McBRIDE STREET CARS LIMITED v THE DISTRICT COURT (DUNEDIN REGISTRY) AND LOACH [2018] NZHC 111

McBRIDE STREET CARS LIMITED v THE DISTRICT COURT (DUNEDIN REGISTRY) AND LOACH[2018] NZHC 111 [12 February 2018]IN THE HIGH COURT OF NEW ZEALANDDUNEDIN REGISTRYI TE KŌTI MATUA O AOTEAROAŌTEPOTI ROHECIV-2017-412-64[2018] NZHC 111BETWEEN McBRIDE STREET CARS LIMITEDPlaintiffAND THE DISTRICT COURT (DUNEDINREGISTRY)First DefendantSTEPHEN AND DIANE LOACHSecond DefendantHearing: 8 November 2017Appearances: L A Andersen for ApplicantP J Page and J J Y R Pierce for Second RespondentsJudgment: 12 February 2018JUDGMENT OF NICHOLAS DAVIDSON JA. INTRODUCTION[1] A Dunedin motor vehicle dealer imported a damaged Volkswagen Amarok("the Amarok") from Australia. It was a statutory write-off in Queensland, a factknown to the dealer. This judgment upholds on review a District Court decision whichin turn upheld a decision of the Motor Vehicle Disputes Tribunal that the dealerbreached the Fair Trading Act 1986 when it sold the Amarok in New Zealand. Not tohave told the purchasers about the statutory write-off was held misleading anddeceptive in all the circumstances, as was the purported disclosure that the vehicle hadbeen imported as damaged.[2] The Amarok was imported by McBride Street Cars Limited ("McBride") andsold to Mr and Mrs Loach of Otematata. When purchased at auction in Queenslandby McBride, it was described on the sale invoice as "statutory write-off, unable to bere-registered – water affected – mechanical issues". The vehicle developedtransmission problems. The Loaches found out about the statutory write-off andwanted their money back.[3] Mr Cottle of McBride says that while he knew of the statutory write-off, hehad not misled the Loaches. He said that at the time of sale he gave them a CustomerInformation Notice ("CIN"), as required by the applicable regulatory regime.1 TheCIN recorded that the vehicle was "imported as damaged", and McBride's position isthat was true and as far as it needed to go as it had no obligation to tell the Loacheswhat it knew about the vehicle's history.[4] The Loaches agreed they were given the CIN but said they did not read it, anddid not have the "imported as damaged" reference drawn to their attention, nor didthey sign the CIN in the space provided to acknowledge that they had read it.B. FACTS[5] The Amarok was imported to New Zealand in January 2016. The border checkrecorded it as "damaged: storm, flood, other – written-off, QLD 06 May 2015,statutory write-off". This Court was advised from the Bar that a statutory write-offhas a different meaning state by state. On its arrival, the Amarok underwent tests byVehicle Inspection New Zealand and Action Panelbeating. It was assessed ascompliant with the Land Transport Rules: Vehicle Repair 1998, and a compliancecertificate was issued.1 Consumer Information Standards (Used Motor Vehicles) Regulations 2008 ("the Regulations").[6] The Loaches entered a Vehicle Offer and Sale Agreement ("VOSA") topurchase the vehicle for $40,000 on 17 June 2016. McBride, trading as "Tokyo AutoTown", had listed the vehicle on Trade Me. The Loaches took it for at least two testdrives, and it was inspected for them by another trader. It was described by Mr Loachas presenting "incredibly well". They were informed that the vehicle had beenimported from Australia, but there was no further discussion of the vehicle's history,no oral mention that it had been damaged, nor of the statutory write-off.[7] The CIN recorded, under the heading "Information about used importedvehicles", that the car was first registered in 2013 in Australia. The "'Yes" box wasticked next to the reference "imported as damaged vehicle". The circumstances inwhich the CIN was given to the Loaches, and their knowledge of its contents, is a pointof contention.[8] The CIN records "If you buy this motor vehicle, the trader must give you acopy of this notice to keep" under which there is a heading "Trader confirmation"containing a statement by way of acknowledgment by the trader that he has supplieda copy of the notice to the buyer, including a copy of the information on the back ofthe CIN. The acknowledgement of McBride is dated 17 June 2016. There is acorresponding box for the purchaser to sign and date, worded "buyer confirmation",which is blank, unsigned by the Loaches.[9] On the VOSA, there is a clause under the heading "Purchaser's offer andagreement":2. Supplier Information Notice ("SIN"): I acknowledge that I have beengiven a copy of the SIN in the vehicle and that I have read, understoodand accept the contents of the SIN (including the list of defects (if any)set out on the SIN.[10] "Supplier Information Notice" ("SIN"), is a reference to the consumerinformation requirement of the previous regulatory regime. The SIN was replaced bythe CIN in 2008.[11] Two months later, the Loaches noticed noises and shuddering from thevehicle's transmission. After inspection, they were informed the transmission fluidcould have been contaminated by water and/or glycol. They investigated the Amarok'shistory and discovered the statutory write-off, with the NZTA database recording it as"storm, flood, other – written off ", as above.[12] McBride refused to refund the purchase price, but offered to repair the vehicle.The Loaches brought a claim before the Motor Vehicle Disputes Tribunal.C. BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL2[13] Mr Cottle gave evidence that he had placed the CIN under the windscreenwiper, and he had seen Mrs Loach reading it. He said he gave the CIN to Mr Loachthree or four minutes before giving him the VOSA for signature. Mr Loach said hecould not recall seeing the CIN before agreeing to purchase the vehicle, and hisrecollection was that he was only given a copy of it as he and Mrs Loach were leavingin the Amarok they had just purchased.