Jones v Banks Reference No. MVD 284/2023 [2023] NZMVDT 271 (6 December 2023)

Last Updated: 26 January 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 284/2023 [2023] NZMVDT 271 BETWEEN LUCY JONES Applicant AND CAMPBELL BANKS First Respondent AND BEYOND MOTORS LIMITED Second Respondent AND MONACO MOTORS LIMITED Third Respondent

HEARING at CHRISTCHURCH on 20 September 2023 MEMBERS OF TRIBUNAL

D M Jackson, Barrister – Adjudicator S Gregory – Assessor

APPEARANCES

L Jones, Applicant W Stout, Witness for the Applicant

C Banks, for the First and Second Respondents J Thompson, Witness for the Third Respondent

DATE OF DECISION 6 December 2023

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DECISION OF THE TRIBUNAL

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A Ms Jones’ rejection of the vehicle is upheld.

2. Within ten working days from the date of this decision, Monaco Motors Limited shall pay $21,000 to Ms Jones.

100. Upon receipt of payment from Monaco Motors Limited, Ms Jones shall make the vehicle available for collection by Monaco Motors Limited, at its expense.

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REASONS

Introduction

[1] On 4 July 2022 Lucy Jones purchased a 1984 Toyota Landcruiser 60 series from Campbell Banks for $21,000. The purchase was recorded in a document entitled “Private Vehicle Sales Agreement” dated 4 July 2022. The vehicle’s odometer read 324,100 kms at the time of sale, and 327,890 kms when Ms Jones applied to the Tribunal.
[2] Ms Jones says she did not deal with Mr Banks or his Beyond Motors Limited. She says the transaction was conducted via Jack Thompson of Monaco Motors Limited, who had advertised the vehicle on TradeMe and handled the whole deal with her.
[3] Ms Jones says the vehicle has extensive defects; so bad, in fact, that the vehicle is not roadworthy. She applies to reject the vehicle on the basis that the defects breach the Consumer Guarantees Act 1993 (the CGA) and otherwise because the vehicle’s condition was misrepresented to her by Monaco as being in “great condition” when it was not. She therefore alleges that Monaco engaged in misleading or deceptive conduct under the Fair Trading Act 1983 (the FTA).
[4] I record that this claim was originally filed in the Disputes Tribunal but was transferred to this Tribunal.
[5] All three respondents oppose the claim and say Ms Jones got what she paid for. Monaco denies that it was the seller of the vehicle. It says that it acted as an agent or intermediary to negotiate a sale direct between Ms Jones and Mr Banks. Monaco says the evidence is clear that this was a private sale between two individuals and that it has no liability to Ms Jones. Monaco denies engaging in misleading conduct.

