Singh v MD Distributors Limited Reference No. MVD 215/2018 [2018] NZMVDT 171 (24 July 2018)

Last Updated: 17 August 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2018] NZMVDT 171 Reference No. MVD 215/2018
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	JODHVIR SINGH
		Purchaser
	AND	MD DISTRIBUTORS LTD
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Haynes, Assessor
HEARING at Auckland on 10 July 2018
DATE OF DECISION 24 July 2018
APPEARANCES
J Singh, Purchaser P K Sandhu, Witness for the Purchaser
G Haslem, for the Trader R Tenedero, Witness for the Trader

ORDERS

1. Jodhvir Singh’s application is dismissed.

DECISION

[1] MD Distributors Ltd engaged in conduct that breached s 9 of the Fair Trading Act 1986 (the FTA) by describing the vehicle as a 2018 vehicle when it was actually manufactured in June 2016.
[2] Although Mr Singh was misled by MD Distributors’ conduct, he has not suffered any loss recoverable under the FTA. Accordingly, his application is dismissed.

REASONS

Introduction

[3] Mr Singh is a taxi driver, who regularly drives to and from Auckland Airport. Requirements imposed by Auckland International Airport Ltd mean that all taxis operating from the airport must be less than seven years old from the date of manufacture.
[4] By early 2018, Mr Singh’s 2011 Toyota Prius was about to become older than allowed under Auckland Airport rules. On 7 April 2018, Mr Singh purchased a Mahindra XUV500 for $30,940 from MD Distributors to use as a replacement for his Prius in his taxi business. Mr Singh purchased the vehicle on the mistaken understanding that it had been manufactured in 2018. It had not been. The vehicle was manufactured in June 2016.
[5] The vehicle’s year of manufacture was important to Mr Singh as he wanted to be able to use the vehicle in his taxi business for seven years before selling it. He says that he will now only be able to use this vehicle for five years before it becomes older than is allowed by Auckland Airport rules.
[6] Mr Singh has now applied to the Tribunal seeking to cancel the contract for purchase of the vehicle and to obtain a refund of the purchase price. He says that he would not have purchased the vehicle if he had known it had been manufactured in June 2016, and that he has suffered loss as a result of purchasing it.
[7] MD Distributors says that it did not engage in misleading conduct. It says that it did not advise Mr Singh that the vehicle was manufactured in 2018 and says that the vehicle is the latest model available in New Zealand and that the vehicle comes with a new car warranty and roadside assistance, as a reasonable consumer would expect from a new vehicle.

The Issues

[8] Against this background, the issues requiring consideration in this case are:

• (a) Has MD Distributors engaged in misleading conduct that breached s 9 of the FTA by misrepresenting the year of the vehicle?
• (b) If so, what remedies is Mr Singh entitled to under the FTA?

Has MD Distributors engaged in conduct that breached s 9 of the FTA?

[9] Section 9 of the FTA 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.

[10] 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. 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.

