Australian Competition and Consumer Commission v Mazda Australia Pty Limited

[2023] FCAFC 45

FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Mazda Australia Pty Limited [2023] FCAFC 45

Appeal from:

Australian Competition and Consumer Commission v Mazda Australia Pty Ltd [2021] FCA 1493

Australian Competition and Consumer Commission v Mazda Australia Pty Ltd (No 2) [2022] FCA 250

File numbers:

VID 195 of 2022
VID 196 of 2022

Judgment of:

MORTIMER, LEE AND HALLEY JJ

Date of judgment:

23 March 2023

Catchwords:

CONSUMER LAW – misleading or deceptive conduct – false or misleading representations – appeal – where primary judge found Mazda Australia Pty Limited (Mazda) contravened s 18(1) and s 29(1)(m) of the Australian Consumer Law (ACL) by making false representations concerning existence or effect of consumer guarantees, rights or remedies and false representations that it had reasonable grounds for expressing opinions that nine consumers who had purchased Mazda vehicles not entitled to refund or replacement vehicle at no cost to them under ACL (misrepresentation case) – where false representations were found to arise by implication – where consideration of whether a representation that a party has reasonable grounds for expressing opinion should be approached from perspective of target audience – appeal dismissed

CONSUMER LAW – unconscionable conduct – where misrepresentation case provided foundation for unconscionable conduct case – appeal – where primary judge found Mazda did not contravene s 21 of the ACL – where no dishonesty or systemic conduct case alleged – where Australian Competition and Consumer Commission contends primary judge failed to use correct judicial technique to assess unconscionability, give sufficient weight to relevant findings and provide adequate reasons – where primary judge faced with unenviable task but ultimately did not provide sufficient reasons – where majority conclude independently of primary judge that Mazda’s conduct does not sufficiently depart from acceptable commercial behaviour to contravene s 21 of the ACL – appeal dismissed

Legislation:

Australian Securities and Investments Commission Act 2001 (Cth) s 12CB

Competition and Consumer Act 2010 (Cth), Sch 2 (Australian Consumer Law) ss 18, 21, 22, 29, 54, 259, 260, 263

Federal Court of Australia Act 1976 (Cth) s 30

Cases cited:

Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2021) 287 FCR 388; [2021] FCAFC 121

Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38

Australian Competition & Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634

Australian Competition and Consumer Commission v Dateline Imports Pty Ltd [2014] FCA 791

Australian Competition and Consumer Commission v Dateline Imports Pty Ltd [2015] FCAFC 114

Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672

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) 267 FCR 544; [2018] FCAFC 235

Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (2021) 285 FCR 133; [2021] FCAFC 40

Australian Competition and Consumer Commission v Valve Corporation(No 3) [2016] FCA 196

Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18

Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liquidation) (No 3) (2020) 275 FCR 57; [2020] FCA 208

Australian Securities and Investments Commission v GetSwift Limited (Liability Hearing) [2021] FCA 1384

Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132; [2005] FCAFC 226

Beale v Government Insurance office of New South Wales (1997) 48 NSWLR 430

Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; [2001] FCA 1833

Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60

Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 39

Carlisle Homes Pty Ltd v Barrett Property Group Pty Ltd [2009] FCAFC 31

Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd (2017) 251 FCR 404; [2017] FCAFC 75

Commonwealth Bank of Australia v Kojic (2016) 249 FCR 421; [2016] FCAFC 186

DL v The Queen (2018) 266 CLR 1; [2018] HCA 26

Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39

Good Living Company Pty Ltd v Kingsmede Pty Ltd and Another (2021) 284 FCR 424; [2021] FCAFC 33

Hunter v Transport Accident Commission [2005] VSCA 1

Inn Leisure Industries Pty Ltd (Provisional Liquidator Appointed) v DF McCloy Pty Ltd (No 1) (1991) 28 FCR 151

Ireland v WG Riverview Pty Ltd (2019) 101 NSWLR 658; [2019] NSWCA 307

Jenyns v Public Curator of Queensland (1953) 90 CLR 113; [1953] HCA 2

Kaur v Minister for Immigration and Border Protection (2019) 269 FCR 464; [2019] FCAFC 53

Kumova v Davison (No 2) [2023] FCA 1

Mann v Mann (1957) 97 CLR 433; [1957] HCA 68

NSW Police Force v Winter [2011] NSWCA 330

Paciocco v Australian and New Zealand Banking Group Ltd (2015) 236 FCR 199; [2015] FCAFC 50

Pettitt v Dunkley [1971] 1 NSWLR 376

Singh v Minister for Immigration and Border Protection [2019] FCA 781

Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247

Sun Alliance Insurance Ltd v Massoud [1989] VR 8

TechnologyOne Limited v Roohizadegan [2021] FCAFC 137

The Juliana (1822) 2 Dods 504 at 522; 165 ER 1560

Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631; [2018] FCAFC 155

Senate Standing Committee on Economics, The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (December 2008)

Division:

General Division

Registry:

New South Wales

National Practice Area:

Commercial and Corporations

Sub-area:

Economic Regulator, Competition and Access

Number of paragraphs:

655

Date of hearing:

1-2 August 2022

Counsel for the Appellant in VID 195 of 2022 and the Respondent in VID 196 of 2022:

Mr N De Young KC with Ms N Hickey and Ms A Garsia

Solicitor for the Appellant in VID 195 of 2022 and the Respondent in VID 196 of 2022:

Webb Henderson

Counsel for the Respondent in VID 195 of 2022 and the Appellant in VID 196 of 2022:

Mr M Scott KC with Mr M Hoyne

Solicitor for the Respondent in VID 195 of 2022 and the Appellant in VID 196 of 2022:

Mills Oakley

ORDERS

VID 195 of 2022

BETWEEN:

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Appellant

AND:

MAZDA AUSTRALIA PTY LIMITED

Respondent

ORDER MADE BY:	MORTIMER, LEE AND HALLEY JJ
DATE OF ORDER:	23 MARCH 2023

THE COURT ORDERS THAT:

1.The notice of appeal filed on 2 May 2022 be dismissed.

2.Within 14 days of these orders, the parties provide, by email, to the Associate of Mortimer J, agreed or competing orders for costs by way of an agreed lump sum or that there be no orders as to costs.

3.In the event of competing orders, the parties also provide short written submissions and any affidavit evidence in support of their respective positions.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

VID 196 of 2022
BETWEEN:	MAZDA AUSTRALIA PTY LTD Appellant
AND:	AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Respondent

ORDER MADE BY:	MORTIMER, LEE AND HALLEY JJ
DATE OF ORDER:	23 MARCH 2023

THE COURT ORDERS THAT:

1.The notice of appeal filed on 2 May 2022 be dismissed.

2.Within 14 days of these orders, the parties provide, by email, to the Associate of Mortimer J, agreed or competing orders for costs by way of an agreed lump sum or that there be no orders as to costs.

3.In the event of competing orders, the parties also provide short written submissions and any affidavit evidence in support of their respective positions.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MORTIMER AND HALLEY JJ:

