Baxter v Central Motor Holdings Limited t/a Wholesale Vehicles Taupo Reference No. MVD 050/2018 [2018] NZMVDT 163 (12 July 2018)

Last Updated: 17 August 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2018] NZMVDT 163
Reference No. MVD 050/2018

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN LUCY JOLYNNE BAXTER AND STUART MICHAEL BAXTER

Purchasers

AND CENTRAL MOTOR HOLDINGS LIMITED T/A WHOLESALE VEHICLES TAUPO

Trader

MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

S N Haynes – Assessor

HEARING at Taupo on 26 April 2018

FURTHER SUBMISSIONS RECEIVED on various dates in May and June 2018

DATE OF DECISION 12 July 2018
APPEARANCES

L J and S M Baxter, Purchasers
No appearance for Trader

DECISION

1. Central Motor Holdings Limited must pay Lucy and Stuart Baxter $221.75 no later than 26 July 2018.
2. If the fault in the vehicle's transmission continues and Central Motor Holdings refuses to remedy it, then Lucy and Stuart Baxter may bring a further application to the Tribunal to reject the vehicle.
   

REASONS

Introduction

[1] Stuart and Lucy Baxter began to experience transmission problems with their 2003 Volkswagen Passat, two to three weeks after purchasing it from Central Motor Holdings Limited trading as Wholesale Vehicles Taupo. Central Motor Holdings denies selling the vehicle to them. Its director, Daniel Hunter, says he sold the vehicle on behalf of its owner and it was a private sale.
[2] From this background, the following issues arise:

• (a) Who sold the vehicle to Mr and Mrs Baxter?
• (b) Did the vehicle fail to comply with the guarantee of acceptable quality?

Issue one: Who sold the vehicle to Mr and Mrs Baxter?

[3] Mr and Mrs Baxter claim they bought the vehicle from Central Motor Holdings, trading as Wholesale Vehicles Taupo with the trader number M198272, from 3 Matai Street in Taupo.
[4] Mr Baxter saw the vehicle listed on Trade Me and used the Trade Me platform to forward a summary of the listing to his wife on 23 November 2017. The date on which the vehicle had been listed is recorded on the listing summary as Monday 13 November. The full details of the listing were not included on the email produced by Mr Baxter, so the Tribunal asked the purchasers to enquire with Trade Me if it was possible to obtain them. Trade Me supplied details of an earlier listing of the vehicle confirming that it had been listed by Wholesale Vehicles Taupo through a DealerBase account in the name of Daniel Hunter and Gary Francis. This account was, in turn, associated with an AutoBase account in the name of Central Motor Holdings Limited trading as Lakeside Wholesale Vehicles.
[5] The photograph on the listing summary which Mr Baxter forwarded to his wife had a logo on it which, while small, was readily identifiable as the same logo used by Wholesale Vehicles Taupo on its advertising and signage.
[6] Mr Baxter told the Tribunal that he phoned Wholesale Vehicles Taupo to enquire about the vehicle he had seen listed on Trade Me. He spoke to Mr Hunter, who told him that the vehicle was not at his yard because he was changing the location of his business premises. Mr Hunter gave Mr Baxter the address of where the vehicle was being kept, which Mr Hunter later described as a paddock on his property.
[7] Mr Baxter went to inspect the vehicle and took it for a test drive. He thought there may have been a consumer information notice (CIN) on the passenger seat, but this was not supplied to Mr Baxter or produced to the Tribunal.
[8] Mr Hunter told Mr Baxter that he was selling the vehicle "on behalf" and that Mr Hunter was “the middle man”.
[9] Mr Hunter provided Mr Baxter with a bank deposit slip showing the account holder as:

