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Jaques v Seven Seas Motors Ltd - Reference No. MVD 157/2021 [2021] NZMVDT 114 (23 June 2021)

Last Updated: 23 July 2021

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 157/2021
[2021] NZMVDT 114

BETWEEN DAVID JAQUES

Applicant

AND JAMAL NASSER
First Respondent

AND SEVEN SEAS MOTORS LTD
Second Respondent

MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory, Assessor

HEARING at Tauranga on 8 June 2021



APPEARANCES
David Jaques, Applicant
Deena Jaques, Witness for the Applicant
Jamal Nasser for the First and Second Respondents

DATE OF DECISION 23 June 2021

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

  1. The agreement to purchase the vehicle is declared void from the date of purchase.
  2. David Jaques’ rights and obligations under the collateral credit agreement with MARAC, a division of Heartland Bank Ltd, dated 15 March 2021 are assigned to Seven Seas Motors Ltd from the date of this decision.
  1. Seven Seas Motors Ltd shall, within 10 working days of the date of this decision, pay $9,529.47 to David Jaques.

_________________________________________________________________

REASONS

Introduction

[1] The 2011 Jaguar XJ[1] David Jaques purchased for $30,000 on 16 March 2021 had been recently imported from Singapore. The vehicle was advertised as having an odometer reading of 17,000 km and the mileage showing on the vehicle’s odometer when Mr Jaques purchased the vehicle was about 17,300 km. Mr Jaques has since discovered that the vehicle has defects and wear and tear consistent with a vehicle of much higher mileage. Mr Jaques has also obtained Jaguar manufacturer’s warranty claims records that shows that the vehicle’s odometer reading was 103,325 km when the last warranty claim was made in Singapore in August 2015.
[2] Mr Jaques says that he initially thought the vehicle was sold by Jamal Nasser in his personal capacity, but now considers that the vehicle may have been sold on behalf of Seven Seas Motors Ltd, a registered motor vehicle trader of which Mr Nasser is the sole director and shareholder. Mr Jaques therefore alleges that Jamal Nasser and/or Seven Seas Motors Ltd (whichever sold the vehicle to him) engaged in misleading conduct in breach of the Fair Trading Act 1986 (the FTA) by misrepresenting the vehicle’s odometer reading. Mr Jaques wants to return the vehicle and seeks orders to recover all amounts he has paid in respect of the vehicle and be relieved of his ongoing obligations under the credit contract he entered into with MARAC, a division of Heartland Bank Ltd (MARAC) to purchase the vehicle (the collateral credit agreement).
[3] Mr Nasser, who appeared for both Respondents, says that he sold the vehicle and the transaction was a private sale with the vehicle being sold on an “as is where is basis”. Mr Nasser also denies that the representations about the vehicle’s odometer reading were misleading. He says that there is no evidence to prove that the vehicle’s odometer was incorrect at the time of sale and considers that Mr Jaques, or his son, may have damaged the vehicle since purchase, including by driving it in a manner that has caused a significant oil leak.

Relevant background

The purchase of the vehicle

[4] The vehicle was advertised on the Trade Me website. Relevant to the issues in this case, the vehicle’s odometer reading was represented as “17,000 ks”.
[5] Mr Jaques was interested in the vehicle as he owned a similar Jaguar and wanted to purchase this vehicle for his son. Mr Jaques then contacted Mr Nasser, who identified himself as “Jamal Mason” and said that he was selling the vehicle because he had purchased it for a family member who then decided that they no longer wanted the vehicle.
[6] After negotiations, Mr Jaques agreed to purchase the vehicle for $30,000,[2] with Mr Jaques’ son paying a cash deposit of $6,000 and the remainder financed through a loan with MARAC. The agreement to purchase the vehicle is recorded in an undated “Used Car Sales Agreement”, which relevantly stated:
[7] The Waka Kotahi NZ Transport Agency (Waka Kotahi) Certificate of Registration for the vehicle provided by Mr Jaques shows that the vehicle’s odometer reading at the time of purchase was 17,274 km.