INTRODUCTION	[1]
FACTUAL BACKGROUND	[7]
Mazda’s role with its dealers	[11]
How Mazda’s internal structures were designed to deal with consumer complaints	[29]
THE CASES ADVANCED BY THE ACCC	[34]
OVERALL APPROACH OF THE PRIMARY JUDGE	[45]
MAZDA APPEAL	[48]
Overview	[48]
Statutory provisions and principles	[50]
Misleading or deceptive conduct	[50]
Statutory guarantees	[57]
Overview of the approach and reasons of the primary judge	[60]
Grounds 1 and 2	[62]
Submissions	[65]
Consideration	[72]
Ground 3	[79]
Mazda’s contentions and submissions	[79]
ACCC’s submissions	[86]
Consideration	[87]
Ground 4	[97]
Mazda’s contentions and submissions	[97]
ACCC’s submissions	[102]
Consideration	[105]
Ground 5	[115]
Mazda’s contentions and submissions	[115]
ACCC’s submissions	[117]
Consideration	[118]
Ground 6	[123]
Mazda’s contentions and submissions	[123]
ACCC’s submissions	[125]
Consideration	[126]
Ground 7	[128]
Mazda’s contentions and submissions	[128]
ACCC’s submissions	[130]
Consideration	[131]
Ground 8	[141]
Ground 9	[144]
Mazda’s contentions and submissions	[144]
Mazda’s reply submissions	[149]
Consideration	[151]
Overview of Grounds 10 to 38	[154]
RC background facts	[157]
Ground 10	[159]
RC 1	[159]
Principal findings and reasons of the primary judge	[161]
Mazda’s contentions and submissions	[165]
Consideration	[167]
Ground 11	[171]
RC 2	[171]
Further RC background facts	[173]
Principal findings and reasons of the primary judge	[174]
Mazda’s contentions and submissions	[177]
Consideration	[180]
Ground 12	[184]
RC 3	[184]
Principal findings and reasons of the primary judge	[186]
Mazda’s contentions and submissions	[188]
Consideration	[190]
Ground 13	[197]
RC 4	[197]
Principal findings and reasons of the primary judge	[199]
Mazda’s contentions and submissions	[200]
Consideration	[202]
Ground 14	[207]
RC 5	[207]
Principal findings and reasons of the primary judge	[209]
Mazda’s contentions and submissions	[211]
Consideration	[213]
Ground 15	[216]
RC 6 and 7	[216]
Principal findings and reasons of the primary judge	[218]
Mazda’s contentions and submissions	[220]
Consideration	[223]
Ground 16	[226]
RC 8 and 9	[226]
Principal findings and reasons of the primary judge	[228]
Mazda’s contentions and submissions	[231]
Consideration	[233]
Ground 17	[236]
RC 9 (second)	[236]
Mazda’s contentions and submissions	[237]
Consideration	[238]
Ground 18	[246]
RC 10, 11 and 12	[246]
Principal findings and reasons of the primary judge	[248]
Mazda’s contentions and submissions	[250]
Consideration	[253]
CT/MT background facts	[256]
Ground 19	[258]
CT/MT 1 and 2	[258]
Principal findings and reasons of the primary judge	[260]
Mazda’s contentions and submissions	[264]
Consideration	[267]
Ground 20	[271]
CT/MT 3	[271]
Further CT/MT background facts	[273]
Principal findings and reasons of the primary judge	[274]
Mazda’s contentions and submissions	[278]
Consideration	[280]
Ground 21	[283]
CT/MT 4 and 5	[283]
Principal findings and reasons of the primary judge	[285]
Mazda’s contentions and submissions	[286]
Consideration	[288]
Ground 22	[290]
CT/MT 6, 7 and 8	[290]
Principal findings and reasons of the primary judge	[294]
Mazda’s contentions and submissions	[297]
Consideration	[302]
Ground 23	[307]
CT/MT 9 and 10	[307]
Principal findings and reasons of the primary judge	[309]
Mazda’s contentions and submissions	[312]
Consideration	[315]
SB/KB background facts	[317]
Ground 24	[319]
SB/KB 1 and 2	[319]
Principal findings and reasons of the primary judge	[321]
Mazda’s contentions and submissions	[325]
Consideration	[330]
Ground 25	[333]
SB/KB 3	[333]
Further SB/KB background facts	[335]
Principal findings and reasons of the primary judge	[336]
Mazda’s contentions and submissions	[338]
Consideration	[340]
Ground 26	[342]
SB/KB 4 and 5	[342]
Principal findings and reasons of the primary judge	[344]
Mazda’s contentions and submissions	[345]
Consideration	[347]
Ground 27	[351]
SB/KB 6, 7 and 8	[351]
Principal findings and reasons of the primary judge	[353]
Mazda’s contentions and submissions	[354]
Consideration	[360]
MG background facts	[365]
Ground 28	[367]
MG 1 and 3	[367]
Principal findings and reasons of the primary judge	[369]
Mazda’s contentions and submissions	[372]
Consideration	[376]
Ground 29	[379]
MG 4, 5 and 6	[379]
Principal findings and reasons of the primary judge	[381]
Mazda’s contentions and submissions	[383]
Consideration	[384]
TK/MK background facts	[386]
Ground 30	[388]
TK/MK 2	[388]
Principal findings and reasons of the primary judge	[390]
Mazda’s contentions and submissions	[392]
Consideration	[394]
Ground 31	[397]
TK/MK 3 and 4	[397]
Further TK/MK background facts	[399]
Principal findings and reasons of the primary judge	[400]
Mazda’s contentions and submissions	[402]
Consideration	[405]
Ground 32	[409]
TK/MK 5 and 6	[409]
Principal findings and reasons of the primary judge	[411]
Mazda’s contentions and submissions	[413]
Consideration	[415]
LC background facts	[418]
Ground 33	[420]
LC 6 and 7	[420]
Principal findings and reasons of the primary judge	[422]
Mazda’s contentions and submissions	[424]
Consideration	[426]
Ground 34	[429]
LC 8 and 9	[429]
Principal findings and reasons of the primary judge	[431]
Mazda’s contentions and submissions	[433]
Consideration	[434]
Ground 35	[436]
LC 8 and 9 (second)	[436]
Principal findings and reasons of the primary judge	[437]
Mazda’s contentions and submissions	[438]
Consideration	[440]
Ground 36	[443]
LC 10 and 11	[443]
Principal findings and reasons of the primary judge	[445]
Mazda’s contentions and submissions	[447]
Consideration	[449]
EG background facts	[452]
Ground 37	[454]
EG 1	[454]
Principal findings and reasons of the primary judge	[456]
Mazda’s contentions and submissions	[458]
Consideration	[459]
Ground 38	[462]
EG 2	[462]
Principal findings and reasons of the primary judge	[464]
Mazda’s contentions and submissions	[466]
Consideration	[467]
Conclusion	[469]
ACCC APPEAL	[470]
Overview	[470]
Statutory provisions and principles	[476]
Overview of the approach and reasons of the primary judge	[489]
Ground 6	[497]
Overview	[497]
Principles	[498]
Submissions	[505]
Consideration	[507]
Grounds 1, 4 and 5	[521]
Overview	[521]
Submissions	[526]
Consideration	[534]
Our conclusion on unconscionable conduct	[543]
Overlap in the unconscionable conduct cases	[549]
General propositions	[555]
Significance of Contraventions	[563]
General Findings made by the primary judge	[576]
Conclusion	[588]
Ground 2	[595]
Overview	[595]
Submissions	[596]
Consideration	[600]
Ground 3	[606]
Overview	[606]
Submissions	[607]
Consideration	[610]
DISPOSITION	[619]

INTRODUCTION

1. These reasons for judgment address appeals brought by both Mazda Australia Pty Limited (Mazda) and the Australian Competition and Consumer Commission (ACCC) against orders made by a judge of this Court in Australian Competition and Consumer Commission v Mazda Australia Pty Ltd(No 2) [2022] FCA 250 for the reasons advanced by the primary judge in Australian Competition and Consumer Commission v Mazda Australia Pty Ltd [2021] FCA 1493 (J). The appeals were heard together.

2. Mazda appeals against orders made by the primary judge finding that it had contravened s 18(1) and s 29(1)(m) of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL), by making false representations (a) concerning the existence or effect of consumer guarantees and rights or remedies available under the ACL and (b) that it had reasonable grounds for expressing opinions that nine consumers who had purchased Mazda vehicles were not entitled to a refund or replacement vehicle at no cost to them under the consumer guarantee provisions of the ACL (Mazda appeal). The ACCC filed a notice of contention in the Mazda appeal.

3. The ACCC appeals against the primary judge’s dismissal of its claims that Mazda had engaged in unconscionable conduct in contravention of s 21 of the ACL with respect to the nine consumers (ACCC appeal). Mazda filed a notice of contention in the ACCC appeal.

4. The two central questions for the primary judge and this Court are whether the conduct of Mazda in its dealings with the nine consumers (Consumers), in relation to their seven vehicles (three of the vehicles were jointly owned), was first, misleading or deceptive and second, whether in all the circumstances it was unconscionable. The two appeals are interrelated in that the representations that the primary judge found were false or misleading in contravention of

   
   

   s 18(1) and s 29(1)(m) of the ACL (Contraventions) provided the foundation for the unconscionable conduct case pursued by the ACCC.

5. The Consumers were referred to by their initials RC, CT, MT, SB, KB, MG, TK, MK, LC and EG in the reasons of the primary judge and we have followed that convention in these reasons.

6. For the reasons that follow we would allow the ACCC notice of contention but reject both the ACCC appeal and the Mazda appeal. In the circumstances, it was unnecessary to address the Mazda notices of contention.

   FACTUAL BACKGROUND

7. The following factual background is taken from the undisputed factual findings of the primary judge which in turn were largely sourced from the very lengthy and detailed facts that had been agreed between the parties (agreed facts).

8. When faults with the vehicles occurred, the Consumers took their vehicles to authorised Mazda dealers. The dealers, often in consultation with Mazda, attempted to repair the faults. Although representatives of the dealers engaged with the Consumers in relation to the faults and repairs, Mazda chose to deal with the Consumers, principally via employees described as “customer service representatives” (or “customer advocates”). The Consumers were often told by the dealers to approach Mazda. Mazda says it was under no legal obligation to become involved in any communications with the Consumers, but it did so “in an effort to improve the outcome for [them]”.

1. All consumer contact with Mazda (including complaints by consumers) was managed by Mazda’s National Customer Support department (NCS). The NCS was divided into teams which focused on different areas of complaint. The intention of Mazda was that they were to work collaboratively to provide a satisfactory outcome for complaints by customers.

2. The NCS operated out of Melbourne. It handled all complaints and enquiries of a technical or operational nature made directly by owners of Mazda vehicles. Such owners were, in almost all cases, customers of Mazda dealers. Complaints and enquiries were received by the NCS either by telephone, email, or letters. Telephone calls were generally recorded if made to the customer support lines (an 1800 number) and were retained by Mazda for quality control purposes. Where complaints and enquiries were made through the Mazda website via the “Contact Us” page, they were directed to relevant staff within the NCS. If there was an existing record of an enquiry or complaint in Mazda’s contact management system, called Maestro, the complaint or enquiry was entered into that record for review by the assigned customer advocate.

   Mazda’s role with its dealers

3. The dealers were the “suppliers” of the vehicles for the purposes of Div 1 of Pt 5-4 of the ACL, set out below. Mazda was the deemed manufacturer within the meaning of s 7 of the ACL. Although Mazda had no obligation to provide a refund or replacement vehicle under the ACL, it took on the responsibility for dealing with the Consumers’ requests. It did so mainly because, as a rule, Mazda bore the full cost associated with any refund or the provision of a new vehicle.

4. The dealers, from time to time, “escalated” vehicle faults to Mazda. They were required to escalate “ACL” classified repairs and faults that could not be resolved “within the first 4 steps of Mazda’s Technical Protocol”. Repairs were classified as “ACL” prior to 2016. That terminology was replaced with “Priority Vehicle Repairs” in or about 2016.

5. Pursuant to Mazda’s Service Standards (see [24] below), any technical and customer handling concerns needed to be rectified by carrying out corrective measures jointly with Mazda and by sharing information among all personnel involved.

6. Dealers were required to submit a Prior Authorisation Request (PAR) for faults in respect of which the dealer considered that Mazda had an obligation.

7. Mazda would also, from time to time, seek information from its parent company, Mazda Motor Corporation, in respect of some vehicle faults.

8. Mazda also operated a “Dealer Support Team”, which comprised Technical Services and Dealer Operations teams. The technical support which Mazda provided to dealers included:

   (a)conducting training on some Mazda specific systems and repair procedures;

   (b)issuing technical bulletins, as required, which dealt with specific issues with Mazda vehicles and procedures that dealers should follow to repair “Complete Built Unit” vehicles that presented with these issues;

   (c)establishing a technical protocol setting out the procedure to be followed by dealers when making technical enquiries of Mazda;

   (d)providing a technical and warranty “help desk” for dealers to contact with technical or warranty enquiries regarding Mazda products, and responding to technical reports provided by dealers in respect of specific issues with Mazda vehicles; and

   (e)providing Field Technical Specialists (FTS), whose role was to provide advisory support to dealers in relation to vehicle and customer enquiries.

9. Mazda also relied on written policies, including those contained in the following documents:

   (a)Summary Guidelines for Responding to Consumer Warranty Questions from July 2015 (Summary Guidelines);

   (b)Post Major Repair / ACL Form, renamed Priority Vehicle Repair Form in February 2016, and discontinued in May 2017;

   (c)Warranty Bulletins;

   (d)Post Warranty Support Criteria;

   (e)Knowledge Articles (offering training to the NCS);

   (f)Compliance Training Materials;

   (g)Mazda Service Standards;

   (h)CCA Compliance Manual;

   (i)Mazda Australia Buy Back Process; and

   (j)Refund Process. 

