Perawiti v Free to Sell Northland Limited Reference No. MVD 438/2018 [2018] NZMVDT 298 (18 December 2018)

Last Updated: 15 January 2019

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL
		[2018] NZMVDT 298 Reference No. MVD 438/2018
	IN THE MATTER	of the Motor Vehicle Sales Act 2003
	AND
	IN THE MATTER	of a dispute
	BETWEEN	LEIANA REI PERAWITI
		Purchaser
	AND	FREE TO SELL NORTHLAND LTD
		Trader
MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Haynes, Assessor
HEARING at Auckland on 14 December 2018
DATE OF DECISION 18 December 2018
APPEARANCES
L R Perawiti, Purchasers S Hicks, Witness for the Purchaser
A Campi, for the Trader R Cates, Witness for the Trader

ORDERS

1. Free to Sell Northland Ltd shall, within 10 working days of the date of this decision, rectify the faults with the vehicle’s navigation system and Bluetooth functionality. All repairs performed should ensure that the vehicle has the same navigation system and Bluetooth functionality as represented in the Trade Me listing for the vehicle.

DECISION

[1] The vehicle has fault was navigation system and Bluetooth functionality that breaches the acceptable quality guarantee in s 6 of the Consumer Guarantees Act 1993 (the CGA). Ms Perawiti has not proven that the fault with the left-rear electric seat breaches any of the guarantees in the CGA.
[2] Under 18(2)(a) of the CGA, Ms Perawiti is entitled to have faults with the navigation system and Bluetooth functionality rectified within a reasonable time.
[3] Free to Sell Northland has also engaged in conduct that breaches s 9 of the Fair Trading Act 1986 (the FTA) by making misleading representations as to the extent of the vehicle’s navigation and Bluetooth functionality. However, Free to Sell Northland made no misleading representations in relation to the existence of a fault with the vehicle’s electric rear seat folding function.
[4] Although Free to Sell Northland’s conduct breaches s 9 of the FTA, the Tribunal makes no orders in relation to that conduct, as the remedies ordered under the CGA are sufficient to remedy the harm caused by the conduct that breached the FTA.

REASONS

Introduction

[5] On 2 August 2018, Ms Perawiti purchased a 2008 Mitsubishi Outlander for $10,995 from Free to Sell Northland Ltd. The vehicle had an odometer reading of 138,680 km at the time of sale. The vehicle was advertised as having Bluetooth functionality, navigation functionality (including NZ maps) and hands-free functionality. Ms Perawiti was also told that “everything works”.
[6] Everything does not work. The vehicle does not have Bluetooth functionality, does not have NZ maps (i.e. the vehicle’s navigation system is not programmed with New Zealand relevant data) and its hands-free function does not work. Likewise, it also has an undiagnosed fault with its left-hand electric rear seat folding function.
[7] Ms Perawiti has applied to the Tribunal seeking orders that Free to Sell Northland rectify the vehicle’s faults and compensate her for the cost of bringing this application.
[8] Free to Sell Northland accepts that the vehicle does not have the functionality advertised, but disputes that it represented that the vehicle necessarily had that functionality. It says that it is prepared to provide a remedy to Ms Perawiti, but not to the extent she seeks.

The Issues

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

• (a) Does the vehicle have faults that breach the acceptable quality guarantee in s 6 of the CGA?
• (b) What remedy is Ms Perawiti entitled to under the CGA?
• (c) Has Free to Sell Northland engaged in conduct that breaches s 9 of the FTA?
• (d) What remedy is Ms Perawiti entitled to under the FTA?

Does the vehicle have faults that breach the acceptable quality guarantee?

[10] Section 6 of the CGA imposes on suppliers and manufacturers of consumer goods "a guarantee that the goods are of acceptable quality". Section 2 of the CGA defines "goods" as including vehicles.
[11] The expression "acceptable quality" is defined in s 7 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.

(2) Where any defects in goods have been specifically drawn to the consumer's attention before he or she agreed to the supply, then notwithstanding that a reasonable consumer may not have regarded the goods as acceptable with those defects, the goods will not fail to comply with the guarantee as to acceptable quality by reason only of those defects.

(3) Where goods are displayed for sale or hire, the defects that are to be treated as having been specifically drawn to the consumer's attention for the purposes of subsection (2) are those disclosed on a written notice displayed with the goods.

(4) Goods will not fail to comply with the guarantee of acceptable quality if—

(a) the goods have been used in a manner, or to an extent which is inconsistent with the manner or extent of use that a reasonable consumer would expect to obtain from the goods; and

(b) the goods would have complied with the guarantee of acceptable quality if they had not been used in that manner or to that extent.

(5) A reference in subsections (2) and (3) to a defect means any failure of the goods to comply with the guarantee of acceptable quality.

