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Archibald's Motors Limited v B - Reference No. MVD 192/2020 [2020] NZMVDT 150 (15 September 2020)

Last Updated: 17 March 2021

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 192/2020
[2020] NZMVDT 150

BETWEEN ARCHIBALDS MOTORS LIMITED

Applicant

AND B

Respondent

ON THE PAPERS
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

R C Dixon – Assessor

DATE OF DECISION 15 September 2020, reissued 27 October 2020

___________________________________________________________________

DECISION OF THE TRIBUNAL

___________________________________________________________________

Archibalds Motors Ltd’s application is dismissed.

___________________________________________________________________

REASONS

Introduction

[1] Archibalds Motors Ltd seeks to recover $21,033.83 from B in respect of a 2009 Porsche Boxter. Archibalds says that B agreed to purchase the car on or around 28 December 2018. More than two months after the purchase, Archibalds realised that it had not been paid the purchase price of $59,990. Archibalds then repossessed the vehicle from B but it claims to have incurred certain expenses which it now seeks to recover.
[2] B says that the reason she did not pay for the car is simple. She was not the purchaser. Her former partner Bruce (also known as James) Reid was the purchaser. B says that Mr Reid agreed to purchase the vehicle as a gift for her. She says she never agreed to pay any money for the car and she should not be regarded as the purchaser just because Mr Reid did not pay for it. B says that Archibalds’ contract is with Mr Reid and it should pursue him for any money owing in respect of the car.
[3] B says that she now knows that Mr Reid is a notorious con-artist who has engaged in many frauds. She advises that there is a Police investigation of this matter underway. B says she is being bullied and harassed by Archibalds, on the basis that she signed the vehicle offer and sale agreement (“VOSA”). But she says she signed that document only because she thought (as did Archibalds) that the vehicle’s full purchase price had already been paid and there was no money outstanding. B says that Archibalds knows that she never agreed to pay for the car.

Hearing on the papers

[4] The Tribunal may determine a proceeding on the papers if the adjudicator considers it appropriate.[1] Before doing so, the Tribunal must give the parties a reasonable opportunity to comment on whether the proceeding should be dealt with in that manner. I convened a telephone conference on 14 August 2020 at which I asked B and John McKenzie (Archibalds’ Group Aftersales Manager) to comment on whether I should determine this matter on the papers. Mr McKenzie said Archibalds did not object. B said that she would not object as long as she maintained a right of appeal against the Tribunal’s decision.[2]
[5] After considering the parties’ comments, I decided that I would determine this matter on the papers without a hearing. I considered it appropriate to do so as the parties had provided me with extensive written documentation and I do not consider that a hearing would be necessary to ensure that the Tribunal has adequate information to proceed to determine the matter.
[6] The three issues that I need to consider are as follows:

• (a) Does the Tribunal have jurisdiction to hear and determine this claim?
• (b) What happened?
• (c) What, if anything, is the appropriate remedy?

Issue one: Does the Tribunal have jurisdiction to hear and determine this claim?

[7] The Tribunal’s jurisdiction is limited by s 90 of the Motor Vehicle Sales Act 2003, which provides that the Tribunal has jurisdiction only if one party, but not both parties, to the application or claim is a motor vehicle trader. While s 90 on its face appears to permit a claim by a trader against a purchaser, this is unusual because most purchasers are not subject to the Consumer Guarantees Act 1993 or the Fair Trading Act 1986 (the main statutes under which claimants seek remedies in the Tribunal), unless they are themselves motor vehicle traders. In that case, the Tribunal would not have jurisdiction according to s 90(1)(a) of the Motor Vehicle Sales Act, which does not allow claims where both of the parties are motor vehicle traders.
[8] There is, however, one part of the Tribunal’s jurisdiction which potentially remains relevant to a claim by a trader against a purchaser. Although the Tribunal has no general jurisdiction to determine contractual disputes under s 89 of the Motor Vehicle Sales Act, it does have jurisdiction under subpt 3 of pt 2 of the Contract and Commercial Law Act 2017 and it has the power to make orders under ss 43-48 of that Act.[3]

