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Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 16 October 2022
IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA
MVD
211/2022
[2022] NZMVDT 185
BETWEEN ANDREW GARRY HEDLEY HORNBY
Purchaser
AND JMTR HOLDING LIMITED T/A THE CAR GUYS
Trader
AND EMBETH LIMITED T/A CARPOW.CO.NZ
Joined Party
HEARING at Auckland on 27 July 2022
MEMBERS OF TRIBUNAL
J S McHerron, Barrister – Adjudicator
S Haynes – Assessor
APPEARANCES (via Microsoft Teams)
A G H Hornby, Purchaser
T M Rolton, Managing Director and shareholder of
JMTR Holding Ltd T/A The Car Guys
J A Moore, Director of Embeth Ltd T/A
Carpow.co.nz and Director of JMTR Holding Ltd
H O’Hare, Vehicle
Specialist at Embeth Ltd
DATE OF DECISION 31 August 2022
___________________________________________________________________
DECISION OF THE TRIBUNAL
___________________________________________________________________
A Andrew Hornby’s rejection of his Subaru Exiga is upheld.
___________________________________________________________________
REASONS
Introduction
[1] Andrew Hornby has rejected the 2010 Subaru Exiga that he purchased on 16 March 2022 from JMTR Holding Ltd trading as The Car Guys.
[2] The reason Mr Hornby has rejected the vehicle is because it is only two-wheel drive. Mr Hornby says he specified when purchasing the vehicle that he wanted it to be all-wheel drive or four-wheel drive. That is because he lives in a hill suburb of Dunedin and travels to work in Mosgiel during the week. The route on which Mr Hornby commutes can be icy during the winter.
[3] Mr Hornby said he had a perfectly serviceable Toyota Caldina. However, he wished to upgrade to a four-wheel or all-wheel drive vehicle so that he could be sure about getting to work safely during the winter months.
[4] Mr Hornby’s application raises the following issues for the Tribunal to determine:
- (a) Did the vehicle fail to comply with the guarantee as to fitness for a particular purpose?
- (b) Was it a failure of a substantial character?
- (c) What, if anything, is the appropriate remedy?
Issue 1: Did the vehicle fail to comply with the guarantee as to fitness for a particular purpose?
[5] Section 8 of the Consumer Guarantees Act 1993 (the CGA) provides:
- Guarantees as to fitness for particular purpose
(1) Subject to section 41, the following guarantees apply where goods are supplied to a consumer:
(a) that the goods are reasonably fit for any particular purpose that the consumer makes known, expressly or by implication, to the supplier as the purpose for which the goods are being acquired by the consumer; and
(b) that the goods are reasonably fit for any particular purpose for which the supplier represents that they are or will be fit.
(2) Those guarantees do not apply where the circumstances show that—
(a) the consumer does not rely on the supplier’s skill or judgment; or
(b) it is unreasonable for the consumer to rely on the supplier’s skill or judgment.
(3) This section applies whether or not the purpose is a purpose for which the goods are commonly supplied.
(4) Part 2 gives the consumer a right of redress against the supplier where the goods fail to comply with any guarantee in this section.
[6] Section 2 of the CGA provides that “goods” includes “vehicles”.
[7] In early March 2022, Mr Hornby inquired with Carpow.co.nz (the trading name of Embeth Ltd) about purchasing a car.
[8] Because Carpow was Mr Hornby’s primary point of contact in relation to his vehicle purchase, I joined Embeth Ltd as a party to the proceeding. I requested it to provide documents and audio recordings relevant to Mr Hornby’s vehicle purchase, and directed that a particular Embeth representative who had dealt with Mr Hornby, Hannah O’Hare, attend the hearing.[1]
[9] Embeth Ltd’s director James Moore queried the joinder of the company to the proceeding. He sought to establish the authority under which the Tribunal could join Embeth Ltd and request it to provide documents, pointing out that “we are a finance broker and not a registered car dealer”.