[12] In considering whether or not goods meet the guarantee of acceptable quality, the Tribunal must consider the quality elements as set out in s 7(1)(a)–(e) of the CGA as modified by the factors set out in s 7(1)(f)–(j), from the perspective of a “reasonable consumer”. The test is an objective one; it is not a view of those factors from Ms Perawiti’s subjective perspective.

The navigation and Bluetooth functionality

[13] Free to Sell Northland advertised the vehicle on Trade Me. Ms Perawiti was attracted to the vehicle after reading the Trade Me listing and seeing the extensive list of extras and accessories that came with the vehicle. Ms Perawiti provided details of the Trade Me listing, which included representations that the vehicle came with Bluetooth functionality, a navigation system with NZ maps functionality and a hands-free talking function.
[14] The vehicle does not have those functions. The navigation system worked, but the system’s software had not been updated to include information relevant to New Zealand. Likewise, the Bluetooth function, which also controls the hands-free function, does not work.
[15] Free to Sell Northland submitted that the Trade Me listing did not contain representations as to the functionality of the vehicle. Instead, it submitted that the listing contained representations that the vehicle had those capabilities (i.e. that the functionality could be obtained, but did not necessarily exist).
[16] I do not accept the submission. I consider that the Trade Me listing is clear. Free to Sell Northland represented that the vehicle came with this functionality. It did not and I am satisfied that the vehicle was not of acceptable quality for the purposes of s 6 of the CGA. I consider that a reasonable consumer, having read the Trade Me listing stating that the vehicle had navigation system with NZ maps and Bluetooth functionality (which included a hands-free function), would expect the vehicle to come with that functionality. Because it did not, the vehicle was not of acceptable quality for the purposes of s 6 of the CGA.

The rear left electric seat folding function

[17] Ms Perawiti also claims that the rear left electric seat folding function did not work. Steve Hicks, Ms Perawiti’s husband, also gave evidence and confirmed the existence of this fault.
[18] Unfortunately, despite a direction from the Tribunal to do so, Ms Perawiti has not had this fault diagnosed by a qualified professional, meaning that there is no evidence to show what has caused the fault and how serious the fault is. Ms Perawiti advised that she did not want to incur the cost of having the fault diagnosed.
[19] Ms Perawiti was free to make that choice, but it does not assist her case. That is because Ms Perawiti has not proven whether the fault is sufficient to breach the acceptable quality guarantee.
[20] The purchaser of a 10-year-old vehicle that has travelled more than 136,000 km should understand that such a vehicle will inevitably come with minor faults. Mr Haynes, the Tribunal’s Assessor, advises that this fault could well be very minor, such as a faulty switch that requires replacement or cleaning. Accordingly, in the absence of evidence proving the significance of the fault, I cannot be satisfied that the fault is such that a reasonable consumer would consider a vehicle of this price, age and mileage to be of unacceptable quality.
[21] Ms Perawiti alleged that she expected the vehicle to be free of such faults because of the statement made by Richie Cates, a salesman from Free to Sell Northland. Mr Cates accepted that he told this Perawiti that “everything works” in the vehicle. Ms Perawiti says that this representation led her to believe that all components of the vehicle would function, and because the rear left-hand electric seat folding function does not work, Free to Sell Northland ought to rectify that fault.
[22] I do not consider that a reasonable consumer would have understood Mr Cates’ representation to be a guarantee that every one of the vehicle’s many distinct functions or components worked. Instead, I consider that a reasonable consumer would have interpreted Mr Cates’ representation as being an expression of his belief, based on the information that he had in his possession (which apparently included an AA appraisal showing the vehicle was free of defects), that all of the vehicle’s components functioned as they should.
[23] On the evidence I heard, I accept that Mr Cates’ representation was a genuine expression of his belief, based upon the information available to him at the time. Accordingly, the fact that Mr Cates represented that everything worked is not sufficient to prove that the fault with the rear left electric seat folding function breaches any of the CGA’s guarantees.

What remedy is Ms Perawiti entitled to under the CGA?

[24] The remedies relevant to this claim are set out in s 18 of the CGA, which provides:

18. Options against suppliers where goods do not comply with guarantees

(1) Where a consumer has a right of redress against the supplier in accordance with this Part in respect of the failure of any goods to comply with a guarantee, the consumer may exercise the following remedies.

(2) Where the failure can be remedied, the consumer may—

(a) require the supplier to remedy the failure within a reasonable time in accordance with section 19:

(b) where a supplier who has been required to remedy a failure refuses or neglects to do so, or does not succeed in doing so within a reasonable time,—

(i) have the failure remedied elsewhere and obtain from the supplier all reasonable costs incurred in having the failure remedied; or

(ii) subject to section 20, reject the goods in accordance with section 22.

