Stargate IT v Hutt Valley Ssangyong Limited Reference No. MVD 324/2018 [2018] NZMVDT 265 (15 November 2018)

Last Updated: 18 December 2018

BEFORE THE MOTOR VEHICLE DISPUTES TRIBUNAL

[2018] NZMVDT 265
Reference No. MVD 324/2018

IN THE MATTER of the Motor Vehicle Sales Act 2003

AND

IN THE MATTER of a dispute

BETWEEN STARGATE IT

Purchaser

AND HUTT VALLEY SSANGYONG LIMITED

Trader

MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

D Binding – Assessor

HEARING at Wellington on 15 October 2018

DATE OF DECISION 15 November 2018
APPEARANCES

R Bastet, Director of Purchaser
R J M Bastet, Director of Purchaser
S G Hartnell, After Sales Manager of Trader

DECISION

Mr and Mrs Bastet's claim on behalf of their company, Stargate IT, is dismissed.

REASONS

Introduction

[1] Mr and Mrs Bastet, through their company Stargate IT, purchased a brand new SsangYong Rexton in 2016 for $43,990 from Hutt Valley SsangYong Limited (HVS). They have driven the vehicle for nearly 52,000 km since purchasing it but have two long-standing concerns about it. These concerns are so significant to them that they consider HVS should take the vehicle back and refund them $38,000. Alternatively, Mr and Mrs Bastet seek compensation for the time the vehicle has been in HVS's workshop. The compensation they seek would reflect three months’ worth of their loan repayments on the vehicle, plus $5,000 for what they describe as the vehicle's lost safety features.
[2] From this background, the following issues arise:

• (a) Did the vehicle fail to comply with the guarantee of acceptable quality?
• (b) If so, what is the appropriate remedy?

Issue one: Did the vehicle fail to comply with the guarantee of acceptable quality?

[3] Section 6(1) of the Consumer Guarantees Act 1993 (the Act) provides that "where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality”. According to s 2 of the Act, “goods” includes vehicles.
[4] "Acceptable quality" is defined in s 7 of the Act (as far as is relevant) as follows:

7. Meaning of acceptable quality

(1) For the purposes of section 6, goods are of acceptable quality if they are as—

(a) fit for all the purposes for which goods of the type in question are commonly supplied; and

(b) acceptable in appearance and finish; and

(c) free from minor defects; and

(d) safe; and

(e) durable,—

as a reasonable consumer fully acquainted with the state and condition of the goods, including any hidden defects, would regard as acceptable, having regard to—

(f) the nature of the goods:

(g) the price (where relevant):

(h) any statements made about the goods on any packaging or label on the goods:

(ha) the nature of the supplier and the context in which the supplier supplies the goods:

(i) any representation made about the goods by the supplier or the manufacturer:

(j) all other relevant circumstances of the supply of the goods.

[5] Whether a vehicle is of acceptable quality is considered from the point of view of a reasonable consumer who is fully acquainted with the state and condition of the vehicle, including any hidden defects.
[6] Mr and Mrs Bastet purchased the vehicle on 10 May 2016. They were attracted to its hands-free and voice-controlled central display or head unit. The head unit was meant to support phone calls, “mode navigation” and a navigation system.
[7] Mr and Mrs Bastet were also attracted to the fact that the head unit was compatible with their Nokia Lumia phones, which run on the Windows 10 operating system and are independent of both Google and Apple.
[8] However, Mr and Mrs Bastet say they found that the head unit and its integration with the steering wheel controls did not work as promised. The head unit began to "freeze" when the DVD player was being used and there were instances of file failure. Moreover, the voice controls and steering wheel controls did not operate correctly.
[9] The vehicle has been in for repairs by the trader at least four times (the purchasers say eleven times), but these repairs have not remedied the problems for Mr and Mrs Bastet.
[10] The original head unit installed in the vehicle was not factory-installed but was a Pantera-branded unit that was fitted after-market by SsangYong NZ through RVE Vehicle Enhancement in Auckland. It was an upgraded head unit, designed to provide features such as GPS that were not in the standard head unit installed by SsangYong at the time.
[11] After problems with the original head unit were identified, HVS installed an identical Pantera replacement unit, but this also failed.
[12] In January 2018, HVS replaced the Pantera head unit with a Phillips CED 1910 as a trial solution. A map card error was promptly rectified, but Mr and Mrs Bastet decided they did not want the Phillips unit as it had fewer features than the Pantera. In particular, the Phillips unit did not have voice activation for GPS or phone.
[13] In June 2018, HVS made further inquiries with RVE Vehicle Enhancement, but it no longer supports or sells any audio equipment and was unable to supply a replacement solution.
[14] HVS then explored whether an Alpine model head unit might work instead. HVS purchased a unit and fitted it to the vehicle, but a physical problem was identified with it, rendering the Alpine unit unsuitable. It was never supplied to Mr and Mrs Bastet.
[15] Finally, a Sony XAV–200 unit was fitted which HVS claims has been 100 per cent successful.
[16] The remaining problem, however, is that the Sony head unit depends on the Android Auto or Apple Car Play applications. Mr and Mrs Bastet have phones that do not run on either of these systems. In the meantime, pending resolution of this dispute, the original Pantera head unit has been reinstalled in the vehicle, but HVS accepts that it is defective.

