Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd
[2020] FCA 1672
•20 November 2020
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672
File number: VID 1308 of 2017 Judge: WHEELAHAN J Date of judgment: 20 November 2020 Catchwords: CONSUMER LAW – statutory guarantees under the Australian Consumer Law (ACL) – statutory guarantee as to acceptable quality under s 54 of the ACL – statutory guarantee as to fitness for purpose under s 55 of the ACL – statutory guarantee as to supply by description under s 56 of the ACL – statutory guarantee of manufacturer’s warranty under s 59 of the ACL – consumer’s entitlement to reject goods for major failure of a statutory guarantee – whether the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure – application of the ACL statutory guarantees to complex manufactured goods.
CONSUMER LAW – prohibition on misleading or deceptive conduct under s 18 of the ACL – prohibition on certain false or misleading representations under s 29(1)(m) of the ACL – principles applicable to the assessment of oral statements.
CONSUMER LAW – prohibition on unconscionable conduct under s 21 of the ACL – consideration of the standard fixed by the statutory prohibition on unconscionable conduct – consideration of the judicial technique in determining whether conduct was, in all the circumstances, unconscionable – judicial technique described in Jenyns v Public Curator (Qld) (1953) 90 CLR 113 at 118 involves a scrutiny of the exact relations established between the parties with regard to every connected circumstance – consideration of allegations of unconscionable conduct against a manufacturer for obstructing consumers’ rights against suppliers – coherence of the statutory scheme of the ACL including separate manufacturer’s and supplier’s obligations, and incorporation of manufacturer’s contractual warranties.
Legislation: Australian Securities and Investments Commission Act2001 (Cth) ss 12CB and 12CC
Competition and Consumer Act 2010 (Cth) s 137H, s 139B, Schedule 2 – Australian Consumer Law, ss 2, 3, 4(1), 7, 18, 21, 22, 29, 54, 55, 56, 59, 64, 64A, 102, 151(m), s 224, 228, s 232(2), 239, 246, 247(1)(a), s 248(1)(a)(ii), s 259, 260, 261, 262, 263, 271, 272, 274, 276(1), and 276A
Competition and Consumer Legislation Amendment Act 2011 (Cth)
Competition and Consumer Regulations 2010 (Cth) reg 90
Consumer Rights Act 2015 (UK) s 24(8)
Federal Court Rules 2011 (Cth) r 16.02(1)(e)
Trade Practices Act 1974 (Cth) (repealed) ss 51AB, 51AC, 52, and 74A to 74G
Trade Practices Amendment (Australian Consumer Law) Act (No 2)2010 (Cth)
Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth), explanatory memorandum
Cases cited: Australian Competition and Consumer Commission v Bunavit Pty Ltd [2016] FCA 6
Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634; 317 ALR 73
Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682
Australian Competition and Consumer Commission v Ford Motor Company of Australia Ltd [2018] FCA 703; 360 ALR 124
Australian Competition and Consumer Commission v LG Electronics Australia Pty Ltd [2018] FCAFC 96
Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90
Australian Competition and Consumer Commission v Medibank Private Ltd [2018] FCAFC 235; 267 FCR 544
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2020] FCAFC 130; 381 ALR 507
Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196; 337 ALR 647
Australian Competition and Consumer Commission v Woolworths Group Limited [2020] FCAFC 162
Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liq) (No 3) [2020] FCA 208; 380 ALR 27
Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 1284; 139 ACSR 52
Australian Securities and Investments Commission v Kobelt [2019] HCA 18; 368 ALR 1
Austral Pacific Group Ltd v Airservices Australia [2000] HCA 39; 203 CLR 136
Brennan v Comcare [1994] FCA 360; 50 FCR 555
Bulstrode v Trimble [1970] VR 840
Burt v Australia and New Zealand Banking Group Ltd (1994) ATPR (Digest) 46‑123
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592
Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304
Campomar Sociedad, Limitada v Nike International Limited [2000] HCA 12; 202 CLR 45
CCL Secure Pty Ltd v Berry [2019] FCAFC 81
Coles Supermarkets Australia Pty Ltd v Clarke [2013] NSWCA 272
Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd [2017] FCAFC 75; 251 FCR 404
Comité Interprofessionnel du Vin de Champagne v Powell [2015] FCA 1110; 330 ALR 67
Commonwealth Bank of Australia v Kojic [2016] FCAFC 186; 249 FCR 421
Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; 169 CLR 594
Contact Energy Ltd v Jones [2009] 2 NZLR 830
Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; 200 CLR 1
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696
Ellis v Wallsend District Hospital (1989) 17 NSWLR 553
George Wills & Co Ltd v Davids Pty Ltd [1957] HCA 6; 98 CLR 77
Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 67; 2 FCR 82
Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; 259 CLR 435
Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939
Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1969] 2 AC 31
Harris v Warre (1879) 4 CPD 125
Healthcare at Home Ltd v The Common Services Agency [2014] UKSC 49; 4 All ER 210
Hill v Van Erp [1997] HCA 9; 188 CLR 159
Innes v AAL Aviation Ltd [2017] FCAFC 202; 259 FCR 246
Ipstar Australia Pty Ltd v APS Satellite Pty Ltd [2018] NSWCA 15; 329 FLR 149
Jenyns v Public Curator (Qld) (1953) 90 CLR 113
Jewson Ltd v Boyhan [2003] EWCA Civ 1030; [2004] 1 Lloyd’s Rep 505
Julstar Pty Ltd v Hart Trading Pty Ltd [2014] FCAFC 151
Mann v Paterson Constructions Pty Ltd [2019] HCA 32; 373 ALR 1
McNamara v Consumer Trader and Tenancy Tribunal [2005] HCA 55; 221 CLR 646
Medtel Pty Ltd v Courtney [2003] FCAFC 151; 130 FCR 182
Merck Sharp & Dohme (Australia) Pty Ltd v Peterson [2011] FCAFC 128; 196 FCR 145
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited [2010] HCA 31; 241 CLR 357
Moore v Scenic Tours Pty Ltd [2020] HCA 17; 377 ALR 209
Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583
Nesbit v Porter [2000] NZCA 288; 2 NZLR 465
Ogden Industries Pty Ltd v Lucas [1970] AC 113; (1968) 118 CLR 32
Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; 236 FCR 199
Paciocco v Australia and New Zealand Banking Group Ltd [2016] HCA 28; 258 CLR 525
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; 149 CLR 191
Perre v Apand Pty Ltd [1999] HCA 36; 198 CLR 180
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355
Rasell v Cavalier Marketing (Australia) Pty Ltd [1991] 2 Qd R 323
Roads and Traffic Authority of NSW v Dederer [2007] HCA 42; 234 CLR 330
Rogers v Parish (Scarborough) Ltd [1987] QB 933
Scott v Copenhagen Reinsurance Co (UK) Ltd [2003] 2 All ER (Comm) 190
Shi v Migration Agents Registration Authority [2008] HCA 31; 235 CLR 286
Sullivan v Moody [2001] HCA 59; 207 CLR 562
Tame v New South Wales [2002] HCA 35; 211 CLR 317
Teubner v Humble [1963] HCA 11; 108 CLR 491
The Juliana (1822) 2 Dods 504
Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125
Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155; 266 FCR 631
Valve Corporation v Australian Competition and Consumer Commission [2017] FCAFC 24; 351 ALR 584
Vautin v By Winddown Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; 362 ALR 702
Virk Pty Ltd (in liq) v YUM! Restaurants Australia Pty Ltd [2017] FCAFC 190
Watson v Foxman (1995) 49 NSWLR 315
W & S Pollock & Co v Macrae 1922 SC 192
Whisprun Pty Ltd v Dixon [2003] HCA 48; 200 ALR 447
Benjamin on Sale 8th edition (1950)
Shorter Oxford English Dictionary (6th edition, 2007)
Dates of hearing: 24, 25, 26, 29, 30 and 31 July, and 6 August 2019 Date of last submissions: 16 August 2019 Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub Area: Regulator and Consumer Protection Category: Catchwords Number of paragraphs: 862 Counsel for the Applicant: Mr M Osborne QC with Ms C Van Proctor Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Respondent: Mr N O’Bryan SC with Mr D Clough Solicitor for the Respondent: Macpherson Kelley ORDERS
VID 1308 of 2017 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
AND: JAYCO CORPORATION PTY LTD
Respondent
JUDGE:
WHEELAHAN J
DATE OF ORDER:
20 NOVEMBER 2020
THE COURT ORDERS THAT:
1.On or before 4.00 pm on 1 December 2020, the parties are to confer and submit to the Court a joint proposal, or if they are unable to agree, separate proposals for the further conduct of this proceeding, including the determination of the questions of remedies, the costs of the proceeding, and any other orders to give effect to these reasons.
