Cairns Pty Ltd v Fleetman Pty Ltd
[2004] FMCA 644
•24 September 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CAIRNS PTY LTD v FLEETMAN PTY LTD & ANOR | [2004] FMCA 644 |
| TRADE PRACTICES – Misleading and deceptive conduct – silence – motor vehicle – model year – whether current year model – failure to inform buyer that vehicle was previous year model – damages. |
Trade Practices Act 1974 (Cth), s.52
Motor Vehicle Standards Act 1989 (Cth)
Franklin Motors Pty Ltd v Piano (1999) SASC 476
Campomar v Nike International (2000) 202 CLR 45
Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Demagogue Pty Ltd v Ramenski (1992) 39 FCR 31
Kenny & Good Pty Ltd v MGICA (1992) Ltd (1997) 77 FCR 307
| Applicant: | CAIRNS PTY LTD |
| Respondents: | FLEETMAN PTY LTD and ESANDA FINANCE CORPORATION LIMITED |
| File No: | WZ 268 of 2002 |
| Delivered on: | 24 September 2004 |
| Delivered at: | Perth |
| Hearing Dates: | 29 April & 30 May 2003 |
| Judgment of: | McInnis FM |
REPRESENTATION
| Counsel for the Applicant: | Mr P Quinlan |
| Solicitors for the Applicant: | Arns & Associates |
| Counsel for the First Respondent: | Mr J Curthoys |
| Solicitors for the First Respondent: | Lynette P Quinlivan |
| Second Respondent: | Leave to discontinue granted |
ORDERS
It is declared that the Respondent has engaged in misleading and deceptive conduct in relation to the sale of the vehicle.
The Respondent shall pay the Applicant damages assessed in the sum of $9,800.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
WZ 268 of 2002
| CAIRNS PTY LTD |
Applicant
And
| FLEETMAN PTY LTD AND ESANDA FINANCE COPORATION LIMITED |
Respondents
REASONS FOR JUDGMENT
In this application Cairns Pty Ltd (the Applicant) by an application filed on 23 December 2002 initially made claims against Fleetman Pty Ltd (the First Respondent) and Esanda Finance Corporation Limited (the Second Respondent) and relied upon alleged breaches of s.52 of the Trade Practices Act 1974 (Cth) (“the Act”).
The proceedings against the Second Respondent were discontinued by leave granted on 29 April 2003 with no order as to costs. A Cross-claim by the Second Respondent against the First Respondent was also the subject of leave to discontinue with no order as to costs in the Cross-claim between the Second Respondent and the First Respondent. Hence, the remaining dispute before the Court was the claim by the Applicant against the First Respondent. That claim arises from the purchase by the Applicant of a Saab 9-5 Griffin motor vehicle (the vehicle) purchased from the First Respondent on 3 October 2001.
At all material times Mr Lee Kerryn Robinson was a director of the Applicant and on its behalf had entered into an agreement to purchase the vehicle. At the same time that the agreement to purchase the vehicle was executed the Applicant through Mr Robinson further entered into a finance agreement with the Second Respondent.
By a contract to purchase the vehicle dated 3 October 2001 (the contract) it was agreed between the Applicant and the First Respondent that the Applicant would purchase the vehicle for the sum of $88,931.00.
The finance agreement to which reference has been made between the Applicant and the Second Respondent was in the nature of a written chattel mortgage dated 5 October 2001 (the finance agreement) whereby the Second Respondent provided finance to the Applicant for the purchase of the vehicle. The total amount repayable pursuant to the finance agreement was $112,847.00 comprising the following:-
Purchase price $88,931.00
Contract charges $203.00
Stamp duty$305.50
Interest$23,407.50
The essence of the dispute is relatively simple. Mr Robinson claims that the purchase of the vehicle occurred in circumstances where it was his understanding that the vehicle was a 2001 model namely the most recent model at the time of purchase.