10. Mazda had the following technical documents which it provided to, and intended to be relied upon by, dealers and Mazda personnel to diagnose the cause of faults and undertake repairs:

    (a)technical bulletins;

    (b)diagnostic protocols; and

    (c)Mazda’s Technical Protocol.

11. The ACCC relied on a number of Mazda’s internal compliance documents in aid of its unconscionable conduct case, including the contention that departures from the relevant terms of training and similar documents was unconscionable.

12. Mazda’s Diagnostics Training Slides (Diagnostics 2) were created by Mazda’s Technical Training team in 2008, and were last updated in 2018. Their principal purpose was to assist in delivering a two-day technical training course to Mazda dealer technicians, and also to make dealer technicians aware of the ACL, particularly when diagnosing, repairing and servicing customer vehicles.

13. Slide 28 of the Diagnostics 2 presentation was entitled “Mazda’s New VEHICLE WARRANTY” and read:

    -Important message from Mazda (First page in the new Warranty Booklet)

    -Our goods come with guarantees that cannot be excluded under the Australian Consumer Law (ACL). 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.

14. Slide 29 was entitled “Determining ACL cases” and read:

    –What may constitute a Major Failure?

    –Concern that will make the vehicle undriveable & not quickly/easily repaired

    –Concern that is safety related, even if driveable

    –Concern that is expensive to repair

    –Concern requiring replacement of major component (engine, trans, diff)

    –Major refinishing of body work

    –New vehicle sale after Jan 1st 2011 

15. The Diagnostics 2 slides were provided to the court in their native PowerPoint format, including speaking notes. The speaking notes to slide 29 relevantly read: “not quickly / easily repaired – any longer than 5 working days”.

16. Mazda’s Service Standards dated October 2017, which were intended to assist dealers in their dealings with consumers, contained references to “ACL”. The Service Standards included a section entitled “ACL Service Guidelines”, which provided information on the process required by dealers and Mazda for “ACL” classified vehicle repairs. The Guidelines included a flowchart with a list of relevant (ACL) “Vehicle Repairs”:

    •Operational failures caused by major assemblies such as engines, transmissions, differential, etc.

    •Repeated occurrences of the same failure after the first repair

    •Safety [r]elated concerns

    •Concerns that make the vehicle not drivable; not quickly & easily repaired in a reasonable time, say, 5 working days

17. Mr Michael Robins, Mazda’s General Counsel, agreed in cross-examination that ACL classified repairs were a “red flag” to consumers having a right to a refund or replacement vehicle under the ACL.

18. Mazda’s July 2015 Summary Guidelines were provided to NCS staff as part of their training. They were used to train NCS staff between 2017 and 2019. Under the heading “Purpose of these guidelines” it was stated:

    Many customer warranty claims and questions can be dealt with easily under the terms of our factory warranties. However, in addition to those factory warranties customers also have rights under the consumer guarantees contained in the Australian Consumer Law. Those rights can extend for longer, and give greater rights to refunds and replacements, than exist under our factory warranties. Failure to honour those consumer guarantees and/or misleading a consumer about their rights under those consumer guarantees is a breach of the law. The purpose of this summary is to assist you to know when a customer has rights under the consumer guarantees and how to respond to customer queries when those rights may be involved.

19. The Summary Guidelines included a section on “Simple rules to avoid breaching the law”, which included the following:

    •Never tell a customer that they do not have any rights or aren’t entitled a remedy because the factory warranty period has expired. Remember – the consumer guarantees do not have clear time limitations, and last for a “reasonable period”. What is a “reasonable period” may differ depending on the component which is defective. For example, a “reasonable period” for windscreen wiper blades will be much less than the “reasonable period” that applies to a transmission.

    •Never tell a customer that they do not have any rights or aren’t entitled to a remedy because they did not purchase or have not been given an extended warranty. Remember - they may still be entitled to a refund, repair or replacement under the consumer guarantees.

    •Never tell a customer the time period for a consumer guarantee has expired - if you suspect that the vehicle is so old that the “reasonable period” for the consumer guarantees has expired, please check with Legal before you advise the customer.

    •Do not tell customers that they will only be entitled to a refund or replacement if they have had the vehicle repaired first. A customer will have the right to insist on a refund or a replacement where the vehicle is a “major defect”.

    •…

    •Do not tell customers that you [are] providing them with a remedy as “a gesture of good will”, “as a favour” or “just this once”. Remember - the consumer guarantees are mandatory, it is not a choice to comply with them.

    •If in doubt, always seek assistance from Legal - the application of consumer guarantees can often involve difficult judgments and Legal can help.

20. The Summary Guidelines also contained a section on “Questions to ask”, which included the following:

    To help determine whether a customer has a right under a consumer guarantee, ask:

    •“What is the factory warranty or extended warranty applying to the vehicle” – use this information to first determine what Mazda can do under these warranties, but remember that this will only give you part of the answer. You must consider whether the consumer guarantees apply.  

    •“What is the problem with the vehicle?” – use this information to determine the nature of the defect and whether the defect is major or minor. A major defect is one where the vehicle is unsafe or a reasonable person would not have purchased the vehicle had they known about the fault, or a fault which cannot be repaired. For example, a fault requiring replacement of the engine would be a major defect. There are many shades of grey in between.

    •“How did this problem occur” – this will assist you in determining whether or not the cause of the problem is due to a manufacturing default (which is covered by the consumer guarantee), or otherwise. For example, engine seizure due to the customer’s failure to have the vehicle serviced and the oil replaced may not be covered but the same engine failure occurring where the customer has ensured that the oil levels are appropriate would be covered.

    •“When did the customer purchase the vehicle?” – this will help you determine whether a reasonable time has passed for the fault to become apparent.

    •“Has the vehicle been repaired previously?” – a history of repeated repairs to the same part, or repairs to multiple parts may indicate that there is a major defect.  

    •“What is the customer asking for?” – remember that in the event of a major defect only, it is the customer’s choice of repair, replacement or refund.

    How Mazda’s internal structures were designed to deal with consumer complaints

21. At all material times, Mazda had the following internal structures for dealing with consumer complaints, including those of the consumers the subject of this proceeding. 

22. The first point of call for consumers was with Mazda’s customer service representatives.

23. Before June 2017, decisions on consumers’ requests for a refund or a replacement vehicle were made in meetings called “round table reviews”. These meetings could be attended by the Customer Relations Manager (Ms Han), the relevant customer service representative, the Senior Manager of Customer Support, and/or the Senior Manager Technical (Mr Bradford). Prior to April 2018, the round table made decisions as to whether a replacement or refund or other means of redress would be offered to consumers. 

24. Following the introduction in April 2018 of an “executive panel review process”, the round table review process continued, but it no longer had authority to make these decisions on requests for a refund or a replacement vehicle. The executive panel comprised members of the NCS and a Mazda executive. From April 2018 onwards, the executive panel made decisions as to whether a replacement or refund or other means of redress would be offered to consumers. 

25. The primary judge made the following introductory findings in relation to each of the Consumers:

    59Consumer RC. RC purchased a Mazda2 in 2014, and between 2015 and 2018, had issues with the car’s engine lights coming on and the car going into “limp mode” or losing power. Her evidence described her interactions with Mazda to attempt to resolve these issues, including telephone conversations with Mazda’s customer representatives throughout 2017 and 2018. RC ultimately obtained a partial refund.

    60Consumers CT and MT are married. They purchased a Mazda CX-5 Akera in 2016. Their evidence described their individual interactions with Mazda about problems with the vehicle’s adaptive headlights, which began five months after purchase. After seeking to repair the vehicle, CT and MT told Mazda that they no longer wanted the vehicle, at which point they contacted NSW Fair Trading and the ACCC and continued to engage with Mazda, seeking a refund or a replacement vehicle. They commenced proceedings in the NSW Civil and Administrative Tribunal (NCAT) in November 2017, which resulted in consent orders requiring Mazda to replace the vehicle.

    61Consumers SB and KB are married. They purchased a Mazda CX-5 Mazz Sport Diesel in 2013 to use as a family car, including for holidays and for SB’s work. Between 2015 and 2017, they experienced a number of engine issues, including three engine failures and a starter motor failure. Initially, SB was the one who spoke with Mazda. KB became involved in August 2017. The couple lodged a complaint with NSW Fair Trading and, after further engine issues, commenced proceedings in NCAT in February 2018. Those proceedings settled, with Mazda paying SB and KB $16,000.

    62Consumer MG. MG purchased a Mazda6 in 2013, primarily to drive to work. The vehicle had three engine replacements over four years, and a number of other issues including the car displaying warning messages, the engine light coming on, a failure and subsequent replacement of the car’s turbo-charger and camshaft, and the car going into “limp mode”. In August 2018, Mazda offered to provide MG with an Atenza Auto Wagon in exchange for his vehicle and MG paying $17,700. MG accepted the offer.

    63Consumer TK. TK and her husband MK purchased a Mazda BT 50 in 2017 to travel around Australia with a new caravan. Their issues with the car included needing an engine replacement within five months of purchase and an intermittent stalling issue in 2018. The couple took the car to Mazda three times to fix the stalling issues. Mazda could not replicate the fault on the first two occasions; the third time, Mazda was able to replicate the fault and later gave a full refund to TK and MK for the car and its accessories.

    64Consumer LC (previously LS). LC purchased a Mazda CX-3 A 6AAkari Diesel All Wheel Drive in 2015. She deposed that she wanted a car that was reliable and safe for personal and business use. Several months after her purchase, LC experienced issues with the car losing power while driving. After discussions with Mazda, Mazda offered LC an extended warranty and free service, which she accepted in December 2017. LC said the issues with the car were ongoing as at the date of her affidavit (April 2020).

    65Consumer EG. EG bought a Mazda2 in 2014 to use for travel to work, as well as in her daily life. Her issues included the car going into “rough idle”, an issue which began several weeks after purchase, and “limp mode”, a problem which began in February 2018. She left her car at a Mazda dealer for repairs in early July 2018. EG had several discussions with NSW Fair Trading and Mazda, and ultimately commenced NCAT proceedings in January 2019, seeking a replacement vehicle or services to the value of the purchase price. The matter was resolved, with Mazda agreeing by consent to pay EG $303 and to provide a one year extended warranty on the car, a two year extended warranty on new parts, and three free car services.

