KENNY v MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT [2018] NZHC 1984

KENNY v MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT [2018] NZHC 1984 [6 August2018]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-Ā-TARA ROHECIV 2017-485-645[2018] NZHC 1984IN THE MATTER OF an application pursuant to s 3 of theDeclaratory Judgments Act 1908BETWEEN GEOFFREY BRIAN KENNYPlaintiffAND MINISTRY OF BUSINESS, INNOVATIONAND EMPLOYMENTDefendantHearing: 9 July 2018Counsel: A O'Connor for PlaintiffJ C Catran and E J Couper for DefendantJudgment: 6 August 2018JUDGMENT OF MALLON JTable of contentsIntroduction [1]The factual background [5]The MVS Act and its predecessor [20]The MVS Act [20]Motor Vehicle Dealers Act 1975 [32]Summary of the new regime [42]Finance company legislation [46]The Credit Contracts and Consumer Finance Act 2003 [46]The Financial Services Providers (Registration and Dispute Resolution) Act 2008 [51]My assessment [52]The "finance company" definition [52]The s 7 definition [55]Is Mr Kenny not a motor vehicle trader because of s 9 [59]Does Mr Kenny hold himself out as a motor vehicle trader (s 8(1)(a))? [69]Does Mr Kenny sell motor vehicles for the primary purpose of gain (s 8(1)(b))? [88]Result [99]Introduction[1] Mr Kenny is in the business of motor vehicle finance. The issue in theproceeding is whether he is also in the business of motor vehicle trading. This questionarises because Mr Kenny sells around a hundred cars a year on TradeMe when hisbusiness, MTF Lower Hutt, repossesses them pursuant to a default under the financecontract. The issue is one of statutory interpretation of the relevant provisions of theMotor Vehicle Sales Act 2003 (the MVS Act).[2] The issue is before me by way of an application under the DeclaratoryJudgments Act 1908. The defendant is the Ministry of Business, Innovation andEmployment (the Ministry). The Ministry administers the MVS Act and theMinistry's Chief Executive appoints and employs the Registrar of Motor VehicleTraders under the MVS Act. Mr Kenny and the Registrar have different views aboutwhether Mr Kenny is a motor vehicle trader and they had been corresponding aboutthat. Because Mr Kenny wishes to avoid prosecution if he is incorrect in his view, heseeks a declaration that he is not a motor vehicle trader under the MVS Act.[3] Mr Kenny contends the MVS Act makes a distinction between financecompanies and motor vehicle traders and that selling a repossessed vehicle under asecurity is finance company business and not motor vehicle trading business. He saysthat when he is selling repossessed vehicles he does not hold himself out as a registeredtrader under the MVS Act. He also says his primary purpose in selling repossessedvehicles is compliance with the Credit Contracts and Consumer Finance Act 2003 (theCCCF Act). He can obtain a better price for the vehicle than if he sells through aregistered trader and this is to the benefit of the debtor.[4] The Ministry contends that a finance company selling repossessed motorvehicles may be a motor vehicle trader depending on the circumstances. The Ministrysays Mr Kenny is a motor vehicle trader because he does not sell repossessed vehiclesthrough a trader, he holds himself as a motor vehicle trader, and his primary purposein selling repossessed vehicles is for gain (by minimising his losses).The factual background1[5] Motor Trade Finance Limited (MTF) was formed in 1970 to enable a group ofmotor vehicle dealers to offer car loans to their customers. Mr Kenny is a director ofMTF. MTF offers franchise agreements. Mr Kenny, through his company GeoffKenny Ltd holds an MTF franchise in Lower Hutt (MTF Lower Hutt). MTF LowerHutt borrows funds from MTF.[6] MTF Lower Hutt offers motor vehicle financing to consumers. Financing isavailable to assist the person to purchase a vehicle, whether from a motor vehicledealer or a private seller. MTF Lower Hutt also offers refinancing of motor vehiclesand financing for other assets (for example, boats). A consumer can apply for financeif they are over 18 years of age, a New Zealand resident, hold a valid New Zealanddriver's licence and have regular income.[7] If a consumer's application is accepted by MTF Lower Hutt, the parties enterinto a credit contract. Standard hire purchase credit terms of the contract include:(a) The consumer agrees to purchase the vehicle conditionally from MTFLower Hutt.(b) MTF Lower Hutt lends the funds required to purchase the vehicle andthe consumer agrees to borrow that amount. The consumer agrees torepay the loan principal and to pay interest on it (principal and interest).(c) The consumer takes possession of the vehicle on the condition that,until the principal and interest are repaid, any other money owing ispaid and any other contract between the consumer and MTF LowerHutt that is in default has been paid, ownership of the vehicle does notpass to the consumer.1 The parties filed an agreed statement of facts. This was supplemented by an affidavit fromMr Kenny and an Agreed Bundle of Documents.(d) The consumer grants a security interest in the vehicle purchased tosecure the payment of all money owed to MTF Lower Hutt and theperformance of all obligations under the contract.(e) The Consumer Guarantees Act 1993 applies to the contract unless thegoods are acquired for business purposes.(f) An event of default can occur for a number of reasons including:(i) if any term of the contract is breached;(ii) any person lawfully claims to have a security interest in thevehicle; or(iii) MTF Lower Hutt reasonably believes the vehicle is atsignificant risk of loss or damage.(g) If an event of default occurs, all amounts owing or to become owingunder the contact immediately become due and payable and MTFLower Hutt may enforce its security interest, cancel the contract, takepossession of the vehicle, sue immediately for all money owing,exercise rights against any guarantor or appoint a receiver of the vehicleby repossessing the vehicle. Where MTF Lower Hutt takes possessionof the vehicle, the consumer is liable for any sum of money paid byMTF Lower Hutt to repossess it.(h) After repossessing a vehicle MTF Lower Hutt may sell it and use theproceeds to repay the loan. MTF Lower Hutt does not need to notify aconsumer if it intends to sell a vehicle it has repossessed.[8] The interest rates charged to consumers under the contract range from 9.75 percent to 21.95 per cent per annum and on default increases to 25 per cent per annum.[9] As recorded in the contract, MTF Lower Hutt is the legal owner. However theconsumer is the registered person (recorded on the Motor Vehicle Register) and isresponsible for compliance with all legislation and requirements relating to possessionof the vehicle, including registrations, licences, permits, warrants, certificates,authorisations, paying speeding and parking fines and keeping the vehicle roadworthy.The vehicle must also be insured in the consumer's name and MTF Lower Hutt mustbe noted as an interested party.[10] About 95 per cent of the transactions for which MTF Lower Hutt providesfinance do not go into default. The remaining five per cent represents around 100vehicle repossessions per year. In all cases, when MTF Lower Hutt repossesses andsells vehicles, the proceeds have been insufficient to repay the debtor's paymentobligations. However, if they were to be sufficient, any amount received above theconsumer payment obligations would be returned to the consumer.[11] Repossessed vehicles often do not have a warrant of fitness or a registration.They are also often unserviced, not mechanically sound and in poor condition.Sometimes they do not have ignition keys. Mr Kenny says that registered traders aretypically scared of repossessed vehicles because of their unknown history and poorcondition. A sizeable investment in panelling and painting is often required to makethem yard ready.[12] MTF Lower Hutt's primary method of selling repossessed vehicles is by listingthem on TradeMe. Mr Kenny regards TradeMe as an efficient and cost effective meansof achieving his obligations under the CCCF Act. He notes that TradeMe's websiteinvites sellers to "sell in NZ's largest car market". As at 7 May 2018 at 11.08 am therewere 82,330 vehicles for sale on TradeMe.[13] Mr Kenny's description of the vehicle on TradeMe includes details such as itsmake and model, the number of kilometres travelled, whether it is imported or not andwhether it has a warrant of fitness. He also lists any faults he has noticed andencourages the purchaser to view the vehicle before they purchase it. Each listing alsostates: "Finance Company Repossession. No warranty given or implied. We are notregistered traders".[14] The majority of feedback from purchasers on TradeMe about Mr Kenny havebeen positive: overall Mr Kenny has 235 positive reviews (of which 197 are fromindividuals), one neutral review and three negative reviews. The positive reviewsinclude many comments along the lines of "great trader", "excellent trader", "great todeal with", "great dealer", "easy fast trade, thanks so much would happily trade again",and "very satisfactory trade".