[14] The primary issue was whether Mr and Mrs Loach had proved the vendorbreached s 9 of the Fair Trading Act 1986 by engaging in "conduct that is misleadingor deceptive or is likely to mislead or deceive". 3 The Tribunal referred to the test setout by the Supreme Court in Red Eagle Corporation v Ellis:4The question to be answered in relation to s 9 in a case of this kind isaccordingly whether a reasonable person in the claimant's situation — that is,with the characteristics known to the defendant or of which the defendantought to have been aware — would likely have been misled or deceived. If so,a breach of s 9 has been established. It is not necessary under s 9 to prove thatthe defendant's conduct actually misled or deceived the particular plaintiff oranyone else. If the conduct objectively had the capacity to mislead or deceivethe hypothetical reasonable person, there has been a breach of s 9. If it is likelyto do so, it has the capacity to do so. Of course the fact that someone wasactually misled or deceived may well be enough to show that the requisitecapacity existed.[15] The Tribunal recognised that the common law approach of caveat emptor(buyer beware) has in recent times moved towards a "reasonable expectation" testwhen issues of disclosure arise. Silence can constitute a misrepresentation. There2 Loach v McBride Street Cars Limited T/A Tokyo Auto Town MVD 287/2016, 14 December 2016.3 Loach v McBride Street Cars Limited T/A Tokyo Auto Town MVD 287/2016 (WN82), 14December 2016.4 Red Eagle Corporation v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].need not be an overt misrepresentation. Whether particular non-disclosure amountsto misrepresentation involves analysis of all the circumstances.[16] The CIN contains a space for the purchaser to acknowledge receipt of thenotice, and under the Regulations it is mandatory for vendor and purchaser to sign anddate the form.5 On the Loaches' form there was no acknowledgement of receipt, nordid they sign the form. The Tribunal found that the statutory write-off had not beendisclosed to the Loaches (and McBride did not say it had), and that they had not read,or at least not absorbed, the CIN until after the sale of the vehicle, so had not seen orrecognised the reference to it being "damaged".[17] The Tribunal found that Mr Cottle had actively taken steps to discourage theLoaches from reading the CIN by requiring them to sign the VOSA only, with itsreference to the SIN buried in the small print. That the Loaches did not ask questionsabout the history of the vehicle, it said, should not count against them.[18] Concluding that non-disclosure of the statutory write-off in this caseconstituted misleading conduct, the Tribunal said:[55] As I have already noted, Mr Cottle and Tokyo Auto Town accept theydid not disclose to Mr and Mrs Loach that the vehicle is an Australian statutorywrite-off. In other words, there was silence on this aspect. In my view, havingregard to the cases that have discussed the "reasonable expectation ofdisclosure" test in light of the overall test for whether conduct is misleadingand deceptive Red Eagle (above), I consider that a reasonable person in Mrand Mrs Loach's situation would likely have been misled or deceived byTokyo Town's conduct, specifically omitting to tell them that the vehicle is anAustralian statutory write-off.[56] In addition, I accept Mr and Mrs Loach's evidence that they wereactually misled by Mr Cottle's omission to disclose the vehicle is an Australianstatutory write-off. Mr Loach's evidence was that the car presented"incredibly well". There was no outward indication that it had been written-off in Australia and I accept their evidence that they were shocked atdiscovering this fact.[57] A more sophisticated purchaser may have noticed the disclosure thatthe vehicle was "imported as damaged" on the CIN and asked more questions,especially in combination with the knowledge that the vehicle was importedfrom Australia. Through their experience with this vehicle Mr and Mrs Loachhave now become more sophisticated purchasers but I accept they were not soat the relevant time. In any event, as stated above, Mr Cottle took steps to5 Consumer Information Standards (Used Motor Vehicles) Regulation 2008, schedule 1.discourage Mr and Mrs Loach from reading the CIN, by getting them to signthe buyer acknowledgement on the VOSA rather than on the CIN itself.[19] The Tribunal declared the purchase agreement void, and ordered refund of the$40,000 purchase price.D. APPEAL TO THE DISTRICT COURT6[20] On appeal McBride's counsel Mr Andersen submitted that it had complied withits legal obligations of disclosure, and under s 17 of the Motor Vehicle Sales Act 2003(MVSA), the acknowledgement of provision of the CIN may be on the VOSA.Reference to the SIN in the VOSA, he submitted, should be read as "CIN". Thevehicle was imported as damaged and this was disclosed on the CIN. He submittedthe Loaches would not have purchased the vehicle if they had known it was importedas damaged, so it was their failure to read the CIN with its disclosure of "damage" andnot any non-disclosure of the statutory write-off which led to the decision to purchase,and the resulting loss.