Simeon v Khan - Reference No. 125/2020 MVD [2020] NZMVDT 140 (28 August 2020)

Last Updated: 17 September 2020

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 125/2020 [2020] NZMVDT 140 BETWEEN JACKIE MAAKO SIMEON Purchaser AND MOHAMMAD ISHRAT KHAN First Respondent AND M I K AUTOS LTD Second Respondent

MEMBERS OF TRIBUNAL (all by audio-visual link)

B R Carter, Barrister – Adjudicator

S Haynes, Assessor

HEARING at Auckland on 20 August 2020

APPEARANCES (all by audio-visual link)

J M Simeon, Purchaser

M I Khan, for the Respondents

DATE OF DECISION 28 August 2020

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DECISION OF THE TRIBUNAL

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1. Jackie Simeon’s application is dismissed.

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REASONS

Introduction

[1] Jackie Simeon wants to cancel the agreement with M I K Autos Ltd on 21 April 2020 to purchase a 2018 Nissan Navara for $26,695. The vehicle was a statutory write off[1] from Australia, which had been repaired in New Zealand before it was sold to Mr Simeon. Mr Simeon says that he was told that the vehicle was a statutory write off before he purchased it, but he was pressured into purchasing the vehicle and has since discovered that the vehicle was more damaged than he was led to believe by M I K Autos. Mr Simeon has applied to the Tribunal seeking a refund of the purchase price.

Relevant background

[2] Mr Simeon saw the vehicle advertised for sale on the Trade Me website. The Trade Me listing stated that the vehicle was an Australian “stat write-off”. Mr Simeon then arranged to view the vehicle on 18 April 2020 with Mohammad Khan, a director of M I K Autos.
[3] During that viewing Mr Khan advised Mr Simeon on several occasions that the vehicle was a statutory write off from Australia. Mr Khan also showed Mr Simeon a copy of the NZ Transport Agency Light vehicle repair record of certification dated 20 February 2020 (the certification documents), which contained details of the damage to the vehicle and the repairs performed before it was certified for registration in New Zealand.
[4] The certification documents noted that vehicle had suffered damage to the following components:

• (a) left front inner guard;
• (b) radiator support panel;
• (c) front bumper;
• (d) front bumper beam;
• (e) headlight;
• (f) left front guard;
• (g) bonnet; and
• (h) left front suspension.

[5] The certification documents also noted that the following repairs were performed:

Cut and weld LF Inner Guard and Radiator Support panel to manufacturer repair specifications.

Replace LF Bumper, LF Bumper Beam, Headlight, LF Guard, Bonnet, LF Suspension.

Apply weld through primer.

A prime and Paint.

Apply rust proof.

Supply Wheel Alignment measurement report

Supply 3D Chassis measurement report

Supply ABS/SRS declaration

Supply mechanical repair declaration.

Supply parts as per supplied invoices.

Supply manufacturer repair specifications.

Supply PPSR Statutory write off: I01D, I02D, I06B, I16D, I17D, I2D, I22D, I34F.

[6] Mr Khan advised Mr Simeon that he had other potential buyers who were interested in the vehicle. Mr Simeon says that, due to the “look” of the vehicle and its price, which was less expensive than other similar vehicles he had seen advertised for sale, he decided to move quickly to purchase the vehicle. He saw the vehicle as “a good bargain”.
[7] Consequently, on 19 April 2020, Mr Simeon advised Mr Khan that he wanted to purchase the vehicle and paid a deposit of $6,995 on that day. On 21 April 2020 a vehicle offer and sale agreement was completed, under which Mr Simeon agreed to purchase the vehicle for $26,995. The balance of the purchase price was then paid directly to M I K Autos by MTF, Mr Simeon’s finance company.
[8] After agreeing to purchase the vehicle and paying the purchase price, Mr Simeon says that he was advised by an acquaintance who had more than 30 years in the automotive industry that he should check the integrity of the vehicle’s chassis. Mr Simeon says that he was also told that the fact that the vehicle had been written off in Australia would be permanently recorded on official records relating to the vehicle.
[9] Mr Simeon then contacted Mr Khan and asked him whether the vehicle had suffered any chassis damage. He says that Mr Khan led him to believe that the vehicle had suffered no chassis damage. Mr Simeon also asked Mr Khan to provide copies of the certification documents and an AA Inspection Report performed on the vehicle on 17 February 2020, which Mr Khan did.
[10] Still concerned about the vehicle, Mr Simeon had the vehicle assessed by Hometune Mobile Mechanics on 1 May 2020. In a tax invoice of that date, Hometune recorded the following findings:

CHECKED VEHICLE FOR CHASSIS DAMAGE AS REQUESTED BY CUSTOMER.

FOUND LEFT FRONT UPPER RADIATOR SUPPORT PUSHED TOO FAR BACK AND LEFT

FRONT HEADLIGHT BRACKET DAMAGED IN ORDER TO LINE UP FITMENT

FRONT OF CHASSIS UNDERNEATH APPEARS TO OF BEEN CUT OFF AND A NEW SECTION WELLED ON PHOTOS WILL BE EMAILED THROUGH TO CUSTOMER.

VEHICLE HAS PASSED COMPLIANCE AND A AA PRE PURCHASE INSPECTION WITH THESE REPAIRS.

[11] This report led Mr Simeon to believe that the vehicle was structurally unsound and unsafe. Mr Simeon then contacted Mr Khan seeking to unwind the agreement to purchase the vehicle. Mr Khan declined to accept Mr Simeon’s rejection of the vehicle, so Mr Simeon has now filed this claim with the Tribunal.

