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Jones v Chevron Quality Cars 2018 Ltd - Reference No. MVD 078/2021 [2021] NZMVDT 119 (24 June 2021)

Last Updated: 23 July 2021

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 078/2021
[2021] NZMVDT 119

BETWEEN NICOLAS TERENCE JONES

Purchaser

AND CHEVRON QUALITY CARS 2018 LTD

First Respondent

AND NICHOLAS (NICK) JEFFREY PURVIS

Second Respondent

HEARING at Christchurch on 28 May 2021
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator
R C Dixon – Assessor

APPEARANCES

N T Jones, Purchaser
A M Kinsley, Loan Consultant, Pacific Motor Group (by phone)
J P Ferrari, Director and Sales Manager of First Respondent
N G Purvis, Second Respondent

DATE OF DECISION 24 June 2021

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

  1. The sale and purchase agreement between Nicolas Jones and Nick Purvis in respect of the modified Mazda RX7 purchased on or around 26 January 2021 is declared to be void.
  2. Mr Purvis must pay Mr Jones $80,000 no later than 8 July 2021.
  1. Once the amount in B. is paid in full, Mr Jones must make the vehicle available for Mr Purvis to collect at his cost, if any.

___________________________________________________________________


REASONS

Introduction

[1] Nicolas Jones is unhappy about the condition of the modified 1999 Mazda RX7 that he purchased on or around 26 January 2021 for $80,000. He wishes to return the car and get a refund of the purchase price.
[2] Mr Jones’ primary concern is that the vehicle was imported as a damaged vehicle, but this was not disclosed adequately, or at all, to him. Although he was aware that certain repairs would be needed in order to get the vehicle certified as compliant with New Zealand laws, he maintains he was unaware that the vehicle had been imported as a damaged vehicle. He says that this information was hidden from him when he purchased the car.
[3] Because of the unusual circumstances of the sale, it was not initially clear who had sold this vehicle to Mr Jones. This uncertainty also raised questions about the Tribunal’s jurisdiction to hear and determine the dispute.
[4] Mr Jones asserted that he had purchased the vehicle from Chevron Quality Cars 2018 Ltd. Chevron Quality Cars’ primary defence to the claim was that it was a private sale by one of its sales staff, Nick Purvis, to Mr Jones. If Chevron is correct that this was a private sale by Mr Purvis, then the Tribunal would not have jurisdiction. If, however, it was Chevron itself which sold the car, or if Mr Purvis was the seller but he did so as a motor vehicle trader, then the Tribunal will have jurisdiction.
[5] From this background, the following issues arise for the Tribunal to determine:

Issue 1: Who sold the vehicle?

[6] The vehicle is a 1999 Mazda RX7. However, this is no ordinary RX7. Rather, the vehicle is described as a “rocket bunny”. It has been heavily modified, both internally and externally, and was advertised with the following features:
[7] Mr Jones is a car collector. He was interested in purchasing this striking and unusual vehicle. He first became aware that the vehicle was for sale because he saw it in a Snapchat story that was published online by Mr Purvis. Mr Jones contacted Mr Purvis to ask whether he wanted to sell the vehicle, but he received no reply.
[8] Mr Jones then became aware that the vehicle was being listed by Chevron Quality Cars on Trade Me. The Trade Me listing indicated that the vehicle was to be “provided by Chevron Quality Cars” and that finance was available for its purchase. The Trade Me listing described the vehicle in detail as “another great example secured from Japan and now here in New Zealand”. The Trade Me listing gave several indications that would suggest to an ordinary reader that Chevron Quality Cars was the seller of the car. These included:

ON ROAD COSTS OF $495 INCLUDE FULL SERVICE, AA COMPLIANCE, AA APPRAISAL, VEHICLE REGISTRATION AND WARRANT OF FITNESS.

