Kakahu Aotearoa Limited v Manawatu Motors 1970 Ltd - Reference No. MVD 358/2020 [2021] NZMVDT 28 (1 March 2021)

Last Updated: 21 April 2021

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL

I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 358/2020
[2021] NZMVDT 28

BETWEEN KAKAHU AOTEAROA LIMITED

Purchaser

AND MANAWATU MOTORS 1970 LTD TA ROBERTSON HOLDEN

Trader

HEARING at Palmerston North on 19 February 2021
MEMBERS OF TRIBUNAL

J S McHerron, Barrister – Adjudicator

S D Gregory – Assessor
APPEARANCES

A L Moir, Director of Purchaser
A H P Huwyler, Director of Purchaser
Te U Tamehana, Witness for Purchaser
M R Harris, Dealer Principal of Trader
C D Syverston, Workshop Foreman of Trader

DATE OF DECISION 1 March 2021

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DECISION OF THE TRIBUNAL

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Kakahu Aotearoa Ltd’s rejection of its Holden HSV Colorado SportsCat is upheld. No later than 15 March 2021, Manawatu Motors 1970 Ltd TA Robertson Holden must pay Kakahu Aotearoa Ltd $78,950 minus the on-road costs ($1,250) and the amount Kakahu Aotearoa owes it for servicing work. If there is any dispute as to the final amount owing the parties may advise the case manager and the Tribunal will make a further order if necessary.

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REASONS

Introduction

[1] Kakahu Aotearoa Ltd has rejected the 2019 Holden HSV Colorado SportsCat that it purchased new from Manawatu Motors 1970 Ltd (trading as Robertson Holden) for $78,795 on 28 November 2019.
[2] The directors of Kakahu Aotearoa, Andrew Moir and Annette Huwyler, have experienced a problem with the vehicle’s climate control system.[1] Mr Moir describes the problem as being that the vehicle’s climate control system is “blowing hot or cold all the time, not staying on a constant temperature as a climate control should do”. Robertson Holden acknowledges that the climate control system is not operating as well as desired. It has proactively sought to resolve this dispute with Kakahu Aotearoa. However, the parties have not been able to reach a resolution. They have turned to the Tribunal to assess whether it is appropriate to uphold Kakahu Aotearoa’s rejection of the vehicle.
[3] The following issues arise for the Tribunal’s determination:

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

Issue 1: Did the vehicle fail to comply with the guarantee of acceptable quality?

[4] 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.
[5] “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.

(2) Where any defects in goods have been specifically drawn to the consumer’s attention before he or she agreed to the supply, then notwithstanding that a reasonable consumer may not have regarded the goods as acceptable with those defects, the goods will not fail to comply with the guarantee as to acceptable quality by reason only of those defects.

(3) Where goods are displayed for sale or hire, the defects that are to be treated as having been specifically drawn to the consumer’s attention for the purposes of subsection (2) are those disclosed on a written notice displayed with the goods.

...

