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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 17 May 2016
BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
[2016] NZMVT Auckland 46
Reference No. MVD 33/16
IN THE MATTER of the Motor Vehicle Sales Act 2003
AND
IN THE MATTER of a dispute
BETWEEN SHARLENE EVELYN SANDERS
Purchaser
AND GOOD AS GOLD MOTORS LIMITED
Trader
MEMBERS OF TRIBUNAL
Mr C H Cornwell, Barrister &
Solicitor - Adjudicator
Mr S D Gregory - Assessor
HEARING at Auckland on 11 April 2016
DATE OF DECISION 14 April 2016
APPEARANCES
Mrs S E Sanders, the purchaser
Mr J-P Ferguson, witness for the purchaser
Mr M A
Findsen, witness for the purchaser
Mr D Lilly, purchaser’s support
person
Mr C Orsbourne, Director representing the trader
Mrs J Orsbourne,
mother and support person for trader’s director
ORDERS
REASONS
Background
[1] On 23 October 2015 Mrs Sanders (“the purchaser”) agreed to buy a 1995 Nissan Skyline (“the vehicle”) sight unseen for $19,500. The purchaser claims the seller of the vehicle was Good as Gold Motors Limited (“the respondent”).
[2] The purchaser says that she was misled by the trader’s advertisement as to the cost of obtaining compliance approval. She says that instead of costing $1,000 to $2,000 to get the vehicle complied she has been told that it may cost her a sum in excess of the cost price of the vehicle. The purchaser says that had she known the true cost of obtaining compliance she would not have bought the vehicle.
[3] The trader denies that it sold the vehicle to the purchaser and says that it has never owned the vehicle. The trader’s director says his former business partner Mr Samuel Clough sold the vehicle to the purchaser as a private sale without the knowledge or involvement of the trader.
[4] Pursuant to clause 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 I have appointed Mr Gregory as expert assessor to assist in the determination of the complaint. Mr Gregory took the oath required by clause 10(2) of Schedule 1 to that Act. As an assessor Mr Gregory assisted the adjudicator but the application was determined by the adjudicator alone.
The issues
[5] The issues raised by this application are:
(a) Whether the trader or Mr Clough sold the vehicle to the purchaser?
(b) If the vehicle was sold by the trader, did it misrepresent the cost of obtaining compliance approval to the purchaser in breach of the Fair Trading Act 1986?
(c) If so, what loss has the purchaser suffered, and what remedy is appropriate?
Issue [a]: Whether the trader or Mr Clough sold the vehicle to the purchaser?
[6] The purchaser says she saw the vehicle advertised for sale on TradeMe on 18 October 2015. The advertisement, a copy of which she produced described the vehicle as a Nissan GTR R33 Skyline Genuine GTR 1995 with a “start price” of $26,000. After listing the vehicle’s odometer of 84,000kms, colour, fuel type, transmission, the fact that it was an import and the vehicle’s features the advertisement described the fact that the vehicle had a full roll cage and was a two- seater vehicle and then listed the aftermarket modifications the vehicle had. The advertisement then stated:
“I have just picked the car up from compliance on Friday and there are no major concerns. Requirements to make this car “On Road” are:
-Cert plates for Suspension, Roll Cage & Custom Wide Body Kit
-Two new tyres & remove rear spacers on the hubs
-Remove surface rust under body, quoted $300 for this
-Remove tints
-Skim Rear rotors
At a guess this will be between $1,000-$2,000
I will be happy to part with this Beautiful Godzilla for the price of $26,000 as is- Compliance notes/requirements will be provided as above or $29,990 all on road.’
[7] The purchaser who lives in Ruakaka says she made contact with the advertiser by email and, without inspecting the vehicle or having anyone inspect it on her behalf, agreed to purchase the vehicle for $19,500. The purchaser did not complete a vehicle offer and sale agreement with the seller nor was she provided with a CIN.