The Tribunal’s jurisdiction under the Contract and Commercial Law Act 2017

[9] Under s 36 of the Contract and Commercial Law Act, a party may cancel a contract if another party repudiates it.
[10] Repudiation occurs where a party makes it clear that it does not intend to perform or complete performance of the obligations under the contract.[4] Repudiation may occur by words or conduct. Repudiation may be inferred from conduct if a reasonable person would believe the actions evidenced an intention not to perform the obligations of the contract. In each case it is a question of fact to be determined after consideration of the surrounding circumstances taken in context.[5]
[11] Cancellation may be known by words or by conduct showing an intention to cancel, or both.[6] It is not necessary to use any particular form of words, so long as the intention to cancel is made known.[7]
[12] Section 42(3) of the Contract and Commercial Law Act provides that cancellation does not affect the right of a party to recover damages for a misrepresentation or the repudiation or breach of the contract by another party. The Tribunal has no powers to make orders under s 42.[8] However, the Tribunal has power to grant relief under s 43 of the Contract and Commercial Law Act “if it is just and practicable to do so”. Section 43(3) of the Contract and Commercial Law Act sets out a number of different types of orders that may be made under that section. The only one that is potentially relevant in the present case is that described in s 43(3)(a), to “direct a party to pay another party the sum that the Court thinks just (subject to s 35)”.[9]
[13] In making an order under s 43, the Tribunal must have regard to the matters set out in s 45, which provides:

45. Matters court must have regard to

(a) the terms of the contract; and

(b) the extent to which any party to the contract was or would have been able to perform it in whole or in part; and

(c) any expenditure incurred by a party in, or for the purpose of, performing the contract; and

(d) the value, in the court’s opinion, of any work or services performed by a party in, or for the purpose of, performing the contract; and

(e) any benefit or advantage obtained by a party because of anything done by another party in, or for the purpose of, performing the contract; and

(f) any other matters that the court thinks proper.

[14] Archibalds says it cancelled the contract for purchase of the Porsche on 1 April 2019 when it sent an email to B demanding full payment of the purchase price for the vehicle. Shortly after that email was sent, the vehicle was repossessed, presumably through the exercise of the Romalpa clause in the VOSA, which provides that title was retained by Archibalds in the vehicle until all monies owing under the VOSA had been paid.
[15] On 16 July 2020, Archibalds commenced a claim in the Tribunal to recover its “expenses” totalling $21,033.83. These expenses include a repair to the clutch and flywheel, devaluation of the car “due to mileage, time and other ownership”, replace worn and broken bump stops, tyres, freight, paint, roadside recovery, updated warrant of fitness and a repair to the key.
[16] I will consider Archibalds’ claim under s 43(3)(a) of the Contract and Commercial Law Act.

Issue two: What happened?

[17] On or around 17 December 2018, a person identifying himself as Dr James Reid completed an Archibalds’ website enquiry form addressed to Jarrod Clarke, Archibalds’ Porsche general manager. The enquiry form stated as follows:

Hi Jarrod

I am looking at purchasing the above car for my partner who is in desperate need of a vehicle upgrade. Could I please have more detailed specs about the car and photos and how much would delivery be to Wellington?

Kindest regards

James

[18] The website enquiry form specified a Porsche Boxter that had been advertised on Archibalds’ website. Mr Clarke responded that day to “Dr Reid” apologising that the vehicle specified had already been sold and asking “what else would you like to get for your partner?” Mr Reid replied

She wants a convertible and a manual. She likes the look of the Boxter. My maximum budget is $90 K.