The restricted performance warning message

[8] Deena Jaques, Mr Jaques’ wife, collected the vehicle from Auckland on 16 March 2021. Mrs Jaques was surprised at the condition of the vehicle, calling it “shabby”. While driving home to Puni, near Waiuku, Mrs Jaques says that a “Restricted Performance” warning message appeared on the dashboard display and the vehicle was “sluggish” under acceleration and smelled strongly of fumes. That same day, Mr Jaques, his son and daughter each drove the vehicle, travelling a further 15 km or so.

The oil leak

[9] On 21 March 2021, Mr Jaques then drove the vehicle to Pukekohe, where he noticed oil leaking from the vehicle. The vehicle’s oil level warning light then illuminated while returning home to Puni. Mr Jaques contacted Mr Nasser to give him a “heads up” about the warning message and oil leak. Mr Nasser agreed that Mr Jaques should have the vehicle assessed and offered to “help out as much as I can”.

The assessments of the vehicle

[10] The vehicle was then assessed by Jaguar Workshop Ltd in Pukekohe. An invoice dated 17 April 2021 records that Jaguar Workshop found a “bad oil leak”: from the front crankshaft seal/pulley area. It also noted “previous part/component replacement on the vehicle”. In an email of the same date, Jeremy Hatch of Jaguar Workshop also states that “[n]ever have I seen any Jaguar, ever, with so many parts replaced on it until now, let alone a modern one”.
[11] Mr Jaques then contacted Mr Nasser. A text message exchange between the pair shows that Mr Nasser offered $3,000 in compensation. Mr Jaques declined, saying “[s]orry no thanks the issue is bigger than that”. Mr Nasser responded saying “[t]hat’s we done See you at court”.
[12] Mr Jaques has since had the vehicle assessed by Stag Spares & Services Ltd. An estimate dated 14 May 2021 records that Stag Spares & Services found an oil leak from the front oil pump seal. It provided an estimate of $4,620.13 to replace the seal and related components.
[13] In an email dated 17 May 2021, Morris Turner, the Managing Director of Stags Spares & Services, also advised Mr Jaques that the following components had previously been replaced on the vehicle:
[14] Mr Turner considered that “[n]one of the above I world expect replaced on a 17,000 km car. Front Brake pads possibly?”.
[15] In a separate invoice of 11 May 2021, Stag Spares & Services also stated that the “general wear and t[e]ar of the vehicle does not represent 17,564 mileage shown on the i[n]strument cluster”. In addition to the matters listed in Mr Turner’s email of 17 May 2021, Stag Spares & Services also considered that:

The compliance information

[16] Mr Jaques has also obtained information from Waka Kotahi about the compliance inspections performed on the vehicle when it was imported from Singapore in February 2021. In an email dated 22 April 2021, Waka Kotahi advised that the vehicle inspector who performed the compliance assessment entered the following information into Waka Kotahi’s system:
[17] Waka Kotahi confirmed that the required repair certification for the vehicle was completed by Tauranga Repair Certifiers Ltd.
[18] Mr Jaques also provided the VTNZ Certification Check Sheet dated 15 January 2021 and the Light vehicle repair record of certification for the vehicle dated 9 February 2021, which were both completed during the compliance process. The information on those documents corresponds with the information provided by Waka Kotahi.

Other evidence regarding the vehicle’s true odometer reading

[19] Mr Jaques has since obtained the vehicle’s manufacturer’s warranty claim history from Armstrong & Shorter, an Auckland based Jaguar franchise. That information shows that the vehicle was subject to numerous warranty claims, goodwill repairs and recall campaigns in Singapore between December 2010 (when its odometer reading was 18 km) and 12 August 2015 (when its odometer reading was recorded as 103,325 km).
[20] Mr Nasser and Seven Seas Motors dispute the accuracy and reliability of those records and provided information from PA Exports And Trading, the Singapore-based supplier of the vehicle. Both Respondents say that this information shows that the vehicle was in good condition and its odometer reading was about 16,000 km when the vehicle was exported from Singapore. The Respondents also say that the vehicle has been assessed by Waka Kotahi, New Zealand Customs and VTNZ and no concern was raised about the vehicle’s odometer reading. The Respondents therefore consider the vehicle’s mileage to be “legal under NZ law”.[3]

The issues

[21] Against this background, the issues requiring the Tribunal’s consideration in this case are:

Issue 1: Who sold the vehicle?