[15] The three negative comments and Mr Kenny's response to them are as follows:My account is not fake where is vehicles pick upTrader responded: I have sent you 3 emails with details for payment and pickup but no reply. Car can be picked up from 1/64 Hutt Road.You should understand people always can't afford things and can't even givethe full details on the car. Call you so many times, you didn't not give previousowner details. How can I trust?Trader responded: Absolute nonsense. If you couldn't afford it why did youbid? This car was being sold a rego lapsed and poor condition. If u wantprevious owner do a lemon check? And owner got nothing to do with valueof this car. U are obviously a young person totally out of your depth.VIR report on the car showed that the owner that Geoff claimed, did notactually own the car until the day the auction finished, the rego expired earlierthan advertised, and the engine was smaller. Very suspicious. Tried to contactGeoff, but will not answer emails or phone calls.Trader responded: This is absolute rubbish this member has not replied toseveral emails and no calls from her. Engine size is as advertised and if anymistakes made re rego we would have put it right. This just a case of little girloperating in the big world and not having the integrity to back up her bid. Wewill be taking action thru the small claims court.[16] In the past Mr Kenny has used other methods of sale, such as selling throughTurners Car Auctions (Turners), which is registered as a motor vehicle trader. As at7 May 2018 at 11.12 am Turners had 2,310 vehicles listed on its website for sale. Itruns both mainstream and damaged vehicle auctions. Turners have at times insistedthat repossessed vehicles be sold through the damaged vehicle auctions. UnlikeTradeMe, Turners charges both the buyer and seller a fee. If MTF Lower Hutt wereto sell through another registered trader they would incorporate a profit margin. Alsoregistered traders must charge GST whereas MTF Lower Hutt's sales are GST exempt.[17] Mr Kenny therefore considers he would be doing the borrower a disservice ifhe were to sell repossessed vehicles through a registered trader. He obtains a higherrecovery for the borrower by selling them directly through TradeMe. An example ofthis concerns a 2002 Ford Falcon XR6 that MTF Lower Hutt repossessed in early2018. Mr Kenny listed this for sale on TradeMe. It sold on 28 February 2018 for$3,310. The sale could not be completed for reasons unrelated to the bidder.Mr Kenny decided to use this vehicle as a case study for the present proceeding. Hedelivered the vehicle to Turners in March 2018. Turners assessed the vehicle as havingan auction value of $1,000-$1,200 with a suggested reserve of $1300. By 23 April2018 the vehicle was placed in three auctions without selling. In May 2018 the vehiclesold for $1,200.[18] The vehicles sold by Mr Kenny on TradeMe typically sell for less than$10,000. The highest value sale was $18,000.[19] There was no evidence at the hearing about whether other MTF franchiseessold their vehicles through registered motor vehicle traders. It was indicated that someMTF franchisees were registered motor vehicle traders. I sought further informationabout this. The parties have not been able to put forward an agreed position about this.In the circumstances I have decided it is appropriate to consider Mr Kenny's positionwithout reference to what other MTF franchisees may or may not do.2The MVS Act and its predecessorThe MVS Act[20] The purpose of the MVS Act is "to promote and protect the interests ofconsumers in relation to motor vehicle sales".3 The Act requires all persons carrying2 Leave was sought by the Ministry to file an affidavit about this. This affidavit was provided toassist the court in response to my enquiry and I appreciate that. However the information in thataffidavit is limited and Mr Kenny takes issue with what can be inferred from it. Leave is declinedin these circumstances.3 Section 3.on the business of motor vehicle trading to be registered. It sets out the procedure forregistration. It imposes requirements on motor vehicle traders when selling motorvehicles. There are also enforcement provisions.[21] Part 1 contains the preliminary provisions. These include the definitionprovisions. A finance company is defined as follows:4finance company includes any person who carries on a business (except thebusiness of motor vehicle trading) and who, in the course of that person'sordinary business,—(a) buys, exchanges, or takes by way of assignment any motor vehicle forany of the following purposes:(i) letting or hiring it to any other person under a hire purchaseagreement:(ii) taking or enforcing a security over it:(iii) leasing it to any other person without conferring on thatperson the right to buy the motor vehicle; or(b) sells any motor vehicle bought, exchanged, or taken by way ofassignment for any of the purposes specified in paragraph (a); or(c) sells any motor vehicle under a right of sale conferred by a securityinterest (within the meaning of section 17(1)(a) of the PersonalProperty Securities Act 1999)[22] A "motor vehicle trader" is defined as having the meaning given in s 7 of theAct.5 Section 7 provides:7 Meaning of motor vehicle traderIn this Act, motor vehicle trader—(a) means any person who carries on the business of motor vehicle trading(whether or not that person carries on any other business); and(b) includes—(i) [Repealed]6(ii) an importer:4 Section 6.5 Section 6.6 This referred to a "car market operator". It was repealed because it covered, for example, thosethat merely provided a venue for motor vehicle trades, such as TradeMe, rather than those engagedin the business of trading the vehicles.(iii) a wholesaler:(iv) a car auctioneer:(v) a car consultant.[23] Section 8 provides who is treated as a motor vehicle trader:8 Who is treated as motor vehicle trader(1) A person is treated as carrying on the business of motor vehicle tradingfor the purposes of this Act if—(a) the person holds out that the person is carrying on the businessof motor vehicle trading; or(b) in any specified period, the person sells more than 6 motorvehicles, unless that person proves that those motor vehicleswere not sold for the primary purpose of gain; or(c) in any specified period, the person imports more than 3 motorvehicles, unless that person proves that those motor vehicleswere not imported to be sold for the primary purpose of gain.(2) For the purposes of subsection (1)(a), a person holds out that theperson is carrying on the business of motor vehicle trading if thatperson—(a) advertises or notifies or states that the person carries on thebusiness of motor vehicle trading; or(b) in any way represents that the person is ready to carry, or iscarrying, on the business of motor vehicle trading.(3) Subsection (1)(b) does not apply to any trustee corporation (within themeaning of section 2(1) of the Trustee Act 1956) acting in the capacityof executor, administrator, trustee, guardian, committee, manager,agent, attorney, or liquidator, or in any fiduciary capacity, unless thetrustee corporation is acting on behalf of the same person or estate.[24] Section 9 provides who is not treated as a motor vehicle trader:9 Who is not treated as motor vehicle trader(1) A person is not treated as carrying on the business of motor vehicletrading for the purposes of this Act only because that person is—(a) an employee or an agent of a motor vehicle trader; or(b) under a contract for services with a motor vehicle trader; or(c) a solicitor who acts in that capacity as an agent for selling anymotor vehicle unless that person is remunerated bycommission in addition to, or instead of, that person'sprofessional charges; or(d) a liquidator of a company that is a motor vehicle traderregistered under this Act; or(e) a manufacturer who sells any motor vehicle to—(i) the Crown; or(ii) a motor vehicle trader registered under this Act; or(iii) any person who is or has been employed by themanufacturer; or(ea) a car market operator; or(f) a licensed car wrecker; or(g) a finance company selling any motor vehicle under atransaction in which a motor vehicle trader acts as anintermediary between the finance company and the buyer(whether or not the motor vehicle trader acts as an agent ofthe finance company); or(h) a finance company, an insurance company, a rental carcompany, a storage provider (within the meaning of section2(1) of the Land Transport Act 1998), or any other person, thatsells any motor vehicle as an incidental part of the person'sordinary business; or(i) carrying on any other business besides carrying on thebusiness of motor vehicle trading and who, in the course ofthat other business,—(i) buys any motor vehicle for use in connection with thatbusiness, with or without the intention of reselling itafter such use; or(ii) resells the vehicle after using it in connection withthat business.(2) Subsection (1)(d), (h), and (i) applies only if the person sells motorvehicles through a motor vehicle trader registered under this Act.[25] Part 2 of the Act sets out the requirements that apply to motor vehicle traders.These requirements include disclosure obligations when a motor vehicle trader offersa motor vehicle for sale. These obligations are to display prominently:77 Sections 14 and 15.(a) a statement that a buyer or lessee of a motor vehicle who acquires themotor vehicle for value takes it free of any security interest in the motorvehicle; and(b) a consumer information notice in accordance with the requirements ofthe Consumer Information Standards (Used Motor Vehicles)Regulations 2008 (discussed further below).