Jefferies v Nicholson United Autos Ltd - Reference No. MVD 345/2024 [2024] NZMVDT 180 (4 October 2024)

Last Updated: 29 December 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 345/2024 [2024] NZMVDT 180 BETWEEN ALAN JEFFERIES First Applicant AND MICHELLE BRENNAN Second Applicant AND NICHOLSON UNITED AUTOS LIMITED Respondent

HEARING at AUCKLAND on 1 October 2024 (by audio-visual link) MEMBERS OF TRIBUNAL

C Euden – Adjudicator S Gregory – Assessor

APPEARANCES

A Jefferies, Applicant

B McKenzie and F Du Toit, for the Respondent A Webb, Witness for the Respondent

DATE OF DECISION 4 October 2024

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DECISION OF THE TRIBUNAL

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1. Nicholson United Autos Limited shall, within five working days of the date of this decision, pay $620.30 to Alan Jefferies.

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REASONS

Introduction

• [1] Ms Brennan purchased a 2020 Toyota Corolla MZEA12R SX Hatchback for $24,500 from Nicholson United Autos Limited (NUAL) on 30 May 2024.
• [2] As agreed between the parties, NUAL transported the vehicle from Whakatane to Tauranga Airport for Mr Jefferies to collect on 13 June 2024.
• [3] The applicants say the vehicle was not in the condition represented to them prior to purchase, in that there are several marks/scratches on the exterior of the vehicle, a cosmetically damaged centre console and a cosmetically damaged steering wheel.
• [4] The applicants subsequently returned the vehicle to NUAL for a full refund on 12 July 2024. Mr Jefferies has claimed to be reimbursed for his costs relating to travelling from Wellington to Tauranga Airport to collect the vehicle and then return home.
• [5] NUAL’s position is that the company is not liable to pay those travel costs.

Joinder

• [6] Mr Jefferies initially filed this application in his name only.
• [7] The vehicle offer and sale agreement records that the purchaser of the vehicle was Michelle Brennan, Mr Jefferies’ partner. The vehicle was also registered in Ms Brennan’s name after purchase. The vehicle was paid for from their joint funds.
• [8] I therefore considered that Ms Brennan had sufficient connection to these proceedings to justify joining her as an applicant and did so by minute dated 25 September 2024. Ms Brennan was excused from the hearing as she was unavailable to attend.

Evidence

• [9] Mr Jefferies gave evidence at the hearing for the applicants. For NUAL, evidence was given by Brad McKenzie, its Chief Executive Officer, as well as Abigail Webb, its Sales Manager. Written material was also supplied by both parties before the hearing and copies of a few emails between the parties were supplied by Mr Jefferies afterwards.

The issues

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

(a) Was the vehicle of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA)?

(b) Were the vehicle’s defects a failure of a substantial character?

(c) What remedy are the applicants entitled to under the CGA?

(d) Did NUAL engage in misleading conduct in breach of s 9 of the Fair Trading Act 1986 (the FTA)?

(e) What remedy are the applicants entitled to under the FTA?

Relevant background

• [11] Mr Jefferies says that he observed the vehicle listing on Trade Me on 30 May 2024 and called NUAL and spoke with Ms Webb the same day. He says that he asked Ms Webb to inspect the vehicle while he was on the phone, and to let him know if there were any marks or scratches on the bodywork. Ms Webb walked around the vehicle and only advised Mr Jefferies of a scratch on the front bonnet, which was repaired prior to sale.
• [12] Mr Jefferies asked Ms Webb about the inside of the vehicle, querying whether there was any inside damage. Ms Webb said the interior was “good”.
• [13] Mr Jefferies paid for the vehicle on 30 May 2024 and flew from Wellington to Tauranga Airport on 13 June 2024 to collect the vehicle.

The cosmetic damage

• [14] Mr Jefferies immediately noticed cosmetic damage when he first viewed the vehicle at the airport terminal, and then drove it away, including:

(a) several marks/scratches on the exterior of the vehicle;

(b) cosmetic damage to the centre console; and

(c) cosmetic damage to the steering wheel.

• [15] Mr Jefferies contacted NUAL on 1 July 2024, providing it with photos of the marks/scratches, centre console and steering wheel.
• [16] NUAL’s initial response to Mr Jefferies was that the vehicle was in an appropriate condition for a four-year-old vehicle and suggested that the marks/scratches could be repaired via paint touch-ups.
• [17] Mr Jefferies escalated his concerns to NUAL’s Managing Director, Dean Nicholson. After discussions between the parties, NUAL offered to provide a full refund to Mr Jefferies in exchange for return of the vehicle.
• [18] Mr Jefferies returned the vehicle to NUAL on 12 July 2024 and was refunded in full by NUAL the same day.
• [19] The applicants now claim the following costs relating to Mr Jefferies’ travel to Tauranga Airport to collect the vehicle:

(a) Shuttle to Wellington Airport: $68.60.

(b) Air New Zealand flight Wellington to Tauranga: $293.

(c) Accommodation for one night at Beech Tree Motel in Taupo: $160.

(d) Petrol purchased at Z High Street for travel from Tauranga to Wellington: $98.70.

