GEOFFREY BRIAN KENNY v MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT [2019] NZSC 150

GEOFFREY BRIAN KENNY v MINISTRY OF BUSINESS, INNOVATION AND EMPLOYMENT [2019]NZSC 150 [19 December 2019]IN THE SUPREME COURT OF NEW ZEALANDI TE KŌTI MANA NUISC 113/2019[2019] NZSC 150BETWEEN GEOFFREY BRIAN KENNYApplicantAND MINISTRY OF BUSINESS, INNOVATIONAND EMPLOYMENTRespondentCourt: Glazebrook, O'Regan and Ellen France JJCounsel: A O'Connor for ApplicantP H Courtney and S P Connolly for RespondentJudgment: 19 December 2019JUDGMENT OF THE COURTA The application for leave to appeal is dismissed.B The applicant must pay the respondent costs of $2,500.____________________________________________________________________REASONSIntroduction[1] The applicant, Mr Kenny, operates a finance company business that sellsrepossessed vehicles. He sought a declaration in the High Court to the effect that heis not a motor vehicle trader under the Motor Vehicle Sales Act 2003 (the Act) and sodid not have to meet the regulatory requirements for a motor vehicle trader.1 Mallon J1 A trader must register at a cost of $456 each year and provide a detailed consumer informationnotice to purchasers: Motor Vehicle Sales Regulations 2003; and Consumer Information Standards(Used Motor Vehicles) Regulations 2008. See also Kenny v Ministry of Business, Innovation andEmployment [2019] NZCA 435 (Kós P, Woolford and Dunningham JJ) [Kenny (CA)] at [10].in the High Court concluded Mr Kenny was a motor vehicle trader under the Act.2 Hisappeal from that decision was dismissed by the Court of Appeal.3 Mr Kenny seeksleave to appeal to this Court.Background[2] Mr Kenny's business operates in the following way. First, purchasers find carsat a dealership and financing is undertaken by Mr Kenny. Next, the dealer sells thecar to Mr Kenny who enters into a finance agreement with the purchaser by which titlepasses only on full payment. Mr Kenny repossesses vehicles approximately 100 timesa year in circumstances in which a purchaser has defaulted. He then sells therepossessed vehicles himself on Trade Me.[3] Mr Kenny's case required consideration of the various definitions in the Act.Sections 7 and 8 set out the definition of a "motor vehicle trader". Section 7(a)provides that a motor vehicle trader "means any person who carries on the business ofmotor vehicle trading (whether or not that person carries on any other business)".Section 8 deals with "Who is treated as a motor vehicle trader" and, relevantly, s 8(1)states that:(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; [4] Section 9 sets out circumstances in which a person "is not treated as carryingon the business of motor vehicle trading". For present purposes, s 9(1)(g), (1)(h) and(2) are relevant. This section provides that:(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—2 Kenny v Ministry of Business, Innovation and Employment [2018] NZHC 1984, (2018) 15 TCLR114 [Kenny (HC)].3 Kenny (CA), above n 1.(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, or any other person, that sells anymotor vehicle as an incidental part of the person's ordinarybusiness; or(2) Subsection (1)(d), (h), and (i) applies only if the person sells motorvehicles through a motor vehicle trader registered under this Act.[5] A "finance company" is defined in s 6 to include: any person who carries on a business (except the business of motor vehicletrading) and who, in the course of that person's ordinary 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)(emphasis added)[6] Both Courts below found Mr Kenny came within the definition in s 8(1)(b).He sold more than six vehicles and did so for gain. The Court of Appeal agreed withMallon J that "gain" "encompasses some commercial advantage or improvement tothe seller's position which may be something other than receiving in monetary termsmore than the costs involved in the sale".4 Retrieving the monies outstanding under4 Kenny (CA), above n 1, at [37], citing Kenny (HC), above n 2, at [92].the finance contract from the sale of a repossessed vehicle represented "gain" and wasthe primary purpose of the sale.5[7] The Court of Appeal stated that the subsections of s 9, identified above,supported this interpretation. The exemption for a finance company only applies if itis selling the vehicle through another registered trader, encapsulating the consumerprotection purpose. The Court said that a finance company selling motor vehiclesincidentally, but directly (as in Mr Kenny's case), does not have the benefit ofexemption.6The proposed appeal[8] Mr Kenny wishes to argue the Court of Appeal's interpretation of s 9 isincorrect and that the Court has not correctly factored in the definition of "financecompany" in the Act. The latter argument is the primary focus of the application.Mr Kenny's contention is that the definition of "finance company" means that, if he isin the business of motor vehicle trading, then he cannot be a finance company as well.[9] He says these questions involve a matter of general and commercialsignificance.7 This is because there are many finance companies in New Zealand towhom the Court of Appeal's decision will apply. Additionally, the decision willimpact on debtors and finance company consumers generally.[10] The respondent accepts the Court of Appeal decision has broader implications.However, the submission is that leave should be declined because the arguments haveno realistic prospect of success.Assessment[11] We are not satisfied that the arguments the applicant wishes to pursue meet thetest for the grant of leave. In terms of the argument based on s 9, nothing raised by5 If necessary, the Court of Appeal would also have found Mr Kenny was a motor vehicle dealerunder s 8(1)(a). He held himself out in this way on Trade Me and his disclaimer "We are notregistered traders" was insufficient to dispel the impression he was: at [43].6 At [40].7 Senior Courts Act 2016, s 74(2).the applicant calls into question the Court of Appeal's construction of the statutorylanguage or the Court's assessment that its interpretation met the consumer protectionpurpose of the provision. Mr Kenny's argument about the effect of the definition of"finance company" does not square up to the wording of the section and nor does it fitwith s 7(a) which contemplates a person carrying on business as a motor vehicle traderand another business.8 We do not consider these arguments have sufficient prospectof success to justify a further appeal.[12] The application for leave to appeal is accordingly dismissed. The applicantmust pay the respondent costs of $2,500.Solicitors:Surridge & Co, Porirua for ApplicantCrown Law Office, Wellington for Respondent8 The argument is also inconsistent with s 9(1)(g) and (h) as that section has been interpreted by theCourt of Appeal.