Mitsubishi Motors Australia Ltd v Begovic [2023] HCA 43

The High Court has held, unanimously, that affixing a fuel consumption label on a vehicle in the form required by law will not give rise to a breach of s 18 of the Competition and Consumer Act (2010) (Cth) sch 2 (Australian Consumer Law or ‘ACL’).

Background

In 2017, the respondent, Mr Begovic, purchased a new 2016 Mitsubishi Triton 4x4 from the second appellant, Northpark, a dealer of cars supplied by the first appellant, Mitsubishi. On the windscreen a fuel consumption label was attached that indicated four factors of consumption. The label fulfilled the dealer’s compliance with the provisions of the Motor Vehicle Standards Act 1989 (Cth) (‘the Act’) and a legislative rule under the Act, the Vehicle Standard (Australian Design Rule 81/02 – Fuel Consumption Labelling for Light Vehicles) 2008 (Cth) (‘Standard’).

The respondent became dissatisfied with the vehicle’s fuel consumption following purchase and complained to both Mitsubishi and Northpark. The respondent conducted his own testing and, dissatisfied with the response of Mitsubishi and Northpark, filed a claim in the Victorian Civil and Administrative Tribunal (‘VCAT’). The respondent alleged that the vehicle consumed fuel at a higher rate than that indicated by the label. He alleged that Mitsubishi and Northpark had contravened ss 18 and 54 of the ACL and that the fuel consumption label was misleading or deceptive, therefore rendering the vehicle defective.

Proceedings below

The respondent succeeded on both claims before VCAT. The key evidence of the fuel consumption of the vehicle substantially exceeding the fuel consumption values on the label applied to the vehicle was results of tests carried out in 2019 in accordance with the testing protocols in the Standard, by which time the vehicle had been driven for nearly 50,000 km. The results showed that the vehicle’s fuel consumption was 26.6 per cent higher for ‘Combined’, 17.8 per cent higher for ‘Urban’ and 36.8 per cent or 56.3 per cent higher for ‘Extra Urban’ than the fuel consumption values disclosed on the label. VCAT ordered Northpark to repay to Mr Begovic the purchase price of the vehicle: at [4].

The appellants obtained leave to appeal to the Supreme Court of Victoria on questions of law, including whether a manufacturer required by law to apply a fuel consumption label to a vehicle, ‘the form and content of which are prescribed by law’, could thereby be found to have engaged in misleading or deceptive conduct contravening s 18 of the ACL. This question raised the ‘mandatory conduct ground’, which was the main issue in the High Court. The primary judge allowed the appeal in respect of the appellants’ contraventions of s 54 of the ACL but dismissed the appeal in respect of the appellants’ contraventions of s 18 of the ACL.

This was because:

(1) the label represented that, if the vehicle was tested in accordance with the prescribed testing protocols, the fuel consumption would be similar to or substantially the same as the values on the label;

(2) the 2019 test results proved that the results for fuel consumption were not similar to or substantially the same as the values on the label; and

(3) compulsory labelling can be misleading or deceptive if it inaccurately records information about the goods which it is obliged by law to describe accurately: at [5].

The appellants obtained leave to appeal to the Victorian Court of Appeal. The Court of Appeal dismissed the appeal, holding that a reasonable consumer was entitled to believe that the information on the fuel label would substantially reflect the results that their own vehicle would produce if it was tested using the prescribed method. The Court of Appeal also rejected the mandatory conduct ground on the basis that the Act and the Standard did not require Mitsubishi or Northpark to ‘offer such a vehicle for sale in the first place’, still less ‘require that a vehicle be offered for sale in circumstances where the representation in the label is misleading or deceptive in respect of that vehicle’: at [7].

High Court

The appellants were granted special leave to appeal to the High Court on two grounds. The first was the mandatory conduct ground, and the second was that the only representation conveyed by the label was that the label accurately recorded the results of testing of a test vehicle of the relevant type in accordance with the Standard (being the ‘test accuracy representation’).

The High Court (Gageler CJ, Gordon, Steward, Gleeson and Jagot JJ) unanimously allowed the appeal on the mandatory conduct ground. Accordingly, their Honours did not need to consider the second ground: at [71].

The High Court examined the relevant provisions of the Act (at [15]–[26]) and the Standard (at [27]–[40]) and their interaction with the ACL. The court noted, in particular, that s 41 of the Act deemed the Standard to be a safety standard under the ACL and that, in that context, s 106(1) of the ACL provides that a person must not, in trade or commerce, supply consumer goods of a particular kind if a safety standard for consumer goods of that kind is in force and those goods do not comply with the standard: at [14].

Prior to oral submissions, the respondent’s case was that Northpark could (and should) have sold him a vehicle the fuel consumption of which matched the values shown on the label. In oral submissions, however, the respondent submitted that while the Standard was highly prescriptive, the Standard did not prescribe the vehicle to be tested, and taken to an extreme, a manufacturer could test every vehicle beforen import and supply: at [52].

The High Court, however, accepted the appellants’ submissions that it had been common ground between the parties that the test vehicle was required to be a representative of a vehicle type and there could be no case to the contrary, as the label ‘is in binding and closed fashion to be regarded as correct’, it having been accepted by the respondent that if the appellants were to import and sell this vehicle, the label as applied to the vehicle had to be so applied: at [53].

The High Court said further that conduct in trade or commence cannot contravene s 18 of the ACL if it is the same conduct which is required by another consumer protection provision, with their Honours stating that ‘the need to reconcile s 18 of the ACL with that other law cannot be avoided by characterising the conduct (such as presentation and supply) as voluntary’: at [68].

Further, there may have been no difficulty in reconciling the Act and the ACL where the Act required that the vehicle be sold with the label applied and the ACL prevented a supplier representing that the actual vehicle sold conformed to the relevant type of vehicle where it did not: at [69]. Importantly, whether that latter representation was made depended on what a vehicle importer or a dealer does and says before and at the time of sale. Here, however, there was no evidence that either Mitsubishi or Northpark engaged in any conduct in representing the fuel consumption as accurate, save for applying the label in trade or commerce: at [69].

In the present case, Mitsubishi, by s 18(1) of the Act, could not import the vehicle without the fuel consumption label being applied to it. Sections 13A(1) and 17(1)(d) of the Act prohibited Mitsubishi from supplying the vehicle to Northpark without that fuel consumption label remaining applied to it. Further, without the fuel consumption label, Northpark could not supply the vehicle to Mr Begovic under s 14(1) of the Act: at [70].

The High Court therefore held that since the presence of the fuel consumption label on the vehicle suppled to Mr Begovic was a requirement under s 41 of the Act and mandated by s 106 of the ACL as a safety standard, Mitsubishi was bound to apply the fuel consumption label on the vehicle prior to its supply to Northpark and Northpark was bound to maintain the fuel consumption label on the vehicle prior to selling it to Mr Begovic. Otherwise, both Mitsubishi and Northpark would have contravened s 106 of the ACL: at [70]. BN