    THE CASES ADVANCED BY THE ACCC

26. The conduct relied upon by the ACCC as giving rise to its false or misleading representation case was identified in general terms in the amended concise statement (ACS) at [3] to [10].

27. The representations that were alleged to be false or misleading were identified at ACS [11] (Representations).

28. The ACCC contended that by making the Representations to the Consumers, Mazda engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18(1) of the ACL and made false or misleading representations concerning the existence or effect of consumer guarantees, rights or remedies in contravention of s 29(1)(m) of the ACL.

29. The following Representations were alleged in the ACS at [11(a)] and [11(b)]:

    (a)the Faults [the Consumers experienced various and often recurring faults] with the Vehicles were not major failures under the consumer guarantee provisions of the ACL;

    (b)the Consumers were not entitled to a refund or replacement vehicle at no cost to the Consumer under the consumer guarantee provisions of the ACL;

    (Together, the Opinion Representations).

30. The following Representations were alleged in the ACS at [11(c)] to [11(e)]:

    (c)the Consumers did not have any ability under the ACL to seek to obtain a refund or replacement vehicle, because Mazda was entitled to repair the Vehicle regardless of the number of attempts made to repair the Faults or the time it took to repair the Faults, and the Consumers’ rejection of the Vehicles and Requests and/or Mazda’s obligation under the ACL was to repair the Vehicle;

    (d)Mazda was not required to provide a refund or replacement vehicle at no cost to the Consumer because of the age and/or mileage of the Vehicles; and/or;

    (e)a major failure within the meaning of the consumer guarantee provisions of the ACL in respect of motor vehicles is limited to a failure of a major component of the vehicle.

    (Together, the ACL Representations)

31. Although the ACS [11(c)] and [11(e)] Representations were stated in the ACS to be directed at the Consumers, the Representations were ultimately alleged by the ACCC to be false statements of fact about the rights of consumers generally under the ACL rather than statements of fact limited to the specific positions of each of the Consumers.

32. The ACL Representations and the Opinion Representations were alleged in the ACS at [12] to be false or misleading because:

    (a)the Faults [the Consumers experienced various and often recurring faults with their Vehicles] were major failures for the purposes of section 260 of the ACL, or otherwise were failures to comply with the consumer guarantees that the Consumers required to be remedied and that Mazda had not remedied at all or within a reasonable time for the purposes of section 259(2) of the ACL; and the Consumers were entitled to refunds or replacement vehicles at no cost pursuant to section 263(4) of the ACL;

    (b)they incorrectly represented the position under the ACL in that: the Consumers did have an ability under section 263(4) of the ACL to seek to obtain a refund or replacement vehicle; the right to a refund or replacement vehicle under section 263(4) is not confined by the age and/or mileage of the vehicle; and a major failure within the meaning of section 260 of the ACL in respect of motor vehicles is not limited to a failure of a major component of the vehicle; and/or

    (c)at the time the Representations were made, Mazda had not given any, or any proper, consideration to whether the Consumers were entitled to refunds or replacement vehicles at no cost pursuant to the ACL; and in circumstances where the Representations impliedly conveyed that Mazda had reasonable grounds for making the statements, Mazda did not have reasonable grounds for making the Representations.

1. As the primary judge explained at J [7], the contention that the alleged “various and often recurring faults” that the Consumers experienced with their vehicles were not “major failures” to comply with consumer guarantees was narrowed during the course of the hearing. The ACCC confirmed that it did not seek to establish that the vehicles in fact suffered major failings for the purposes of the ACL. Rather, as the primary judge explained at J [7] the case advanced by the ACCC was that:

   Mazda misrepresented the position as to the consumers’ legal rights because Mazda’s customer representatives expressed an opinion that there was no major failure, in circumstances where they could have had no basis for holding such an opinion, because Mazda had not considered whether or not the issues complained of were, in fact, major failures. The ACCC submitted such statements about the exercise of rights were misleading or deceptive because the opinion was not genuinely held and there was no reasonable basis for it, citing Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 88; and Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 at [598].

2. The conduct relied upon by the ACCC in the ACS as giving rise to the unconscionable conduct case was the same conduct identified in general terms in the ACS at [3] to [10] that it relied upon for its misrepresentation case, together with the making of the Representations, as alleged at ACS [11] and [12].

3. The ACCC contended at ACS [14] that by engaging in the conduct described in the at ACS [3] to [12], Mazda engaged in conduct, in trade or commerce, with respect to the supply of vehicles that was in all the circumstances, unconscionable conduct in contravention of s 21 of the ACL. The ACCC relied in particular on the circumstances referred to in ss 22(1)(a), (b), (d), (e), (f), (i) and (l) of the ACL.

4. The ACCC contended at ACS [15] that the circumstances of Mazda’s unconscionable conduct included:

   (a)the Consumers were in a substantially weaker bargaining position relative to Mazda with respect to the Faults and the Requests;

   (ba)the Consumers were vulnerable and disadvantaged with respect to Mazda, given that they had outlaid significant amounts on purchasing the Vehicles, relied on them for their daily domestic and business obligations and were entirely dependent on Mazda as to how the Faults and Requests were dealt with;

   (bb)Mazda took advantage of that vulnerability and disadvantage by engaging in the conduct referred to in paragraphs (b) to (f) below;

   (b)      the false or misleading Representations described in paragraph 11 and 12;

   (c)Mazda’s refusal to provide a refund or replacement vehicle at no cost to the Consumer, even after the Consumer’s Vehicle had undergone multiple repairs which had not remedied the issues and where in some cases, Mazda’s internal “Post Repair Checklist” indicated that the Fault with the Vehicle was a major failure;

   (d)Mazda’s failure to give any proper consideration to whether the Faults made the Vehicles unfit to drive, defective and/or unsafe with the effect that a reasonable consumer would not have regarded the Vehicle as acceptable had they known of the Faults;

   (e)the offers made by Mazda to Consumers to pay amounts less than a full refund for the Vehicles or to provide replacement vehicles only if the Consumers made a significant financial contribution towards the replacement vehicle, or alternatively to provide an extended warranty and other services instead of a refund or replacement vehicle;

   (f)Mazda provided the Consumers with limited time to consider and accept an offer; and

   (g)Mazda’s ongoing refusal to provide a refund or replacement vehicle at no cost to the Consumers which caused harm to the Consumers.

   OVERALL APPROACH OF THE PRIMARY JUDGE

5. The primary judge identified that central to the controversy between the parties was how to characterise the agreed facts. The agreed facts included the content of conversations between the Consumers and Mazda customer service representatives. The primary judge observed that the complaints made by the Consumers and the response by Mazda to those complaints was recorded in various documents, including audio clips of telephone calls between Consumers and Mazda customer representatives.

6. The primary judge provided the following explanation of the approach that he took to the determination of the misrepresentation and unconscionable conduct cases:

   131I now turn to consider each of the seven individual cases and the evidence in respect of them. I will take each case, and the ACCC’s case in respect of each such case, in turn.

   132In order to explain how the representations and alleged unconscionable conduct is said to arise, I have structured these reasons in respect of each consumer as follows. First, I have set out the relevant background facts that the ACCC claimed gave rise to each representation (or group of representations, where it is convenient to deal with them in such a manner). I then turn to consider, in respect of each representation said to arise from those facts, whether those representations were false or misleading in the manner that the ACCC claimed. I then continue to set out the relevant facts for the next representation or group of representations, and so on.

   133Having considered each representation in turn, and in the course of doing so, having described all the facts relevant to the consumer, I then consider the ACCC’s case on unconscionable conduct in respect of that consumer. As will become apparent, there is a considerable, but necessary, degree of repetition.

7. A necessary consequence of the approach that the primary judge adopted was that the factual findings relevant to the misrepresentation and unconscionable conduct cases were inextricably linked. A further consequence of the approach was that the “considerable, but necessary, degree of repetition” was often sought to be ameliorated by the inclusion of cross-references to the consideration of similar conduct with a particular Consumer or other Consumers.

   MAZDA APPEAL

   Overview

8. Mazda’s notice of appeal is 38 pages in length. It raises 38 numbered grounds of appeal. Many of those grounds have multiple sub-paragraphs. The first two grounds of appeal challenge the primary judge’s findings in general terms as to the making of 48 of the Representations and the falsity of 38 of the Representations. Grounds 3 to 9 in the notice of appeal are directed at what are described as “Common grounds arising in multiple findings under appeal”. These common grounds raise discrete challenges to the primary judge’s findings with respect to the Opinion Representations (Grounds 3 to 5) and the ACL Representations (Grounds 6 to 8). The common grounds also include challenges to implying representations from: (a) Mazda’s offers of less than a replacement vehicle or a refund of the full purchase price to a Consumer and (b) Mazda’s refusals to provide a replacement vehicle or a full refund to a Consumer (Ground 9).

9. The remaining 29 grounds, each with multiple sub-paragraphs, are directed at each of the Representations that are challenged as to making and falsity, individually and by Consumer and are cross referenced where Mazda considered appropriate to the first nine grounds.

   Statutory provisions and principles

   Misleading or deceptive conduct

10. Section 18(1) of the ACL provides:

    18       Misleading or deceptive conduct

    (1)A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

11. Section 29(1)(m) of the ACL provides:

    29       False or misleading representations about goods or services

    (1)A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

    …

    (m)make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2); or

    …

12. There is no meaningful distinction between the phrase “misleading or deceptive” in s 18(1) and the phrase “false or misleading” in s 29(1)(m): Australian Competition & Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634 at [40] (Allsop CJ).

13. Unlike s 18(1), s 29(1)(m) of the ACL is a civil penalty provision.

14. Further, although representations to the public must be considered by reference to the class of consumers likely to be affected by the conduct, “where the conduct is directed to a single person …attention must be directed to the relationship between the two persons, the context in which the statement is made, the reasonably known characteristics of the recipient of the statement, and the effect on a reasonable person in the position of the recipient of the statement”: Australian Competition and Consumer Commission v Valve Corporation(No 3) [2016] FCA 196 at [219] (Edelman J).

15. In Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [37] (Gleeson CJ, Hayne and Heydon JJ) it was said:

    … it is necessary to consider the character of the particular conduct of the particular agent in relation to the particular purchasers, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known. 

