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Lemisio v Max Motors Limited - Reference No. MVD 411/2019 [2020] NZMVDT 40 (5 March 2020)

Last Updated: 20 May 2020

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 411/2019
[2020] NZMVDT 40

BETWEEN IOANE HIOHE LEMISIO

Purchaser

AND MAX MOTORS LIMITED

Trader

HEARING at Wellington on 18 December 2019 and 12 February 2020

MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator
D Binding - Assessor

APPEARANCES
I H Lemisio, Purchaser
F P Lemisio, Purchaser’s Mother
I V Lemisio, Purchaser’s Father
J Croxford, Director of Trader
G Nelson, Business Manager of Trader (18 December 2019 only)
L Croxford, Operations Manager of Trader (12 February 2020 only)
T P Craig, Director of Hutt Automatics 2019 Ltd, Witness for Purchaser on 18 December 2019 (by phone)

DATE OF DECISION 5 March 2020

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________


  1. Ioane Lemisio’s application to reject his 2007 Ford Territory is not upheld.
  2. The contract between Mr Lemisio and Max Motors Ltd in relation to “Max Care” is declared to be void under s 43(3)(a)(i) of the Fair Trading Act 1986.
  1. No later than 20 March 2020, Max Motors Ltd must refund Mr Lemisio $950 in relation to his Max Care payments and the cost of his Protecta mechanical breakdown insurance policy.
  1. Max Motors Ltd must, at its expense, repair the vehicle’s transmission as recommended by Hutt Automatics 2019 Ltd. Max Motors is to provide full disclosure to Mr Lemisio of all of the repairs carried out so he can ensure that they correspond with those recommended by Hutt Automatics 2019 Ltd.
  2. These repairs should be completed as soon as possible and no later than four weeks after the date of this decision.
  3. If the parties experience any difficulty in having the repairs completed within that timeframe, they may advise the case manager and the Tribunal will consider making additional orders.

___________________________________________________________________


REASONS

Introduction

[1] In the relatively short period since he purchased a 2007 Ford Territory from Max Motors Ltd in March 2019, Ioane Lemisio and other members of his family have driven the vehicle more than 32,000 km. Their use of this vehicle has taken its already high odometer reading from 198,650 km to at least 231,240 km.
[2] In that period, the vehicle has suffered a number of faults, some of which were repaired at Max Motors’ expense and some of which Mr Lemisio has had to pay for. Currently, the vehicle has a serious problem with its transmission which means it can no longer be driven. Because of the range of faults suffered by the vehicle, including the current fault, Mr Lemisio wishes to reject it.

Summary of decision

[3] For the reasons set out below, I have decided that Mr Lemisio is not entitled to reject the vehicle. In summary, that is because too much time has passed, and in particular the vehicle has been driven too many kilometres since purchase, for there to be any right to reject the vehicle under the Consumer Guarantees Act 1993 (the CGA).
[4] As well, the vehicle was in an accident in or around 1 May 2019 at McDonald’s Lower Hutt. Various panel beating repairs were required to the vehicle after this accident. Max Motors correctly submits that, in terms of s 20(1)(c) of the CGA, the vehicle has been damaged after delivery to Mr Lemisio for reasons not related to its state or condition at the time of supply.
[5] In light of these factors, Mr Lemisio has lost any right to reject the vehicle under the CGA.[1]
[6] However, Mr Lemisio’s claim is successful under the Fair Trading Act 1986 (the FTA). I consider that Mr Lemisio was misled as to the existence of a three year warranty on the vehicle. The vehicle was sold to Mr Lemisio with a “3yr warranty” on his payment of an additional $500. However, Max Motors did not meet the disclosure requirements under the FTA in respect of this “warranty”. Both parties accept that the “warranty” that was sold to Mr Lemisio, which was a Protecta mechanical breakdown insurance policy, is now void. That is because Mr Lemisio failed to comply with conditions of the warranty of which he was not aware (because Max Motors did not disclose them to him). That leaves Mr Lemisio unable to make a claim under the “warranty” in respect of the current damage to the vehicle’s transmission, for which he has been told that approximately $6,000 in repairs are required. In addition, the “warranty” had a $4,000 claim cap which Max Motors did not disclose. Because of Max Motors’ failure to comply with the disclosure requirements in respect of the “warranty”, I consider that Mr Lemisio is now entitled to recover from Max Motors the full cost of the repairs that are needed to get his vehicle back on the road.
[7] The fund known as “Max Care” to which Mr Lemisio and other members of his family have contributed money is an “extended warranty agreement” in terms of the FTA.[2] Again, Max Motors did not comply with the extended warranty agreement disclosure provisions in the FTA in respect of Max Care. For that reason, I declare that the Max Care agreement between Mr Lemisio and Max Motors is void under s 43(3)(a)(i) of the FTA. I order Max Motors to refund Mr Lemisio $450, the money that has been deposited into the “Max Care” fund by or on behalf of Mr Lemisio.

