Dunedin dealer failed to disclose write-off status

The 2013 Volkswagen Amarok purchased by Steve and Diane Loach. Photo: NZ Herald / Supplied
The 2013 Volkswagen Amarok purchased by Steve and Diane Loach. Photo: NZ Herald / Supplied

An Otematata couple who bought a $40,000 vehicle from a Dunedin dealer only to learn it was declared a write-off before being imported are backing changes to give buyers clearer vehicle history information.

The Motor Vehicle Disputes Tribunal wants action, after dealing with a high number of cases involving vehicles imported after being declared statutory write-offs in Australia.

Changes are likely; the Ministry of Business, Innovation and Employment (Mbie) has confirmed a review of information disclosure regulations will take place this year.

Hundreds of vehicles written off in Australia have been brought into New Zealand every month, totalling 1731 imported in 2015/16 (both statutory and insurance write-offs).

In Australia, a statutory write-off means a car has sustained damage serious enough that it cannot be registered again. That can be because of an accident, flooding or even hail damage. Such vehicles can be imported to New Zealand and used for parts, or repaired and sold-on after certification.

Otematata retirees Steve and Diane Loach were unaware Australian write-offs could be sold here, until they unknowingly purchased one for $40,000 from a Dunedin dealer. Steve Loach labelled the import rules "insane".

"Why should our Government allow those vehicles to be purchased, brought back here, so an unsuspecting purchaser will end up owning it without the faintest clue of its history?

"Who knows how long it takes for [damage] to surface and become a massive issue? You could be taking your kids to the swimming pool, and all of a sudden someone pulls out and the airbags don't work."

The tribunal heard at least 11 cases related to Australian write-offs in 2016/17, and highlighted the issue in its annual report.

Two cases detailed in the report both involved Dunedin's Tokyo Auto Town, owned by Mervyn Cottle's company McBride Street Cars.

In one, Philip Slimm discovered several months after buying a 2013 Volkswagen Golf TSI Cabriolet that it had been classified as a statutory write off in Queensland. Slimm said he wouldn't have bought the $22,000 car had he known its history.

Traders must attach a consumer information notice (CIN) to all used motor vehicles, which contains certain information including whether a vehicle was recorded as damaged when it was imported.

While Cottle disclosed in the CIN that the vehicle was a damaged import, the tribunal concluded Slimm should have been told about the write-off status, and awarded $4000.

In the second case involving the Loaches, the tribunal concluded the write-off status should have been disclosed and the Fair Trading Act was therefore breached. A full refund was ordered.

That decision was upheld by the District Court. Cottle has applied for a judicial review of the court's decision. A High Court decision released this week upheld the district court's decision, and denied a judicial review. The vehicle was returned to Tokyo Auto Town, and the $40,000 will be released by the Loaches' lawyers.

About two months after purchasing the 2013 Volkswagen Amarok the Loaches said they noticed a shuddering coming from the transmission, and a mechanic gave the view that the cause was most likely from fluid contamination.

New Zealand Transport Agency (NZTA) records confirmed the vehicle was auctioned in Queensland as "statutory write-off, unable to be re-registered, water affected – mechanical issues".

Loach said it had been more than a year since the tribunal's decision, and he and his wife were still out of pocket about $50,000, including significant legal costs.

"It has been the most hellish experience to go through this … we are retired and trying to get this thing behind us. And you can't lay your head on the pillow at night because it won't go away."

Cottle argued the CIN had been presented – something disputed by the Loaches – and that made clear the vehicle was imported as damaged. Adding additional information to the CIN wasn't allowed, Cottle told the tribunal, and he would have disclosed the vehicle's write-off status if asked about the vehicle's history.

He told the Herald he didn't want to comment before the judicial review decision, but said he had done everything required by accurately filling out and displaying the CINs: "there is only one box you can tick, and it was ticked".

There were probably 20 or 30 dealerships that specialised in Australian imports, Cottle said. Selling former write-offs was a part of his business, "but I wouldn't say a big part".

Cottle said the current system was "two-faced", because the NZTA was unable to get write-off information from countries other than Australia, including Japan, which does not keep a register and accounts for the vast majority of used imports.

"They could be anything. But unless it gets picked up at a border inspection, you don't have to disclose anything. The Japanese side of it is a lot, lot worse."

In its annual report, the Motor Vehicle Disputes Tribunal suggested a review of regulations prescribing what information is disclosed in the CIN form, to include a requirement for traders to confirm whether the vehicle has been written-off in another country.

An Mbie spokeswoman said such a review was expected this year, and would consider changes such as a requirement to disclose if a vehicle has been written-off, and vehicle safety ratings.

An NZTA spokesman said buyers were strongly advised to use the www.rightcar.govt.nz website to check the history of a vehicle. The term "write-off" was primarily an insurance term and was applied in a wide range of ways, the spokesman said, and Australian states had different thresholds when deciding if a vehicle was a statutory write-off.

"Some states such as New South Wales have a very low threshold ... there are systems in place to ensure damaged vehicles imported from all countries are safely repaired before going on the road in New Zealand.

"All vehicles go through invasive inspections when they enter New Zealand ... and vehicles identified as damaged during pre-registration inspections are referred for specialist repair certification."

In September 2016 the NZTA introduced new rules requiring water-damaged light vehicles, including imports, to have a full replacement of all electronic safety components such as airbags, sensors and wiring. Previously, only items below the water line had to be replaced.

Tony Everett, dealer and mediation specialist at the MTA, said those tougher standards would make it much more uneconomical for dealers to bring in write-offs from Australia.

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