[22] The Used Car Sales Agreement records that the vehicle was sold by its owner “Jamal Mason”. There is no Jamal Mason, or at least none involved in this transaction. Mr Nasser, whose current first names are Jamal Mason, says that he was the seller of the vehicle and the $6,000 deposit was paid into a bank account belonging to his partner.
[23] Despite Mr Nasser’s claims, the evidence shows that this vehicle was purchased, imported, owned and sold by Seven Seas Motors, a registered motor vehicle trader, of which Mr Nasser is the sole director and shareholder.
[24] In his oral evidence, Mr Nasser advised that Seven Seas Motors purchased and imported the vehicle from Singapore, that Seven Seas Motors was the owner of the vehicle and that the proceeds of the sale to Mr Jaques were used by Seven Seas Motors to repay a shareholder’s loan from Mr Nasser and his partner.
[25] Contemporaneous documents also support the conclusion that the vehicle was purchased, imported and sold by Seven Seas Motors. For example:
[26] This evidence satisfies me that the vehicle was sold by Seven Seas Motors Ltd and that Mr Nasser attempted to pass this transaction off as a private sale.

Issue 2: Has Seven Seas Motors engaged in conduct that breached s 9 of the FTA?

[27] Section 9 of the FTA 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.

[28] The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corp Ltd v Ellis:[4]

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.

[29] Seven Seas Motors is in trade. It is a registered motor vehicle trader.
[30] Seven Seas Motors represented on the Trade Me listing for the vehicle that the vehicle’s odometer reading was 17,000 km. That representation was misleading in breach of s 9 of the FTA because the vehicle’s true odometer was much higher. In that regard, I accept the information about the vehicle’s warranty claims history from Archibald & Shorter, which shows that the vehicle’s odometer reading was 103,325 km in 2015 – much higher than its current odometer reading.
[31] Even without the information from Archibald & Shorter, I would have concluded that the vehicle had travelled much further than the current odometer reading. In that regard, Mr Gregory, the Tribunal’s Assessor, advises that the wear and tear and repairs performed on this vehicle as set out in the evidence from Jaguar Workshop, Stag Spares & Services and in the various compliance documents are entirely inconsistent with a vehicle that has travelled less than 20,000 km. Mr Gregory advises that the wear and tear and the replaced parts are much more consistent with a vehicle that has travelled more than 100,000 km.
[32] The only conclusion I can therefore reach is that someone in Singapore has tampered with the vehicle’s odometer. Mr Nasser says that he had no knowledge of any odometer tampering, and in that regard, I accept that the tampering occurred before the vehicle was imported into New Zealand. However, absence of knowledge provides no defence. The FTA is a strict liability statute, in that the representor can have liability under the FTA even if it believes the representation to be true.
[33] Consequently, by representing that the vehicle’s odometer reading was 17,000 km when the vehicle has travelled much further, Seven Seas Motors has engaged in misleading conduct in breach of s 9 of the FTA.

Issue 3: What remedy is entitled to under the FTA

[34] The remedies available for a breach of the FTA are set out in s 43 of the FTA which is as follows:

43 Other orders

(1) This section applies if, in proceedings under this Part or on the application of any person, a court or a Disputes Tribunal finds that a person (person A) has suffered, or is likely to suffer, loss or damage by conduct of another person (person B) that does or may constitute any of the following:

(a) a contravention of a provision of Parts 1 to 4A (a relevant provision):

(b) aiding, abetting, counselling, or procuring a contravention of a relevant provision:

(c) inducing by threats, promises, or otherwise a contravention of a relevant provision:

(d) being in any way directly or indirectly knowingly concerned in, or party to, a contravention of a relevant provision:

(e) conspiring with any other person in the contravention of a relevant provision.

(2) The court or the Disputes Tribunal may make 1 or more of the orders described in subsection (3)—

(a) whether or not the court grants an injunction, or the court or the Disputes Tribunal makes any other order, under this Part; and

(b) whether or not person A made the application or is a party to the proceedings.

