Saunders v Muscle Car Imports Limited - Reference No. MVD 520/2018 [2019] NZMVDT 82 (18 April 2019)

Last Updated: 18 May 2019

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 520/2018
[2019] NZMVDT 082

BETWEEN TREVOR JOHN SAUNDERS

Purchaser

AND MUSCLE CAR IMPORTS LIMITED

Respondent

HEARING at Christchurch on 22 March 2019
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

R C Dixon – Assessor
APPEARANCES

T J Saunders, Purchaser
S J Saunders, Wife of Purchaser
T W Banks, Witness for Purchaser
L J Brookes, Director of Muscle Car Imports Ltd

DATE OF DECISION 18 April 2019

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

Muscle Car Imports Ltd must pay Trevor Saunders $25,000 no later than 13 May 2019.

___________________________________________________________________

REASONS

Introduction

[1] In 2015, Trevor Saunders decided to purchase an American classic car. He intended the car would be for his and Mrs Saunders' personal use and pleasure. The car Mr Saunders chose was a 1973 Dodge Challenger. In pre-sale marketing material, it was described to Mr Saunders as having “no rust an[y]where”. Based on this description, Mr Saunders bought the vehicle and waited for it to be imported from the United States.
[2] Sadly, the car has failed to bring any pleasure to Mr and Mrs Saunders. Contrary to the way in which it was described, the car has significant underbody rust, so much so that it was flagged by the New Zealand Transport Agency border inspector as having structural damage. More than three years after it was imported, the car still does not have entry certification. The estimated cost of repairs needed to achieve entry certification so that the vehicle can be used lawfully on New Zealand roads is more than the purchase price that Mr Saunders paid for it.
[3] Mr Saunders seeks help from the business that he says sold him the vehicle, Muscle Car Imports Ltd. Muscle Car Imports refuses to help. It does not accept that it sold the vehicle to Mr Saunders.
[4] Apart from determining whether Muscle Car Imports sold the car to Mr Saunders, the Tribunal needs to determine whether Mr Saunders has a claim for breach of a relevant guarantee in the Consumer Guarantees Act 1993 (the Act), or whether he has a valid claim under any other legislation in respect of which the Tribunal has jurisdiction. If Mr Saunders does establish a valid claim, the Tribunal will then have to determine what, if any, is the appropriate remedy.

What happened?

[5] By word of mouth, Mr Saunders heard that Geoffrey Hale, director of Muscle Car Imports Ltd, could obtain a suitable vehicle for him. Mr Saunders found Muscle Car Imports’ website and verified that it was a registered motor trader, under the trader number M291451.
[6] The website, which is still online, despite the fact that Muscle Car Imports’ trader registration expired on 3 February 2017, states as follows:

About Muscle Car Imports

For over 20 years we have been sourcing and importing cars into New Zealand from the USA.

We have contacts in the USA who regularly send us information on cars for sale and we make regular buying trips to the USA ourselves. We are usually able to source cars to order as well.

...

We can provide advice on what cars can be registered here and the “ins and outs” of doing so.

In our fully equipped workshop we can carry necessary repairs and prepare the car for NZ compliance.

Usually pre-purchase inspections can be arranged providing you detailled [sic] reports and pictures for added peace of mind.

At Muscle Car Imports we are super passionate about cars, especially V8 Muscle Cars, and we get a real kick of pairing any new owner up with their cool new ride, be it a project vehicle or a drive away Classic.

[7] Muscle Car Imports operated a mailing list which Mr Saunders joined. Muscle Car Imports sent out regular emails to those on the mailing list from the email account [e-mail]. In these emails, vehicles for sale were advertised with descriptions of their condition, usually with pictures.
[8] On 6 March 2015, Mr Saunders received an email from the [e-mail] email address which states as follows:

Subject: FWD: ’73 Dodge Challenger

A clean Challenger with a good running 440 & 727 auto

$23,500 delivered in LA for shipping.

www.musclecarimports.co.nz

[9] The same day as he received the email, Mr Saunders telephoned Mr Hale and requested more information about the vehicle. Over the next five hours, Mr Saunders held two phone conversations with Mr Hale. Mr Saunders also emailed Mr Hale to establish the overall condition of the body and what, if any, rust the car might have. Mr Saunders said he was quite precise in his questioning of Mr Hale about the condition of the vehicle in terms of possible rust issues. From his limited knowledge of importing cars from America, Mr Saunders knew that the older cars can be quite rusty depending on what States they come from and the climate there. Mr Saunders reported that Mr Hale told him that the car was basically restored, without any rust. Although not a show car, it would make an excellent “daily driver” for a classic car enthusiast.
[10] At 3.11 pm on 6 March 2015, Mr Saunders emailed Mr Hale to ask him:

Hi Geoff

As discussed

What aint factory

What reconditioning done?

Is the colour original or factory colour.

What does the car need done if any?

What set up was it originally.

What funds required initially approx.

Cheers Trev

[11] At 6.04 pm the same day, Mr Hale replied by email from the [e-mail] email address to Mr Saunders as follows:

Hi Trev,

Got this back from my guy.