CENTRAL MOTOR HOLDINGS LIMITED

WHOLESALE VEHICLES TAUPO RMVT

[10] Mr Hunter did not attend the hearing and so the trader was unrepresented. Prior to the hearing, Mr Hunter sought an adjournment but he did not provide adequate evidence that a representative of Central Motor Holdings was unable to attend the hearing. For that reason, I declined the adjournment request.
[11] In an email supplied after the hearing, Mr Hunter repeated his denial that Central Motor Holdings had sold the vehicle. He said that Wholesale Vehicles Taupo has closed and has surrendered its motor vehicle trading registration.
[12] Since January 2018, Mr Hunter has operated a new business, Lakeside Wholesale (1989) from different premises in Taupo, with a different registration number (M336252) and a different holding company, Chelate Holdings Limited. However, as at the date of purchase of Mr and Mrs Baxter's vehicle, 1 December 2017, Central Motor Holdings still held its trader registration to allow it to trade as Wholesale Vehicles Taupo, and the company is still listed on the Companies Register. Indeed, the Motor Vehicle Traders Register records that Central Motor Holdings’ trader registration was not surrendered until 19 April 2018, more than four months after the sale of the vehicle to Mr and Mrs Baxter.
[13] In considering Mr Hunter’s submission that Central Motor Holdings Ltd was not the trader which sold the vehicle, it is necessary to have regard to various definitions in the applicable legislation.
[14] First, I note the definition of “sale” in s 6 of the Motor Vehicle Sales Act 2003 (the MVSA), which provides:

sale, in relation to any motor vehicle,—

(a) means the sale or lease or exchange or any other disposition of that motor vehicle or of any interest in that motor vehicle (for example, under a hire purchase agreement); and

(b) includes the display for sale or offer for sale or offer for lease or offer for exchange of that motor vehicle; but

(c) does not include a lease or offer for lease of a motor vehicle for a term not exceeding 4 months.

[15] This definition includes not only the actual sale of a vehicle but extends to the "display for sale or offer for sale" of a vehicle. It is designed to cover a trader who merely offers a vehicle for sale through the mechanism of a Trade Me listing, as Central Motor Holdings clearly did in the present case. The fact that the vehicle was not displayed for sale on the former premises of Central Motor Holdings/Wholesale Vehicles Taupo does not mean it was not the seller.
[16] Furthermore, as I will shortly explain further, there were other indications that Central Motor Holdings was involved in the sale of the vehicle, including that Mr Hunter took part in the sale transaction and that the purchase price for the vehicle was deposited into Central Motor Holdings' bank account.
[17] Also relevant is the definition of “supplier” in s 2(1) of the Consumer Guarantees Act 1993 (the CGA), which provides:

supplier—

(a) means a person who, in trade,—

(i) supplies goods to a consumer by—

(A) transferring the ownership or the possession of the goods under a contract of sale, exchange, lease, hire, or hire purchase to which that person is a party; or

(B) transferring the ownership of the goods as the result of a gift from that person; or

(C) transferring the ownership or possession of the goods as directed by an insurer; or

(ii) supplies services to an individual consumer or a group of consumers (whether or not the consumer is a party, or the consumers are parties, to a contract with the person); and

(b) includes,—

(i) where the rights of the supplier have been transferred by assignment or by operation of law, the person for the time being entitled to those rights:

(ii) a creditor within the meaning of the Credit Contracts and Consumer Finance Act 2003 who has lent money on the security of goods supplied to a consumer, if the whole or part of the price of the goods is to be paid out of the proceeds of the loan and if the loan was arranged by a person who, in trade, supplied the goods:

(iii) a person who, in trade, assigns or procures the assignment of goods to a creditor within the meaning of the Credit Contracts and Consumer Finance Act 2003 to enable the creditor to supply those goods, or goods of that kind, to the consumer:

(iv) a person (other than an auctioneer) who, in trade, is acting as an agent for another, whether or not that other is supplying in trade.