[21] Mr Andersen submitted that Taco Co of Australia Inc & Anor v Taco Bell PtyLtd 1982 is authority that conduct "cannot be characterised as misleading or deceptiveor likely to be misleading or deceptive unless it contains or conveys amisrepresentation".7 Here, he argued, there had been no misrepresentation by McBrideto detract from the statement in the CIN that the vehicle was "imported as damaged".The only obligation on McBride, he submitted, was to provide the CIN with thisinformation, and it was reasonable to presume that it had been read. If there were anyconcerns about the reference to "imported as damaged", it was incumbent on thepurchaser to raise them. There was nothing in the circumstances of the transactionwhich gave rise to a reasonable expectation of disclosure of the fact the vehicle was astatutory write-off, so it was submitted.[22] In the District Court, His Honour Judge Phillips observed that the CIN is "anentirely different notice with different input from the reason for and supply of a SIN".86 McBride Street Cars Limited v Loach [2017] NZDC 10758.7 Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; ATPR 40-277.8 At [52].He considered that the reference to an SIN in the VOSA meant that the regulatoryrequirement on McBride to ensure acknowledgement of the CIN is signed by thepurchaser had not been fulfilled. The Court found that:9if the appellant had carried out its statutory and regulatory requirements tohave the CIN signed by the respondents then the information as to a damagedvehicle would have been clearly and directly in the eyes of Mr Loach as hewas requested to acknowledge receipt of the CIN prior to the purchase of thevehicle.[23] The Court agreed with the Tribunal that getting the Loaches to sign the VOSAwith a clause confirming they had seen the SIN rather than getting them to sign theCIN was a strategy to deflect attention away from the CIN.[24] Further, the Court found that describing the vehicle as merely imported"damaged" was itself misleading, deliberately obscuring the statutory write-off.Mr Cottle acknowledged in evidence that 'damage' can mean a number of differentthings. An informed purchase decision could only be made with knowledge that thevehicle had been written off.[25] Hieber v Barfoot & Thompson is authority that silence of itself, or with otherfactors, can amount to misleading or deceptive conduct, depending on all the facts.10The Judge affirmed the Tribunal's reliance on Red Eagle and the statement that theposition in New Zealand has moved away from the necessity for an explicitmisrepresentation to "a reasonable expectation" test.[26] The Judge concluded that it was incumbent on McBride to disclose the fact thevehicle was a statutory write-off:[77] In my view the argument in relation to the statement in the CIN as tothe vehicle being "imported damaged", even if this had been pointed to andthe respondents had been made aware of it, only told a very small part of theoverall relevant issues in respect of the vehicle. To the knowledge of theappellant it had been statutorily written-off in Australia. An experienced cartrader, such as the appellant, would have been aware that was importantinformation to a prospective purchaser. In terms of the New Zealand test of"reasonable expectation", the circumstances that related to a well presentedvehicle being sold at a price representative of motor vehicles of its age andquality and no comment being made as to it having been subject to statutory9 At [54].10 Hieber v Barfoot & Thompson Ltd (1996) 7 TCLR 301 (HC).write-off requirements in Australia, would be overall circumstances that theTribunal would use to decide whether there should have been disclosure of theactual position. The Tribunal, as already stated, came to the decision that therewas a duty to disclose and not to do so was a breach of s 9 of the FTA.[82] When I have regard to the legal position as detailed by the Tribunal Iconsider that there was no error in any of its findings on matters of law. In itsapplication of that law and the required test and applying the test to the factsthat it had found and accepted the Tribunal was acting appropriately. I rejectthe appellant's argument that it was not.E. JUSTICIABILITY[27] Clause 16 of the first schedule to the MVSA sets out the right of appeal from adecision of the Motor Vehicle Disputes Tribunal to the District Court. Subclause 6states "to avoid doubt, nothing in this clause affects the right of any person to apply,in accordance with law, for judicial review".[28] In Murphy v District Court at Auckland, Whata J discussed justiciability:11[15] The High Court has inherent powers of judicial review to supervisepublic decisions and ensure that they are made according to law. The HighCourt is said to be a superior Court of general jurisdiction and is "thereforeresponsible for determining the jurisdiction and legality of the decisions andconduct of the inferior Courts and tribunals. This supervisory or judicialcontrol is of constitutional importance in maintaining the proper observanceof the law, and is not to be lightly shed."12[16] Judicial review is concerned with the processes of decision-makingrather than the merits of the decision itself,13 and where there are reasonablegrounds for the decision there is no authority to intervene.14 It is possible fora decision-maker to have a number of different decisions reasonably open toit, but there may (though rarely) be intervention in the case of a verified andmaterial factual mistake on the face of the decision.[29] Judicial review is not an opportunity for disgruntled litigants simply to rearguetheir case. In a case like the present, where a decision of an appellate Court is beingreviewed, the justiciable issues will usually be narrowly confined.