(3) The orders are as follows:

(a) an order declaring all or part of a contract made between person A and person B, or a collateral arrangement (for example, a collateral credit agreement) relating to such a contract,—

(i) to be void; and

(ii) if the court or the Disputes Tribunal thinks fit, to have been void at all times on and after a date specified in the order, which may be before the date on which the order is made:

(b) if an order described in paragraph (a) is made in respect of a contract that is associated with a collateral credit agreement, an order vesting in person B all or any of the rights and obligations of person A under the collateral credit agreement:

(c) an order in respect of a contract made between person A and person B, or a collateral arrangement (for example, a collateral credit agreement) relating to such a contract,—

(i) varying the contract or the arrangement in the manner specified in the order; and

(ii) if the court or the Disputes Tribunal thinks fit, declaring the varied contract or arrangement to have had effect on and after a date specified in the order, which may be before the date on which the order is made:

(d) if an order described in paragraph (c) is made in respect of a contract that is associated with a collateral credit agreement, and if that order results in person A no longer having property in the goods that are the subject of the contract, an order vesting in person B the rights and obligations of person A under the collateral credit agreement:

(e) an order directing person B to refund money or return property to person A:

(f) an order directing person B to pay to person A the amount of the loss or damage:

(g) an order directing person B, at person B’s own expense, to repair, or to provide parts for, goods that have been supplied by person B to person A:

(h) an order directing person B, at person B’s own expense, to supply specified goods or services to person A.

(4) In subsection (3)(a) to (d), collateral credit agreement, in relation to a contract for the supply of goods, means a contract or an agreement that—

(a) is arranged or procured by the supplier of the goods; and

(b) is for the provision of credit by a person other than the supplier to enable person A to pay, or defer payment, for the goods.

(5) An order made under subsection (3)(a) to (d) does not prevent proceedings being instituted or commenced under this Part.

(6) This section does not limit or affect—

(a) subpart 5 of Part 2 of the Contract and Commercial Law Act 2017; or

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

[35] The Supreme Court in Red Eagle sets out the approach to be taken in applying s 43. The Tribunal must consider whether:
[36] Mr Jaques was misled. He saw and relied upon the misleading representation on the Trade Me listing that the vehicle’s odometer reading was 17,000 km.
[37] Mr Jaques has suffered loss or damage. The vehicle’s odometer has been tampered with and that fact means the vehicle is now likely to be worth much less than the $30,000 paid by Mr Jaques. Mr Nasser submitted that Mr Jaques had suffered no loss, as he considered that a reasonable consumer would have paid approximately $30,000 for a vehicle of the same model and age with an odometer reading of 103,325 km (which was the vehicle’s odometer reading in August 2015).
[38] Mr Nasser’s submission overlooks the fact that the vehicle’s odometer reading before the odometer was tampered with was likely to have been much higher than 103,325 km. The vehicle travelled 103,325 km between late 2010 and August 2015. If the vehicle was then used to the same extent before it was imported into New Zealand in late 2020, its odometer reading would now be approximately 200,000 km. Ultimately though, any purchaser of this vehicle cannot know what its true odometer reading is because the odometer has been tampered with. That factor, in my view, means the vehicle is worth much less than the price paid by Mr Jaques, because any reasonable purchaser of the vehicle can have no reassurance as to its true mileage.
[39] Seven Seas Motors’ conduct in representing that the odometer reading was 17,000 km was the effective cause of the loss suffered by Mr Jaques, because I am satisfied that Mr Jaques would not have purchased the vehicle if he had known that the odometer reading was much higher than represented.

Has Mr Jaques damaged the vehicle?

[40] Mr Nasser says that Mr Jaques should not be entitled to the remedy he seeks because the vehicle is likely to have been damaged by the use of the vehicle after purchase. For example, Mr Nasser considered that the oil leak may have been caused by damage to the underside of the vehicle (such as impact from a rock) during Mr Jaques’ ownership.
[41] I do not accept this submission. There is no evidence to show that Mr Jaques, or any other member of his family, has unreasonably used the vehicle or caused any damage. Instead, it is much more likely that the oil leak and other issues with this vehicle were pre-existing and are a result of wear and tear consistent with the vehicle’s age and true mileage, rather than any misuse since purchase.

