Struthers v Ingham Motors Wellington Limited Reference No. MVD 154/15 (Wellington) [2015] NZMVDT 139 (21 October 2015)

Last updated: 15 December 2015

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL



Reference No. MVD 154/15 (WN)

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN BENJAMIN JOEL STRUTHERS

Purchaser

AND INGHAM MOTORS WELLINGTON LIMITED

Trader



MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator
D Binding – Assessor

HEARING at Wellington on 6 October 2015
DATE OF DECISION 21 October 2015

APPEARANCES

B J Struthers, Purchaser

B C Loxton, Dealer Principal for Trader
G C Tully, Witness for Trader

DECISION

Mr Struthers’ application is dismissed.

REASONS

Introduction

[1] The purchaser of a new Mitsubishi Challenger discovered after purchasing the vehicle that it needs to be serviced every six months to comply with the terms of its warranty. He had assumed the vehicle would only have to be serviced once a year and is concerned about the additional cost of the extra servicing required. He claims to have been misled and seeks to recover from the trader the additional cost.
[2] This claim raises the following issue – has the trader engaged in misleading and deceptive conduct in its dealings with the purchaser in relation to the required service interval for the vehicle?

Background

[3] On 27 January 2015, Mr Struthers agreed to purchase a new Mitsubishi Challenger 7 seat model from Ingham Motors Wellington Limited, trading as Wellington Mitsubishi (“Ingham”).
[4] The vehicle was to be sourced from overseas and needed to have extras fitted so it was not delivered until 4 March 2015.
[5] Mr Struthers’ evidence was that Ingham did not advise him of the required service interval for the vehicle either prior to his purchasing it, or on its delivery.
[6] Mr Tully was the salesman who sold the vehicle to Mr Struthers. His evidence was that, on 24 January 2015, Mr Struthers and his family came into the dealership to inspect a demonstration model similar to the vehicle Mr Struthers was considering purchasing. Mr Tully told the Tribunal that he explained to Mr Struthers that it had a five year warranty plus a ten year powertrain warranty. Mr Tully also explained that, to ensure this warranty remains valid, the vehicle must be serviced in accordance with the manufacturer’s specified service interval. For this vehicle the specified interval is every six months or 15,000 km.
[7] Mr Tully said that he had sold several vehicles of this model and he always explained to purchasers this shorter service interval requirement. He said that the warranty was a big selling tool as it was the only five/ten year warranty on the market. In order to keep the contractual warranty valid, however, the vehicle must be serviced to the manufacturer’s specifications.
[8] Mr Tully’s evidence was that he repeated this information about the warranty and service interval requirements when the vehicle was delivered to Mr Struthers on 4 March 2015. Mr Tully also recalled advising Mr Struthers that the Mitsubishi Service Centre was located close to Mr Struthers’ residence and that he might wish to make himself known to a particular staff member there and build a relationship with him so that, when it was time for the vehicle to be serviced, he could obtain a loan car. Mr Tully was sure that he had given Mr Struthers this information because he was thoroughly familiar with the service requirements for this type of vehicle, and his practice is to provide such information to every purchaser he deals with.
[9] Unfortunately, on 9 March 2015 a letter was sent to Mr Struthers which incorrectly stated: “Mitsubishi recommends your vehicle has its first service at 1 month or 1500 km, and thereafter at every 15000 km or once every 12 months”. This letter was signed by Mr Tully.
[10] Mr Struthers said that this letter was consistent with what he had thought all along during the purchase process. As nothing relating to the servicing schedule had been discussed and, in his experience, a 12 month service interval is standard for a new vehicle, he thought the letter was correct. He was anticipating having to pay for one service per year, which he was happy to do.
[11] Then, early in May 2015, Mr Struthers received a customer care phone call from Mitsubishi asking him about his experience with the vehicle and inquiring whether the warranty and servicing plan had been explained. Mr Struthers replied that these matters had not been explained to him. The Mitsubishi representative on the phone then told him that, in addition to the initial service, the vehicle would require servicing every 15,000 km or six monthly, whichever came first, because it was classed as a light commercial vehicle. The consequence of this was that twice as many services as Mr Struthers expected would be required (20 over the ten year warranty period, excluding the initial service). Mr Struthers was concerned about this as he had not had it explained to him at the dealership; nor was it included in the brochures he was given there.
[12] Mr Struthers took the 9 March letter into Ingham on 9 May 2015. One yard salesman he spoke to indicated that the letter was correct but then went to check with the Manager, Mr Loxton. Mr Loxton came out to see Mr Struthers and told him it was a mistake. He took a copy of the letter and assured Mr Struthers that he would call him during the week to sort the issue.
[13] On 8 June 2015, Mr Loxton emailed Mr Struthers and confirmed:

• (a) the correct service interval is 15,000 km or once every six months;
• (b) that Mr Tully indicated this information to Mr Struthers at the time of delivery;
• (c) there was a glitch in Ingham’s automated customer letter system and that he sincerely apologised for the misunderstanding this has caused;
• (d) that Mr Loxton was happy to collect the vehicle when it needed servicing so that he would not be inconvenienced.

[14] Mr Struthers responded on the same day to indicate that the salesman did not mention the service interval being six monthly and that the first time he had heard about this was when he received the phone call from customer care. Mr Struthers said that, if this information had been explained to him prior to purchase, he would probably have looked at buying a different vehicle or he may have gone elsewhere to purchase a vehicle. Mr Struthers said that he did not see why he should have to meet the cost of the additional servicing required.
[15] Mr Struthers came into the Ingham dealership to discuss the matter further, following which Ingham offered to pay for every second service for three years (ie, three services would be free of charge).
[16] After Mr Struthers filed an application to the Tribunal, Ingham revised its offer to Mr Struthers and said that it would meet the costs of every second service on the vehicle for the next five years (ie, five services would be free of charge).
[17] Both offers were rejected by Mr Struthers.
[18] In his submission to the Tribunal, Mr Struthers also pointed out that a Mitsubishi Motors New Zealand recommended retail price list was provided to him by Mr Tully, which listed the Challenger 7 seat model that Mr Struthers purchased as a car, not as a light commercial vehicle. However, as Mr Tully pointed out, this grouping on the price list does not govern the service interval requirements for the vehicle. In any event, the Challenger was not the only model listed as a “car” on the price list which has a six month service interval.
[19] Ingham also supplied the Tribunal with a copy of the service plan and warranty manual that was in the vehicle when it was delivered to Mr Struthers. This document clearly refers to the 15,000 km/six monthly service interval. Mr Struthers told the Tribunal that he had not looked at this document prior to the vehicle’s delivery.

Has the trader breached the Fair Trading Act?