Total claimed: $620.30 (together, the Travel Costs)

Issue 1: Was the vehicle of acceptable quality?

• [20] 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”.
• [21] “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.

• [22] Whether a vehicle is of acceptable quality is judged by how a reasonable buyer would see it, knowing its condition and any hidden issues or defects.
• [23] Relevantly, s 7(1)(b) of the CGA provides that ‘acceptable quality’ means that the vehicle must have been acceptable in appearance and finish. It is my view that the vehicle was not of acceptable quality for the purposes of s 6 of the CGA due to the cosmetic damage listed at paragraph [14] above. That is because a reasonable consumer would not have considered the cosmetic damage to be acceptable in appearance and finish for a 2020 vehicle which had only travelled 24,952 km (particularly, the appearance of the centre console and steering wheel).

Issue 2: Were the vehicle’s defects a failure of a substantial character?

• [24] As I have found that the vehicle was not of acceptable quality for the purposes of s 6 of the CGA, I must now consider whether that failure was of a substantial character.
• [25] A failure of a substantial character is 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.

• [26] The question I must answer is whether the cosmetic damage was such that a reasonable consumer, fully acquainted with the true nature and extent of the faults, would not have purchased the vehicle.
• [27] None of the cosmetic damage was, when considered separately or together, a failure of a substantial character. It is my view that the cosmetic damage was not the kind of fault that would cause a reasonable consumer to decline to purchase the vehicle.

Issue 3: What remedy are the applicants entitled to under the CGA?

• [28] 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.

• [29] Under s 18(3) of the CGA, Mr Jefferies was not entitled to reject the vehicle as the cosmetic damage did not amount to a failure of a substantial character. Instead, under s 18(2)(a), Mr Jefferies was entitled to have the cosmetic damage rectified within a reasonable time. Had Mr Jefferies exercised those rights and had the cosmetic damage been rectified, he would not have been entitled to his Travel Costs as those costs:

(a) would still have been incurred; and

(b) were not reasonably foreseeable as liable to result from cosmetic damage which was capable of being remedied.

• [30] Further, the Travel Costs did not result from the failure, being the cosmetic damage, which is a requirement of s 18(4) of the CGA.
• [31] Accordingly, Mr Jefferies is not entitled to his Travel Costs under the CGA.

Issue 4: Did NUAL engage in conduct that breached s 9 of the FTA?

• [32] Section 9 of the FTA provides:
  9. 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.

• [33] 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.

• [34] I have considered whether NUAL has engaged in misleading conduct by the representations Ms Webb made in relation to the vehicle only having one scratch on the bonnet and being “good” on the inside.
• [35] The context of the discussions between Mr Jefferies and Ms Webb prior to the purchase are important. Both Mr Jefferies and Ms Webb gave evidence that Mr Jefferies had specifically asked Ms Webb:

(a) whether the previous owner had been rough on the vehicle; and

(b) for Ms Webb to walk around the vehicle and tell Mr Jefferies about any issues.

• [36] I accept the evidence of Mr Jefferies that he made clear to Ms Webb that he wanted to know whether there were any scratches or marks on the exterior of the vehicle and whether there were any issues inside the vehicle as well.
• [37] In all the circumstances, I consider that a reasonable consumer would have interpreted Ms Webb’s comments that the exterior and interior of the vehicle were “good” as being a representation that the vehicle was free from the types of cosmetic damage noted at [14] above.
• [38] Ms Webb’s representation about the condition of the vehicle was misleading. The vehicle was not in the represented condition. Consequently, I find that NUAL has engaged in misleading conduct in breach of section 9 of the FTA.

Issue 5: What remedy are the applicants entitled to under the FTA?

• [39] The relevant remedies available for a breach of the FTA are set out in s 43 of the FTA:

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:

...

(f) an order directing person B to pay to person A the amount of the loss or damage:

...

• [40] The Supreme Court in Red Eagle set out the approach to be taken in applying s 43.^[2] The Tribunal must consider whether:

(a) Mr Jefferies was in fact misled or deceived;

(b) Mr Jefferies has suffered, or is likely to suffer, loss or damage; and

(c) NUAL’s conduct was the effective cause or an effective cause of Mr Jefferies’ loss or damage.

• [41] As noted at [37], Mr Jefferies was misled about the condition of the vehicle as it related to the cosmetic damage noted at [14] above.
• [42] I find that Mr Jefferies suffered loss because of the misrepresentation. I accept that Mr Jefferies travelled to Tauranga to collect the vehicle based on the representation by Ms Webb as to the condition of the vehicle. Consequently, NUAL’s conduct was the effective cause of Mr Jefferies’ transport costs.

What remedy are the applicants entitled to under s 43(3) of the FTA?

• [43] The Tribunal is satisfied that the Travel Costs incurred by Mr Jefferies are reasonable and consistent with the amounts that a consumer could ordinarily expect to pay if travelling from Wellington to Tauranga to collect a vehicle and then drive it home. Under s 43(f) of the FTA, Mr Jefferies is therefore entitled to recover that loss from NUAL.

Outcome

• [44] NUAL shall, within five working days of the date of this decision, pay $620.30 to Mr Jefferies as compensation for the Travel Costs.

C Euden
Adjudicator

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^[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 [23].