Balasubramoniam v Gazley Motors Cambridge Limited t/a Gazlet Mitsubishi and Gazley Mercedes Benz Wellington - Reference No. MVD 365/2024 [2024] NZMVDT 262 (25 November 2024)

Last Updated: 21 December 2024

IN THE MOTOR VEHICLE DISPUTES TRIBUNAL I TE RŌPŪ TAKE TAUTOHENGA Ā-WAKA MVD 365/2024 [2024] NZMVDT 262 BETWEEN VAITHIANATHAN BALASUBRAMONIAM Applicant AND GAZLEY MOTORS CAMBRIDGE LTD T/A GAZLEY MITSUBISHI & GAZLEY MERCEDEZ BENZ WELLINGTON Respondent

HEARING at Wellington on 24 September 2024 (by MS Teams) MEMBERS OF TRIBUNAL

Shaurya Malaviya, Barrister – Adjudicator Scott Cousins - Assessor

APPEARANCES

Mr Balasubramoniam and Mrs Kumar, for the Applicant

Oliver Gazley, Hayden McKeown and Nathan Thomas, for the Respondent

DATE OF DECISION 25 November 2024

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DECISION OF THE TRIBUNAL

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1. The claim is dismissed.

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REASONS

Introduction

• [1] Mr Balasubramoniam purchased a 2023 Mitsubishi Eclipse Cross PHEV on 31 May 2023, as new, from Gazley Motors Cambridge Limited (Gazley) for $57,740. The vehicle was driven by both him and his wife Mrs Kumar. Since its purchase, Mr Balasubramoniam has encountered multiple problems with the airbag system in the vehicle.
• [2] Mr Balasubramoniam says that on several occasions the airbag warning light has illuminated on the dashboard. He says the light comes on at random, usually within four to five minutes of driving and then stays for a while. It then goes away on its own.
• [3] The vehicle has been taken back to Gazley on at least six occasions between June 2023 and July 2024. Gazley has performed a variety of tests on the vehicle, but the fault continued to reappear.
• [4] On 29 February 2024, Mr Balasubramoniam said he was driving the vehicle near the Terrace Tunnel at a speed of about 70 to 80 km/hour when the car went into limp mode and lost power. He says the vehicle had just returned after a service where Gazley had fixed the ongoing airbag issue. As the vehicle stalled into limp mode, the airbag light came on again.
• [5] Mr Balasubramoniam says the issue occurred for the eighth time on 6 July 2024, just a month after Gazley had replaced the airbag curtain and the Electronic Control Unit (ECU).
• [6] After the repairs were carried out, Mrs Kumar rejected the vehicle, but Gazley instead offered to swap the car with the same model with lesser kilometres which was not acceptable to Mrs Kumar.
• [7] Mrs Kumar says as purchasers they have lost confidence in the vehicle. They do not feel it is safe to drive the vehicle as they feel they are unprotected in the event of an accident.
• [8] Mr Thomas, Mitsubishi’s NZ’s Technical Service Manager, appeared on behalf of Gazley. He says he is confident that the vehicle has now been repaired and that the fault is unlikely to reappear.
• [9] Mr Gazley, dealer principal for Gazley, says he has offered a replacement vehicle to Mr Balasubramoniam which is newer and has done fewer kms as a good faith gesture, but he does not accept rejection at the outcome.

Issues

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

(a) Has the vehicle been of acceptable quality for the purposes of s 6 of the Consumer Guarantees Act 1993 (the CGA)?

(b) Is the vehicle’s defect a failure of a substantial character?’

(c) Has Mr Balasubramoniam lost the right to reject the vehicle?

(d) What remedy, if any, is Mr Balasubramoniam entitled to under the CGA?

Has the vehicle been of acceptable quality?

• [11] 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”.
• [12] "Acceptable quality" is defined in s 7 of the CGA 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.

(4) Goods will not fail to comply with the guarantee of acceptable quality if—

(a) the goods have been used in a manner, or to an extent which is inconsistent with the manner or extent of use that a reasonable consumer would expect to obtain from the goods; and

(b) the goods would have complied with the guarantee of acceptable quality if they had not been used in that manner or to that extent.

(5) A reference in subsections (2) and (3) to a defect means any failure of the goods to comply with the guarantee of acceptable quality.

• [13] Whether the 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.
• [14] Mr Balasubramoniam submitted a timeline of when the airbag light has illuminated which I outline below.

4 June 2023

• [15] The issue occurred for the first time on 4 June 2023 on a drive back from Auckland. He called the salesperson who sold the vehicle at Gazley who booked them in for an appointment on 12 June 2023 for a service. The vehicle had done around 1,500 km at that point.