Relevant background

[6] The vehicle was listed on TradeMe for $27,990 and advertised as being in “great condition”. The advertisement goes further to describe the vehicle as “very tidy and highly sought after”.
[7] Further, the advertisement states “This vehicle is being listed on behalf. Monaco Motors is only acting as the listing and marketing agency. The contract is between the owner and purchaser.”
[8] Ms Jones inspected the vehicle at what she described as Monaco’s yard. She accepts that Mr Thompson told her the vehicle was being sold on behalf of a friend.
[9] Ms Jones was satisfied that the vehicle looked to be in good condition and having a fresh warrant of fitness (WOF) and registration, she resolved to purchase it.
[10] Ms Jones brought Mr William Stout with her to view the vehicle. Mr Stout noticed some surface rust in the roof gutters and that the engine had a turbo fitted, which Mr Thompson confirmed would need to be certified (as the model did not come with a turbo ex-factory).
[11] The parties negotiated the purchase of the vehicle without the original Toyota split rim wheels fitted (hence the significantly lower price paid for the vehicle).
[12] Ms Jones says that at no stage did she meet or speak with Mr Banks. She executed the purchase contract, which was sent to her by Monaco. Ms Jones notes the contract does not describe the vehicle as being sold on an “as is where is” or similarly limited basis (which is something the respondents allege in their defence).
[13] Ms Jones says Monaco arranged the transfer of ownership and she paid Mr Banks the purchase price direct.
[14] The wheels were transferred over and tyres fitted as agreed. An issue with a clutch and battery was identified and attended to.
[15] Ms Jones communicated with Mr Banks via text message over various items including certification of the turbo modification. She says Mr Banks ignored her queries over certification.
[16] Ms Jones used the vehicle and took it on a lengthy road trip without issue.
[17] After six months and 3,000 kms travelled, the vehicle was due for a WOF. Ms Jones described taking the vehicle to a local mechanic who inspected the vehicle and failed it for 28 different items. She produced the WOF inspection sheets in her evidence. The advice from the mechanic was that a number of the defects likely existed at the time of purchase and could not have occurred in six months or 3,000 kms use. I will not recite the full list of the alleged defects here.
[18] The mechanic identified that in addition to multiple minor failures, there was significant failure in the chassis, uncertified welding in the chassis (hidden with black paint), and extensive cracking to the chassis hidden by “bog”. Photographs were produced proving these defects. The mechanic recommended Ms Jones complain to the New Zealand Transport Agency’s WOF Audit Team. Ms Jones did so. The result of the audit inspection was to confirm 19 faults of which “8 major faults present and evident and should have been identified when the vehicle was inspected by [the pre-purchase WOF issuer]”.
[19] These faults include:

• [19.1] No certification of after-market turbo fitted;
• [19.2] Corrosion damage in the front cross member;
• [19.3] Front and rear spring shackles modified;
• [19.4] Front suspension shock absorber mounts modified and loose;
• [19.5] Left front brake components contaminated;
• [19.6] Right rear chassis rail – corrosion damage;
• [19.7] Right rear sill – corrosion damage;
• [19.8] Left chassis rail – repaired but no evidence of certification.

[20] For completeness, the other faults identified were:

• [20.1] Damaged right rear seat belt;
• [20.2] Damaged left rear seat belt buckle cover;
• [20.3] Damaged left rear seat belt webbing;
• [20.4] Corrosion damage in right roof structure;
• [20.5] Worn front sway bay link bushes;
• [20.6] Play in the front wheel hub;
• [20.7] Leaking fuel tank;
• [20.8] Worn rear sway bar link bushes;
• [20.9] Loose engine mount (left).

[21] The vehicle has been flagged as a result of the audit and cannot receive a WOF until repairs are completed and a certification for the chassis repairs and other issues is provided.
[22] Ms Jones wrote to Mr Banks to ask for her money back and was told in response “the vehicle was purchased in a non-road legal state as it was stated in the listing as it requires certification for modification to be road legal”.
[23] The parties agree that at the relevant time neither Mr Banks nor his company Beyond Motors Limited were motor vehicle traders. Monaco accepts that it was a motor vehicle trader.
[24] The vehicle’s ownership history discloses that on 6 July 2022 the vehicle’s ownership was transferred from Mr Banks to Austin Motor Company Limited to Ms Jones.

The issues

[25] The issues requiring the Tribunal’s consideration in this case are:

• (a) Does the CGA apply to this transaction?
• (b) Has the vehicle been of acceptable quality for the purposes of s 6 of the CGA?
• (c) Are the vehicle’s defects a failure of a substantial character?
• (d) What remedy is Ms Jones entitled to under the CGA?
  

Issue 1: Does the CGA apply to this transaction?

