Joden Finance Limited v Auckland District Court
[2021] NZHC 823
•19 April 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-1061
[2020] NZHC 823
IN THE MATTER of an application for judicial review UNDER
The Judicial Review Procedure Act 2016
BETWEEN
JODEN FINANCE LIMITED
Applicant
AND
THE AUCKLAND DISTRICT COURT
First Respondent SANHACHAI PRERSSILP
Second Respondent
Hearing: 8 December 2020 Counsel:
D Beard for applicant
A Fuiava for second respondent
Judgment:
19 April 2021
JUDGMENT OF KATZ J
This judgment was delivered by me on 19 April 2021 at 3:00pm pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors:Denham Bramwell Lawyers, Manukau Legal Street, Auckland
JODEN FINANCE LTD v THE AUCKLAND DISTRICT COURT & PRERSSILP [2020] NZHC 823 [19 April 2021]
Introduction
[1] Joden Finance Ltd (“Joden”) seeks judicial review of a District Court decision1 upholding a decision of the Motor Vehicle Disputes Tribunal (“the Tribunal”)2.
[2] The underlying dispute is between Joden and the second respondent, Sanhachai Prerssilp. It relates to a Mercedes Benz S350 motor vehicle that Mr Prerssilp purchased from Joden. The Tribunal found that the vehicle failed to comply with the guarantee of acceptable quality in s 6(1) of the Consumer Guarantees Act 1993 (the “Act”). In particular, the vehicle had faults with its cooling, air bag, anti-lock braking and electronic stability control systems.
[3] The Tribunal found that Mr Prerssilp was entitled to reject the vehicle. Judge G M Harrison, in the District Court at Auckland, upheld that decision on appeal. There is no further right of appeal.3 Instead, Joden seeks judicial review of the District Court decision on the grounds that:
(a)The Judge erred in finding that the right to reject goods under s 20(1)(c) of the Act was not lost if the purchaser caused minor damage to the goods after delivery for reasons not related to their state or condition at the time of supply.
(b)The Judge erred in finding that the damage caused to the vehicle by Mr Prerssilp was minor.
(c)The Judge erred in finding that the damage was consistent with ordinary wear and tear.
(d)The Judge erred by failing to take into consideration that the damage was caused by Mr Prerssilp’s parking accident and it is unreasonable to find that damage caused by a parking accident is consistent with ordinary wear and tear.
1 Joden Finance Ltd v Prersslip [2020] NZDC 12239.
2 Prersslip v Joden Finance Ltd [2019] NZMVDT 185.
3 Motor Vehicle Sales Act 2003, sch 1 cl 16 provides that any decision by the District Court on appeal from the Motor Vehicle Disputes Tribunal is final. Although, cl 16(6) preserves the right to seek judicial review.
Mr Prerssilp’s purchase of the vehicle and the discovery of faults
[4] Eleven days after Mr Prerssilp had purchased the car, a leak in the cooling system became apparent. Joden repaired the car. Shortly afterwards, the same issue reappeared. Joden repaired the car for a second time. Immediately after Mr Prerssilp had picked it up, the cooling system leaked again.
[5] The car also had a range of other faults. Specifically, warning lights were on for the airbags, the electronic stability control system, and the anti-lock braking system.
[6] Mr Prerssilp invoked his right under the Act to reject the vehicle. Joden refused to accept that rejection.
The Consumer Guarantees Act 1993
[7] The purpose of the Act is to contribute to a trading environment in which the interests of consumers are protected, businesses compete effectively, and consumers and businesses participate confidently.4 To this end, the Act relevantly provides that consumers have:5
(a)certain guarantees when acquiring goods or services from a supplier, including that goods are reasonably safe and fit for purpose and are otherwise of an acceptable quality; and
(b)certain rights of redress against suppliers if goods fail to comply with a guarantee.
[8] The Act therefore has a strong consumer protection focus. Section 6 of the Act provides that where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality. Section 7 defines “acceptable quality” as meaning that the relevant goods are as fit for all the purposes for which they would be commonly supplied, acceptable in appearance and finish, free from minor defects,
4 Consumer Guarantees Act 1993, s 1A(1).
5 Section 1A(2).
safe, and durable, as a reasonable consumer would regard as acceptable having regard to the nature of the goods and the conditions of the sale.