16. This is a proceeding, like Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 (Wheelahan J), where the ACCC alleged that the conduct alleged to be misleading or deceptive, or likely to mislead or deceive, included the making of representations as to the law or legal rights. As Wheelahan J said in that case:

    598[R]epresentations as to the law or legal rights … may relate to the existence of rights in a particular relationship or arising from a particular transaction, in a general sense: see, for example, Valve Corporation v Australian Competition and Consumer Commission [2017] FCAFC 24; 351 ALR 584, and Australian Competition and Consumer Commission v LG Electronics Australia Pty Ltd [2018] FCAFC 96. Others may relate to the exercise of rights in particular circumstances that may depend upon questions of judgment involving fact and degree. In considering such representations, it is necessary to be mindful that a representation in the nature of an appraisal or opinion does not necessarily give rise to a contravention of s 18 because it later proves to be inaccurate. An opinion, so expressed, at least if it is genuinely held and there is a basis for it, however erroneous, misrepresents nothing: Global Sportsman v Mirror Newspapers at 88 (Bowen [CJ], Lockhart and Fitzgerald JJ). The High Court made this point in Campbell v Backoffice Investment, in which it was held that the provision of financial estimates in pre-contractual documents before a corporate transaction, which were believed to be true but which turned out to be inaccurate, was not misleading or deceptive. In circumstances closer to the present proceeding, Dowsett J in Australian Competition and Consumer Commission v Bunavit Pty Ltd [2016] FCA 6 at [29], commented on the potential danger of penalising suppliers for bona fide denials of liability, such as denials that a defect in goods amounts to a major failure of a statutory warranty, which later turn out to be wrong …

    599Such cases involving representations as to the law or legal rights may involve claims under both ss 18 and 29(1)(m) of the ACL, such as the ACCC has made in the present proceeding. The general prohibition on misleading or deceptive conduct in s 18 operates concurrently with the more specific prohibitions in s 29: see, s 18(2).

    Statutory guarantees

17. Section 54 of the ACL provides:

    54       Guarantee as to acceptable quality

    (1)      If:

    (a)       a person supplies, in trade or commerce, goods to a consumer; and

    (b)       the supply does not occur by way of sale by auction;

    there is a guarantee that the goods are of acceptable quality.

    (2)      Goods are of acceptable quality if they are as:

    (a)fit for all the 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

    …

    (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.

    …

18. Section 259 of the ACL provided relevantly as follows:

    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, 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 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.

    …

19. Section 260 of the ACL provided relevantly as follows:

    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 or 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)…

    (e)the goods are not of acceptable quality because they are unsafe.

    Overview of the approach and reasons of the primary judge

20. The primary judge made the following principal findings on the misrepresentation case advanced by the ACCC:

    (a)Mazda had no reasonable basis for making the Opinion Representations because it failed to make any enquiries as to whether the faults were “major failures” for the purposes of the ACL: at J [243] and [372]; and

    (b)Mazda gave no real consideration to Consumers’ rights to a refund or replacement under the ACL: at J [358], [373], [586], [823] and [938].

21. The primary judge concluded that 49 of the 55 Representations (each being to the effect of one of the five generic Representations identified in the ACS at [11(a)-(e)]) had been conveyed and were false. The Representations that were found not to have been conveyed were the first Representation in the TK/MK case and the first five Representations alleged in the LC case. The Representations that the primary judge found were conveyed in the case of each Consumer and cross referenced to the relevant generic Representation were summarised by Mazda in the following table in its notice of appeal (where NF records that the Representation was not found):

Table of Representations

1

2

3

4

5

6

7

8

9

10

11

12

RC

11(c)

11(c)

11(d)

11(b)

11(b)

11(b)

11(d)

11(a)

11(b)

11(a)

11(b)

11(d)

CT/MT

11(b)

11(c)

11(c)

11(b)

11(c)

11(a)

11(a))

11(b)

11(a)

11(b)

-

-

SB/KB

11(b)

11(d)

11(d)

11(b)

11(d)

11(b)

11(d)

11(e)

-

-

-

-

MG

11(b)

11(c)

11(d)

11(b)

11(b)

11(b)

-

-

-

-

-

-

TK/MK

NF

11(a)

11(b)

11(b)

11(b)

11(b)

-

-

-

-

-

-

LC

NF

NF

NF

NF

NF

11(a)

11(b)

11(a)

11(b)

11(a)

11(b)

-

EG

11(b)

11(b)

-

-

-

-

-

-

-

-

-

-

Grounds 1 and 2

1. It is convenient to address Grounds 1 and 2 together.

2. In Ground 1 of its notice of appeal Mazda contends that given the words used and the circumstances in which they were used 48 of the 49 Representations were not conveyed for the reasons advanced in sections C to F of its notice of appeal (Grounds 3 to 38).

3. In Ground 2 of its notice of appeal Mazda contends that if conveyed, the 33 Representations in the form of the Opinion Representations were not misleading or deceptive and were not false for the reasons advanced in sections C and F of its notice of appeal (Grounds 3 to 5 and 10 to 38). We note that in their written submissions, both Mazda and the ACCC stated that Ground 2 was directed at 38 Representations but this must have been an inadvertent error. In fact, there were only 33 Opinion Representations, comprising 8 ACS [11(a)] Representations and 25 ACS [11(b)] Representations.

   Submissions

4. In its written submissions Mazda advances three overarching submissions in support of Grounds 1 and 2.

5. First, Mazda submits that in determining whether a representation was conveyed, the primary judge failed to have sufficient regard to context, including when the representation was made to an individual, the knowledge of that individual. Mazda submits that if the individual to whom the representation was made knew the truth, a finding that the individual was likely to be misled would be unlikely. It submits that all the Consumers received advice from the ACCC, the relevant Department of Fair Trading or a lawyer, and that (a) this was a highly relevant factor in determining the nature of the representation and whether it was likely to lead the Consumers into error, (b) it was apparent that at the time the alleged representations were made none of the Consumers was actually misled, and (c) the relevance of the receipt of advice by the Consumers and the absence of any evidence that the Consumers were misled was misapprehended or overlooked by the primary judge.

6. Second, Mazda submits that conduct that is transitory or ephemeral, or where any misleading impression is likely to be dispelled quickly does not constitute misleading and deceptive conduct under the ACL. It submits that if a Mazda representative made an inaccurate statement but clarified or corrected it in the same conversation then that fact is highly relevant to whether there has been a contravention. Mazda contends this occurred in relation to some of the Representations that were found to have been conveyed to RC, CT/MT, SB/KB, TK/MK and LC.

1. Third, Mazda submits that the Representations that consumers did not have a right to a refund or a replacement vehicle because Mazda always had the right to repair a vehicle, were in substance a negative representation about the existence of legal rights generally. It submits that statements by Mazda customer service representatives that Consumers had the right to commence legal proceedings if they were not satisfied with Mazda’s response “can only be taken to have confirmed the existence of those rights at the conceptual level with which the alleged representation is concerned”.

2. The ACCC submits that Mazda’s contentions that the Representations were not conveyed, were correctly characterised by the primary judge at J [180] (by way of example) to be “an altogether too literal and unrealistic; non contextual reading” of the relevant communications relied upon by the ACCC.

3. The ACCC submits that Mazda’s submission that each Consumer “knew the truth” is legally misconceived. It submits that (a) the primary judge’s focus was correctly on Mazda’s impugned conduct, (b) it is not necessary to prove an intention to mislead or that the impugned conduct in fact misled or deceived anyone, and (c) the fact that a person has sufficient knowledge not to be misled or deceived does not alter the misleading character of what might have been said.

4. In any case, the ACCC submits that Mazda’s contentions are not established on the evidence because (a) in most cases, the Consumers did not fully understand their rights or feel confident enforcing those rights against Mazda, (b) it was irrelevant that Consumers remained open to commence proceedings against Mazda, and (c) the statements relied upon by Mazda to assert that the Representations were “clarified or corrected” in the same conversations in which they were made did not have that effect.

   Consideration

5. Grounds 1 and 2 of Mazda’s notice of appeal are expressed at a degree of generality that is largely overtaken by the more specific grounds that are subsequently advanced in the notice of appeal. For that reason these grounds are best understood as introductory and overarching grounds that seek to identify generic errors in the reasoning of the primary judge.

6. It is sufficient to make the following observations in response to the written submissions advanced by Mazda in support of these two grounds.

7. First, as submitted by the ACCC, knowledge of the falsity of a representation does not alter the misleading character of the representation. As the Full Court stated in Australian Competition and Consumer Commission v LG Electronics Australia Pty Ltd [2018] FCAFC 96 at [54] (Allsop CJ, Jagot and Lee JJ):

   Here, however, even though the false representation did not mislead, as conduct it was to be characterised as false and so as misleading or deceptive in that sense. In the context of a serious inquiry about a faulty consumer good the mere fact that [the consumer] had sufficient knowledge not to be misled does not alter the misleading character of what was said. Nor is the misleading character of the statement altered by the fact, if it be the fact, that the LG representative is to be inferred to have known that [the consumer] held such knowledge….

8. Second, any alleged reliance on advice provided by third parties necessarily turns on the specific context in which that advice might have been provided and both the content and circumstances in which the statements that gave rise to the misleading representations were made by the Mazda customer service representatives.

9. Third, the effect of any statements that are alleged to be inconsistent with the Representations must be considered both in the context of the conversation or document considered as a whole and against the specific Representation alleged to have been conveyed, either expressly or by implication.

10. Fourth, any awareness by a Consumer of their ability to bring proceedings or make complaints to regulatory bodies if requests for refunds or replacement vehicles were not accepted cannot logically detract from the misleading character of a Representation or necessarily preclude a finding that a Consumer may have been misled.

11. It follows for these reasons that Grounds 1 and 2, to the extent that they are relied upon as general overarching grounds, independently of other grounds, must be rejected.

    Ground 3

    Mazda’s contentions and submissions

12. In Ground 3 of its notice of appeal Mazda contends that the Opinion Representations did not necessarily convey any representation by implication that Mazda had reasonable grounds for making them, and the primary judge ought to have so found.

13. Mazda submits that the following two fundamental misconceptions in the representation cases advanced by the ACCC were adopted by the primary judge and underpinned many of his Honour’s alleged erroneous findings.

14. First, a misconception that every statement of opinion also conveys a further implied representation that there was a reasonable basis for that opinion.