[10] In response to this query, the Tribunal’s case manager responded on my direction that the Tribunal’s power to join a party is not limited to persons who are motor vehicle traders as defined in s 7 of the Motor Vehicle Sales Act 2003 (MVSA). Rather, the test for joinder is whether a person appears to the adjudicator to have “sufficient connection with the proceedings in relation to the application”.[2]
[11] I consider that Embeth Ltd meets the test for joinder given its involvement in Mr Hornby’s vehicle purchase, including as finance broker.[3] However, the vehicle offer and sale agreement dated 16 March 2022 clearly states that the seller of the vehicle to Mr Hornby was JMTR Holding Ltd.
[12] I also accept that even if I thought that Embeth Ltd had sold the vehicle itself, but used JMTR Holding as an intermediary, s 9(1)(g) of the MVSA would likely apply. That section provides that 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 is not to be treated as carrying on a business of a motor vehicle trading for the purpose of the Motor Vehicle Sales Act only for that reason. As it happens, and for the reasons that follow, I consider that Embeth acted as JMTR Holding’s agent, rather than the other way around. Embeth provided the first point of contact for Mr Hornby when he was looking for a car, and linked him to the seller of the vehicle, JMTR Holding.
[13] As already mentioned, Mr Hornby’s primary concern about the vehicle that he purchased is that it is two-wheel drive. It is not in dispute that the vehicle Mr Hornby purchased is only two-wheel drive. However, he submits that he specified that he needed a four-wheel or all-wheel drive vehicle and that he specified the reason, or purpose, why he needed the car to have those attributes. But his specified purpose was ignored.
[14] Mr Hornby also raised another concern about a defect with the vehicle’s radiator. However, this issue has been resolved at JMTR Holding’s expense and so does not need to be discussed further in this decision.
Mr Hornby’s purchase of the vehicle
[15] Mr Hornby filled in a contact form on Carpow’s website in early March 2022. He was unable to provide a copy of the form as submitted. Neither was Carpow.
[16] Mr Hornby said he heard from Carpow’s representative, Ihaka Puke, on 8 March 2022. Mr Hornby said he had several phone conversations with Mr Puke in which Mr Hornby told him that he wished to buy a four-wheel or all-wheel drive vehicle. Recordings of these conversations were not made available as it seems the calls were made from Mr Puke’s cell phone and so escaped Carpow’s recording system.
[17] Mr Hornby took offence at some comments Mr Puke made after which Mr Hornby decided not to continue dealing with him.
[18] At that point Thomas Rolton, JMTR Holding’s Managing Director phoned Mr Hornby. Mr Hornby said he initially thought Mr Rolton was from Carpow but Mr Rolton clarified in the phone conversation that he was from The Car Guys. Mr Hornby said he had no discussion with Mr Rolton at this stage about the particular type of vehicle Mr Hornby wanted. However, Mr Rolton asked Mr Hornby whether he wished to continue with purchasing a vehicle. When Mr Hornby said yes, Mr Rolton offered to put Mr Hornby in touch with another Carpow representative to finalise the process.
[19] On 15 March 2022 at 1.05pm, Mr Rolton emailed Mr Hornby with a selection of two vehicles that he thought might suit him. They were:
- (a) a white 2009 Subaru Legacy, freshly imported, with 176,000kms, for $13,500; and
- (b) a black 2010 Subaru Exiga, freshly imported, with 141,000kms, for $11,999. This was the vehicle that Mr Hornby eventually purchased.
[20] On 15 March 2022 Carpow “Vehicle Specialist” Hannah O’Hare contacted Mr Hornby by phone and discussed a plan for buying a vehicle with him. As is clear from the following transcript of parts of that call, Mr Hornby made it clear to Ms O’Hare, and she ought reasonably to have understood, that he was seeking either a four-wheel drive or all-wheel drive vehicle.