It is specifically pleaded that prior to the execution of the contract and the finance agreement by the Applicant, the Respondent had represented to the Applicant that the vehicle was a new Saab 9-5 Griffin. The representation by the First Respondent had been made allegedly during the course of discussions between Mr Robinson and the Sales Manager of the First Respondent. In brief terms it is claimed by the Applicant in the alternative there was an implied representation to the Applicant that the vehicle was the most recent model Saab 9-5 Griffin available to purchase on the market as at
3 October 2001 and that the vehicle had not been superseded by a more recent model Saab 9-5 Griffin. The claim arises in circumstances where the Applicant asserts that in fact the vehicle was a 2000 model Griffin vehicle which had been built in September 1999. Indeed it is the case that on the pleadings there is no dispute that the vehicle was in fact a 2000 model. The Applicant’s claim is that Mr Robinson had not been told that the vehicle was a 2000 model or that it had been superseded by a later model.
It is not disputed that at the time of purchase of the vehicle that the Applicant already owned a 1999 model Saab 9-5 and he claimed to be satisfied with its performance. The Applicant’s complaint is that at no time had it been suggested that the vehicle which had been offered by the First Respondent was a 2000 model.
There is also no dispute that the compliance plate on the vehicle bears a date “01” which was asserted in the evidence by the Applicant to simply be the date of assessment of the vehicle as complying with standards under the Motor Vehicle Standards Act 1989 (Cth). That information was claimed by the Applicant to not identify the model of the vehicle and in any event the main thrust of the case by the Applicant was that the meaning of the date should be assessed from the perspective of a reasonable consumer and not by reference to a person with knowledge of some particular trade practice (see Franklin Motors Pty Ltd v Piano (1999) SASC 476 at [9]; Campomar v Nike International (2000) 202 CLR 45 at 103). It was further argued that in the absence of some explanation a mere reference to a date of the compliance plate on the vehicle where the date differs from the built date may in itself constitute misleading or deceptive conduct.
The claim was based upon express representation that the vehicle was a new black Saab 9-5 Griffin or in the alterative implied representations that the vehicle was the most recent model available to purchase on the market as at 3 October 2003 and had not been superseded by a more recent model as indicated earlier. A further claim was based on what were described as undisclosed facts namely that the vehicle was a 2000 model Saab 9-5 Griffin, that it was not the most recent model available for purchase as at 3 October 2001 and that it had been superseded by a more recent model as at 3 October 2001 (the undisclosed facts). Hence, the claim was based upon express and/or implied representations and/or undisclosed facts all of which it was claimed caused the Applicant through Mr Robinson to be induced to enter into the contract and the finance agreement and to trade in his current vehicle to the Respondent, all of which would not have occurred but for the failure of the First Respondent to disclose those matters referred to earlier in this judgment.
It was claimed that the First Respondent’s conduct was misleading or deceptive or was likely to mislead or deceive in contravention of s.52 of the Trade Practices Act.
The Applicant gave the First Respondent notice that it had elected to rescind the contract and purported to do so on 17 December 2002 though it is further claimed that despite the notice of rescission the Applicant in order to mitigate its loss retained possession of the vehicle and continued to make monthly payments to the Second Respondent arising out of the finance agreement.
A further claim arising out of the chronology of events was made against the First Respondent for negligent mis-statement.
The loss and damage likely to be suffered by the Applicant is claimed to be the difference between the price paid for the vehicle and the true value of the vehicle. Whilst recognising that a new car would depreciate without any use the second it is driven out of the car dealership or car yard, it was otherwise asserted by the Applicant that as a matter of importance the degree of depreciation will be markedly more by reason of the model year of the car with different models representing different re-sale value.
The First Respondent in its defence claimed that Mr Robinson had been expressly informed by a Mr Gregory Weston-Arnold of the First Respondent that the vehicle was a demonstration car and had further been informed by Gareth John Hughes of the First Respondent that it was a 2000 model. The First Respondent otherwise denies the allegations made against it by the Applicant.
Relevant law
It is useful to note that in deciding whether there has been misleading or deceptive conduct an objective assessment needs to be made of all the facts and circumstances in their context (see Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177). Misleading and deceptive conduct may include silence as to particular facts. In Demagogue Pty Ltd v Ramenski (1992) 39 FCR 31 Black CJ stated the following at page 32,
“Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or likely to mislead or deceive. To speak of ‘mere silence’ or of a duty of disclosure can divert attention from that primary question. Although ‘mere silence’ is a convenient way of describing some fact situations, there is in truth no such thing as ‘mere silence’ because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed.”