[20] As I explained to Mr Struthers during the hearing, this complaint does not raise any quality issues relating to the vehicle and none of the guarantees in the Consumer Guarantees Act 1993 is in issue in this case.
[21] Nor does this Tribunal have jurisdiction to evaluate whether Ingham (or Mitsubishi Motors New Zealand) is justified in requiring its customers to have their vehicles serviced every six months, as a condition of maintaining their contractual entitlement to the Mitsubishi warranty.
[22] Rather, the Tribunal’s jurisdiction to consider Mr Struthers’ claim arises under the relevant provisions of the Fair Trading Act 1986.^[1]
[23] The Act provides that “no person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive”.^[2]
[24] Misleading or deceptive conduct can involve an omission.^[3] The omission need not be deliberate.^[4] So, in theory, if Ingham omitted to provide relevant information about the servicing requirements for the vehicle, that could give rise to a breach of s 9 of the Act.
[25] When assessing relevant conduct to determine whether the Act has been breached, it is necessary to have regard to the overall conduct, and not focus too closely on the individual components of that conduct.^[5]
[26] The overall conduct relevant to whether Ingham misled Mr Struthers in relation to the required service interval for the vehicle includes the purchase and delivery transactions for the vehicle, the service plan and warranty handbook provided with the vehicle, the erroneous letter stating there was a 12 month service interval, the retail price list, and the phone call and discussions with Ingham concerning the correct service interval.
[27] There is conflicting evidence whether Mr Struthers was told during the purchase and delivery transactions about the six month service interval. However, I found Mr Tully’s evidence to be credible and convincing on this question, particularly in light of his established practice of making it clear to all of his customers what the relevant service interval is. I also think that it is possible that, as Mr Tully suggested, Mr Struthers may simply have innocently failed to absorb this information in the midst of a transaction in which he would have been provided with a lot of different information at the same time.
[28] Accordingly, I find that Mr Struthers has not proved on the balance of probabilities that Ingham omitted to tell him what the required service interval for the vehicle was.
[29] The letter that Mr Struthers received dated 9 March 2015 contained incorrect information about the service interval for the vehicle. This letter, looked at on its own, was misleading. But, as explained, the letter needs to be looked at in the context of the overall transaction and all information provided to Mr Struthers relating to the service interval. As well, the letter plainly cannot have influenced Mr Struthers’ decision to purchase the vehicle, as it was sent and received after the sale and purchase and delivery of the vehicle had taken place. Once Ingham became aware that incorrect information had been accidently provided, it ensured Mr Struthers had the correct information about the six monthly service interval.
[30] The retail price list describing the vehicle as a “car” does not assist Mr Struthers, in my view. That document says nothing about the relevant service interval for the vehicle.
[31] The service plan and warranty manual provided with the vehicle clearly states that the vehicle has a six monthly service interval. This document reinforces that there was no real ambiguity about the applicable service interval, apart from the incorrect letter that was sent to Mr Struthers on 9 March 2015.
[32] The phone call and discussions with Ingham confirm that, when it became aware that the incorrect letter had been sent, Ingham took immediate steps to ensure Mr Struthers had the correct information.
[33] Standing back, Mr Struthers argues that he was influenced in his purchase of the vehicle by an assumption that he had made regarding the applicable service interval. But I do not consider that Mr Struthers’ assumption that the vehicle would have a 12 month service interval was a safe assumption in any event. Twelve months may be a reasonably common service interval for new vehicles. But the Assessor has confirmed that it is not uncommon for new vehicles, particularly larger diesel 4x4 vehicles such as the vehicle in question, to have shorter service intervals than a standard passenger car.
[34] I do not think that this is a case in which it can be said that silence by Ingham (assuming I had found that Ingham had been silent) could be construed as positively affirming a misrepresentation formed in the mind of Mr Struthers.^[6] In other words, it is certainly in Ingham’s and its customers’ interests to make it clear what is the relevant service interval for a vehicle. But Ingham was not required to spell out the details of that service interval in more detail than the evidence shows it did in the present case. In my view, a purchaser has some responsibility to ask the trader what the relevant service interval is, if that is an important consideration for the purchaser in deciding whether to purchase a vehicle.^[7]
[35] Accordingly, I have concluded in this case that Ingham has not misled Mr Struthers in relation to the service interval associated with the vehicle and there is no breach of the Act.
[36] Moreover, I consider that Ingham’s offer, as a gesture of goodwill, to meet the cost of every second service required for five years, was a generous offer that makes amends for Ingham’s acknowledged mistake in sending out a letter with incorrect information, and is fully in keeping with the consumer protection spirit underlying the Motor Vehicle Sales Act 2003, which requires traders to attempt to settle claims brought by purchasers before this Tribunal. All I am able to do is to encourage Ingham to put that offer back on the table, despite Mr Struthers’ rejection of it.

Conclusion

[37] For the above reasons, Mr Struthers’ application is dismissed.

DATED 21 October 2015



J S McHerron
Adjudicator

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^[1] Herein, “the Act”.

^[2] Section 9 of the Act.

^[3] Section 2(2) of the Act.

^[4] Commerce Commission v Telecom New Zealand Limited [2005] DCR 160 at [85].

^[5] Parkdale Custombuilt Furniture Pty Limited v Puxu Pty Limited [1982] HCA 44; (1982) 149 CLR 191, 196; [1982] HCA 44 at [10].

^[6] Mills v United Building Society [1988] 2 NZLR 392 (HC and CA).

^[7] See Janus Nominees Ltd v Fairhall [2009] NZCA 280, [2009] 3 NZLR 757 (CA).