18 and 28 June 2023

• [16] Shortly after service, the issue arose again on 18 June 2023 and then again on 28 June 2023. The vehicle was booked for another check on 6 July 2023. Gazley’s record suggests that the vehicle presented with 2,884 km on the odometer and a fault code B1659 came up as a past fault but was not present at the time.
• [17] As the fault was not present, it was difficult for Gazley to understand the cause. But to detect the problem, it carried out the following checks and repairs:

Scanned for codes, DTC B1659 – 2nd seat LHR pretensioner squib short stored. Removed “B” pillar trim

Disconnected battery & HV fuse.

Disconnected pretensioner squib.

Checked connectors, cleaned contacts and re-installed.

Found loom under tension, rerouted wiring and function checked – ok.

Customer to please monitor and advise if fault returns as would then require further diagnoses.

September 2023 to February 2024

• [18] Mr Balasubramoniam has provided several photos to show the reoccurrence of fault on a regular basis in this period. When the vehicle went in for service in February 2024, the fault was not present again but was presented as a past fault upon scanning.
• [19] Gazley has provided its repair notes which say:

Scanned for codes, DTC-stored B1659 – 2nd seat LHR pretensioner squib short

Carried out diagnostic check and test procedure. Checked for power and earth at plug – ok.

Disconnected battery for 10 min. Cleared codes. Road tested, no faults occurred.

• [20] Essentially, the same fault as the one from June 2023 was still present. But as the fault did not present itself when the vehicle was with Gazley, it continued to attempt detection and repair through trial and error methods.

29 February 2024 and 5 March 2024

• [21] Mr Balasubramoniam says after the service, the car went into limp mode while driving near the Terrace Tunnel and the airbag light came on as well. A further appointment was set and Mr Balasubramoniam took the vehicle back to Gazley.
• [22] Gazley’s repair notes state:

No warning light on dash at time of testing.

Scanned for codes, DTC-stored B1659 – 2nd seat LHR pretensioner squib short

As this was the same as previous occasion next step was replacement.

Disconnected battery, removed boot panels, HV covers, loosen rear seat bottom bench, disconnect airbag plug, remove 3x bolts and remove seatbelt, install new seatbelt, install airbag plug, reinstall covers. Carry out teach in of windows and wing mirror teach in. Cleared all DTC’s. Check data list – ok. Carry out function test of seatbelt – ok.

• [23] But the issue returned a week later, and the vehicle was brought back to Gazley. Again, as on previous occasions, the fault did not present itself when the vehicle was with Galey. The same error code B1659 was present as a stored fault.
• [24] Gazley was carrying out a 6-step fault code assessment process and on this occasion, they carried out step 5 which checked continuity between the SRS ECU harness side to the LHR seatbelt pretensioner. The technician removed the centre console to gain access to SRS control unit and boot trims to access the seatbelt pretensioner. When checked, the LHR and RHR both had the same results of 0.06 ohms. The fault code was then cleared.

15 May 2024

• [25] The vehicle was back in May 2024 when the fault reappeared.
• [26] The repair notes supplied state:

Removed boot trims, “B” pillar trims, rear seats, front seats, carpet and centre console.

Located wires from SRS control unit to LHR pretensioner visual inspection of wiring performed by removing sheathing – ok. Tested for continuity on both wires from SRS control unit to LHR pretensioner - ok.

Rewrapped harness and re-installed all parts in reverse.

Installed replacement SRS control unit as supplied by MMNZ.

• [27] Mr Thomas says they replaced the ECU on this occasion but used a donor ECU as opposed to a new one because one was not available in stock.

6 July 2024

• [28] When the issue returned in July 2024, the vehicle was again taken back to Gazley. This time the repairs were as follows:

Scanned vehicle, fault code B1450 and code U0151 LHF curtain airbag and SRS control unit “Time Out”

Removed interior boot trims, “C” pillar, “B” pillar, centre console and roof liner so as to gain access to the LHF curtain air bag and SRS control unit.

Checked wiring for power, earths and continuity – all passed ok.

Fitted replacement SRS control unit as supplied by Mitsubishi New Zealand.

Carried out initial start up of unit – ok.

Cleared all codes.

Reassembled vehicle.

Road tested multiple times.

• [29] On this occasion, Mr Thomas says a new ECU was placed in the vehicle and by carrying out the previous diagnostic steps he was able to isolate the issue to the ECU. He believed the donor ECU had created other problems after the repairs in May 2024, but after the installation of the new ECU this problem is likely to be resolved once and for all.
• [30] At that stage, Mrs Kumar refused to pick up the vehicle and rejected it.