[26] A motor vehicle trader must obtain written acknowledgement from the buyerthat they have received this information.8 A motor vehicle trader must also keep arecord of each contract for the sale of any motor vehicle.9[27] Part 3 of the Act concerns registration. A motor vehicle trader must beregistered.10 Registration is made by application to the registrar.11 An applicationmust include specified contact details.12 The registrar may accept or refuse anapplication for registration.13 The registrar must accept an application for registrationif the application is properly completed and the applicant is not disqualified fromregistration.14 An individual is disqualified from registration if, for example, theindividual is under 18 years of age, is an undischarged bankrupt, or has had his or herregistration as a motor vehicle trader cancelled within in the preceding five years.15 Acompany is disqualified from registration if, for example, the company is inliquidation, or a person concerned in the management of the company is disqualifiedfrom registration in his or her own right, or if the company's registration as a motorvehicle trader has been cancelled within the preceding five years.16[28] Part 3 of the Act also provides that a register of motor vehicle traders must bekept.17 The purpose of the register is to enable members of the public to know who isresponsible for a motor vehicle trading business, how to contact a motor vehicle trader8 Section 16.9 Section 21.10 Section 10.11 Section 31.12 Section 32.13 Section 33.14 Section 34.15 Section 24.16 Section 25.17 Section 52.and how to determine whether or not a person is registered as a motor vehicle traderunder the Act.18 It is also to facilitate the Ministry or the Commerce Commission'senforcement of the Act or any consumer protection legislation and the Ministry'scompliance, audit, and other supporting and administrative functions under the Act.19[29] Part 4 of the Act sets out the enforcement provisions. These include provisionsfor persons to be banned from participating in the business of motor vehicle trading.A ban may be imposed under the Act for various reasons including, for example,failing to pay money to a principal, entering false information into a record of contractsfor sale, or being convicted of a dishonesty offence within the preceding five years.20A ban may be imposed by the District Court if the person is not a fit and proper personto participate in the business of motor vehicle trading.21[30] Part 4 also establishes motor vehicle disputes tribunals.22 A disputes tribunalhas jurisdiction over disputes if one party is a motor vehicle trader and the total sumof the dispute does not exceed $100,000.23 If no party to the dispute is a motor vehicletrader, a disputes tribunal will still have jurisdiction if the parties to the dispute consentin writing to its determination by the disputes tribunal.24 The disputes tribunal hasjurisdiction to inquire into and determine any application or claim about the sale ofany motor vehicle under the Fair Trading Act 1986, the Consumer Guarantees Act1993 and Subpart 3 of Part 2 or Part 3 of the Contract and Commercial Law Act2017.25[31] Part 4 of the Act also contains offence provisions. This includes an offence ofcarrying on the business of motor vehicle trading without being registered.26 Thepenalty on conviction for this is a fine not exceeding $50,000 in the case of anindividual or a fine not exceeding $200,000 in the case of a company.2718 Section 53(a).19 Section 53(b) and (c).20 Section 68.21 Section 69.22 Section 82.23 Section 90(1).24 Section 90(2).25 Section 89(a) and (b).26 Section 95.27 Section 118.Motor Vehicle Dealers Act 1975[32] The MVS Act replaced the Motor Vehicle Dealers Act 1975 (MVD Act). TheMVD Act referred to motor vehicle dealers rather than motor vehicle traders. Section4 of the MVD Act was the comparable provision to ss 7-9 of the MVS Act. Itprovided:284. Meaning of "motor vehicle dealer"-(1) Subject to the succeeding provisions of this section, and to sections 5and 6 of this Act, in this Act the term "motor vehicle dealer" meansany person who carries on the business of purchasing, selling,exchanging, or leasing motor vehicles (whether as principal or agent),whether or not that person carries on any other business; and includesa car consultant.(2) Without limiting the definition in subsection (1) of this section, everyperson who holds himself out to the public as being ready to carry onthe business of purchasing, selling, exchanging, or leasing motorvehicles shall be deemed to be a motor vehicle dealer for the purposesof this Act.(3) Every person who, in any period of 12 consecutive monthscommencing after the commencement of this Act, purchases, sells,exchanges, or leases more than 6 motor vehicles shall be presumed tobe a motor vehicle dealer for the purposes of this Act, unless he provesthat he did not purchase, sell, exchange, or lease the motor vehiclesfor the primary purpose of gain.(4) Notwithstanding the foregoing provisions of this section, no personshall be deemed to be a motor vehicle dealer for the purposes of thisAct by reason only of the fact that-(a) Being a solicitor, he acts, in the course of his business as asolicitor, as agent in respect of the purchase, sale, exchange,or lease of any motor vehicle, unless he is remunerated for soacting by commission in addition to, or instead of, hisprofessional charges:(b) Being a manufacturer or wholesaler, he sells any motorvehicle to-(i) The Crown; or28 As explained in Mutual Rental Cars Ltd v Russell CA294/84, 14 August 1985, s 4(1) was directedat persons who carried on the business of dealing in motor vehicles; s 4(2) was concerned withthose who held themselves out to the public as being ready to carry on such a business; s 4(3)provided a simple prima facie numerical test for limiting dealing in vehicles to licensed dealerswhich can be displaced by proof that the person did not deal with the vehicle for the primarypurpose of gain; and s 4(4) provided qualified protection for those who would otherwise be withinthe terms of ss4(1)-(3).(ii) Any other wholesaler, or to a licensed motor vehicledealer; or(iii) Any person who is or has been employed by themanufacturer or wholesaler:(c) Being the holder of a secondhand dealer's licence grantedunder the Secondhand Dealers Act 1963, he purchases, in thecourse of his business as a secondhand dealer, any motorvehicle for wrecking or dismantling by him:(d) Being a finance company, it purchases, sells, exchanges, orleases any motor vehicle in the ordinary course of its businessas a finance company:(e) In the course of carrying on any other business (not being thebusiness of a motor vehicle dealer) he-(i) Purchases any motor vehicle for use in connectionwith that business, with or without the intention ofreselling it after such use; or(ii) Resells any such vehicle after using it as aforesaid.[33] The definition of "finance company" in the MVD Act was the same as in theMVS Act. Section 4(4)(d) therefore covered finance company repossession sales.29[34] These definitions aside, the MVD Act regime was significantly different.Motor vehicle dealers were required to be licensed and it was an offence to carry onthe business of motor vehicle dealing without a licence.30 Licencing involved anapplication process and a hearing before a Motor Vehicle Dealers Board. Theapplication process was protracted. There was a public notification process, andmembers of the public or the Motor Vehicle Dealers Institute could object to thegranting of a licence of certain grounds and had an entitlement to be heard.31 Further,an applicant was required to be a registered salesman with at least two years'experience in the previous three years working for a licence holder.3229 Wilson v Interim Finance Ltd AP141/98, 23 October 1993 at p 33 per Giles J where the Judgecontrasted the business undertaken by Interim Finance with the activities of a finance company.The Judge suggested that a company acting as a pawnbroker and selling a vehicle pursuant to itssecurity would likely be protected by s 4(4)(d) of the MVD Act as the sale "would have been inthe ordinary course of its business as a pawnbroker".30 Section 7.31 Sections 9-13.32 Section 14.