The car is clean, 1/4s were replaced professionally at the factory seams & NO rust anwhere [sic]

High quality paint, all new interior including restored guages [sic] etc.

8 and 3/4 diff

Very clean underneath

Good ready to use driver.

I can knock off USD $500 coz I owe you something for the Camaro sale (thanks for that).

Got 2 other guys asking about it too.

The car price needs to be paid upfront, the rest (shipping, GST, etc) when it lands in ChCh.

Lets know

Cheers Geoff

[12] During his telephone conversations with Mr Hale, Mr Saunders said that Mr Hale told him he could assist with getting the car complied and any repairs that it might need to pass compliance.
[13] At 6.22 pm on 6 March 2015, Mr Saunders confirmed to Mr Hale that he would buy the car.
[14] Further discussions followed regarding payment for the vehicle. Mr Hale told Mr Saunders that he should pay the initial purchase price into a nominated USA bank account in the name of S Curle. As requested by Mr Hale, Mr Saunders paid NZ$31,752.27 into Mr Curle's account on 9 March 2015. This sum represented the New Zealand dollar value for the vehicle purchase price of US$23,000, plus a telegraphic transfer fee of NZ$50. Apart from the customer receipt for the telegraphic transfer for this payment, there was no documentation produced to the Tribunal recording any vehicle offer and sale agreement (VOSA).
[15] On 21 May 2015, Mr Hale contacted Mr Saunders and requested payment of freight charges for the vehicle in the sum NZD$3,961.79. The invoice for this sum is dated 21 May 2015 and is headed with the words “Muscle Car Imports”. The Muscle Car Imports website URL is set out at the bottom of the invoice.
[16] On 22 June 2015, Mr Saunders received a second invoice relating to the vehicle. The total amount of this invoice was $7,320.21. It included GST on the vehicle in the sum of $4,859.15, plus various other expenses including for customs inspection and freight, other inspection fees, port service charges and transportation. This invoice was headed “Muscle Car Imports Limited” and it also had Muscle Car Imports’ website URL at the bottom of the page. Mr Saunders paid this invoice the following day, on 23 June 2015. When he informed Mr Hale that he had made the payment, Mr Saunders asked Mr Hale to give him a call when the vehicle reached Christchurch. Later that day, Mr Hale emailed Mr Saunders to say that the vehicle had arrived. However, Mr Hale had some further news about the vehicle for Mr Saunders, which he relayed to him as follows:

Now the good news and bad news, car is really cool, looks nice (needs a clean) sounds very very strong and healthy, and is very tidy.

But it has been flagged for rust. I did manage to have a quick look this avo and its pretty minor, its got a hole on the inside of the left rear sill and a bit daggy around one of the floor drain holes.

Pretty minor fix, and i would expect you would have a panel beater that would sort that for a coupla hundred bucks or so.

But all in all a bloody good car.

So, i cant get my guy to look at it until thats done and it has a repair cert (not sure what they are worth) so if you want to get a lift out you may as well take it away get the repairs done and get it back to me in a week or two, then I can do the rest. ...

[17] This email was a complete surprise to Mr Saunders for two reasons:

• (a) First, Mr Saunders understood that he would be getting a vehicle with no rust anywhere, as it had been described in the first email from Muscle Car Imports dated 6 March 2015.
• (b) Second, as part of the negotiation for the vehicle, Mr Saunders had asked Mr Hale to get his compliance agent contact to arrange what was needed for the car to obtain entry certification. On hearing that the car needed to have rust issues repaired, Mr Saunders first asked if Mr Hale could get that done for him. Mr Hale told Mr Saunders that he did not know anyone who could do this work. He asked Mr Saunders to arrange the rust repairs himself and then return the car to Muscle Car Imports, once the repairs were completed. Then, Mr Hale's compliance contact would check the car and arrange for the entry certification process to be completed.

