Chen v Gazley Motors Cambridge Ltd T/A Gazley Mitsubishi & Gazley Mercedes Benz Wellington - Reference No. MVD 257/2024 [2024] NZMVDT 210 (29 October 2024)

Last Updated: 4 December 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 257/2024 [2024] NZMVDT 210 BETWEEN XIAOCHEN CHEN Applicant AND GAZLEY MOTORS CAMBRIDGE LIMITED T/A GAZLEY MITSUBISHI & GAZLEY MERCEDES BENZ WELLINGTON Respondent

HEARING at Auckland on 6 September 2024 (via MS Teams) MEMBERS OF TRIBUNAL

S Malaviya, Barrister – Adjudicator

A Cate – Assessor

APPEARANCES

Xiaochen Chen, Yishang (Eason) Chen and Wei Quin Li, on behalf of Applicant

Oliver Gazley and Hayden McKeown, for the Respondent

DATE OF DECISION 29 October 2024

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

A Gazley Motors Cambridge Ltd is ordered to pay Xiaochen Chen a sum of $2,029.15 within 10 days of the date of this order.

_________________________________________________________________

REASONS

Relevant background

• [1] Mr Chen purchased a 2021 Mazda CX-5 (“the vehicle”) from Gazley Motors Cambridge Limited (“Gazley”) on 7 May 2024 on behalf of his company Wadeley Investments Limited. The vehicle was purchased for $30,990.00 and had travelled 52,000 km at the time of purchase.
• [2] Mr Chen’s son, Yishang (Eason) Chen (“Mr E Chen”), handled the purchase as he is more comfortable with English.
• [3] Prior to the purchase, both Mr Chen and Mr E Chen were clear that the family wanted to buy a vehicle that was in good condition and one that had not been involved in an accident.
• [4] Mr Chen says this is because the vehicle was to be used jointly with his wife Mrs Li who has limited mobility and a fear of vehicles that have been involved in accidents.
• [5] The Applicants say they were given assurances by Gazley that the vehicle had not been in an accident, but they have since discovered that this is not true.
• [6] A vehicle inspection carried out by Automobile Association NZ (“AA”) after purchase stated that the vehicle showed signs that it had been in a minor accident. Mr Chen claims that Gazley engaged in deceptive and misleading conduct by selling a vehicle that was in an accident despite knowing the Applicants’ requirements.
• [7] The vehicle still has some scratches and damage to the front guards, floor covers and the engine splash tray.
• [8] Mr Chen files this claim seeking to reject the vehicle on grounds of Gazley’s misleading conduct. He submits that he would not have purchased this vehicle had he been aware that the vehicle had been in an accident prior to its sale. He says the deception has materially changed the contract and he should be entitled to cancel it for a full refund.
• [9] Gazley’s position is that it did not engage in misleading or deceptive conduct because it did not guarantee that the car had not had repairs previously. It simply communicated to Mr Chen what it knew at the time. The previous owner has since confirmed that the vehicle did have a minor collision which led to minor repairs being carried out but Gazley was not aware of this at the time of sale.
• [10] Gazley also submits that the AA report submitted by the Applicants states that the vehicle is in good condition consistent with its age and mileage. Therefore, it states that it has sold a car that is consistent with Mr Chen’s and his family’s requirements.
• [11] Gazley offers to rectify the panel and paint issues identified by the Applicants but does not accept rejection.

Issues

• [12] Against this background, the issues requiring the Tribunal’s consideration in this case are:

(a) Has Gazley engaged in misleading or deceptive conduct in breach of s 9 of the Fair Trading Act 1986 (“the FTA”)?

(b) Has Gazley induced the Applicants into purchasing the vehicle through misrepresentation pursuant to s 35 of the Contract and Commercial Law Act 2017 (“the CCLA”)?

(c) Has the vehicle been of acceptable quality for the purpose of s 6 of the Consumer Guarantees Act 1993?

(d) What, if any, remedies are available to the Applicants?

Has Gazley engaged in misleading or deceptive conduct in breach of s 9 of FTA?

• [13] 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.

• [14] 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. It is not necessary under s 9 to prove that the defendant’s conduct actually misled or deceived the particular plaintiff or anyone else. If the conduct objectively had the capacity to mislead or deceive a hypothetical reasonable person, there has been a breach of s 9. If it is likely to do so, it has the capacity to do so. Of course the fact that someone was actually misled or deceived may well be enough to show that the requisite capacity existed.

Misleading conduct

• [15] Mr Chen says that prior to purchase he informed the salesperson that his wife, Mrs Li was not able to walk properly and was scared to be in a vehicle that had previously been in an accident.
• [16] Mr E Chen also asked if the vehicle had any water damage or general damage, and he was informed that the vehicle only had minor scratches. A video call had been organised for Mr Chen and his son to view the car and confirm the sale.
• [17] He says the dealer gave an express warranty that the vehicle did not have any accidents prior to the sale in an email dated 7 May 2024 from Isaac Kingi where Mr Kingi says:

  As mentioned, I will have the scratches touched up.

  The car as we are aware hasn’t been in any accident.