[26] I am satisfied that the transaction between Ms Jones and Mr Banks was a private sale. Therefore, the Tribunal has no jurisdiction to hear Ms Jones’ claim against Mr Banks or his company.
[27] In terms of Ms Jones’ claim against Monaco, it is relevant to consider whether Monaco was acting as a supplier (as defined in s 2 of the CGA) for the purposes of this transaction. if Monaco is a supplier as defined in s 2 of the CGA. Relevant to this case, “supplier” is defined in s 2 of the CGA at (b)(iv) as being a person who, in trade, is acting as an agent for another, whether or not that other is supplying in trade.
[28] Monaco is in trade. Trade is defined in s 2 of the CGA as “any trade, business, industry, profession, occupation, activity of commerce, or undertaking relating to the supply or acquisition of goods or services”. By its own admission, Monaco provides premises for the sale of motor vehicles and is a registered motor vehicle trader. There can be no doubt that it is in trade.
[29] Although it is in trade, Monaco considers it should not have liability because it sold the vehicle on behalf of Mr Banks. Accepting Monaco’s evidence that it sold this vehicle on Mr Bank’s behalf, Monaco was nonetheless the supplier of the vehicle for the purposes of the CGA because it acted as an agent for the owner of the vehicle. In reaching that conclusion I rely on the following evidence:

• [29.1] Monaco advertised the vehicle on TradeMe on behalf of Mr Banks (an express agency);
• [29.2] The agency was described as being limited to listing and marketing. However, it is clear that Monaco’s role in the sale of the vehicle went further than that. There can be no doubt Monaco was “selling” the vehicle;
• [29.3] The vehicle was displayed at and purchased from Monaco’s premises. I note that Mr Thompson accepted the site was leased by him to store excess stock;
• [29.4] Monaco liaised with Ms Jones over the purchase agreement with Mr Banks; and
• [29.5] Monaco arranged for transfer of ownership including transferring the vehicle into and out of the ownership of a company, Austin Motor Company Limited, which Mr Thompson has an historic and commercial business relationship with (Mr Thompson purchased the majority of that company’s stock upon its cessation of business).

[30] This evidence shows that Monaco was actively involved in the advertising and sale of the vehicle and then completed the sale on behalf of its client. The fact that it disclosed that it was selling the vehicle on behalf of Mr Banks does not change this conclusion, as a trader cannot exclude the operation of the CGA where it would otherwise apply simply by disclosing that it is selling the vehicle for someone else.
[31] The conclusion that Monaco was the supplier of the vehicle is consistent with the High Court’s finding in Walters v Taylor Marine Ltd,[1] where Taylor Marine Ltd, a boat broking firm, was found to be liable as a supplier under the CGA even though it was not a party to the relevant transaction. The High Court found that a legislative decision had been made that professional agents such as Taylor Marine (and Monaco in this case), who act as an agent on behalf of others should meet claims such as this.[2]
[32] I am conscious that this interpretation of the definition of supplier means that motor vehicle traders who sell a vehicle on behalf of another are subject to the guarantees in the CGA. They effectively stand in the shoes of the owner of the vehicle by providing a guarantee that the vehicle is unencumbered, will be delivered within a reasonable time, will be of acceptable quality and be reasonably fit for a particular purpose. As recognised in Walters v Taylor Marine Ltd,[3] this conclusion accords with the consumer protection purpose of the CGA and means that traders who decide to sell on behalf of others must take such steps as are necessary to comply with their obligations under the CGA.
[33] This is at the heart of Ms Jones’ claim. She took comfort from the fact that the vehicle was being sold via a motor vehicle trader.

Issue 2: Did the vehicle fail to comply with the guarantee of acceptable quality?

[34] 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”.
[35] “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.

(2) Where any defects in goods have been specifically drawn to the consumer’s attention before he or she 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.

(3) Where goods are displayed for sale or hire, the defects that are to be treated as having been specifically drawn to the consumer’s attention for the purposes of subsection (2) are those disclosed on a written notice displayed with the goods.

...

(5) A reference in subsections (2) and (3) to a defect means any failure of the goods to comply with the guarantee of acceptable quality.

