Gillanders v Precision Enterprises Limited t/a Precision Autos - Reference No. MVD 337/2016 (Auckland) [2017] NZMVDT 8; [2017] NZMVT Auckland 8 (19 January 2017)

Last Updated: 28 February 2017

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2017] NZMVDT Auckland 8

Reference No. MVD 337/2016

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN FREDRICK JOHN GILLANDERS

Purchaser

AND PRECISION ENTERPRISES LIMITED T/A PRECISION AUTOS

Trader

MEMBERS OF TRIBUNAL
Mr C H Cornwell, Barrister & Solicitor - Adjudicator
Mr S D Gregory, Assessor

HEARING at Auckland on 17 January 2017

DATE OF DECISION 19 January 2017

APPEARANCES

Mr F J Gillanders, the purchaser

Mr R Hanodi, Director for the trader
Mr A Majid, Salesperson for the trader

DECISION

The purchaser’s application is dismissed.

REASONS

Background

[1] On 3 August 2016, Mr Gillanders (“the purchaser”) agreed to buy a 2014 Holden Commodore VF SS-V Redline vehicle registration KAD365 (“the vehicle”) for $46,980 from Precision Enterprises Limited trading as Precision Autos (“the trader”). The vehicle, an Australian import, had 6,372kms on its odometer at the time of sale.

[2] The purchaser says he was aware when he bought the vehicle that it had been damaged in Australia, repaired and imported as a damaged vehicle into New Zealand and that further repairs were done to it in New Zealand. The purchaser says, however, that he was not told by the trader when he agreed to buy the vehicle that it had been a statutory write-off in Australia. He claims that the trader misled him by failing to disclose that the vehicle had been a write-off. The purchaser seeks a remedy under the Fair Trading Act 1986 (“the FTA”).

[3] The trader says that it disclosed the fact that the vehicle had been damaged in Australia and provided the purchaser with colour photographs taken before the vehicle was repaired showing the extent of the damage. The trader also says its salesman disclosed to the purchaser, before he agreed to buy the vehicle, that it had been a statutory write-off. The trader therefore denies that it misled the purchaser regarding the vehicle’s history.

[4] Pursuant to cl 10 of Schedule 1 of the Motor Vehicle Sales Act 2003 the Tribunal has appointed Mr Gregory as expert assessor to assist in the determination of the complaint. Mr Gregory took the oath required by cl 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 misrepresented the vehicle to the purchaser by failing to disclose the vehicle was a statutory write-off in Australia, in breach of the Fair Trading Act 1986 (“the FTA”)?
(b) If the answer to issue (a) is in the affirmative, what remedy is appropriate?

Issue [a]: Whether the trader misrepresented the vehicle to the purchaser by failing to disclose the vehicle was a statutory write-off in Australia in breach of the FTA?

Legal Principles

[6] 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.”

[7] Section 13(a) of the FTA provides as follows:

“13 False or misleading representations

No person shall, in trade, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of goods or services,-

(a) make a false or misleading representation that goods are of a particular kind, standard, quality, grade, quantity, composition, style, or model, or have had a particular history or particular previous use; or ... ”

[8] 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 judgment 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.”

[9] 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.

[10] As a general rule silence does not amount to misrepresentation. However there are certain cases where one party may be under a duty of disclosure to the other of any relevant information in his or her possession. See Mills v United Building Society [1988] 2 NZLR 392. There are three circumstances where there will be a duty of disclosure, and silence may amount to misleading or deceptive conduct:

(a) Where there is a fiduciary element in the relationship between the parties see Stevens v Premium Real Estate [2009] 2 NZLR384, (2009) 9 NZBLC 102,532; [2009] NZSC 15 (agent to principal);
(b) Where a statement is made which is literally true, but which omits mention of other matters which make what was said inaccurate see Gloken Holdings Ltd v The CDE Co Ltd [1997] NZHC 457; (1997) 6 NZBLC 102,272;
(c) Where one party makes a statement that is true, but subsequently fails to disclose the occurrence of a material change in circumstances see Gregory v Rangitikei District Council [1995] 2 NZLR 208. Some cases may involve half truths and a failure to disclose see Hieber v Barfoot & Thompson Ltd (1996) 5 NZBLC 104,179. Some cases are founded on whether there is something in the circumstances of the transaction which gives rise to a reasonable expectation that one party would volunteer information as to matters of importance to the other see Tuiara v Frost & Sutcliffe [2003] 2 NZLR 833. However, the courts will be slow to find that a party to an arm’s-length commercial transaction has misled the other party by silence. The key question is whether in all the circumstances the failure to speak is misleading see Guthrie v Taylor Parris Group Cossey Ltd (2002) 10 TCR 367.