Factual background

[8] A very wide range of faults were alleged with this vehicle. These included:
[9] Many of these matters were repaired, some at the expense of Max Motors and some at the expense of the Lemisio family. The evidence was that Max Motors saw fit to carry out repairs in respect of some of these items in accordance with its obligations under the CGA. Other items appear to have been repaired using funds accumulated through the “Max Care” programme. Some of the other faults, in particular repairs to the driver’s window, the faulty suspension arm and the centre drive shaft were paid for by Mr Lemisio or his family.
[10] I do not propose to examine each of these numerous faults and repairs in detail in the remainder of this decision. That is because, in broad terms, the Tribunal’s Assessor, Mr Binding, and I consider that the range of faults identified with this vehicle is not inconsistent with the fact that it is a very high-mileage car that has accumulated significant additional mileage while in Mr Lemisio’s ownership.
[11] Having said that, there is one significant outstanding issue with the vehicle that requires addressing before the vehicle can be used again. The transmission is coolant damaged and needs to be removed and reconditioned. While it is strongly arguable that this particular issue is not a failure of acceptable quality under the CGA (due to the age and mileage of the car, the period Mr Lemisio has owned it, and the extent to which it has been used since purchase), there is a good argument that the current transmission fault is the kind of issue that Mr Lemisio would have been entitled to have repaired under the “three year warranty” that was purportedly supplied with the vehicle when Mr Lemisio purchased it. The question of whether Mr Lemisio is entitled to seek reimbursement for the cost of the repair that is now required is appropriately dealt with under the framework of the FTA. That is because, in my view, Mr Lemisio did not get the benefit of the “three year warranty” that Max Motors sold him with this car, primarily because Max Motors did not adequately disclose the terms and conditions of the warranty agreement to him.
[12] Accordingly, it is necessary for the Tribunal to consider whether Max Motors has breached the FTA and, if so, whether Mr Lemisio is entitled to a remedy because of that.

Issue one: Has Mr Lemisio established that Max Motors breached the Fair Trading Act 1986?

[13] The starting point in assessing whether Max Motors breached the FTA is s 9 of that Act, which provides:
  1. 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.

[14] The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corp Ltd v Ellis: [3]

... 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.

[15] Section 13(i) of the FTA is also relevant in the present case. It provides:
  1. False or misleading representations

No person shall, in trade, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of goods or services,—

...

(i) make a false or misleading representation concerning the existence, exclusion, or effect of any condition, warranty, guarantee, right, or remedy, including (to avoid doubt) in relation to any guarantee, right, or remedy available under the Consumer Guarantees Act 1993;

...