[9] Where goods do not meet the guarantee of acceptable quality, a consumer can require the supplier to fix the problem.6 Where the supplier fails to fix the problem or the problem either cannot be fixed or is of a substantial character, the consumer can reject the goods.7 A failure to comply with the guarantee of acceptable quality will be of a substantial character where, among other things, the goods are unsafe. A consumer who rejects goods can elect either a full refund or replacement goods, if replacements are reasonably available to the supplier.8
[10] Section 20 sets out the circumstances in which the right to reject goods may be lost.
Decision of the Motor Vehicle Disputes Tribunal
[11] As Joden did not accept Mr Prerssilp’s rejection of the vehicle, the case went to the Tribunal. The Tribunal held that the vehicle was not of acceptable quality, and hence Mr Prerssilp had a right to reject it.9 Joden had not succeeded in repairing the vehicle's cooling system or any of the other issues within a reasonable time, as required by s 18(2)(b) of the Act. The Tribunal also found that the presence of the warning lights was a failure of substantial character, as they related to the safety of the vehicle. Either of these matters entitled Mr Prerssilp to reject the vehicle.
[12] The Tribunal considered whether Mr Prerssilp had lost his right to reject the vehicle pursuant to s 20(1)(c) of the Act, which provides that the right of rejection will be lost if:
…the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply.
6 Consumer Guarantees Act 1993, s 18(2)(a)
7 Section 18(3)(a). Rejection of the goods must be done in accordance with s 22 and is subject to the s 20 exceptions whereby the right to reject goods may be lost.
8 Section 23.
9 Prerssilp v Joden Finance Ltd [2019] NZMVDT 185.
[13] Mr Prerssilp admitted that he had hit the kerb while parking the car. This impact had caused damage to the left rear wheel, including a flat tire. Joden alleged that there was also damage to the panel work above the damaged wheel. Mr Prerssilp denied this. After reviewing the photographic evidence, the Tribunal was not persuaded that there was damage to the panel work. In its view there was no damage to the vehicle that required any repairs other than normal wear and tear. This was not substantial enough to qualify as “damage” within the meaning of the Act. Mr Prerssilp had accordingly not lost his right to reject the car.
District Court Appeal
[14] Joden appealed to the District Court. As is apparent from Joden’s notice of appeal, its written submissions on appeal, Judge Harrison’s interlocutory judgment declining leave to Joden to adduce fresh evidence10 and Judge Harrison’s substantive decision,11 Joden’s appeal was advanced on a narrow basis.
[15] Joden was represented at both the Tribunal hearing and in the District Court appeal by its director, Mr Murphy. The sole ground of appeal advanced by Mr Murphy was that the Tribunal had erred in its interpretation of s 20(1)(c). Joden’s position was that s 20(1)(c) did not specify that a particular level of damage had to occur in order for a purchaser to lose their right of rejection. Rather, the section envisages that any damage caused after delivery to the consumer, for reasons not related to the state or condition of the goods at the time of supply, would result in the loss of the consumer’s right of rejection. As the Tribunal had found there was damage to the vehicle, Mr Murphy argued, s 20(1)(c) was engaged and the right of rejection was lost.
[16] Given its focus on this statutory interpretation issue, Joden did not appeal the Tribunal’s factual findings. On the contrary, it relied on those findings to establish that the vehicle had been damaged post-delivery to Mr Prerssilp (and hence, on Joden’s interpretation of s 20(1)(c), the right of rejection had been lost).
10 Joden Finance Ltd v Prersslip [2020] NZDC 2628.
11 Joden Finance Ltd v Prersslip [2020] NZDC 12239.
[17] Joden could, of course, have advanced alternative grounds of appeal. First, that the Tribunal had erred in its interpretation of s 20(1)(c). Alternatively, that the damage to the vehicle was significantly more substantial than that found by the Tribunal and that the right of rejection was therefore lost even on the Tribunal’s interpretation of s 20(1)(c). Joden focussed solely, however, on the first argument.