[19] Mr Clarke replied “well, we better keep her happy then” and supplied Mr Reid with another vehicle listing. Mr Reid responded with B’s phone number and encouraged Mr Clarke to telephone her. Mr Clarke then appears to have telephoned B while she was in the supermarket. Mr Clarke reported back to Mr Reid that B was “keen”. Mr Clarke then arranged for Archibalds’ business manager, Allen Wang, to contact Mr Reid “with account numbers and talk about what name you want it in etc”. Mr Clarke also encouraged Mr Reid to contact him to “work out delivery”. Mr Clarke said there would be no charge to deliver the vehicle from Christchurch to Wellington.
[20] Delivery was arranged to occur on 28 December 2018 in Wellington. Beforehand, Mr Clarke was anxious to ensure that Mr Reid had attended to the necessary paperwork. He checked with Mr Wang, who told him that he had not received the paperwork from Mr Reid. Mr Reid had emailed Mr Wang on Saturday 22 December 2018 to say that he had “transferred the funds today so may not show at your end till Tuesday”. Based on this, Mr Wang sought to reassure Mr Clarke that Mr Reid had “told” him “that he has transferred the fund to us”.
[21] After Christmas 2018, Mr Wang seems to have realised that, despite Mr Reid’s promises, the funds still had not been received. He emailed Mr Reid on Thursday 27 December 2018, the day before the scheduled delivery, to ask him to sign the VOSA and consumer information notice and send both documents back to Mr Wang, who would arrange to provide the original documents via Mr Clarke at delivery. In this email, Mr Wang told Mr Reid that he could “pay by direct credit (deposit slip attached) ...”.
[22] Already therefore, prior to delivery, Archibalds was on notice that Mr Reid had not met his promise to pay the purchase price. Yet Archibalds appears to have proceeded with the delivery of the vehicle without taking any further steps to ensure that it had actually received the payment.
[23] On 28 December 2018, as he was delivering the vehicle in Wellington, Mr Clarke still did not know whether payment of the purchase price had been made. Mr Reid showed him two transactions on his phone totalling $59,990. It is unclear whether Mr Clarke thought Mr Reid was showing him a record that the payments had been made earlier, or that Mr Reid was initiating the transactions at the time of delivery. Either way, Mr Clarke accepted whatever Mr Reid showed him on his phone on 28 December 2018 as a record of payment. Mr Clarke told the Tribunal that payment for vehicles “often happens like this without a hitch”. However, Mr Clarke explained that due to the Christmas holidays and staff being away it did not come to light immediately that payment still had not been received.
[24] Indeed, it was not until early March 2019, more than two months after the vehicle had been delivered, that Archibalds finally realised that the money had not been paid. Simon Unger, Archibalds’ business manager, telephoned Mr Reid on 4 March 2019 to advise that no record of the $59,990 payment had been recorded, either as a lump sum or two smaller sums of $29,990 and $30,000 respectively. Mr Unger’s email dated 5 March 2019 states as follows:

I know you recollected paying it in front of Jarrod and he recalls much the same thing, but could you please have a check what dates it did come out of your account, and let us know the exact figures and that it was paid to our Archibalds account ...

[25] Mr Reid replied:

Hi Simon

Happy to help. I am in meeting most of today. I will call into my bank tomorrow morning and get the information you require.

Kindest regards

Dr James Reid DForensPsy UNSW, BScCrimJ Camb.

[26] On 11 March 2019, Mr Reid emailed Mr Unger again to say that he was picking up the payment information that afternoon and would fax or scan and email it to Mr Unger once back in the office. James Reid said that his “personal banker had a hard job finding it as I make payments simular [sic] to that at least four times a week to various charities etc ...” But the information promised by Mr Reid never arrived.
[27] As Mr Unger’s requests became more insistent, Mr Reid’s responses became even less plausible. On 17 March 2019, as a further excuse for his failure to provide the payment information, Mr Reid claimed that, following the recent “incident that happened in Christchurch”, his “work within the national intelligence community is overwhelming at this moment in time”. Nevertheless, Mr Reid said that he had the paperwork required and offered to post it to Mr Unger.
[28] On 19 March 2019, someone from Archibalds telephoned B to advise her that her car had not been paid for. She then emailed Mr Clarke to say:

I had a phone message from someone at Archibalds about a missing payment for a Porsche Boxter S ... I was given by my husband James Reid for Christmas. James assures me he made two payments to you to cover the full cost of this car, can you please confirm this?

