Walters v Wood De Rtib Limited T/A Amc Motors Reference No. MVD 346/2017 [2017] NZMVDT 217 (21 December 2017)

Last Updated: 16 January 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2017] NZMVDT 217 Reference No. MVD 346/2017
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	SHARLOTTE WALTERS
		Purchaser
	AND	WOOD DE RTIB LIMITED T/A AMC MOTORS
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 13 December 2017
DATE OF DECISION 21 December 2017
APPEARANCES
Ms S Walters, Purchaser Mr G Van Ommeren, Witness for the Purchaser
Mr R Luo, for the Trader

ORDERS

1. Wood de Rtib Limited trading as AMC Motors shall, within 10 working days of the date of this decision, pay $11,895 to Sharlotte Walters.

DECISION

[1] Wood de Rtib Limited trading as AMC Motors (“AMC Motors”), failed to deliver the vehicle within a reasonable period of time as required by s 5A(1)(a) of the Consumer Guarantees Act 1993 (“the Act”).
[2] The failure to deliver the vehicle is a failure of a substantial character for the purposes of s 21 of the Act.
[3] Ms Walters is entitled to reject the vehicle and obtain compensation for loss suffered as a result of AMC Motors’ failure to deliver the vehicle.

REASONS

Introduction

[4] On 9 August 2017, Sharlotte Walters agreed to purchase a 2012 Nissan Leaf from AMC Motors. Under the Motor Vehicle Offer and Sale Agreement signed by the parties (“the third agreement”), AMC Motors agreed to supply a 2012 Nissan Leaf within two months, plus an unspecified period for shipping and compliance. Ms Walters agreed to pay between $11,895 and $12,895 for the vehicle.
[5] This agreement was the third contract signed by Ms Walters and AMC Motors to purchase a Nissan Leaf.
[6] The first agreement was cancelled because the condition of that vehicle was not satisfactory to Ms Walters.
[7] The second agreement was cancelled because AMC Motors had misrepresented the second vehicle’s battery capacity. AMC Motors had claimed that the second vehicle’s battery capacity indicator showed 11 bars of battery capacity (out of a maximum of 12 bars). That was incorrect, as its true reading was 10 bars of battery capacity.
[8] Upon finding this inaccuracy, Ms Walters returned the vehicle. After negotiations with AMC Motors, Ms Walters agreed to sign the third agreement to purchase another Nissan Leaf. As Ms Walters had already paid $11,895 for the second vehicle, funded by a loan from AA Finance, the parties agreed that those funds would be put towards the purchase of the third vehicle and Ms Walters would pay any outstanding balance.
[9] Ms Walters has since sought to cancel the third agreement, claiming that AMC breached the Consumer Guarantees Act and the Fair Trading Act 1986 by misrepresenting the battery capacity of the second vehicle and that she entered into the third agreement under duress. She now seeks a refund of all amounts paid in respect of the second vehicle.
[10] AMC Motors denies that Ms Walters is entitled to a refund of all amounts paid in respect of the second vehicle. It says that it initially offered Ms Walters $800 and a free battery charger as compensation for the second vehicle not having the expected battery capacity. Ms Walters did not accept this offer and instead chose to enter into the third agreement.

The Issues

[11] The issues requiring consideration in this case are:

• (a) Has AMC Motors failed to deliver the vehicle within the timeframe required by s 5A of the Act?
• (b) Was the failure to deliver in the required timeframe a failure of a substantial character for the purposes of s 21 of the Act?
• (c) What remedy is Ms Walters entitled to under the Act?

[12] During the hearing, much of the evidence focussed on the second vehicle, and whether AMC Motors misrepresented the battery capacity of that vehicle. Although that issue is clearly of some importance to Ms Walters, I do not consider that it is critical to the outcome of this case.
[13] Ms Walters entered into the third agreement with a full understanding of what she was agreeing to. She may have been unhappy that AMC Motors refused to refund the entire purchase price, but there was nothing untoward in AMC Motors’ refusal to provide a full refund, and the remedies it did offer – compensation or a replacement vehicle, are both remedies that are available under the Consumer Guarantees Act and the Fair Trading Act for the misdescription of a vehicle. I do not accept Ms Walters’ submission that she entered into the third agreement under duress.
[14] I therefore consider that she has no ongoing claim in relation to the second vehicle, as she has already resolved any claim she may have had by agreeing to allow AMC Motors to supply a replacement vehicle.
[15] Instead, the main issue in this case is whether AMC Motors has now failed to supply the third vehicle within a reasonable time.

Did AMC Motors deliver the vehicle within a reasonable time?

[16] Section 5A of the Act provides that a supplier must deliver goods within a reasonable time. Specifically, s 5A of the Act states:

“5A Guarantee as to delivery

(1) Where a supplier is responsible for delivering, or for arranging for the delivery of, goods to a consumer there is a guarantee that the goods will be received by the consumer—

(a) at a time, or within a period, agreed between the supplier and the consumer; or

(b) if no time or period has been agreed, within a reasonable time.

(2) Where the delivery of the goods fails to comply with the guarantee under this section, Part 2 gives the consumer a right of redress against the supplier and, in that case, the consumer may,—

(a) if the failure is of a substantial character, reject the goods under section 18(3); and

(b) in any case, obtain damages under section 18(4) (other than damages relating to the remedies set out in section 18(2)), whether or not the consumer also rejects the goods.