Applicant’s evidence
Mr Lee Kerryn Robinson gave evidence on behalf of the Applicant and adopted affidavits sworn by him on 2 April 2003 and 17 April 2003. Mr Robinson at all material times as director of the Applicant gave evidence that he is a real estate agent and principal licensee of the Applicant which is a real estate company. He claimed to have had an interest in all types of luxury cars in the past and has owned various models. In April 1999 the Applicant purchased a 1999 Saab 9-5 (the first vehicle) from the First Respondent. The first vehicle was unreliable and broke down he claims on three separate occasions between April 1999 and October 2001. On 3 October 2001 he attended the First Respondent’s premises and after discussing the problems with the first vehicle and discussing its unreliability he was referred to a sales manager of the First Respondent namely Mr Gareth Hughes. It is relevant to set out the following paragraph from the first affidavit of Mr Robinson where he states at paragraph 8:
“I told Mr Hughes that I was not happy with the first vehicle because of the problems I was experiencing with it and that I would take my business elsewhere and buy a different brand of vehicle. He said to me words to the effect that he could “put me into” a new black Saab 9-5 Griffin V6 which was a demonstration model (‘second vehicle’). He said to me that the owner of the dealership, Brian Gardner, had been using this vehicle since March 2001 as his personal transport.”
Further in his affidavit Mr Robinson claims that from that discussion he understood “that the vehicle I would be shown was at that time a current 2001 Saab 9-5 Griffin demonstration model”.
Mr Robinson claims that he did not examine either the manufacture plate nor compliance plate on the vehicle which he had test driven and ultimately purchased. He was not told that the vehicle that he had purchased was not the current model and nor told by any representatives of the First Respondent that in fact the vehicle was a 2000 model. He was only shown one car on the day of purchase namely the vehicle which was ultimately the subject of the purchase agreement. The purchase agreement provides details of the vehicle as follows:-
COMPLIANCE PLATE
MTH/YEAR
MAKE & MODEL
TRANS/ENG
VEHICLE COLOR
TRIM COLOR
01
SAAB GRIFFIN
AUTO
BLACK
BRYCE
A finance agreement was entered into with Esanda Finance and in the chattel mortgage agreement dated 5 October 2001 the description of the goods appears to be in part the following:-
“1. 9-5 Griffin MYO1 sedan”
In both the contract of purchase and the chattel mortgage agreement the vehicle is referred to as a “new” vehicle.
According to Mr Robinson he was under the impression from his discussions with Hughes that the vehicle was a current 2001 demonstration model. He claimed that at no time was he told that it was not a current 2001 model or that it was a superseded model. He took possession of the vehicle on 5 October 2001 on behalf of the Applicant and used it as an every day car.
In early 2002 the Applicant purchased a Mercedes Benz motor vehicle from another car dealership. During the course of completing that purchase a suggestion was made that he might trade in the vehicle he had purchased from the First Respondent for a new Mercedes. He claims that at that time he was told that the vehicle was not a 2001 model as the manufacturers plate build date suggested it was built in September 1999. He claimed to be told that the trade in value of the vehicle was $48,000. He claims to have been shocked to find out that it was not a 2001 model and states that if he had known it was not a current 2001 model he would not have entered into the contract to purchase it. Mr Robinson became further dissatisfied upon receiving details of an amount which may be offered as a trade in of the vehicle on another Saab vehicle and expressed dissatisfaction with the value which he believed was less than if the vehicle had been a 2001 model as he claimed had been the subject of misrepresentations by the First Respondent. In correspondence to the First Respondent dated 26 July 2001 Mr Robinson relevantly states the following after referring to what he describes as unsatisfactory valuations of the vehicle:-
“The valuers at both firms are not being very generous ($48,000 mark) and claim that the Griffin is a dud because its build date is 9/99 while the compliance plate is 01/01 and it is therefore not a current model. The Griffin seems to have been in a black hole for 17 months. Although I paid the 2001 price it looks like I am being penalised for this build date discrepancy.”
