Trade Board indemnifies itself - JUCDA livid, prepares for battle
Marcella Scarlett, Business Reporter
The Customs declaration form for motor vehicle imports has been amended to exempt agents of the Government from legal liabilities that may arise from age discrepancy of vehicles entering the Jamaican market.
The Trade Board, too, now requires car dealers to sign a similar indemnity as a condition of licence renewals and approval of permits for vehicle imports.
The changes are occurring amid warnings from car dealers that they are prepared to sue the trade agency if they are forced by the courts to pay compensation relating to age discrepancies for cars already sold.
The Attorney General's (AG) Department, however, has dismissed those threats as lacking teeth.
The Customs Department and Trade Board made changes to their paperwork in May.
"Our function is to facilitate trade, so while we can't say to them, 'You can't import these cars,' we can make ourselves free from any unfortunate incidents that may arise, such as if it is found that the item is being misrepresented," Commissioner of Customs Richard Reese told Wednesday Business.
Regarding the changes to the declaration form: "We have amended it to include an indemnity clause to indemnify the Government of any issues that may arise due to misrepresentation of the vehicle," Reese said.
The changes are guided by a legal opinion from the Attorney General's Department issued September 5, 2012 which establishes the Trade Board as the "competent authority" responsible for determining the age of motor vehicles to be imported.
The function was delegated by ministerial order to the trade administrator on December 6, 2011.
The AG also suggested that the Trade Board consider establishing protocols for verifying information with the authorities in the markets where vehicles are sourced, for the purpose of "due diligence" in fulfilment of its regulatory function. And the Trade Board was advised to amend the application form to state explicitly that the obligation to provide accurate information rests with the importer.
On October 30, close to two months after the opinion was issued, then permanent secretary in the Ministry of Industry Investment and Commerce, Reginald Budhan, instructed then acting Trade Commissioner Bentham Hussey to revise the import application forms.
Still, the issue of where the obligation rests is shaping up to be the focus of a legal fight involving at least six car dealers, which the Fair Trading Commission (FTC) plans to take to court this summer over 43 complaints at last disclosure that the wrong model years were quoted to car buyers.
Lynvalle Hamilton, president of the Jamaica Used Car Dealers' Association (JUCDA) - who previously disclosed that up to 25 members and about 2,500 vehicles appear to be affected by the mix-up - says if the FTC wins its case, JUCDA members would in turn sue the Trade Board to recover any damages.
The age discrepancies mainly involve Singaporean vehicles, whose 17-character vehicle identification number does not disclose the model year.
Car dealers who usually declare the model year of the vehicles to be imported are arguing nonetheless that the responsibility for ensuring that the information is correct rests solely with the Trade Board, according to Hamilton.
As such, the state agency, having granted the import licence, is legally liable if age discrepancies are found after the vehicles are landed, he told Wednesday Business.
The Government's legal advisers disagree.
The AG Department dismissed that line of argument, saying it has "no basis in law" because the Trade Board is a facilitator and not a party to the contract between car dealer and supplier.
"A well established principle of the law of contract is the doctrine of privity of contract. No one may be entitled to, or bound by, the terms of a contract to which he is not an original party," the attorney general's office wrote last September.
"It has long been an axiom of common law that a contract between A and B cannot impose a liability upon C."
The AG Department also cited Section 6 of the Motor Vehicle Import Policy, which is explicit that: "In all cases, the dealer is responsible to ensure that that there is no misrepresentation to the consumer", who may sue the dealer whether the company, "knowingly or unknowingly" sold a vehicle on which information is later found to be incorrect.
Victor Cummings, the current trade administrator, said the Trade Board has recommended changes to the motor vehicle policy, which is under review by the Ministry of Industry.
Cummings wants used-car dealers to declare in writing to the Trade Board that they have settled outstanding issues - including complaints relating to age discrepancies - when they apply to renew operating licences. Dealers are required to apply for recertification annually.
If accepted, the new conditions will take effect by year end, he said.
"After these amendments are made, this issue or any other issue about age discrepancy will be a thing of the past," Cummings told Wednesday Business.
The trade administrator said dealers are being encouraged to make this declaration even before it is written into the policy.
"Most of them are complying, but we have another set that is resisting," he said.
"It is not mandatory right now, it is just recommended, but after the new policy comes into effect, it will be a requirement, and they won't get their permit renewed if they don't comply - and they can't operate without a permit," he said.