2.A case management hearing is fixed at 10.15 am on Friday, 4 December 2020.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
WHEELAHAN J:
Part 1: Overview
[1]
Part 2: Summary of conclusions
[11]
Part 3: The Australian Consumer Law (ACL)
[12]
Broad outline
[13]
Statutory guarantees
[22]
Acceptable quality
[23]
Fitness for purpose
[28]
Express warranties
[30]
A consumer’s remedies against a supplier
[34]
A consumer’s remedies against a manufacturer
[53]
A supplier’s remedies against a manufacturer
[56]
Liability may not be excluded by contract
[57]
Unconscionable conduct
[58]
Misleading or deceptive conduct
[62]
False or misleading statements in connection with the supply of goods
[64]
Part 4: The Jayco warranty and owner’s handbook
[67]
Part 5: The parties’ concise statements
[81]
The concise statement of the ACCC
[82]
The concise statement of Jayco Corp
[85]
Disputes as to the scope of the ACCC’s pleaded case
[89]
Part 6: The witnesses
[98]
Part 7: The four Consumers’ RVs
[113]
(1) Consumer MO
[113]
Purchase and delivery of the RV
[113]
Initial concerns with the RV
[116]
First trips around September 2013 and concerns raised with Jayco Sydney
[118]
Christmas 2013 school holidays – trip to Glen Allen and the first roof collapse
[121]
January 2014 – concerns raised with Jayco Sydney
[122]
February 2014 – concerns raised with Jayco Corp
[124]
March 2014 – Jayco Sydney assessment of the RV
[130]
Jayco Corp evidence about Mr Gregorovic
[142]
April 2014 – RVGO assessment of the RV
[143]
April 2014 – second roof collapse
[146]
April 2014 – conversation between Consumer MO and Mr Bilbija of Jayco Sydney at the Rosehill caravan show
[148]
Jayco Corp’s consideration of the Jayco Sydney and RVGO repair work quotations
[155]
July 2014 – Jayco Sydney repair work
[167]
August 2014 – return of the RV and Consumer MO’s further concerns
[169]
August 2014 – further repair work by Jayco Sydney
[177]
Consumer MO’s later concerns with his RV
[180]
Consideration – defects in Consumer MO’s RV
[181]
Was Consumer MO entitled to reject the RV?
[193]
(2) Consumer TB
[201]
Purchase and delivery of the RV
[201]
May 2013 – initial concerns with the RV
[205]
June 2013 – Jayco Sydney repair works
[225]
July 2013 – trip to Queensland
[233]
November 2013 – Jayco Canberra repair works
[235]
February-March 2014 – correspondence with Jayco Canberra and Jayco Corp
[237]
March 2014 – Jayco Canberra repair works
[256]
April to May 2014 – Jayco Canberra repair works
[259]
June 2014 – Jayco Canberra repair works
[262]
July 2014 – trip to Nelson Bay, Caravan Wizard repair works, and correspondence with Jayco Corp and Jayco Sydney
[271]
July 2014 – further Jayco Canberra warranty claim
[282]
August 2014 – Jayco Sydney repair works
[283]
August to September 2014 – Jayco Sydney repair works
[325]
August to September – Fair Trading complaint and correspondence
[333]
September to November 2014 – Jayco Corp Dandenong factory repair works
[339]
Subsequent use and sale of the RV
[367]
Consideration – defects in Consumer TB’s RV
[369]
Was Consumer TB entitled to reject the RV?
[376]
(3) Consumer JT
[382]
Purchase of the RV
[382]
Pre-delivery check and repairs to the RV
[385]
Delivery of the RV and Consumer JT’s initial concerns
[386]
3 September 2015 – online survey
[391]
3-4 September 2015 – emails to Jayco Sydney
[393]
September 2015 – Jayco Sydney repair works
[397]
September 2015 – Jayco Sydney correspondence with Jayco Corp.
[400]
22 December 2015 – telephone conversation with Mr Manning of Jayco Corp
[401]
Early January 2016 – trip to Ulladulla
[405]
Early 2016 – request for extras from Jayco Sydney
[414]
Mid to late January 2016 – correspondence with Jayco Sydney
[415]
Telephone conversation with Jayco Corp
[430]
January to February 2016 – Jayco Sydney assessment and preparation for repair works
[432]
January to February 2016 – Fair Trading complaint
[450]
February 2016 – meeting with Mr Holman
[452]
February 2016 – Jayco Corp bulletin with fix for the 2015 model Expanda bed lid leak issue
[458]
February – March 2016 correspondence
[462]
February – April 2016 Jayco Sydney repair works
[474]
April 2016 – return of Consumer JT’s RV
[481]
April 2016 – further leak and proposed trade-in transaction
[486]
Subsequent use of the RV
[491]
Consideration – defects in Consumer JT’s RV
[493]
Was Consumer JT entitled to reject the RV?