[35] A motor vehicle dealer's licence specified the licensee and the place ofbusiness and it was an offence to carry on the business in a different name or place.33Licensees were required to display a notice at their premises.34 They were alsorequired to personally supervise and control their business.35[36] The Act also provided a process for registration of motor vehicle salesmen.There were particular eligibility requirements and a public notice and a hearingprocess.36 The MVD Act provided for a Motor Vehicle Salesmen RegistrationAuthority which heard and determined applications for registration to be a salesmanand complaints about salesmen.37 Approved salesmen were a further class createdunder the Act.38[37] The MVD Act pre-dated the Fair Trading Act 198639 and the ConsumerGuarantees Act 2003,40 legislation aimed at contributing to a trading environment inwhich the interests of consumers are protected, businesses compete effectively, andconsumers and businesses participate confidently.41 The MVD Act contained specificwarranties and guarantees for vehicles sold by licensed motor vehicle dealers.42 Therewere also particular disclosure obligations for second hand vehicles. Relevantly forpresent purposes, this included a requirement to state "Repossessed vehicle. Nowarranty" where that was the case.4333 Sections 19-21.34 Sections 54-56.35 Section 57.36 Sections 66-72.37 Section 64.38 Part 6.39 The Fair Trading Act applies to goods (which includes vehicles) supplied by a supplier in trade.It prohibits unfair practices such as misleading and deceptive conduct, false or unsubstantiatedrepresentations and other unfair business activities. It also provides for the promulgation ofconsumer information standards. Consumers have civil remedies. Additionally the CommerceCommission can take enforcement action.40 The Consumer Guarantees Act provides consumers of goods (which includes vehicles for personaluse) with certain guarantees from suppliers acting in trade. The guarantees include that thesupplier has the right to sell the vehicle, the vehicle is free from any undisclosed security, thevehicle complies with its description, the vehicle is reasonably "fit for purpose" and it is otherwiseof "acceptable quality" (terms which depend on the circumstances of the sale). The Act alsoprovides remedies for a consumer.41 Section 1A of the Acts.42 Part 7.43 Section 90.[38] A licensed motor vehicle dealer was required to contribute to a fidelity fund.The fund was, amongst other things, to settle claims made by purchasers of vehiclesfrom licensees for defective title, defective parts or the vehicle being substantiallydifferent to what had been represented.44 As with the MVS Act, there was a MotorVehicle Disputes Tribunal for the resolution of disputes.45[39] In short, the licensing regime was complicated and burdensome and imposedsignificant costs on licensees. As described in the Explanatory Note to the MVS Bill,the MVD Act was overly prescriptive and no longer addressing the needs of industryand consumers. The particular problems described in the Explanatory Note were:• its coverage is limited to licensed motor vehicle dealers (other modesof motor vehicle trading fall outside its scope):• it is inflexible and it imposes unnecessary restrictions:• it imposes significant compliance costs on motor vehicle dealers:• it attracts high levels of non-compliance (which is compounded bylow levels of enforcement):• it poses difficulties for consumers in obtaining redress:• it duplicates a number of consumer protection provisions found inother statutes.[40] The Explanatory Note described the major reforms under the MVS Act asbeing:46This Bill requires all persons carrying on the business of motor vehicle tradingto be registered. These persons include car market operators, importers,wholesalers, and car auctioneers. The Bill replaces the existing licensingregime for motor vehicle dealers with a registration regime that has specificminimal entry criteria aimed at ensuring that unsuitable persons are preventedfrom participating in the industry. For example, persons with certain criminalconvictions are disqualified from registration.44 Sections 30-53.45 Sections 96-108.46 The Explanatory Note goes on to refer to the abolition of the Motor Vehicle Dealers LicensingBoard, a significantly simplified process for registration as a motor vehicle trader, an increase inpenalties for carrying on the business of motor vehicle trading while unregistered, a regime forbanning persons from participating in the motor vehicle trading industry, amongst other things.[41] The Explanatory Note provided further information about the public policyobjective of the MVS Act in its "regulatory impact and compliance cost statement"which said:47Used motor vehicle purchases entail a number of risks. Vendors generally havean information advantage over consumers and, as relatively high-valueconsumer goods, vehicles are often used as security for finance and may besubject to prior security interests that are not always disclosed. These risks arenot unique to the purchase of used motor vehicles, but the combination of risksis uncommon in the purchase of other consumer goods.The current regime has high compliance costs and a restricted scope. For thesereasons, over 70% of transactions occur outside the scope of the regime. Inaddition, consumer law and consumer expectations have changed significantlysince the Motor Vehicle Dealers Act 1975 was passed.Public policy objectiveThe overall objective is to ensure appropriate and accessible consumerprotections through the provision of accurate information for consumers'purchase decisions, credible and accessible redress, coverage of the full rangeof sales in trade, and effective enforcement.Summary of the new regime[42] The MVS Act was therefore intended to broaden the motor vehicles salestransactions caught by the regulatory regime in order to provide greater reach for theprotections offered the legislation. The MVS Act now expressly included importers,wholesalers, auctioneers and, until it was later repealed, car market operators. Inreality the only significant change was to include auctioneers. This is because caselaw had held that importers were within s 4(1),48 wholesalers were within the MVDAct unless they fell within s 4(4) and the inclusion of car market operators wasrepealed when motor vehicle sales began to be commonly conducted on TradeMe.49In contrast auctioneers had been expressly excluded under the MVD Act.50 In additionthe MVS Act changed the scope of some of the deeming provisions.47 The Explanatory Note is similar to the principle behind the Bill as explained in the SelectCommittee Report to which I was also referred.48 Motor Vehicle Dealers Institute Inc v Herron CA475/96, 16 June 1997; and Wilson v InterimFinance Ltd, above n 29.49 The Motor Vehicle Sales Amendment Bill 2009 repealed "car market operators" from thedefinition of motor vehicle traders. Bill Digest 1690 comments that market operators are nottraders unless they sell vehicles. TradeMe was specifically mentioned in Hansard as the reasonfor this change at (27 May 2010) 663 NZPD 11423 and (24 August 2010) 666 NZPD 13655.50 Section 5.[43] At the same time, the regulatory process is considerably less burdensome andthe protections the MVS Act offered were reduced because there was other consumerprotection legislation in place. The main protection, as compared with a sale by afinance company,51 is the information traders are required to disclose to consumers.Regulations provide the form of a consumer information notice that must be displayedwith a used vehicle advertised for sale.52 The notice must include the trader's contactinformation, sale information, information about overseas registration and whether ithad any obvious structural damage when it was imported, and a short statement of thebuyer's rights under the Consumer Guarantees Act and the Fair Trading Act and thebuyer's obligations about registering a change of ownership. The sales information inthe notice includes the vehicles make and model, year, engine capacity, actual distancechallenged and warrant of fitness and registration status amongst other things.53[44] An issue arose at the hearing about whether motor vehicle traders wererequired to sell a vehicle with a current warrant of fitness.54 In further submissionsreceived after the hearing it has been clarified that the requirements are the same formotor vehicle traders as defined in the MVS Act and for other sellers of motorvehicles. All persons selling vehicles must ensure the vehicle has been certified withinone month before the date of the vehicle's delivery to the purchaser unless thepurchaser undertakes in writing that the vehicle will not be operated on the road untilit has been certified.55[45] In addition to the consumer information notice, purchasers of vehicles fromregistered motor vehicle traders can bring their disputes to the Motor Vehicle DisputesTribunal. This enables disputes to be determined by a specialist tribunal. Those whopurchase from other sellers have access to the, non-specialist, Disputes Tribunal forclaims up to $15,000 and the District Court.5651 As discussed further below, a repossession sale by a finance company contains provisions intendedto ensure the purchaser takes the vehicle free of registered security interests.52 Consumer Information Standards (Used Motor Vehicles) Regulations 2008. The regulations werepromulgated under s 27 of the Fair Trading Act.53 Schedule 2.54 Current warrants are ones issued within the preceding month.55 Land Transport Rule: Vehicle Standards Compliance 2002 (35001/2002).56 Disputes Tribunals may hear disputes of claims up to $20,000 if the parties consent.Finance company legislationThe Credit Contracts and Consumer Finance Act 2003[46] The issue in this case is whether a finance company selling repossessedvehicles pursuant to the security granted over the vehicle is a motor vehicle trader.That sale is subject to the Credit Contracts and Consumer Finance Act 2003 (the CCCFAct) enacted six months after the MVS Act. The CCCF Act sets out rules that applywhen consumer goods, which includes vehicles covered by the MVS Act, arerepossessed.57[47] Under these rules the creditor must offer the repossessed vehicle for sale "assoon as is reasonably practicable" after 15 days has expired from when the debtor hasbeen served with a repossession notice.58 Section 83Z says:83Z Rules relating to sale by creditor(1) When selling repossessed consumer goods (which may be by anymethod that meets the requirements of this subsection), the creditormust—(a) ensure that every aspect of the sale, including the manner,time, place, and terms, is commercially reasonable; and(b) take reasonable care to obtain the best price reasonablyobtainable for the goods as at the time of sale.