[6] 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.
[7] This is not the first time that there have been problems with the climate control system in a Holden HSV Colorado SportsCat sold by Robertson Holden. The parties referred to another similar vehicle that had been rejected for exactly the same reason. In that case, Robertson Motors repurchased the vehicle and replaced it with an identical new vehicle.
[8] The Act provides a defence to a claim of breach of the acceptable quality guarantee, if a defect is disclosed in writing to a prospective purchaser, as provided in subss (2) and (3) of s 7 (above). However, Robertson Motors did not avail itself of this defence by disclosing any issues relating to the vehicle’s climate control system to Kakahu Aotearoa prior to purchasing the vehicle in November 2019.
[9] Mr Moir told the Tribunal that, shortly after purchasing the vehicle, he and Ms Huwyler thought there may have been an issue with its climate control system. At first, they were not worried because they knew that, as a new vehicle, any ongoing issues would be sorted out under the new vehicle warranty.
[10] But it was only after the Covid-19 level 4 lockdown ended, and Mr Moir and Ms Huwyler took the vehicle for a long drive on the West Coast of Te Waipounamu, that they became convinced that there was a problem with the vehicle’s climate control system. They, and their witness Te Utupoto Tamehama, experienced great discomfort on that trip, which occurred in or around June 2020. They struggled to get the climate control system to hold a consistent temperature in the vehicle. Mr Moir and Ms Huwyler described how they had to open and close the windows to try and maintain the vehicle’s temperature. They said that hot air was blowing “aggressively” out of the vents, which became unbearable.
[11] After returning from that trip, Mr Moir called into his local Holden dealer, Ignition Motor Group Whanganui, to ask if it had experience of climate control system problems in other Holden Colorados. Its service manager, Steve Alderton, told Mr Moir that he had experienced problems of a similar kind with another Holden Colorado. Mr Alderton also provided a written statement in which he described his experience with a Holden Colorado, one of three he had used in the past two years, in which there was a “significant temperature differentiation in the heater temperature of between 22 degrees and 23 degrees, where 23 degrees was considerably hotter than the 1 degree difference registering on the control knob.”
[12] Mr Moir says he then spoke with Robertson Holden on or around 22 July 2020. It confirmed to him that problems with the climate control system had been experienced in similar vehicles.
[13] Mr Moir booked his vehicle in to be checked by Robertson Holden. For various reasons the vehicle was not dropped off to be checked until 14 September 2020. Robertson Holden kept the vehicle for approximately two weeks, during which repairs were also made to its bonnet scoop and a brake squeak was fixed. Robertson Holden checked the operation of the climate control system and ensured that the latest software had been installed in the vehicle.
[14] Robertson Holden acknowledged that when the climate control system was set at a certain temperature, the air temperature could be very cold, but that adjustment of the temperature by one degree resulted in the air then blowing very hot. Robertson Holden also acknowledged that the temperature at which this issue occurs can vary depending on external temperature and is normally worse in winter. This may explain why it took until around June 2020, when Mr Moir took the vehicle on a trip, before he realised how bad the problem was.
[15] The vehicle was returned to Mr Moir on or around 1 October 2020. Robertson Holden said it sympathised with him as it agreed that the climate control did not operate as well as desired. It said it had a number of other customers also who had raised the same issue. It said it had also noticed this issue while driving its Holden Colorado demonstrator vehicles. Unfortunately, however, Robertson Holden confirmed there was nothing mechanically it could do to change or improve the climate control system’s operation.
[16] Within about three days after receiving the vehicle back, Mr Moir emailed Robertson Holden on 4 October 2020 to advise that due to the climate control system issue, Kakahu Aotearoa would like to return the vehicle and receive a full refund.
[17] Robertson Holden then undertook to speak with Holden Special Vehicles (HSV) in Australia to advise it of Kakahu Aotearoa’s decision and to see if anything further could be done.
[18] Robertson Holden contacted HSV, which advised that Robertson Holden should open a technical assistance centre (TAC) case with Holden Customer Care. Over the next week or so, Holden Customer Care advised that the climate control system was operating normally according to how it had been designed. It confirmed that there was nothing it could do to fix the problem. However, it suggested some techniques for operating the climate control system which might mitigate Kakahu Aotearoa’s concerns. Mr Moir told the Tribunal that he tried these techniques, but they did not noticeably improve the operation of the climate control system.
[19] As part of the discussion between the parties in an attempt to resolve the matter, Robertson Holden’s dealer principal, Mark Harris, emailed Mr Moir on 27 October 2020, stating:

We are battling a little bit with HSV/Holden Australia who have advised they believe the aircon is operating as intended. This is not our view and we are trying to resolve this.

[20] Furthermore, at the hearing, Robertson Holden’s workshop foreman, Craig Syverston, admitted that the vehicle’s climate control system “does not work as well as desired” and that he would not be 100% satisfied with it if it were his own vehicle. Both Mr Harris and Mr Syverston also admitted that other Holden Colorados had had similar issues, including the one that had previously been bought back by the trader.

Tribunal’s assessment

[21] Even though Holden Australia asserts that the vehicle is operating as intended, it was clear to the Tribunal’s Assessor Mr Gregory and me that the performance of the climate control system in this near-new vehicle was less than what a reasonable consumer would find acceptable, especially given the high purchase price of the vehicle, $78,795. This price firmly places the vehicle in a category in which a reasonable consumer would expect to have a climate control system that was at least capable of keeping the vehicle at a constant temperature to ensure the comfort of driver and passengers. Indeed, it is not hard to imagine this issue affecting the vehicle’s safety, if its occupants are distracted by having to keep adjusting the controls, or opening and shutting windows, to ensure a comfortable cabin environment.
[22] Mr Gregory advised that the evidence shows that the existing climate control system may have a fundamentally defective design. Although it was suggested by Mr Harris and Mr Syverston that problems in other vehicles had been fixed by a software upgrade, they confirmed in the case of Kakahu Aotearoa’s vehicle that the vehicle’s software was up to date.
[23] There appears to be a more significant, underlying design issue that, as Holden Australia has admitted, is either not capable of being fixed or it does not intend to devote the necessary resources to assisting its customers by attempting to fix the vehicle itself.[2]
[24] Accordingly, I accept the evidence of the witnesses for Kakahu Aotearoa that the vehicle’s climate control system is not fit for purpose or free from minor defects to the extent that a reasonable consumer would regard as acceptable, having regard to the near-new nature of the vehicle and the high purchase price paid by Kakahu Aotearoa. Kakahu Aotearoa has therefore established a breach of s 6 of the Act in respect of this vehicle.