[16] As well, ss 36T and 36U of the FTA are relevant. Those sections contain the definition of “extended warranty agreement” and the disclosure requirements for extended warranty agreements.
[17] The vehicle offer and sale agreement between Mr Lemisio and Max Motors dated 6 March 2019 states that the vehicle’s purchase price was $9,980. In addition to that, it was agreed that Mr Lemisio would pay an additional $500 for what was described in the vehicle offer and sale agreement as a “three yr warranty”. Beneath the reference to the “three yr warranty” was handwritten: “$250 excess”.
[18] It was common ground that, at the time of sale of the vehicle, Max Motors did not provide Mr Lemisio with any additional paperwork indicating what the terms of the “three yr warranty” were. Both parties acknowledged a discussion at the time of purchase about needing to have the vehicle serviced, however they disagreed about exactly what the Max Motors salesman had said. The salesman did not attend the hearing or provide a written statement. He no longer works for Max Motors.
[19] Speaking on behalf of her son, Mrs Filifili Lemisio was adamant that all that the Max Motors salesman told her and her family about servicing was that the vehicle would need to be serviced within the next six months after purchase, namely by early September 2019.
[20] Mrs Lemisio and the other members of the Lemisio family were certain that they were not told that the vehicle would have to be serviced within a certain number of kilometres after purchase. In particular, they denied that anyone told them that a condition of the warranty was that the vehicle had to be serviced within 5,000 km after the purchase of the vehicle.
[21] On 29 October 2019, Jamie Croxford, Max Motors’ director, wrote a letter to Mr Lemisio and his parents which asserted that “as the 5,000 km service was missed the Protecta warranty is void ...”. But, as I have mentioned, according to the Lemisio family, they were unaware that there was any 5,000 km service requirement associated with the “Protecta warranty”.
[22] Mr Croxford acknowledged that the Protecta “warranty” was not supplied to Mr Lemisio at the time of sale, or for some time afterwards. Indeed, the Protecta mechanical breakdown insurance policy is dated 19 March 2019, some 13 days after the date of purchase. An administrative backlog at Max Motors meant that the policy was not sent to Mr Lemisio at the time Max Motors received it.
[23] Mr Lemisio denied having received a copy of this policy until after he had lodged his application to this Tribunal, in or around November 2019. Mr Croxford asserted that the policy had been posted to Mr Lemisio before then, but no evidence was put forward to substantiate this assertion.
[24] Based on the evidence before the Tribunal, I prefer Mr Lemisio’s evidence that he did not receive the Protecta policy until after he had commenced his Tribunal proceeding.
[25] There was no evidence that the 5,000 km service requirement condition was ever notified to Mr Lemisio. None of the material produced to the Tribunal contained any reference to that condition. Accordingly, I find that the Lemisio family did not have notice of this stipulation. I accept that it came as a complete surprise to them that the “warranty” was void due to their failure to comply with a condition of which they were previously unaware.
[26] Moreover, as I outlined to Mr Croxford in the hearing, Max Motors failed to comply with its obligations under s 36U of the FTA in respect of the Protecta policy. That section provides:

36U Disclosure requirements relating to extended warranty agreements

(1) A warrantor must ensure that—
(a) every extended warranty agreement—
(i) is in writing; and
(ii) is expressed in plain language; and
(iii) is legible; and
(iv) is presented clearly; and
(v) complies with the requirements of subsection (2); and

(b) a copy of the agreement is given to the consumer at the time the consumer purchases the extended warranty.

(2) The requirements referred to in subsection (1)(a)(v) are that—

(a) the following information is set out on the front page of the agreement:

(i) a summarised comparison between the relevant Consumer Guarantees Act 1993 guarantees and the protections provided by the extended warranty agreement; and

(ii) a summary of the consumer’s rights and remedies under the Consumer Guarantees Act 1993; and

(iii) a summary of the consumer’s right to cancel the agreement under section 36V; and

(iv) the warrantor’s name, street address, telephone number, and email address; and

(b) all the terms and conditions of the agreement are included in the agreement, including—

(i) the rights and obligations of the warrantor and the consumer; and

(ii) the duration and expiry date of the agreement (including whether or not the agreement expires when a claim is made); and

(c) the total price payable under the agreement is disclosed in the agreement; and

(d) the agreement is dated.