[18] I consider that Central Motor Holdings is covered by this definition in two respects. First, Central Motor Holdings supplied the vehicle to Mr and Mrs Baxter under para (a)(i)(A) by transferring the ownership and possession of the vehicle to them under a contract of sale to which it was a party. The evidence of this is that Mr Hunter, the company’s director, was personally involved in the sales transaction. It also appears that the registration of the vehicle was placed in the name of Central Motor Holdings on the day of its sale, after which it was then transferred to Mr and Mrs Baxter.
[19] Moreover, I consider that even if Mr Hunter was (as he says) acting as the “middle man” for an undisclosed private seller, he would be caught by the definition of “supplier” in terms of para (b)(iv) of the definition as a person who was, in trade, acting as an agent for another.
[20] The third definition to which it is helpful to refer is the expanded definition of who is treated as a motor vehicle trader in s 8 of the MVSA:

8. Who is treated as motor vehicle trader

(1) A person is treated as carrying on the business of motor vehicle trading for the purposes of this Act if—

(a) the person holds out that the person is carrying on the business of motor vehicle trading; or

(b) in any specified period, the person sells more than 6 motor vehicles, unless that person proves that those motor vehicles were not sold for the primary purpose of gain; or

(c) in any specified period, the person imports more than 3 motor vehicles, unless that person proves that those motor vehicles were not imported to be sold for the primary purpose of gain.

(2) For the purposes of subsection (1)(a), a person holds out that the person is carrying on the business of motor vehicle trading if that person—

(a) advertises or notifies or states that the person carries on the business of motor vehicle trading; or

(b) in any way represents that the person is ready to carry, or is carrying, on the business of motor vehicle trading.

(3) Subsection (1)(b) does not apply to any trustee corporation (within the meaning of section 2(1) of the Trustee Act 1956) acting in the capacity of executor, administrator, trustee, guardian, committee, manager, agent, attorney, or liquidator, or in any fiduciary capacity, unless the trustee corporation is acting on behalf of the same person or estate.

[21] In respect of this definition, I note that s 8(2)(a) provides that a person is treated as carrying on the business of motor vehicle trading if that person “advertises” that the person carries on the business of motor vehicle trading.
[22] In this regard, I note again the fact that the Trade Me listing for the vehicle contained the logo for Wholesale Vehicles Taupo. Mr Baxter obtained the contact details for Central Motor Holdings/Wholesale Vehicles Taupo from that listing.
[23] It follows, in my view, that Central Motor Holdings was holding itself out as a motor vehicle trader and advertising that it was carrying on the business of motor vehicle trading. It was doing so when it listed this vehicle for sale, and when Mr Hunter facilitated the sale of the vehicle to Mr and Mrs Baxter.
[24] Accordingly, I find the combination of the Trade Me listing which Mr Baxter saw and used to contact Mr Hunter, the deposit slip provided for the payment of the purchase price, the fact that Mr Hunter was personally involved in the sales transaction, and the registration of the vehicle in the name of Wholesale Vehicles Taupo, a trading name for Central Motor Holdings Ltd, all indicate that Central Motor Holdings was the seller of the vehicle.
[25] It also follows that, as the vehicle was sold by a motor vehicle trader, it should have been supplied with a CIN in accordance with the Consumer Information Standards (Used Motor Vehicles) Regulations 2008. Furthermore, the vehicle does not appear to have been sold with a vehicle offer and sale agreement, contrary to the requirements of ss 14‒16 of the Motor Vehicle Sales Act 2003. I accept that it is possible that Mr Hunter may have genuinely believed that he was not selling the vehicle as a trader and that it was a private sale. However, I have found that he was mistaken.

Issue two: Did the vehicle fail to comply with the guarantee of acceptable quality?

[26] Section 6(1) of the CGA provides that where goods are supplied to a consumer there is a guarantee “that the goods are of acceptable quality”. According to s 2 of the CGA, “goods” includes vehicles.
[27] "Acceptable quality" is defined in s 7 of the CGA (as far as is relevant) as follows:

7. Meaning of acceptable quality

(1) For the purposes of section 6, goods are of acceptable quality if they are as—

(a) fit for all the purposes for which goods of the type in question are commonly supplied; and

(b) acceptable in appearance and finish; and

(c) free from minor defects; and

(d) safe; and

(e) durable,—

as a reasonable consumer fully acquainted with the state and condition of the goods, including any hidden defects, would regard as acceptable, having regard to—

(f) the nature of the goods:

(g) the price (where relevant):

(h) any statements made about the goods on any packaging or label on the goods:

(ha) the nature of the supplier and the context in which the supplier supplies the goods:

(i) any representation made about the goods by the supplier or the manufacturer:

(j) all other relevant circumstances of the supply of the goods.