[29] On 23 March 2019, James Reid told Archibalds that his former accountant had “embezzled” more than $200,000 of his money. Mr Reid told Mr Unger that he would make payment for the car by no later than 29 March “if we discover that the payment wasn’t made”. Mr Reid tried to reassure Mr Unger: “I want to honour the sale as my wife loves her Christmas present so I most certainly will get it resolved”.
[30] On 27 March 2019, Mr Unger emailed Mr Reid to check whether the payment would be made on Friday 29 March 2019 and Mr Reid confirmed that it would be paid on Friday afternoon. On Friday 29 March 2019 at 5.00 pm Mr Unger emailed Mr Reid to check whether he had made the payment that day and Mr Reid replied that it was “being processed now”.
[31] At this stage Archibalds’ Group general manager, Murray Gorton, became involved. Mr Gorton indicated to Mr Unger:

I think we will be picking the car up on Monday Simon. That is just too soft and I wouldn’t be given that response in any hurry to pay if I were him.

[32] Mr Clarke then made an additional suggestion to Mr Gorton and Mr Unger on 29 March 2019:

I think we will be able to get her [B] to pay before that happens ...

[33] This was the first suggestion in the correspondence that Archibalds was turning its focus towards B and thinking of recovering the purchase price from her. For her part, B was becoming anxious that the vehicle may not have been paid for. On 28 March 2019, she asked Mr Clarke to send her receipts for the payments for the Porsche when he had them.
[34] On 30 March 2019, Mr Unger emailed Mr Reid again to say that he could not see the funds in Archibalds’ account. This time, Mr Unger warned that if the money was not paid there would be repercussions as “we are out of pocket”. Mr Reid replied to say that he would “contact the person who paid it immediately”.
[35] Then, on 1 April 2019, Mr Unger emailed both Mr Reid and B as follows:

I am writing this letter with regards to Porsche Boxter EYQ300 bought from us at the end of last year for you B, negotiated by Mr Reid. At the time of delivery Mr Reid indicated he had paid for the car, initially saying he paid for it before delivery, but then indicating he paid for it on the day of delivery. This appears not to be the case. I have followed up Mr Reid by email and phone multiple times and, while always agreeable, he has not completed one promise with regards providing documentation for a proof of payment, and later admitted he had not paid but was going to. He agreed he was going to on multiple occasions and did say he had done so as recently as this Saturday. Again, payment was not made.

I am sorry to have to include you B but your name is on the contract hence the liability is yours in association with your husband.

The upshot is we are $59,990 out of pocket from three months ago which is not satisfactory. We intend to take legal action against you both for non-payment of our invoice and seek judgement in the courts if necessary.

[36] In the meantime, Mr Reid was still promising Mr Unger that he “had every intention to pay this”. Mr Reid also promised B he would make the payment. On 2 April 2019, he emailed her to say “I will try and raise the money it isn’t your fault or responsibility”.
[37] On 2 April 2019, the day after Mr Unger’s email threatening legal action against B and Mr Reid for non-payment of the invoice, Mr Clarke emailed B to say that while Archibalds’ legal advice suggested that it was entitled to recover the full purchase price of the car, as she had signed both the VOSA and the consumer information notice, “considering your situation” Archibalds would be willing to settle for $6,504.91 (“at minimum”).
[38] The essential positions of each party were summarised in email correspondence between B and Mr Clarke on 1 April 2019. After Mr Clarke emailed B a copy of the VOSA, she pointed out that the agreement says that the vehicle had been “paid for in cash with no money owing”. Otherwise, she would not have signed that document. Mr Clarke responded:

Correct there is no Finance contract against this car and James said he Paid for it before it left for wellington (via email), when I got to your house he claimed it didn’t work and I would not have known that due to Christmas/boxing Day . That is why he showed me his phoned with two transactions for $29990 and $30000 to make up the $59990.