[495]
(4) Consumer RH
[501]
Purchase of the RV
[501]
Pre-delivery check and repairs to the RV
[506]
Delivery of the RV
[509]
Proper method for raising the roof of the RV
[511]
Consumer RH’s alleged initial concerns with the RV
[514]
February 2015 – Jayco Newcastle repair work
[519]
March 2015 – Jayco Newcastle repair work
[521]
April 2015 – Jayco Newcastle deferred repair work
[528]
May 2015 – Queensland trip and correspondence with Jayco Corp and Jayco Newcastle
[530]
Roof issue and 4 May 2015 Mak’s Mechanical and Onsite Caravan repair works
[531]
Further roof issue and 7 May 2015 Bundaberg Caravan Repairs repair works
[539]
May 2015 – further correspondence with Jayco Newcastle and Jayco Corp
[557]
Mid-2015 – Fair Trading complaint
[572]
10 July 2015 – Consumer RH traded in her RV to Jayco Newcastle for a used Jurgens RV
[574]
Subsequent repair works
[577]
Consideration – defects in Consumer RH’s RV
[579]
Was Consumer RH entitled to reject the RV?
[584]
Part 8: Alleged contraventions of ss 18(1) and 29(1)(m) of the Australian Consumer Law
[589]
The operation of ss 18 and 29(1)(m) of the ACL
[590]
The representations which the ACCC alleges Jayco Corp made to Consumer MO
[602]
The representations which the ACCC alleges Jayco Corp made to Consumer TB
[621]
The representations which the ACCC alleges Jayco Corp made to Consumer JT
[641]
The representations which the ACCC alleges Jayco Corp made to Consumer RH
[645]
Part 9: Unconscionable conduct
[653]
The operation of s 21 of the ACL
[654]
The ACCC’s pleaded claims of unconscionable conduct
[684]
The submissions of the ACCC
[687]
The submissions of Jayco Corp
[702]
The matrix of statutory rights and obligations
[712]
How did Jayco Corp address requests for repairs, refunds and replacements?
[726]
Jayco Corp witnesses’ understanding the operation of the ACL
[738]
Requests for replacement RVs or refunds
[747]
Jayco Corp’s role generally in the decision of a dealer whether to replace an RV or to refund the purchase price
[758]
The practices of the two Jayco dealers in relation to decisions whether to replace an RV or to refund the purchase price
[780]
The practices of Jayco Sydney
[781]
The practices of Jayco Newcastle
[786]
The ACCC’s claims in relation to Jayco Corp’s practices
[790]
The ACCC’s claims of unconscionable conduct by Jayco Corp in relation to the four Consumers
[797]
Consumer RH
[798]
Consumer MO
[804]
Consumer JT
[821]
Consumer TB
[841]
Part 10: Some final observations
[858]
Part 11: Conclusions
[861]
Part 1: Overview
The respondent, Jayco Corporation Pty Ltd (Jayco Corp), is a manufacturer of caravans, campervans, camper trailers, and other recreational vehicles. I will refer to all such vehicles as RVs, which was the term adopted by the parties during the course of the trial.
Jayco Corp manufactured RVs at its factory in Dandenong, Victoria. Jayco Corp then supplied new, manufactured RVs to Jayco dealers, which then supplied them to consumers. The supply of the RVs to consumers was the subject of statutory guarantees and rights under the Australian Consumer Law (ACL), which is Schedule 2 to the Competition and Consumer Act 2010 (Cth). There are three Jayco dealers which are relevant to the facts in issue in this proceeding: Jayco Sydney, Jayco Newcastle, and Jayco Canberra. Each of those dealers is operated by a company that is independent of Jayco Corp, and is an independent business. However, each of the dealers adopted to some extent the Jayco name and style as part of its get-up.
The applicant, the Australian Competition and Consumer Commission (ACCC), alleges that Jayco Corp engaged in unconscionable conduct and misleading or deceptive conduct, and made false or misleading representations to four consumers, Consumer MO, Consumer TB, Consumer JT, and Consumer RH (the Consumers) in connection with dealings by each of them with Jayco Corp in relation to claimed defects in their RVs. The ACCC’s allegations of unconscionable conduct were pleaded and maintained at the hearing by reference to the conduct of Jayco Corp in relation to the four Consumers. While there were some common components of the ACCC’s case in relation to the four Consumers, the ACCC did not allege that Jayco Corp engaged in a system of conduct, or a pattern of behaviour: cf, ACL, s 21(4)(b); Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155; 266 FCR 631 at [104]; Australian Competition and Consumer Commission v Ford Motor Company of Australia Ltd [2018] FCA 703; 360 ALR 124 at [26].
The conduct of Jayco Corp is alleged to have arisen in connection with claims by the Consumers that the RVs acquired by them contained defects such as to entitle them to a refund of the purchase price, or replacement goods, pursuant to rights under the ACL. The supply of the RVs to each of the Consumers was the subject of a written warranty by Jayco Corp in relation to any defects in the RVs. The terms of the Jayco warranty are important. The terms were contained in a handbook that was supplied with each RV. The parties accepted that the warranty had contractual force and arose by way of a collateral contract between Jayco Corp and each of the Consumers, the consideration for which was the purchase by the consumer of an RV from a Jayco dealer. As I discuss later, the Jayco warranty was also enforceable under statute.
The issues in this proceeding concern the interaction between Jayco Corp’s obligations under the Jayco warranty, and the Consumers’ statutory entitlements under the ACL against the suppliers of the RVs. The ACCC alleges that in respect of each of the four Consumers, there were manufacturing defects in the RV that he or she acquired which were of a character that, under the ACL, entitled the Consumers to a refund of the purchase price or a replacement vehicle from the supplier of the RV, which in each case was a Jayco dealer. The relevant Jayco dealers are not parties to this proceeding. The ACCC alleges that Jayco Corp considered the Consumers’ claims about defects in their RVs against its obligations under the Jayco warranty rather than with full reference to the Consumers’ rights under the ACL, and thereby engaged in conduct that was unconscionable. That conduct is alleged to have involved –
(1)refusing to exercise its discretion under the Jayco warranty to provide a replacement RV;
(2)pressing the position that the only remedy available to the Consumers was repair; and
(3)unfairly obstructing the Consumers from obtaining a refund or replacement RV from the Jayco dealer that sold the RV, to which they were entitled under the ACL.
The ACCC alleges that by its conduct, Jayco Corp caused harm to the Consumers in that they were deprived of the opportunity to obtain a refund or replacement RV, and that they suffered distress and frustration as a result of their inability to use their RVs and in failing to obtain proper redress.
The ACCC also alleges that Jayco Corp made false or misleading representations to the Consumers as to their entitlement to a remedy, and as to Jayco Corp’s own role in relation to the Consumers’ rights or ability to obtain a replacement RV, or a refund of the purchase price.
By its originating application, the ACCC seeks a range of remedies, including declarations, the imposition of pecuniary penalties under s 224 of the ACL, injunctions, a disclosure order pursuant to s 246 of the ACL, an order under s 239 of the ACL to redress loss or damage suffered by the Consumers, an order under s 246 of the ACL that Jayco Corp establish and maintain a compliance program, and finally an order under s 137H of the Competition and Consumer Act that sealed copies of the reasons for judgment and final orders in this proceeding be retained on the Court file. The ACCC’s standing to bring the proceeding was not in issue. The ACCC has standing under s 228 of the ACL to institute a proceeding for the recovery, on behalf of the Commonwealth, of a penalty under s 224. It also has standing under s 232(2) to seek an injunction. And the court may make orders under ss 239 and 246 of the ACL on the application of the ACCC.