Air conditioning unit

[17] Mr and Mrs Bastet also have concerns about the vehicle’s air conditioning system which, they say, does not maintain a constant temperature. They provided several videos which they said demonstrate that the air coming from the vents is in fact much colder than the temperature that is set on the air conditioning controls.
[18] Neil Hodgson from SsangYong Dealer Liaisons provided a written statement explaining how the "Full Automatic Temperature Control" system fitted in the vehicle works (verbatim):

Regarding the operation of the SsangYong Rexton FATC This stands for Full Automatic Temperature Control, the operation of this in Auto mode is that it can be set at an operator’s choice of temperature, i.e. 22 degrees, once this is selected it adjusts the cabin temperature through multiple sensors to keep the cabin temp at 22 degrees, now the only way it can do this is by controlling the air flow inside the heater/AC it does not direct 22 degrees to come out of the Vents as it cannot control the temp it can only control the vent and direction, for Example you start the Rexton at 10 degrees C [in] the morning it will blow as much hot air until it reaches a cabin temp of 22 degrees, as you drive along the sun comes up and yourself and maybe another passenger are in the car both in the sun and persons in the Rexton the cabin temperature rises because of body heat and sunlight in a closed space (the cabin) so the FATC turns on cold air initially at 1 fan speed but if this is not lowering the temp it will engage AC to lower the temp (Cabin temp will still be above 22 degrees) only when the cabin temp gets to 22 degrees will it turn the air flow off, This unfortunately gives the operator the impression it is getting cold as they have been subjected to something like 24 degrees and are now getting cool air from the vents this gives the impression it is not keeping 22 degrees when in reality it is trying to hold at 22 degrees by cooling the hot interior.

In no way does the FATC blow air at the temperature set on the auto indicator it either warms or cools the cabin by ambient or AC depending on whether it needs to raise or lower the Temp

If any sensor fails, then there is ability to Auto Diagnose through the FATC for faults in sensors or vent motors etc which in this case there are no faults with the FATC.

[19] Mr Bastet confirmed in the hearing that he understands the set temperature does not necessarily correspond directly with the temperature coming out of the vents but relates to the cabin temperature.
[20] This indicates that Mr Bastet understands that the real issue, as explained by Mr Hodgson, is what is the cabin temperature, not what is the temperature of the air coming out of the vents.
[21] However, only one of Mr Bastet’s videos involved him measuring the cabin temperature. That video, in which Mr Bastet used a temperature probe to measure the temperature of air in the vents and then quickly compare it to the cabin temperature, showed that with the control unit set to 22 degrees, Mr Bastet’s temperature probe recorded a cabin temperature of 20 – 22 degrees.
[22] Neither from this video, nor from any other evidence produced by Mr and Mrs Bastet, is it possible to conclude that the air conditioning system is defective. Rather, the evidence Mr Bastet provided indicates the cabin temperature was at or near the temperature that was selected.
[23] Mr and Mrs Bastet were very sure that something is wrong with the vehicle's air conditioning system. I am not saying they are wrong. The problem for them is that they have not proved there is a defect, so the Tribunal is unable to uphold their claim. Fortunately, HVS is willing to undertake further testing of the air conditioning system at its cost. I encourage the parties to co-operate to ensure that these tests occur, and so that any problems identified can be remedied.

Conclusion in relation to acceptable quality

[24] Accordingly, on the basis of the above findings, I conclude that the original Pantera head unit in the vehicle failed to correspond with the guarantee of acceptable quality (this was accepted by the trader). However, I conclude that Mr and Mrs Bastet have not proved that the air conditioning system in their vehicle is defective. Nevertheless, as indicated above and at [35] below, Mr Binding and I consider further testing of the air conditioning system is warranted. HVS said at the hearing it would be willing to undertake such testing.