Mr Robinson also raised a complaint by letter dated 29 July 2002 with Saab Automobile Australia Pty Ltd and received a response from Saab by letter dated 30 July 2002 which in part states the following:-
“We advise that Saab designate ‘model year’ according to the vehicle chassis number and your vehicle is a 2000 model irrespective of the build date. As you can appreciate, we manufacture vehicles prior to the commencement of the model year so they are available from 1 January.
Any irregularities in the representation of the age of a vehicle made by a dealership at the time of purchase are out of our control, and unfortunately you would need to address this issue with our authorised dealer.”
Mr Robinson does not dispute that at the time he purchased the vehicle he knew it was a demonstration model though claims he believed it to be a “current 2001 model because nothing was said to contrary.”
At one point Mr Robinson had claimed that there were 1200 improvement changes between the 2001 and 2000 model Saab Griffin though he accepted that that ultimately was not the case. A great deal of Court time was taken with comparing the models which I do not find necessary to recite in this judgment. It is sufficient to note and find that there was a similarity between the two models with some differences which perhaps might be more obvious to those with specialist knowledge than the ordinary consumer.
A key issue which was addressed in the evidence resulted in the following evidence from Mr Robinson:-
“Yes. What I am more interested in is what you understood you were being shown and what you believed rather than what normally ---? --- Okay. I can re-phrase in those terms. From my perspective, your Honour, by virtue of the fact that the vehicle was purported directly and represented to me as a demonstration vehicle I made the assumption, which I think in my own mind is a fair assumption, that the car would be a current model because logic would dictate that you wouldn’t have a demonstration model on your yard that was a superseded model.”
(Transcript p.17)
The following exchange occurred in further evidence:
“Why is it that you would prefer to buy the current model rather than the superseded model? --- Well, that is – there is my opinion, my perspective a two pronged answer to that. Firstly as I was buying this vehicle on behalf of my company I had a duty to the company to, obviously from a financial point of view, enter into a contract on fair terms. The fact that the vehicle was subsequently been shown to be worth less because of its age I would not have continued with the transaction on that basis purely because I would have known from my experience that there would be a financial penalty attached in valuation terms at some stage in the future when the vehicle was sold and which would then be a penalty to my company. On the other hand the other point is more vanity than anything else. I am unfortunately am a bit of a tragic when it comes to cars and I would have always liked to have the latest so the fact that it was not the latest, as it subsequently was revealed to me, was a great disappointment because I thought I was getting the latest car.
(Transcript p.17-18)
It is not in dispute that the vehicle is still currently used by the Applicant and driven by one its representatives as a company car.
During the course of cross-examination Mr Robinson stated in clear terms, “If I had been told it was 2000 model I wouldn’t have bought it”. The fact that it was a demonstrator motor vehicle did not, according to Mr Robinson’s evidence detract from his view that it would be regarded as a “new car”.
The Applicant relied upon evidence from Mr Randy Mark Hayes who had sworn an affidavit on 2 April 2003. He gave evidence of inspecting the vehicle for the purpose of valuation as a trade in on a Mercedes vehicle for the Applicant. He stated that he checked the compliance plate on the vehicle “that showed 01/01 but a much earlier build date being guided by the information given by Henley Saab. This meant it was a superseded 2000 model year vehicle not model year 2001”. As a superseded model he claimed that the value was substantially less.
The Applicant was given time to consider and then re-open the case by calling further evidence in relation to valuations from Mr Christopher Thoday who had sworn an affidavit on 16 April 2003. The hearing was then adjourned for that evidence of loss to be received some weeks later with the Respondent’s evidence being interposed.
Mr Thoday was a sales and marketing manager employed by Glass Information Services who provided a valuation and report in relation to the vehicle at the request of the Applicant’s solicitors. In his report he refers to values on a number of different dates and for three different purposes namely ‘trade low’, ‘trade’ and ‘retail’. In his evidence he explained them as follows:-
“Trade low and trade they are terminology that we use at Glass’s. The trade low is the lower price and that tends to be a wholesale price where if a vehicle is traded in at a dealership and the dealership wants to sell that vehicle straight to the trade. ‘Trade’ is where we feel a vehicle is being traded, so it is a like-on-like vehicle, a vehicle that may well be kept by the dealership and sold as a retail vehicle. The retail price is your achievable – the retail price that can be set by the dealership to sell that model.”
