Van Niekerk v Wood De RTIB Limited t/a AMC Motors - Reference No. MVD 198/2017 [2017] NZMVDT 135 (19 September 2017)

Last Updated: 17 October 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 135 Reference No. MVD 198/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	JOHANES NEL VAN NIEKERK
		Purchaser
	AND	WOOD DE RTIB LIMITED T/A AMC MOTORS
		Trader
MEMBERS OF TRIBUNAL
J S McHerron, Barrister – Adjudicator
S D Gregory, Assessor
HEARING at Auckland on 14 August 2017
DATE OF DECISION 19 September 2017
APPEARANCES
J N van Niekerk, Purchaser
M M van Niekerk, Partner of Purchaser R Luo, Manager of Trader

DECISION

Wood de RTIB Limited must pay Mr van Niekerk $1,000 no later than 26 September 2017.

REASONS

Introduction

[1] Mr van Niekerk agreed to purchase a vehicle from Wood de RTIB Limited trading as AMC Motors. He paid $1,000 deposit. The purchase was subject to an AA inspection. The inspection report revealed the vehicle had several large scratches on its paintwork. Mr van Niekerk told the trader that, when he found out about the scratches, he did not want to proceed with the transaction and requested his deposit back. AMC Motors refused. It says Mr van Niekerk was only entitled to cancel the agreement if the inspection report revealed a big mechanical problem.
[2] The issues raised by Mr van Niekerk’s claim are whether he has validly cancelled the contract to purchase the vehicle and, if so, whether he is entitled to a refund of the deposit.
[3] Before addressing these issues, it is necessary to set out the background facts in a little more detail.

The facts in a little more detail

[4] On 2 May 2017 Mr van Niekerk, who is based in Christchurch, enquired about a vehicle that Auckland-based AMC Motors was advertising on Trade Me. The vehicle is a 2006 Toyota Sienta.
[5] AMC Motors emailed Mr van Niekerk to say that if he put a $1,000 deposit on the vehicle "subject to inspection", it would hold the vehicle until 1 June.
[6] Mr van Niekerk replied that he had decided to take the car "subject to inspection". Mr van Niekerk then asked AMC Motors to arrange for an AA inspection to take place, which AMC Motors confirmed would cost $150.
[7] The following day, Mr van Niekerk deposited $1,000 in AMC Motors’ account plus $150 for the AA inspection.
[8] After Mr van Niekerk had deposited this money, AMC Motors emailed him a vehicle offer and sale agreement (VOSA), to which it had added the following handwritten words as a special condition:

* 1,000 NZD deposit only can refund when the car done AA or VTNZ inspection for big mechanical issue.

[9] On 9 May 2017, Mr van Niekerk signed the VOSA. However, he emphasised in the hearing that AMC Motors had not discussed these additional words with him and that they were only added after he had paid the deposit. This is confirmed on the VOSA itself, which records that a deposit of $1,000 was paid, plus $150 for the inspection.
[10] On 22 May 2017, AMC Motors sent Mr van Niekerk the AA vehicle inspection report. It recorded the vehicle had several large scratches – on the bonnet, the right front wing and both left doors. In addition, the report recorded the radio was not working. A photograph of a large scratch on the left doors was included in the AA report. That day, Mr van Niekerk emailed AMC Motors asking it to contact him regarding the scratches which, he said, had not been disclosed.
[11] The following day, Mr van Niekerk’s partner telephoned AMC Motors as it had not replied to his email. She explained that Mr van Niekerk was not aware of the scratches and wanted his deposit back. AMC Motors refused to refund the deposit. It said it was only required to return the deposit if there was a mechanical problem with the vehicle. AMC Motors’ representative then told Ms van Niekerk not to telephone again and hung up.
[12] Mr van Niekerk observed that on 25 May 2017, AMC Motors had begun advertising the vehicle again on Trade Me. This was inconsistent with its agreement to hold the car for him until 1 June 2017 which, he understood, was the justification for requiring the $1,000 deposit.
[13] On 1 June 2017, Mr van Niekerk travelled to Auckland and went to AMC Motors’ yard to inspect the vehicle personally. During his inspection, he observed large scratches on the vehicle, consistent with the AA report.

Is Mr van Niekerk entitled to a remedy under the Contractual Remedies Act 1979?