• [18] This was in response to an earlier email from Mr Chen where he asked “Could you please confirm that there are no accidents or wear damage to the car”.
• [19] Mr E Chen says the transaction was done remotely and he relied on the truthfulness and honesty of Gazley.
• [20] Mr E Chen submits that it is unacceptable that Gazley did not pick up on obvious signs of damage to the car when it purchased it from the last owner, or alternatively has knowingly misled him.
• [21] Gazley advertised on its website that customers may "Enjoy the benefits of our fully equipped service department with highly trained factory technicians and the latest electronic diagnostic equipment". Mr Chen says it ought to have known about the previous accident as other technicians hired by Mr E Chen identified the collision within a few minutes of inspecting the car.
• [22] Mr McKeown denies that the Applicants were misled and he submits that Gazley has done its best to fairly represent the car. He says Mr Kingi, who sold the vehicle to the Applicants, was not aware at the time of sale that the vehicle had had minor repairs carried out by the previous owner. He says most second-hand vehicles have some repair or damage done to the panel work over the course of its life and it is not possible for a seller to know the full extent of its repair history.
• [23] Mr McKeown advised that the vehicle was purchased by Gazley in October 2023 via tender. Gazley carried out checks at its workshop and obtained a warrant of fitness for the vehicle where Gazley says it did not find any signs indicating an accident or a collision repair.
• [24] After the claim was filed, Gazley made inquiries with the previous owner who advised that the vehicle had suffered damage to the front passenger door which was replaced by an authorised repairer. The previous owners classed this as a minor repair and the vehicle was not tendered for sale as an accident repaired vehicle.

Signs of an accident

• [25] Mr E Chen says shortly after purchase, he discovered the left passenger door was making a noise that was coming from the components inside the door. There was damage to the door hinge and signs of an accident on the engine cover.
• [26] The main evidence submitted by Mr Chen is an AA report that has the following comment from the vehicle inspector:

  “Signs vehicle has possibly been in a minor accident”

• [27] After this report, Mr E Chen took the vehicle to Autocity which found more signs of damage on the body of the vehicle. The technician at Autocity also concluded that the car had been in an accident according to Mr Chen but did not write that on the invoice. The vehicle was also taken to Terry’s Panel Shop for another opinion and its technician also agreed the vehicle had been in an accident but did not provide a statement to that effect.
• [28] Mr Chen summarises the damage on the vehicle as follows which is indicative of an accident:

(a) Broken part inside the left-hand side passenger door;

(b) Uneven gap in the engine cover on the left-hand side;

(c) Loose screw inside the engine cover on the left-hand side;

(d) Signs of repaint on the left-hand side passenger door;

(e) After-market sealer on the left-hand side passenger door; and

(f) Rust and the damage at the bottom of the car.

Tribunal’s assessment

Did the vehicle suffer an accident?

• [29] The previous owners of the vehicle have confirmed that they have carried out minor repairs to the vehicle due to a minor collision. So the first question I must answer is whether the cause of the repair can be deemed to be an accident based on the evidence. Putting this in another way, is a minor collision the same as an accident?
• [30] Mr Cate’s opinion is that the automotive industry generally categorises an accident as a collision where a panel and parts of the vehicle need replacement such as a door or the front fender. He says the photos provided by the Applicants show a very minor collision. He also notes that the AA report states the vehicle has been in a minor collision. He does not agree that the vehicle can be classed as one that has been in an accident as the current damage to the vehicle seems minor and cosmetic in nature.
• [31] The vehicle has had its door replaced and some minor or superficial damage to the front panels. On the whole, I would categorise the incident that caused the damage needing repair as an accident albeit a minor one.

Has Gazley misled or deceived Mr Chen?

• [32] Upon being asked to confirm whether the vehicle was in an accident previously, Mr Kingi’s response was not an unconditional “No”. He replied that as far as he knew the vehicle had not been in an accident. The fact that the vehicle had not been in an accident was false, but that Mr Kingi did not know about the accident was not misleading or an attempt to deceive. This is because I accept Gazley’s evidence that it was not aware of the previous accident when it purchased the vehicle at tender.
• [33] I do not find this to be a case where the seller has given false or deliberately vague answers to hide information from a purchaser. Mr Kingi’s response was consistent with his knowledge at the time.
• [34] Mr Chen says the three technicians who assessed the vehicle saw signs of a collision within a few minutes. But barring the AA inspector, the other technicians have not given any evidence to confirm this. Even the report from AA does not categorically state that the vehicle has been in an accident. The inspector opined that it was possible that the vehicle had a minor accident previously. This demonstrates to me that the signs of a previous accident were not as obvious as Mr Chen submits so it is possible that Gazley’s technicians could not detect the vehicle’s previous accident.
• [35] Taking all of the above into account, I do not find that Gazley has engaged in misleading or deceptive conduct pursuant to s 9 of the FTA.

Has Gazley induced the Applicants into purchasing the vehicle through misrepresentation pursuant to s 35 of the CCLA?