By an interlocutory order in this proceeding made by Murphy J on 26 April 2018, his Honour ordered that the question of liability in this proceeding be heard separately from the question of relief. These reasons concern questions of liability only.
In relation to the ACCC’s case that Jayco Corp had engaged in unconscionable conduct in contravention of s 21(1) of the ACL, the ACCC submitted that it was a necessary part of its case that by reason of manufacturing defects in the RVs, each of the Consumers was entitled to reject the goods, and at his or her election to seek a refund of the purchase price, or a replacement RV. It is therefore necessary to consider in turn the circumstances of each of the four Consumers. The primary facts were, to a large degree, not in contest. The fact of, or content of some conversations was in issue, and I will identify any such conflicts, and make findings where appropriate. Although many of the primary facts were not in dispute, the conclusions, or the ultimate issues were fundamentally in dispute. The main issues to be resolved are as follows –
(1)Did the RVs have manufacturing defects that led to a failure to comply with a statutory guarantee that was to be characterised as a “major failure” for the purposes of the ACL?
(2)In consequence, were the Consumers entitled to reject the RVs and obtain a refund or a replacement RV?
(3)Were the representations alleged by the ACCC made, and if so were they misleading or deceptive, or likely to mislead or deceive, or did they otherwise constitute false or misleading representations made in contravention of the ACL?
(4)Was Jayco Corp’s conduct, in relation to the claims made by the four Consumers, to be characterised as unconscionable for the purposes of s 21(1) of the ACL?
Part 2: Summary of conclusions
For the reasons that follow, I have concluded that –
(1)three of the four RVs in question had manufacturing defects that resulted in a major failure to comply with a statutory guarantee;
(2)three of the four Consumers were entitled to reject their RV, and to obtain a refund or a replacement RV from the supplier, being the selling dealer;
(3)one representation made by an employee of Jayco Corp to one of the Consumers was made in contravention of ss 18 and 29(1)(m) of the ACL because it was misleading or deceptive, or likely to mislead or deceive, and was false or misleading; and
(4)otherwise, Jayco Corp’s conduct in relation to the claims made by the four Consumers was not to be characterised as unconscionable for the purposes of s 21(1) of the ACL.
Part 3: The Australian Consumer Law (ACL)
The full statutory context in which the ACCC alleges that Jayco Corp engaged in contravening conduct is significant. It is necessary to have regard to the legislative context, in broad outline, before referring to the relevant provisions in more detail.
Broad outline
Prior to 1 January 2011, the Trade Practices Act 1974 (Cth) implied into certain consumer contracts for the sale of goods mandatory terms relating to merchantable quality and fitness for purpose. Those implied terms had their genesis in the Sale of Goods Act 1893 (UK), but in many respects were developed by the Trade Practices Act beyond their 19th century origins. A claim for breach of those terms was a claim in contract: Austral Pacific Group Ltd v Airservices Australia [2000] HCA 39; 203 CLR 136 at [8]-[9] (Gleeson CJ, Gummow and Hayne JJ). In addition, the Trade Practices Act created a direct statutory liability in a manufacturer to compensate a consumer for loss and damage in respect of goods supplied by the manufacturer for the purposes of re-supply, which were supplied to a consumer and which were not fit for purpose, or not of merchantable quality: Trade Practices Act, s 74A to s 74G (now repealed); and see, Merck Sharp & Dohme (Australia) Pty Ltd v Peterson [2011] FCAFC 128; 196 FCR 145 at [169]-[182].
The ACL was introduced as Schedule 2 of the renamed Competition and Consumer Act by the Trade Practices Amendment (Australian Consumer Law) Act (No 2)2010 (Cth), and commenced on 1 January 2011. The ACL re-enacted several provisions of the Trade Practices Act, and introduced new provisions, such as those providing for consumer guarantees. The consumer guarantee provisions of the ACL are couched in terms that are broadly similar to the Consumer Guarantees Act 1993 (NZ): see the explanatory memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) at [7.9]. In turn, elements of the New Zealand legislation appear to have been inspired by the Consumer Products Warranties Act 1978 (Sask), and the Sale of Goods Act 1979 (UK), as then in force.
Under the ACL, the rights of a consumer against a supplier of goods or services no longer rest solely upon contract. Rather, the consumer guarantees under the ACL and the remedies for breach of those guarantees arise by force of the statute. The ACL provides for remedies against the supplier and the manufacturer of goods where the statutory guarantees are not complied with. Relevant to the present case are the following guarantees –
(1)a guarantee that the goods will be of acceptable quality [s 54];
(2)a guarantee that the goods will be fit for purpose [s 55]; and
(3)a guarantee that the manufacturer of the goods will comply with any express warranty given by the manufacturer [s 59].
At a general level, and without being exhaustive, in respect of the consumer guarantees the ACL provides for the following remedies against a supplier of goods, against a manufacturer of goods, and as between a supplier of goods and a manufacturer.
In relation to a supplier –
(1)a supplier of goods is liable to a consumer to remedy any failure of the goods to comply with the statutory guarantees of acceptable quality and fitness for purpose, and for damages for any foreseeable loss as a result of the failure [ss 259(2) and (4), 261]; and
(2)where a failure is a “major failure”, or a failure cannot be remedied, the consumer is entitled as against the supplier to reject the goods, and is entitled at the consumer’s election to replacement goods, or to a refund of the purchase price [ss 259(3), 263(4)].
In relation to a manufacturer –
(1)a manufacturer is liable in damages to an “affected person” where the goods fail to comply with the statutory guarantee of acceptable quality [s 271(1)];
(2)a manufacturer has no direct liability under the ACL itself to repair or replace goods that do not comply with the statutory guarantee of acceptable quality; and
(3)a manufacturer is liable in damages to an “affected person” for a failure to comply with the statutory guarantee that the manufacturer will comply with any express warranty given by it [s 271(5) and (6)].
As between a manufacturer of goods and a supplier, a manufacturer is liable to indemnify a supplier if the supplier is liable to pay damages to a consumer for loss or damage and the manufacturer is or would be liable to pay damages to the consumer for the same loss or damage, and also if the supplier incurs costs because of its liability for failure to comply with the statutory guarantee of acceptable quality, or of fitness for certain disclosed purposes, or of correspondence with certain descriptions [s 274(1) and (2)].
