Halliwell v I. Autos Direct Limited - Reference No. MVD 78/2014 (Auckland) [2014] NZMVDT 59 (30 May 2014)

Last Updated: 17 June 2014

Decision No:AK 53/2014
Reference No. MVD 78/2014

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN STEVEN JAMES FRANCIS HALLIWELL

Purchaser

AND I. AUTOS DIRECT LIMITED

Trader

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

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

HEARING at Auckland on 26 May 2014

APPEARANCES

Mr S J F Halliwell, the purchaser

Mr I Vaana, director, representing the trader

DECISION

Background

[1] On 10 December 2013 Mr Halliwell (“the purchaser”) bought a 2002 Ford Falcon XR6 registration HES188 (“the vehicle”) from I. Autos Direct Limited (“the trader”) for $10,995. The purchaser seeks to recover $1,099.40 for repairs and a service he claims he did to the vehicle before the purchaser returned the vehicle to a finance company on 3 April 2014. He also seeks compensation from the trader because he claims he paid more than a reasonable price for the vehicle.

[2] The trader says the purchaser is not entitled to recover any of his repair costs for two reasons. First, because when the purchaser bought the vehicle he told the trader that he was buying the vehicle for his lawn mowing business and he contracted out of the Consumer Guarantees Act. Second, because the purchaser never required the trader to repair the vehicle before incurring any repair costs.

[3] Prior to the commencement of the hearing the Tribunal appointed Mr Gregory as the Tribunal’s assessor and he 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.

The Issues

[4] The issues are:
[a] Whether the parties agreed to exclude the Act because the purchaser acquired the vehicle for the purpose of a business?
[b] If the Act has not been excluded was the vehicle of acceptable quality within the meaning of s6 of the Consumer Guarantees Act 1993 (“the Act”) when it was supplied to the purchaser?
[c] If not, did the purchaser require the trader to remedy any faults?
[d] If so, is the purchaser entitled to any of his claimed repair costs?

[5] The purchaser sought to obtain compensation from the trader for the amount he claimed he had overpaid for the vehicle being the difference between the sale price of $10,995 and the value that Car Valuations NZ Ltd had valued the vehicle in a report prepared for Avanti Finance Ltd on 30 January 2014 of $2,500 to $3,000. The Tribunal explained to the purchaser both prior to and at the hearing that the Tribunal does not have jurisdiction to deal with contract based claims and that the Guarantee as to price (s 11 of the Act)) does not apply where the price is determined by contract as had occurred in this transaction.

Issue [a]: Whether the parties agreed to exclude the Act because the purchaser acquired the vehicle for the purpose of a business?

Relevant Law

[6] Section 43(1) and (2) of the Act provides as follows:

43 No contracting out except for business transactions
(1) Subject to this section and to sections 40, 41 and 43A, the provisions of this Act shall have effect notwithstanding any provision to the contrary in any agreement.
(2) Nothing in subsection (1) shall apply to an agreement made between the supplier and a consumer who acquires, or holds himself or herself out as acquiring, under the agreement, goods or services for the purposes of a business provided either—
(a) that the agreement is in writing; or
(b) where it is not possible to conclude an agreement in writing because the supplier is unaware of the acceptance by the consumer of the supplier’s offer at the time of acceptance, that the supplier has clearly displayed the terms and conditions of the service at every place of the supplier’s business.”

[7] The purchaser and the trader signed a Vehicle Offer and Sale Agreement dated 10 December 2013 in the standard form supplied to traders by MotorWeb Services Ltd which contains the following provision:

“Consumers (sic) Guarantees Act 1993
It is a condition of sale that the Consumers Guarantees Act 1993 will not apply to any Goods or Services acquired for business purposes. To the extent permissible by law the provisions of the Consumers Guarantees Act 1993 do not apply to this Agreement. Any warranty is restricted to that warranty (if any) provided by the manufacturer of the vehicle.”

[8] In Kerry Stone Ltd v Knowles [2006] NZHC 1289; [2007] DCR 318, (2006) 11 TCLR 768, Venning J held that provisions in standard form contracts which require the consumer to declare that they are acquiring goods or services for business purposes will have evidential value only and are unlikely to be conclusive as to business purpose in the absence of supporting evidence as to business purpose or holding out.