[18] On 24 June 2015, Mr Saunders picked the car up from the premises of Muscle Car Imports, as listed on its motor vehicle trader details and on the company’s office website. At no time was any consumer information notice (CIN) or VOSA provided with the car.
[19] Mr Saunders arranged for a panel beater contact to make an initial assessment of the car to repair the sill rust and associated drain plughole rust as described by Mr Hale in his email of 22 June 2015. On inspection, the panel beater identified that other areas underneath the car also had rust issues and that the car would require an engineer’s inspection and sign off once it was repaired.
[20] On 7 July 2015, Mr Saunders contacted Mr Hale by text to advise him that there were still more rust problems with the vehicle. By then, Mr Saunders had arranged for an engineer to make an initial inspection of the vehicle. The engineer identified some other areas of concern, mainly in the rear of the car, including rust around the shackles connecting to the rear chassis rails and other areas.
[21] Later on 7 July 2015, Mr Saunders telephoned Mr Hale and told him that the car would likely cost quite a lot of money to repair. Mr Saunders asked Mr Hale for help. Mr Hale told Mr Saunders that there was nothing he could do, as he did not make much commission out of the car and that it would not be possible to return it to its owner in the USA and get a refund. After that conversation, Mr Saunders felt stranded with the car. Not really knowing how serious the rust issues were, Mr Saunders instructed his panel beater, Belfast Panel and Paint, to repair the vehicle to obtain certification so that it could be used in New Zealand.
[22] Later in 2015, Mr Hale contacted Mr Saunders and asked him to pick up the importation documents for the vehicle. When Mr Saunders uplifted the documents, he realised that they identified the previous United States owner of the vehicle, Ernie Hampton. These documents identified Mr Hampton as the seller of the car and Muscle Car Imports Ltd as the buyer. The purchase price was US$18,000, which was US$5,000 less than the price Mr Saunders paid into Mr Curle's account. This information is listed on the vehicle bill of sale dated 15 March 2015. This document was provided in two forms, an unsigned handwritten document, and a typed form which was signed by Geoff Hale on behalf of Muscle Car Imports Ltd. In both cases the declared value of the car was US$18,000.
[23] The car sat at Mr Saunders’ panel beater for several months. The panel beater did some dismantling work but did not make much progress with repairs. In late 2015, frustrated at the lack of progress, Mr Saunders uplifted the car from Belfast Panel and Paint and took it home.
[24] On 19 September 2015, Mr Saunders met with Mr Hale by chance and remonstrated with him briefly about the car having rust issues. Mr Hale did not make any offer to assist at this point.
[25] In early 2016, Mr Saunders asked Kerry Aitkens of Aitkens Panel and Paint Limited to assess the car and advise on whether he could complete the repairs. Mr Aitkens identified further areas of rust throughout the entire underneath of the car which would require nearly all the chassis rails and support braces to be replaced. Mr Aitkens also identified that the rear quarter panels, which had been described by Muscle Car Imports in the 6 March 2015 email as having been "replaced professionally at the factory seams", had in fact had lower panels only spot welded onto the structural upper rear quarter panels. Mr Aitkens advised that these quarter panels would not pass the engineer's inspection as they were structural to the car and needed to be in one piece. Moreover, Mr Aitkens found that the inner guard tubs and rear floor pans were either rusty or repaired in a shoddy manner prior to Mr Saunders’ purchase of the vehicle. Further inspection also revealed the front left A pillar was rusted away and the front left chassis rail was completely rusty, with holes in the rail.
[26] Mr Aitkens told Mr Saunders that he could complete the work but would have to schedule another date when he had more time. Mr Aitkens asked Mr Saunders to take the vehicle away and said that he would be in contact in the future. Mr Aitkens told Mr Saunders the vehicle would have to be dismantled completely to get it ready for the rust repair work that was needed.
[27] In late 2016, Mr Saunders engaged two mechanic acquaintances to assist him to dismantle the car in his garage. He set about acquiring new parts from the United States. By the middle of 2017, after many requests to Mr Aitkens for a timeline to start repairs, and with no agreement reached as to a start date, Mr Saunders engaged another panel beater, Banks Autobody Restorations, to assess and repair the vehicle.
[28] In March 2018, the vehicle was transported to the workshop of Mr Terry Banks of Banks Autobody Restorations. Mr Banks appeared at the Tribunal hearing to give evidence. On completion of the structural work now underway on the vehicle, it is proposed that it be inspected by a motor body engineer, Mr Gordon Taylor.
[29] At present, the vehicle is completely dismantled. It is attached to a rotisserie cradle and is undergoing repairs. Mr Saunders and Mr Banks said it was difficult to estimate a timeline for the vehicle to be put back in a roadworthy and legal state for New Zealand roads. However, Mr Banks said he hoped it would be before the end of 2019.
[30] Mr Saunders said that some of the vehicle's rust was so serious that one of its front left chassis rails can be picked apart with his fingers. It was hard for Mr Saunders to believe that the seller would not have been aware of this at the time of sale.
[31] Mr Saunders submitted that it is difficult to provide a completely accurate estimate of what the vehicle will cost to complete the restoration process. He estimates that, to date, he has spent between NZ$70,000 to NZ$75,000, including the vehicle’s purchase price. He estimates that a further NZ$40,000 will be required for repairs to complete the vehicle, making a total of approximately NZ$111,000. Mr Saunders estimates that, on completion, the vehicle will have a market value of approximately NZ$80,000.
[32] The breakdown of Mr Saunders' estimated summary of costs is as follows:

Vehicle cost $42,764.27 (including freight and other associated expenses)

Parts cost $14,886.94

Repairs and associated costs

(as quoted by Terry Banks) $53,456.00[1]

Total $111,107.21

[33] As at the date of Mr Saunders’ application to the Tribunal, he had not yet initiated the process of getting an NZTA certifier repair schedule. The Tribunal directed Mr Saunders to obtain a repair certificate, which he obtained on 5 March 2019. The repair certifier, Mr Gordon Taylor, recorded the following structural damage in the vehicle:

This vehicle has rust to the following areas which require rectification to allow the vehicle to meet NZTA current entry level requirements.