Tribunal’s assessment

• [31] Since the purchase of the vehicle, the purchasers have driven the vehicle for approximately 20,000 km. In that period the airbag fault has presented itself more than ten times and the vehicle has been taken for repairs on seven or eight occasions.
• [32] Gazley and Mitsubishi Motors New Zealand (MMNZ) both tried to diagnose the fault a number of times but did not do so successfully until July 2024 when according to Mr Thomas, they changed the key component driving the airbag system which in their view should remedy the fault once and for all.
• [33] Given the fact that this was a new vehicle, I am not satisfied that the vehicle meets the definition of acceptable quality. Mr Balasubramoniam and Mrs Kumar have experienced the airbag fault on several occasions which has caused them to worry about the safety of the vehicle and for good reason. I do not believe the vehicle was free from minor defects and it was not durable as per subs 7(1)(c) and 7(1)(e) of the CGA, above.
• [34] As a reasonable consumer, Mr Balasubramoniam could expect that a new vehicle should not display the same fault code multiple times despite several repairs.

Issue 2: Is the vehicle’s defect a failure of substantial character?

• [35] A failure of substantial character is defined in s 21 of the CGA:
  21. Failure of substantial character

  For the purposes of section 18(3), a failure to comply with a guarantee is of a substantial character in any case where—

(a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or

(b) the goods depart in 1 or more significant respects from the description by which they were supplied or, where they were supplied by reference to a sample or demonstration model, from the sample or demonstration model; or

(c) the goods are substantially unfit for a purpose for which goods of the type in question are commonly supplied or, where section 8(1) applies, the goods are unfit for a particular purpose made known to the supplier or represented by the supplier to be a purpose for which the goods would be fit, and the goods cannot easily and within a reasonable time be remedied to make them fit for such purpose; or

(d) the goods are not of acceptable quality within the meaning of section 7 because they are unsafe.

• [36] In Cooper v Ashley & Johnson Motors Ltd, the District Court found that a purchaser may reject a vehicle where there had been an accumulation of defects, even if those defects could not in themselves be described as substantial.^[1] The Court noted that a point will eventually be reached where the purchaser could “say convincingly that he or she had no confidence in the reliability of the vehicle”.^[2]
• [37] Since purchase, the vehicle has had defects that breach the guarantee of acceptable quality due to the frequent appearance of the airbag error warning. Mr Gazley says this is not a major fault due to its intermittent nature and a message indicating a fault does not necessarily mean that the airbag system was non‑functional.
• [38] Mr Cousins, the Tribunal’s assessor, points out that section 7-6-6(b) of the Vehicle Inspection Requirements Manual (In-service certification (WoF and CoF) – General vehicles) details “the airbag warning light indicates a fault in the system” as a reason for rejection of a warrant of fitness. As such, a vehicle with an airbag fault message does not meet road worthy standards, and so is not compliant or safe to be driven on the road.
• [39] He outlined that the purpose of a seatbelt pretensioner, which was the initial fault, is to firmly restrain the occupant in the event of airbag activation. This is necessary to prevent the airbag itself from excessively injuring an occupant during inflation. If the airbag were to inflate without the pretensioner activating, the likelihood of injury and death in the event of an accident exponentially increases, in particular, the occupant may bear the full force of the airbag in addition to the forces of the accident itself.
• [40] Therefore, I do not accept that the fault itself is minor in nature as the underlying consequences of such a fault can be serious and this is recognised by the fact that a vehicle will fail its warrant of fitness if this warning is present.
• [41] Accordingly, I am satisfied that the vehicle’s defects amount to a failure of substantial character.

Has Mr Balasubramoniam lost the right to reject the vehicle?

• [42] The law relating to the loss of the right to reject goods is set out in s 20 of the CGA, which states:
  20. Loss of right to reject goods

(1) The right to reject goods conferred by this Act shall not apply if—

(a) the right is not exercised within a reasonable time within the meaning of subsection (2); or

(b) the goods have been disposed of by the consumer, or have been lost or destroyed while in the possession of a person other than the supplier or an agent of the supplier; or

(c) the goods were damaged after delivery to the consumer for reasons not related to their state or condition at the time of supply; or

(d) the goods have been attached to or incorporated in any real or personal property and they cannot be detached or isolated without damaging them.

(2) In subsection (1)(a), the term reasonable time means a period from the time of supply of the goods in which it would be reasonable to expect the defect to become apparent having regard to—

(a) the type of goods:

(b) the use to which a consumer is likely to put them:

(c) the length of time for which it is reasonable for them to be used:

(d) the amount of use to which it is reasonable for them to be put before the defect becomes apparent.

(3) This section applies notwithstanding section 170 of the Contract and Commercial Law Act 2017.