Application of law to facts

[9] The purchaser told the Tribunal that his employer at the time he bought the vehicle provided him with a Mercedes vehicle to enable him to get to and from his work. He also told the Tribunal that he had purchased the vehicle for two purposes; first, to enable him to carry on a lawn mowing business in the weekends and that he has eight customers for whom he mows lawns. Second, the purchaser says he has a young family and wanted to use the vehicle for private use. The trader told the Tribunal that the purchaser told him he wanted a vehicle with a tow bar and a large boot so as to carry his mower and tools for his lawn mowing business. The trader produced a business card which he says the purchaser handed to him when he bought the vehicle which shows the purchaser’s name and contact details on a printed business card in colour bearing the name “Steves Lawnmowing” and the purchaser’s name as the owner and his contact details. The reverse of the card invites readers to call or email the purchaser for a free quote. The trader claims the purchaser told him the vehicle was to be used 70% for his lawn mowing business and 30% for personal use.

[10] The Tribunal accepts that the purchaser told the trader that he intended to use the vehicle partly for his weekend lawn mowing business but doubts that this was discussed as being on the basis of 70% business use and 30% private use as the trader claimed. The Tribunal considers that the part time nature of the purchaser’s business coupled with his private use of the vehicle does not result in the vehicle being ”acquired for the purpose of a business” within the definition of s43(2) of the Act.

Conclusion on issue [a]:

[11] The Tribunal is not satisfied that the provisions of the Act were excluded by agreement between the parties.

Issue [b]: Was the vehicle of acceptable quality within the meaning of s6 of the Act when it was supplied to the purchaser?

Relevant law

[12] Section 6 of the Act imposes on a supplier "a guarantee that the goods are of acceptable quality." Section 2 defines "goods" as including "vehicles.”

[13] The expression "acceptable quality" is defined in s 7(1) 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 obtain 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.”

Application of law to facts

[14] The purchaser bought the vehicle from the trader for $10,995 on 10th December 2013. Its odometer was written on the VOSA and CIN as 180,000kms. The vehicle was supplied with a warrant of fitness issued by VTNZ Mt Wellington the previous day. The vehicle had passed compliance inspection by VINZ on 6 November 2013 when its odometer was recorded as 180,289kms. The purchaser claimed that all four tyres needed replacing in April 2014 and he produced photographs showing the condition of each tyre. The Tribunal’s Assessor who is a WOF inspector says that from the appearance of the tyres in the photographs he thinks that three of the four tyres would probably have met WOF standards. However the purchaser, without first requiring the trader to replace the tyres, elected to replace them in the interests, he said, of his family’s safety, with four new tyres costing $139 each on 1 April 2014. He also replaced the battery at the same time at a cost of $180. He did not require the trader to replace the battery before doing so.

[15] In deciding whether the vehicle complied with the guarantee of acceptable quality in s6 of the Act has had regard to the nature of the vehicle: here a 12 year old imported Ford falcon XR6 with 180,000kms, its sale price of $10,995 and the fact that the vehicle was sold with a new warrant of fitness. There was no reliable evidence produced by the purchaser to show the tyres or the battery were faulty either at the time of sale or on 1 April 2014 when the purchaser elected to replace them. The Tribunal is unable to find that the vehicle did not comply with the guarantee of acceptable quality in s6 of the Act.

Conclusion on issue [b]:

[16] The purchaser did not establish that the vehicle he bought from the trader failed to comply with the guarantee of acceptable quality and accordingly his application for his repair costs must be dismissed. The Tribunal also notes that even if it had found that the vehicle had not complied with the guarantee of acceptable quality it would not have been able to order the trader to pay the purchaser’s costs of replacing the tyres and battery because the purchaser did not comply with his obligations under s18(2)(a) of the Act and require the trader to replace those items before he went ahead and had the tyres and battery replaced.

Order

The purchaser’s application is dismissed.

DATED at Auckland this 30th May 2014

C H Cornwell
Adjudicator