Dispute over deposit placed on car

DISPUTE: Colin Flipp is in dispute with a Masterton car dealer over a deposit. PHOTO/ALISA YONG

An agreement between an elderly man and a Masterton car dealer has turned sour after a dispute over whether a deposit should be refunded.

Eketahuna man Colin Flipp, 70, paid a $2000 deposit to Auto Imports and Wholesale Limited to purchase a $19,000 Honda CR-Z as a surprise for his wife's birthday, intending to pay the difference from an expected inheritance settlement.

But when his inheritance money failed to come through several months later, Mr Flipp said he decided to cancel the sale.

He had contacted the car dealer several times but was told it was a "non refundable holding deposit" and that the money could only be transferred to the sale of another vehicle, he said.

"I wanted a surprise for my wife for her birthday - but it's turned into a nightmare."

He had signed a written "agreement to purchase" but there was no written agreement around the terms of the deposit, he said.

He had sought advice from the Citizen's Advice Bureau and believed he was entitled to get his deposit back, he said.

"I'm just disappointed ... I'm not going to be pushed around by a bully, I'm going to stand my ground."

Director of Auto Imports and Wholesale Lawson Hoggard said he did not understand why Mr Flipp would provide a deposit if he was unable to complete the sale.

"I don't think we've acted improperly. At the end of the day he signed up to buy a car in February and four to five months later changed his mind. And in four to five months the market can change considerably so it's probably cost us more than $2000."

"We've held the car based on the deposit so basically we've lost value."

They had also done some work on the car in preparation for Mr Flipp taking it, he said.

A Commerce Commission spokeswoman said the general rule was a deposit was not refundable. However, if a false representation was made about the deposit, a complaint could be made under the Fair Trading Act.

Motor Trade Association (MTA) chief executive Warwick Quinn said deals could become "problematic" if the terms were not documented.

"It is not uncommon for deposits to be non-refundable, but that should be part of the document and it should be very clear what the conditions are."

"Every set of circumstances tends to be unique when you get these deposits."

MTA dealer services and mediation manager Tony Everett said there was "no hard and fast rule" on deposits but "generally normal business practice is that it's not refundable but most dealers would revisit that."

It should be recorded on the sale form if a deposit was refundable or not, although there was no legal obligation to have a written contract, he said.

Most dealers would often take into account the individual situation of each sale and make allowances depending on the circumstances and the nature of the agreement, although in some cases a dealer might retain a portion of the deposit if work had been done on the car, Mr Everett said. He recommended Mr Flipp contact the Motor Vehicle Disputes Tribunal, which specialises in problems with motor vehicles.