headlamps are out of alignment.
6. The alternator mounting bolts are either loose or missing.
7. All four tyres have part of the tyre size missing from side walls.
8. There is significant corrosion on the underside of the rear cross member.

[13] However after it had completed its investigation the NZTA sent the WOF issuer notice on 8 May 2013 that the vehicle failed to comply with the following requirements for the issue of a WOF namely:
1. Driver’s seat belt frayed approximately 300mm along edge of belt
2. Right hand headlamp out of alignment
3. Structural corrosion in rear cross member.

[14] The purchaser or his partner (the purchaser was unclear who had done so) contacted the trader who lodged $165 into the purchaser’s bank account on 14 February, details of which were provided by the purchaser’s partner to the trader on 13 February. The payment was $65 for outstanding road user charges that the trader had underpaid and $100 for the frayed seat belt. The trader produced an email from the purchaser’s agent Megan Christison thanking the trader for that payment and the purchaser also placed positive feedback on the trader’s TradeMe account regarding the transaction on 28 February 2013.

[15] The purchaser produced a quotation from Thomas Rowe Motor Engineer Ltd of $992.85 to fit flares to the vehicle, replace the seat belt, weld a patch into the cross member, reface the manifold, remove the turbo and manifold and replace bolts and a gasket.

[16] The Tribunal considers that the trader’s promise in its advertising that it would supply a new WOF with the vehicle cannot be considered to have been discharged where the warrant of fitness supplied by the trader with the vehicle has subsequently been found not to have been properly issued because of the existence of three faults, namely the frayed driver’s seat belt, the headlamp out of alignment and corrosion in the rear cross member. The Tribunal has little doubt, given that the re-examination of the vehicle took place in Palmerston North so soon after the vehicle had been supplied to the purchaser that the other faults listed in paragraph 12 (above) were probably also present when the vehicle was sold and each of these will prevent the vehicle getting a warrant of fitness until they are remedied.

Conclusion

[17] The Tribunal finds that the trader’s conduct in supplying the vehicle with a warrant of fitness which has subsequently been found by NZTA to be one which should not have been issued by the trader’s warrant of fitness issuer was misleading conduct by the trader. The Tribunal finds that the purchaser was misled into thinking the vehicle was of warrant of fitness safety standard. It follows that the Tribunal does not accept the trader’s defence that it complied with its obligation to the purchaser by obtaining a warrant of fitness. The Tribunal considers that every trader who supplies a warrant of fitness for a vehicle is ultimately responsible to the purchaser of that vehicle for the validity and the quality of the inspection process that precedes the issue of that warrant. Traders need to be discouraged from using inexperienced, incompetent or careless warrant of fitness issuers.

Issue (b): What remedy is appropriate?

[18] 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."

[19] 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?

[20] 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 now requires remedial work in order to be obtain a warrant of fitness. The Tribunal notes that the trader has already given the purchaser $100 towards the cost of replacing the frayed driver’s seat belt and therefore considers that the appropriate remedy is for the trader to pay the purchaser $992.85 as quoted by Thomas Rowe Motor Engineer Ltd less the value of one hours’ labour of $60 plus GST to fit the seatbelt and the cost quoted for the seatbelt of $80 and GST leaving a balance payable to the purchaser of $815.90.

Conclusion

[21] The trader will be ordered to pay the purchaser $815.90 in damages.

Issue (c):Did the parties agree to settle their dispute by the trader’s payment of $165?

Relevant law

[22] The Tribunal understands the trader’s defence to the purchaser’s application is one of accord and satisfaction; the trader says that the parties agreed to settle any claim the purchaser had against the trader by the trader paying the purchaser $165 on 13 February 2013 and that sum was accepted by the purchaser’s agent in full settlement.

[23] Accord and satisfaction has been judicially defined in British Russian Gazette Ltd v Associated Newspapers Ltd [1933] 2KB 616 at 643-644 as “the purchase of a release from an obligation, whether arising under contract or tort, by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative.

Facts
[24] The trader claimed that he had a conversation with the purchaser soon after he bought the vehicle regarding the frayed seat belt and road user charges in which he agreed to pay the purchaser $165. The purchaser was unable to provide any details regarding that conversation.

[25] The trader produced a copy of an email dated 13 February 2013 from Megan Christison the purchaser’s partner to the trader providing the trader with the purchaser’s bank account details and the email ended:
“Thanks heaps for all of your help with everything.”

[26] The trader says that on 13 February 2013 he replied to Megan Christison’s email by email and he produced a copy which states:
“Hi Megan
All good, hopefully all is well and you’ll be placing some happy feedback
Please confirm the amount to be paid back to him including the outstanding RUC that I underpaid. Sorry about the mix-up with that- Human error!
Thanks again
Robert Allen Director”

[27] On 14 February 2013 the trader lodged $165 to the purchaser’s bank account.

[28] On 28 February the purchaser or his partner Miss Christison placed the following feedback on the trader’s TradeMe account:
“Aries209 28 Feb 2013
Good trader. Good communication. Had a few things wrong but very helpful in getting it sorted.”

[29] The Tribunal accepts that the trader paid the purchaser $165 and that this was a payment for road user charges and the frayed seat belt. However the Tribunal is unable to find any evidence from the exchange of emails which the trader produced of the formation of an agreement between the parties. That agreement needed to be one whereby the payment of $165 was to be made by the trader in full satisfaction of any claim the purchaser might have had against the trader in respect of the sale of the vehicle to the purchaser. Hence there was no accord.

Conclusion on issue (c):

[30] The Tribunal is not satisfied that there was an accord and satisfaction between the parties. There is no evidence that the parties agreed to settle their dispute over the vehicle by the trader’s payment of $165 on 14 February 2013.

Order

The trader shall pay the purchaser $815.90 immediately.

DATED at Auckland this 17 October 2013.

C.H.Cornwell
Adjudicator