[14] The Tribunal has no general jurisdiction to determine contractual disputes.[1] However, the Tribunal has a limited remedial jurisdiction in circumstances where a contract has been cancelled. It may "inquire into and determine any application or claim" under the Contractual Remedies Act 1979 "in respect of the sale of a motor vehicle".[2] The Tribunal may make any order that a court or a Disputes Tribunal constituted under the Disputes Tribunals Act 1988 may make under s 9 of the Contractual Remedies Act.
[15] Section 9 of the Contractual Remedies Act provides (as far as is relevant):

9 Power of court to grant relief

(1) When a contract is cancelled by any party, the court, in any proceedings or on application made for the purpose, may from time to time if it is just and practicable to do so, make an order or orders granting relief under this section.

(2) An order under this section may—

(a) vest in any party to the proceedings, or direct any such party to transfer or assign to any other such party or to deliver to him the possession of, the whole or any part of any real or personal property that was the subject of the contract or was the whole or part of the consideration for it:
(b) subject to section 6, direct any party to the proceedings to pay to any other such party such sum as the court thinks just:
(c) direct any party to the proceedings to do or refrain from doing in relation to any other party any act or thing as the court thinks just.

(3) Any such order, or any provision of it, may be made upon and subject to such terms and conditions as the court thinks fit, not being in any case a term or condition that would have the effect of preventing a claim for damages by any party.

(4) In considering whether to make an order under this section, and in considering the terms of any order it proposes to make, the court shall have regard to—

(a) the terms of the contract; and
(b) the extent to which any party to the contract was or would have been able to perform it in whole or in part; and
(c) any expenditure incurred by a party in or for the purpose of the performance of the contract; and
(d) the value, in its opinion, of any work or services performed by a party in or for the purpose of the performance of the contract; and
(e) any benefit or advantage obtained by a party by reason of anything done by another party in or for the purpose of the performance of the contract; and
(f) such other matters as it thinks proper.
...

Has the contract been cancelled for the purposes of s 9?

[16] Before the Tribunal can order any relief under s 9 there has to be a "contract" that is "cancelled by any party".
[17] Cancellation under the Contractual Remedies Act is governed by ss 7 and 8. Section 7(2) provides:

(2) Subject to this Act, a party to a contract may cancel it if, by words or conduct, another party repudiates the contract by making it clear that he does not intend to perform his obligations under it or, as the case may be, to complete such performance.

[18] The relevant contract in the present case was an agreement between Mr van Niekerk and AMC Motors for the sale of a 2006 Toyota Sienta for $6,195. (The $6,195 included the $1,000 deposit and $150 inspection fee.)
[19] As explained above, the contract was subject to a condition that Mr van Niekerk was entitled to have the vehicle inspected by the AA and that the contract was "subject" to that inspection. Up to the time when Mr van Niekerk paid the $1,000 deposit the words "subject to inspection", as used by the trader in its email of 3 May 2017, were left unqualified. By implication, those words entitled Mr van Niekerk to decide that he would not proceed with the purchase of the vehicle, if the AA inspection revealed any information about the vehicle that disinclined Mr van Niekerk to proceed with purchasing it.
[20] There is nothing in the words "subject to inspection" that limits Mr van Niekerk’s entitlement to cancel the contract to "big mechanical issues", the handwritten words AMC Motors subsequently added into the VOSA.
[21] The general expression "subject to inspection", that AMC Motors used to encourage Mr van Niekerk to pay the deposit, defines the scope of the entitlement to cancel the agreement, not the specific words unilaterally added in by the trader to the VOSA after the $1000 deposit had been paid.
[22] Those specific words were added in without any further negotiation with Mr van Niekerk about whether he agreed with that limiting condition. The fact Mr van Niekerk has signed the VOSA containing the new, unilaterally imposed condition, does not affect my conclusion. By this time, the deposit money had been paid. And Mr van Niekerk's evidence was that the words "for big mechanical issue" were written in handwriting which he found difficult to read. He did not realise the trader had attempted to limit the basis on which he could cancel the agreement to purchase the vehicle.
[23] Ultimately, the purpose of the deposit was to provide comfort to AMC Motors that Mr van Niekerk was entering into the transaction in good faith. On that basis, AMC Motors was prepared to hold the vehicle until 1 June 2017. The inspection condition, allowed Mr van Niekerk to reject the vehicle if he was unhappy with the inspection report. It was not limited to "mechanical issues". That was a limitation imposed by the trader after the purchaser had already paid the deposit.
[24] Accordingly, AMC Motors agreed that if Mr van Niekerk was unhappy with the results of the AA inspection, it would refund him the $1,000. When Mr van Niekerk and his partner telephoned the trader on 23 May 2017 to ask for the deposit back because of the scratches on the vehicle, AMC Motors refused and told him that it was only required to return the deposit if there was a mechanical problem. AMC Motors then indicated by its conduct that it did not wish to continue to discuss on the matter and forbade Mr van Niekerk or his partner from telephoning it again.
[25] I conclude that, by this conduct, AMC Motors repudiated the agreement that it had with Mr van Niekerk by making it clear that it did not intend to perform its obligations to refund him his deposit money if he was unsatisfied with the AA inspection report.

