Arain v 500 Autos Ltd - Reference No. MVD 516/2018 [2019] NZMVDT 67 (9 April 2019)

Last Updated: 19 May 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 516/2018 [2019] NZMVDT 067 BETWEEN ZAFAR ARAIN Applicant AND 500 AUTOS LTD Trader

MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator

S D Gregory, Assessor

HEARING at Auckland on 25 February 2019 and 26 March 2019

APPEARANCES

Z Arain, Applicant A Chatha, Witness for the Purchaser

D Zhang and A Zhao, for the Trader

DATE OF DECISION 9 April 2019

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DECISION OF THE TRIBUNAL

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1. Zafar Arain’s application is dismissed.
   

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REASONS

Introduction

[1] On 15 April 2018, Budget Computers New Zealand Ltd purchased a 2016 BMW 730LD for $107,000 from 500 Autos Ltd. Zafar Arain is a director of Budget Computers New Zealand Ltd.
[2] Budget Computer has applied to the Tribunal seeking to reject the vehicle under the Consumer Guarantees Act 1993 (the CGA) and obtain orders for a refund of the purchase price and payment of compensation. That application has been decided separately. It also alleges that 500 Autos engaged in misleading conduct by representing that the vehicle was imported from Japan, when it was imported from the United Kingdom.
[3] Although Mr Arain did not purchase the vehicle, he has also applied to the Tribunal seeking orders that 500 Autos Ltd pay compensation to him personally.

The Issues

[4] The issues requiring consideration in this application are:

• (a) Is Mr Arain is entitled to compensation under the CGA in respect of a vehicle he did not purchase?
• (b) Has 500 Autos engaged in misleading conduct in breach of s 9 of the FTA?
• (c) If so, what remedy is Mr Arain entitled to under the FTA?

Is Mr Arain entitled to compensation under the CGA?

[5] 500 Autos is a supplier for the purposes of the CGA. It sells motor vehicles and sold this vehicle to Budget Computers.
[6] The remedies against a supplier are contained in Part 2 of the CGA. Under s 16 of the CGA, the remedies in Part 2 of the CGA are only available to a consumer, as that term is defined in the Act. Under s 2 of the CGA, a consumer is defined as “a person who acquires from a supplier goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption”. This definition means that Mr Arain can only seek a remedy against 500 Autos if Mr Arain acquired the vehicle from 500 Autos.
[7] Mr Arain did not acquire the vehicle from 500 Autos, Budget Computers did. Accordingly, Mr Arain is not entitled to any remedy in respect of the vehicle under the CGA. The fact that Mr Arain is a director of Budget Computers and that he may personally have incurred costs and suffered stress and anxiety because of the ongoing issues with the vehicle does not change that conclusion.
[8] His application for compensation under the CGA is therefore dismissed.

Has 500 Autos engaged in misleading conduct?

[9] I also understood Mr Arain to allege that 500 Autos engaged in misleading conduct by representing that the vehicle was imported from Japan, when it was imported from the United Kingdom.
[10] 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.”

[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] I am satisfied that 500 Autos engaged in misleading conduct in breach of s 9 of the FTA. The Consumer Information Notice provided to Budget Computers stated that the vehicle was imported from Japan. That representation was false, because the vehicle was imported from the United Kingdom.

What remedy is Mr Arain entitled to under the FTA?

[13] 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.

[14] Although I am satisfied that a person can obtain damages under the FTA when that person was not a party to the transaction, I am not satisfied that Mr Arain has proven that he suffered any loss as a result of the vehicle being imported from the United Kingdom rather than Japan.
[15] Mr Arain submitted that Budget Computers would not have purchased the vehicle if it had known that the vehicle was imported from the United Kingdom. In this regard, I understood Mr Arain to suggest that vehicles imported from the United Kingdom were more prone to problems than vehicles of Japanese origin. Mr Arain suggested that the loss he has suffered has occurred because of the decision to purchase the vehicle.
[16] I have some reservations about accepting this submission. Mr Arain did not lead sufficient evidence to show why the country of origin of the vehicle was significant to the company’s purchasing decision, or that vehicles imported from the United Kingdom are more prone to problems than those imported from Japan.
[17] Instead, I consider that the country of origin had no real bearing on Budget Computers’ decision to purchase the vehicle. It may now have assumed some significance due to events that occurred after purchase, but I am not satisfied that Mr Arain has proven that Budget Computers would not have purchased the vehicle if it had known that it was imported from the United Kingdom, or that he suffered loss because of the misleading representation as to the vehicle’s country of origin.
[18] Accordingly, Mr Arain’s application under the FTA is dismissed.

DATED at AUCKLAND this 9th day of April 2019

B.R. Carter
Adjudicator

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