[30] McBride's statement of claim reads:11 Murphy v District Court at Auckland HC Auckland CIV-2010-404-2015, 6 May 2011.12 Auckland District Court v Attorney General [1993] 2 NZLR 129 (CA) at 133.13 R v Sloan [1990] 1 NZLR 474 (HC) at 479.14 Progressive Enterprises v North Shore CC [2006] NZRMA 72, (2005) 11 ELRNZ 421 at [71].7. The Reason the [District Court] dismissed the [appeal] was itdetermined that [McBride's] conduct was misleading and/or deceptiveand in breach of section 9 of the Fair Trading Act 1986 as [McBride]had a duty to disclose to the [Loaches] that the vehicle had been astatutory write-off in Australia.8. The decision made by the [District Court] on the appeal is invalid asthere was no legal basis upon which it could properly make thatdetermination.[31] The sole ground of review is that the District Court erred in law in finding therewas a duty on McBride to disclose the statutory write-off of the vehicle. This is clearlya justiciable issue – if the decision was made on an incorrect finding of law it isincumbent on this Court to rectify that. However, some of the points relied upon byMcBride in support of its argument are essentially challenges to settled findings offact, and it is not for this Court on judicial review to allow such re-litigation, nor todisturb the conclusions of the District Court on such facts. There may be exceptionalcircumstances where a clear mistake has been made which requires a remedy, but nosuch mistake is here asserted by either party.[32] The District Court's factual findings will thus not be subject to scrutiny onreview except on orthodox principles and they form the baseline for its decision:(a) The vehicle was well-presented with no indication of damage, and wasbeing sold at a price representative of motor vehicles of its age andquality;15(b) The Loaches did not read, or at least did not absorb, the CIN until afterthe purchase of the vehicle;16(c) The CIN was not actually presented to the Loaches until after the sale;17(d) Mr Cottle deliberately tried to obscure the fact the vehicle was importeddamaged by putting the acknowledgement of having read the "SIN" in15 District Court at [77]; Tribunal at [56].16 District Court at [59]; Tribunal at [58].17 District Court at [76]; Tribunal at [55]-[58].a clause to the VOSA rather than requiring the Loaches to sign the CIN,where the information would have been more visible.18(e) The Cottles were actually misled by the omission of the informationthat the vehicle was a statutory write-off;19(f) The Loaches were not particularly sophisticated vehicle purchasers,20and Mr Cottle/McBride was an experienced vehicle trader.21[33] In particular, I draw attention to (d) above, which I consider a central issue onthis review. Making this finding, the Tribunal said:[38] Moreover, in my view, Mr Cottle's method of getting Mr Loach tosign an acknowledgement on the VOSA rather that they had seen the "SIN",rather than getting them to sign the acknowledgement on the CIN itself, wasa deliberate strategy to deflect Mr and Mrs Loach's attention away from theCIN, with the aim that they would not see or absorb the information on it.[34] As the District Court observed, this was a factual finding made after having"heard and seen the witnesses giving evidence".22[35] Before the Tribunal, Mr Cottle was asked whether he ever gets purchasers tosign the actual CIN notice rather than relying on the VOSA. He said no, and furtherthat it is "not my responsibility to force someone to read the thing, if he chooses notto read it". When it was suggested to him that provision for the purchaser's signatureon the CIN is there for the vendor's protection, so there is clear evidence of thepurchaser having read the document, he replied "well he's got a copy of it and that'sall he has to have". These comments and others convey a strong sense that Mr Cottlewas satisfied to do the bare minimum required in terms of disclosure, and was preparedto benefit from any oversight of the purchaser. It was open to the Tribunal to find astrategy in Mr Cottle's conduct, misleading and deceptive in itself, in not making surethe CIN was signed in the acknowledgement of receipt, giving a false lead in theVOSA to the SIN which was not a document involved in the transaction at all.18 District Court at [55]; Tribunal at [38].19 District Court at [78]; Tribunal at [56].20 Tribunal at [57].21 District Court at [77].22 At [56].Statutory/regulatory compliance[36] Before addressing the substantive question on review a further point must beaddressed. Counsel Mr Pierce, for the Loaches, says the Court found as a"non-justiciable finding of fact that the applicant failed to carry out its statutory andregulatory duties in respect of disclosure". Mr Andersen for McBride says the Tribunal"did not find a breach of statutory obligations but implicitly (if not explicitly) foundcompliance stating at [57] that a "more sophisticated purchaser may have noticed thedisclosure that the vehicle was 'imported as damaged' on the CIN". Mr Andersen saysthat as the Loaches "did not appeal this issue to the District Court" it was not open tothe Court to find that the obligations had not been met and any comments by the Courtto that effect are obiter dicta, and irrelevant to the issue on review.[37] I do not accept the submission that the Tribunal implicitly found compliancewith the regulatory regime. Simply noting the undisputed fact that the "imported asdamaged" box was ticked on the CIN and that the Loaches were given the CIN cannotbe read as a finding that there had been compliance. The regulations require more.Regardless, in accordance with r 18.19 of the District Court Rules, the appeal was byway of rehearing, and the Court was able to come to its own conclusion on any aspectof the case. It was immaterial whether the point was directly appealed or even raisedby the Loaches' counsel. On my reading of the District Court judgment, non-compliance with the regulatory regime was a material finding and one element of theCourt's overall conclusion that there had been misleading and deceptive conduct.