Separate from the consumer guarantees and the remedies flowing from any failure to comply with those guarantees, the ACL also includes more general prohibitions on engaging in proscribed conduct in trade or commerce. Section 18(1) prohibits a person from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive. Section 29(1) prohibits a person from making false or misleading representations about goods or services. Relevant to this proceeding, sub-section 29(1)(m) prohibits the making of such representations concerning the existence, exclusion, or effect of any condition, warranty, guarantee, right or remedy, including the statutory consumer guarantees. And section 21(1) prohibits a person from engaging in conduct in connection with goods or services that is, in all the circumstances, unconscionable. I will return to consider these more general prohibitions.
In considering the application of those provisions outlined above to the present proceeding, it is helpful to note that, for the purposes of those provisions –
(1)the RVs acquired by the Consumers were goods of a kind ordinarily acquired for personal, domestic or household use or consumption;
(2)accordingly, each of the Consumers was a “consumer” within the meaning of that term in s 3 of the ACL;
(3)in the case of each of the four RVs, a Jayco dealer was the “supplier” of the goods; and
(4)Jayco Corp was the manufacturer of the goods.
Statutory guarantees
The statutory guarantees under Part 3-2, Division 1 of the ACL apply where a person in trade or commerce supplies particular goods to a consumer other than by sale by auction. A supplier of goods has a meaning that corresponds to the defined term supply, which includes in relation to goods, the supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase: s 2. A person acquires goods as a consumer if, inter alia, the goods are of a kind ordinarily acquired for personal, domestic or household use or consumption: s 3(1)(b). It was not in dispute in this proceeding that each sale of an RV by the Jayco dealers to the four Consumers was a supply of goods to that consumer in trade or commerce.
Acceptable quality
Section 54 of the ACL provides for a guarantee that the goods are of acceptable quality. The meaning of “acceptable quality” is given content by s 54(2), (3), and (6) –
(2) Goods are of acceptable quality if they are as:
(a)fit for all purposes for which goods of that kind are commonly supplied; and
(b)acceptable in appearance and finish; and
(c)free from 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 of the goods), would regard as acceptable having regard to the matters in subsection (3).
(3)The matters for the purposes of subsection (2) are:
(a)the nature of the goods; and
(b)the price of the goods (if relevant); and
(c)any statements made about the goods on any packaging or label on the goods; and
(d)any representation made about the goods by the supplier or manufacturer of the goods; and
(e)any other relevant circumstances relating to the supply of the goods.
…
(6)Goods do not fail to be of acceptable quality if:
(a)the consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and
(b)they are damaged by abnormal use.
One must be cautious about comparing the extent to which the standard of acceptable quality under the ACL compares to the standard of merchantable quality under earlier or cognate legislation. The standards are differently expressed, and attention must be given to the text of the ACL having regard to its context and purpose. References to other legislation, and judicial formulations that are explanatory of other legislation, are liable to mask the nature of that task: Shi v Migration Agents Registration Authority [2008] HCA 31; 235 CLR 286 at [92] (Hayne and Heydon JJ); Ogden Industries Pty Ltd v Lucas [1970] AC 113 at 127 (PC); (1968) 118 CLR 32 at 39.
Section 54 provides for a common standard of acceptable quality which goods are required to reach. It is necessary that goods have all the qualities referred to in s 54(2) in order to comply with the statutory standard: Vautin v By Winddown Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; 362 ALR 702 (Vautin) at [142] and [144] (Derrington J). The standards under s 54(2) include that goods will be fit for all purposes for which goods of that kind are commonly supplied. This general standard of fitness for purpose is not dependent upon the consumer communicating any intended purpose to the supplier, or relying upon the supplier’s skill or judgment. And, in relation to the general standard, it does not suffice that the goods will be fit for only some of those purposes.
The standard of acceptable quality in s 54(2) has as its reference point a construct, namely the objective standard of a reasonable consumer fully acquainted with the state and condition of the goods, including any hidden defects of the goods. The reasonable consumer sits with an array of other hypothetical persons who have been recruited by the law and by reference to whom objective standards are evaluated: see, Healthcare at Home Ltd v The Common Services Agency [2014] UKSC 49; 4 All ER 210 at [1]-[4] (Lord Reed JSC). Such a person has been described as an anthropomorphic conception of justice that is and must be the court itself: see Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 at 728 (Lord Radcliffe).
The hypothetical question whether the reasonable consumer would have regarded the quality of the goods as acceptable is to be determined at the time of supply. However, the reference in s 54(2) to hidden defects has the consequence that for the purposes of determining that question, the reasonable consumer may be acquainted with information known at the time of trial: cf, Medtel Pty Ltd v Courtney [2003] FCAFC 151; 130 FCR 182 at [70] (Branson J, Jacobson J agreeing). The standard of acceptable quality prescribed by s 54(2) is not absolute, or a standard of perfection. It is tempered by what a reasonable consumer would regard as acceptable having regard to the several matters in s 54(3). These matters render the standard of acceptable quality elastic, and context specific: Contact Energy Ltd v Jones [2009] 2 NZLR 830 at [95] (Miller J). The significance of the components of the guarantee of acceptable quality will therefore vary with the circumstances of each case.
Fitness for purpose
Section 55 of the ACL provides for a guarantee that the goods are reasonably fit for any disclosed purpose, or for any purpose for which the supplier represents that they are reasonably fit. The meaning of “disclosed purpose” is the subject of s 55(2) –
(2)A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that:
(a) the consumer makes known, expressly or by implication, to:
(i)the supplier;
(ii)a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or
(b)the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a)(ii).
There is some conceptual overlap between the statutory guarantees in s 54(1) and s 55(1) to the extent that any disclosed purposes or represented purposes that engage s 55(1) may also amount to common purposes for the objective standard of acceptable quality under s 54(2)(a): see, Jewson Ltd v Boyhan [2003] EWCA Civ 1030; [2004] 1 Lloyd’s Rep 505 at [68], [71] (Clarke LJ), and at [77] (Sedley LJ).
Express warranties
In relation to express warranties, s 59(1) of the ACL provides for a statutory guarantee that the manufacturer of the goods will comply with any express warranty given or made by the manufacturer in relation to the goods, and s 59(2) provides that the supplier of the goods will comply with any express warranty given or made by the supplier in relation to the goods. The term “manufacturer” is given an extended meaning by s 7 of the ACL, but that is not in issue in this proceeding because Jayco Corp was the manufacturer of the four RVs in the ordinary sense of that term.
Section 102 of the ACL authorises the prescription by regulation of requirements relating to the form and content of non-statutory warranties against defects, and mandates compliance with those requirements. A warranty against defects is defined by s 102(3) of the ACL as follows –
(3)A warranty against defects is a representation communicated to a consumer in connection with the supply of goods or services, at or about the time of supply, to the effect that a person will (unconditionally or on specified conditions):
(a) repair or replace the goods or part of them; or
(b) provide again or rectify the services or part of them; or
(c) wholly or partly recompense the consumer;
if the goods or services or part of them are defective, and includes any document by which such a representation is evidenced.