[18] Nevertheless, Joden applied to admit fresh evidence on appeal. That evidence comprised photographs which Mr Murphy submitted showed a greater degree of damage to the vehicle than the photos that had been before the Tribunal. Judge Harrison, who heard the application, acknowledged that “on the face of it” the further evidence could be relevant to the right of the purchaser to reject the vehicle (presumably on the basis of the alternative argument in [17] above). The Judge recorded, however, that: 12
…Mr Murphy says that is not his case. His case is that the Tribunal’s decision as it stands is wrong by reason of the finding of the Tribunal that the damage referred to in evidence by the Tribunal is sufficient to warrant the application of s 20(1)(c) of the Act.
That being the case, there is no basis upon which any further evidence should be called at the hearing of the appeal.
[19] Joden maintained its singular focus on the statutory interpretation argument at the District Court appeal hearing. In its written submissions, Joden referred to three decisions of the Tribunal (all decided by Mr B R Carter) in support of its submission that any damage, no matter how minor, would result in the loss of the right to reject a vehicle.13 Mr Murphy submitted that those decisions were determinative:
[I]f there is a finding on the facts that the purchaser has caused damage to the vehicle, even minor damage, that was caused after delivery for reasons not related to their state or condition at the time of supply, then the right to reject the vehicle is lost by virtue of s 20(1)(c) of the Act. As the [Tribunal] has said, there is no discretion, it has no option but to decline any application to reject the vehicle if s 20(1)(c) applies.
(Emphasis as per original)
12 Joden Finance Ltd v Prerssilp [2020] NZDC 2628 at [3]-[4].
13 Mitchell v Tradin Post Ltd [2019] NZMVDT 293; Pou v Harvey [2019] NZMVDT 246; and
Wright v Fortis Panmure Ltd [2018] NZMVDT 159.
[20] Judge Harrison dismissed Joden’s appeal.14 He noted that in two other decisions in which Mr Carter had been the arbitrator, he had not viewed the interpretation of s 20(1)(c) in such absolute terms, and had instead asked whether or not the damage to the vehicle exceeded normal wear and tear.15
[21] The key issue was what “damage” in s 20 meant. Joden submitted that it meant any damage, however slight. Mr Prerssilp submitted that it meant damage that exceeded normal wear and tear. Judge Harrison noted that s 20 was only relevant if the Tribunal had already found that the goods supplied breached the guarantee of acceptable quality in the Act, and that those faults were of a substantial character. He considered that it would not be in keeping with Parliament’s intention to let s 20 operate in the manner contended for by Joden. Instead his Honour considered that the damage had to impair the value of the vehicle to such an extent that it would be unconscionable to force the supplier to accept it back. Judge Harrison noted that in this case the Tribunal had found that the damage did not exceed fair wear and tear. Mr Prerssilp had not therefore lost his right to reject the vehicle. Joden’s appeal was dismissed.
Did the Judge err in his interpretation of s 20(1)(c)?
[22] The first ground of review is that the Judge made an error of law. Mr Beard, counsel for Joden, submitted that the Judge erred in his interpretation of s 20(1)(c) of the Act. He contended for the same interpretation that Joden had advanced in the District Court, namely that any damage, however minor, will result in the purchaser’s loss of the right to reject the goods. Mr Beard emphasised that if the right to reject goods under s 20 is lost, then the other remedies in the Act still apply. A consumer would therefore not be completely without remedy.
[23] Joden cited the three Tribunal decisions it had relied on in the District Court as supporting a narrow and literal interpretation of s 20.16 Joden also cited several Australian authorities on s 262(1)(c) of the Australian Competition and Consumer
14 Joden Finance Ltd v Prerssilp [2020] NZDC 12239 at [27].
15 Singh v Spot One Ltd [2018] NZMVDT 288; and Featonby v Advantage Cars Ltd [2018] NZMVDT 248.
16 Mitchell v Tradin Post Ltd [2019] NZMVDT 293; Pou v Harvey [2019] NZMVDT 246; and
Wright v Fortis Panmure Ltd [2018] NZMVDT 159.
Act 2010 (Cth), which is nearly identical to s 20 of the Act. Those authorities, however, do not assist Joden:
(a)In LSH Auto (Sydney) Pty Ltd v Sherman the key issue related to whether repair of the damage will void s 262(1)(c) and permit the consumer to reject the goods.17 The Tribunal did not express a conclusive view and ordered a rehearing.