Issue 2: What, if anything, is the appropriate remedy?

[25] The remedies available to a consumer who has established a breach of the guarantee of acceptable quality are set out in s 18 of the Act, which provides:

18. Options against suppliers where goods do not comply with guarantees

(1) Where a consumer has a right of redress against the supplier in accordance with this Part in respect of the failure of any goods to comply with a guarantee, the consumer may exercise the following remedies.

(2) Where the failure can be remedied, the consumer may—

(a) require the supplier to remedy the failure within a reasonable time in accordance with section 19:

(b) where a supplier who has been required to remedy a failure refuses or neglects to do so, or does not succeed in doing so within a reasonable time,—

(i) have the failure remedied elsewhere and obtain from the supplier all reasonable costs incurred in having the failure remedied; or

(ii) subject to section 20, reject the goods in accordance with section 22.

(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.

(4) In addition to the remedies set out in subsection (2) and subsection (3), the consumer may obtain from the supplier damages for any loss or damage to the consumer resulting from the failure (other than loss or damage through reduction in value of the goods) which was reasonably foreseeable as liable to result from the failure.

[26] In the present case, s 18(3) of the Act applies, as it has been admitted by Robertson Holden that this failure cannot be remedied. That entitles Kakahu Aotearoa to reject the vehicle under s 18(3)(a), subject to s 20 of the Act. That section provides that the right to reject goods is lost if (inter alia) it is not exercised within a reasonable time following the supply of the vehicle. As described earlier in this decision, there was a delay of several months before Mr Moir and his colleagues identified the severity of the problem. I accept their justification for this delay, namely the fact that the problem is worse in winter, and that it takes a period of time before the problem becomes apparent on any particular journey, so it was more apparent on the long trip that Mr Moir and his colleagues took in the vehicle in June 2020. This evidence was not disputed by Mr Harris and Mr Syverston on behalf of Robertson Holden. Therefore, I conclude that Kakahu Aotearoa exercised its right to reject the vehicle within a reasonable time from the time of supply of the vehicle.
[27] Accordingly, I conclude that Kakahu Aotearoa was entitled to reject the vehicle and I uphold its rejection. Prima facie, that means it is entitled to a refund of the purchase price. One of the obstacles to settling this matter had been Robertson Holden’s concern about the amount of time Kakahu Aotearoa had used the vehicle and the distance that it had driven it, some 12,632 km. As I said at the hearing, rejection is a blunt instrument that prima facie entitles a purchaser to a refund of the full purchase price.[3] That is why notification of the decision to reject must occur reasonably promptly.
[28] In the present case, it is appropriate to deduct the on-road costs paid in respect of the vehicle, $1,250, to reflect the use that Kakahu Aotearoa has had of the vehicle in the time since it purchased it (during which it has enjoyed the benefit of what those on-road costs were for). In addition, Mr Harris mentioned that there was an unpaid bill of approximately $500 for servicing or repair work carried out by Robertson Holden in respect of the vehicle. It is entitled to deduct that amount from the amount it pays Kakahu Aotearoa to settle this matter. That means that the payment due by way of refund for the vehicle will be approximately $77,000.

Conclusion

[29] Kakahu Aotearoa’s rejection of the vehicle is upheld, but Robertson Holden may deduct the on-road costs, and the unpaid bill (approximately $1,750) from the amount it must repay Kakahu Aotearoa within 14 days of the date of this decision. I will leave the parties to sort out calculation and payment of the correct amount among themselves. If there is any issue about this, they should advise the case manager and I will make further orders if necessary.

J S McHerron
Adjudicator

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[1] Some of the documentation presented as part of Kakahu Aotearoa’s application refers to the vehicle’s HVAC (heating, ventilation and air conditioning) system. For simplicity, this decision refers to the vehicle’s “climate control system” as a catch-all term.

[2] It is also relevant that, since Kakahu Aotearoa purchased the vehicle, General Motors has announced that it is retiring the Holden brand and leaving the Australia and New Zealand market altogether. That has meant that Robertson Holden has been unable to offer a replacement vehicle in the present case, unlike the other case discussed, where the affected vehicle could be bought back and swapped for a similar replacement vehicle.

[3] Consumer Guarantees Act 1993, s 23(1)(a).