[48] The debtor is entitled to obtain, at the debtor's expense, a valuation of thevehicle at the time of repossession.59 The debtor has the right to reinstate or settle thecredit contract, introduce a buyer or force a sale where the goods have not been soldwithin 30 working days.60[49] The above provisions are protections for the debtor. There are also protectionsfor the purchaser. Section 83ZG provides:57 Credit Contracts and Consumer Finance Act 2003, s 5 and MVS Act, s 6(1).58 Section 83Y.59 Section 83ZA.60 Sections 83ZB-83ZF.83ZG Disposal of consumer goods to purchaser for value and in goodfaith(1) A purchaser for value and in good faith who takes possession ofconsumer goods sold by a creditor takes the consumer goods free fromthe following interests:(a) the interest of the debtor:(b) any interest subordinate to that of the debtor:(c) the interest of the creditor:(d) any interest subordinate to that of the creditor.(2) Subsection (1) applies whether or not registrations relating to anysecurity interests referred to in subsection (1) have been removedfrom the register of personal property securities established under thePersonal Property Securities Act 1999.[50] If the vehicle is sold by the creditor, the creditor's security interest isextinguished as are all other security interests that are subordinate to that securityinterest.61 Within seven days after the sale, the creditor must give to the debtor astatement of account that sets out the gross proceeds of the sale, the costs of the saleand the amount required to settle the credit contract.62 The creditor must pay from anysurplus any other security interests in the order of their priority under the PersonalProperty Securities Act 1999.63The Financial Services Providers (Registration and Dispute Resolution) Act 2008[51] This Act provides broadly comparable provisions about who may providefinancial services as the provisions in the MVS Act as to who may be registered as amotor vehicle trader. Financial service providers must be registered.64 There is publicaccess to the register.65 A person is disqualified for registration for reasons whichinclude being an undischarged bankrupt, prohibited from being a director or subject toa management ban, or convicted of a dishonesty offence.6661 Section 83ZH.62 Section 83ZI.63 Section 83ZJ.64 Financial Services Providers (Registration and Disputes Resolution) Act 2008, ss 11-12.65 Section 25.66 Section 14.My assessmentThe "finance company" definition[52] A "finance company" is defined as including both the arrangement throughwhich security is obtained over the vehicle (paragraphs (a) and (b) of the definition)and selling the vehicle pursuant to the security obtained (paragraph (c) of thedefinition). This suggests that when a finance company is selling a vehicle pursuantto the security, it is carrying out the business of a finance company rather than thebusiness of motor vehicle trading.[53] The words "(except the business of motor vehicle trading)" reinforce this. Thebusiness of a finance company is not the business of motor vehicle trading. Howevera finance company business may be operated as part and parcel of the business ofmotor vehicle trading. For example, a motor vehicle trader may sell a vehicle to apurchaser and offer them finance for it. The definition is about a finance companybusiness which is not also a motor vehicle trading business. It is similar in effect tothe former definition of "finance company" in the MVD Act which referred to a person"whose ordinary business is not that of dealing in motor vehicles".[54] In my view, therefore, the starting point is that a "finance company" is notnecessarily a motor vehicle trading business because it sells vehicles pursuant to itssecurity interest. Such sales are part of the business of a finance company. Whethera finance company is also in the business of motor vehicle trading depends on ss 7, 8and 9 of the Act.The s 7 definition[55] Under s 7 a person who "carries on the business of motor vehicle trading" is amotor vehicle trader". It is therefore clear that not every sale of a motor vehicle willbe motor vehicle trading for the purposes of the Act. For example, a person whodecides to sell their personal car will not be a motor vehicle trader. It is necessary thatthe person carry on a business in motor vehicle trading.[56] As set out above, the predecessor to s 7 similarly referred to a person who"carries on the business of". As to that wording, the Court of Appeal considered theordinary sense of "business" was "the exercise of an activity in an organised andcoherent way and one which is directed to an end result". Further, the "existence of aprofit-making motive or of an intention that the activity serve commercialpurposes" are material considerations.67[57] The s 7 definition also makes it clear that a person can be a motor vehicle tradereven if they are carrying on another business. In principle, therefore, just because aperson is carrying on a finance company business, does not mean they cannot also bea motor vehicle trader.[58] The s 7 definition specifies certain activities to be motor vehicle trading. Thisdoes not include finance companies. As Mr Kenny submits, had Parliament intendedthat finance company repossession sales to be motor vehicle trading, it could haveexpressly said so. The Ministry's submission relies on ss 8 and 9.Is Mr Kenny not a motor vehicle trader because of s 9[59] Mr Kenny submits the purpose of s 9 is to provide a list of activities that inthemselves are insufficient to constitute motor vehicle trading. He says the importantwords in s 9(1) are "only because". The list is not a closed list. In other words, evenif none of the listed activities apply, that does not mean the person is a motor vehicletrader. It just means they do not have the benefit of s 9.[60] The Ministry submits s 9 provides a limited exception to those who wouldotherwise be carrying on the business of motor vehicle trading. It submits that financecompanies must sell vehicles by or through motor vehicle traders in order to have theprotection of s 9. The implication of s 9 is that, if they sell repossessed vehicles67 Mutual Rental Cars Ltd v Russell, above n 28, at 10 per Richardson J citing income tax casesCalkin v CIR [1984] 1 NZLR 440 at 446; and Grieve v CIR [1984] 1 NZLR 101 at 106-107. Anexample is Motor Vehicle Dealers Institute Inc v Herron, above n 48, which concerned defendantswho had a reputation for being able to import second hand vehicles from Japan. They wereapproached by people to import vehicles on their behalf. The defendants provided a list of vehicleswith prices and arranged the importation of the selected vehicle but the purchaser sent the moneydirectly to Japan. The Court of Appeal restored the conviction entered in the District Court on thebasis that the transactions were part of a course of conduct with an obvious commercial purposeand so were motor vehicle dealing under s 4(1) of the former definition.themselves rather than through a motor vehicle trader, they are carrying on thebusiness of motor vehicle trading.[61] I consider the correct approach to s 9 is to start with the opening words ofs 9(1). Mr Kenny is "not treated as carrying on the business of motor vehicle trading only because" he is within one of the sub-paragraphs of s 9(1). The natural andordinary meaning of those words is that the activities listed are not by themselvessufficient to make a person a motor vehicle trader. If that is the person's onlyassociation with the business of motor vehicle trading they are not a motor vehicletrader.[62] The s 9 activities all have some association with motor vehicle trading. In anumber of those cases, the purchaser of the vehicle will already have the benefit of theAct's protections because a motor vehicle trader is already involved (subss (a), (b),(d), (e)(i) and (iii), (ea) and (g)). In other cases the purchaser is the Crown (subs (e)(ii))or there is no longer a purchaser involved (subs (f)). In the remaining cases theintention appears to be to ensure that certain business activities which may incidentallyinvolve selling vehicles are not caught (subss (c), (h) and (i)). In all cases s 9 is aboutwho is not to be treated as a motor vehicle trader. It is not about who is to be treatedas motor vehicle trader.[63] In Mutual Rental Cars Ltd v Russell the Court of Appeal considered the effectof s 4(4) of the MVD Act, the equivalent of s 9 in the MVS Act.68 In that case MutualRental Cars was convicted on a charge of being an unlicensed motor vehicle dealer.The defendant carried on a rental car business. It replaced its rental fleet every threeyears. Under a separate sales division of the defendant's business, the ex-rentals weresold in car yards which it operated under its name. It did so on behalf of itself as wellas others in the group. The cars were advertised for sale under its name. It offered toarrange finance for purchasers and it assisted prospective purchasers to sell theirvehicles by putting them in touch with licenced motor vehicle dealers.