(b)Barton v Bridgeman is on point, but explicitly rejects Joden’s position.18 Sheridan DCJ describes it as an “unlikely construction” and observes that there is “no basis to read down the rights granted in [the relevant section]”.19
(c)Pate v Neich Holdings Pty Ltd deals with a damaged vehicle, but emphasises that the damage is exceptional, well beyond the expected level of damage for a vehicle of its age, and resultant from the non-standard use of the vehicle to transport heavy loads of firewood.20
(d)Hereford v Automobile Direct Wholesale Pty Ltd was decided based on whether the applicant could prove that the supposed breach of the Competition and Consumer Act was present at the time of sale, or instead created by heavy use of the vehicle.21 The Tribunal concluded that, in the absence of more extensive expert evidence, this could not be inferred. Section 262(1)(c) was mentioned once but the Tribunal neither analyses it nor comes to any conclusion regarding its interpretation (as relevant to the issues in this case).22
[24] In my view the interpretation of s 20(1)(c) adopted by both the Tribunal and District Court in this case accords with a purposive interpretation of the Act, given the
17 LSH Auto (Sydney) Pty Ltd v Sherman [2020] NSWCATAP 246 at [64]-[68] and [75]-[87].
18 Barton v Bridgeman [2020] QDC 16.
19 At [243]-[244].
20 Pate v Neich Holdings Pty Ltd [2018] NSWCATCD 16 at [76] and [82].
21 Hereford v Automobile Direct Wholesale Pty Ltd [2015] NSWCATCD 58 at [45]-[48].
22 At [49].
legislation’s strong consumer protection focus. It is also consistent with the overall scheme of the Act. The right to reject will only arise in limited circumstances, including:
(a)where the failure to comply with a guarantee can be remedied and the supplier refuses or neglects to do so, or does not succeed in doing so within a reasonable time; or
(b)the failure cannot be remedied or is of a substantial character (which includes goods that are unsafe).
[25] In many cases it will take some time for a fault to become apparent. Some use will generally be necessary to uncover the kind of faults that the Act is intended to guard against. After all, if the faults were apparent before the product was used, presumably the consumer would not have bought it. Almost all use of a product, however, will cause some wear and tear damage.
[26] Further, in many cases (as was the case here) one or more attempts may be made to remedy the fault. It may not be until sometime after the goods have been returned to the customer that it becomes apparent that the fault has not been remedied. It is reasonable to assume that during those periods the goods will continue to be used by the consumer for their intended purpose.
[27] Interpreting s 20 to mean that a consumer loses their right to reject a product if there is any damage (including damage resulting from fair wear and tear) would result in the right of rejection becoming an ineffective remedy in many cases. That cannot have been the intention of Parliament, given the consumer protection focus of the legislation. If Parliament had intended that goods could only be returned in new or pristine condition, free from any damage caused by fair wear and tear, then it would presumably have provided for an immediate right of rejection where a statutory guarantee has been breached. Instead, however, Parliament has structured the Act so that the right of rejection will, in many cases, be a remedy of last resort. Parliament must have envisaged the likelihood of fair wear and tear occurring during the period between sale of a consumer product and its eventual rejection (possibly following one or more attempts to repair it).
[28] Mr Beard submitted that interpreting the Act so as to allow purchasers to reject damaged goods (even if the damage is only minor damage associated with fair wear and tear) would lead to undesirable social outcomes, by forcing suppliers to absorb the cost of damaged goods. In my view this is not an undesirable social outcome, but is the outcome intended by the Act. A careful balance is struck between the rights of suppliers and the rights of consumers, as evidenced by the limited scope of the right to reject goods. It is only in fairly narrowly defined circumstances, such as where a defect cannot be remedied, is of a substantial nature, or remedial attempts have failed, that a right to reject arises. Further, s 20(1)(c) still operates to divest consumers of the right to reject goods where the damage is more than minor/fair wear and tear. Suppliers do not have to absorb the cost unfairly if consumers have caused significant damage to goods.
[29] In conclusion, the Tribunal and the District Court were correct to reject Joden’s submission that any damage to the goods after delivery to the consumer, no matter how minor, will result in the consumer’s loss of the right to reject the goods. Interpreted purposively, and consistently with the scheme of the Act as a whole, s 20(1)(c) requires that minor damage to goods, such as that associated with fair wear and tear, will not result in the purchaser losing his or her right to reject the goods.
Did the Judge make one or more errors of fact?
[30] The other three grounds of review (set out at [3](b), (c) and (d) above) all raise alleged errors of fact.
