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Leon v Gulf Motor Holdings Ltd - Reference No. MVD 365/2022 [2022] NZMVDT 258 (22 November 2022)

Last Updated: 26 December 2022

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL
I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA

MVD 365/2022
[2022] NZMVDT 258

BETWEEN DAVID LEON

Applicant

AND GULF MOTOR HOLDINGS LTD
Respondent





HEARING at AUCKLAND on 1 November 2022 (by audio-visual link)

MEMBERS OF TRIBUNAL
B R Carter, Barrister – Adjudicator
S Gregory – Assessor




APPEARANCES
D Leon, Applicant
C Innes, for the Respondent
R McKay, D Benito and D Bruce, Witnesses for the Respondent

DATE OF DECISION 22 November 2022

_________________________________________________________________

DECISION OF THE TRIBUNAL

_________________________________________________________________

David Leon’s application is dismissed.

_________________________________________________________________

REASONS

Introduction

[1] David Leon wants to reject the 2020 Mercedes-Benz GLC 300 plug-in hybrid he purchased for $90,000 from Gulf Motor Holdings Ltd (GMH Ltd) in March 2022. Mr Leon says that GMH Ltd misrepresented the vehicle’s electric battery range, and that the vehicle has had a recurring fault that affects the charging capacity of the electric battery. Mr Leon says that he has given GMH Ltd several opportunities to rectify the battery capacity fault, and it has failed to do so. He has therefore applied to the Tribunal seeking to return the vehicle for a full refund of the purchase price and $10,000 in damages
[2] GMH Ltd says that it initially found issues that might affect the vehicle’s electric battery, but it has repaired those issues and has been unable to find any ongoing faults. It also says that the vehicle’s electric battery range is normal when it tested the vehicle, and it believes that the issues experienced by Mr Leon may be caused by the way he drives the vehicle.

Relevant background

The electric battery range indicator

[3] The vehicle has an “electric only” mode, which enables the vehicle to be driven solely off the vehicle’s high voltage lithium-ion battery (the electric battery), with the internal combustion engine only engaging when the electric battery is depleted. The vehicle’s electric battery range indicator displays the estimated distance that can be driven before the electric battery is depleted (the predicted range).
[4] The predicted range is calculated using an algorithm. GMH Ltd has provided information from Mercedes-Benz AG[1] (the vehicle’s manufacturer), which states that the algorithm considers factors including: the current outside air temperature, the air-conditioning settings, the battery capacity, the characteristics of previous journeys (including driving style and use of power consuming components like seat heating, lights and smartphone charging function). Further, if the active navigation or active commuter route functions are used, additional information about the route ahead (including elevation profile and traffic volume) can be included in the predicted range calculation.

Pre-purchase discussions

[5] Mr Leon spoke with Rhys McKay, a GMH Ltd salesperson, before purchasing the vehicle. Mr Leon says that he told Mr McKay that he needed the vehicle to travel more than 40 km in electric only mode, as he lives in a semi-rural area. Mr Leon says that Mr McKay told him that the vehicle would travel that distance in electric only mode. Mr Leon also says that Mr McKay showed him the predicted range on the vehicle’s display, which indicated that the vehicle would travel 48 km when the electric battery was fully charged.

The communication error and air-conditioning fault

[6] Mr Leon says that about six weeks after purchase the vehicle’s electric battery range dropped dramatically, and the battery would only charge to 75 per cent. By this time, Mr Leon says that the vehicle only travelled 31 to 34 km on electric battery power when fully charged. Mr Leon says that the vehicle had previously travelled at least 42 km on each battery charge.
[7] Mr Leon returned the vehicle to GMH Ltd on about 27 May 2022, when the vehicle’s odometer reading was 45,222 km. GMH Ltd:
[8] The vehicle was returned to Mr Leon, but he remained concerned about the vehicle’s electric battery range. He says that the electric battery now charged to 100 per cent, but the maximum predicted range was 34 km.
[9] Mr Leon continued to use the vehicle, and by 15 July 2022, a “hybrid malfunction” warning had appeared on the vehicle’s display, so the vehicle could not be driven. The vehicle was transported to GMH Ltd, when the odometer reading was 48,905 km. GMH Ltd found a fault with the vehicle’s air-conditioning compressor. GMH Ltd replaced the air-conditioning compressor.