[64] The Court of Appeal described the function of s 4(4) as being:6968 Mutual Rentals Cars Ltd v Russell, above n 28.69 At p 11-12. to provide qualified protection for those whose vehicle transactions arewithin its terms. The protected transaction in each case is one carried out inthe course of a different primary activity and in some cases of a specificallylimited kind. The subsection takes out of the category of motor vehicle dealerthose persons who have engaged in nominated dealing transactions in thosespecial and limited circumstances. That is subject to the further qualificationexpressed in the formula that no such person is deemed a motor vehicle dealerby reason only of the fact that he [or she] comes within one of the paragraphsthat follow. Thus subs (4) is not a shield if there are circumstances not coveredby the protective umbrella of the particular paragraph which considered ontheir own still bring that person within the earlier definitions.[65] The focus in that case was on s 4(4)(e) of the MVD Act, of which s 9(1)(i) ofthe MVS Act, is the comparable provision. The Court of Appeal considered that thewords "[i]n the course of carrying on any other business (not being the business ofmotor vehicle dealer)" was to exclude from s 4(4)(e) where the primary business wasmotor vehicle dealing. The Court of Appeal said:70The object of para (e) is readily perceivable. It is to obviate the need forlicensing where vehicles used in the business are sold in the ordinary course.The orderly disposal of assets which have served their purpose in the businessis a common and necessary business practice. Even where the sellingarrangements involve substantial volumes and considerable organisation theymay properly be characterised as the realisation of the assets of that businessin an enterprising way rather than the venturing of them in another businessof dealing. It is a question of fact and degree where and how the line is to bedrawn. Clearly some advertising and displaying of such vehicles should beexpected as incidental to selling and so as contemplated by the expression"resell" in the context of para (e). In such a case the person is not regarded byreason only of those reselling arrangements as being a motor vehicle dealer.But the selling may be conducted in such a way that notwithstanding thequalified protection afforded by the paragraph he is still regarded as carryingon the business of dealing in motor vehicles for the purposes of the section.[66] On the facts, the Court of Appeal considered there was a different reason forwhy the defendant was unable to rely on s 4(4)(e). The defendant could not rely onthe qualified protection provided by that provision because some of the cars it wasselling belonged to other companies in the group. Those cars had not been purchasedfor use in the defendant's business. As discussed further below, the defendant wasconvicted under s 4(2) (holding out that it was a motor vehicle dealer).[67] The MVS Act has narrowed the qualified protection from that provided by s4(4)(e). Because of s 9(2), section 9(1)(i) (the equivalent provision to s 4(4)(e))70 At p 13-14.applies only if the sales are made through a motor vehicle trader. Section 9(2)similarly narrows the qualified protection for finance companies in s 9(1)(h). At thesame time, that now also expressly covers an insurance company, a rental carcompany, a storage provider or any other person, as well as a finance company.71These additions appear intended to make it clear that sales by these businesses arepotentially protected but only if they make the sales through a motor vehicle trader. Ifthey do not use a motor vehicle trader they may be caught by s 8(1)(b) depending onthe extent and purpose of the sale. This is consistent with Parliament's intent tobroaden the reach of the Act in order to promote and protect the interests of consumersin relation to motor vehicle sales.[68] In other words, if Mr Kenny sold repossessed vehicles through a motor vehicletrader, he is not to be treated as a motor vehicle trader only because of this. AsMr Kenny does not sell motor vehicles through a registered trader, s 9(1)(h) does notapply to him. This means that s 9(1)(h) does not tell us whether Mr Kenny is a motorvehicle trader. For that question, s 8 must be considered.Does Mr Kenny hold himself out as a motor vehicle trader (s 8(1)(a))?[69] The Act treats Mr Kenny as carrying on the business of motor vehicle tradingif he "holds out" that he is carrying on that business. Mr Kenny contends that he doesnot suggest he is in the business of motor vehicle trading. Instead his TradeMe listingsexplicitly state that "we are not registered traders" and the vehicle is a "financecompany repossession". Potential buyers who wish to inspect the car are advised theycan do so at the "MTF office".[70] The Ministry submits that Mr Kenny's statements do not assist because aperson cannot contract out of the MVS Act. The consumer protection purpose would71 The qualified protection for a finance company also more clearly addresses the different ways thata finance company may sell a vehicle. Section 9(1)(g) appears to be directed specifically to wherea buyer wishes to buy a vehicle from a motor vehicle trader but requires finance from a financecompany. The finance company may take ownership from the trader and sell the vehicle to thebuyer through a hire purchase agreement as is the case with MTF Lower Hutt. Section 9(1)(g) istherefore saying that, if a finance company sells to a buyer in this way, that does not make MTFLower Hutt a motor vehicle dealer. Section 9(1)(h) appears to be directed to where a financecompany sells a vehicle pursuant to its security. That sale can be described as an incidental partof the ordinary business of a finance company but only has the protection conferred by s 9 if thesale is through a registered motor vehicle trader.be thwarted if a person could avoid the regulatory system under the Act by sayingpublicly that the Act does not apply to them. In support of this submission, theMinistry relies on Interim Finance Ltd.72 In that case purchasers were provided withdocumentation which stated that Interim Finance was a finance company and not amotor vehicle dealer. The High Court said:73I do not consider the fact that Interim Finance repeatedly said it was not amotor vehicle dealer to be very relevant, if at all. Protestations (written ororal) that you are not what the law says you are, do not prevail. If, on thefacts, Interim Finance was conducting a motor vehicle dealing business thenit matters not that it protests an incorrect view in its documentation.[71] The Ministry submits the focus of s 8(1)(a) is on the impression a consumerwould form when dealing with the business. The Ministry refers to Mutual RentalCars where the Court of Appeal considered s 4(2) of the MVD Act, the equivalent ofs 8(1)(a) of the MVS Act.74 The relevant inquiry is the impression made on "the manin the street".75 The Ministry submits the man [or woman] in the street would perceiveMTF Lower Hutt as holding itself out as a motor vehicle trader because:(a) From MTF Lower Hutt's statements, the public would understand thatthe business was not registered, rather than that it was not in thebusiness of motor vehicle trading.(b) Potential purchasers who take up the invitation to inspect the vehicleswould turn up to MTF Lower Hutt which is set up as a professionalbusiness (in contrast to, for example, a private residence) and MTFstands for "Motor Trade Finance" (emphasis added).(c) Potential purchasers may see the number of vehicles listed by MTFLower Hutt on TradeMe and infer it to be in the business of motorvehicle trading.72 Wilson v Interim Finance Ltd, above n 29.73 At [9] per Giles J.74 Mutual Rental Cars Ltd v Russell, above n 28.75 At p 15 per Richardson J.(d) Potential purchasers may also see the TradeMe feedback which refer toMr Kenny as a "trader" or "dealer". This suggests some customershave assumed that MTF Lower Hutt is a motor vehicle trader. This isa reasonable assumption in the circumstances.(e) Potential purchasers may also visit the MTF franchise website. Thewebsite makes a number of references to "dealer". For example, underthe tab "About MTF" the website states: "MTF was formed in 1970 toenable a group of motor vehicle dealers to offer car loans to theircustomers". On that same page, under the heading "Become an MTFdealer", the website states: "As an MTF dealer you belong to a networkof quality dealers who offer superior finance options and servicethroughout New Zealand". Under the "Buying a car" tab, one of theheadings is: "Buying from a dealer". Under that heading there is a sub-heading: "A nationwide network of dealers" and the statement: "Thatmeans we're well placed to help find the wheels that are right for you".[72] As set out earlier, the Act sets out two ways that a person may hold out theyare carrying on the business of motor vehicle trading. The first is where the personadvertises, notifies or states that they are carrying on that business (s 8(2)(a)). Thesecond is where the person "in any way represents that the person is ready to, or iscarrying on" that business (s 8(2)(b)). In my view Mr Kenny is not advertising,notifying or stating that he is carrying on the business of motor vehicle trading. Insteadhe is advertising the sale of vehicles as a finance company repossession. The questionis whether he is in any way representing that he is carrying on the business of motorvehicle trading.