[11] I am satisfied that MD Distributors has breached s 9 of the FTA by engaging in conduct that would lead a reasonable consumer to believe that the vehicle was a 2018 model, when it was not.
[12] There was disagreement between the parties as to precisely what was said between them regarding the age of the vehicle. Mr Singh and his wife, Ms Sandhu, gave evidence that they advised Roger Tenedero, the salesman who sold the vehicle, that they wanted to purchase a vehicle manufactured in 2018. Mr Tenedero disagreed and said that Mr Singh and Ms Sandhu never asked about the year of manufacture and were instead only interested in purchasing a new vehicle, of the model that they had seen advertised online.
[13] I am unable to resolve the differences in this evidence as I found both sets of witnesses to be equally plausible. However, I do not need to decide whether MD Distributors represented that the vehicle was manufactured in 2018. That is because, on the evidence provided by MD Distributors, I am satisfied that MD Distributors made misleading representations to the effect that this vehicle was a 2018 model. Mr Tenedero accepted that he advised Mr Singh that this was the latest model vehicle and that it was new. Further, the Consumer Information Notice (CIN) attached to the vehicle and provided to Mr Singh shows that the “vehicle year” is 2018.
[14] I acknowledge that the vehicle year representation on the CIN reflects NZ Transport Agency requirements that the “vehicle year” is the year of first registration, rather than the year of manufacture. Nonetheless, I am satisfied that the representations made by Mr Tenedero, together with the statement on the CIN, was sufficient for a reasonable consumer to conclude that this vehicle was a 2018 model. It was not. MD Distributors provided evidence to show that the vehicle was manufactured in June 2016.
[15] MD Distributors does not agree that this conduct was misleading. Mr Haslem, the General Manager of MD Distributors, spent some time talking the Tribunal through MD Distributors’ business model. MD Distributors is the licensed distributor for Mahindra vehicles in New Zealand. Mr Haslem advised that MD Distributors does not import the most recent model of Mahindra XUV500 vehicles, and instead tends to purchase stock from Australian businesses that have overstocked and are looking to onsell surplus stock. Mr Haslem advised that this means that his company does not sell the most recent model of Mahindra XUV500 vehicles.
[16] Mr Haslem says that, although it is not the latest model available overseas, the vehicle is a new vehicle. He says that the model purchased by Mr Singh is the newest model available in New Zealand, and that the vehicle comes with full manufacturer’s warranty and roadside assistance, which is consistent with purchasing a new vehicle.
[17] Although I acknowledge Mr Haslem’s evidence provides an explanation as to how Mr Singh came to purchase a vehicle manufactured in June 2016, I do not think it provides any defence to Mr Singh’s claim that he was misled. MD Distributors sold a vehicle manufactured in June 2016 as a 2018 vehicle. I am satisfied that a reasonable consumer would have been misled by MD Distributors’ conduct. I consider that a reasonable consumer would have understood the representations made by MD Distributors to mean that the vehicle was the latest model and that it was manufactured in 2018, or if not manufactured in 2018, manufactured in late 2017. A reasonable consumer certainly would not have expected the vehicle to have been manufactured in June 2016.
[18] I am therefore satisfied that MD Distributors has engaged in conduct that breached s 9 of the FTA.

What remedy is available to Mr Singh under the FTA

[19] The remedies available for a breach of the FTA 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 a 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.

[20] 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 protecting 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]

Did Mr Singh pay more for the vehicle than it was worth?

[21] Under s 43 of the FTA, the normal measure of loss is the “difference between the value of what was acquired and the price paid”.[3] That means Mr Singh will have suffered loss if he paid more for the vehicle than it was worth.
[22] In this case, I am not satisfied that Mr Singh paid more than the vehicle was worth. Mr Singh paid $30,940 for the vehicle, and I heard no evidence to suggest that Mr Singh paid more for the vehicle then it was worth. Indeed, the evidence suggests that this was the market price for the vehicle.
[23] Mr Singh also claims that the vehicle is worth less than he paid for it because under the Auckland Airport rules, he will only be able to use the vehicle for five years as a taxi, rather than the seven years he expected. Again, Mr Singh has not proven that the vehicle was worth less because of its reduced life expectancy as a taxi, and even if he had, I do not consider that he would be entitled to recover that loss because that loss would not have been a reasonably foreseeable consequence of MD Distributors’ misleading conduct.
[24] Loss recoverable under s 43(3) of the FTA must be a reasonably foreseeable consequence of the misleading conduct. That is, the loss must be of a kind that the parties to the transaction could reasonably have contemplated may arise because of any misleading conduct.
[25] In this case, I am not satisfied that loss arising from the reduced life expectancy of the vehicle as a taxi is a reasonably foreseeable consequence of Mr Singh being misled about the vehicle’s age. That is because I am not satisfied that Mr Singh has proven that he told MD Distributors that the vehicle was going to be used as a taxi and I do not consider that MD Distributors, in the absence of being told, could reasonably foresee that the vehicle was going to be used as a taxi.
[26] Mr Singh says he told Mr Tenedero that he intended to use the vehicle as a taxi. Ms Sandhu gave evidence in support of her husband’s version of events. Mr Tenedero is adamant that Mr Singh did not mention that the vehicle was going to be used as a taxi. Mr Tenedero says that he would have remembered such a conversation. Mr Tenedero arranged finance for Mr Singh and says that this information would have been important to him in making the finance application. Mr Tenedero is from the Philippines, where he worked as a car salesman. Mr Tenedero says that he would have remembered if Mr Singh had told him that the vehicle was to be used as a taxi because, in the Philippines, he would have been required to advise the finance company of that use, an obligation he believes he would also have in New Zealand.
[27] Again, I cannot resolve the differences between the oral evidence of Mr Singh, Ms Sandhu and Mr Tenedero, and the other evidence provided by the parties does not assist in determining whether Mr Singh advised MD Distributors that he was intending to use the vehicle as a taxi.
[28] Mr Singh provided copies of bank statements provided to MD Distributors as part of his finance application that show income from his taxi driving business. However, that information is not sufficient to show that this vehicle was going to be used in Mr Singh’s taxi business. Further, Mr Singh claimed that email correspondence with the National After Sales Manager of Mahindra New Zealand also proved that he notified the trader that he intended to use the vehicle as a taxi. That email correspondence does not assist Mr Singh’s claim as it occurred after he purchased the vehicle.
[29] As applicant, Mr Singh must prove all aspects of his claim on the balance of probabilities. Based on the evidence I have seen and heard, I am not satisfied that he has proven that he told MD Distributors that he intended to use the vehicle as a taxi before he purchased the vehicle.
[30] Accordingly, I am not satisfied that any loss that Mr Singh may have suffered because of the reduced life expectancy of the vehicle as a taxi are a reasonably foreseeable consequence of MD Distributors’ misleading conduct.