(a) L/F inner guard.
(b) L/side bulkhead.
(c) R/F inner guard.
(d) L/outer A pillar.
(e) L/inner and outer sills.
(f) L/R inner guard and wheel tab.
(g) L/R outer guard.
(h) H boot floor.
(i) L/R & R/R chassis rail.
(j) R/R inner guard and wheel tab.
(k) R/R outer guard.
(l) R/outer B pillar.
(m) L/R floor pan.
(n) L/inner A pillar.
(o) R/side radiator panel.
(p) L/F chassis rail.
(q) Centre X member.
[34] Following this list of areas with rust, Mr Taylor has set out a detailed list of repairs needed to all of the above areas, plus a process of inspection to follow.
[35] Also in the lead up to his Tribunal hearing, Mr Saunders attempted to contact Mr Curle to obtain more details as to his involvement in Mr Saunders' purchase of the vehicle. In an email dated 12 March 2019, Mr Curle told Mr Saunders that “the vehicle in question going back through our files was a Geoff Hale purchase and didn’t have your name attached to it”. Mr Curle indicated that his role was limited to providing a bank account to facilitate the transfer of funds to the United States seller of the vehicle, Mr Hampton.

Muscle Car Imports’ response

[36] Muscle Car Imports did not make any attempt to rebut Mr Saunders’ submissions and evidence regarding the state of the vehicle on its arrival to New Zealand or the repairs needed to bring it into compliance with New Zealand requirements.
[37] Rather, Muscle Car Imports’ primary argument, which was presented in writing by Mr Hale, and orally at the hearing by its other director, Linda Brookes, was that it did not sell Mr Saunders the car. Instead, it says it “facilitated his purchase of the car”. Muscle Car Imports argued that it had no contract with Mr Saunders for the sale and purchase of the car. Furthermore, Muscle Car Imports submits that the sale and purchase of the car took place in the United States, not Christchurch.
[38] In support of its argument that it was not the seller of the car to Mr Saunders, Muscle Car Imports argued that it received no money in the transaction including any commission. It denied that it should be seen as a motor vehicle trader for the purposes of the sale of this vehicle. It argued that it was only required by the Ministry of Business, Innovation and Employment to register as a motor vehicle trader due to its activity in shipping (importing) cars from the USA to New Zealand, not because Muscle Car Imports sells cars.
[39] Muscle Car Imports also argued that the listing of its name on the export documentation produced by Mr Saunders does not prove that Muscle Car Imports owned the vehicle.
[40] Muscle Car Imports submitted that the entire transaction took place overseas between Mr Saunders and an “online private seller, based in another country”.
[41] Furthermore, Muscle Car Imports argued that Mr Saunders is himself a motor vehicle trader. According to s 90(1)(a) of the Motor Vehicle Sales Act 2003 the Tribunal has jurisdiction only if “one party, but not both parties, to the application or claim is a motor vehicle trader”. As both Muscle Car Imports and Mr Saunders are motor vehicle traders, Muscle Car Imports argues that the Tribunal has no jurisdiction to consider Mr Saunders’ application.
[42] Finally, Muscle Car Imports argued that Mr Saunders has taken too long to bring his claim in the Tribunal. In particular, it argues that the sale of this vehicle occurred in 2015 and that Mr Saunders only brought his application to the Tribunal in December 2018.

Tribunal’s assessment of Muscle Car Imports’ arguments

Who sold the car to Mr Saunders?

[43] The Motor Vehicle Disputes Tribunal has jurisdiction to enquire into and determine any application under certain legislation if that application or claim is in respect of the “sale of any motor vehicle”.[2]
[44] As Muscle Car Imports correctly submits, one, but not both, of the parties to a Tribunal application must be a motor vehicle trader. By implication, it is the seller of the vehicle who must be a motor vehicle trader for the purposes of an application to the Tribunal.
[45] Therefore, in order to determine who is the appropriate respondent to Mr Saunders’ claim in the Tribunal it is necessary to ascertain who sold the car to him and whether that person was a motor vehicle trader at the relevant time.
[46] “Sale” is defined in s 6(1) of the Motor Vehicle Sales Act as follows:

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

[47] As can be seen from this definition, selling a motor vehicle encompasses a broad range of conduct. It not only includes the sale of a motor vehicle in a narrow, legal sense, but it also includes the broader concepts of “display for sale” or “offer for sale”. This broad definition corresponds with the broad definition of who is a motor vehicle trader for the purposes of the Motor Vehicle Sales Act. The link between sales of motor vehicles and motor vehicle trading is established by the definition of “motor vehicle trading” in s 6(1). Motor vehicle trading is defined as “the sale of motor vehicles by a person (whether or not the person is a principal or agent)”. That captures those involved in the sale of motor vehicles, even if they are doing so merely as an agent for someone else, for example selling a vehicle on behalf. “Motor vehicle trader” is itself defined in s 7 of the Motor Vehicle Sales Act as “any person who carries on the business of motor vehicle trading (whether or not that person carries on any other business)”. Moreover, the definition expressly includes “an importer”.[3]
[48] Section 8 provides for who is treated as a motor vehicle trader, as follows:

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.