[38] However, I do not agree with Mr Pierce that this amounts to a "non-justiciablefinding of fact". The facts were not in issue – it was agreed that the Loaches signedonly the VOSA and not the CIN, and that the acknowledgement clause in the VOSAreferred to an SIN rather than a CIN. There is a question of law as to whether thatamounted to compliance although there is an associated factual element as to theconduct of McBride in provision of the CIN which is non-justiciable on review, andthe first of two questions addressed in this judgment. As such this is an issue amenableto review, and I set out the reasons I agree with the District Court that McBride failedto comply with the regulations in the provision of the CIN.[39] Sections 14-16 of the MVSA provide that a notice, containing the particularsprescribed under the regulations, must be displayed in a prominent place on thevehicle, and that a "written acknowledgment" from the buyer that they have receiveda copy of the notice must be obtained "immediately before the sale". Section 17provides that "nothing in section 16 prevents the acknowledgement being containedin the contract for sale". Clause 7 of the regulations specifies the CIN as the requirednotice. Schedule 1 of the regulations specifies that "both the motor vehicle trader anda buyer of the motor vehicle must sign and date the [CIN] in order to provide writtenacknowledgement that the buyer has received a copy".[40] I accept that the signed acknowledgement may be in the VOSA rather than onthe CIN itself. The written acknowledgement mentioned in ss 16 and 17 MVSA is notseparate from that in the schedule to the regulations. Only one acknowledgement isneeded, not two. I accept Mr Andersen's submission, which was not in dispute beforethe District Court, that preference must be given to the primary legislation, so s 17 isengaged to achieve compliance with the regulations.[41] The requirement on the vendor therefore is twofold. The correct notice mustbe displayed prominently on the vehicle. Then, before sale, the same notice must begiven to the purchaser, whose signed acknowledgement must be obtained. Both stepsare equally important, aimed at ensuring the information on the CIN is made knownto the purchasers prior to sale. I do not accept Mr Andersen's submission that the'disclosure requirements' are met when the right information is on the CIN on thevehicle, and that the signed acknowledgement is a separate matter. The signedacknowledgement is to ensure disclosure. "Disclosure" requires the information beingput before the purchasers, and the proof of this is the signed acknowledgement.[42] McBride correctly displayed the CIN. However, I agree with Judge Phillipsthat the reference to the 'SIN' in the VOSA was an error material enough that signingthe VOSA could not constitute an acknowledgement under s 16 MSVA and schedule1 of the Regulations. The error may have been mitigated if Mr Cottle had drawnattention to the CIN when explaining the clause in the VOSA, but he did not. There isno reason why the Loaches would have drawn the inference that 'SIN' in the VOSAreferred to the CIN form that had been displayed on the vehicle. The fact that an SINis another document, with different information and for a different purpose furtheradds to the confusion.[43] What is more, the Loaches' evidence was accepted that the form was not givento them by Mr Cottle until after the sale. This means that at the time of signing theVOSA, Mr Cottle was asking the Loaches to sign an acknowledgement that he hadgiven them information which he had not. He could not rely on that in suchcircumstances.[44] While in itself not determinative, the finding that McBride did not comply withits regulatory disclosure requirements is another aspect of the context within whichthe Court came to the view that there had been misleading or deceptive conduct.F. ERROR OF LAW[45] Mr Andersen submits that although the Court held there was "a duty to disclosethat the vehicle was imported as a statutory write-off" no such duty exists, and that theobligation on McBride was to disclose that it was imported as damaged, which it did.He says the Court did not explain why it was misleading not to do so. Further, therewas no conduct of McBride which misrepresented, or was inconsistent with, the truestate of affairs, that the vehicle was imported as damaged.[46] This is a direct assertion that there was sufficient provision of the CIN, and itsreference to "imported as damaged" was all it needed to say. Thus, McBride couldkeep to itself what it knew about the statutory write-off unless asked whether it hadbeen damaged.[47] He refers to the Court of Appeal in Overton Holdings Ltd v APN New Zealandas authority that in the absence of a specific representation, there must be an implicitrepresentation that makes the failure to disclose the further information misleading.23He says the Court there endorsed the statement of (then) Elias J, that "The Fair TradingAct is not designed to provide a guarantee to purchasers who fail to look after their23 Overton Holdings Ltd v APN New Zealand Ltd [2015] NZCA 526, (2015) 17 NZCPR 251.own interests in a manner that is reasonable in the circumstances".24 He says, that theLoaches failed to do that by not reading the CIN, so they brought their misfortune onthemselves.