Has Mr Singh suffered loss because he has not used the vehicle as a taxi?

[31] Mr Singh also seeks to recover income he has lost since he purchased the vehicle. He says that he has not used the vehicle in his taxi business since purchasing it, meaning that he has not received the level of income that he would normally expect to receive.
[32] Mr Singh advises that a taxi driver must register their vehicle with Auckland Airport before it can be used to transport passengers to and from the airport. Mr Singh says that he has lost income because he has not used the vehicle as a taxi because he has not registered the vehicle for use at the airport. He says that he was uncertain as to whether he should register the vehicle as a 2016 or 2018 vehicle, so chose to wait until this application was resolved before deciding what to do. Mr Singh says he is entitled to recover these losses from MD Distributors because he told MD Distributors that he was going to use the vehicle as a taxi.
[33] Again, I consider that Mr Singh is not entitled to recover this loss, as it is not a reasonably foreseeable consequence of MD Distributors’ misleading conduct. For the reasons set out above, I do not consider that MD Distributors could reasonably foresee that Mr Singh might suffer loss arising from the use of the vehicle in his taxi business.
[34] Further, even if Mr Singh had proven that he had told MD Distributors that the vehicle was to be used as a taxi and that the loss was reasonably foreseeable, I am not satisfied that he can recover the lost income he seeks.
[35] That is because Mr Singh’s loss was caused by his own decision not to register the vehicle, rather than MD Distributors’ misleading conduct. By the time Mr Singh made the decision not to register the vehicle for use at the airport, he knew that the vehicle was manufactured in 2016. I consider that, to avoid suffering the loss he now claims, he could easily have registered the vehicle as a 2016 vehicle and used it to drive to and from the airport as part of his taxi business. He could then have sought to recover any loss that he might have suffered from purchasing the vehicle from the Tribunal.
[36] This would have been the sensible path to take, it would not have compromised his claim before the Tribunal and would have led to no disruption at all to his taxi business, or to any loss of income. Instead, Mr Singh chose not to register the vehicle for use at the airport. In those circumstances, I decline to make any order requiring MD Distributors to compensate Mr Singh for any loss suffered because of his decision not to register the vehicle to be used at Auckland Airport.

Conclusion

[37] MD Distributors engaged in conduct that breached s 9 of the FTA by describing the vehicle as a 2018 vehicle when it was actually manufactured in June 2016.
[38] Although Mr Singh was misled by MD Distributors’ misleading conduct, he has not suffered any loss recoverable under the FTA.
[39] Accordingly, Mr Singh’s application is dismissed.

DATED at AUCKLAND this 24th day of July 2018

B.R. Carter
Adjudicator

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[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].
[3] Narayan v Arranmore Developments Ltd [2011] NZCA 681, (2011) 13 NZCPR 123 at [49].