Sherlock v Superior Cars Limited - Reference No. MVD 192/2021 [2021] NZMVDT 214 (5 November 2021)

Last Updated: 26 December 2021

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 192/2021
[2021] NZMVDT 214

BETWEEN MAXWELL JOHN SHERLOCK

Purchaser

AND SUPERIOR CARS LIMITED

Trader

TELEPHONE CONFERENCE on 15 October 2021
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

A B Cate – Assessor
APPEARANCES

M J Sherlock, Purchaser
P W Wilson, Director of Trader

DATE OF DECISION 5 November 2021

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DECISION OF THE TRIBUNAL

___________________________________________________________________

Superior Cars Ltd must pay Maxwell Sherlock $255 no later than 19 November 2021.

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REASONS

Introduction

[1] Max Sherlock seeks to recover $350 from Superior Cars Ltd in respect of an Audi A5 that Mr Sherlock purchased from that trader on 6 February 2021. The purchase price recorded on the vehicle offer and sale agreement (VOSA) was $21,000. This consideration was established through Mr Sherlock supplying two trade-in vehicles. In addition, the parties referred to a $2,000 payment made by Superior Cars to Mr Sherlock, however this was not reflected in the VOSA.
[2] The reason why Mr Sherlock claims $350 against Superior Cars is because the vehicle was not sold with a new warrant of fitness issued within one month before the date of delivery of the vehicle to him. Rule 9.12(3) of the Land Transport Rule: Vehicle Standards Compliance 2002 provides that a person who sells a vehicle (other than a heavy vehicle covered by r 9.12(2)):

... that may not be operated on a road without a current warrant of fitness must ensure that it has been certified for in-service fitness within one month before the date of delivery of the vehicle to the purchaser.

[3] Rule 9.12(4) provides an exception to the rule that a vehicle must be delivered with a new warrant of fitness in r 9.12(3), if the purchaser undertakes to the seller in writing at the time of delivery of the vehicle that:

• (a) where the warrant of fitness is not current, the purchaser will not operate the vehicle until it has been inspected and certified for in-service fitness (except for the purpose of obtaining in-service certification); or
• (b) where the vehicle has a current warrant of fitness, but was certified one month or more before the date of delivery of the vehicle, the purchaser accepts that the vehicle has been certified one month or more previously.

[4] In the present case, the VOSA states that the warrant of fitness was due to expire on 19 January 2022. However, that was incorrect: in fact, the vehicle’s warrant of fitness was due to expire on 14 February 2021, just over a week after the date of purchase. The exceptions in r 9.12(4) do not apply.
[5] Mr Sherlock says that he told Superior Cars’ director Peter Wilson that, by law, he had to sell the vehicle with a new warrant of fitness. Mr Sherlock alleges that Mr Wilson told him to get the warrant of fitness renewed and he would “sort [him] out”. By this, Mr Sherlock took Mr Wilson to mean that he would reimburse him for the costs of obtaining a new warrant of fitness.
[6] Mr Sherlock took the vehicle to VTNZ in Bell Block, New Plymouth on 9 February 2021. The vehicle failed the warrant of fitness test because one of its front tyres was mismatched in respect of its load rating. Mr Sherlock says he contacted Mr Wilson about this and that Mr Wilson told him to go to Just Tyres.
[7] Mr Sherlock purchased four new tyres for the vehicle from Just Tyres on 9 February 2921 at a cost of $560. He then returned to VTNZ the same day and was issued a new warrant of fitness, with an expiry date of 14 February 2022.
[8] The warrant of fitness inspection cost Mr Sherlock $60.
[9] The VOSA also records the vehicle’s licence expiry date as 19 May 2021. This was also an error. In fact, the vehicle’s licence had expired two months earlier in December 2020.
[10] Mr Sherlock also alleges that Mr Wilson told him that he would “sort [him] out” in respect of getting a renewed vehicle licence. Accordingly, Mr Sherlock also claims $55 in respect of six months’ vehicle licence.
[11] Finally, Mr Sherlock also claims $140, being the cost of one new tyre.
[12] Mr Sherlock also claimed his $50 Tribunal application fee. However, I explained to Mr Sherlock that the Tribunal only has jurisdiction to order parties to be reimbursed for the Tribunal application fee in the circumstances set out in cl 14 of sch 1 of the Motor Vehicle Sales Act 2003. Those circumstances do not apply in the present case. Accordingly, no jurisdiction exists for the Tribunal to order that Mr Sherlock be reimbursed for the Tribunal application fee.
[13] On behalf of Superior Cars, Mr Wilson denies liability to reimburse Mr Sherlock. He says that the Tribunal lacks jurisdiction to determine this case because Mr Sherlock is, or was at the time of this vehicle sale, a motor vehicle trader and that this was a “dealer to dealer” sale. The Tribunal only has jurisdiction to determine matters where one party, but not both parties, is a motor vehicle trader.[1]
[14] The issues that the Tribunal needs to determine in the present case are as follows:

• (a) Does the Tribunal have jurisdiction to determine this dispute?
• (b) Did the vehicle fail to correspond with its description?
• (c) Did the vehicle fail to comply with the guarantee of acceptable quality?
• (d) What, if anything, is the appropriate remedy?

[15] In accordance with clause 9A of schedule 1 of the Motor Vehicle Sales Act 2003, I determined this matter with the assistance of the Tribunal’s Assessor Mr Cate, on the papers. At a telephone conference on 15 October 2021 (which Mr Cate did not attend), I gave the parties an opportunity to comment on whether the proceeding should be dealt with on the papers. Both Mr Wilson and Mr Sherlock agreed that this was appropriate, given the likelihood that the Tribunal would not have a circuit in New Plymouth in the foreseeable future and their reluctance to have the matter heard using remote access technology such as AVL or VMR.

Issue 1: Does the Tribunal have jurisdiction to consider this dispute?

[16] It was not in dispute that Mr Sherlock has been a motor vehicle trader in the past. His name appears on the Register of Motor Vehicle Traders under the trader number M390900. The entry on the Register shows that Mr Sherlock was first registered as a trader on 26 September 2019, but that his registration expired on 26 September 2020. In addition, Mr Sherlock was an individual associated with the company CARSCHB.CO.NZ Ltd, which was registered as a motor vehicle trader under the trader number M100200, from 24 March 2004 until the registration was surrendered on 11 July 2019.
[17] Mr Wilson alleged that Mr Sherlock had given him “stock lists” relating to cars he was attempting to dispose of, and that Mr Sherlock “pretended” to be a car dealer. Mr Wilson said that it was his understanding that the deal in respect of the Audi A5 was “done as a car dealer” and that this was a “dealer to dealer” transaction.
[18] Unfortunately for Superior Cars, the documents recording the sale of this vehicle to Mr Sherlock, in particular the VOSA, do not reflect that this was a sale by one motor vehicle trader to another. By the time of the sale of the present vehicle, Mr Sherlock’s registration as a motor vehicle trader had expired. And I do not consider that Mr Wilson has established, through the evidence he presented to the Tribunal, that Mr Sherlock was holding himself out as a trader in respect of this particular vehicle transaction, to warrant his being treated as a motor vehicle trader.[2]
[19] Rather, all of the evidence produced to the Tribunal suggests that this was a purchase of a vehicle by Mr Sherlock in his private capacity. In particular, as Mr Sherlock points out, the box on the VOSA in which a purchaser can acknowledge that goods are being supplied and acquired in trade, and that the Consumer Guarantees Act 1993 (CGA) will not apply, has been struck out and has not been signed by Mr Sherlock. It therefore appears that the parties intended that the CGA would apply to this vehicle transaction.
[20] Accordingly, I consider that the Tribunal has jurisdiction to hear and determine this matter, because only one of the parties, Superior Cars, was acting as a motor vehicle trader, consistent with s 90(1)(a) of the Motor Vehicle Sales Act.

Issue 2: Did the vehicle fail to correspond with its description?

[21] Section 9 of the CGA provides that there is a guarantee that goods correspond with their description. Under s 2 of the CGA, “goods” includes vehicles. It was not in dispute that the VOSA incorrectly recorded the vehicle’s licence expiry date as 19 May 2021 and the warrant of fitness expiry date as 19 January 2022.
[22] Accordingly, I conclude that in these two respects the vehicle failed to comply with its description.

Issue 3: Did the vehicle fail to comply with the guarantee of acceptable quality?

