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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 16 July 2018
BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
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Reference No. MVD 091/2018
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IN THE MATTER
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of the Motor Vehicle Sales Act 2003
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AND
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IN THE MATTER
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of a dispute
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BETWEEN
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VALERIE BRIMBLECOMBE
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AND
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OLYMPIA PAK TRADING LTD T/A MILESTONE MOTORZ
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AND
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MILESTONE MOTOR CARZ LTD
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MEMBERS OF TRIBUNAL
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B R Carter, Barrister – Adjudicator
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S Gregory, Assessor
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HEARING at Auckland on 12 June 2018
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DATE OF DECISION 21 June 2018
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APPEARANCES
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V Brimblecombe, Purchaser
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A Bandeesha for Olympia Pak Trading Ltd
M Faruk for Milestone Motor Carz Ltd
M Saadat, witness for Milestone Motor Carz Ltd
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ORDERS
DECISION
[1] Milestone Motor Carz Ltd engaged in misleading conduct in breach of s 9 of the Fair Trading Act 1986 (the FTA) by purporting to have a right to seize the vehicle when it had no such right.
[2] Ms Brimblecombe has suffered loss as a result of Milestone Motor Carz’s misleading conduct and is entitled to damages under s 43(3)(f) of the FTA to reflect the loss and damage suffered as a result of her vehicle being unlawfully seized. Accordingly, the Tribunal orders Milestone Motor Carz to pay $7,051.36 to Ms Brimblecombe.
REASONS
Introduction
[3] On 4 December 2017, Ms Brimblecombe purchased a 2006 Mazda Atenza for $6,300 from Olympia Pak Trading Ltd, trading as Milestone Motorz. When Ms Brimblecombe purchased the vehicle, she was advised the vehicle was not subject to any security interest.
[4] In January 2018, Milestone Motor Carz seized the vehicle from Ms Brimblecombe, claiming that it had a right to do so.
[5] Ms Brimblecombe applied to the Tribunal seeking a remedy against Olympia Pak Trading. Pursuant to cl 7(1) of sch 1 to the Motor Vehicle Sales Act 2003 (the MVSA), the Tribunal joined Milestone Motor Carz to these proceedings, as it was apparent that Milestone Motor Carz should participate to ensure that the questions that arise in this matter could be properly addressed and determined and that the Tribunal could grant the relief that it considers to be due.
[6] Olympia Pak Trading says that it has no liability, as it sold a vehicle that was free of any security interest. It says that Milestone Motor Carz improperly registered a financing statement against the vehicle in 2017, which was discharged on 17 November 2017 when Milestone Motor Carz failed to prove that it had a legitimate security interest in the vehicle. It says that it has done nothing wrong and that Ms Brimblecombe should claim against Milestone Motor Carz.
[7] Milestone Motor Carz says that the vehicle belonged to it and that Olympia Pak Trading had no right to sell the vehicle to Ms Brimblecombe. It says that it has lawfully repossessed the vehicle.
The Issues
[8] Against this background, the following issues arise:
- (a) Did Milestone Motor Carz have a right to seize the vehicle?
- (b) If not, has Milestone Motor Carz engaged in misleading conduct in breach of s 9 of the FTA by purporting to have a right to repossess the vehicle?
- (c) If so, what remedy is Ms Brimblecombe entitled to under the FTA?
Did Milestone Motor Carz have a right to seize the vehicle?
[9] Milestone Motor Carz claims that it had a right to seize the vehicle. It claims that the vehicle belonged to it and that Olympia Pak Trading sold the vehicle to Ms Brimblecombe without its authority or knowledge. Further, it claims that it had registered a financing statement against Olympia Pak Trading under which the vehicle was identified as a secured chattel.
[10] Although Milestone Motor Carz is a separate entity from Olympia Pak Trading, with different shareholders and directors, there is clearly a relationship of some sort between the two companies. I do not know the full extent of that relationship and I do not feel that the evidence I heard from both companies was a complete or accurate account of the dealings that occur between these two companies.
[11] Regardless of what that relationship is, I am satisfied that Milestone Motor Carz had no right to seize the vehicle from Ms Brimblecombe for two reasons.
[12] First, it has not proven that it has any registered security interest in the vehicle. It provided a copy of the financing statement, registration number FP052274MS2PE790, that it says gives rise to the security interest. Olympia Pak Trading produced a financing statement discharge document issued by the Companies Office showing that the financing statement was discharged on 17 November 2017. After the hearing, I asked Milestone Motor Carz to provide a copy of the financing statement proving that it had a registered security interest over the vehicle. Milestone Motor Carz has provided no such statement.
[13] Second, even if Milestone Motor Carz had a legitimate security interest over the vehicle, there is no evidence to show that Ms Brimblecombe had any knowledge of that interest over the vehicle when she purchased it.