[36] 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.
[37] The purchaser of a $21,000, 40-year-old Toyota Landcruiser with an odometer reading of 324,000 kms should have realistic expectations as to its quality and durability and should understand that the vehicle is likely to have pre-existing defects consistent with its age and mileage and that expensive reconditioning work may be required to bring the vehicle to a high standard.
[38] I need not recite the list of defects set out above suffice to say that I view the NZTA audit as credible and reliable evidence, from an independent and regulatory body, that the vehicle has multiple defects of sufficient seriousness to make it both unsafe and unroadworthy. I exclude the fact that the turbo fitted required certification from this finding because Ms Jones had notice of that issue prior to purchase and took on the risk herself. Unsurprisingly, the Tribunal’s Assessor, Mr Gregory, accepts the NZTA audit advice and concurs that the vehicle should not be on the road. Furthermore, Mr Gregory agrees with the original mechanic and the NZTA auditor that a number of the defects would have been present at the time of sale. Mr Gregory goes further and says the evidence is clear that some work to the chassis has been hidden by painting and bog.
[39] In light of this definitive, highly probative evidence, I find the NZTA audit results mean the vehicle has not been of acceptable quality for the purposes of s 6 of the CGA because the vehicle has not been as free of minor defects as a reasonable consumer would consider acceptable for a vehicle, which despite its age, was sold as being in “great condition” and “very tidy”, and which cost $21,000. I am satisfied that a reasonable consumer purchasing a vehicle of this price and age would expect it to be safe and roadworthy.
[40] It follows that I reject Mr Banks’ assertion (which Mr Thompson endorsed) that the vehicle was sold to Ms Jones as a project vehicle. That is not how the vehicle was advertised.

Issue 3: Are the vehicle’s defects a failure of a substantial character?

[41] A failure of a substantial character is defined in s 21 of the CGA:

21. 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.

[42] Section 21(a) of the CGA applies to this case and I am satisfied that the vehicle’s defects, considered cumulatively, are a failure of a substantial character. Putting the issues relating to the fitted turbo aside (which was clearly disclosed to Ms Jones), the vehicle still requires extensive repairs to bring it to a standard consistent with Monaco’s pre-purchase representations about the vehicle’s condition and I am satisfied that a reasonable consumer would not have purchased this vehicle for $21,000 if they had been fully acquainted with the true nature and the extent of the faults present in this vehicle. That so many of the defects are serious WOF failures only fortifies my conclusion in this regard.

Issue 4: What remedy is Ms Jones entitled to under the CGA?

[43] The relevant remedies are set out in s 18 of the CGA, 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.

[44] Where a breach of guarantee is of substantial character but remediable, the consumer has the choice of remedies under s 18. The consumer may require the supplier to remedy the defect in a reasonable time (s 18(2)), may reject the goods, or seek damages in compensation for reduction in value under s 18(3).
[45] Under s 18(3)(a), Ms Jones is entitled to reject the vehicle because its defects, viewed globally, are a failure of substantial character and she is entitled to recover all amounts he has paid for the vehicle.
[46] The Tribunal therefore upholds Ms Jones’ rejection of the vehicle and orders that Monaco Motors Limited shall, within 10 working days from the date of this decision, pay $21,000 to Ms Jones. Monaco Motors Limited can then collect the vehicle, at its expense. Mr Thompson will feel aggrieved at this result but I would add that Monaco Motors Limited is entitled to seek indemnity from its principal, Mr Banks, but not in this Tribunal.
[47] In light of these findings, I need not go on to consider Ms Jones’ claims under the FTA suffice to say that I would have been satisfied that the representation of the vehicle by Monaco Motors Limited as being in “great condition” and “very tidy” was misleading and causative of Ms Jones’ loss as alleged.

D M Jackson
Adjudicator

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[1] Walters v Taylor Marine Ltd [2009] NZHC 2617; [2010] 2 NZLR 656 (HC).

[2] At [34].

[3] At [34].