In turn, reg 90 of the Competition and Consumer Regulations 2010 (Cth) prescribes requirements including that particular text must be included in a warranty against defects. During the period relevant to this proceeding, reg 90 was in the following terms –
90 Requirements for warranties against defects
(1)For subsection 102(1) of the Australian Consumer Law, the following requirements are prescribed:
(a)a warranty against defects must be in a document that is transparent;
(b)a warranty against defects must concisely state:
(i)what the person who gives the warranty must do so that the warranty may be honoured; and
(ii)what the consumer must do to entitle the consumer to claim the warranty;
(c)a warranty against defects must include the text mentioned in subregulation (2);
…
(h)a warranty against defects must state that the benefits to the consumer given by the warranty are in addition to other rights and remedies of the consumer under a law in relation to the goods or services to which the warranty relates.
(2)For paragraph (1)(c), the text is ‘Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure’.
…
Sections 64 and 64A of the ACL have the effect that the consumer guarantees cannot be excluded, restricted, or modified by contract, and in the case of goods of a kind ordinarily acquired for personal, domestic, or household use, liability cannot be limited.
A consumer’s remedies against a supplier
The remedies available to a consumer for failure to comply with the statutory guarantees are provided for by Part 5-4 of the ACL. Under Division 1 of that Part, a consumer has remedies against the supplier of the goods.
A supplier is liable to a consumer to remedy a failure to comply with a guarantee of acceptable quality or fitness for purpose within a reasonable time, or for compensation where the supplier refuses or fails to comply with the requirement to remedy the failure. If the failure to comply with the guarantee cannot be remedied, or is a major failure, the consumer may reject the goods. If the consumer rejects the goods, the supplier must, in accordance with an election made by the consumer, refund any money paid by the consumer for the goods, or replace the rejected goods with goods of the same type and of similar value, if such goods are reasonably available to the supplier. Section 259 of the ACL provides –
259 Action against suppliers of goods
(1) A consumer may take action under this section if:
(a)a person (the supplier) supplies, in trade or commerce, goods to the consumer; and
(b)a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with.
(2)If the failure to comply with the guarantee can be remedied and is not a major failure:
(a)the consumer may require the supplier to remedy the failure within a reasonable time; or
(b)if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement within a reasonable time – the consumer may:
(i)otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or
(ii)subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection.
(3)If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:
(a)subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or
(b)by the action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods.
(4)The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
(5)Subsection (4) does not apply if the failure to comply with the guarantee occurred only because of a cause independent of human control that occurred after the goods left the control of the supplier.
(6)To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).
(7)The consumer may take action under this section whether or not the goods are in their original packaging.
The conditions in s 259(3) that engage the entitlement of a consumer to reject the goods are a failure to comply with a guarantee that cannot be remedied, or a major failure to comply with a guarantee. In relation to what constitutes a major failure to comply with a guarantee, s 260 of the ACL provides –
260 When a failure to comply with a guarantee is a major failure
A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if:
(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 one or more significant respects:
(i)if they were supplied by description – from that description; or
(ii)if they were supplied by reference to a sample of demonstration model – from that sample or demonstration model; or
(c)the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
(d)the goods are unfit for a disclosed purpose that was made known to:
(i)the supplier of the goods; or
(ii)a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made;
and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or
(e) the goods are not of acceptable quality because they are unsafe.
Section 260(a), which is set out above, also recruits the hypothetical reasonable consumer as a reference point for the objective standard that is established by the provision. The statutory construct of the reasonable consumer in this context no doubt draws upon principles that were developed around the condition of merchantable quality implied by sale of goods legislation. In George Wills & Co Ltd v Davids Pty Ltd [1957] HCA 6; 98 CLR 77, the Court approved a statement in the 8th edition (1950) of Benjamin on Sale that goods are said to be of merchantable quality “if they are of such a quality and in such a condition that a reasonable man, acting reasonably, would, after a full examination, accept them under the circumstances of the case in performance of his offer to buy them, whether he buys them for his own use or to sell again”. The focus of the ACL, as reflected in its language, is upon the expectations and rights of consumers rather than of merchants engaged in commercial trade: compare the reference to “commercially saleable” as a synonym for “merchantable quality” in Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1969] 2 AC 31 at 75 (Lord Reid), and see the observations of Cooper J in Rasell v Cavalier Marketing (Australia) Pty Ltd [1991] 2 Qd R 323 at 348, citing Rogers v Parish (Scarborough) Ltd [1987] QB 933.
The text of s 260(a) of the ACL directs attention to the question whether the goods would not have been acquired by the reasonable consumer, fully acquainted with the nature and extent of the failure, and not to the different question whether an individual consumer acted reasonably in rejecting the goods. In my view, for the purposes of evaluating whether a failure is a major failure for the purposes of s 260(a), a reasonable consumer who purchases an RV is to be taken to have some degree of tolerance for certain types of failure. This is owing to at least three features.
First, the legislation assumes that not every failure to comply with a guarantee will be a major failure. Section 259(2) of the ACL expressly contemplates that some failures to comply with statutory guarantees can be remedied within a reasonable time. Further, s 260(a) requires that consideration be given to the nature and extent of the failure in determining whether the reasonable consumer would not have acquired the goods, thereby indicating that the mere existence of any failure is not sufficient. Section 260(c) contemplates that goods that are substantially unfit for a common purpose might easily, and within a reasonable time, be remedied so as to make them fit for purpose, in which case there is no major failure on account of unfitness for a common purpose. Likewise, s 260(d), which relates to unfitness for a disclosed purpose, also contemplates that the goods might be remedied easily, and within a reasonable time, so as to make them fit for purpose.
Second, the nature of the goods is relevant. RVs, like many substantial consumer items such as motor vehicles, yachts, and even bicycles, are manufactured from a range of component parts, many of which may be capable of easy replacement or repair in the event of some fault. Some of the accessories, such as air conditioning units, televisions, or microwave ovens, may be manufactured by specialist suppliers of electrical appliances, and installed in the RV by the manufacturer or the supplier of the RV. Many of the component parts are designed for mechanical movement. RVs are intended to be towed. The process of towing will subject the RVs to stresses and flex. RVs will necessarily be exposed to weather. They are designed to be lived in, and otherwise to be used. Lids will be raised, and lowered. Doors will be opened, and shut. Drawers will be pulled out, and pushed in. RVs will be used by families with children, who sometimes lack fine motor skills when handling equipment. Surfaces may become scratched or chipped though normal use. An appliance installed in an RV, if found to be faulty, might be able to be easily repaired or replaced by a specialist supplier. Fuses may blow. Sometimes, just as in a household, the cause of an isolated occurrence of a blown fuse may not be apparent. Screws might have to be tightened. Doors might have to be straightened. These things are inherent in the nature of the goods. The reasonable consumer will tolerate some faults or breakages, and some need for adjustments of this type that are exposed by a period of initial use. The reasonable consumer will purchase an RV accepting that there is a reasonable prospect that some components of the RV may have to be adjusted, repaired, or replaced within a manufacturer’s warranty period. Putatively, if a reasonable consumer was fully acquainted with the nature and extent of a failure to comply with a statutory guarantee at the time of purchase, the reasonable consumer might nonetheless proceed with the purchase on the basis that the supplier, or the manufacturer, will remedy the failure within a reasonable time. On the other hand, it does not follow that merely because a failure to comply with a statutory guarantee is capable of being remedied, that a reasonable consumer fully acquainted with the nature and extent of the failure would acquire the goods. Whether that is so will depend upon the circumstances of each case.