Application of law to facts

[11] The purchaser says he saw the vehicle advertised on Trade Me in August 2016 and went to inspect and test drive it at the trader’s premises. The purchaser says the trader’s sales staff told him the vehicle was an Australian import and that it had been accident damaged in Australia and repaired. The purchaser acknowledged that he had been sent copies of seven colour photographs of the vehicle showing the damage it had sustained. The purchaser says that he thinks the vehicle was about $8,000 cheaper than a comparable New Zealand new vehicle of the same age, mileage and specification although the Tribunal’s assessor thinks the vehicle was probably closer to $14,000 cheaper than a comparable New Zealand new vehicle.

[12] The purchaser says that whilst the vehicle offer and sale agreement he signed contained a special condition “Customer is aware of australian damage auction of this vehicle” he says that he was not told that the vehicle was a write-off and that he would not have bought it if he had known that fact.

[13] In early November 2016, after the vehicle had travelled a further 10,000kms, the purchaser attempted to trade the vehicle in on a used vehicle at Tristram European. Tristram European told the purchaser that the vehicle was flagged as a write-off and that its value was only $30,000 as a trade in. The purchaser did not provide any evidence (apart from the oral Tristram European quote) to show what loss he had suffered.

[14] The purchaser visited the trader on 7 November 2016 to express his annoyance at finding the vehicle had been a write-off. The trader reminded the purchaser that it had disclosed the vehicle had been a write-off but still made the purchaser three offers; first, to trade the vehicle in on another vehicle, second to sell it on the purchaser’s behalf or third to buy it back from the purchaser for $41,000. The purchaser rejected those offers.

[15] Mr Hanodi for the trader says the trader bought the vehicle at auction in Victoria, Australia where it was a statutory write-off. The vehicle was repaired for about $NZ6,000 in Australia. It was shipped to New Zealand and border checked on 12 December 2015. The repair welds done to the vehicle’s damaged left rear in Australia were found to be of poor quality and spot weld upgrades were done on the vehicle in New Zealand. The vehicle had a pre-registration check on 2 March 2016 and was registered and sold to the purchaser in August 2016. Mr Hanodi, although not personally involved in making the sale, says he believes the trader made full disclosure to the purchaser regarding the vehicle’s history before it sold him the vehicle.

[16] Mr Majid, the trader’s salesman who had sold the vehicle to the purchaser gave evidence that he had told the purchaser on 3 August 2016, before the purchaser agreed to buy the vehicle that it had been a statutory write-off in Australia. When the purchaser returned on 7 November 2016 to express his annoyance at finding the vehicle had been a write-off Mr Majid says he reminded the purchaser that he had disclosed that information to the purchaser before he agreed to buy the vehicle.

[17] In determining whether the trader misrepresented the vehicle to the purchaser I have had regard to the following matters. First, I found Mr Majid, the trader’s salesman a credible witness. Mr Majid gave clear evidence of his conversations with the purchaser on 3 August and 7 November 2016, and he was adamant that he had told the purchaser on 3 August that the vehicle had been a statutory write-off. The purchaser, who was given the opportunity to comment on the evidence given by the trader, did not challenge or disagree with Mr Majid’s evidence. Second, I am in no doubt that the purchaser was fully aware that the vehicle had been imported from Australia and that it had been damaged and repaired by the trader. Third, that the purchaser knew that he was buying the vehicle probably as much as $14,000 cheaper than he could buy a comparable New Zealand new vehicle of the same make and specification with only 6,372kms on its odometer and thus could have reasonably expected that the vehicle had probably been written-off in Australia. Fourth, that a reasonable person, in the purchaser’s position would know that used motor vehicles in New Zealand are cheaper than in Australia and so a vehicle imported from Australia has more than likely been imported because it was bought cheaply at a statutory write-off auction.

[18] I conclude that I am not satisfied, on a balance of probabilities that the purchaser was misled by the trader.

Conclusion on issue [b]

[19] Having found the purchaser was not misled by the trader’s conduct I find it is not entitled to any remedy under the Fair Trading Act and I dismiss the purchaser’s application.

DATED at AUCKLAND this 19th day of January 2017

C. H. Cornwell
Adjudicator