[73] In my view the passage from Interim Finance does not particularly assist. Thatcase was quite different to the present case. It involved motor vehicle trading (throughthe business of importing vehicles for customers) under the guise of a financearrangement. That finance arrangement was in reality an upfront deposit at the timeof ordering the car and a balance payment with a commission for the trader when thecar was delivered.[74] As explained in Mutual Rental Cars in relation to the predecessor of s 8(1)(a),this provision is useful where, perhaps because of limited records or the absence ofspecific witnesses, the prosecution may be unable to prove that the person chargedwas carrying on a motor vehicle trading business but the external indications maynevertheless demonstrate that they were holding themselves out as being ready to doso. The Court of Appeal considered that it was a matter of fact and degree whatconstituted a holding out. However it involved "an inquiry into the impression madeupon the public as to the manner in which the undertaking was conducted".76[75] In that case the Court of Appeal was not called upon to reconsider the HighCourt's conclusion about this. The High Court considered there had been a holdingout. This was because:77The sale of the cars was conducted from several different car yards. Thesewere operated under such names as "Avis Car Sales", "Avis Young ExRentals", "Avis Used Cars", and the like. There was nothing in these namesor in the nature of the car yards themselves (containing, as they did, carsdisplayed for sale) which could have distinguished them in the minds of thepublic from any other car sales yard or used car business. Moreover, thedefendant advertised its cars for sale in the same way as any other businessseeking to sell cars. I do not consider that there is any other reasonablehypothesis open than that the defendant was holding itself out to the public ascarrying on the business of selling used cars. It was plainly competing for thepublic's custom with other firms seeking to sell cars. The member of thepublic who was minded to buy a car and who saw the defendant'sadvertisement or its car yards could have gained no other impression. The factthat there may in some cases have been a reference to the fact that the carswere 'ex rental' would not have affected or diminished that impression.[76] That case is therefore quite different from the present. Mr Kenny is usingTradeMe to sell repossessed vehicles. That of itself makes no representation aboutthis business. Members of the public also use TradeMe to sell vehicles. The mannerin which the cars are sold, in contrast with the car sale yards in Mutual Rental Cars,make no representation about the nature of Mr Kenny's business.[77] The natural and ordinary meaning of "representation" is to convey somethingby words or conduct or both. For example, Black's Law Dictionary defines"representation" as "a presentation of fact – either by words or conduct – made to76 Mutual Rental Cars Ltd v Russell, above n 2867, at p 15 per Richardson J.77 At p 8 citing the decision of Quilliam J in the High Court..induce someone to act".78 In the Fair Trading Act context, a representation involves"a representor saying something to the representee either by words (whether spokenor written) or other means" and the "representor must be communicating a statementof fact to the representee either directly or by clear and necessary implication".79[78] This is consistent with the view that has been taken to the meaning of "holdsout" under the MVD Act. For example, in the District Court it was said that holdingout meant to represent to the public and the representation as to being ready to carryon the business " may be made verbally, in written form, or by conduct. It may bemade either expressly or impliedly but there must be no ambiguity as to what is meant".80 Similarly, in the High Court it was said that "[h]olding out in this context issimply to represent by words or conduct a state of affairs".81[79] In my view Mr Kenny was not representing by words that he was carrying onthe business of a motor vehicle trader. He said he was not a registered trader and thatthe vehicle was a finance company repossession. These descriptions may not havebeen particularly clear to the general public. For example members of the public maynot understand that those carrying on the business of motor vehicle trading are requiredto be registered. Further, the vehicle may have been obtained by a motor vehicletrading business from a finance company repossession. While these words may havebeen somewhat unclear to members of the public, they certainly were notunambiguously conveying that Mr Kenny was in the business of motor vehicle trading.[80] I consider that Mr Kenny's business premises also did not represent he was inthe business of motor vehicle trading. The Ministry's submission relies on aphotograph of the exterior of the business. As the Ministry submits, this photographindicates a commercial operation. However that operation is not obviously a motortrading business. The signage is predominantly about vehicle finance: "Vehiclefinance approved. Today" and the "MTF" logo comprise the signage. The Ministrydoes not suggest there are vehicles on display at the business. Counsel for Mr Kenny78 AB Garner (ed) Black's Law Dictionary (10th ed, Thomson Reuters, Minnesota, 2014) at 1493.79 Marcol Manufacturers Ltd v Commerce Commission [1991] 2 NZLR 502 (HC) at 506 perTipping J.80 Motor Vehicle Dealers Institute Inc v Dunn [1996] DCR 848 per Judge JR Callander at [20].81 Kerry Stone Ltd v Knowles HC Napier CIV-2006-441-564, 25 October 2006 at [49] per Venning J.advises they are not displayed at the business – they are stored at an unmannedwarehouse. This is consistent with carrying on a finance company business and theselling of repossessed vehicles as an incidental part of that business.[81] In my view there is no significance in the fact that "MTF" stands for "MotorTrade Finance" (emphasis added). That does not convey that the business is one ofmotor vehicle trading. It conveys that finance is available for motor vehicles.[82] Nor is there significance in the fact that potential purchasers looking atMr Kenny's TradeMe reviews may see that he is often referred to as agood/great/excellent "trader". Counsel for the Ministry accepts that this is a termwhich refers to anyone selling on the TradeMe website. Sales are often referred to as"trades" and the seller is often referred to as a "trader". Consistent with thisterminology, a number of reviews say "good trade", "easy fast trade", "great trade"and so on.[83] A stronger point for the Ministry is that potential purchasers looking atMr Kenny's TradeMe reviews will see that he has sold a large number of repossessedvehicles. However the question is whether by that conduct Mr Kenny is representingthat he is motor vehicle trader. The significance of making such a representation isthat purchasers may wrongly believe they are purchasing from a registered motorvehicle trader and therefore have the protections of the MVS Act. The concern inMutual Rental Cars was that the defendant was conducting its business in the sameway as a licensed dealer, competing with licensed dealers and thereby misleadingpotential purchasers.[84] In this case the number of sales made by Mr Kenny is a representation that hesells a number of vehicles through TradeMe. However, this is not of itself arepresentation that he is in the business of motor vehicle trading and that therefore thesales will be protected by the MVS Act. It is a representation only that he sells a lotof motor vehicles. Although this is relevant to whether Mr Kenny is holding himselfout as a motor vehicle trader, also relevant is any representation about the nature ofthose sales and the protection conferred on purchasers in the listing for the particularvehicle being considered by a purchaser. Mr Kenny makes it clear he is not aregistered trader, the vehicle is a finance company repossession and no warranty isgiven.[85] I agree with the Ministry that the MTF website is confusing. It is notimmediately obvious to someone visiting the website that not all MTF franchisees sellvehicles (whether or not a purchaser requires finance) and that some simply financevehicles purchased through a motor vehicle trader. However, in relation to MTFLower Hutt in particular it becomes more apparent that MTF Lower Hutt is not a"vehicle dealer". The website enables a user to click the area of interest under the"buying a car" and "selling a car" tabs. When Lower Hutt is selected, two boxes aredisplayed:(a) One box says "1 vehicle dealers in your area" and there is a "viewdealers" tab. When that tab is clicked, the page has a heading "Forvehicles and finance" and the business contact details and location of"Wellington Vehicle Wholesalers" are provided. There is anotherheading "For finance" under which MTF Lower Hutt's contact detailsand location are provided.(b) The other box says "1 office in your area" and it sets out the contactdetails for MTF Lower Hutt. When this box is clicked and the tab"buying a car" is selected, the website page says "MTF Lower Hutt.Whether you are buying from a dealer, privately, online or want cash tonegotiate, we provide an immediate answer".