[8] The purchaser arranged a mortgage over her property to finance the purchase price and on 23 October 2015 she deposited $19,500 in four tranches in the bank account as instructed by Mr Clough. She says she did not know the name of the payee’s bank account when she lodged the funds. The details appearing on the purchaser’s bank account alongside each tranche show the payee was abbreviated to “Gold Motors Ltd Gtr”. Mr Orsbourne, in answer to questions from the Tribunal, confirmed that the $19,500 from the purchaser’s bank had been lodged to the trader’s bank account.
[9] The purchaser says that she had, on 24 October asked Mr Clough for his email address and some information about himself and he sent her a copy of the advertisement for the vehicle from the trader’s website and an email at 1-55pm on 24 October showing his email address as Goodasgoldmotors@gmail.com.
[10] The purchaser arranged for the vehicle to be delivered to her on the evening of 24 October 2015. Mr Clough delivered the vehicle to the purchaser in Waipu where they met about 10pm that night. The vehicle had not been complied, was unregistered, unwarranted and should not have driven on the road. The purchaser says that when Mr Cough delivered the vehicle to her it had dealer plates on it. There was a sticker on the vehicle’s windscreen showing the matters that had to be done to obtain compliance. Mr Clough sent the purchaser the Japanese export certificate for the vehicle she says, but he has not supplied her with legible compliance documentation as he promised.
[11] I accept that the trader was not named as the advertiser in the TradeMe advertisement. I have also had regard to Mr Osbourne’s evidence that although he and Mr Clough were business partners in the trader they agreed to end their partnership on 29 September 2015. Mr Orsbourne also claims, without any supporting evidence, that Mr Clough bought the vehicle himself.
[12] I find however as a fact, first that Mr Clough remains named as the trader on the Register of Motor Vehicles in respect of the trader company. Second, that the trader allowed Mr Clough to use its bank account to receive payment for the vehicle from the purchaser on 23 October 2015. Third, that the trader also allowed Mr Clough to use its website to send material to the purchaser- probably to give her some comfort that she was dealing with the trader. Fourth, Mr Clough also sent the purchaser his email address at the trader’s website. Finally, the trader also allowed Mr Clough to use its dealer plates to deliver the vehicle to the purchaser in Waipu.
Conclusion on issue [a]
[13] I conclude that Mr Clough appears to have had ostensible authority, if not actual authority, to represent the trader throughout the transaction with the purchaser by the use of the trader’s bank account, its website and dealer plates. I therefore find that the seller of the vehicle to the purchaser was the trader and the trader is to be treated for all purposes as the seller of the vehicle.
Issue [b]: Did the trader misrepresent the cost of obtaining compliance approval to the purchaser in breach of the Fair Trading Act 1986?
Relevant law
[14] The FTA 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.
[15] 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.”
[16] In order to breach s 9 there is no requirement that there be an intention to mislead or deceive see Taylor Bros Limited v Taylors Textile Services Auckland Limited (1987) 2 TCLR 415 at 447.
Application of law to facts
[17] On 6 November 2015, the purchaser took the vehicle to VINZ for a compliance inspection. VINZ recorded the following defects with the vehicle:
“Remove tints, Frt indicators removed, repair cert required for roll cage welded to structure/ border check items/strut towers welded up, fuel leaks to engine, front bumper and side skirts insecure, front wheel arch trims missing, tyres fowl wiring and w/arch, head lights insecure, driver’s seat belt not retractable, 3 tyres under limit to cords. Damaged left right rear ¼ panel and sill rust under interior, LVV for rollcage, possible steering modification, rear seats, seat belts removed, wheels tyres wheel spacers, suspension body and interior mods, steering wheel, airbags removed, intercooler repair and low volume certificate to cover entire vehicle Slight play most rear susp joints, Play top of strg colum,,Sun visors removed, Coloured h/light bulbs.”
