|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Motor Vehicles Disputes Tribunal of New Zealand |
Last Updated: 13 July 2022
|
BETWEEN GLENN RONALD SONNTAG & KELLY MARIE SONNTAG
Applicant
AND INFINITY AUTO IMPORT LTD
Respondent
|
|
|
|
MEMBERS OF TRIBUNAL
|
|
B R Carter, Barrister – Adjudicator
|
|
S Gregory, Assessor
|
|
|
|
HEARING at Auckland on 10 May 2022 (by audio-visual link)
|
|
|
|
|
|
|
|
APPEARANCES
|
|
G R & K M Sonntag, Applicant
K M Sonntag, Witness for the Applicant
|
|
P Li, for the Respondent
|
|
DATE OF DECISION 18 May 2022
|
|
|
_________________________________________________________________
DECISION OF THE TRIBUNAL
_________________________________________________________________
_________________________________________________________________
REASONS
Introduction
[1] Glenn and Kelly Sonntag want to reject the 2010 Lexus IS 350 they purchased for $15,450 from Infinity Auto Import Ltd in February 2022. They seek a refund of the purchase price, alleging that the vehicle has not been of acceptable quality and Infinity Auto Import engaged in misleading conduct because:
- (a) the left rear tyre has an illegal puncture repair and the tyres are significantly cracked;
- (b) the vehicle’s window tints were removed before the vehicle was supplied; and
- (c) the vehicle has previously been damaged and repaired.
[2] Infinity Auto Import says that the Sonntags should not be entitled to reject the vehicle. It says:
- (a) the tyres passed compliance testing before it was sold, during which the condition of the tyres was assessed. It is nonetheless prepared to replace any tyre that does not meet warrant of fitness requirements;
- (b) the rear window tints were removed during compliance testing as they did not comply with New Zealand standards. It is prepared to install compliant tints; and
- (c) the vehicle’s appearance is acceptable and any previous damage that the vehicle has had is non-structural and not uncommon with a vehicle of this age and mileage.
Relevant background
[3] Mr and Mrs Sonntag were looking for a vehicle to be used by Mrs Sonntag and their son Dylan. They saw this vehicle advertised on the Trade Me website. Amongst the statements on that website was a representation that “all vehicles are not damaged import”. The website listing also had a photograph showing dark window tints on the rear passenger doors and rear window. Dylan then travelled from Hamilton to Auckland to inspect the vehicle. Mrs Sonntag and Dylan appear to have been particularly attracted to the dark window tints.
[4] Dylan was satisfied with the condition of the vehicle and Mr and Mrs Sonntag then agreed to purchase it. Because the vehicle was a recent import from Japan, Infinity Auto Import then took the vehicle for compliance testing. A VTNZ Certification Checksheet dated 21 February 2022 notes that the vehicle initially failed that testing due to its rear window tints. The vehicle then passed compliance testing on 22 February 2022, after the rear window tints were removed. The VTNZ Certification Check Sheet also notes that vehicle was assessed for structural damage, and none was found, and the condition of all tyres was assessed and were in acceptable condition.
[5] The vehicle was then delivered to the Sonntags in Hamilton. The Sonntags say that they immediately noticed that the window tints had been removed. Dylan also says that he also took the vehicle to an associate’s house shortly after it was delivered. He says that another associate, who is a panelbeater, noticed that the tyres were cracked, that one of the tyres had been repaired using an “illegal rope style temporary puncture repair” and there was poorly repaired damage to the driver side quarter panel and rear door.
[6] The Sonntags then contacted Infinity Auto Import and rejected the vehicle. They say the condition of the tyres makes the vehicle unsafe, that they would not have purchased the vehicle if they had known the window tints would be removed and that the vehicle had poorly repaired accident damage to the driver side rear door and guard, which is inconsistent with Infinity Auto Import’s pre-purchase representation that the vehicle was not damaged.
[7] Infinity Auto Import was prepared to replace any tyres that did not meet warrant of fitness requirements and install compliant window tints. However, it considered that the condition of the vehicle was generally acceptable and the Sonntags should not be entitled to reject it.