[86] In summary, once the Lower Hutt area is selected and the various tabs arefollowed, it becomes apparent that MTF Lower Hutt is involved in the business ofmotor vehicle finance not motor vehicle dealing.[87] In these circumstances I am not persuaded that Mr Kenny is representing thathe is carrying on the business of motor vehicle trading. The "impression made uponthe public as to the manner in which the undertaking [is] conducted" when looked atas a whole is not that he is a registered motor vehicle trader. The impression is thatMr Kenny operates a finance company business and in that capacity he sellsrepossessed vehicles. I consider the issue of whether a person is to be deemed to bemotor vehicle trading because of the number of vehicles they sell is more appropriatelydetermined by s 8(1)(b).Does Mr Kenny sell motor vehicles for the primary purpose of gain (s 8(1)(b))?[88] The Act treats Mr Kenny as carrying on the business of motor vehicle tradingif in the preceding 12 month period he sold more than six motor vehicles, unless heproves that they "were not sold for the primary purpose of gain". It is accepted thatMr Kenny has sold more than six motor vehicles in the last 12 months. The issue iswhether he does so for the primary purpose of gain.[89] The Ministry submits that the proper focus is on the object of the sale, that iswhy a person is selling the vehicle. The Ministry submits that when MTF Lower Hutttakes possession of the vehicle that is an election to take enforcement action for adefault by exercising its security under the finance agreement. It submits the mainobject of this election is to maximise, as far as possible, the original benefit it expectedto derive from the finance agreement. When a repossessed vehicle is sold, thisminimises MTF Lower Hutt's losses under the finance agreement. In other wordsMr Kenny derives a commercial benefit from the sale of repossessed vehicles and thisis a "gain" under s 8(1)(b).[90] The Ministry relies on Motor Vehicle Dealers Institute v Ball as to the meaningof "gain".82 In that case Mr Ball faced two charges of carrying on the business ofmotor vehicle trading under the Act. The District Court said:83I do not agree with the defence submission that the term "gain" should benarrowly construed so as to be equivalent to profit. I agree with theprosecution view that it should be given a wider definition. I am not requiredto determine the outer limits of the term "gain". For present purposes it issufficient to say that, given the expansive interpretation required by thepurposes of the Act, "gain" can include more than mere profit. I am inclinedto read gain as a commercial benefit, which would encompass not just profit,but minimising losses, avoiding costs, and divesting encumbering assets.82 Motor Vehicle Dealers Institute v Ball [2014] DCR 294.83 At [26] per Chief Judge Doogue.[91] The plain or dictionary meaning of the word includes "[i]ncrease ofpossessions, resources, or advantages; and instance of this; profit, improvement; spec.the acquisition of wealth. (Opp, loss) Sums acquired by trade etc,; emoluments,winnings".84 Similarly, the definitions of "gain" in dictionaries of legal words andphrases include: "'Gain' is not restricted to pecuniary or commercial profits; itincludes other considerations of value obtained from business transactions ordealings";85 "a gain is something obtained, not necessarily a pecuniary gain";86and "'gain' includes a gain by keeping what one has, as well as a gain by getting whatone has not".87[92] I accept that "gain" is a wider term than "profit". It encompasses somecommercial advantage or improvement to the seller's position which may besomething other than receiving in monetary terms more than the costs involved in thesale.88 This must be the primary purpose of the motor vehicle sale. As explained inMutual Rental Cars, the Court of Appeal regarded s 4(3) of the MVD Act, theequivalent of s 8(1)(b) in the MVS Act, to be a simple prima facie numerical test forlimiting dealing in vehicles to licenced dealers. The number of trades was a simpleway of determining whether a person was carrying on "the business of dealing inmotor vehicles". If the primary purpose was not "gain" that was evidence that the salewas not part of a business activity of selling motor vehicles.[93] Mr Kenny does not propose any different meaning of "gain". He accepts thereis a commercial benefit in MTF Lower Hutt dealing with the repossessed vehicle.However he says the primary purpose of selling a repossessed vehicle is not to receivea commercial benefit. He says the primary purpose is to comply with the obligationsunder the CCCF Act. He says that he is able to obtain a better price for a repossessed84 Shorter Oxford English Dictionary (6th ed, 2007) vol 1 (A-M) Gain at [1006].85 D Greenberg Stroud's Judicial Dictionary of Words and Phrases Vol 2: F-O (8th ed, Sweet andMaxwell, 2012) at 1185.86 D Greenberg Jowitt's Dictionary of English Law Vol 1: A-I (4th ed, Sweet and Maxwell, 2015) at1055 citing Re Arthur Average Association for British, Foreign and Colonial Ships Ex p. Hargrove& Co (1875) L.R. 10 Ch. App. 545n at [546]-[547n] per Jessel MR.87 D Hay (ed) Words and Phrases Legally Defined Vol 1: A-K (4th ed, LexisNexis NZ, Wellington,2007) at 1014.88 Registrar of Motor Vehicle Traders v Daniels [2017] NZDC 10155 is a decision in the DistrictCourt which determines that a number of sales made by Mr Daniels were not for "gain".vehicle than if he is required to sell the vehicle through a registered motor vehicletrader. This is to the debtor's benefit because his debt to MTF Lower Hutt is reduced.[94] I do not accept Mr Kenny's submission. I consider it conflates the purpose orobject of selling the vehicles with the manner in which he must sell them. Mr Kennymakes a decision to sell the vehicle when he elects to enforce his enforce his security.He does so because he considers that is commercially advantageous to him to do so inorder to recoup all or (more usually) some of the outstanding loan. The sale of thevehicle is for the primary purpose of "gain" (or a commercial benefit) to him.[95] Mr Kenny contends the gain was to the debtor because the debt was reduced.This is because, regardless of how much is achieved in the sale, the debtor remainsliable to MTF Lower Hutt for the balance of the debt owing. However, MTF LowerHutt must regard repossession and sale as a commercially advantageous way to obtainrepayment. It is not required under the hire purchase agreement to use this method ofenforcement yet it is the method of enforcement it uses. That the debtor also benefitsfrom the sale in the sense that their debt is reduced, does not alter the fact that MTFLower Hutt also benefits.[96] Once MTF Lower Hutt decides to gain this commercial improvement to itsposition from the sale of the motor vehicle, it must carry out the sale in accordancewith the CCCF Act. The requirement to take reasonable care to obtain the best pricereasonably obtainable for the vehicle is not inconsistent with and does not overrideMTF Lower Hutt's obligations under the MVS Act to either register as a motor vehicletrader or to sell through another registered motor vehicle trader.[97] I have given this issue careful consideration. If Mr Kenny is correct that hecan obtain a higher price for the vehicle if he is not subject to the MVS Act, then it isunclear to me why the perceived benefits for a buyer of a sale by a registered motorvehicle trader should outweigh a debtor's interest in a sale method that gives him orher the opportunity of achieving the highest price for the vehicle (and therefore thegreatest reduction of their debt achievable). This is especially unclear to me whenbuyers are informed that they are buying the vehicle without the advantages providedby the MVS Act (namely the consumer information notice and access to the MotorVehicle Disputes Tribunal) and buyers are nevertheless happy to "trade" with thefinance company on TradeMe on this basis. In such circumstances it is difficult to seewhat purpose the MVS Act is serving.[98] The extent to which consumer goods, including vehicles, are traded onTradeMe and the New Zealand public's comfort with that was probably not foreseenwhen the MVS Act was enacted.89 However any changes because of this are forParliament. On the words of s 8(1)(b), in light of the narrowing of the protection forfinance companies in s 9(1)(h), and the Act's stated purpose, I am unable to concludethat Mr Kenny's sales are not within its terms.Result[99] Mr Kenny sought a declaration that a finance company selling repossessedmotor vehicles is not selling motor vehicles for the primary purpose of gain andreward. For the above reasons I decline to grant that declaration. If there is any issueabout costs, the parties have leave to make brief submissions (no longer than fivepages) about this within two weeks of the date of this judgment. However mypreliminary view is that costs should lie where they fall. The issue is a difficult oneand Mr Kenny has acted responsibly in bringing this proceeding in order to have thematter determined.Mallon J89 As is indicated by the need to remove "car market operator" from the scope of the MVS Act.