[49] On the facts of the present case, I have concluded that Muscle Car Imports was the motor vehicle trader which sold the car to Mr Saunders. I have reached that conclusion for the following reasons:

• (a) Muscle Car Imports’ website states that it sources and imports muscle cars into New Zealand, that it is able to do so “to order”, that it has a fully equipped workshop in which it can carry out necessary repairs and prepare cars for New Zealand compliance, and that it gets “a real kick out of pairing any new owner up with their cool new ride, be it a project vehicle or a drive away classic”. In addition, Muscle Car Imports ran a mailing list through which it communicated information about cars for sale, to various individuals, including Mr Saunders, who had indicated their interest in buying a car through Muscle Car Imports. In one such email, dated 6 March 2015, Muscle Car Imports advertised a 1973 Dodge Challenger for sale. This email was, in my view, an “offer for sale” of that vehicle in terms of the definition of “sale” in s 6(1) of the Motor Vehicle Sales Act (above). Mr Saunders indicated his interest in Muscle Car Imports' offer for sale and Muscle Car Imports’ director Mr Hale told Mr Saunders that he had “2 other guys asking about it too”. Muscle Car Imports then negotiated with Mr Saunders about the price for the vehicle, answered Mr Saunders’ questions about it, represented that the vehicle had “no rust anywhere”, and facilitated the importation and transfer of the possession of the vehicle to Mr Saunders some three months later.
• (b) Muscle Car Imports was a registered motor vehicle trader at the time it sold the vehicle to Mr Saunders. Mr Saunders’ evidence was that he specifically checked this point to ensure that he was buying from a registered trader. Muscle Car Imports’ explanation that it was only registered as a motor vehicle trader because it imported vehicles does not excuse it from being the trader who sold the vehicle in the present case. Indeed, the definition of "motor vehicle trader" as set out above expressly includes those who import vehicles to be sold for the primary purpose of gain.
• (c) Although Muscle Car Imports attempted to argue that it received no commission for the vehicle, I do not accept that as being correct. Muscle Car Imports did not provide the Tribunal with documentation that would conclusively establish the financial transactions that occurred in respect of the vehicle. Mr Saunders drew the Tribunal's attention to the US$5,000 difference between the price he deposited in Mr Curle’s account, US$23,000, and the sale price payable to Mr Hampton of US$18,000. In his email to Mr Saunders, Mr Curle expressly denied having received any money for the car. No other evidence was produced to the Tribunal indicating who received the "missing" US$5,000. In my view s 8(1)(c) of the Act requires the trader to prove that it imports vehicles other than for the primary purpose of gain. I am not satisfied that Muscle Car Imports proved it did not import the vehicle for the primary purpose of gain. In any event, as I discuss further below, even if it made no financial gain from the vehicle sale, I would have found Muscle Car Imports to be the trader who sold this vehicle to Mr Saunders. That is because it was registered as a motor vehicle trader at the relevant time and it held itself out as carrying on the business of motor vehicle trading. Specifically, in respect of the vehicle sold to Mr Saunders, it offered that vehicle to him for sale.

[50] Accordingly, I reject Muscle Car Imports’ argument that it did not sell Mr Saunders the car. Rather, I conclude that Muscle Car Imports was the motor vehicle trader that sold the car to Mr Saunders.
[51] The lack of any properly documented contract for sale of the vehicle to Mr Saunders does not operate in Muscle Car Imports’ favour either. Rather, its failure to provide the usual documents associated with the sale of a vehicle, namely the VOSA and CIN, contravenes the legislative requirements in respect of those documents.[4]

Is it necessary to show that Muscle Car Imports received any money in the transaction or any commission?

[52] I have already referred to the “missing” US$5,000. I do not know where that money went, and I am unable to establish that it went to Muscle Car Imports. However, as I have set out, it was for Muscle Car Imports to prove that it did not sell the vehicle to Mr Saunders for the primary purpose of gain, and I find that Muscle Car Imports did not establish it received no gain. In any event, Mr Saunders did not need to establish that Muscle Car Imports made a profit on the transaction in order to be entitled to a remedy. As I have already indicated, a person can be a motor vehicle trader who sells a vehicle, even if they are just selling as an agent "on behalf" of the "true" seller. Moreover, the relevant definitions in the Consumer Guarantees Act 1993 (the Act) make it clear that financial reward is not a prerequisite to being recognised as a supplier for the purposes of that Act.
[53] The Act provides various remedies for consumers. A consumer is a person who acquires from a supplier goods or services of a kind ordinarily acquired for personal, domestic, or household use or consumption.[5] A supplier is defined (as far as is relevant to the present case) as a “person who, in trade, supplies goods to a consumer by transferring the ownership or the possession of the goods under a contract of sale ... to which that person is a party”.[6] The definition of supplier goes on to say that a supplier includes “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”.[7]
[54] In the present case, I consider that Muscle Car Imports, at the very least, transferred the possession of the vehicle under a contract of sale to which it (Muscle Car Imports) was a party. That is the case even if Muscle Car Imports was acting as an agent for another person (whoever that might have been). However, I record that my assessment of the facts as reflected in the bills of sale is that Muscle Car Imports itself purchased the vehicle (possibly through an undisclosed intermediary) from Mr Hampton in the United States. Muscle Car Imports then sold the vehicle to Mr Saunders. The requirement that Mr Saunders pay the money into Mr Curle's bank account may have been an attempt to disguise the fact that Muscle Car Imports was the purchaser of the vehicle from Mr Hampton and the seller of the vehicle to Mr Saunders. I say this primarily because of the evidence produced by Mr Saunders in the form of an email from Mr Curle, dated 12 March 2019, in which he stated “the vehicle in question going back through our files was a Geoff Hale purchase and didn’t have your name attached to it”.
[55] Furthermore, for completeness, I note that under the Act, a supplier does not have to make any gain or reward on a transaction with a consumer for it to be potentially liable to the consumer under the guarantees provided in the Act.[8]