15 March 2022 at 17:13:42
From 1:52 into the call
Hannah: With the vehicles and everything, the main thing for us is just that you pick a vehicle that you absolutely love
Andrew: I basically – I told him [Mr Puke] straight up – I just need something either four wheel drive or all wheel drive is what I was looking for
Hannah: Yeah
Andrew: because I live up the hill and I work out of town
Hannah: Oh yeah
Andrew: Something for winter...as far as I got
Hannah: I was speaking with Tom – because it sounded like there was a bit of confusion and that’s why I just thought I’ll see myself. Cos there was the 2007 X-Trail which I believe is a 4 wheel drive. I’ll double check, I’m pretty sure they all are but Tom’s the expert on the vehicles I’d hate to tell you wrong. So, I believe it was 13 and a half. Just for your own, so you know with that one
...
... what I can do if you like is I can get Tom to email you the vehicle and then you can let him know if you like it or not, if you’re interested in that one
...
Andrew: ...If you could just get him to send me the details of it cos the other thing I talked to him very briefly about I only spoke to Tom for five minutes
...
Hannah: ... What I’ll do is I’ll email you through all the details just so you can make sure it’s something you’re happy with n that, and I’ll send you the vehicle – I’ll just get it from Tom and you can just reply and yeah just let me know what you think
[21] Mr Rolton emailed Mr Hornby on 16 March 2022 at 10.34am providing details of a further vehicle, a 2007 Nissan X-trail which was described as a “fresh import, 2WD/4WD, travelled 148,000kms - $13,500”. Mr Rolton asked Mr Hornby to let him know if this vehicle suited him and Mr Rolton would “secure” it.
[22] Mr Hornby replied via email to Mr Rolton at 12.20pm on 16 March 2022 to say “the black one looks okay, I just need a breakdown of the finance so I can do a proper budget before I agree to anything.”
[23] Mr Rolton responded at 12.33pm on 16 March 2022 to say he would arrange for Ms O’Hare to call him to discuss the payments and then he could confirm the vehicle with her. At 12.35pm Mr Hornby emailed Mr Rolton to say he “also liked the Subaru Exiga”. Ms O’Hare then emailed Mr Hornby at 1.11pm on 16 March to say that the Exiga was still available and giving him an indication of the weekly repayments.
[24] Later that afternoon there was a further phone discussion between Mr Hornby and Ms O’Hare, which included the following:
16 March 2022 15:03:22
Andrew: ...I’m sorta leaning more towards the Subaru just with the all wheel drive rather than the four wheel drive sorta makes a bit more sense because of where I live
Hannah: Yeah
Andrew: So I think we might go for that one – sweet as – I think it’s a good idea
Hannah: Perfect, ok yeah they are very popular we are constantly selling them
Andrew: [inaudible] years ago
Hannah: Yeah they are very good
... I’ll let Tom know ... we’ll get the new vehicle to you as soon as we can...
[25] Following this discussion, the vehicle offer and sale agreement was signed and Mr Hornby purchased the Subaru Exiga.
[26] It was common ground that this model of vehicle is available in both front-wheel drive and four-wheel drive versions.
Did Mr Hornby specify a particular purpose for which the vehicle would be used?
[27] In his submissions at the hearing, Mr Moore acknowledged that a key factual question for the Tribunal is whether:
- (a) Carpow advised Mr Hornby that he would be purchasing an all-wheel drive vehicle; or
- (b) Mr Hornby clearly told Carpow that was a necessity?
[28] The two excerpts from the phone conversations between Mr Hornby and Ms O’Hare on 15 and 16 March 2022 respectively both make it clear that Mr Hornby specified that he needed a four-wheel drive or all-wheel drive vehicle because he lived up a hill and worked out of town and needed something for winter transport in the Dunedin area.
[29] At the hearing, Mr Moore and Ms O’Hare denied that they or anyone else at Carpow had any responsibility for the selection of Mr Hornby’s vehicle which, they said was a matter between Mr Hornby and Mr Rolton at JMTR Holding. They said that Carpow is not there to do anything but arrange the finance.
[30] I disagree with Mr Moore’s and Ms O’Hare’s description of Carpow’s role. It was not in dispute that Carpow was Mr Hornby’s first point of contact for seeking not only finance for the vehicle, but in respect of obtaining the vehicle itself.