Mr Leon’s ongoing concerns

[10] The vehicle was returned to Mr Leon on about 28 July 2022. Mr Leon says that he charged the vehicle, and the range predictor showed a predicted range of 43 km. He then drove the vehicle and the electric battery depleted to the extent that he could travel only 30.2 km before it was depleted. Mr Leon says that the range reduced even further to 28 km on 31 July 2022.
[11] Mr Leon then contacted GMH Ltd and attempted to reject the vehicle. Craig Innes, the Dealer Principal at GMH Ltd, advised Mr Leon that the company would send an employee to test drive the vehicle with Mr Leon. A test drive then occurred. Mr Leon says that the vehicle was driven at low speeds, without air-conditioning and only managed a distance of 35 km before the electric battery discharged.
[12] The vehicle was then returned to GMH Ltd on 12 September 2022. GMH Ltd again performed some repairs, including finding a fault with the driver’s seat forwards/backwards motor and updating the Heads Up display software, but says that it found no faults relating to the vehicle’s electric battery. Diego Benito, a Team Leader at GMH Ltd, says that he also test drove the vehicle on three occasions. On the first test drive, the electric battery range exceeded 30 km. On the second and third test drives, the range was 44.2 km and 48 km respectively. GMH Ltd provided photographs of the vehicle’s dashboard display, which it says shows the vehicle’s range following those test drives.
[13] Mr Leon is sceptical about Mr Benito’s test drives. At the hearing he advised that those test drives are not recorded in the vehicle’s memory, which would ordinarily occur. He also says that the results achieved by Mr Benito – particularly the 48 km range – are unachievable given the battery size. Mr Leon believes that Mr Benito may have performed these test drives while the vehicle was in hybrid mode, using a combination of battery and petrol power.

Mr Leon’s comparison test

[14] On 28 October 2022, Mr Leon performed a comparison test, during which he drove his vehicle and a different Mercedes-Benz GLC 300 plug-in hybrid (the test vehicle), which had an odometer reading of about 4,500 km. He says that he drove both vehicles on the same roads he usually drives, and the test vehicle drove about 30 per cent further than his vehicle on a single electric battery charge.
[15] Mr Leon produced photographs of each of the vehicles’ “EQ” displays, which show, among other things, the range and energy consumption experienced when Mr Leon test drove each vehicle. The photographs show that:

The post-hearing test drive

[16] Following the hearing on 1 November 2022, Mr Leon and Mr Benito test drove the vehicle, with Mr Benito driving while Mr Leon was in the passenger’s seat. Mr Benito charged the vehicle before the test drive and says that the range indicator was at 41 km following that charge. Mr Benito then drove the vehicle. Information provided by Mr Leon shows that the vehicle travelled 39 km at an average speed of 68km/h and average electrical consumption of 23.4 kw/100 km.
[17] Mr Leon says that the range achieved during this test drive was 23 per cent lower than the earlier tests conducted by Mr Benito, which Mr Leon says is consistent with the reduction in range Mr Leon says that he experienced in April 2022. Mr Benito says that the range may have been lower on this test drive as the vehicle’s air-conditioning was on, there was an extra person in the vehicle and the vehicle’s lights were on low beam throughout. GMH Ltd also maintains its view that the vehicle is not faulty and any reduction in range may well be due to Mr Leon’s driving style or the conditions in which the vehicle is being driven.

The issues

[18] The issues requiring the Tribunal’s consideration in this case are:

Issue 1: Has the vehicle been of acceptable quality?

[19] Section 6(1) of the CGA provides that “where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality”.
[20] “Acceptable quality” is defined in s 7 of the CGA (as far as is relevant) as follows:
  1. 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.


[21] In considering whether or not goods meet the guarantee of acceptable quality, the Tribunal must consider the quality elements as set out in s 7(1)(a)-(e) of the CGA as modified by the factors set out in s 7(1)(f)-(j), from the perspective of a “reasonable consumer”. The test is an objective one; it is not a view of those factors from Mr Leon’s subjective perspective.

The communication error and air-conditioning fault meant the vehicle was not of acceptable quality

[22] The vehicle has clearly been faulty. Mr Leon complained of a reduced charging capacity in May 2022, which GMH Ltd found was caused by a communication error, which it has rectified. Despite that repair, the vehicle’s predicted range remained at 34 km and a “hybrid malfunction” warning message appeared. GMH Ltd then found a fault with the air-conditioning compressor, which it has replaced.
[23] Mr Gregory, the Tribunal’s Assessor, advises that the air-conditioning fault will have caused a significant drain on the vehicle’s electric battery capacity, reducing the vehicle’s electric battery range. Mr Gregory also advises that there is a real possibility that the communication error and air-conditioning fault were related. Mr Gregory advises that the faulty air-conditioning compressor could have either:
[24] Both the communication error and air-conditioning compressor faults mean the vehicle was not of acceptable quality for the purposes of s 6, because the reduced electric battery range caused by those issues meant that the vehicle was not as fit for purpose or as free of minor defects as a reasonable consumer would consider acceptable.