[9] The Trade Me listing said the asking price for the vehicle was $89,999. Once he saw the Trade Me listing, Mr Jones contacted Mr Purvis again. Mr Purvis told him that the vehicle was a Series 8 Mazda RX7 with low kilometres and that it was a “grade 4” car. “Grade 4” refers to the grade assigned to the vehicle in the Japanese auction from which it was purchased before being imported to New Zealand. It signified to Mr Jones that it was a good solid vehicle with low kilometres.
[10] Mr Jones said that Mr Purvis offered to sell him the car for $75,000, but that by the time Mr Jones replied, Mr Purvis told him that there was someone else interested in purchasing it for $80,000. Mr Jones said that Mr Purvis encouraged him to come in and look at the vehicle at Chevron Quality Cars, where the vehicle was sitting in the showroom.
[11] Mr Jones went to Chevron Quality Cars and looked at the car and asked several questions. He was aware that the vehicle was being sold “uncomplied” and that he would have to arrange for the vehicle to get compliance certification himself. However, Mr Jones said that he asked Mr Purvis whether it could be complied for road use, while keeping the same “look” as in the pictures that accompanied the advertising, and how it looked currently in the showroom. Two of the features of the vehicle’s “look” are:
[12] Mr Jones also said that he asked Mr Purvis if the vehicle had any damage. Mr Jones said that Mr Purvis told him that:
[13] Mr Jones and Mr Purvis agreed that the sale price for the vehicle would be $80,000. Mr Jones had to get finance to pay the purchase price. He contacted Pacific Motor Group and spoke with Anita Kinsley. The finance was to be provided by Marac. Ms Kinsley asked for a tax invoice from the “dealer”, plus the bank account number for payment. Mr Jones asked Mr Purvis to email that through to him. Mr Jones told the Tribunal that although Mr Purvis emailed through a form of agreement, Mr Jones could not read that because it was blurry on his phone. This document was, however, forwarded to Ms Kinsley who took it upon herself to sign the agreement in Mr Jones’ name.
[14] Ms Kinsley attended the Tribunal hearing by telephone and confirmed that she had signed the document on behalf of Mr Jones. She said that she thought she had authority to sign the document. However, Mr Jones told the Tribunal that he had not given Ms Kinsley any authority to sign the document on his behalf. Ms Kinsley accepted that she had signed the document without Mr Jones’ express authorisation.
[15] It was only afterwards, when Mr Jones saw a clearer copy of the agreement that had been signed by Ms Kinsley, that he realised the document stated that it was an “agreement to buy a vehicle privately” from Nick Purvis. Mr Jones told the Tribunal that at all times he had thought he was buying the vehicle from Chevron Quality Cars.
[16] There is, however, no dispute that the money for the vehicle was paid directly by Mr Jones into Mr Purvis’s bank account. Furthermore, at the hearing, Mr Purvis confirmed that if Mr Jones’ application for a refund of the purchase price was to succeed then any refund would come from him, Mr Purvis. Therefore, Mr Purvis accepted that he was the seller of the vehicle.
[17] After Mr Jones had paid for the vehicle, and while he was leaving, he said that Mr Purvis then showed him a sticker in the driver’s door pocket. This was a sticker stating that the vehicle had been flagged by the border inspector as having structural damage at the time of importation into New Zealand. This sticker had been removed from the vehicle’s windscreen by Mr Purvis and placed in the door pocket, contrary to the express instructions on the sticker itself that it should not be removed until the vehicle was inspected by an entry certifier:

Notice to the importer label

Conclusion

[18] I conclude that the seller of the vehicle to Mr Jones was Mr Purvis, rather than Chevron Quality Cars. However, I also accept Mr Jones’ evidence that he thought he was buying the vehicle from Chevron Quality Cars. I accept Mr Jones’ evidence that he did not sign the agreement to purchase the vehicle privately, and that Ms Kinsley had no authority to sign it as his agent. I also accept Mr Jones’ evidence that he did not see a clear copy of that agreement before it was signed on his behalf by Ms Kinsley.

Issue 2: Does the Tribunal have jurisdiction to determine this dispute?