[31] Mr Hornby inquired about purchasing a vehicle through Carpow’s website. Carpow’s website advertises that it can “supply any make and model” of vehicle. The website states “it’s as simple as choosing your perfect vehicle from our online stock or visiting in Auckland, Hamilton and soon Christchurch also”. The FAQs on the website state:
What cars do you have?
Stock changes everyday depending on what our customers purchase but we can typically provide each and every popular vehicle in NZ including buying into stock for you. We have storage yards in Auckland, Hamilton and Christchurch to service the whole country. Check out the vehicles page on this website for more accurate listings.
[32] Carpow’s website shows details of the “latest stock vehicles we have available” which has scores of pictures of vehicles each of which has an “apply now” button under its picture.
[33] In my view, Carpow’s marketing through its website encourages prospective vehicle purchasers to think that Carpow is involved in the supply of vehicles, not just providing finance for vehicles.
[34] Moreover, although in the hearing Ms O’Hare denied that she had any knowledge about vehicles or that she advised Mr Hornby as to whether he would be purchasing a four-wheel drive or all-wheel drive model, her own email signature line describes her title as a “vehicle specialist”. Moreover, in the conversations transcribed above, there were clearly discussions between her and Mr Hornby as to the purpose for which he was seeking a vehicle and his need for a four-wheel or all-wheel drive.
[35] Mr Hornby he said had no conversations with Mr Rolton about the choice or type of vehicle he was seeking. His evidence was that his only requests to purchase a four-wheel drive or all-wheel drive vehicle were made to the two representatives of Carpow with whom he spoke, Ms O’Hare and Mr Puke.
Was Carpow a supplier of the vehicle to Mr Hornby?
[36] As mentioned earlier, Carpow resisted being defined as a motor vehicle trader. It is not necessary for me to make any findings on that point. The Tribunal’s decision does not depend on a finding that Carpow is a motor vehicle trader either as registered under the MVSA or treated as such under the deeming provisions in that Act.[4]
[37] However, Carpow can be considered as a “supplier” of the vehicle for the purposes of the CGA, without being a motor vehicle trader. The CGA defines “supplier” as including “a person (other than an auctioneer) who, in trade, is acting as an agent for another, whether or not that other is supplying in trade”.[5]
[38] In my view Carpow was acting with JMTR Holding as a joint supplier of the vehicle and as an agent for JMTR Holding in respect of the vehicle sale.
[39] Accordingly in terms of the guarantee as to fitness for a particular purpose in s 8 of the CGA I find that Mr Hornby made it known expressly to Carpow (as joint supplier and agent for JMTR Holding) the purpose for which he was acquiring a vehicle, which included the need for it to be four-wheel drive or all-wheel drive.
Mr Hornby discovers the vehicle was two-wheel drive only
[40] On or around 8 April 2022, Mr Hornby put the vehicle on a hoist to give it a wheel alignment and realised from looking underneath that it did not have a rear differential and was only a two-wheel drive rather than four-wheel drive. He immediately contacted Carpow, The Car Guys and Avanti Finance Ltd, which lent Mr Hornby the money to purchase the vehicle. No one would assist him.
[41] Mr Rolton denied that Mr Hornby told him he sought an all-wheel drive or four-wheel drive vehicle. He said that the information received from Carpow was Mr Hornby’s finance approval limit and contact details. He said he emailed Mr Hornby the vehicles he had in Christchurch that were within his approval limit
Carpow, as joint supplier of the vehicle, failed to communicate to The Car Guys the purpose for which the vehicle would be used
[42] It is not in dispute that the vehicle is only two-wheel drive and not four-wheel drive or all-wheel drive. And I have already found that Mr Hornby clearly communicated to Carpow his need for an all-wheel drive or four-wheel drive vehicle.