[28] Whether a vehicle is of acceptable quality is considered from the point of view of a reasonable consumer who is fully acquainted with the state and condition of the vehicle, including any hidden defects.
[29] Having found that the vehicle was sold to Mr and Mrs Baxter by Central Motor Holdings, I turn to the evidence of what is wrong with it. Mr and Mrs Baxter allege that within two to three weeks of purchasing the vehicle, its gear box was not working correctly. They explained that the vehicle was not changing gear, it was sticking in gear and going into limp mode. Mr Baxter produced several videos which he said demonstrated the issues experienced.
[30] The Tribunal directed Mr and Mrs Baxter to provide a detailed report from an MTA assured repairer outlining what is wrong with the vehicle and two estimates of any repair costs.
[31] Mr Baxter produced a report from ACE Automotive 2005 Limited, but it found no fault codes and could not replicate the fault on a road test. Mr Baxter also produced a report from Ebbett Taupo which, again, could not find what was wrong as the fault did not appear at the time it assessed the vehicle.
[32] Ebbett Taupo suggested the fault could be in the park/neutral switch on the gear box control unit, but it could not tell.
[33] The Tribunal’s Assessor, Mr Haynes, advised that whatever is faulting is not leaving a “hard code” that is staying in the memory of the power-train control module (PCM). Any “soft code” that is being recorded will be deleted from the PCM when it resets itself after the vehicle is switched off.
[34] We adjourned the hearing to give the purchasers an opportunity to take the vehicle back to Ebbett Taupo when it was faulting, so that it could capture the live data. We provided a deadline of 21 June 2018. That date came and went with no further evidence being produced by the purchasers.
[35] The Tribunal is not prepared to adjourn this matter indefinitely, so we propose to resolve the application in the following way.
[36] Clearly the issue relating to the gear box is Central Motor Holdings’ responsibility.[1] There is something wrong with the vehicle’s transmission, but we do not yet know exactly what. We conclude that this is for Central Motor Holdings to sort out, by taking the vehicle back from Mr and Mrs Baxter to diagnose the fault itself. If it does so, it should provide Mr and Mrs Baxter with a suitable loan vehicle. Alternatively, Central Motor Holdings may decide to allow Mr and Mrs Baxter to bring the vehicle to Ebbett Taupo when it is next faulting and arrange for it to carry out any necessary repairs at Central Motor Holdings' expense.
[37] I note that if the vehicle continues to fault and Central Motor Holdings Ltd continues to refuse to assist, Mr and Mrs Baxter would be entitled to make a further application to the Tribunal in which they could seek to reject the vehicle and obtain a full refund.[2] Any such application will need to include evidence of what the fault is, what repair is needed, and what is the estimate of the cost of repair. Any rejection of the vehicle will need to comply with s 20 of the CGA, including the requirement that the right to reject be exercised within a reasonable time.[3]
[38] In the meantime, I consider that Mr and Mrs Baxter have established that the vehicle failed to comply with the guarantee of acceptable quality under s 6 of the CGA. In addition to the approach I have outlined by which they can seek to remedy that fault, I find they are entitled to recover the expenses they have incurred in attempting to have the fault diagnosed by Ace Automotive (in the sum of $141.25) and by Ebbett Taupo ($80.50). Accordingly, Central Motor Holdings must pay Mr and Mrs Baxter $221.75 within 14 days of the date of this decision.

J S McHerron
Adjudicator

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[1] Consumer Guarantees Act 1993, s 18(2)(a).

[2] Consumer Guarantees Act 1993, s 18(2)(b)(ii).

[3] Consumer Guarantees Act 1993, s 20(1)(a).