[48] He says that all of the cases of misleading conduct arising from silence involverepresentations which affected the aggrieved person's perceptions so that failure toprovide the extra knowledge was misleading. In Hieber v Barfoot & Thompson,25 thevendor said a property had "magnificent sea and city views". While true, the vendorfailed to add that he also knew those views were likely to be short lived because ofbuilding plans for a neighbouring property. That silence was held to amount to bemisleading and deceptive. Mr Pierce says that the situation here was similar. The saleinvolved a representation associated with the ordinary risks of purchasing a usedvehicle, when the risks were far higher, and known to McBride.Misleading and deceptive conduct[49] Section 9 Fair Trading Act states:Misleading and deceptive conduct generallyNo person shall, in trade, engage in conduct that is misleading or deceptive or islikely to mislead or deceive.[50] As Thomas J put it, s 9 uses "plain language and its meaning and intent areclear enough without refining or adding to its terms".26 The Courts have been reluctantto be more specific, instead preferring a broad fact-based enquiry. That is particularlyapposite in the case of misleading or deceptive conduct by silence. Mr Pierce referredto Guthrie v Taylor Parris Group Cossey Ltd. Priestley J said:27 it would be wrong to approach the issue of whether an alleged failure todisclose information constitutes misleading or deceptive conduct in amechanical or formulaic way. Whether or not an omission to discloseinformation crosses the boundary into misleading and deceptive conduct mustultimately depend on the circumstances of each particular situation.24 Des Forges v Wright [1996] 2 NZLR 758 (HC).25 Hieber v Barfoot & Thompson Ltd, above n 10.26 Paper Plus NZ Ltd v Robert Mitchell Ltd HC Auckland CL53/92, 10 March 1993.27 Guthrie v Taylor Parris Group Cossey Ltd (2002) 10 TCLR 367 (HC), at [32].[51] Nevertheless, the section must be read in light of the purpose of the legislationas stated in s 1A:1A Purpose(1) The purpose of this Act is to contribute to a trading environment inwhich—(a) the interests of consumers are protected; and(b) businesses compete effectively; and(c) consumers and businesses participate confidently.[52] The FTA is intended to strike a balance between the protection of consumerson the one hand, and the facilitation of business on the other. As explained by Elias J,facilitating business does not mean that the Act is to protect consumers who conductbusiness foolishly or carelessly.28 Nevertheless, the FTA has tempered the commonlaw doctrine of caveat emptor, and is symptomatic of a move towards greaterprotection of consumer rights.[53] No issue was taken with the District Court's reliance on Red Eagle, binding onthis Court. Its statement of the test is straightforward:29whether a reasonable person with the characteristics known to the defendantor of which the defendant ought to have been aware — would likely have beenmisled or deceived.[54] Silence can constitute misleading or deceptive conduct and that is now wellaccepted.30 Mr Andersen referred to Overton Holdings Ltd, for the proposition thatthere must be an 'implicit representation' in order for silence to give rise to a breach,but that case concerned an alleged breach of s 14 of the FTA, which prohibits falserepresentations and other misleading conduct in relation to land. While related, itrefers explicitly to a misrepresentation, whereas s 9 is more broadly couched.[55] Insofar as Mr Andersen means by 'implicit representation' that there must besome sort of tacit assumption or default understanding derived from silence then Iagree. The circumstances must be such that it is likely that a reasonable person in the28 Des Forges v Wright, above n 23.29 Red Eagle Corporation v Ellis, above n 4, at [28].30 See for example Phyllis Gale v Ellicott (1997) 8 TCLR 57,65.purchaser's shoes would be confirmed in their misapprehension by the vendor'ssilence. Put another way if something is known by the vendor to be of consequenceto the purchaser, the purchaser reasonably expects to be told.[56] Apart from these points no challenge has been made to the statement of the lawby the Tribunal, confirmed by the District Court. Its lucid distillation of the applicationof Red Eagle and Guthrie was correct in law, and on the facts.[57] Mr Andersen frames the issue as whether there is a duty when selling a carsubject to statutory write-off to disclose that aspect of the vehicle's history. However,in all cases the particular circumstances must frame the answer whether s 9 FTA hasbeen breached. Gummow J said of a corresponding provision in Australia:31In my view to inquire whether an independent 'duty to disclose' has arisenis to digress from the application of the terms of [the legislation] [T]hequestion is whether in the light of all the circumstances constituted by acts,submissions or statements or silence, there has been conduct which is or islikely to be misleading or deceptive.[58] Similarly, Samuels JA said:32[S]ilence is not misleading only where there is a duty to disclose at commonlaw or in equity. It may simply be the element in all the circumstances of acase which renders the conduct in question misleading or deceptive, whetheror not it also constitutes breach of some other precept of law or equity.[59] The question before the District Court was whether in the particularcircumstances there was misleading or deceptive conduct by McBride. The Court didnot, in its judgment, declare a duty of general application. It made the more modestpronouncement that in the circumstances Mr Cottle's silence regarding the vehicle'sstatutory write-off history was in breach of s 9.