[43] However, it appears that Carpow may have failed to tell JMTR Holding about Mr Hornby’s need for an all-wheel drive or four-wheel drive vehicle. As Carpow was the joint supplier of the vehicle for the purpose of the CGA, and as JMTR Holding’s agent, it should have passed all of the information Mr Hornby provided about his vehicle needs, to JMTR Holding. Even though there is no evidence that the information about Mr Hornby’s need for an all-wheel drive or four-wheel drive vehicle was passed from Carpow to JMTR Holding, Mr Hornby did assume (and was entitled to assume) that it had been. There was no reason for him to think that he needed to explain everything again to Mr Rolton, having already explained it to Mr Puke and Ms O’Hare. He was entitled to assume that both of the vehicle’s joint suppliers knew everything he had told to either of them about his vehicle needs. Ultimately, there was a failure of Carpow to communicate Mr Hornby’s needs to JMTR Holding. Even though it is Carpow that is mainly responsible for this failure, both it and JMTR Holding have responsibility to sort it out between themselves.
Conclusion
[44] Accordingly, I conclude that Mr Hornby has established a breach of the guarantee that the vehicle was reasonably fit for the particular purpose that Mr Hornby made known to Carpow as joint supplier of the vehicle that it be four-wheel drive or all-wheel drive.
Issue 2: Was it a failure of substantial character?
[45] Section 21(c) of the CGA provides that a failure to comply with the guarantee is of a substantial character in any case where, in the case of a breach of s 8(1), “the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose”.
[46] This section applies in respect of Mr Hornby’s vehicle, as it cannot easily or within a reasonable time be remedied to make it a four-wheel drive or all-wheel drive vehicle.
Conclusion
[47] Accordingly, Mr Hornby has established that there was a failure of a substantial character.
Issue 3: What is the appropriate remedy?
[48] The remedies available to a consumer where a vehicle does not comply with a guarantee in the CGA are set out in s 18, which provides:
- 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.
[49] Where a failure is of a substantial character, s 18(3)(a) provides that the consumer may reject the vehicle. Mr Hornby has rejected the vehicle and seeks a full refund of the purchase price. At the hearing he confirmed that the vehicle has not been damaged since he purchased it.
[50] Accordingly, I conclude that Mr Hornby is entitled to reject his vehicle and obtain a full refund of the purchase price.
[51] The Tribunal only has jurisdiction under the MVSA to make orders against JMTR Holding as it is a motor vehicle trader. As joint supplier of the vehicle, it is required to refund Mr Hornby the purchase price and take the vehicle back.
[52] Mr Hornby paid for the vehicle both in terms of a trade-in of his existing vehicle to the value of $2,500 with the balance being financed through a loan from Avanti Finance Ltd dated 17 March 2022.
[53] Under s 89 of the Motor Vehicle Sales Act 2003, the Tribunal has the power to vest this loan (as a collateral credit agreement) in the trader that sold Mr Hornby the vehicle, JMTR Holding. In addition, given the fact that this vehicle was never fit for the purpose specified by Mr Hornby, I consider that he should be entitled to all of his loan repayments made in respect of the vehicle, amounting to $1,735.80 (up to his most recent payment on 25 August 2022).
Conclusion
[54] Mr Hornby’s rejection of his Subaru Exiga is upheld. JMTR Holding Ltd must pay Mr Hornby $4,235.80 within 14 days of the date of this decision. In addition, the loan between Mr Hornby and Avanti Finance Ltd dated 17 March 2022 is vested in JMTR Holding Ltd. Mr Hornby is not required to make any further payments under this loan.
[55] Once the payments provided above have been made in full to Mr Hornby, he must make the vehicle available for JMTR Holding to collect at its cost, if any.
J S McHerron
Adjudicator
[1] Motor Vehicle Sales Act 2003, sch 1, cl 7.
[2] Ibid.
[3] It is as well to point out some other links between Embeth Ltd and JMTR Holdings Ltd. James Moore is not only a director of Embeth Ltd but he is also a director of JMTR Holding Ltd. As well, he is a director and 100% owner of Kaitiaki Trust Ltd which is a 50% shareholder of JMTR Holdings Ltd, with Thomas Rolton being the other 50% shareholder as well as its other director. It can also be observed that “JMTR” is a combination of the initials of Messrs Moore and Rolton.
[4] Motor Vehicle Sales Act 2003, ss 7, 8.
[5] Consumer Guarantees Act 1993, s 2(1), definition of supplier””, at (b)(IV).
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