Issue two: What is the appropriate remedy?

[25] Section 18(3) of the Act provides the following options to a consumer where goods do not comply with a guarantee, but the failure cannot be remedied:

(3) Where the failure cannot be remedied or is of a substantial character within the meaning of section 21, the consumer may—

(a) subject to section 20, reject the goods in accordance with section 22; or

(b) obtain from the supplier damages in compensation for any reduction in value of the goods below the price paid or payable by the consumer for the goods.

[26] As is clear from the above analysis, it is accepted that the head unit is defective but that, as it is now obsolete, it cannot be repaired. Accordingly, s 18(3) of the Act is triggered as the failure in the head unit cannot be remedied. In theory, therefore, Mr and Mrs Bastet could argue that s 18(3)(a) of the Act applies, allowing them to reject the vehicle.
[27] However, s 18(3)(a) is expressed to be “subject to section 20”. That section provides that the right to reject goods is lost if not exercised within a reasonable time. Reasonable time is defined in s 20(2) as a period from the time of supply of the goods in which it would be reasonable to expect the defect to become apparent. On any assessment, the period envisaged by s 20(2) as a “reasonable time” for rejecting the vehicle is long over. As mentioned at the outset, Mr and Mrs Bastet purchased this vehicle well over two years ago. They have driven over 50,000 km in it. The defects in the head unit became apparent early on in the Bastet’s ownership of the vehicle. Understandably, they gave HVS several opportunities to repair the issue. They argue that HVS’s lack of success in fixing the problems should not count against them.
[28] Nevertheless, s 20(2) is relatively inflexible and depends on a consumer who wishes to reject a vehicle doing so promptly after the defect has reasonably become apparent. In that way, the Act balances the rights of consumers with those of suppliers of goods. As discussed, I consider that window of opportunity has long since closed for Mr and Mrs Bastet. It would be extremely harsh on HVS to allow them to reject their vehicle so long after they purchased it, and after they have used the vehicle so extensively.
[29] With the right of rejection unavailable, that leaves the remedy envisaged in s 18(3)(b), namely damages in compensation for reduction in value of the vehicle below the price paid or payable. Here again, I consider Mr and Mrs Bastet have difficulties. There was no evidence produced to indicate that their vehicle has lost any value due to the defects in the head unit. Even if it has lost value, it is unlikely to be any more than a few hundred dollars.
[30] HVS says that, as technology has changed at a rapid rate, what was available two years ago at the time of purchase is already obsolete. In recent times, Apple Car Play and Android Auto are being integrated by most car manufacturers into new cars, reflecting the fact that navigation and audio systems in cars are increasingly operating as an extension of their drivers' phones. Nearly all phones nowadays rely on Apple’s iOS or Google's Android operating systems.
[31] HVS is prepared to replace the Pantera unit with the Sony unit (with an extended warranty), which it says will be compatible with the steering wheel controls in Mr and Mrs Bastet’s vehicle.
[32] HVS is also prepared to offer Mr and Mrs Bastet a replacement Android phone each. It is ultimately their choice whether to accept this offer. Mr Binding and I consider HVS's offer to be a perfectly reasonable and pragmatic solution to the fact that the Act itself provides them with no effective remedy.
[33] Mr and Mrs Bastet will need to choose between:

• (a) maintaining their objection to using Google or Apple, but with the need to keep a defective and obsolete Pantera head unit; or
• (b) adopting the Google or Apple application, in the interests of getting a replacement head unit that works.

[34] Whichever of these options they choose, it is a matter for their decision rather than something that is suitable for an order to be made by the Tribunal.
[35] In relation to the vehicle’s air conditioning system, Mr Binding’s view is that Mr and Mrs Bastet’s concerns need to be properly tested and verified against a comparative car of the same type. It would also be beneficial for HVS to arrange for independent testing by a suitably qualified agency. HVS indicated at the hearing that it is happy to commission an independent test of the heating/air conditioning system at its cost.
[36] Ultimately, therefore, the resolution of this case involves the pragmatic options suggested above. It is not a case in which the Tribunal has available to it other options by way of orders that it can or should make against HVS. Accordingly, Mr and Mrs Bastet’s claim on behalf of their company, Stargate IT, must be dismissed.

J S McHerron
Adjudicator