Healthy Kids Ltd v About Cars Ltd - Reference No. MVD 456/2022 [2023] NZMVDT 28 (1 March 2023)

Last Updated: 24 April 2023

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 456/2022 [2023] NZMVDT 028 BETWEEN HEALTHY KIDS LTD Applicant AND ABOUT CARS LTD Respondent

HEARING at AUCKLAND on 9 February 2023 (by audio-visual link) MEMBERS OF TRIBUNAL

B R Carter, Barrister – Adjudicator S Haynes – Assessor

APPEARANCES

D Montgomerie for the Applicant

R Tuck for the Respondent

DATE OF DECISION 1 March 2023

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DECISION OF THE TRIBUNAL

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Healthy Kids Ltd’s claim is dismissed.

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REASONS

Introduction

[1] Healthy Kids Ltd purchased a 2013 Ford Focus for $13,590 from About Cars Ltd in November 2022. Healthy Kids rejected the vehicle shortly afterwards due to various defects, including a faulty transmission control module, and dissatisfaction with the service provided by About Cars.
[2] About Cars initially declined to refund the purchase price, so Healthy Kids filed this claim on about 9 December 2022. About Cars then refunded the purchase price on 19 December 2022, but Healthy Kids has continued this claim as it seeks to recover costs of $3,000 that it says its director Daniel Montgomerie and his family have incurred because of the vehicle’s defects and About Cars’ response.

The issues

[3] Because About Cars has refunded the purchase price, the sole issue requiring the Tribunal’s consideration in this case is whether Healthy Kids is entitled to the further compensation it seeks.

Is Healthy Kids entitled to compensation?

[4] Mr Montgomery appeared for Healthy Kids. He submitted that the vehicle’s defects meant that his family incurred the following costs and losses:

• (a) $2,000 for five days’ work missed by his wife due to being unable to use the vehicle; and
• (b) $500 compensation for a day spent by Mr Montgomerie communicating and meeting with Mr Tuck.

[5] Healthy Kids cannot recover any of these amounts because it did not incur those costs or losses. A company is a separate legal entity from its directors and shareholders, and the costs and losses incurred by Mr Montgomerie and his wife were not incurred by the company. Mr Montgomerie submitted that the cost of his time should be considered as a cost to the company, as he is a director of the company. However, Healthy Kids has provided no evidence to substantiate this submission, so it cannot recover those amounts.
[6] Neither can Mr Montgomerie and his family recover compensation personally. The Consumer Guarantees Act 1993 (the CGA) applies to this claim because the transmission control module fault means that the vehicle was not of acceptable quality for the purposes of s 6 of the CGA. Under the CGA, only a consumer (as that term is defined in s 2 of the CGA) is entitled to the remedies provided by the CGA. Relevant to this dispute, a consumer is the person who acquires goods from a supplier. Mr Montgomerie and his family are not consumers for the purposes of this transaction as they did not acquire the vehicle from About Cars. They are therefore not entitled to the remedies under the CGA.

Healthy Kids’ other concerns

[7] Aside from its concerns regarding the quality and condition of the vehicle, Healthy Kids also says that About Cars:

• (a) failed to state it was a dealer on Trade Me and instead listed the vehicle as a private seller, although it advised Mr Montgomerie that About Cars was a motor vehicle trader shortly thereafter,
• (b) failed to display the Consumer Information Notice in the window of the car, and
• (c) failed to provide a complete Vehicle Offer and Sale Agreement before Healthy Kids paid the deposit.

[8] The Tribunal can provide no remedy relating to any of these allegations. The Tribunal can only make compensatory orders under the CGA, Fair Trading Act 1986 and certain sections of the Contract and Commercial Law Act 2017. None of these allegations raise issues under those Acts. Also, there was no evidence presented to show that Healthy Kids has suffered any loss because of that conduct. Instead, all the costs and losses claimed by Healthy Kids and Mr Montgomerie relate to the defects that arose shortly after purchase, rather than any disclosure failures by About Cars.

Costs

[9] Healthy Kids also sought to recover the $50 cost of filing this claim and $500 compensation for the time spent by Mr Montgomerie preparing the claim. Under the Motor Vehicle Sales Act 2003 (MVSA), the Tribunal may only award such costs against About Cars where:

• (a) the matter ought reasonably to have been settled before a hearing, but About Cars refused, without reasonable excuse, to participate in pre-hearing settlement discussions ordered by the Tribunal or acted in a contemptuous or improper manner during those discussion;[1] or
• (b) About Cars failed to attend the hearing without reasonable cause.[2]

[10] About Cars attended the hearing, so I cannot award costs on that basis. Further, I am satisfied that About Cars made reasonable efforts to settle this claim before the hearing by refunding the full purchase price. It has also successfully defended Healthy Kids’ claim for compensation, so I am not satisfied that it is appropriate to award costs against About Cars.

Outcome

[11] Healthy Kids’ application is dismissed.

B R Carter
Adjudicator

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[1] Schedule 1, cl 14(1)(a)(ii) of the MVSA.

[2] Schedule 1, cl 14(1)(b) of the MVSA.