In the table which formed part of the report of Mr Thoday, the following details appear –
PUBLICATION DATES TRADE LOW TRADE RETAIL
Non superseded 2001model – RRP at Oct 2001 $82,900 (new)
As at October 2001 $53,400 $63,200 $72,200
As at July 2002 $51,400 $60,800 $69,400
As at April 2003 $50,900 $60,200 $68,800
Superseded 2000 model – RRP at Oct 2001 $82,886 (new)
As at October 2001 $46,100 $46,100 $62,400
As at July 2002 $44,400 $52,500 $59,900
As at April 2003 $43,900 $52,000 $59,300
Under cross-examination Mr Thoday confirmed his experiences as a valuer and involvement in dealerships and seeing cars on a weekly basis coming into a dealership. For the present purposes I accept that he is an appropriate expert able to give valuations of the kind presented to the Court.
Mr Thoday was questioned closely about the basis upon which the valuation is given and it is noted that whilst there are some difficulties in providing an assessment for a vehicle of this kind and other variables which might affect the retail price including trade-in arrangements, the Court was otherwise prepared to accept his evidence of providing some basis for the claimed loss at least on the basis of the amount paid by the Applicant for the vehicle and its value as a superseded model as at October 2001. He did explain the downward curve in the value of vehicles and by way of example the retail value of the non superseded 2001 model changed from as at October 2001 with a figure of $72,200 to as at April 2001 a value of $68,800.
Respondent’s evidence
The Respondent relied upon evidence of John Stratton Donbrose who adopted an affidavit sworn by him on 27 February 2003. Mr Donbrose gave evidence in relation to the Motor Vehicle Standards Act as he is the Manager Vehicle Standards of the Department of Planning & Infrastructure in the State of Western Australia. He confirmed the Commonwealth legislation is administered by the State and otherwise confirmed that a compliance plate on a vehicle is fitted only when the vehicle is ready for certification in Australia having been imported. The compliance plate has a date which shows the date upon which that plate was fitted but he agreed does not tell the reader anything about the date that the car was built. He confirmed however that the date on the compliance plate for the purposes of vehicle licensing is deemed to be the year of manufacture. Accordingly it is entirely appropriate for a car dealership to refer to a certified motor vehicle by its compliance plate date of manufacture and not necessarily the date on the build plate.
The Respondent then relied upon the evidence of Gareth John Hughes, a Sales Manager of the First Respondent referred to earlier in this judgment. Mr Hughes adopted an affidavit sworn by him on 15 April 2003. He recited the chronology of events and otherwise confirmed that the vehicle was a demonstration vehicle. He referred in some detail to a comparison between a 2000 and 2001 model of the Saab Griffin vehicle.
Under cross-examination he denied saying to Mr Robinson that “We can put you in a new 95 Griffin”. The following exchange of evidence is relevant:
“You raised with Mr Robinson the prospect of him trading in the car for a new 95 Griffin, didn’t you?---I think it was Mr Robinson who approached us about replacing the car.
You said ‘approached us’. What exactly was said?---I don’t recall exactly what would have been said.
Do you recall whether you raised it with him, or he raised it with you?---No, I recall being introduced to Mr Robinson by my service adviser, Mr Stuart Faulkner.
Yes, and after you were introduced to him you brought up the prospect of putting him in a new 95 Griffin?---Sorry, putting- - -
‘We can put you in a new 95 Griffin if you’re not happy with the - - -‘?--- I would never have used those words. You don’t put people in cars.
You would have referred to it as new 95 Griffin?---Correct.
This was in late 2001?----I believe so, yes.
And you knew that that car had been built in September 1999?---I wasn’t aware that it was a 99. I was aware that it was a 200 model year car.
You were aware it was 2000 model year car?---Yes.
And your knowledge of the dates on which Saab automobiles are built would suggest to you that it would have been built in 1999?---It is irrelevant. It’s a 2000 model year car. It could be built anywhere within that model year period."
Further evidence from Mr Hughes included the following:-
“And you never said to Mr Robinson that the model that he was looking at was a 2000 model?---No, I did not.
And you never said anything to him to indicate that it was a 2000 model or a superseded model?---It wasn’t a superseded model.
You’ve already told us that prior to this you had sold a more recent model of the V6 Griffin?---It’s got one if not two differences. It’s not a superseded model.”