The vehicle has no proven ongoing faults that breach the guarantee of acceptable quality

[25] Despite Mr Leon’s submission to the contrary, I find that the cause of the initial battery capacity issues experienced by Mr Leon have now been fixed by replacing the air-conditioning compressor, and I am not satisfied that Mr Leon has proven that there is any ongoing fault affecting the vehicle’s electric battery capacity or range.
[26] GMH Ltd has assessed the vehicle on several occasions and found no fault and Mr Leon has not had the vehicle assessed by any other technician to prove the existence of any ongoing fault. Instead, he relies upon his own experience of charging and driving the vehicle.
[27] The best evidence I have as to the current condition and range of this vehicle’s electric battery is the results of the test drive performed by Mr Leon and Mr Benito on 1 November 2022. Those results were not challenged by Mr Leon and show:
[28] That information shows that the vehicle’s electric battery is functioning as it should, and the electric battery range is within expected parameters. That is particularly the case where this vehicle’s battery is being heavily used and is beginning to age. Mr Gregory advises that lithium-ion high voltage batteries, such as those in this vehicle, will inevitably lose some capacity as they age and are used, and given that Mr Leon appears to use the vehicle almost exclusively in electric only mode and has now driven the vehicle at least 10,000 km during his ownership, he must expect the vehicle’s range to reduce over time.
[29] I acknowledge Mr Leon’s evidence that he experiences a lower predicted range when he charges the vehicle at home, but his experience does not prove any fault. Instead, I cannot avoid the real possibility that Mr Leon is experiencing lower predicted range figures because of factors such as the surrounding topography, current draw from electrical components such as air-conditioning, lights, wipers and mobile phone charging and his driving style, all of which are used to calculate the vehicle’s predicted range.
[30] Regarding Mr Leon’s driving style, he advises that he drives in a manner consistent with Mr Benito’s driving during the 1 November 2022 test drive. However, the only corroborative evidence I have of Mr Leon’s driving style is the photographs of the energy consumption data he provided from the test drive he performed on 28 October 2022. Those photographs show that his vehicle used an average of 31 kWh/100 km during that test drive, with two sustained peaks of 50 kWh/100 km, indicating significant and sustained acceleration. Sustained acceleration to this extent will undoubtedly reduce the range of an electric battery.
[31] Consequently, in the absence of a conclusive diagnosis of an ongoing fault with the vehicle that affects its electric battery range, I am not satisfied that Mr Leon has proven that the vehicle has any ongoing defect that breaches the guarantee of acceptable quality. Instead, I consider that any reduced range experienced by Mr Leon is likely to be due to external factors, including the topography over which the vehicle is driven and his driving style.

Issue 2: Has the vehicle been fit for a particular purpose made known by Mr Leon?

[32] Section 8 of the CGA imposes an obligation on all suppliers of goods that those goods must be fit for any particular purpose made known by the consumer. Section 8 provides:
  1. Guarantees as to fitness for particular purpose

(1) Subject to section 41, the following guarantees apply where goods are supplied to a consumer:

(a) that the goods are reasonably fit for any particular purpose that the consumer makes known, expressly or by implication, to the supplier as the purpose for which the goods are being acquired by the consumer; and

(b)   that the goods are reasonably fit for any particular purpose for which the supplier represents that they are or will be fit.

(2) Those guarantees do not apply where the circumstances show that—

(a)   the consumer does not rely on the supplier's skill or judgment; or

(b)   it is unreasonable for the consumer to rely on the supplier's skill or judgment.

(3) This section applies whether or not the purpose is a purpose for which the goods are commonly supplied.

(4) Part 2 gives the consumer a right of redress against the supplier where the goods fail to comply with any guarantee in this section.

[33] Mr Leon says that he expressly told Mr McKay that he needed a vehicle with an electric battery range of more than 40 km. He says that the vehicle does not reliably have that range, so it is not fit for his particular purposes.
[34] For the reasons set out above, I find that the vehicle is fit for Mr Leon’s stated purposes, in that it is capable of an electric battery range of more than 40 km and Mr Leon has not proven that the vehicle has any ongoing defect that reduces that range. Instead, it seems most likely that, once the communication error and air-conditioning compressor fault were fixed, any reduction in range experienced by Mr Leon is due to factors such as the topography over which the vehicle is driven and his driving style.

Issue 3: Has GMH Ltd engaged in conduct that breached s 9 of the FTA?

[35] Section 9 of the FTA provides:
  1. Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

[36] The test for establishing a breach of s 9 was set out by the Supreme Court in Red Eagle Corporation Ltd v Ellis:[2]

The question to be answered in relation to s 9 ... is ... whether a reasonable person in the claimant’s situation – that is, with the characteristics known to the defendant or of which the defendant ought to have been aware – would likely have been misled or deceived. If so, a breach of s 9 has been established.

[37] Mr Leon alleges that GMH Ltd engaged in misleading conduct by representing that the vehicle would travel more than 40 km on electric battery power.
[38] For the same reasons set out above, I am not satisfied that GMH Ltd has engaged in misleading conduct. The vehicle is capable of an electric battery range of more than 40 km and Mr Leon has not proven that the vehicle has any ongoing defect that reduces that range.
[39] Mr Leon’s claim is therefore dismissed.

B R Carter
Adjudicator


[1] Xentry Tips – Complaints about the electric range dated 4/12/22

[2] Red Eagle Corporation Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].

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