[8] The Sonntags then filed this claim and have since had the vehicle assessed by Peninsula Panel & Paint (2019) Ltd, which considered that:
- (a) there were “very poor repairs” to the right rear guard and right rear door, with visible scratches in both panels;
- (b) the right rear guard has been repaired with filler, which was not sanded with fine sandpaper, and not enough primer was put on the panel before the base coat. It considers that the “repair has shrunk back considerably”;
- (c) the right rear door has not been sanded properly, leaving “highs & lows” across the door; and
- (d) the paint finish on both doors were completed to a poor standard, and the paint is “extremely peely” due to too much paint being applied.
[9] Peninsula Panel & Paint says that, due to the black colour of the vehicle, these defects are not evident in photographs, but are “extremely noticeable” in certain lights. Following the hearing, the Sonntags provided further photographs of the alleged damage and poor repairs to the driver side of the vehicle.
The issues
[10] The issues requiring the Tribunal’s consideration in this case are:
- (a) Has the vehicle been of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA)?
- (b) Did the vehicle comply with its description for the purposes of s 9 of the CGA?
- (c) Are the vehicle’s defects a failure of a substantial character?
- (d) What remedy is Mr and Mrs Sonntag entitled to under the CGA?
- (e) Has Infinity Auto Import engaged in misleading conduct in breach of s 9 of the Fair Trading Act 1986 (the FTA)?
- (f) If so, what remedy are Mr and Mrs Sonntag entitled to under the FTA?
Issue 1: Has the vehicle been of acceptable quality?
[11] Section 6 of the CGA imposes on suppliers and manufacturers of consumer goods a guarantee that the goods are of acceptable quality. Section 2 of the CGA defines “goods” as including vehicles.
[12] The expression "acceptable quality" is defined in s 7 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.
[13] In considering whether or not goods meet the guarantee of acceptable quality, the Tribunal must consider the quality elements as set out in s 7(1)(a)-(e) of the CGA as modified by the factors set out in s 7(1)(f)-(j), from the perspective of a “reasonable consumer”. The test is an objective one; it is not a view of those factors from Mr and Mrs Sonntag’s subjective perspective.
The window tints
[14] The absence of the rear window tints does not breach the guarantee of acceptable quality. The window tints were illegal, so the removal of those tints was necessary to ensure that the vehicle was fit to use on New Zealand roads.
The tyres
[15] Mr and Mrs Sonntag provided clear colour photographs of the vehicle’s tyres to the Tribunal. Those photographs show that one of the tyres has been repaired using a rope or string plug. That repair will cause the vehicle to fail a warrant of fitness inspection. The warrant of fitness requirements for tyres are set out in s 10-1 of the In-service Certification (WoF and CoF) Vehicle Inspections Requirements Manual for general vehicles (the VIRM). Relevantly, s 10-1-14, states that a tyre will fail a warrant of fitness inspection if it has “a string-like repair visible from the outside”, as is the case here.
[16] The photographs also show that at least two of the tyres do have some cracking. However, I am not satisfied that the photographs show that the tyres made the vehicle unsafe, or that the tyres were not of a warrant of fitness standard.
[17] Under s 10-1-13 of the VIRM, tyres will fail a warrant of fitness assessment where they have damage that is likely to compromise their ability to operate in a safe manner or lead to premature tyre failure, such as:
- a cut or crack in the sidewall or tread more than 25mm long that reaches the cords;
- exposed or cut cords; or
- significant perishing, e.g. due to age, moisture or exposure.
[18] Although the tyres have signs of some wear and cracking consistent with their age, they do not have damage that is likely to compromise their ability to operate in a safe manner or lead to premature tyre failure. In that regard, I note that the cracks evident in the photographs do not reach the cords, that the cords are not exposed or cut and that the perishing evident is not significant. Accordingly, I am not satisfied that Mr and Mrs Sonntag have proven that cracks or perishing mean the vehicle’s tyres were of an unacceptable standard.