15. Second, a misconception that in making an offer for less than a replacement vehicle at no cost to the Consumer or a full refund, Mazda conveyed a representation (either as an opinion or as a fact) that each of the Consumers (or consumers more generally) had no rights to a refund or a replacement vehicle under the consumer guarantee provisions of the ACL.

16. Mazda submits that contrary to the approach that it alleges was adopted by the primary judge, statements of opinion do not necessarily carry an implied representation that there is a reasonable basis for the opinion. It submits that in the case of an inexpert opinion there would usually be no reason to assume that it was based on reasonable grounds and references the following decisions: Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39 at [94], [102]-[105] (Heydon J); Inn Leisure Industries Pty Ltd (Provisional Liquidator Appointed) v DF McCloy Pty Ltd (No 1) (1991) 28 FCR 151 at 167 (French J, as his Honour then was).

17. Mazda submits that no implied representations of reasonable grounds were conveyed in the present case because (a) conversations with “call centre staff” should not be “impressed with a profundity they lack on their face”, (b) Mazda and the Consumers did not have shared commercial interests, (c) the Consumers did not regard the “call centre staff” to be providing them with legal advice, (d) the relevant context often involved the communication of Mazda’s position or the call centre conveying an offer “as a conduit for the decision of others”, (e) whether Mazda followed its own processes is not relevant to identifying precisely what representations were conveyed, (f) there may have been more than one reasonable basis for the opinion, (g) the fact a response may be spontaneous is relevant as to whether a representation as to reasonable grounds was conveyed, and (h) the primary judge did not imply any representation as to reasonable grounds for the opinions conveyed on the basis that Mazda had a dominant bargaining position and Mazda did not in fact hold a stronger bargaining position than the Consumers.

18. The references by Mazda to “call centre staff” were references to the Mazda customer service representatives in the NCS.

    ACCC’s submissions

19. The ACCC submits that (a) the question of whether a representation conveys an implied representation as to reasonable grounds turns on the content of the opinion and the context in which the opinion is given, (b) Mazda’s appeal ignores the essential findings made by the primary judge that Mazda never gave any, or any proper or genuine consideration to Consumers’ requests for refunds or replacement vehicles, and (c) establishing an absence of reasonable grounds for giving the opinions did not depend on the Consumers demonstrating an entitlement to compensation under the ACL.

    Consideration

20. A statement of opinion may carry with it one or more implied representations. Those implied representations may include a representation that the opinion is based on reasonable grounds or that it was formed on the basis of reasonable inquiries: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 39 at [33] (French CJ).

21. In Ireland v WG Riverview Pty Ltd (2019) 101 NSWLR 658; [2019] NSWCA 307, in reasons principally directed at distinctions between statements of fact and statements of opinion, Bell ACJ (as his Honour then was) stated at [34] (Barrett AJA agreeing at [91]):

    Where, however, it is established that a statement or representation is or must have been understood by its target audience as one of opinion or belief, even though presenting at one level as one of fact, liability will not be strict; rather, it will generally depend upon an assessment as to whether or not the belief or the opinion was honestly held and “perhaps” (see [24] above) whether or not the maker had a reasonable basis for the belief or opinion. Other than in cases of statements as to future matters (where the statutory presumption is engaged: see, for example, Competition and Consumer Act 2010 (Cth), Sch 2 — Australian Consumer Law, s 4), it will be for a plaintiff to establish the lack of reasonable basis for belief if misleading or deceptive conduct is to be established.

22. To consider whether a representation that a party has reasonable grounds for expressing an opinion is conveyed, it is necessary to approach the issue from the perspective of the target audience. The relevant question is whether the person or persons to whom the statement of opinion was made would reasonably understand that the person expressing the opinion was also representing by implication that they had reasonable grounds for expressing it.

23. An answer to that question requires a consideration of the context in which the opinion is expressed and the specific content of the opinion. Those issues in turn require a consideration of matters that would include any information asymmetry, the significance and importance of the subject matter of the opinion to the person or persons to whom it is directed and any overarching context provided by relevant legislative requirements or objectives such as those that might arise from consumer protection legislation.

24. The approach of the primary judge, at a general level, was not inconsistent with these propositions.

25. Contrary to the implicit contention advanced by Mazda, the primary judge did not make any finding or proceed on any assumption that every representation that might be construed as a representation as to the holding of an opinion necessarily also conveyed a further implied representation that the opinions were honestly held and that there was a reasonable basis for holding that opinion. Rather, the primary judge only made that finding for the Representations that he found were expressions of opinions after considering the specific context in which each of those Representations was conveyed.

26. We do not accept that any overarching error arose because the relevant communications on which the primary judge relied were with “call centre staff”. As noted above, the alleged “call centre staff” were Mazda customer service representatives in the NCS. To describe them as “call centre staff” in the sense such a phrase is usually understood is wrong. As the evidence shows, they are case managers, they sometimes have long discussions with consumers, send and receive emails from Mazda executives, and take detailed notes in Maestro of their communications. The NCS staff had specific responsibility to deal directly with disaffected consumers and act as a conduit between those consumers and senior Mazda executives. The Consumers were entitled to, and did, regard them as having some authority to speak on behalf of Mazda.

27. Nor did any alleged failure to give sufficient weight to any belief by a Consumer that they were not being provided with “legal advice” by the Mazda customer representatives or that the representatives were only a conduit for the decision of others, establish any error by the primary judge. Consumers could readily be expected to have inferred that (a) responses by Mazda customer service representatives to requests for refunds or replacement vehicles at no cost reflected a settled, considered and approved position of Mazda, and (b) this approved position was based on advice as to the scope and nature of its legal obligations, including its obligations under the ACL.

28. It follows for these reasons, that this ground, to the extent that it is relied upon as a general overarching ground, must be rejected.

29. Ultimately, the question, of whether the Opinion Representations conveyed further implied representations that that there was a reasonable basis for holding those opinions, turns on a consideration of the specific context and content of the conversations or documents relied upon by the ACCC for each of the Opinion Representations.

    Ground 4

    Mazda’s contentions and submissions

30. In Ground 4 of its notice of appeal, Mazda contends that if contrary to its contentions, the Opinion Representations were conveyed and they carried a further implied representation that they were based on reasonable grounds, there were reasonable grounds for each Opinion Representation given “the undisputed evidence of the circumstances of each case identified below”.

31. Mazda contends that irrespective of whether it relied upon a matter at the time, the primary judge ought to have found that it had reasonable grounds for each of the Opinion Representations because:

    c.no Consumer had proved, the ACCC's case did not involve seeking to prove (J[7]) and the trial judge therefore did not find, and Mazda did not at the relevant time accept, that they were entitled to a replacement vehicle or refund under the ACL and Mazda was therefore entitled to refuse to provide a replacement vehicle or full refund to each Consumer;

    d.the expiration of the ACL rejection period, damage to the vehicle and the failure of any Consumer to prove an ACL entitlement.

32. Mazda submits that the misrepresentation case advanced by the ACCC included the following fundamental misconceptions that it alleges were adopted by the primary judge and underpinned many of his Honour’s alleged erroneous findings:

    (a)statements of opinion that Consumers had no right to a refund or replacement vehicle at no cost were misleading notwithstanding that the ACCC had not alleged and the primary judge had not found that such a right existed; and

    (b)Mazda could only prove that it had a reasonable basis to make an opinion representation if it had undertaken a review in accordance with its documented processes and correctly applied the law and facts.

33. Mazda submits that given the ACCC’s abandonment of any case that the Consumers had established an entitlement to a refund or replacement vehicle under the ACL it must follow that Mazda had reasonable grounds for making the Opinion Representations because (a) the Consumers had not established that the faults with their vehicles were major failures, and therefore, (b) the Consumers were not entitled to a refund or replacement vehicle under the ACL.

34. Mazda also submits that despite the primary judge’s recognition that the ACCC had not established that any Consumer was entitled to a refund or a replacement vehicle at no cost, “a number of” the findings by the primary judge were made on the assumption that the Consumer’s vehicle had suffered a major failure or the Consumer was otherwise entitled to reject their vehicle.

    ACCC’s submissions

35. The ACCC submits that the contention that it was necessary to establish that Consumers were entitled to a refund or replacement vehicle in order to “prove” or “meet their onus” misapprehends the relevant enquiry. It submits that the relevant questions to be addressed for the ACL Representations, was whether they were correct by reference to the provisions of the ACL and for the Opinion Representations, turned on whether they were reasonably held at the time they were conveyed. It submits that neither case required the ACCC to prove that Customers were entitled to a refund or replacement vehicle at no cost.

36. The ACCC submits that the relevant inquiry is whether Mazda had reasonable grounds for holding the opinions conveyed by the Opinion Representations, not whether the Consumers were entitled to a refund or replacement vehicle at no cost under the consumer guarantee provisions in the ACL. It submits that the absence of any finding that the Consumers were entitled to a refund or replacement vehicle at no cost under those provisions and the expiry of the ACL rejection period are not relevant to that inquiry.

37. The ACCC submits that (a) any recognition of an entitlement to commence legal proceedings against Mazda cannot alter the false or misleading nature of the Representations, (b) the alleged clarification or correction of false or misleading statements in the same communication cannot be established on the unchallenged facts found by the primary judge, (c) the primary judge did not wrongly assume that vehicles had suffered “major failures”, and (d) the primary judge did not proceed on the basis that it was “decisive” that Mazda failed to follow its own internal processes or to evaluate the law correctly, rather the failures to follow internal processes formed part of the relevant context, but was not decisive.

    Consideration

38. Although the ACCC initially sought to advance a case that the Opinion Representations were statements of fact and were false, that case was subsequently abandoned by the time the hearing before the primary judge commenced. Having abandoned that case, the objective truth of the matters the subject of the Opinion Representations was no longer relevant. Irrespective of whether in fact the faults with the Consumers’ were major failures under the consumer guarantee provisions of the ACL and irrespective of whether in fact the Consumers were entitled to a refund or a replacement at no cost under those provisions, the ACCC could succeed if it was able to establish that the information available to Mazda at the time each Opinion Representations was conveyed, did not objectively provide Mazda with reasonable grounds to express the representation.

39. In Australian Competition and Consumer Commission v Dateline Imports Pty Ltd [2014] FCA 791, Rangiah J found at [268], [269] and [276] that in order for the ACCC to establish an absence of reasonable grounds for the respondent to make representations directed at the absence of toxic or dangerous chemicals in a hair straightening product, including formaldehyde, and representations that the product was safe for use and complied with health and safety regulations, it was necessary for the ACCC to prove that the representations were not true.