[18] Mr Ferguson, the purchaser’s mechanic gave evidence that he had examined the vehicle which he says is not suitable for road use in New Zealand. In his opinion it is unsafe in its present state and uneconomic to repair. He says that he estimates it will cost $3500 to $4000 to remove the roll cage from the vehicle which is unlikely to pass an engineer’s certification because it has been constructed from a type of steel which is not acceptable for roll cages approved for New Zealand vehicles. The floors would need to be repaired and a reconstructed roll cage certified and installed. The existing roll cage has been welded to the vehicle’s chassis and the chassis has been weakened by the heat of welding. As a result the vehicle’s chassis will also need to be replaced.
[19] Mr Ferguson says that there is a fuel leak to the engine and he thinks it will be necessary to replace the engine’s six injectors at a cost of about $200 each. In addition both of the vehicle’s head lights need to be replaced at a cost of $250 to $450 each. The seat belts require LV certification at an estimated cost of $650 and the cost of replacing the three worn tyres on the vehicle is $2,700. Mr Ferguson says repair certification of the various modifications made to the vehicle is likely to cost a further $500. The intercooler must be removed and a factory intercooler fitted with all the associated plumbing. The engine will need tuning at a cost of about $1,000.
[20] It appears from notes on the vehicle obtained from VTNZ Mt Wellington, a copy of which were produced to the Tribunal, that the vehicle was border checked on 14 May 2015, and found to be imported as damaged. The damage to the vehicle was recorded by VTNZ as follows:
“left right rear 1/4panel and sill rust under int, PEP cert reqd, for whole vehicle, has rust and roll cages welded to the vehicle structure.”
[21] The VTNZ’s notes also record the faults they found up until the time they were told to stop the inspection. The notes state:
“Failed; original export cert reqd, no stds on front/rear brake pads, replace rear tyres,skim rear brake rotors, replace front rotors, remove aftermarket boths from seatbelt anchorages, remove tints, rust on fuel and brake lines.LVV reqd steering modifications, front/rear suspensions, wheel spacers and exhaust system.”
[22] The VTNZ records go on to record as follows:
“Compliance work cancelled due to owner Cameron Orsbourne [driving licence and mobile phone numbers recorded] & partner Samuel Clough [driving license and phone number recorded] sold the car as is to the new owner (unknown) Inspector TSR1 sighted copies of driving license and handed over the original export cert to the above mentioned names TSR1 has no responsibilities after the handover for the OE cert. The C/sheet has been cancelled & filed on fail folder. Copies of driving licenses attached to the file.”
[23] I am satisfied, on the basis of the evidence given by Mr Ferguson and the copies of the notes of VTNZ submitted to the Tribunal that the description of the work needed to obtain compliance certification contained in the TradeMe advertisement was incomplete and in that respect was misleading. The trader’s “guess” as to the cost of bringing the vehicle to compliance standard of $1,000 to $2,000 was greatly understated and hence also misleading. The evidence given by Mr Ferguson was not challenged by Mr Orsbourne and I accept as accurate Mr Ferguson’s opinion that the vehicle is uneconomic to repair.
[24[ I also consider it likely that had the VTNZ compliance inspection not been cancelled by the trader, the list of faults would probably have been greater.
Conclusion on issue [b]
[25] The purchaser, in buying this highly modified, imported, ten year old performance vehicle, sight unseen and uninspected, knowing it had not passed compliance certification and was thus unwarranted, and then agreeing to accept delivery of it in a poorly lit provincial town at night, displayed deplorable judgment and a lack of any commercial common sense. Nevertheless she was entitled to expect an honest and truthful description of the vehicle and the trader, by giving an estimate of the cost of compliance, was bound to do that honestly and accurately.
[26] I am satisfied the trader misled the purchaser into believing that she was getting a good vehicle which, with the expenditure of a further $1000 to $2,000 and $300 to remove rust, would result in her receiving her dream car. I find the trader’s conduct was misleading and a reasonable person in the purchaser’s situation would likely have been misled.