What remedy is Mr Jaques entitled to?

[42] The remedies in s 43(3) of the FTA are discretionary, and the discretion is to be exercised so as to give effect to the policy of the FTA, which includes to protect the interests of consumers. The object of the remedies in s 43(3) of the FTA is to do justice to the parties in the particular circumstances of the case.[5]
[43] I consider that a reasonable consumer would not have purchased this vehicle if they had been appraised of the fact that its odometer had been tampered with. In those circumstances, I consider that the appropriate remedies under the FTA in this case are:
[44] Mr Nasser submitted that Mr Jaques should not be entitled to recover the cost of registering, towing and assessing the vehicle, in part to reflect the use he has had of the vehicle and to reflect the fact that an oil leak has developed during his ownership. I disagree. This vehicle should never have been sold to Mr Jaques because its odometer had been tampered with, and there was no evidence to show that the oil leak was caused by Mr Jaques use of the vehicle – instead the evidence shows that the oil leak was most likely caused by an inherent defect in the vehicle. I am therefore satisfied that he is entitled to recover all costs and losses he has incurred.
[45] Mr Jaques also sought general damages of $3,000. I agree with Mr Nasser that this is not a case in which general damages should be awarded. Such damages are reserved for extraordinary cases, and the circumstances of this case are not such that an award of general damages is required.

The collateral credit agreement

[46] In addition to the FTA remedies above, Mr Jaques is entitled to have his ongoing rights and obligations under the collateral credit agreement assigned to Seven Seas Motors. The relevant provisions are set out in ss 89(2) and (3) of the Motor Vehicles Sales Act 2003 (MVSA), which state:

89 Jurisdiction of Disputes Tribunal

...

(2) A Disputes Tribunal may order that the rights and obligations of the buyer of a motor vehicle under a collateral credit agreement vest in a motor vehicle trader if—

(a) the collateral credit agreement is associated with the contract for the sale of that motor vehicle; and

(b) the motor vehicle trader is a party to that contract for sale; and

(c) either one of the following circumstances applies:

(i) the buyer exercises the right conferred by the Consumer Guarantees Act 1993 to reject that motor vehicle and, on a claim by the buyer under section 47(1) of that Act, the Disputes Tribunal orders the motor vehicle trader to refund any money paid, or other consideration provided, for that motor vehicle; or

(ii) the Disputes Tribunal finds that the buyer has suffered, or is likely to suffer, loss or damage by the conduct of the motor vehicle trader that constitutes, or would constitute, any of the conduct referred to in section 43(1) of the Fair Trading Act 1986 and the Disputes Tribunal makes an order under section 43(2) of that Act declaring the whole or any part of the contract for sale to be void.

(3) For the purposes of subsection (2), collateral credit agreement, in relation to a contract for the sale of a motor vehicle, means a contract or agreement arranged or procured by the motor vehicle trader or the buyer for the provision of credit by a person other than by the motor vehicle trader to enable the buyer to pay the price reserved by the contract for sale in respect of the motor vehicle.

[47] The criteria in s 89(2) of the MVSA for the assignment of rights and obligations under a collateral credit agreement to Seven Seas Motors are all met in this case:
[48] Accordingly, under s 89(2) of the MVSA, all of Mr Jaques’ rights and obligations under the collateral credit agreement are assigned to Seven Seas Motors from the date of this decision.

Orders

[49] The Tribunal orders that:

DATED at AUCKLAND this 23rd day of June 2021

B.R. Carter
Adjudicator


[1] Registration number NJN227 and VIN number SAJAC2221BNV13206.

[2] There were documents produced (including an alternate version of a Used Car Sales Agreement and loan documents from MARAC) that stated that the purchase price was $34,000. Both parties confirmed that the true purchase price was $30,000.

[3] See email from Mr Nasser to Mr Jaques and the Motor Vehicle Disputes Tribunal sent on 25 May 2021 at 10:21 am.

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

[5] Red Eagle Corp Ltd v Ellis [2010] NZSC 20; [2010] 2 NZLR 492, at [31].

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