Third, the reasonable consumer will accept that the process of production of certain complex goods, such as RVs, can never be perfect. As I have mentioned, the Jayco RVs were subject to a manufacturer’s warranty which had as an assumption that the RVs might suffer from some teething problems or defects from time to time for which the manufacturer would assume responsibility for repair. The Jayco handbook that was supplied with the RVs gave this advice to purchasers in its introduction –
We recommend that you check your RV carefully as soon after you take delivery as you can ensuring that all items are working as they should and reporting any problems to your dealer for early rectification.
The introduction went on to state –
Your first Service (1000kms or 3 months) after an initial running-in period is an ideal time for any minor adjustments to components to be made and for your Jayco dealer to answer any questions you may have.
It is not to be suggested that the existence of a manufacturer’s warranty should operate to diminish the expectations of the reasonable consumer when it comes to questions of acceptable quality: Rogers v Parish (Scarborough) Ltd [1987] QB 933 at 945 (Mustill LJ). In particular, generally, a manufacturer’s warranty should have no bearing on the question whether the goods comply with the statutory guarantee of acceptable quality. Rather, for the purposes of s 260(a) of the ACL, and evaluating whether a reasonable consumer would have acquired the goods, the existence and terms of the manufacturer’s warranty are consistent with the reasonable consumer accepting that some complex goods might suffer some minor defects, expecting that they will be repaired under warranty, or in the exercise of remedies available under the ACL. As I have said, whether that is so in a particular case will depend upon the nature of the defect, and other circumstances. In those cases that are not clear-cut, the resolution of the issue will turn upon questions of fact, degree, and value judgment.
Section 261 of the ACL provides for the ways in which a supplier may remedy a failure to comply with a consumer guarantee –
261 How suppliers may remedy a failure to comply with a guarantee
If, under section 259(2)(a), a consumer requires a supplier of goods to remedy a failure to comply with a guarantee referred to in section 259(1)(b), the supplier may comply with the requirement:
(a) if the failure relates to title – by curing any defect in title; or
(b) if the failure does not relate to title – by repairing the goods; or
(c) by replacing the goods with goods of an identical type; or
(d) by refunding:
(i)any money paid by the consumer for the goods; and
(ii)an amount that is equal to the value of any other consideration provided by the consumer for the goods.
Section 262 of the ACL qualifies the entitlement of a consumer to reject goods, including by providing for a rejection period –
262 When consumers are not entitled to reject goods
(1)A consumer is not entitled, under section 259, to notify a supplier of goods that the consumer rejects the goods if:
(a)the rejection period for the goods has ended; or
(b)the goods have been lost, destroyed or disposed of by the consumer; or
(c)the goods were damaged after being delivered 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)The rejection period for goods is the period from which the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to comply with a guarantee referred to in section 259(1)(b) to become apparent having regard to:
(a)the type of goods; and
(b)the use to which a consumer is likely to put them; and
(c)the length of time for which it is reasonable for them to be used; and
(d)the amount of use to which it is reasonable for them to be put before such a failure becomes apparent.
As set out above in s 262(2), the rejection period is the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to become apparent. This is a reference to the failure to comply with the statutory guarantee becoming apparent, rather than any underlying defect becoming apparent, which may occur at an earlier point in time. In Nesbit v Porter [2000] NZCA 288; 2 NZLR 465 at [40], the New Zealand Court of Appeal explained in relation to the corresponding New Zealand provision –
In some instances the defect will be of a kind where it may be obvious that something is wrong with the goods but the supplier or someone else to whom the consumer turns for help may be in doubt about the exact nature of the problem and thus about how serious it is. For example, the operation of a motor vehicle may be affected by the failure of a small and comparatively obscure part, say, a waver spring in an automatic transmission; until the transmission is dismantled a mechanic cannot be sure what the defect is. Or the cause of malfunction, particularly one which occurs intermittently, may be hard to detect even upon inspection. It may be necessary to carry out a series of tests or even to wait and see what, if anything, develops. Or the repairer may think the fault has been identified and that the correct repair or adjustment has been made but this view may prove to be wrong and the problem may manifest itself again. … In all such cases, a reasonable period will not elapse before the consumer has had the opportunity to become properly informed about the nature of the defect and has also had a little time then to consider an appropriate decision, whether or not to reject the goods. It almost goes without saying that the period will be correspondingly longer where the supplier has taken steps which effectively conceal a defect or has withheld relevant information.
The Court in Nesbit v Porter at [41] went on to refer to the practical utility to a consumer of the right of rejection as informing what is a reasonable period within which to exercise a right to reject goods –
In considering what is a reasonable period in a particular case it is necessary also to bear in mind the practical utility to a consumer of the right of rejection given by s 18 of the [Consumer Guarantees Act 1993 (NZ)]. Ms Nield submitted persuasively that, although a right to damages survives the loss of the right to reject, in pursuing it the consumer may face substantial litigation costs where the claim is for a sum exceeding the jurisdiction of the Disputes Tribunal (now $7500, or $12,000 by agreement of both parties). Replacement (under s 19(1)(b)) or repair by or at the cost of the supplier or rejection of the goods, where that is available in terms of s 18, are more “user-friendly” solutions to a consumer’s problem with goods, although of course it may still prove to be necessary to litigate in order to recover all or part of the price.
I pause to observe that the practical and useful remedy of the right of rejection of the goods given by the ACL will in most cases be exercisable only against the supplier, and not against a manufacturer if the manufacturer did not supply the goods to the consumer.
In relation to the time within which it would be reasonable to expect the failure to become apparent, I respectfully agree with Derrington J in Vautin at [265], where his Honour stated that –
… the section requires a sufficiently high level of certainty in relation to the knowledge of the relevant failure including its nature and extent and what it will cost to remediate it. If the level of knowledge required is as identified above, it follows that if there exists doubt about the consequences of a defect in an item and, therefore, the cost of repairing it, the failure of the statutory guarantee has not become apparent.
Section 263 of the ACL provides for the consequences of the rejection of goods by a consumer, which include the capacity for the consumer to elect whether the supplier should replace the goods, or refund the purchase price –
263Consequences of rejecting goods
(1)This section applies if, under section 259, a consumer notifies a supplier of goods that the consumer rejects the goods.
(2)The consumer must return the goods to the supplier unless:
(a)the goods have already been returned to, or retrieved by, the supplier; or
(b)the goods cannot be returned, removed or transported without significant cost to the consumer because of:
(i)the nature of the failure to comply with the guarantee to which the rejection relates; or
(ii)the size or height, or method of attachment, of the goods.