[14] This is important because, under s 58 of the Personal Property Securities Act 1999, a purchaser of a motor vehicle acquires that vehicle free of any security interest if the vehicle is purchased from a registered motor vehicle trader and the security interest was not disclosed to the purchaser. In this case, Ms Brimblecombe purchased the vehicle from a registered motor vehicle trader and no security interest was disclosed to her. In fact, the Consumer Information Notice provided to Ms Brimblecombe at the time of sale specifically records that there is no security interest registered against the vehicle.
[15] Accordingly, because it had no security interest over the vehicle, and because Ms Brimblecombe had acquired the vehicle from a registered motor vehicle trader without knowledge of any security interest, Milestone Motor Carz had no right to seize this vehicle.
Has Milestone Motor Carz engaged in conduct that breached s 9 of the FTA?
[16] Section 9 of the FTA provides;
- 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.
[17] The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corporation v Ellis:[1]
The question to be answered in relation to s 9 ... is ... 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.... If the conduct objectively had the capacity to mislead or deceive a 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.
[18] Ms Brimblecombe says she used the vehicle until 20 February 2018, when a “van load” of men seized the vehicle, claiming they had a right to repossess the vehicle on behalf of Milestone Motor Carz. Milestone Motor Carz accepted that the men who seized the vehicle acted on its behalf.
[19] This evidence satisfies me that, by seizing the vehicle and claiming a right to do so, Milestone Motor Carz has engaged in misleading conduct in breach of s 9 of the FTA. It had no right to seize the vehicle.
What remedy is available to Ms Brimblecombe under the FTA
[20] The remedies available for a breach of s 9 are set out in s 43 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 the 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.
[21] The remedies in s 43(3) of the FTA are discretionary, and the discretion is to be exercised so to give effect to the policy of the FTA, which includes to protect the interests of consumers. The object of the remedies in s 43(3) of the FTA is to do justice to the parties in the particular circumstances of the case.[2]
[22] I consider that the appropriate remedy is to award damages to Ms Brimblecombe under s 43(3)(f) of the FTA for the loss she has suffered as a result of Milestone Motor Carz’s misleading conduct.
[23] I had considered ordering Milestone Motor Carz to return the vehicle to Ms Brimblecombe, and in that regard, asked Milestone Motor Carz to:
- (a) advise whether the vehicle has been sold, and if so, when and for how much; and
- (b) if the vehicle has not been sold, provide colour photographs showing the vehicle’s condition and its current odometer reading.
[24] Milestone Motor Carz has provided none of this information. In those circumstances, I consider that there is a real risk that this vehicle has been disposed of and that damages are the only appropriate remedy for Ms Brimblecombe. Accordingly, the Tribunal orders Milestone Motor Carz to pay $6,300 to Ms Brimblecombe, being the purchase price of the vehicle.
[25] The Tribunal also orders that Milestone Motor Carz should compensate Ms Brimblecombe for the cost of insuring a vehicle that she has not had the benefit of using. Ms Brimblecombe paid $754.09 to Crombie Lockwood (NZ) Limited on 1 January 2018 to insure the vehicle for 12 months. Ms Brimblecombe has maintained that insurance in the forlorn hope that the vehicle will be returned to her. That will not occur, and I consider that Ms Brimblecombe is entitled to recover the cost of insurance for the period in which she has been without the vehicle. By my calculation, as at the date of this decision, it has been a little more than four months, or one third of a year, since the vehicle was seized. Ms Brimblecombe is therefore entitled to recover one third of the cost of her insurance policy, being $251.36.
[26] Ms Brimblecombe also seeks compensation for inconvenience and distress and for her lost time and expenses. Ms Brimblecombe has undoubtedly been distressed and inconvenienced by Milestone Motor Carz’s unlawful seizure of her vehicle. In the circumstances of this case, I order that Milestone Motor Carz must pay $500 compensation for the inconvenience and distress it has caused to Ms Brimblecombe.
[27] I make no orders against Olympia Pak Trading. There is no evidence to show that it engaged in any conduct that would justify such orders.
Conclusion
[28] Milestone Motor Carz engaged in misleading conduct in breach of s 9 of the FTA by purporting to have a right to seize the vehicle when it had no such right.
[29] Ms Brimblecombe has suffered loss as a result of Milestone Motor Carz’s misleading conduct and is entitled to damages under s 43(3)(f) of the FTA to reflect the loss and damage suffered as a result of her vehicle being unlawfully seized. Accordingly, the Tribunal orders Milestone Motor Carz to pay $7,051.36 to Ms Brimblecombe.
DATED at AUCKLAND this 21st day of June 2018
B.R. Carter
Adjudicator
[1] Red Eagle Corporation v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].
[2] Red Eagle Corporation Ltd v Ellis, above n 1, at [31].
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