Did Mr van Niekerk validly cancel the agreement?

[26] Section 8(2) of the Contractual Remedies Act provides that the cancellation of a contract:

... may be made known by words, or by conduct evincing an intention to cancel, or both. It shall not be necessary to use any particular form of words, so long as the intention to cancel is made known.

[27] I consider it was implicit in Mr van Niekerk’s request for a refund of his deposit money that he was not intending to proceed with the transaction and therefore that he had cancelled the contract with AMC Motors. This is also clear from Mr van Niekerk’s conduct in bringing his application to the Tribunal, seeking the refund of his deposit money. AMC Motors can never have been under any doubt that it was Mr van Niekerk’s intention to cancel the contract.

What relief (if any) is Mr van Niekerk entitled to?

[28] Section 9 of the Contractual Remedies Act (set out above at [15]) provides a "wide jurisdiction...[and is] a valuable instrument for achieving justice, of course on declared and rational principles, which need not be trammelled by common law re[3]trictions."3 Section 9(2)(a) provides (inter alia) that orders may be made vesting, transferring or delivering possession of personal property. And s 9(2)(b) provides that an order may be made directing one party to pay another party money. Section 9(4) sets out a series of mandatory considerations for the Tribunal in considering the terms of any order it proposes to make.
[29] The first of these considerations is "the terms of the contract".
[30] As I have explained above, I have concluded that a term of the contract was that Mr van Niekerk was entitled to cancel the agreement if he was unhappy with the findings of the AA inspection.
[31] In those circumstances, Mr van Niekerk would be entitled to a full refund of his deposit. Accordingly, I consider that he is entitled to a refund of that money under s 9(1) of the Contractual Remedies Act.
[32] Mr van Niekerk has also claimed the cost of the AA inspection, $150, as well as the cost of his flights to Auckland to inspect the vehicle on 1 June and the costs of his return ferry trip.
[33] I do not consider that Mr van Niekerk is entitled to recover any of these other expenses.
[34] In terms of s 9(4)(e) of the Contractual Remedies Act, Mr van Niekerk gained a "benefit or advantage" from the AA report, as this was the basis on which he determined that he did not want to proceed with the purchase of the vehicle.
[35] In relation to the transport expenses claimed, Mr van Niekerk originally booked transport so he could collect the vehicle and bring it home to Christchurch. After he had decided to cancel the contract, he took advantage of this transport for another purpose, to obtain another vehicle. As he repurposed these travel expenses for his own benefit, the trader should not be liable to reimburse him.

Result

[36] AMC Motors must refund Mr van Niekerk his deposit of $1,000 within seven days of the date of this decision.

J S McHerron
Adjudicator

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[1] Motor Vehicle Sales Act 2003, s 89.

[2] Motor Vehicle Sales Act 2003, s 89(1)(a)(iv). After the hearing of this application, the Contract and Commercial Law Act 2017 (the 2017 Act) came into force, repealing the Contractual Remedies Act 1979 and amending the Motor Vehicle Sales Act to give the Tribunal jurisdiction to determine disputes under equivalent provisions in the 2017 Act. However, according to s 18 of the Interpretation Act 1999, the repeal of an enactment does not affect the completion of proceedings that relate to an existing right, interest, title, immunity, or duty and a repealed enactment continues to have effect as if it had not been repealed for the purpose of completing the proceedings that relate to the existing right, interest, title, immunity, or duty. Accordingly, the Tribunal has determined Mr van Niekerk's claim under the law that applied as at the date of the hearing. Whether or not the matter is determined under the old or new law makes no difference to the outcome, as the 2017 Act is not intended to change the effect of the law except in ways that are expressly provided and are not relevant to the present dispute (see s 4(1)).

[3] Thomson v Rankin [1993] 1 NZLR 408 (CA) at 410-411 per Cooke P.