Was Muscle Car Imports Ltd only required to register as a trader due to its activity in shipping (importing from USA to New Zealand not because it sells cars)?

[56] As I have set out above, according to the Motor Vehicle Sales Act 2003, the fact that Muscle Car Imports Ltd imported cars brings it within the definition of "motor vehicle trader" in terms of s 7 and s 8(1)(c). I find that none of the exceptions in s 9 applies. Moreover, Muscle Car Imports was in fact a registered motor vehicle trader so none of the deeming provisions in s 8 of the Motor Vehicle Sales Act need to be relied on. I have also concluded that Muscle Car Imports was at the relevant time holding out that it was carrying on the business of motor vehicle trading. Finally, I have found that the actual sale of the vehicle to Mr Saunders was an instance of motor vehicle trading, both through the transfer of the vehicle to Mr Saunders, and through the offering for sale of that vehicle through Muscle Car Imports’ mailing list.
[57] For all these reasons, I am satisfied that Muscle Car Imports is appropriately to be considered as a motor vehicle trader at the relevant time and that it did in fact sell the vehicle to Mr Saunders.

Did the listing of Muscle Car Imports Limited on the export documents indicate any proof of ownership?

[58] It is unnecessary for Mr Saunders to prove that Muscle Car Imports owned the vehicle for it to be regarded as the seller of the vehicle to him. However, the bill of sale documents referred to above are a strong indication, in my view, that Muscle Car Imports did purchase those vehicles from Mr Hampton before on-selling the vehicle to Mr Saunders.

Did the entire transaction take place overseas between Mr Saunders and an “online private seller based in another country”?

[59] Mr Curle is the only offshore person that Mr Saunders had any dealings with and that was only for the purpose of depositing the money to purchase the car. There is no evidence that Mr Curle sold the vehicle to Mr Saunders; and Mr Curle himself denied that he did. He said that Mr Hale was the seller.
[60] In my view, the relevant aspects of the transaction took place in New Zealand rather than overseas. First, the vehicle was “offered for sale” in New Zealand by way of the email from Muscle Car Imports to Mr Saunders dated 6 March 2015. Moreover, Mr Saunders had several direct communications with Mr Hale of Muscle Car Imports in connection with the sale of the car, by email and telephone. All of these communications occurred in New Zealand. Finally, the transfer of possession of the vehicle from Muscle Car Imports to Mr Saunders took place in Christchurch.
[61] Therefore, based on my overall view of the relevant elements of the vehicle sale and purchase, I conclude that it occurred in New Zealand.

Is Mr Saunders himself a trader and, if so, does that remove the Tribunal’s jurisdiction?

[62] As mentioned, s 90(1)(a) of the Motor Vehicle Sales Act provides that the Tribunal only has jurisdiction if one party, but not both parties, to the application or claim is a motor vehicle trader. Muscle Car Imports argued that Mr Saunders is himself a trader. However, it produced no evidence that Mr Saunders is a motor vehicle trader in his own right. Mr Saunders acknowledged that he is the director of Harewood Imports Ltd, which is a registered motor vehicle trader. However, just as there was no evidence that Mr Hale is a motor vehicle trader in his own right (as opposed to Muscle Car Imports), there was no evidence to suggest that Mr Saunders is a motor vehicle trader in his own right.
[63] In any event, Mr Saunders denied that he purchased the vehicle in his capacity as a trader. Rather, his evidence was that it was purchased for personal use and I found his evidence credible. Accordingly, Muscle Car Imports' submission fails.

Do limitation issues preclude Mr Saunders’ claim in the Tribunal?