(3)If subsection (2)(b) applies, the supplier must, within reasonable time, collect the goods at the supplier’s expense.
(4)The supplier must, in accordance with an election made by the consumer:
(a) refund:
(i)any money paid by the consumer for the goods; and
(ii)an amount that is equal to the value of any other consideration provided by the consumer for the goods; or
(b)replace the rejected goods with goods of the same type, and of similar value, if such goods are reasonably available to the supplier.
(5)The supplier cannot satisfy subsection (4)(a) by permitting the consumer to acquire goods from the supplier.
(6)If the property in the rejected goods had passed to the consumer before the rejection was notified, the property in those goods revests in the supplier on the notification of the rejection.
I am not persuaded that the conduct of Jayco Corp towards Consumer TB was unconscionable in all the circumstances. The statutory framework of rights and obligations is again relevant in the case of Consumer TB. The respective liabilities of Jayco Sydney, and Jayco Corp were different, and I have rejected the ACCC’s claim that there existed a procedure under which dealers were required to seek Jayco Corp’s approval before agreeing to provide a refund, or a replacement RV.
The course that Jayco Corp proposed and adopted was to take Consumer TB’s RV back to its factory for repairs. While that was not the course that Consumer TB preferred, I do not consider that in the circumstances Jayco Corp failed to act in good faith in proposing that it repair the RV at the factory under its express warranty obligations. The impression that I formed from all of the evidence, not only in relation to the four Consumers, was that there was never really any reluctance by Jayco Corp to authorise repairs that were shown to be reasonable.
The quality of Jayco Corp’s proposal in August 2014 to take the RV back to the factory for repairs rather than providing a replacement RV is to be evaluated in the context of the evidence about how the Jayco RVs were hand assembled at its Dandenong factory. Jayco Corp’s conduct in making the proposal is also to be evaluated together with the information that Mr Manning gave to the consumer that he should contact the dealer in relation to his requests for a replacement RV, or a refund. That can hardly be characterised as lacking good faith when, under the ACL, it was the dealer and not Jayco Corp that was liable to the consumer in that regard. Not only did Mr Manning refer the consumer to the dealer, he also notified the dealer of the situation on the three relevant occasions. On the third of those occasions, he actively followed the matter up, seeking to know from Mr Holman what Mr Bilbija, the dealer principal, had decided. Mr Holman informed Mr Manning that he was going to present his findings to Mr Bilbija for a decision, the result of which was Mr Holman’s email to the consumer dated 13 August 2014 denying his request to which Mr Manning was copied. Mr Rigby likewise notified Jayco Sydney of Consumer TB’s request on 31 October 2014. The conduct and knowledge of Mr Manning and Mr Rigby to which I have referred are to be attributed to Jayco Corp.
Rather than obstructing Consumer TB’s rights under the ACL to seek a refund or a replacement RV, and asserting an entitlement to attempt further repairs, Mr Manning facilitated the exercise of the Consumer TB’s rights by referring him to the dealer, and then deferred to and allowed the dealer to make its own decision. Thereafter, Consumer TB in a broad sense exercised his rights by making a complaint to New South Wales Fair Trading, the result of which was that he was advised that because Jayco Corp had offered to repair the RV, he could not obtain a refund (see [338] above). As I have mentioned, the basis for, and the reasonableness of that advice is not an issue before the Court.
The ACCC challenged Mr Bilbija, Mr Holman, and Mr Manning about whether the repairs to Consumer TB’s RV were major repairs having regard to the cost of repairs, and the witnesses gave varying answers on that question, that I consider represented honestly held differences of opinion. I do not consider that this line of cross-examination went directly to the real issue, which was not the characterisation of the repairs as being major or not, but whether there was an absence of good faith by Jayco Corp in its appraisal of the RV, having regard to its warranty obligations set against the statutory framework of liabilities.
Part 10: Some final observations
The ACCC’s case that Jayco Corp engaged in conduct that was in all the circumstances unconscionable has failed for three principal reasons. The first is the rejection of the ACCC’s claim that Jayco Corp required its dealers to obtain its approval before agreeing to replace an RV, or to refund the purchase price pursuant to an obligation under the ACL to do so. While there was consultation between Jayco Corp and the relevant dealers which, unremarkably, may have influenced the dealers’ response to requests for refunds or replacement RVs, the evidence fell well short of proving control over the dealers’ decisions. The failure to prove that element of the ACCC’s claim, which would have been significant if it had been established, then informed the basis on which other elements were to be evaluated.
The second reason relates to the close attention to all the factual circumstances that is required by the judicial technique referred to in Jenyns. That technique required that regard be had to the information that the relevant employees of Jayco Corp possessed at the material times in relation to each individual Consumer’s RV, and to the evaluation of Jayco Corp’s conduct in the circumstances existing at the material times having regard to that information. When close attention was given to Jayco Corp’s conduct in this way, it was clear that the conduct could not be characterised as unconscionable.
The third, and probably the most important reason, relates to the statutory framework of rights and liabilities established by the ACL in relation to the supply of goods and services. The features of the statutory matrix of rights and liabilities under the ACL, and the place of manufacturers’ warranties within that scheme, have been referred to at length in these reasons. Under that legislation, Jayco Corp was not directly liable to the Consumers to replace the RV, or to refund the purchase price, in the event of a major failure to comply with a statutory guarantee. Jayco Corp’s direct liability was under the terms of its warranty, pursuant to which it was not liable to replace the entire RV, still less refund the purchase price that the consumer paid to the supplier. The rights of the Consumers under the ACL against the suppliers were separate rights, of which Jayco Corp gave notice to the Consumers in its warranty contained in the owner’s handbook in accordance with the regulations: cf, Medibank at [334]-[335] (Beach J). The ACCC’s claim that Jayco Corp acted unconscionably in not exercising its discretion under the manufacturer’s warranty to replace the Consumers’ RVs has been rejected for a number of reasons that are particular to the cases of the four Consumers. But standing back, one of the difficulties that the ACCC’s claim faced was that it was tantamount to alleging that Jayco Corp was required to assume a direct liability to a consumer to replace goods as if it were the de facto supplier of the goods, in circumstances where the legislation made the supplier so liable. The legislation then had the effect of establishing a commercial setting in which the supplier and the manufacturer might then work out between themselves how the consequential burden of that liability to the consumer would ultimately be borne. Good conscience did not require that Jayco Corp accept additional direct liabilities to consumers which were otherwise not supported by the legislative scheme.
Part 11: Conclusions
I have found that Jayco Corp contravened ss 18 and 29(1)(m) of the ACL by Mr Manning’s statements to Consumer RH in his email dated 5 May 2015 to which I referred at [533] above. Otherwise, the ACCC has not established its claims.
I will hear the parties as to orders.
I certify that the preceding eight hundred and sixty-two (862) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wheelahan. Associate:
Dated: 20 November 2020
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