Throughout his evidence Mr Hughes made it clear that he did not see any difference between a 2000 and 2001 model and did not believe in this case that one would get more by way of trade-in for a current model than for last year’s model. He based this upon there not being any significant differences between the two cars. Whether there is significant difference seemed to play an important part in his evidence as the following exchange reveals:-
“I suppose really what I am trying to understand is whether or not a person involved in sales you would not regard it as relevant to advise a consumer that at the time you are offering for sale what you know to be a 2000 model, there is in existence a model that can be accurately be described as a 2001?---If there was a significant difference I would feel obligated to do so.
Why do you say ‘significant difference’? That’s the part I’m trying to understand – Okay.
It is not simply a fact – what I’m really directing your mind to is just the year alone. Assuming that they are identical, that there aren’t even any differences at all, just that factor alone as an, if you like, attribute of the car. One is a 2000 year, one is a 2001. Isn’t that just simple age factor alone a relevant factor?---The instructions that we have – and this is from the Motor Trade Association – to my knowledge are that the age of the car is for the compliance plate, and if I had been directly – if you came into one of my dealerships and irrespective of where I will be working, and someone specifically asked me, ‘Gareth, when was this car built?” I would look at the build plate and tell them when the car was built. There is no point lying about it. The build plate is affixed to the engine bay of the car and you can check that every day you own the motor vehicle.”
The witness then seemed to rely upon not having a 2001 model in stock though conceded one could have been ordered which may have taken 14 weeks to deliver and it would have had an additional feature of a “parking assist”. The following exchange then occurred between the Court and the witness.
“So the existence of the availability of a 2001, do you think that might have been a relevant factor at the time of this transaction?---Well, as I said, you know, we wouldn’t introduce the fact that we could have another car ordered and a delivery of approximately three or four months if I’ve got the car that’s virtually identical and an 01 compliance, and bear in mind the car that we would order would also be an 01 compliance. No, I wouldn’t be compelled to introduce the fact that I could have made or ordered an 01 that would be virtually identical.”
The witness was then asked the following questions in further cross-examination by Counsel for the Applicant:-
“I just want to clarify that this was, of course, the demonstrator model and that was March 2001 even though the demonstrator was sold October 2001.
HIS HONOUR: Yes, you had had it – it had done, I think, about 1500 kilometres. Is that right?---Correct, yes.
Over what period of time?--- I think we would have licensed it, when did we say, March. So given the fact that the car, you know, a demonstrator and done 1500 K’s, it comes back to my argument that it would be fairly evident that the couldn’t be built in 01, given it was already three months registered when it was bought.”
Reasoning
In my view it is more likely than not that the First Respondent’s representative did say something like, ‘We can put you into a new 95 Griffin’. It was clear that the vehicle was presented as a demonstrator vehicle and in all the documentation was to be regarded as a “new” vehicle.
I further find that the transaction having occurred in October 2001 that it would be reasonable for a consumer to infer that the vehicle being purchased was a current model of that vehicle, that is a 2001 model vehicle and not a 2000 model.
Although the demonstrator vehicle had been registered since March 2001 and although as I find that factor was then known at the time of the transaction to the purchaser who had negotiated the purchase in October 2001, I am satisfied that a reasonable inference drawn by the purchaser would be that he was buying on behalf of his company a current 2001 model.
It is true in the present case that the Respondent at no stage represented that the vehicle was a current 2001 model. That then raises the issue of whether or not silence having regard to an objective assessment of all the facts and circumstances in context in this case could have of itself provided a basis upon which the Court may conclude that the Respondent is guilty of conduct which is misleading or deceptive or likely to mislead or deceive.
Applying the authority of Black CJ in Demagogue v Ramenski referred to in submissions by both counsel, I am satisfied in the present case that in the context of this transaction there would be a reasonable expectation that the knowledge in the mind of the vendor that this was a 2000 model should have been disclosed to the purchaser when purchasing the vehicle which by inferences I have found would be thought to be a current model of that year. A demonstrator model in my view by implication would be a demonstrator model of the current year.