[64] Muscle Car Imports questioned whether Mr Saunders was entitled to bring a claim in the Tribunal so long after purchasing the vehicle, in 2015. Indeed, the delay between the date of his purchase of the vehicle, which was 3 September 2015, and the date of his application in the Tribunal, 19 December 2018, does create a problem in respect of any claim Mr Saunders may wish to make under the Fair Trading Act 1986. That is because s 43A of that Act provides for a three year limit between discovery of loss or damage, or the likelihood of loss or damage, or when such loss or damage or likelihood ought reasonably to have been discovered, and the deadline for application to the District Court or the Tribunal for an order under s 43.
[65] From the above timeline, it can be seen that Mr Saunders missed that three year deadline by just over three months. Accordingly, Mr Saunders' claim under the Fair Trading Act must fail.
[66] However, Mr Saunders' claim for damages under the Consumer Guarantees Act is still within time. The relevant limitation period for a money claim under that Act is six years.[9]
[67] It is convenient to mention at this point also that Mr Saunders also sought to bring a claim for damages for misrepresentation of aspects of the vehicle by Muscle Car Imports under the Contract and Commercial Law Act 2017. That claim cannot be taken any further, as the Tribunal has no jurisdiction to award damages for misrepresentation under the Contract and Commercial Law Act.[10]

Conclusion

[68] Accordingly, for the reasons set out above, all of Muscle Car Imports’ legal arguments are rejected. I conclude that, in its capacity as a registered motor vehicle trader, it sold the vehicle to Mr Saunders and that he is not precluded from bringing a claim for damages under the Act in the Tribunal.
[69] I will now consider whether Mr Saunders has established a breach of a relevant guarantee under the Act and, if so, does he have any remedy?

Did the vehicle fail to comply with the guarantees of acceptable quality or that goods must correspond with their description?

[70] Section 6(1) of the Act 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 Act, “goods” includes vehicles.
[71] "Acceptable quality" is defined in s 7 of the Act (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.

[72] 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.
[73] Also relevant is s 9 of the Act which provides a guarantee that where goods are supplied by description to a consumer, the goods correspond with the description.
[74] In the present case I am satisfied that these two guarantees can appropriately be considered together. That is because the description of the vehicle in Muscle Car Imports’ email to Mr Saunders of 6 March 2015 that it had no rust anywhere is critical to Mr Saunders’ ability to establish a breach of the relevant guarantee. That is primarily because it is conceivable that a vehicle of this age being imported from the United States could have corrosion in it and that a reasonable consumer could nevertheless find that corrosion to be acceptable.
[75] Mr Saunders himself appreciated the risk that the vehicle as advertised by Muscle Car Imports on 6 March 2015 was rusty. That is why Mr Saunders went to some effort to establish with Mr Hale whether the vehicle had any rust, leading to Mr Hale’s emphatic confirmation in his email of 6 March 2015 that it had "NO rust anwhere" [sic]. In terms of Mr Hale's statement that the vehicle had no rust anywhere, that is a relevant representation made about the vehicle by the supplier to which the Tribunal must have regard under para (1)(i) of the meaning of acceptable quality in s 7 of the Act (above).
[76] In light of Muscle Car Imports' representation, when matched against the extensive corrosion on the vehicle as recorded in the repair certificate, and in other documents and photographs produced by Mr Saunders, I do not consider that the vehicle was fit for purpose, as acceptable in appearance and finish, as free from minor defects, or as safe and durable as a reasonable consumer who was fully acquainted with the state and condition of the vehicle would regard as acceptable. Mr Banks, in particular, gave evidence that persuaded me that a reasonable consumer who was fully acquainted with the extent of corrosion of the vehicle would have been unlikely to proceed with the purchase, in light of the difficulty that would be faced by the importer of such a vehicle in obtaining entry certification for it.
[77] Moreover, I consider that the statement by Muscle Car Imports that the vehicle had no rust anywhere was a description associated with the supply of the vehicle, with which the vehicle itself, when it arrived, clearly did not correspond.
[78] Accordingly, I conclude that Mr Saunders has established a breach of the guarantee of acceptable quality, and of the guarantee that the vehicle complied with its description, under ss 6 and 9 of the Act respectively.
[79] The vehicle's rust is very severe, requiring upwards of $50,000 to repair just to be able to get the vehicle complied for entry certification. It is therefore relevant to consider whether the failures to comply with the guarantees in ss 6 and 8 of the Act are failures of a substantial character in terms of s 21 of the Act:

21. Failure of substantial character

For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where—

(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or

(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.

[80] In the present case, Mr Saunders said would not have purchased the vehicle if he knew the extent of the rust on its underside. Mr Banks confirmed that the difficulties in getting entry certification mean that the vehicle was not really suitable for importation at all. I therefore doubt that a reasonable consumer who knew the extent of rust on the vehicle would have proceeded to purchase the vehicle, because of the extensive, time consuming and expensive repairs that would be required.
[81] Moreover, in terms of para (b) of the definition in s 21 (above), the vehicle departs substantially from its description that it had no rust anywhere. There is rust riddled throughout the vehicle’s underside which, while it may not be visible on a superficial photograph of the top of the vehicle, is clearly apparent when one looks at the underside.
[82] And, in terms of para (c) of the definition in s 21 the vehicle is, in my view, substantially unfit for its purpose, primarily because despite Mr Saunders having had the vehicle for over three years, it is still not lawful for him to use it on the road because it still has not been able to obtain entry certification. Therefore, it is substantially unfit for the purpose for which goods of this type are commonly supplied, namely to be driven on the road.
[83] Finally, in terms of para (d) of the definition in s 21, the fact that there is significant structural corrosion implies that the vehicle is likely to be unsafe to use on the road.
[84] Accordingly, all four paragraphs of the definition of a failure of a substantial character in s 21 of the Act are made out.