The issues

[12] Against this background, I consider that the issues requiring the Tribunal’s consideration in this case are:

• (a) Did M I K Autos engage in misleading conduct in breach of s 9 of the Fair Trading Act 1986 (the FTA)?
• (b) Is the vehicle of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA)?

[13] In his application to the Tribunal, Mr Simeon named “MIK Autos”, with the motor vehicle trader registration number M102800, as the respondent to his claim. That trading name and trader registration number have previously been used by Mohammed Khan. Consequently, the Ministry of Justice staff who processed this claim identified Mr Khan as the respondent and the relevant documents, including the notice of hearing, were served on Mr Khan.
[14] While I was reading the file before the hearing, I found information that suggested that the seller of the vehicle was M I K Autos Ltd rather than Mr Khan. The vehicle offer and sale agreement provided by Mr Simeon states that the seller was “M.I.K Autos” with the motor vehicle trader registration number of M367345. That registration belongs to M I K Autos Ltd, which trades as M I K Autos. During the hearing, both parties agreed that the vehicle was sold by M I K Autos, rather than Mr Khan in his personal capacity. Accordingly, this decision considers the claim against M I K Autos only and the claim against Mr Khan is dismissed.

Issue 1: Has M I K Autos engaged in conduct that breached s 9 of the FTA?

[15] 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.

[16] The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corp Ltd v Ellis:[2]

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.

[17] Relevant to a claim under s 9 of the FTA, I understood Mr Simeon to allege that M I K Autos did not adequately disclose the true nature and extent of the damage to the vehicle or the significance of the repairs performed on the vehicle.
[18] M I K Autos undoubtedly had an obligation to disclose that the vehicle had been written off in Australia due to structural accident damage. As recognised by the High Court in McBride Street Cars Ltd v District Court (Dunedin Registry), such information is material to any reasonable consumer’s purchasing decision.[3] It is material information because it enables a consumer to make an informed decision about the purchase — which includes the consumer then being able to make its own enquiries as to the future consequences of the vehicle being a statutory write-off. Those future consequences are important because a stigma attaches to vehicles that have been written off. This stigma significantly affects the resale value of those vehicles — irrespective of the nature of the damage that caused the vehicle to be written off. It is the fact that the vehicle has been written off that creates the stigma.
[19] In this case I am satisfied that M I K Autos has complied with its obligation to disclose the vehicle’s history as a statutory write off from Australia. The Trade Me listing for the vehicle disclosed that the vehicle was a statutory write-off from Australia. Mr Khan then repeatedly advised Mr Simeon that the vehicle was a statutory write-off from Australia when Mr Simeon first inspected the vehicle on 18 April 2020. Mr Khan also provided Mr Simeon with a copy of the certification documents, which clearly set out the nature and extent of the damage to the vehicle and all of the repairs performed before the vehicle was recertified for use in New Zealand.
[20] Although I am satisfied that M I K Autos failed to comply with its legal obligation to provide a Consumer Information Notice to Mr Simeon, I am not satisfied that this failure has led to Mr Simeon being misled about the vehicle’s history as a damaged statutory write-off. That is because the other information provided by M I K Autos, as discussed above, was more than enough to inform Mr Simeon about the nature and extent of the damage to the vehicle and the repairs performed to bring it up to New Zealand standards.
[21] Mr Simeon says that he is not a mechanic and did not understand the implication of the information provided by M I K Autos. That may be the case, but I am nonetheless satisfied that M I K Autos properly disclosed the vehicle’s history to him.
[22] Mr Simeon also alleged that he was pressured into purchasing the vehicle without obtaining further information about the vehicle, such as a pre-purchase inspection, by Mr Khan’s representations that there were other cash buyers interested in the vehicle. Mr Simeon, who is a police officer, came across as a robust and intelligent man and I am satisfied that Mr Simeon’s decision was influenced more by his perception that the vehicle was a good bargain than any undue pressure exerted by M I K Autos.
[23] I am therefore satisfied that M I K Autos has not engaged in misleading conduct in breach of s 9 of the FTA.

Issue 2: Has the vehicle been of acceptable quality?

[24] 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.
[25] 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.

[26] 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 Mr Simeon’s subjective perspective.
[27] Mr Simeon alleges that the vehicle is not of acceptable quality, because he considers that the damage suffered in Australia has made it structurally unsound and that the vehicle has not been adequately repaired. Mr Simeon relies on the assessment of Hometune in making this submission.
[28] I am not satisfied that the evidence shows that the vehicle is structurally unsound or otherwise of unacceptable quality. The documents provided by M I K Autos, including the certification documents and the 3D chassis measurement report from Hamilton Collision Repairs Ltd, shows that the vehicle’s chassis itself has not been damaged or repaired and that the other structural repairs performed on the vehicle are of an acceptable standard to be certified for use on New Zealand roads.
[29] The repairs that have been performed on the vehicle are not perfect – for example the left headlight bracket has been modified and the front upper radiator support still shows signs of damage – but because the vehicle is structurally sound and complies with NZ Transport Agency safety requirements, I am satisfied that the vehicle is of acceptable quality as that term is defined in s 7 of the CGA, taking account of the fact that this vehicle is a repaired statutory write off sold at a discount to reflect its history.
[30] Mr Simeon’s application is therefore dismissed.

DATED at AUCKLAND this 28th day of August 2020

B.R. Carter
Adjudicator

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[1] A statutory (or “stat”) write-off is a vehicle that has been written off in Australia and deemed by Australian law to be unsafe to repair. Such vehicles can be imported into New Zealand, repaired and sold provided they are repaired to NZ Transport Agency safety standards.

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

[3] McBride Street Cars Ltd v District Court (Dunedin Registry) [2018] NZHC 111, [2018] NZAR 289.