(3) Where the failure cannot be remedied or is of a substantial character within the meaning of section 21, the consumer may—

(a) subject to section 20, reject the goods in accordance with section 22; or

(b) obtain from the supplier damages in compensation for any reduction in value of the goods below the price paid or payable by the consumer for the goods.

(4) In addition to the remedies set out in subsection (2) and subsection (3), the consumer may obtain from the supplier damages for any loss or damage to the consumer resulting from the failure (other than loss or damage through reduction in value of the goods) which was reasonably foreseeable as liable to result from the failure.

[25] Free to Sell Northland submitted, in relation to the repairs required to rectify the faults with the navigation system and Bluetooth functionality, that Ms Perawiti could not claim the full cost of the required repair. It says Ms Perawiti agreed on 12 September 2018 to settle this dispute by accepting the payment of $920 from Free to Sell Northland. It says that she cannot now change her mind and seek a further remedy.
[26] I accept that on 12 September 2018, Ms Perawiti did accept Free to Sell’s offer. However, I am not satisfied, for two reasons, that Ms Perawiti is now estopped from seeking a remedy she is otherwise entitled to under the CGA.
[27] Firstly, Ms Perawiti accepted Free to Sell Northland’s offer on the mistaken understanding that the total repair would cost a little more than $1,200. She was under that misapprehension because of a mistake made by a Blair Auto Electrical Ltd, an auto electrician in Wellington, who had provided an estimate for the repair but excluded the cost of many of the necessary components from that estimate. When Ms Perawiti discovered that Blair Auto Electrical had excluded the cost of those components, she immediately retracted her acceptance of Free to Sell Northland’s offer.
[28] Secondly, Free to Sell Northland has not paid the $920 offered to Ms Perawiti, meaning it has suffered no real disadvantage from the retraction of her acceptance of the offer to resolve this dispute.
[29] I am therefore satisfied that Ms Perawiti is entitled to a remedy under s 18(2)(a) of the CGA, and in that regard the Tribunal orders that Free to Sell Northland shall, within 10 working days of the date of this decision, rectify the faults with the vehicle’s navigation system and Bluetooth functionality. All repairs performed should ensure that the vehicle has the same functionality as represented in the Trade Me listing for the vehicle.

Has Free to Sell Northland engaged in conduct that breached s 9 of the FTA?

[30] 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.

[31] 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 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.

[32] I am satisfied that Free to Sell has engaged in misleading conduct in breach of s 9 of the FTA by making misleading representations as to the extent of the vehicle’s navigation and Bluetooth functionality. As set out above, the Trade Me listing contained representations that the vehicle had a navigation system with NZ maps functionality, when it did not, and that the vehicle had Bluetooth functionality, when it did not. Those representations are misleading and breach s 9 of the FTA.
[33] Ms Perawiti also alleged that the representation from Mr Cates that “everything worked” was misleading. As set out above, I consider a reasonable consumer would have interpreted Mr Cates’ representation as being an expression of his belief, based on the information that he had in his possession at the time. I accept that this was Mr Cates’ genuine and reasonably held belief, and accordingly I am not satisfied that this representation amounts to misleading and deceptive conduct in breach of s 9 of the FTA.

What remedy is available to Ms Perawiti under the FTA

[34] The remedies available for a breach of the FTA are discretionary. They 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) subpart 5 of Part 2 of the Contract and Commercial Law Act 2017; or

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

[35] The remedies in s 43(3) of the FTA are discretionary, and the discretion is to be exercised so as 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]
[36] In this case, I consider that the appropriate remedy under the FTA would have been an order under s 43(3)(g) that Free to Sell Northland perform the repairs necessary to rectify the navigation system and Bluetooth functionality faults. However, because I have already made such orders under s 18(2)(a) of the CGA, no further orders are required under the FTA. That is because the remedies granted to Ms Perawiti under the CGA are a reasonable and sufficient recognition of any loss or damage she has suffered as a result of Free to Sell Northland’s misleading conduct.

Costs

[37] Ms Perawiti also seeks to recover $650, being the cost she says she has incurred in bringing this application.
[38] Under cl 14(1)(a)(i) and (b) of sch 1 to the Motor Vehicle Sales Act 2003 (the MVSA), the Tribunal may award costs against a party where either:

• (a) the matter ought reasonably to have been settled before hearing but that party fails to participate in pre-hearing settlement discussions; or
• (b) that party fails to attend without reasonable cause.

[39] In this case, Free to Sell Northland did attempt to resolve this dispute with Ms Perawiti, as evidenced by its offer to pay $920 to her. Further, Free to Sell Northland attended the hearing. Accordingly, the Tribunal cannot award the costs sought by Ms Perawiti.

DATED at AUCKLAND this 18th day of December 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].

[2] At [31]..