(3) In addition to the requirements for written disclosure under subsections (1) and (2), the warrantor must, where reasonably practicable (for example, where the agreement is entered into between a warrantor and consumer in each other’s presence or by telephone), give the consumer oral notice, before the agreement is entered into, of—

(a) the consumer’s right to cancel the agreement within 5 working days; and

(b) how the consumer may cancel the agreement.

[27] In particular, as I have discussed above, there was no evidence that Max Motors complied with s 36U(1)(b) of the FTA. Mr Croxford accepted that no copy of the Protecta insurance agreement was given to Mr Lemisio when he purchased it. In addition, there is no evidence that Max Motors complied with s 36U(2)(b) by giving Mr Lemisio the terms and conditions of the extended warranty agreement. There was no evidence that Mr Lemisio was informed about the obligation to have the vehicle serviced no more than 5,000 km after purchase. Nor was there any evidence that Max Motors told Mr Lemisio there was a $4,000 cap on claims under the policy. Furthermore, although the vehicle offer and sale agreement (VOSA) states that the “warranty” had a $250 excess, the policy certificate itself states that the excess is $350.

Max Care

[28] I also have concerns about another arrangement that Mr Lemisio entered into with Max Motors, known as “Max Care”. This arrangement involved a series of automatic payments by or on behalf of Mr Lemisio of $25 per week that were made between 13 March 2019 and 31 July 2019, totalling $450.
[29] There was no evidence that Max Motors ever gave the Lemisio family a clear description of what Max Care is. At the hearing Mr Croxford described it as “a fund so that if they require money at any time, the money’s there for them to use [and it can be used for] warrant of fitnesses and tyres and whatnot”. Mr Croxford explained that Max Care was a benevolent scheme, which avoided the need for his customers to have to go to expensive instant lenders when they needed to carry out repairs to their vehicle. Mr Croxford acknowledged that the terms of Max Care are not set out in writing and indeed it appears that none of the matters set out in s 36U(2) were disclosed in writing (or necessarily in any other form either). I asked Mr Croxford whether he agreed that Max Care was a form of extended warranty in terms of the definition of that term in s 36T of the FTA, which provides:

36T Meaning of extended warranty agreement and related definitions

In this subpart,—

extended warranty agreement means an agreement—

(a) that is entered into—

(i) between a consumer and a warrantor in relation to the purchase by the consumer of goods or services; and

(ii) at, or at about, the same time as those goods or services are purchased; and

(b) under which the warrantor provides specific warranties, guarantees, or undertakings (either directly or through a third person) in relation to those goods or services; and

(c) for which the consumer pays a price that is separate from, or additional to, the price at which the goods or services are offered for sale
warrantor means both—

(a) the supplier, if that person arranges or provides the extended warranty agreement; and

(b) if the extended warranty agreement is entered into directly between the consumer and a person other than the supplier (for example, an insurer or manufacturer), that other person.

[30] Max Care is an agreement between a consumer and Max Motors in relation to the purchase by the consumer of a vehicle which, in the case of Mr Lemisio’s arrangement, was entered into at or about the same time as he purchased the vehicle.
[31] Under the Max Care arrangement, Max Motors provided specific “undertakings” in relation to the vehicle, and Mr Lemisio agreed to pay a price for Max Care that was separate from or additional to the price of the vehicle itself.
[32] Although Mr Croxford refused to accept in the hearing that Max Care was a form of extended warranty, I find that the definition of extended warranty agreement in s 36T is applicable and therefore that Max Motors was required to comply with the disclosure requirements in s 36U in respect of Max Care.
[33] Mr Croxford confirmed that nothing in relation to Max Care is documented “because of privacy”. I was therefore not satisfied that Max Motors complied with any of the disclosure requirements in s 36U in relation to Max Care. Section 36U(1)(a)(i) makes it clear that these disclosure requirements must be met by way of a written agreement.
[34] Accordingly, Max Motors failed to comply with s 36U of the FTA in respect of both the Protecta policy and the Max Care arrangement with Mr Lemisio. I also consider Max Motors has breached s 13(i) of the FTA (above) because of its failure to make adequate disclosure of the conditions relating to each of these agreements. Its failure amounts to “a false or misleading representation concerning the existence, exclusion, or effect of any ... warranty...” in the terms of that provision. It is well-accepted that under the FTA, silence or the failure to disclose a material fact, can constitute misleading or deceptive conduct:[4]

Silence may constitute misleading or deceptive conduct, but whether it does is to be objectively assessed in all the circumstances ... Conduct may be misleading or deceptive within the meaning of s 9 of the Fair Trading Act 1986 by an omission to provide information even if no obligation to provide such information exists as a matter of general law, outside the standards of conduct required by the Fair Trading Act.