(3) For the purposes of this section, the reference in section 20(1)(b) to an agent of the supplier must be treated as including any carrier or other person who undertakes to deliver the goods on behalf of the supplier.

(4) A consumer’s rights of redress under Part 2 in relation to the guarantee under this section are limited to those specified in subsection (2).”

[17] The issues I must determine in deciding whether this guarantee has been breached are:

• (a) Was the supplier responsible for delivering, or for arranging the delivery of, the vehicles?
  • (b) Did the parties agree as to when the vehicles would be delivered?
  • (c) Have the vehicles been delivered within any agreed time period, or if no time period was agreed, within a reasonable time?

Was AMC Motors responsible for the delivery of the vehicles?

[18] I am satisfied that AMC Motors was responsible for the delivery of the vehicle to Ms Walters. The third agreement provides that AMC Motors will source and import a vehicle for Ms Walters.

Did the parties agree as to when the vehicles would be delivered?

[19] The parties did not agree on a precise timeframe as to when the vehicle would be delivered to Ms Walters. Ms Walters was advised that the vehicle would be ready for collection between one to two months, plus an unspecified time for shipping and compliance.

Has the vehicle been delivered within required timeframes?

[20] Under s 5A(1)(a) of the Act, AMC Motors was therefore required to deliver the vehicle within a reasonable time of the date Ms Walters signed the third agreement on 9 August 2017.
[21] Mr Gregory, the Tribunal’s assessor advises that it would ordinarily take six weeks to ship a vehicle from Japan and complete the compliance process in New Zealand. Accordingly, I am satisfied that allowing two months for sourcing the vehicle, and another six weeks for shipping and compliance, AMC Motors was obliged to supply the vehicle within three and a half months.
[22] AMC Motors has still not delivered the vehicle, more than four and a half months after agreeing to do so. I am therefore satisfied that the vehicle has not been delivered within the timeframe required and that AMC Motors has breached s 5A of the Act.
[23] In reaching this conclusion I acknowledge that Ms Walters has purported to cancel the contract and that AMC Motors appears to have held off sourcing a vehicle until this dispute is resolved.
[24] However, AMC Motors remains liable for delivery of the vehicle to Ms Walters within the time required by s 5A of the Act. That is because AMC Motors claims that Ms Walters is not entitled to cancel the contract, meaning from its perspective Ms Walters has repudiated the contract. Under the Contractual Remedies Act 1979, which applies to this transaction, where a party repudiates a contract, the other party has two choices. It can cancel the contract, or affirm it.
[25] AMC Motors has not cancelled the contract. It says that it remains willing and able to provide the vehicle to Ms Walters. It has therefore affirmed the contract, and in those circumstances, AMC Motors has an obligation to perform the contract.
[26] It has not performed its obligations under the contract and has therefore failed to supply the vehicle within a reasonable time.

Was the failure to deliver in the required timeframe a failure of a substantial character for the purposes of s 21 of the Act?

[27] Ms Walters wants a full refund of all money paid to AMC Motors. She can obtain a full refund if the failure to deliver the vehicle amounts to a failure of a substantial character as defined in s 21 of the Act:

“21 Failure of substantial character

For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where—

(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or

(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.”

[28] I am satisfied that AMC Motors’ failure to deliver the vehicle is a failure of a substantial character. Ms Walters has already paid $11,895 towards the purchase of the vehicle. No reasonable consumer would have agreed to purchase the vehicle if it had known that AMC Motors would retain $11,895 and then fail to deliver the goods within the required timeframes.

What remedy is Ms Walters entitled to under the Act?

[29] Section 18 of the Act provides as follows:

“18 Options against suppliers where goods do not comply with guarantees

(1) Where a consumer has a right of redress against the supplier in accordance with this Part in respect of the failure of any goods to comply with a guarantee, the consumer may exercise the following remedies.

(2) Where the failure can be remedied, the consumer may—

(a) require the supplier to remedy the failure within a reasonable time in accordance with section 19:

(b) where a supplier who has been required to remedy a failure refuses or neglects to do so, or does not succeed in doing so within a reasonable time,—

(i) have the failure remedied elsewhere and obtain from the supplier all reasonable costs incurred in having the failure remedied; or

(ii) subject to section 20, reject the goods in accordance with section 22.

(3) Where the failure cannot be remedied or is of a substantial character within the meaning of section 21, the consumer may—

(a) subject to section 20, reject the goods in accordance with section 22; or

(b) obtain from the supplier damages in compensation for any reduction in value of the goods below the price paid or payable by the consumer for the goods.

(4) In addition to the remedies set out in subsection (2) and subsection (3), he consumer may obtain from the supplier damages for any loss or damage to the consumer resulting from the failure (other than loss or damage through reduction in value of the goods) which was reasonably foreseeable as liable to result from the failure.”

[30] Under s 18(3)(a) of the Act, Ms Walters is entitled to reject the goods in accordance with s 22 of the Act. Having rejected the goods in accordance with s 22 of the Act, under s 23(1)(a) of the Act, Ms Walters is now entitled to a refund of any money paid or other consideration provided in respect of the rejected goods.
[31] Accordingly, the Tribunal orders that AMC Motors Limited must, within 10 working days, pay $11,895 to Ms Walters.

DATED at AUCKLAND this 21st day of December 2017

B.R. Carter
Adjudicator