Background
In what may prove to be a significant decision for the automotive industry, on 12 May 2021 the Supreme Court of Victoria upheld a decision that fuel consumption figures displayed on a brand-new vehicle contravened the Australian Consumer Law (ACL) on the basis that the figures were ‘misleading or deceptive’.
Significance
Although the Court’s findings were limited to the 2016 Mitsubishi Triton purchased by Mr Begovic, the case may have far-reaching implications for the thousands of light vehicles sold in Australia displaying a Fuel Consumption Label (as has been required by law since 2001).
The case also demonstrates key factors impacting on exposure to liability for misleading or deceptive conduct within the automotive industry. These include that:
- liability for misleading or deceptive conduct can apply to both manufacturers and dealers;
- section 18 of the ACL does not require an intent to mislead or deceive; and
- the ACL applies to representations whether or not they are required under law.
VCAT’s findings
In May 2019, the Victorian Civil and Administrative Tribunal (VCAT) found that the actual fuel consumption of the 2016 Triton purchased by Mr Begovic was ‘significantly higher’ than the fuel consumption figures displayed on the vehicle as was required by law. Expert evidence testing under Australian Design Rules standards showed a 27.6% higher actual fuel consumption (on average between the combined Urban and Extra-Urban portions of the test). VCAT accepted the expert evidence that the variation was ‘unusual and excessive’. Accordingly, VCAT found that both Mitsubishi Motors Australia Pty Ltd and the Mitsubishi dealer (collectively, Mitsubishi) contravened the section 18 of the ACL by engaging in misleading or deceptive conduct.
Additionally, VCAT found that the fuel figures contravened consumer guarantees that the Triton was of ‘acceptable quality’ and would ‘correspond with [its] description’ in contravention of sections 54 and 56 of the ACL respectively.
Questions on appeal
Mitsubishi’s appeal to the Supreme Court of Victoria was limited to questions of law. This meant that VCAT’s findings that the actual fuel usage of the 2016 Triton was excessively higher than the figures on the label, which has proven most significant for the industry, was not open to challenge. Rather, Mitsubishi’s only avenue for appeal was that VCAT made a mistake in the way it applied the law to Mr Begovic’s case.
Supreme Court decision
The Supreme Court of Victoria upheld VCAT’s decision that the fuel consumption figures were misleading or deceptive in contravention of section 18 of the ACL. In coming to this conclusion, the Court commented that:
- a reasonable consumer would…expect to be able to rely on the fuel consumption figures as a form of baseline from which an adjustment could be made to reflect real world driving conditions; and
- decisions to purchase a vehicle may often be made in the dealer’s showroom without the opportunity to consult information available on a website.
The Court however rejected VCAT’s finding that Mitsubishi had contravened the consumer guarantees under the ACL. The Court held that since VCAT was not satisfied that Mr Begovic’s 2016 Triton was ‘defective’ it was legally incorrect to conclude that the vehicle was not of ‘acceptable quality’ in contravention of section 54 of the ACL.
Finally, the Court also rejected VCAT’s finding that the Mitsubishi contravened section 56 of the ACL as the 2016 Triton did not ‘correspond with the description’. The Court’s decision was based on the fact that Mitsubishi was not given a proper opportunity to address this issue before VCAT.
Remedies
The Supreme Court is set to determine the remedy for Mitsubishi’s contravention of section 18 of the ACL for misleading or deceptive conduct (along with costs) at a later date.
The available remedies for such a breach include an order allowing Mr Begovic to reject the 2016 Triton and obtain a refund of his purchase price. Importantly, VCAT held that there was likely an indemnity arrangement between the dealer and Mitsubishi and if that was not the case, the dealer would nonetheless not be prevented from making a claim against Mitsubishi Motors.
There may be a number of class actions that follow from this decision if it can be established that a particular model vehicle had ‘significantly higher’ fuel consumption figures than those displayed on the vehicle. If any consumer claim is brought against a dealer, the dealer should investigate its indemnity position against the manufacturer.
The reported Supreme Court decision can be accessed at this link.