[35] Because of my finding that Max Motors has breached ss 13(i) and s 36U of the FTA, in relation to both the Protecta mechanical breakdown insurance policy and Max Care, I propose to forward a copy of this decision to the Commerce Commission for it to take any further action against Max Motors as it considers appropriate.

Why does all of this matter?

[36] There is a clear difference between what Mr Lemisio thought he was getting – a three year warranty on his vehicle – and what he was actually getting, a mechanical breakdown insurance policy, capped at $4,000, and in respect of which there was an undisclosed strict condition to have the vehicle serviced within 5,000 km after purchase.
[37] I do not think that condition was ever explained to any member of the Lemisio family. Even if it was conveyed to Mr Lemisio orally, it appears likely that it would not have been understood. Mr Lemisio is a proficient speaker of Tokelauan, but his English is not as strong. His reliance on a Tokelauan interpreter at the hearing prompted Mr Croxford to acknowledge, in hindsight, that Mr Lemisio may not have understood the oral explanation Mr Croxford claimed Max Motors gave Mr Lemisio. That is one reason why the FTA specifies that all the terms and conditions are provided in writing. Not only is it a legal obligation under the FTA, it is a helpful way in which a trader can prove that it has communicated the conditions of the warranties it sells. Max Motors could not prove it provided this information in writing, and I was not persuaded that it did so in any other way.

What is the current problem with the vehicle?

[38] According to Max Motors’ timeline, on or around 1 August 2019, the car was returned to it with what was described as a noise and vibration. Mr Lemisio’s father told the Tribunal that this “sound below” had been getting worse and worse since about June 2019.
[39] Max Motors took the vehicle to Smart Auto Solutions, which road tested it for noise and vibration and found a front brake shudder. It machined the brake rotors and replaced the brake pads, and road tested the vehicle again, this time finding an engine misfire. It checked the spark plugs, found two of them were worn, and replaced them. It then road tested the vehicle again and found the misfire was still present. It scanned the vehicle for faults and found multiple misfire codes had been logged. It then removed and replaced faulty coils. This time, after road testing the vehicle again, Smart Auto Solutions found the misfire had gone but the vehicle had a slight surge. It scanned the vehicle again and found a faulty brake switch and noted on its invoice that it suspected the gearbox was shifting up and down. The invoice states that the vehicle was referred to Mark Auto Electrical but there was no evidence that the vehicle actually went for further assessment by Mark Auto Electrical.
[40] A handwritten note on Smart Auto Solutions’ invoice, written by the technician who attended to the vehicle states: “at this stage there was no sign of oil of any sort present in the coolant system nor water in the transmission”. This comment is relevant for reasons I will shortly explain.
[41] On or around 12 August 2019, the vehicle was returned to Max Motors after having apparently overheated. Mr Lemisio said this happened because, after the repairs at Smart Auto Solutions, it was returned to him with an empty water reservoir.
[42] Max Motors then arranged for the vehicle to be taken to Nelson Street Motors. Its invoice dated 12 August 2019 states that it replaced the transmission oil cooler and the vehicle’s radiator. It flushed and refilled the cooling system, replaced the transmission filter and flushed the transmission.
[43] Subsequent to this repair, the transmission appears to have operated satisfactorily for approximately 10,000 km. However, on or around 30 October 2019, Mr Lemisio took the vehicle to Hutt Automatics 2019 Ltd, which reported as follows:

Try to road test vehicle. Transmission binding & shuddering. Push vehicle into workshop & raise on hoist. Drain & inspect transfer case oil. Oil discoloured & level low, possible damage in transfer case, would need to be removed & inspected. Check transmission oil level & condition. Oil discoloured, suspect coolant contamination via transmission oil cooler circuit. Take sample of oil & carry out glycol test. Glycol test positive, transmission is coolant damaged & needs to be removed & reconditioned. Approximate cost $6,000 incl GST. Transfer case not included, price on inspection.