[60] Submissions on this judicial review centre on the non-disclosure of the write-off. That was the basis on which the Tribunal found in favour of the Loaches. However,on my reading of its judgment, the District Court went a step further and found therewas a breach of s 9 in McBride's failure to specifically bring the 'imported as31 Demagogue Pty Limited v Ramensky (1992) 39 FCR 31 at [40].32 Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84 at [88].damaged' information to the Loaches' attention. The Court then went on to say that inthe circumstances of McBride's disclose only that the vehicle had been 'imported asdamaged' that would itself be misleading.[61] Whether the Court erred in finding a breach of s 9, then, will be addressed inthe following questions.Question (a): Was it open to the Court to find McBride breached s 9 by not bringingthe 'imported as damaged' status of the car to the Loaches' attention?[62] I am satisfied that it was open to the District Court Judge to uphold the findingof breach on this ground. McBride failed to fulfil its regulatory obligations ofdisclosure. Those regulatory obligations are not merely administrative in nature, butare there to ensure that consumers are well informed when entering into agreementsto purchase used vehicles. The fact that the Regulations place a positive obligation onthe vendor to disclose the damaged status of the vehicle strongly suggests that it is thekind of information purchasers think will be brought to their attention if relevant. Interms of the 'reasonable expectation of disclosure' test purchasers can reasonablyexpect, as an absolute minimum, that vendors will properly disclose informationwhich they are required to at law.[63] Here the Court found that not only had McBride failed to appropriately provideand obtain an acknowledgement from the purchasers of their receipt of the CIN, but itdeliberately obfuscated the damaged status of the vehicle by diverting attention awayfrom that document. The Tribunal found it had not been read by the Loaches and theVOSA reference to the SIN was not just wrong, as there was no SIN, but it wasdiversionary, leading away from the CIN. The submission that the Loaches were atfault for not reading the CIN is unpersuasive given such a finding: McBride stackedthe deck against the Loaches finding out important information which it had aregulatory obligation to disclose.[64] The question then is whether a reasonable person, with the characteristics ofthe Loaches known to McBride, or of which McBride ought to have been aware, wouldlikely have been misled or deceived. McBride could not have assumed that theLoaches were experienced purchasers. It also knew or ought to have known that theLoaches had not read or at least absorbed the CIN, not least because McBride itselfdiverted attention away from it. It knew that the vehicle did not present with any signsof having been significantly damaged. There were no obvious signs of damage, nowarning bells.[65] In my view it was reasonable for the Loaches, given the way the vehiclepresented and the price for which it was being sold, to assume that without evidenceto the contrary the vehicle had not been imported as damaged. McBride's silence, andits obfuscation of the disclosure on the CIN, in the context of a regulatory regime thatrequired that it be brought to the Loaches' attention, had the effect of misleading theLoaches into thinking the vehicle had not been imported as damaged. There wasnothing sufficient in the actions of McBride to tell them otherwise. Thus, in thisrespect McBride's conduct was misleading and deceptive.Question (b): Was it open to the Court to find that disclosing the vehicle had been"imported as damaged", and not the extent of that damage, was abreach of s 9 in all the circumstances?[66] This question assumes the Loaches knew the Amarok was imported asdamaged. It invokes an important issue of principle, but the answer turns on itsapplication to the particular facts.[67] 'Imported as damaged', as Mr Cottle acknowledged, may mean a wide rangeof things. A vehicle statutorily written-off because of significant water damagesuggests it is at the higher end of the scale of 'damage'. Damage may be very minor,or require substantial rebuild or repair. Purchasing a seriously damaged vehicle isrisky, and few fully informed people would be willing to do so on terms, and at a price,set without such background being taken into account.[68] Some levels or kinds of damage may be such that it is enough for a vendor tosay that a vehicle was 'imported as damaged'. At that point the doctrine of caveatemptor comes into play and it is for the purchaser to inquire further. But along thespectrum of damage, at a certain point to merely say that it was imported as damagedbecomes such an understatement of the true state of affairs as to become misleading.Then it becomes incumbent on the vendor to provide the purchaser with a realistic ideaof the history of the vehicle. In my view, a vehicle that had been damaged by water tothe point where it can no longer be re-registered in an Australian state is such a stateof affairs. An accurate description of what is known by the vendor must be providedso the purchaser may follow it up or not as it chooses.[69] The core facts must be borne in mind in any discussion about misleading ordeceptive conduct. In this case, the core facts are that a well-presented Amarok wasoffered for sale without apparent defect, or its accurate history. The Loaches at nostage were aware that the vehicle had been damaged, let alone that it had been subjectto statutory write-off. The vendor McBride knew the vehicle had been importeddamaged, subject to statutory write-off, with some indication why.