At the end of the day we have not been paid to date.

[39] B replied to Mr Clarke that she had “never agreed to pay for the car”. Mr Clarke’s responded: “But James did agree and you knew he was buying (and paying for) you”.
[40] B emailed Mr Clarke and Mr Unger on 4 April 2019 to say that she was happy to return the vehicle. However, she said that Archibalds would need to come and get it because it had broken down “in a serious puff of black smoke” the day before. This was because the vehicle’s clutch had failed. B confirmed that she had given the vehicle’s key to Armstrong Prestige in Wellington. She stated again that Archibalds’ contract in respect of the vehicle was with James Reid.

Analysis

[41] Archibalds’ position is firmly based on the wording of the standard form VOSA which B signed on delivery of the vehicle on 28 December 2018. The VOSA is in B’s own name and states clearly “I agree to pay as follows: sale price inc GST $59,990”. As mentioned above, clause 3 of the contract is a retention of title (or Romalpa) clause. It provides “that title to the vehicle shall be retained by the Trader and shall not pass to the Purchaser until all monies owing by the Purchaser under this agreement have been paid, including payment of any cheques on presentation”. Notwithstanding this retention of title provision, clause 3.3 provides that the trader shall be entitled to take action against the purchaser for the price of the motor vehicle”.
[42] Archibalds, in bringing this claim against B, is relying on the clear and unambiguous terms of these provisions in the VOSA.
[43] Contractual language, like all language, must be interpreted within its overall context, broadly viewed.[10] For many years, contextual interpretation of contracts was restricted to situations of ambiguity.[11] More recently, however, it has been confirmed that a purposive or contextual interpretation is not dependent on there being an ambiguity in the contractual language.[12] The proper approach to contractual interpretation, as upheld by the Supreme Court, is an objective one, the aim being to ascertain “the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at at the time of the contract”.[13] There is no conceptual limit on what can be regarded as “background”, but it has to be background that a reasonable person would regard as relevant.[14]
[44] I must apply these principles of interpretation to the present case. Although the written terms of the VOSA are clear and unambiguous and apparently provide an obligation on the part of the purchaser, B, to pay the full purchase price, the background context points to a different interpretation. The context was that this vehicle was a gift for B and she did not agree to pay any of the purchase price. This was known and understood by Archibalds at the time it sold the vehicle to Mr Reid. It was always understood and is clear from the background emails that have been produced in the context of this Tribunal application, as summarised above, that Mr Reid would be liable for the entire purchase price. Moreover, it was understood that the entire purchase price would be (and had been) paid by him prior to or on delivery of the vehicle.
[45] Without wishing to cut across any ongoing Police investigation of this matter, the documentary evidence produced to the Tribunal makes it abundantly clear that Archibalds has been the victim of a fraud committed by Mr Reid or someone using that alias. Archibalds has let itself down by its lax process for ensuring it has received payment in respect of a vehicle prior to that vehicle being delivered to the prospective purchaser. Moreover, Archibalds’ credulity regarding Mr Reid’s increasingly outlandish excuses for non-payment added to the long delay between delivery and Archibalds’ realisation that no payment had been received.
[46] B’s evidence, which is not seriously disputed by Archibalds, is that she only signed the VOSA because she was asked to do so and because it was clear from the document itself and surrounding context that the balance outstanding was zero. The VOSA itself expressly states this as a fact and makes it clear that there is no money outstanding to be paid on the vehicle. There is no evidence that it was B’s fault, or that she knew, that “BALANCE OUTSTANDING $0.00” on the VOSA was inaccurate. But I accept her evidence that she would not have signed the document if it had (correctly) said “BALANCE OUTSTANDING $59,990”.
[47] Accordingly, having regard to the extensive background contextual material that was supplied by the parties in the present case, I have concluded that this is an appropriate case to adopt a purposive or contextual interpretation of the contract, notwithstanding the lack of ambiguity in the wording of the VOSA itself. On that basis, I conclude that at no time did B agree to pay Archibalds any money in respect of the vehicle. I do not consider that the VOSA, despite its apparently clear wording, provides Archibalds with any basis upon which it is entitled to claim against her. I appreciate that Archibalds alleges that the damage to the vehicle occasioned while it was in B’s possession, including to the clutch as well as some minor panel/paint damage, is as a result of her negligent treatment of the vehicle. I am not in a position to determine the extent to which B is responsible for any such damage. However, even if I could determine this, it would not be a matter in respect of which this Tribunal has any jurisdiction. Any claim against B in respect of these matters would need to be brought in a different forum.