[23] Section 6(1) of the CGA provides that “where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality”.
[24] “Acceptable quality” is defined in s 7 of the CGA (as far as is relevant) as follows:

7. Meaning of acceptable quality

(1) For the purposes of section 6, goods are of acceptable quality if they are as—

(a) fit for all the purposes for which goods of the type in question are commonly supplied; and

(b) acceptable in appearance and finish; and

(c) free from minor defects; and

(d) safe; and

(e) durable,—

as a reasonable consumer fully acquainted with the state and condition of the goods, including any hidden defects, would regard as acceptable, having regard to—

(f) the nature of the goods:

(g) the price (where relevant):

(h) any statements made about the goods on any packaging or label on the goods:

(ha) the nature of the supplier and the context in which the supplier supplies the goods:

(i) any representation made about the goods by the supplier or the manufacturer:

(j) all other relevant circumstances of the supply of the goods.

...

[25] Whether a vehicle is of acceptable quality is considered from the point of view of a reasonable consumer who is fully acquainted with the state and condition of the vehicle, including any hidden defects.
[26] As indicated in the introduction to this decision, when Mr Sherlock went to get a new warrant of fitness for the vehicle, it failed because one of its front tyres was mismatched as to its load rating. That meant that, in order to get a new warrant of fitness for the vehicle, Mr Sherlock had to replace that tyre.
[27] I consider that a reasonable consumer would expect that a 2008 Audi A5, sold for $21,000, would have tyres that complied with warrant of fitness requirements at time of sale, unless they had been specifically excluded as a special condition from that requirement in the VOSA.[3] As this was not the case in respect of Mr Sherlock’s vehicle, I conclude that the vehicle failed to comply with the guarantee of acceptable quality in respect of its mismatched tyre. The vehicle was not as free from minor defects, and potentially not as safe, as a reasonable consumer would regard as acceptable.

Issue 4: What, if anything, is the appropriate remedy?

[28] The remedies available to a consumer where a vehicle breaches a guarantee in the CGA are set out in s 18, which provides:

18. Options against suppliers where goods do not comply with guarantees

(1) Where a consumer has a right of redress against the supplier in accordance with this Part in respect of the failure of any goods to comply with a guarantee, the consumer may exercise the following remedies.

(2) Where the failure can be remedied, the consumer may—

(a) require the supplier to remedy the failure within a reasonable time in accordance with section 19:

(b) where a supplier who has been required to remedy a failure refuses or neglects to do so, or does not succeed in doing so within a reasonable time,—

(i) have the failure remedied elsewhere and obtain from the supplier all reasonable costs incurred in having the failure remedied; or

(ii) subject to section 20, reject the goods in accordance with section 22.

(3) Where the failure cannot be remedied or is of a substantial character within the meaning of section 21, the consumer may—

(a) subject to section 20, reject the goods in accordance with section 22; or

(b) obtain from the supplier damages in compensation for any reduction in value of the goods below the price paid or payable by the consumer for the goods.

(4) In addition to the remedies set out in subsection (2) and subsection (3), the consumer may obtain from the supplier damages for any loss or damage to the consumer resulting from the failure (other than loss or damage through reduction in value of the goods) which was reasonably foreseeable as liable to result from the failure.

[29] As is clear from s 18 (above), the usual remedy is for a purchaser to require the supplier to remedy the failure within a reasonable time. The evidence was that the parties had come to an arrangement whereby Mr Sherlock would get the vehicle warranted and licensed and replace the defective tyre, and that Superior Cars would reimburse him for that. It appears that Mr Wilson reneged on this agreement after he formed the view that Mr Sherlock was operating as a motor vehicle trader. I have rejected Mr Wilson’s allegation that Mr Sherlock was acting as a motor vehicle trader in respect of this vehicle transaction. Therefore, the appropriate remedy in this case is for Mr Sherlock to be reimbursed $255 in damages in respect of the warrant of fitness, licensing of the vehicle, and replacement tyre.
[30] In his application, Mr Sherlock also sought for “penalties as the MVDT sees fit” to be imposed on Superior Cars. However, apart from the damages I have decided to award to cover Mr Sherlock’s losses, the Tribunal has no jurisdiction to impose penalties.[4] This aspect of Mr Sherlock’s claim is dismissed.

Conclusion

[31] Accordingly, Superior Cars Ltd must pay Mr Sherlock $255 within 14 days of the date of this decision.

J S McHerron
Adjudicator

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

[2] Motor Vehicle Sales Act 2003, s 8.

[3] Section 7(2) of the Consumer Guarantees Act 1993 provides that where any defects in goods have been specifically drawn to a consumer’s attention before they agreed to the supply, then notwithstanding that a reasonable consumer may not have regarded the goods as acceptable with those defects, the goods will not fail to comply with the guarantee as to acceptable quality by reason only of those defects.

[4] Motor Vehicle Sales Act 2003, s 89.