Whilst I accept that there is no substantial variation between a 2000 and 2001 model, I do accept the evidence of Mr Thoday that there are significant variations in either the trade-in value or depreciation of vehicles depending on the year of manufacture. Whilst accepting that the vendor can legitimately claim this vehicle to be a 2000 model despite it having being built in 1999, that still means that any purchaser of that vehicle upon re-sale would be required to disclose that it is a 2000 model and not a 2001 model or current year model as at the date of purchase in October 2001.
I further accept that in this case there had not been an express reference to the model as was the case in the Franklin Motors Pty Ltd decision. Nevertheless I am satisfied based upon the findings of fact which I have made that the silence in this instance of the First Respondent through its representative Mr Hughes of the true model year of this vehicle does for the reasons outlined constitute misleading and deceptive conduct. When seeking to sell what is described as a demonstrator model, in my view a reasonable inference to be drawn by a consumer is that it is a demonstrator model of the current year unless otherwise advised and that consumers ought properly to be advised of the fact as it is clear to me and I find that the model year will have a significant impact upon the re-sale value and depreciation of a motor vehicle.
I am satisfied and further find on the evidence of Mr Robinson that had he been advised that this was a 2000 model and not a current 2001 model that he would not have purchased the vehicle on behalf of his company. I am further satisfied that he relied upon the representations made that he would be purchasing a new vehicle and was entitled to infer that it would be a current 2001 model. The silence by the Respondent’s representative in my view having regard to the authorities to which I have referred constitutes misleading and deceptive conduct of a kind which would constitute a breach of s.52 of the Trade Practices Act. I am satisfied that he would not have entered into the contract had he known the vehicle was a 2000 model.
It is noted that the Applicant does not seek rescission of the contract but does seek damages for loss and damage arising from the misleading or deceptive conduct. Specifically it is noted that apart from seeking a declaration that the First Respondent has engaged in misleading and deceptive conduct, the Applicant submits that this is a clear case for an award of damages. The loss and damage suffered it was submitted is primarily the difference between the price paid for the vehicle and the true value of the vehicle (see Kenny & Good Pty Ltd v MGICA (1992) Ltd (1997) 77 FCR 307.
The Court was urged to award to damages on the basis of the evidence of Mr Thoday as to the value of a 2000 and 2001 model. Whilst I accept Mr Thoday’s expertise I am not convinced that the appropriate valuation is to simply compare the price paid and the true value of the vehicle.
It seems to me that in the absence of substantial differences between the vehicles although technically a 2001 model supersedes a 2000 model that the Court in the exercise of its discretion in relation to damages should more appropriately make an assessment based not on the amount paid for the vehicle but rather the difference between the retail value of a current model 2001 compared with what is described as a superseded 2000 model. On Mr Thoday’s evidence that means comparing the non superseded 2000 model as at October 2001 of $72,200 with the superseded 2000 model as at the same date of $62,400 being a difference of $9,800. Whether the Applicant paid more than the retail value of the new model given the slight variation between the recommended retain price for both vehicles as at October 2001 in my view is not relevant in the present case. What is relevant is the variation in retail values of the two models and I do not regard it as necessary to assess and take into account any further the relevant kilometres travelled by the demonstrator model when purchased even though I accept that the assessment of damage requires a somewhat robust approach in a matter of this kind.
In the exercise of the Court’s discretion I am satisfied therefore that the appropriate amount of damages is $9,800. I have considered other items of damage claimed by the Applicant which include additional stamp duty, additional luxury, additional depreciation, additional borrowing costs, additional insurance premiums and additional warranty plans. Although there is evidence in relation to each and every one of those items it seems to me that there is some artificiality in the claim for damages in relation those items particularly in circumstances where the vehicle continues to be used by the Applicant and where the Court is entitled to infer that as a company vehicle many of those items would have been the subject of taxation deductions. To embark upon the detailed process of determining the actual loss in those circumstances being simply a difference between the values which in any event I have not pursued would be an unrealistic process.
In all the circumstances the orders of the Court will be as follows:-
(1)It is declared that the Respondent has engaged in misleading and deceptive conduct in relation to the sale of the vehicle.
(2)The Respondent shall pay the Applicant damages assessed in the sum of $9,800.
I shall hear counsel in relation to any further orders required in this matter.
I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 24 September 2004
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