Issue [c]: What has the purchaser lost and what remedy is appropriate?
Legal Principles
[27] The remedies available for a breach of the FTA are discretionary. They are set out in s43 of the FTA which is as follows:
43 Other orders
(1) This section applies if, in proceedings under this Part or on the application of any person, a court or a Disputes Tribunal finds that a person (person A) has suffered, or is likely to suffer, loss or damage by conduct of another person (person B) that does or may constitute any of the following:
(a) a contravention of a provision of Parts 1 to 4A (a relevant provision):
(b) aiding, abetting, counselling, or procuring a contravention of a relevant provision:
(c) inducing by threats, promises, or otherwise a contravention of a relevant provision:
(d) being in any way directly or indirectly knowingly concerned in, or party to, a contravention of a relevant provision:
(e) conspiring with any other person in the contravention of a relevant provision.
(2) The court or the Disputes Tribunal may make 1 or more of the orders described in subsection (3)—
(a) whether or not the court grants an injunction, or the court or the Disputes Tribunal makes any other order, under this Part; and
(b) whether or not person A made the application or is a party to the proceedings.
(3) The orders are as follows:
(a) an order declaring all or part of a contract made between person A and person B, or a collateral arrangement (for example, a collateral credit agreement) relating to such a contract,—
(i) to be void; and
(ii) if the court or the Disputes Tribunal thinks fit, to have been void at all times on and after a date specified in the order, which may be before the date on which the order is made:
(b) if an order described in paragraph (a) is made in respect of a contract that is associated with a collateral credit agreement, an order vesting in person B all or any of the rights and obligations of person A under the collateral credit agreement:
(c) an order in respect of a contract made between person A and person B, or a collateral arrangement (for example, a collateral credit agreement) relating to such a contract,—
(i) varying the contract or the arrangement in the manner specified in the order; and
(ii) if the court or the Disputes Tribunal thinks fit, declaring the varied contract or arrangement to have had effect on and after a date specified in the order, which may be before the date on which the order is made:
(d) if an order described in paragraph (c) is made in respect of a contract that is associated with a collateral credit agreement, and if that order results in person A no longer having property in the goods that are the subject of the contract, an order vesting in person B the rights and obligations of person A under the collateral credit agreement:
(e) an order directing person B to refund money or return property to person A:
(f) an order directing person B to pay to person A the amount of the loss or damage:
(g) an order directing person B, at person B’s own expense, to repair, or to provide parts for, goods that have been supplied by person B to person A:
(h) an order directing person B, at person B’s own expense, to supply specified goods or services to person A.
(4) In subsection (3) (a) to (d), collateral credit agreement, in relation to a contract for the supply of goods, means a contract or an agreement that—
(a) is arranged or procured by the supplier of the goods; and
(b) is for the provision of credit by a person other than the supplier to enable person A to pay, or defer payment, for the goods.
(5) An order made under subsection (3) (a) to (d) does not prevent proceedings being instituted or commenced under this Part.
(6) This section does not limit or affect—
(a) the Illegal Contracts Act 1970; or
(b) section 317 of the Accident Compensation Act 2001.
[28] 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?
[29] 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. I consider there was in this case.
Application of law to facts
[30] I am satisfied that the purchaser was misled and that the trader’s conduct was an effective cause of the purchaser’s loss.
[31] The purchaser is likely to encounter difficulty in selling the vehicle because it was imported damaged and has not been complied so that anyone buying it will calculate the cost of obtaining compliance and discount the selling price by that amount. The vehicle is likely to appeal to a limited market. I consider the appropriate remedy is to declare the contract for the purchase of the vehicle void. I will order the trader to refund the purchaser with the purchase price of $19,500 and when it has done so to collect the vehicle from the purchaser.
DATED at AUCKLAND this 14th day of April 2016
C. H. Cornwell
Adjudicator
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URL: http://www.nzlii.org/nz/cases/NZMVDT/2016/46.html