Luo v Vehicle Logistics Limited Reference No. MVD 025/2018 [2018] NZMVDT 155 (10 July 2018)

Last Updated: 17 August 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2018] NZMVDT 155 Reference No. MVD 025/2018
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	LEI LUO
		Purchaser
	AND	VEHICLE LOGISTICS LIMITED
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor
HEARING at Auckland on 5 April 2018
DATE OF DECISION 10 July 2018
APPEARANCES
L Luo, Purchaser
P Murray, for the Trader

ORDERS

1. Vehicle Logistics Limited shall, within 10 working days of the date of this decision, pay $350.75 to Lei Luo.

DECISION

[1] Vehicle Logistics engaged in misleading conduct that breached s 9 of the Fair Trading Act 1986 (the Act). It advised Mr Luo that the deposit payable when signing the vehicle offer and sale agreement (the agreement) was refundable. It was not, and Vehicle Logistics has retained $350.75 of the deposit.
[2] Lei Luo has suffered loss as a result of this misleading conduct. Accordingly, under s 43(3)(e) of the Act, Vehicle Logistics must compensate Mr Luo for this loss.

REASONS

Introduction

[3] On 16 December 2017, Mr Luo signed a vehicle offer and sale agreement to purchase a new LDV T60 Ute Luxury MT Manual for $36,938 from Vehicle Logistics. Mr Luo paid a deposit of $5,000 on that day.
[4] Mr Luo says that he was initially interested in purchasing the basic model of the LDV T60. Mr Luo test drove the basic model, but then found out that Vehicle Logistics had no available stock. Vehicle Logistics then offered to sell the “luxury” model to Mr Luo at a discounted price. Mr Luo says he was hesitant about signing an agreement to purchase the luxury model, as he had not seen or test driven the vehicle. Mr Luo says that he was reassured by Vehicle Logistics’ salesperson that he could back out of the agreement and that the deposit payable under the agreement was refundable.
[5] On that basis, Mr Luo says he signed the vehicle sale and purchase agreement on 16 December 2017 and paid a $5,000 deposit.
[6] Mr Luo then decided not to purchase the vehicle. He says that he wanted to install a flat deck on the vehicle to transport beehives. Mr Luo consulted an engineer who advised that installing a flat deck on the vehicle would make the vehicle unstable.
[7] Mr Luo cancelled the agreement and sought to recover his deposit. Vehicle Logistics refunded most of the deposit, but has retained $350.75, which it says reflects the cost it has incurred in its dealings with Mr Luo.
[8] Mr Luo has now applied to the Tribunal, seeking to recover the amount retained by Vehicle Logistics. He says that he was misled by Vehicle Logistics. He says that he was advised that the deposit was refundable, and would not have paid the deposit if he had known that Vehicle Logistics could retain part of the deposit.

The Issues

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

• (a) Has Vehicle Logistics engaged in misleading conduct that breached s 9 of the Act?
• (b) If Vehicle Logistics is found to have breached s 9 of the Act, what remedy is Mr Luo entitled to under the Act?
  

Has Vehicle Logistics engaged in misleading conduct?

[10] The primary issue in this case is to determine whether Mr Luo has proved that Vehicle Logistics breached s 9 of the Act. Section 9 of the Act provides:

“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.”

[11] The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corporation Ltd 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. 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.”

[12] To succeed in a claim under the Act, Mr Luo must show that Vehicle Logistics represented that the deposit was refundable, and that this representation was misleading or deceptive conduct in breach of s 9 of the Act.

Did Vehicle Logistics represent that the deposit was refundable?

[13] Mr Luo says that Vehicle Logistics’ salesperson told him that the deposit was refundable. Mr Luo says that he was hesitant to purchase the vehicle sight unseen, but was reassured by the salesperson’s representation that he could back out of the agreement and that his deposit would be refunded.
[14] Peter Murray, who appeared for Vehicle Logistics, says that the company does not normally tell its customers that the deposit is refundable. He says that Mr Luo would have been told by the company’s business manager that the deposit was non-refundable. Mr Murray also says that he has been told by the salesperson who dealt with Mr Luo that the salesperson did not tell Mr Luo that the deposit was non-refundable.
[15] Despite knowing that this case was about pre-purchase representations made to Mr Luo by its employees, Vehicle Logistics did not call any evidence from any of the employees who dealt with Mr Luo. Accordingly, the only direct evidence I have about what was said to Mr Luo comes from Mr Luo, and I accept Mr Luo’s evidence that he was told that the deposit was refundable. Mr Luo’s evidence was clear and consistent and I am satisfied that he was reluctant to purchase the vehicle sight unseen, and only agreed to do so because he was reassured that he could cancel the agreement and recover his deposit.
[16] In concluding that Mr Luo was told that the deposit was refundable, I note that the vehicle offer and sale agreement contained a clause to the effect that the deposit is non-refundable. However, there is no evidence to show that the agreement was explained to Mr Luo, or that he read or understood the agreement. Further, the agreement is poorly drafted and confusing, and a reasonable consumer could quite easily miss the clause that states that the deposit is non-refundable. There is a reference on the front page of the agreement that the conditions applicable to the deposit are in cl 12 of the agreement. However, cl 12 deals with alterations to the specifications of the vehicle. The terms and conditions applicable to the deposit are in cl 8. There are several other obvious drafting errors in the agreement.
[17] I am therefore satisfied that Mr Luo was told that the deposit was refundable, and that he was not aware of the clause in the agreement that stated that the deposit was non-refundable.

Was the representation misleading?

[18] The representation that the deposit was refundable was misleading because the deposit was not fully refundable. The contract said that the deposit was non-refundable, Vehicle Logistics has retained $350.75 of the deposit, and maintained its insistence at the hearing that it was entitled to do so.
[19] Accordingly, by representing that the deposit was refundable, when it was not, Vehicle Logistics has engaged in conduct that breached s 9 of the Act.

What remedy is Mr Luo entitled to under the Act?

[20] The remedies available for a breach of the Act are discretionary. They are set out in s 43 of the Act 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) subpart 5 of Part 2 of the Contract and Commercial Law Act 2017; or

(b) section 317 of the Accident Compensation Act 2001.

[21] I am satisfied that Mr Luo has suffered loss as a result of being misled. Vehicle Logistics has retained $350.75 of the deposit. Further, Vehicle Logistics’ conduct was an effective cause of that loss. Mr Luo would not have paid the deposit if he knew that Vehicle Logistics could retain some or all of the deposit.
[22] I am therefore satisfied that, under s 43(3)(e) of the Act, Mr Luo is entitled to have the full deposit refunded.
[23] Accordingly, the Tribunal orders that Vehicle Logistics shall, within 10 working days of this decision, pay $350.75 to Mr Luo.

DATED at AUCKLAND this 10th day of July 2018

B.R. Carter
Adjudicator

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[1] Red Eagle Corporation Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].