40. The Full Court overturned those findings in Australian Competition and Consumer Commission v Dateline Imports Pty Ltd [2015] FCAFC 114. Their Honours (Gilmour, McKerracher and Gleeson JJ) concluded at [95]:

    The ACCC submits, correctly in our opinion, for reasons which we will shortly explain, that even assuming that it did not establish that these representations were false, it does not follow from that conclusion that at the time of making the representation, Dateline and Mr Taylor had reasonable grounds to make it.

41. In Dateline, the ACCC had characterised the underlying representations made by the respondent as representations of fact not opinion. Nevertheless, we consider that the following passages in Dateline apply with equal force where the relevant enquiry arises in circumstances where it is alleged that reasonable grounds are represented, by implication or otherwise, for a representation of opinion:

    98Dateline submits that its success on the truth of the underlying representation is enough to defeat these grounds. In other words, so long as the represented fact is right, Dateline submits that the ACCC has not shown that it was misleading or deceptive for Dateline to have made the representation on incomplete or wrong reasons that it believed were correct and complete, and did not include the reasons showing it to be correct.

    99We do not accept this submission. It is not a question as to Dateline’s subjective belief. Rather, the representation that Dateline had reasonable grounds for making the several representations of fact is to be considered in light of the grounds which Dateline actually then knew and whether those grounds, objectively, were reasonable.

    100There will not be reasonable grounds for making a representation if, at the time of making, it, the representor did not have facts sufficient to induce, in the mind of a reasonable person, a basis for making the representation: Australian Competition and Consumer Commission v Jones (No 5) [2011] FCA 49 at [32]–[33]; George v Rockett (1990) 170 CLR 104at 112.

    101It matters not that it transpires, in due course, that the fact represented is true. That may simply be serendipitous. The representation, “I have reasonable grounds“ for making the representation of fact is a discrete representation, indeed one which is likely to reinforce in the representee the reliability of the representation of fact.“

    102Moreover the reasonable grounds representation is also one of fact. It is not directed to grounds which may become known but are not then known. Consumers should be protected against such conduct where, in fact, objectively assessed, there were no reasonable grounds known to the representor.

1. The ACCC made a series of omnibus submissions as to Mazda’s institutional practices (including internal compliance documentation, process, and what was described as “culture”), but as advanced at trial, the prism through which the conduct was to be judged was not at some high level of abstraction. The relevant enquiry was properly directed towards the relevant circumstances of Mazda’s dealings towards each consumer and the logically separate (albeit often repetitive) allegations of contravening conduct in relation to each consumer.

2. Again, despite there being no “system” case, the ACCC focussed in final submissions on the following five aspects of Mazda’s institutional practices that were said to be “common features to Mazda’s conduct”.

3. First, even though Mazda was aware (by the existence of so-called “red flags”) that the provisions of the ACL were engaged by the Consumers’ requests, it did not give any, or any proper or genuine, consideration to the Consumers’ entitlements under the ACL to a refund or replacement vehicle. In this regard, Mazda failed to comply with its own internal process, which was important to ensure that Mazda dealt honestly and fairly with consumers.

4. Secondly, and somewhat problematically given the denial of a “system” case, it was asserted the “culture” within Mazda was to deny requests for refunds or replacement cars which included: summarily rejecting requests without consideration on the merits; seeking to dissuade requests, often in favour of repair, free services, or extended warranty; and treating requests as though they were a matter of commercial negotiation. 

5. Thirdly, and again, at a high level of generality, it was contended that Mazda, by its (oddly named) “customer advocates”, made false or misleading representations in that:

   Mazda ‘Customer Advocates’ told the Consumers on a number of occasions that their request had been escalated to ‘senior management’ or ‘legal’ when the evidence demonstrates that this had not occurred.

6. Fourthly, it was said Mazda did not take seriously the Consumers’ genuine safety concerns, despite their manifest relevance under the ACL and their general importance to the Consumers and the public more broadly.

7. Fifthly, the ACCC submitted that Mazda “was in a completely dominant bargaining position” with respect to the Consumers when requests were raised and “also engaged in unfair tactics in its dealings with the Consumers and placed unfair commercial pressure on the Consumers to accept offers rather than pursue their requests”. It was said this led to “long, drawn-out discussions” between the Consumers and customer advocates.

8. In its final written submissions below, immediately following reference to these general factors, the ACCC submitted (at [18]–[19]):   

   18.Mazda’s conduct was clearly beyond conscience in all the circumstances.  It was “irreconcilable with what is right or reasonable” and involved “unfairness of a significant order, a lack of good faith, or the exercise of economic power in a way worthy of criticism”. It was a “sufficient departure from the norms of acceptable commercial behaviour as to be against conscience or to offend conscience” and involved “misrepresentation, commercial … pressure and sharp practice, using a superior bargaining position”.

   19.To succeed in this case, the ACCC does not have to prove that in each case the Consumers were in fact entitled to a refund or replacement vehicle under the consumer guarantee provisions of the ACL. However, those provisions form an important background to the ACCC’s claims.

   (Citations omitted).

9. Against this background, and faced with an unwieldy case, the primary judge adopted a form of shorthand: having rejected the ACCC’s characterisation of these “common features to Mazda’s conduct” in the context of dealing with the customer known by her initials “RC”, his Honour did not then descend into the further detail referred to in the reasons of Mortimer and Halley JJ.

10. That is not to say his Honour misapprehended that there was a need, in having regard to all the relevant circumstances, to focus on the separate conduct directed to each of the Consumers. Rather, the prominence of the “common features” contentions did not assist the primary judge in the sufficient and precise examination required.

11. Given the need for re-determination, my preference would have been to remit the matter for a new trial of all aspects of the unconscionable conduct case (other than the aspect dealt with below). I would prefer to make an order under s 30 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) that the new trial be limited to the determination of the balance of the unconscionable conduct case on the currently served evidence, but requiring the service of a statement of claim which pleads each unconscionability case against each customer so there was precision and clarity as to the individual unconscionability cases being advanced. This would focus submissions and serve to assist a trial judge in making a sufficient and precise assessment in relation to each case persisted in (to the extent the ACCC thought it consistent with the overarching purpose in Pt VB of the FCA Act to pursue a case in relation to each customer).

12. Given I am in the minority in this regard, I do not propose to go through each of the individual cases advanced below to explain why I respectfully differ from Mortimer and Halley JJ and consider the unconscionable conduct claims should not be dismissed on appeal.   

13. It is appropriate, however, that I deal with the ACCC’s case as it relates to RC, being the customer the primary judge dealt with most extensively (and an aspect of the case not the subject of Ground 6 dealing with sufficiency of reasons). 

14. His Honour recorded (at J [152]–[245]) the dealings between RC and Mazda in 2017 and 2018 and the characterisation of those dealings as involving misleading or deceptive conduct. Mortimer and Halley JJ have explained, in detail, how no error has been identified in the primary judge identifying this conduct and characterising it as being false or misleading.

15. In my respectful view, the fact the contravening conduct was based on implied rather than express representations is not to the point. Speaking generally, and depending upon the context, conduct in the nature of silence or implied representations can often be as seriously misleading as express representations (and, in some circumstances, may be more serious because the misleading nature of the conduct may be more difficult to appreciate). 

16. Here, the misleading conduct was of some seriousness. By way of recapitulation, the following conduct was particularised and, to the extent the communications were oral, were evidenced by recordings annexed to the affidavit of RC sworn on 31 January 2020:   

Date		Representation	Particulars
31 October 2017		RC Representation 1: Telephone call between Ms Marilyn Miller of Mazda and RC	Mazda represented to RC, in response to her query about what would happen if her vehicle was “not fixable” and if “the Mazda Australia technicians looked at it and it just continues to keep having this problem”, that the vehicle was fixable and “there hasn’t been a car that they can’t fix” and “there has never been a situation where they can’t” and “[i]t’s just a matter of sometimes getting the right person on it long enough … to just [sic] persist”.
24 January 2018		RC Representation 2: Telephone call between Ms Miller and RC	Mazda represented to RC, in the context of RC stating “I don’t have to accept the vehicle back if it’s not safe or if it’s taken too long to get fixed”, that “we also work with the Australian Consumer laws”, “we are aware of the consumer’s rights”, and “once this vehicle engine goes in and they test it, quite literally it is going to be safe to drive. They would not release the vehicle to you if it was unsafe to drive”.
27 February 2018		RC Representation 3: Telephone call between Ms Miller and RC	Mazda represented to RC, in the context of RC’s request for a refund, that Mazda’s offer of $12,125 (less than a full refund) took into account the age of and the kilometres on her vehicle.
27 February 2018 and 24 January 2018		RC Representation 4: Telephone calls between Ms Miller and RC	Mazda represented to RC, in the context of RC stating “I don’t have to accept the vehicle back if it’s not safe or if it’s taken too long to get fixed”, that “we also work with the Australian Consumer laws” and “we are aware of the consumer’s rights”. Subsequently, Mazda represented to RC, in response to RC’s request for a refund, that Mazda has reviewed “all the information” and was prepared to offer the sum of $12,215 for the vehicle (less than a full refund) and, in response to RC’s statement that cars should be like any other consumer product (for which a consumer receives a full refund), that “cars, they’re not … they’re actually not [like any other consumer product]”.
1 March 2018		RC Representation 5: Telephone call between Ms Miller and RC	Mazda represented to RC, in response to RC’s request for a refund, that Mazda was prepared to offer the sum of $12,215 for the vehicle (less than a full refund).
2 March 2018		RC Representations 6 and 7: Letter from Mazda to RC	“You have requested that Mazda Australia refund the full purchase price of $18,990.00 to you. As discussed, Mazda Australia has reviewed your request and are unable to accede to your request. We are however prepared to offer you an amount of $12,125.00 to purchase the vehicle from you. We believe this offer is reasonable taking into account you have had fair use and benefit of this vehicle.”
16 March 2018		RC Representations 8 and 9: Telephone call between Ms Miller and RC	Mazda represented to RC, in the context of RC stating that the vehicle had a “major failure” and “the engine obviously has needed to be replaced in the car, which is a major failure with the car” and that she was entitled to a full refund, that Mazda was prepared to increase its offer for the vehicle to $13,000 (less than a full refund).
22 March 2018		RC Representations 10, 11 and 12: Letter from Mazda to RC		“We refer to your recent telephone conversation with the writer on the 16th March 2018 in relation to your Mazda2 vehicle purchased from Eagers Mazda in December 2014. You have requested that Mazda Australia refund the full purchase price of $18,990.00 to you. As discussed, Mazda Australia has reviewed your request and are unable to accede to your request. We are however prepared to offer you an amount of $13,000.00 to purchase the vehicle from you. We believe this offer is reasonable taking into account you have had fair use and benefit of this vehicle.”