The previous damage
[19] In addition to the opinion from Peninsula Panel & Paint, Mr and Mrs Sonntag have provided photographs of the driver side quarter panel and rear door. It is difficult to see any damage or poor repairs in most of the photographs, largely due to glare and reflection from the vehicle’s black paintwork. However, some of the photographs do show imperfections in the vehicle’s paintwork, consistent with a poor-quality repair.
[20] Ordinarily, such minor damage and imperfections would not breach the guarantee of acceptable quality in a vehicle of this price, age and mileage. Many vehicles of this age and mileage have such imperfections, damage and blemishes, which are consistent with the ordinary wear and tear that one can expect from a 12-year-old vehicle that has travelled more than 92,000 km.
[21] However, in its advertising for the vehicle, Infinity Auto Import made a representation to the effect that it does not import damaged vehicles. I acknowledge that Infinity Auto Import intended to represent that the vehicle had not been identified as an “imported as damaged” vehicle during the border inspection process, but the representation on the Trade Me listing was not limited in that way and I consider that it was reasonable for the Sonntags to believe that the vehicle had not been previously damaged, and that the quality of its appearance and finish would not be adversely affected by poor-quality damage repairs.
[22] Therefore, considering Infinity Auto Import’s pre-purchase representation that the vehicle was not damaged, I am satisfied that the poorly repaired accident damage means the vehicle is not as acceptable in appearance and finish as a reasonable consumer would consider acceptable.
Issue 2: Did the vehicle fail to comply with its description?
[23] Mr and Mrs Sonntag allege that the vehicle failed to comply with the description provided by Infinity Auto Import because its window tints, which were shown in the website advertising, were removed after they had agreed to purchase the vehicle. The relevant provision of the CGA reads as follows:
9 Guarantee that goods comply with description
(1) Subject to section 41, where goods are supplied by description to a consumer, there is a guarantee that the goods correspond with the description.
(2) A supply of goods is not prevented from being a supply by description by reason only that, being exposed for sale or hire, they are selected by a consumer.
(3) If the goods are supplied by reference to a sample or demonstration model as well as by description, the guarantees in this section and in section 10 will both apply.
(4) Where the goods fail to comply with the guarantee in this section,—
(a) Part 2 gives the consumer a right of redress against the supplier; and
(b) Part 3 may give the consumer a right of redress against the manufacturer.
[24] The vehicle was supplied by description. It was advertised on the Trade Me website.
[25] The vehicle’s window tints formed part of the description by which it was sold. The tints can be clearly seen in the photographs displayed on the Trade Me listing.
[26] The vehicle failed to comply with that description, in breach of the guarantee in s 9 of the CGA, because the window tints were removed when the vehicle was supplied to the Sonntags.
Issue 3: Are the vehicle’s defects a failure of a substantial character?
[27] The Sonntags may only reject the vehicle if the failure to comply with the CGA guarantees is a failure of a substantial character as defined in s 21 of the CGA:
- 21 Failure of substantial character
For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where—
(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or
(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or
(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, 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; or
(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.
[28] The vehicle’s defects are not a failure of a substantial character. The absence of the window tints is not a significant departure from the vehicle’s description and the vehicle’s defects do not make it unsafe, and in that regard, I note that the rope/string repair, although non-compliant with warrant of fitness requirements, does not make the vehicle unsafe. Likewise, the vehicle’s defects are easily repaired and do not make the vehicle substantially unfit for purposes and are not such that a reasonable consumer, fully acquainted with the true nature and extent of the faults, would not have purchased a vehicle of this price, age and mileage.
Issue 4: What remedy is Mr and Mrs Sonntag entitled to under the CGA?
[29] The relevant remedies are set out in s 18 of the CGA, 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.
[30] Mr and Mrs Sonntag are not entitled to reject the vehicle because its defects are not a failure of a substantial character. Instead, under s 18(2)(a) of the CGA, they are entitled to have the outstanding defects that breach the CGA guarantees rectified within a reasonable time.
Issue 5: Has Infinity Auto Import engaged in conduct that breached s 9 of the FTA?