Issue three: What, if anything, is the appropriate remedy?

[48] As stated above, when a contract is cancelled by any party, the Tribunal may, “if it is just and practicable to do so”, make an order granting relief including to “direct a party to pay to any other party the sum that the [Tribunal] thinks just ...”[15] I have found that the contract between B and Archibalds did not require B to pay Archibalds any money. That is my finding in the light of the contextual material produced to the Tribunal which made it clear that the vehicle was intended to be a gift and that all of its purchase price was intended to have been paid by the time the vehicle was delivered.
[49] Furthermore, I consider that Archibalds’ delay in realising it had not been paid was the result of its extraordinarily lax accounting processes in this instance. As soon as B realised that Archibalds had not been paid for the vehicle, she willingly agreed to give it back. I have not seen any evidence that B was aware that Archibalds had been defrauded by Mr Reid before March 2020.
[50] I do not consider it is “just” to order B to make any payment to Archibalds in light of the factors outlined above.

Conclusion

[51] Accordingly, in my view it is not just and practicable to make any order against B under s 43 of the Contract and Commercial Law Act.
[52] It follows that Archibalds’ application is dismissed.

J S McHerron
Adjudicator

[1] Motor Vehicle Sales Act 2003, sch 1, cl 9A.

[2] There is a right of appeal from decisions of the Tribunal, as provided in cl 16 of sch 1 of the Motor Vehicle Sales Act 2003.

[3] Motor Vehicle Sales Act 2003, ss 89(1)(a)(iii), 89(1)(b)(iv).

[4] Contract and Commercial Law Act 2017, s 36.

[5] Bromley Industries Ltd v Martin and Judith Fitzsimons Ltd [2009] NZCA 382 at [24].

[6] Contract and Commercial Law Act 2017, s 41(2).

[7] Contract and Commercial Law Act 2017, s 41(2). In Car and Universal Finance Co Ltd v Caldwell [1965] 1 QB 525 the purchaser of a car, whose cheque bounced, disappeared. The vendor informed the AA and the Police and requested them to look out for the car. It was held that this was a sufficient rescission of the contract.

[8] Motor Vehicle Sales Act 2003, s 89(1)(b)(iv).

[9] Section 35 relates to damages for misrepresentation and is not relevant in the present case.

[10] Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [61].

[11] Firm PI 1 Ltd v Zurich Australian Insurance Ltd, above n 10, at [61].

[12] Firm PI 1 Ltd v Zurich Australian Insurance Ltd, above n 10, at [61] citing Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [4], [23], [64] and [151].

[13] Firm PI 1 Ltd v Zurich Australian Insurance Ltd (above n 10) at [60].

[14] Firm PI 1 Ltd v Zurich Australian Insurance Ltd, above n 10, at [61] citing Bank of Credit and Commerce International SA v Ali [2001] UKHL 8, [2002] 1 AC 251 at [39] per Lord Hoffmann.

[15] Contract and Commercial Law Act 2017, s 43(3)(a).