1. As the unconscionability case relied upon this false or misleading conduct, one is left with the reality that Mazda, partly through someone who Mazda held out as a so-called “customer advocate”, engaged in conduct towards RC by which it impliedly conveyed the following:

   (1)the fault with RC’s vehicle was not a major failure under the consumer guarantee provisions of the ACL (see the 16 March and 22 March 2018 communications);

   (2)RC was not entitled to a refund or replacement vehicle at no cost to her under the consumer guarantee provisions of the ACL (see the 24 January, 27 February, 1 March, 2 March, 16 March and 22 March 2018 communications);

   (3)RC did not have any ability under the ACL to seek to obtain a refund or replacement for her vehicle, because Mazda was entitled to repair it regardless of the number of attempts made to repair the fault, the time it took to repair, and RC’s requests (see the 31 October 2017 and 24 January 2018 communications); and

   (4)Mazda was not required to provide a refund or replacement vehicle at no cost to RC because of the age and/or mileage of her vehicle (see the 27 February, 2 March and 22 March 2018 communications).

2. As explained by the primary judge (at J [246]–[262]), the ACCC’s case on unconscionable conduct rested upon a number of related propositions: first, RC rejected her vehicle, requested a refund on a number of occasions, and raised serious safety concerns, and the provisions of the ACL were engaged; secondly, RC’s vehicle was off the road under repair for significant periods of time, including for about two months from September to November 2017, and a further three weeks in January 2018; thirdly, Mazda summarily rejected RC’s requests without consideration on the merits and repeatedly assured RC that her vehicle had to be repaired and no proper or genuine consideration was given to whether she was entitled to a refund under the ACL; fourthly, Mazda sought to dissuade RC from continuing with her requests, sought to negotiate a commercial outcome instead of considering her requests under the ACL, and falsely told her that the age and mileage of the vehicle could be taken into account when providing a remedy under the ACL; fifthly, Mazda was in a dominant bargaining position; sixthly, Mazda obfuscated RC’s requests and did not take her safety concerns seriously; and seventhly, Mazda placed unfair and unreasonable commercial pressure on RC to accept its offer.

3. For the reasons explained by the primary judge, the first five of these propositions were made out. Further, the primary judge, with respect correctly, rejected a number of adjectival propositions raised by Mazda in its submissions below (reflected in its notice of contention), namely: (a) Mazda devised and implemented a detailed and accurate training programme for ACL compliance (cf J [31]–[45], [141]); (b) Mazda provided support and assistance to the Consumers (including RC) at no cost, despite not being obliged to do so and without the Consumers having demonstrated an entitlement to relief under the ACL (cf J [140]); (c) the roundtable and executive panel processes were a good faith (albeit flawed) attempt by Mazda to apply the consumer guarantee provisions of the ACL (cf J [141]); and (d) the Consumers (including RC) did not suffer harm in the relevant sense or were no worse off by reason of Mazda’s conduct (cf J [138]–[139], [277]).

4. Moreover, it seems to me that the other aspects of the unconscionable conduct case as it related to RC were established.

5. First, the misleading conduct and “appalling customer service” had the effect of obfuscating RC’s true commercial and legal position qua Mazda. Mazda’s conduct towards RC while pressuring her to accept the offer involved a serious departure from proper commercial conduct. Three examples suffice: (a) the implied rejection by the “customer advocate” of the notion that RC could seek a refund under the ACL, which was manifestly inconsistent with her assertions that “Mazda [is aware of] consumer’s rights” and “work in line with the Australian Consumer Laws” (at J [211]); (b) the false assertion in the context of explaining to RC how Mazda arrived at the figure offered that cars are “actually not” like any other consumer product (at J [204]); and (c) the deflecting observation, in response to RC’s complaint about the engine warning light, that “[t]here must have been a, just a small batch of them on assembly that just, the springs weren’t tight enough or something like that” (at J [154]). It is hard not to share the view of the primary judge that a “number of things” said by the customer advocate to RC “can be correctly be characterised as subterfuge” (at J [280]), in the sense of a want of an appropriate level of candour, rather than deceit (which was not a case advanced by the ACCC).

6. Secondly, as to the offer itself, RC considered she had no alternative option but to keep what she perceived (and Mazda understood she perceived) to be an unsafe car, and her only recourse would be the pressure and uncertainty of commencing litigation against a major corporation, which she understandably wanted to avoid (at J [262]). Put simply, RC was faced with unfair pressure in that if she did not accept Mazda’s proposed outcome, she perceived she might be left with nothing but a car she regarded as unsafe. This was compounded by the fact that the offer had a short timeframe for acceptance (seven days), and RC felt pressured to accept it quickly (at J [229]). Moreover, the terms of the offer not only amounted to less than a full refund (which RC was entitled to under the consumer guarantee provisions of the ACL), but less than the amount approved initially at the Mazda roundtable meeting (at J [232]–[241]).

7. The task of the Court in evaluating whether conduct such as that directed by Mazda towards RC amounts to unconscionable conduct has been complicated by a history of cases in which glosses have been placed upon the statutory words. The cases are canvassed at length in the reasons of Mortimer and Halley JJ. To set them out in detail would be to add unduly to an already lengthy judgment. I will restrict myself to the following.

8. The text is clear. Section 21(1)(a) of the ACL provides that a “person must not, in trade or commerce, in connection with … the supply or possible supply of goods or services to a person … engage in conduct that is, in all the circumstances, unconscionable”. Subparagraph 21(4)(a) provides that it is the intention of Parliament that s 21 “is not limited by the unwritten law relating to unconscionable conduct”.

9. Section 22 of the ACL then sets out a series of factors which the Court may consider in determining whether conduct is, in all the circumstances, unconscionable. As Beach J observed in Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liquidation) (No 3) [2020] FCA 208; (2020) 275 FCR 57 (at 117 [362]) (albeit by reference to a statutory analogue) this “lens”, together with the non-exhaustive list in s 22 in the ACL, is indicative of the fact that “neither the boundaries nor content of the equitable doctrine are defining or limiting features” of statutory unconscionability. This is consistent with Parliament’s evident intention to extend statutory unconscionability beyond the equitable concept (in contrast to s 20, which is expressly limited to unconscionability within “the meaning of the unwritten law”). Of course, this is not to say the accumulated experience of equity does not assist in the evaluative task under s 21. It obviously does, but it does not constrain it.

10. Indeed, the statutory prohibitions on unconscionable conduct were widened, including by the addition of the “system” or “pattern” case provision (s 21(4)(b)), to address Parliament’s impression that the sections had “fallen short of [their] legislative intent”: see Senate Standing Committee on Economics, The need, scope and content of a definition of unconscionable conduct for the purposes of Part IVA of the Trade Practices Act 1974 (December 2008) (at 43 [5.54]).

11. In my respectful view, and speaking generally, there has been a tendency to attenuate the concept of statutory unconscionability and a failure to appreciate its potential reach. Although greater clarity has emerged following a number of relatively recent Full Court decisions, there remains a danger of overcomplicating the evaluative task and becoming distracted by seeking to characterise conduct as being of a nature that can be described as mala fide or dishonest, predatory, exploitative, or unfair to a significant order. The real nature of the evaluative task might be thought to be best captured by the Full Court in Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40; (2021) 285 FCR 133, where Allsop CJ, Besanko and McKerracher JJ (at 155–156 [92]) observed that the aim of evaluating the impugned conduct is to:

    assess whether it is to be characterised as a sufficient departure from the norms of acceptable commercial behaviour as to be against conscience or to offend conscience and so be characterised as unconscionable. In any particular case, it should be recognised that if the evaluative answer be “no: it is not unconscionable”, the court is concluding that by an Australian business conscience the conduct is conscionable and not to be deterred by penalty.

1. So what of the conduct of Mazda towards RC?

2. As I recently said in Kumova v Davison (No 2) [2023] FCA 1 (at [108]), for almost fifty years, the commercial life of this country has been regulated by a basic norm, now reflected in a bewildering array of statutory provisions, being that persons must not engage in conduct, which is misleading or deceptive, or likely to mislead or deceive. The pervading influence of the provisions enacting this norm might be seen generally as a reflection of social attitudes that have heralded a retreat from legal formalism on several fronts and, in many ways, the existence of the norm reflects community expectations of acceptable commercial behaviour. But it is not as simple as that. There is a continuum of conduct that can contravene these norms: at one end, wicked, predatory, and highly immoral conduct; and at the other, guileless conduct, engaged in by someone trying to do their best, but which involves innocent but mistaken conduct.

3. For this reason, it is both simplistic and wrong to point to conduct that is misleading and then say it must also be against good conscience. But the conduct of Mazda towards RC, including the conduct rightly characterised as misleading, was not only seriously wrong, but of such a character that according to prevailing norms of conducting Australian business, it cannot be regarded as being conscionable. Of course, as Mortimer and Halley JJ point out, just because conduct cannot be characterised as not being a sufficient departure from the norms of acceptable commercial behaviour to offend conscience, does not mean it has been found to be acceptable commercial behaviour. It is necessarily a matter of degree. I cannot accept that the sort of conduct summarised above (at [639]–[644]) is anything other than a marked divergence from what is right and proper. My evaluation of Mazda’s conduct, by reference to the values and norms recognised by the text, structure, and context of the legislation, is that the conduct directed towards RC constitutes a sufficient departure from the norms of acceptable commercial behaviour as to be against conscience.

4. Of course, I accept that this evaluative judgment is contestable and generally the case was made harder by the ACCC than it could have been by it not seeking to prove major failure or advancing a “system” case, but I consider the conduct towards RC contravened s 21 without the additional weight of combining other examples. I would allow the appeal against the dismissal of the unconscionable conduct case as it related to RC, hear the parties on appropriately calibrated relief, and make an order pursuant to s 30 of the FCA Act as identified above.

I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.

Associate:

Dated: 23 March 2023