[31] Section 9 of the FTA provides:
- 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.
[32] The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corp Ltd v Ellis:[1]
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.
The damage
[33] The vehicle did have minor damage, which had been poorly repaired before it was imported. That damage was nowhere near bad enough for the vehicle to be flagged as an imported as damaged vehicle, but the damage was nonetheless present. By making a representation to the effect that it did not import damaged vehicles, Infinity Auto Import has engaged in conduct that breached s 9 of the FTA.
[34] Infinity Auto Import did not intend to mislead the Sonntags. I accept its submission that it was trying to tell prospective customers that it does not sell “imported as damaged” vehicles. As discussed with Peter Li, who appeared for the company, if that is the message that Infinity Auto Import is trying to convey, it should state that more clearly in its advertising.
The window tints
[35] I am satisfied that Infinity Auto Import, through the photograph on the Trade Me listing, represented that the vehicle had tinted rear windows. At the time that photograph was published, Infinity Auto Import (which is an experienced motor vehicle trader) would have known those window tints would be removed as part of the compliance process. It did not disclose this fact, and the Sonntags were led to believe that the vehicle would be supplied with those window tints. Infinity Auto Import has therefore engaged in conduct in breach of s 9 of the FTA by representing the vehicle had rear window tints, when it knew that those tints would be removed before the vehicle was supplied.
Issue 6: What remedy are Mr and Mrs Sonntag entitled to under the FTA?
[36] 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.
[37] Although I have found that Infinity Auto Import has engaged in misleading conduct regarding the poorly repaired accident damage, the Sonntags are entitled to no further remedy under the FTA for this breach.
[38] Any order under s 43(3) of the FTA must be proportionate to the harm caused and do justice to the parties in the particular circumstances of the case.[2] In this case, the appropriate and proportionate remedy would have been an order under s 43(3)(g) of the FTA that Infinity Auto Import rectify the poor repair and paintwork to bring the vehicle to an acceptable standard. I have already ordered that remedy under the CGA, so the Sonntags are entitled to no further remedy under the FTA.
[39] Likewise, the Sonntags are not entitled to any remedy under the FTA for the missing window tints. A prerequisite to a remedial order under s 43 of the FTA is a finding that loss or damage has occurred or is likely to occur. The normal measure of loss under s 43 is the “difference between the value of what was acquired and the price paid”.[3] That means the Sonntags will have suffered loss recoverable under s 43 of the FTA if they have proven that they paid more for the vehicle than it was worth.
[40] There is no evidence to show that the vehicle is worth less due to the absence of the window tints, so I cannot be satisfied that the Sonntags are entitled to any remedy under the FTA. Their claim under the FTA is therefore dismissed.
Costs
[41] In their application, the Sonntags also sought compensation for time spent pursuing this claim. I decline that application. Under cl 14(1)(a)(ii) and 14(1)(b) of Sch 1 to the Motor Vehicle Sales Act 2003, the Tribunal may award such costs against a party where the matter ought reasonably to have been settled before the hearing or that party fails to attend the hearing without good cause.
[42] I am not satisfied that this matter ought reasonably to have been settled before the hearing, as Infinity Auto Import has successfully defended the Sonntag’s application to reject the vehicle. Likewise, Infinity Auto Import also attended the hearing, so costs cannot be awarded against it.
Outcome
[43] Mr and Mrs Sonntag’s application to reject the vehicle is dismissed and Infinity Auto Import shall, within a reasonable time from the date of this decision:
- (a) install compliant window tints on the rear doors and rear window;
- (b) replace the tyre with the rope/string repair; and
- (c) repair the damage to the driver side rear quarter panel and door to an acceptable standard.
DATED at AUCKLAND this 18th day of May 2022
B.R. Carter
Adjudicator
[1] Red Eagle Corp Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].
[2]
Red Eagle Corp Ltd, above n 1 at
[31].
[3]
Narayan v Arranmore Developments Ltd [2011] NZCA 681, (2011) 13 NZCPR 123 at
[49].
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/cases/NZMVDT/2022/88.html