[31] There is no second right of appeal from a decision of the Tribunal. It is presumably for that reason that Joden brought this judicial review proceeding. This proceeding is not, however, a second appeal. Judicial review is generally concerned with the processes of decision-making rather than the merits of the decision itself,23 and where there are reasonable grounds for the decision there is no authority to intervene.24 It is possible for a decision-maker to have a number of different decisions
23 R v Sloan [1990] 1 NZLR 474 (HC) at 479.
24 Progressive Enterprises v North Shore City Council [2006] NZRMA 72, (2005) 11 ELRNZ 421 (HC) at [71].
reasonably open to it, but there may (though rarely) be intervention in the case of an objectively verified and material factual mistake on the face of the decision.25
[32] The fundamental difficulty for Joden’s remaining grounds of review is that the District Court was not required to make any factual findings and did not do so. Because Joden’s sole ground of appeal in the District Court was error of law (as I have explained above) it was not necessary for Joden to challenge the factual findings of the Tribunal. The Judge, accordingly, simply adopted the Tribunal’s factual findings and focussed on the legal issue, which concerned the correct interpretation of s 20(1)(c). Therefore, Joden is now (belatedly) seeking to challenge factual findings of the Tribunal, in circumstances where it failed to challenge those factual findings in the District Court.
[33] Joden has now exhausted its right of appeal against the Tribunal’s decision. It cannot now challenge factual findings of the Tribunal that it could have challenged in the District Court but chose not to. Nor is it open to Joden to argue that the Judge made an error of fact in relation to a matter that was not before him for determination.
[34] It necessarily follows that there is no merit in the three grounds of review that are based on alleged factual errors on the part of the Judge.
[35] For the same reasons, the Judge was correct to conclude that the further evidence that Joden sought to admit for the purposes of the appeal (relating to the extent of damage to the vehicle) was inadmissible. It was simply not relevant to the issues on appeal (being the correct interpretation of s 20(1)(c) of the Act).
[36] The further affidavit evidence Joden sought to admit for the purposes of this proceeding, which was also directed to the extent of damage to the vehicle, is similarly inadmissible on relevance grounds. It is not addressed to an issue that is in dispute in this proceeding. Further, Mr Keen, who purports to be an “expert in forensic photo analysis” has no formal qualifications in photo analysis but rather relies on his experience in producing videos for his YouTube channel. I am not satisfied, based on
25 Progressive Enterprises v North Shore City Council [2006] NZRMA 72, (2005) 11 ELRNZ 421 (HC) at [71]; and Re Erebus Royal Commission at [1983] 1 NZLR 662 (PC) at 671 and 681. See also Murphy v District Court at Auckland HC Auckland CIV-2010-404-2015, 6 May 2011 at [16].
his affidavit, that he has the requisite qualifications to demonstrate specific expertise or skill in the area of photo manipulation. In addition, his affidavit fails to comply with the High Court Rules as he does not state that he has read the code of conduct for expert witnesses and agrees to comply with that code. Finally, Mr Keen appears to lack the necessary independence, having apparently participated in the Tribunal process as Mr Murphy’s support person.
Conclusion
[37] In conclusion, the Judge did not err in law in his interpretation of s 20(1)(c) of the Act. He was right to reject Joden’s submission that, correctly interpreted, s 20(1)(c) requires that any damage, however minor, will result in the purchaser’s loss of the right to reject the goods. Interpreted purposively, and consistently with the scheme of the Act as a whole, s 20(1)(c) requires that minor damage to goods, such as that associated with fair wear and tear, will not result in the purchaser losing his or her right to reject the goods.
[38] The remaining grounds of review, which all allege factual errors on the part of the Judge, are misconceived. They overlook that the Judge was not required to make any findings of fact. He simply adopted the Tribunal’s findings of fact, which were not challenged on appeal by Joden.
Result
[39]The application for judicial review is dismissed.
[40] My preliminary view is that, as the successful party, Mr Prerssilp should be entitled to an award of costs on a 2B scale basis. If counsel are unable to agree costs based on this indication, then leave is reserved to file memoranda. Any memorandum on behalf of Mr Prerssilp is to be filed by 3 May 2021. Any memorandum on behalf of Joden is to be filed by 17 May 2021.
Katz J
0
3
1