[19] The Motor Vehicle Disputes Tribunal has jurisdiction only if one party, but not both parties, to the application or claim is a motor vehicle trader.[1] “Motor vehicle trader” is defined in s 7 of the Motor Vehicle Sales Act 2003. Sections 8 and 9 of that Act are also relevant and so all three of these provisions are set out below:
  1. Meaning of motor vehicle trader

In this Act, motor vehicle trader—

(a) means any person who carries on the business of motor vehicle trading (whether or not that person carries on any other business); and

(b) includes—

(i) [Repealed]

(ii) an importer:

(iii) a wholesaler:

(iv) a car auctioneer:

(v) a car consultant.

  1. 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.

  1. Who is not treated as motor vehicle trader

(1) A person is not treated as carrying on the business of motor vehicle trading for the purposes of this Act only because that person is—

(a) an employee or an agent of a motor vehicle trader; or

(b) under a contract for services with a motor vehicle trader; or

(c) solicitor who acts in that capacity as an agent for selling any motor vehicle unless that person is remunerated by commission in addition to, or instead of, that person’s professional charges; or

(d) a liquidator of a company that is a motor vehicle trader registered under this Act; or

(e) a manufacturer who sells any motor vehicle to—

(i) the Crown; or

(ii) a motor vehicle trader registered under this Act; or

(iii) any person who is or has been employed by the manufacturer; or

(ea) a car market operator; or

(f) a licensed car wrecker; or

(g) a finance company selling any motor vehicle under a transaction in which a motor vehicle trader acts as an intermediary between the finance company and the buyer (whether or not the motor vehicle trader acts as an agent of the finance company); or

(h) a finance company, an insurance company, a rental car company, a storage provider (within the meaning of section 2(1) of the Land Transport Act 1998), or any other person, that sells any motor vehicle as an incidental part of the person’s ordinary business; or

(i) carrying on any other business besides carrying on the business of motor vehicle trading and who, in the course of that other business,—

(i) buys any motor vehicle for use in connection with that business, with or without the intention of reselling it after such use; or
(ii) resells the vehicle after using it in connection with that business.

(2) Subsection (1)(d), (h), and (i) applies only if the person sells motor vehicles through a motor vehicle trader registered under this Act.

[20] The basic definition in s 7(a) of “motor vehicle trader” is any person who carries on the business of motor vehicle trading. Motor vehicle trading is defined in s 6(1) as “the sale of motor vehicles by a person (whether or not the person is a principal or agent)”. An essential difference between a private sale and a sale by a motor vehicle trader is that the selling is being done as part of a business.
[21] It is a requirement of the Motor Vehicle Sales Act that all motor vehicle traders must be registered.[2] Mr Purvis is not registered as a motor vehicle trader. He is, however, employed as a sales consultant for Chevron Quality Cars. But just because Mr Purvis is an employee of Chevron Quality Cars is not a basis for treating him as carrying on the business of motor vehicle trading for the purposes of the Motor Vehicle Sales Act.[3] This protects employees, or agents of motor vehicle traders, being held liable in their own right in respect of sales of motor vehicles conducted by them on behalf of their employers.
[22] However, the present car sale to Mr Jones was (as I have found in respect of Issue 1) not done on behalf of Chevron Quality Cars. Rather, Mr Purvis was selling the vehicle in his personal capacity. That means, in my view, the exception in s 9(1)(a) of the Motor Vehicle Sales Act does not apply.
[23] In my view, a combination of circumstances surrounding the sale of this vehicle indicate that Mr Purvis was acting as a motor vehicle trader when he sold the vehicle to Mr Jones, including that:

Conclusion

[24] As I have already found, I consider that Mr Jones thought that he was purchasing the vehicle from Chevron Quality Cars. It turns out that he was not. Rather he purchased the vehicle from Mr Purvis. However, I consider that in selling the vehicle to Mr Jones, Mr Purvis was carrying on the business of motor vehicle trading and therefore this Tribunal has jurisdiction to determine this dispute as against Mr Purvis.

Issue 3: Did Mr Purvis breach the Fair Trading Act 1986?

[25] 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.

[26] The next issue in this case is to determine whether Mr Jones has established that Mr Purvis breached s 9 of the FTA.
[27] 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. 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.