• [43] Under s 20(1)(a) of the CGA, the right to reject the vehicle is lost if it is not exercised within a reasonable time. For the purposes of s 20(1)(a) of the CGA, a “reasonable time” is a period from the time of supply of the goods in which it would be reasonable for the defect to become apparent, having regard to the factors set out in s 20(2)(a)-(d) of the CGA.
• [44] In Nesbit v Porter, the Court of Appeal observed that:^[3]

  A reasonable time under s 20 must accordingly be one which suffices to enable the consumer to become fully acquainted with the nature of the defect, which, where the cause of a breakage or malfunction is not apparent, the consumer can be expected to do by taking the goods to someone, usually and preferably the supplier, for inspection. In this context, therefore, a defect is not “apparent” until its cause has been identified and the buyer knows what has to be done to fix it, and what that will cost; in other words, until the buyer is in a position to determine whether the defect is substantial.

• [45] Section 22 of the CGA states that:
  22. Manner of rejecting goods

(1) The consumer shall exercise the right to reject goods under this Act by notifying the supplier of the decision to reject the goods and of the ground or grounds for rejection.

(2) Where the consumer exercises the right to reject goods, the consumer shall return the rejected goods to the supplier—

(a) unless,—

(i) because of the nature of the failure to comply with the guarantee in respect of which the consumer has the right to reject the goods; or

(ii) because of the size or height or method of attachment,—

the goods cannot be returned or removed or transported without significant cost to the consumer, in which case the supplier shall collect the goods at the expense of the supplier; or

(b) unless the goods have already been returned to, or retrieved by, the supplier.

(3) Where the ownership in the goods has passed to the consumer before the consumer exercises the right of rejection, the ownership in the goods revests in the supplier upon notification of rejection.

[46] Mr Balasubramoniam sent the vehicle for repairs on 6 July 2024. On the same day, Mrs Kumar wrote as follows:

Despite multiple attempts to resolve this issue through repairs conducted by you, the airbag warning light continues to illuminate intermittently. This ongoing problem is not only concerning for the safety of myself and my passengers but also significantly diminishes my confidence in the vehicle.

Regrettably, due to the unresolved nature of this safety issue, I must express my dissatisfaction with the car. At this point, I am compelled to explore options for either a comprehensive resolution or potentially reconsider my ownership of the vehicle.

Please could you let me know how we can proceed further with this? I am available at [the applicant’s cell phone number] or via email to discuss this matter further or to arrange a convenient time to bring the vehicle in for assessment.

• [47] There were further emails between Mrs Kumar and Gazley, where she continued to express her dissatisfaction with the vehicle and sought more “comprehensive” options.
• [48] The vehicle was eventually repaired on 18 July 2024 and Mrs Kumar was asked to come and pick up the vehicle. At that point, she wrote back saying she was deeply concerned that the airbag control had to be replaced again and wanted to meet to address the issue “effectively and promptly”.
• [49] On 22 July 2024, Mr McKeown offered to swap the vehicle with the same model with less than half the kms. At that point, Mrs Kumar rejected the offer and asked for a refund. This was followed up with a formal notice of rejection on 29 July 2024.
• [50] Mrs Kumar rejected the vehicle after the repairs had been carried out and the vehicle was no longer presenting any faults. In my view, Mrs Kumar had the option to reject the vehicle when it faulted on 6 July 2024. But at that time, the vehicle was taken in for repairs. While Mrs Kumar was not pleased with this and expressed her general dissatisfaction with the vehicle, she did not reject the vehicle.
• [51] She has not complied with s 22(1) of the CGA until 23 July 2024, when she first asked for refund in an email. At that stage the vehicle had already been repaired. Mrs Kumar was aware of the nature of the fault having experienced the issue a number of times before and seeing multiple repairs being unsuccessful. She had lost confidence in the vehicle and rightly so. But by not rejecting the vehicle, she has allowed Gazley to repair the vehicle to an acceptable standard.
• [52] Mr Cousins’ opinion is that by replacing the SRS module on this occasion the fault that has been occurring will quite likely stop.
• [53] Accordingly, I come to the conclusion that the purchasers have lost the right to reject the vehicle due to not exercising the right within a reasonable time.

What remedy is Mr Balasubramoniam entitled to under the CGA?

• [54] The relevant remedies are set out in s 18 of the CGA, which provides:
  18. Options against suppliers where goods do not comply with the 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 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.

• [55] Mr Balasubramoniam and Mrs Kumar have not incurred any costs in relation to the vehicle so there is no remedy available to them.
• [56] Having said that, I do believe that if an airbag fault or any other fault, occurs again in the near future, they may have an arguable case for rejection.
• [57] While the Tribunal does not have the jurisdiction to order a swap as offered by Gazley, it remains open to Mrs Kumar and Mr Balasubramoniam to see if Gazley’s offer is still available.

Outcome

• [58] The claim is dismissed.

S Malaviya
Adjudicator

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^[1] Cooper v Ashley & Johnson Motors Ltd (1996) 7 TCLR 407 (DC).

^[2] At 417.

^[3] Nesbit v Porter [2000] NZCA 288; [2000] 2 NZLR 465 (CA) at [39].