[70] There are essentially two approaches in deciding whether McBride keepingsuch information close to its chest (as it did) constituted a breach of s 9. The first isthat disclosure of the vehicle as imported "damaged", put the purchaser on sufficientnotice so that it was up to it to make enquiries, to whatever extent it wished, asMr Andersen submits. The purchaser was entitled to honest and complete answers toany questions put to the vendor. A vendor may know nothing more than that thevehicle had been damaged, so could say no more.[71] The second approach is that such disclosure may not constitute sufficientnotice, and in some circumstances that the vendor has an obligation to give thepurchaser a truthful account of the history of the vehicle regardless of whether it asksquestions. The issue in this case crystallises in the circumstances that McBride didknow more about the Amarok. Mr Cottle either made accurate and sufficientdisclosure of the vehicle being damaged, as Mr Andersen puts it, or that wasincomplete and therefore a misleading disclosure of damage. The answer must bebased on a principle which can apply across different factual settings.[72] In searching for such a principle, the myriad factual circumstances must berecognised. If the vendor is aware that the vehicle for example had suffered minordamage to a door in a supermarket carpark then unless asked about any damage itwould not in my view be bound to offer information. If on the other hand the vendorwas aware that the vehicle had been in a major nose-to-tail collision, involvingmultiple vehicles, so that it suffered severe damage by ricochet impacts, then that it isthe sort of information a purchaser would like, indeed need, to know, and the principlewhich emerges for application whether there is reasonable expectation of thatinformation being provided.[73] In my judgment, there will be a reasonable expectation of disclosure in respectof material, but not immaterial information. I recognise a challenge to such a test isthat in some cases it may be entirely obvious, as there is either very severe damageknown to the vendor, or damage that is minimal and of little consequence, and in manyother cases it will be somewhere in between. The answer to this challenge is that thevendor should simply disclose all it knows, and then it is up to the purchaser, armedwith this information, to be on guard, perhaps to abandon the purchase, or to makeenquiries, including having the vehicle further tested and priced. The rationale for thisprinciple is that the purchaser can make an informed judgement having regard to theprice sought, and the wisdom of the purchase, of that vehicle with its particularcharacteristics.[74] Mr Andersen refutes the sufficiency or materiality test and says that disclosurethat the vehicle was imported damaged was accurate and that is an end to it, unless oruntil the prospective purchaser asks for further information at which time disclosuremust be comprehensive and accurate. If Mr Andersen is right then disclosure of'damage', but not what the damage is known to be, is always enough, and not unfairas misleading or deceptive, because the purchaser is free to push on or not with thepossible purchase, making further enquiries or choosing not to.[75] In my view, this is an instance where any reasonable person would haverecognised that disclosure of the vehicle having been damaged was simply not enough,given what was known about it. McBride's stance is to assume a degree ofunderstanding and appreciation on the part of a prospective purchaser, to pick up thecue given by reference to 'damage' and pursue an enquiry for more information.I have reached the view that the answer cannot simply rest on the comprehension,experience, and sophistication of a prospective purchaser alert to risk, but it must beof more general application. Nevertheless, there will be cases where the lack of suchcomprehension may require a greater level of disclosure, more carefully explained.[76] In this case I consider the information known to McBride was such that it hadto be disclosed. Simple disclosure of the vehicle being damaged leaves too much tochance. This is consumer driven legislation, and it is but a small thing to ask of avendor in these circumstances to advise the prospective purchaser of what it knows,where it is obviously, as here, likely to be of consequence to the purchaser and thusmaterial. The test I have articulated is not complex nor is it onerous on vendors. Itmerely requires them to be open, to act in good faith, in respect of the information towhich they are privy. I conclude that the failure to disclose the statutory write-off wasmisleading and deceptive. Reference to "imported as damaged" was so open-ended,that while it comprehended any damage, and thus not false, it did not even hint at thevehicle's history which was clearly material to the Loaches, and McBride would haveknown that. I thus do not regard this conclusion as onerous to McBride. It simply hadto advise what it knew. It was clearly consequential, and material to the purchaser. Ifwhat it knew is minor, inconsequential, then it falls outside the catchment of requireddisclosure.G. CONCLUSION[77] While Mr Andersen mounted a determined and principled challenge on review,the District Court did not err in law in finding McBride in breach of s 9 FTA, as itfailed to sufficiently disclose the fact the Amarok was damaged, and it failed todisclose the statutory write-off.[78] The judicial review is dismissed.[79] Costs are reserved. Counsel may file contemporaneous memoranda and repliesand I will convene a telephone conference if required, or if I wish to hear furthersubmissions..Nicholas Davidson JSolicitors:Craig Paddon Lawyer, DunedinGallaway Cook Allan, DunedinCopy to counsel:L A Andersen, Barrister, Dunedin