[28] I consider that Mr Purvis engaged in misleading and deceptive conduct in two respects:
[29] Because the damage flag had been removed from the vehicle, and no consumer information notice was supplied, this crucial information was not given to Mr Jones before he purchased the vehicle.
[30] This is another case where the Tribunal must consider the extent to which non-disclosure or silence can be a breach of s 9 and, if so, whether s 9 was breached on the facts.
[31] In Des Forges v Wright, Elias J (as she then was) stated

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.

[32] In the present case, the facts go beyond the circumstances in Des Forges. I have found that Mr Purvis had an express obligation to disclose the fact that the vehicle was damaged, under the requirements contained in the consumer information notice regulations.

Conclusion

[33] Applying the test in Red Eagle to ascertain whether there has been a breach of the FTA, I conclude that Mr Purvis’s conduct was misleading and deceptive in breach of s 9. In short, his failure to disclose before selling the vehicle that it had a damage flag, and the misleading way in which the name of the seller was not clearly disclosed to Mr Jones, were both instances of misleading and deceptive conduct.

Issue 4: What remedy (if any) is Mr Jones entitled to?

[34] Section 43(3) of the FTA provides the orders that the Tribunal can make if a person has suffered loss or damage by conduct in breach of s 9. In an appropriate case, the Tribunal can declare the sale and purchase agreement made between purchaser and trader to be void and to direct the trader to refund the purchase price of the vehicle to the purchaser.[6] Damages are also available.[7]
[35] The Supreme Court in Red Eagle held that the exercise of the power to make an order for payment under s 43 is, “a matter of doing justice to the parties in the circumstances of the particular case and in terms of the policy of the [FTA].”[8]
[36] In the present case, the evidence as to the cost of repairs that will be needed to bring the vehicle into compliance was disputed. It is unclear whether the damage flag will be able to be removed at all.
[37] From Mr Purvis, the evidence was that approximately $6,500 would be required to bring the vehicle into compliance.
[38] Mr Jones produced evidence that the cost of bringing the vehicle into compliance is more likely to be approximately $17,000.
[39] In a sense, this evidence is beside the point as it was accepted by both sides that Mr Jones knew the vehicle would need to be complied before he could operate it on the road. Accordingly, he must have known that he would face certain expenses before this would be possible.
[40] Rather, the more important question is the one that Mr Jones asked Mr Purvis at the outset, namely whether the vehicle would “get on the road looking exactly the way it does in the pictures and how it looks currently”. Mr Jones’ evidence was that Mr Purvis said yes, it would be able to be driven on the road looking like it did in the advertising and in the showroom, and that it had no damage.
[41] According to the Tribunal’s Assessor, Mr Dixon, this is not correct. In order to get the vehicle certified for compliance it is likely to end up as a substantially different car from the one which Mr Jones agreed to purchase.
[42] I do not accept that Mr Jones is entitled to recover any of the expenses that he has incurred in having various workshops inspect the vehicle to ascertain what work might be necessary to obtain a certificate of compliance. In my view doing justice to the parties in the circumstances of this particular case and in terms of the policy of the FTA, should recognise that Mr Jones is an experienced car collector but that he has been somewhat naïve about the purchase of this vehicle. It would not be a just outcome to make Mr Purvis pay Mr Jones for these additional costs that he has incurred largely to prove his losses in this proceeding.
[43] Rather, I consider that the most appropriate remedy is simply to declare the sale and purchase agreement between Mr Jones and Mr Purvis to be void and to direct Mr Purvis to refund Mr Jones the full purchase price of $80,000.

Conclusion

[44] Accordingly, I order Nick Purvis to pay Nicolas Jones $80,000, within 14 days of the date of this decision, following which Mr Jones must make the vehicle available for Mr Purvis to collect at his cost, if any.

J S McHerron
Adjudicator

[1] Motor Vehicle Sales Act 2003, s 90(1)(a).

[2] Motor Vehicle Sales Act 2003, s 10.

[3] Section 9(1)(a).

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

[5] Consumer Information Standards (Used Motor Vehicles) Regulations 2008, reg 6.

[6] Fair Trading Act 1986, ss 43(3)(a)(i) and 43(3)(e).

[7] Section 43(3)(f).

[8] Red Eagle Corp Ltd v Ellis, above n 4, at [31].

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