Financiers selling repossessed vehicles are dealers requiring registration under the Motor Vehicle Sales Act or otherwise must sell though a registered dealer.
In a test case, former Rotorua district councillor Geoff Kenny asked the High Court whether his Wellington finance company selling repossessed cars made him a motor vehicle dealer. His business MTF Lower Hutt sells around one hundred repossessed cars a year on TradeMe.
The court was told Mr Kenny’s business was careful to signal it was not a registered motor vehicle dealer with prominent notices displayed: on his MTF Lower Hutt website offering car finance, on shopfront advertising and on TradeMe listings. Only some five per cent of MTF Lower Hutt financing deals see borrowers default. Mr Kenny said registered dealers are nervous of selling repossessed vehicles on behalf of finance companies; vehicle history is unknown and often vehicles have been poorly maintained. Mr Kenny had used Turners Car Auctions, which is a registered dealer. He preferred TradeMe. Unlike Turners, it does not charge a fee to both buyer and seller. In addition, there are GST benefits. He said there is ample consumer protection rules in the Credit Contracts and Consumer Finance Act which govern MTF Lower Hutt’s repossession sales.
Justice Mallon ruled registration was required for MTF Lower Hutt under the Motor Vehicle Sales Act because selling ‘more than six vehicles in a twelve month period for the primary purpose of gain’ is by definition dealing. MTF Lower Hutt looked to make a 'gain'. While Credit Contracts legislation requires financiers to take reasonable care to get the best price possible on repossessions, this does not negate the fact MTF Lower Hutt was seeking to ensure it made ‘a gain’ on its loan exposure in each repossession sale, Justice Mallon ruled.
Kenny v. Business Innovation & Employment – High Court (6.08.18)
18.158