What (if any) is the appropriate remedy in this case?

[85] The available remedies for a breach of a guarantee under the Act are set out in s 18 of the Act, 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.

[86] Mr Saunders’ options, having established a failure of a substantial character, are set out in s 18(3) (above). That subsection provides that he is entitled to reject the vehicle or obtain damages and compensation for any reduction in value of the vehicle below the price paid or payable.
[87] However, s 22 requires that a consumer must notify the supplier of a decision to reject the vehicle and of the ground or grounds for rejection. Even though I consider Mr Saunders would have been entitled to reject the vehicle, there was no evidence that he ever notified his rejection in a manner that would comply with s 22(1) of the Act. And the fact that he has well and truly embarked on the process of repairing the vehicle is inconsistent with his rejecting it. As well, it is now too late for Mr Saunders to reject the vehicle. Section 20(1)(a) of the Act provides that the right to reject goods is lost if not exercised within a reasonable time. I consider that, on any view, Mr Saunders has left it too late to reject the vehicle.
[88] That leaves Mr Saunders with recovering damages and compensation for any reduction in value of the vehicle below the price paid or payable. In this regard, I take the price payable for the vehicle as US$23,000, rather than the total amount Mr Saunders paid for the vehicle, which included other charges such as freight.
[89] The Tribunal requested Mr Saunders to obtain valuation evidence establishing what the vehicle was worth at the time of importation with the significant corrosion present. Mr Saunders was unable to provide any such evidence making it more difficult for the Tribunal to come up with an appropriate figure for compensation in terms of s 18(3)(b). In saying this, I am mindful of the fact that, if Mr Saunders had rejected the vehicle at the outset, he would have been on very solid ground in terms of his rights to do so. However, for whatever reason, Mr Saunders elected not to reject the vehicle at that point, but has instead embarked on the complicated, slow and expensive process of attempting to remedy the vehicle’s defects.
[90] I am inclined to say, perhaps Mr Saunders might agree, that a reasonable consumer would have thrown in the towel at a much earlier point and simply rejected the vehicle. However, that is not relevant to my decision about what the appropriate remedy is in this case. I am not persuaded that the vehicle as imported, even in its highly damaged state, was effectively valueless. Rather, it has provided the shell of a vehicle which, with painstaking work, will hopefully one day be in fit condition to achieve entry compliance and be used for the purpose Mr Saunders originally intended.
[91] I also have in mind the somewhat impressionistic figures that Mr Saunders himself gave in his submissions that his expectation is that the vehicle when finished will be worth approximately $80,000, as against a total outlay of him estimated to be in the region of $111,000. In addition, I must factor in the fact that Mr Saunders was himself expecting to have to make a modest outlay on the vehicle to get it up to the standard that he wanted. Nevertheless, it has proved to be a much more significant financial outlay than he ever expected or agreed to.
[92] Considering all of these factors, in my view an appropriately conservative (given the lack of valuation evidence) award of damages to reflect the reduction in value of the vehicle below the price paid by Mr Saunders for it is $25,000. This sum incorporates a reasonable contribution, not only to Mr Saunders’ expected costs in respect of the vehicle but also his costs to date.
[93] I do not recognise a separate entitlement by Mr Saunders to recover any additional costs under s 18(4) of the Act (above). Rather, the sum I order Muscle Car Imports to pay reflects the total amount of damages to which Mr Saunders is entitled under s 18 of the Act.

Conclusion

[94] I order Muscle Car Imports Ltd to pay NZ$25,000 to Trevor Saunders within 10 working days of the date of this decision.

J S McHerron
Adjudicator

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[1] Mr Saunders told the Tribunal that he had already paid Mr Banks $13,456 and a further $40,000 was estimated by Mr Banks for remaining work to enable the vehicle to attain entry certification.

[2] Motor Vehicle Sales Act 2003, s 89(1)(a).

[3] Motor Vehicle Sales Act 2003, s 7(b)(ii).

[4] Motor Vehicle Sales Act 2003, ss 14(1), 16, 21, 101; Fair Trading Act 1986, ss 28(1), 40(1B); Motor Vehicle Sales Regulations 2003, reg 4; Consumer Information Standards (Used Motor Vehicles) Regulations 2008, regs 6-8.

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

[6] Consumer Guarantees Act 1993, s 2(1), definition of “supplier”, para (a)(i)(A).

[7] At (b)(iv).

[8] Consumer Guarantees Act, s 2(1) definitions of “supplier”, “trade” (includes business), “business” as “any undertaking whether carried on for gain or reward or not” (emphasis added).

[9] Limitation Act 2010, ss 11(1), 12(1).

[10] The Contract and Commercial Law Act 2017, s 35 provides for damages for misrepresentation. The Tribunal has no jurisdiction to make orders under that section: see Motor Vehicle Sales Act 2003, s 89(1)(b)(iv).