• [36] Section 35 of the CCLA is as follows:

35 Damages for misrepresentation

(1) If a party to a contract (A) has been induced to enter into the contract by a misrepresentation, whether innocent or fraudulent, made to A by or on behalf of another party to that contract (B),—

(a) A is entitled to damages from B in the same manner and to the same extent as if the representation were a term of the contract that has been breached; and

(b) A is not, in the case of a fraudulent misrepresentation, or of an innocent misrepresentation made negligently, entitled to damages from B for deceit or negligence in respect of the misrepresentation.

• [37] Under s 35, the misrepresentation does not need to be fraudulent, and an innocent misrepresentation can also be sufficient to entitle an affected party to seek damages for loss caused.
• [38] In this case, I find Mr Kingi stating that the car had not been in an accident as far as he knew, to be a misrepresentation.. This is because while I accept that Gazley did not know about the previous accident at the time of sale, knowledge is not relevant under s 35.
• [39] What is important is that the vehicle had in fact been in a minor accident and Gazley led Mr Chen and his son to believe that it had not been in one on the basis that it did not have any such knowledge. In my view, that is sufficient to meet the criteria of misrepresentation under s 35.
• [40] When asked about the vehicle’s accident history, Mr Kingi should have either said it could not confirm or in the alternative, enquired with the previous owners like it did after Mr Chen filed a claim with Tribunal to ensure it supplied the correct information to Mr Chen and his family.
• [41] Mr Chen has been clear that he would not have purchased the vehicle had he known about it’s the collision. Therefore, I am satisfied that the misrepresentation has induced him into entering the contract to purchase the vehicle.

Has the vehicle been of acceptable quality for the purposes of s 6 of the CGA?

• [42] 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”. “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.

• [43] 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.
• [44] Mr Chen found scratches on the vehicle that he had asked Gazley to touch up prior to delivery of the vehicle. Mr Chen says it has done an incomplete job. In addition to that, after inspections, Mr Chen has found other issues which are outlined in paragraph [28] of this decision and the report supplied by Autocity.
• [45] It can be expected that most three-year-old second-hand vehicles with 52,000 km will have some panel damage and body scratches through wear and tear resulting from general use. This would not lead the Tribunal to find that the vehicle is not of acceptable quality.
• [46] But under s 7(1)(i) of the CGA, I must take into account the representations made about the goods by the supplier. In this case, the supplier made a representation that the vehicle had not been in an accident previously. Based on that representation, the damage around the front passenger door and front guard should not be there. I am satisfied that this damage is connected to the collision repairs.
• [47] Furthermore, the scratches to the rear of the vehicle were to be fixed by Gazley and that has not occurred.
• [48] As such, I am satisfied that the vehicle is not of acceptable quality for the above reasons.

Is the vehicle’s defect a failure of substantial character?

• [49] A failure of 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.

• [50] I turn to consider whether a reasonable consumer fully acquainted with the nature of the damage to the body of the vehicle would acquire this vehicle. This test here is objective and not subjective to Mr Chen. So while Mr Chen says he would not have acquired this vehicle as he did not want a car that had previously been in an accident, I must consider the damage from a reasonable consumer’s point of view. Looking at the level of damage present in the vehicle objectively, I do not find that this would prevent a reasonable consumer from purchasing the vehicle.
• [51] I also do not consider the vehicle departs significantly from the description provided as the previous collision was minor and not one that would categorise this vehicle as an accident repaired vehicle.
• [52] I also consider Mr Chen’s submission that his wife has a fear of being in a vehicle that has previously been in an accident due to her mobility issues. I do not agree that this amounts to the vehicle being substantially unfit for purpose. The vehicle is safe, roadworthy and suitable for use.
• [53] Accordingly, I find that failures in the vehicle are not of substantial character.

What, if any, remedy are the Applicants entitled to?

• [54] 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.

• [55] As I do not find that the vehicle’s defects are of a substantial character, Mr Chen is not entitled to reject the vehicle. I find repairs under s 18(2)(a) of the CGA are appropriate and Gazley has offered to do this as well.
• [56] Repairs are also consistent with s 35 of the CCLA which allows Mr Chen to claim a loss as if the representation by Gazley was a term of the contract for sale. This would entitle him to carry out all the repairs necessary that are incomplete or those that have not been done to a good standard.
• [57] The most comprehensive list of repairs has been outlined in Autocity’s estimate dated 22 May 2024. Gazley has offered to pay for those repairs.
• [58] In my view, the appropriate remedy is to allow Autocity to carry out the repairs instead of Gazley due to the vehicle being in New Plymouth while Gazley is Wellington based. This will save both time and cost to the parties by avoiding the need to have the vehicle transported to Gazley’s Wellington workshop.
• [59] Accordingly, I order Gazley to pay Mr Chen a sum of $1,800.15.
• [60] I also add $229 for the AA inspection fee under s 18(4) of the CGA which leads to a total of $2,029.15.

Outcome

• [61] For the above reasons, the Tribunal dismisses Mr Chen’s application to reject the vehicle.
• [62] Instead, I order Gazley to pay Mr Chen a sum of $2,029.15.

S Malaviya
Adjudicator

This decision has been appealed. The outcome of that appeal was unknown at the date of the publication of this decision.

---

^[1] Red Eagle Corp Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].