[44] The technician who attended the vehicle at Hutt Automatics was its director Thomas Craig. Mr Craig gave evidence at the first hearing of this matter. He told the Tribunal that a crack in the vehicle’s radiator has caused engine coolant to seep into the transmission fluid. This contamination is causing a transmission problem. Mr Craig was unable to tell how long this had been going on for. He said that it could have happened overnight or over a long time; he could not tell. Mr Craig confirmed that it was necessary to rebuild the transmission to get all of the glycol (coolant) out. It would also be necessary to install a new radiator and put in an external cooler. Mr Craig did not think that this defect could have been prevented through more regular servicing of the vehicle. He said that there was no way of telling when this problem would manifest as all the relevant components were internal. The transfer case issue described in the invoice was a separate issue. Mr Craig had confirmed from its appearance that there was something wrong with the transfer case.

Tribunal’s assessment

[45] Mr Binding thought that it was hard to tell whether the current problems identified by Hutt Automatics were linked to the earlier episode of overheating, requiring the radiator to be replaced and the cooling and transmission system to be flushed, in August 2019. After all, the vehicle had been driven for another approximately 10,000 km since then without any obvious problems.
[46] Nevertheless, Mr Binding thought that it was possible that the issues could be linked and that the later issue could be a result of the transmission and radiator not having been adequately flushed, in August 2019. Mr Binding agreed with Mr Craig’s assessment that a new or reconditioned transmission is now required in the vehicle because of the presence of glycol.
[47] Mr Binding thought that, in a vehicle of this mileage, 231,249 km, it is highly likely that the transmission would be getting to an age and stage where it is likely to need to be replaced anyway. That reinforced Mr Binding’s view, which I accept, that this issue cannot be regarded as a failure of the vehicle to comply with the guarantee of acceptable quality; rather; it is a feature of its age and mileage. And that is also why, as I explained earlier, I have considered this dispute primarily under the FTA rather than under the CGA.

Issue two: What remedy is available to Mr Lemisio, if any?

[48] The remedies available for a breach of the FTA are discretionary. They are set out in s 43, which provides:

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.

[49] The discretion to order a remedy is 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) is to do justice to the parties in the particular circumstances of the case.[5] Under s 43, the normal measure of loss is the “difference between the value of what was acquired and the price paid”.[6]

Tribunal’s assessment

[50] In Mr Binding’s view, it is highly likely that Mr Lemisio would have been covered under the terms of the Protecta mechanical breakdown insurance policy in relation to the vehicle’s current transmission fault. Unfortunately, as explained above, that policy is now deemed to be void on account of Mr Lemisio’s failure to comply with its stipulation that the vehicle be serviced within 5,000 km after activation of the warranty. In addition, I note that the insurance policy itself is limited to a maximum claim of $4,000. As I have found, neither of these conditions were disclosed to Mr Lemisio, which has caused him prejudice. Hutt Automatics 2019 Ltd has estimated the cost of the repair as $6,000.
[51] Based on the contract he entered into with Max Motors, Mr Lemisio could reasonably expect that the cost of the transmission repairs he now needs to arrange could be recovered under the three-year warranty he purchased with the vehicle.

Conclusion

[52] I conclude that the appropriate remedy in the present case is threefold:

J S McHerron
Adjudicator

[1] Consumer Guarantees Act 1993, s 20(1)(a) and (c).

[2] Fair Trading Act 1986, s 36T.

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

[4] Des Forges v Wright [1996] 2 NZLR 758 (HC) at 764.

[5] Red Eagle, above n 3, at [31].

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

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