Australian Competition and Consumer Commission v Mazda Australia Pty Ltd
[2021] FCA 1493
•30 November 2021
FEDERAL COURT OF AUSTRALIA
Australian Competition and Consumer Commission v Mazda Australia Pty Ltd [2021] FCA 1493
File number(s): VID 1169 of 2019 Judgment of: O’CALLAGHAN J Date of judgment: 30 November 2021 Catchwords: CONSUMER LAW – prohibition on misleading or deceptive conduct under s 18 of the Australian Consumer Law (ACL) – prohibition on certain false or misleading representations under s 29(1)(m) of the ACL – statutory guarantee as to acceptable quality under s 54 of the ACL – consumer’s entitlement to reject goods under s 259 of the ACL – representations made as to consumer rights under statutory guarantee provisions of the ACL – representations made as to supplier’s right to repair goods regardless of consumer’s entitlement to reject goods – representations made in the nature of opinions – whether reasonable basis existed for making representations in the nature of opinions – where supplier gave no consideration to consumers’ entitlements to a refund or replacement under the ACL – whether misleading or deceptive
CONSUMER LAW – prohibition on unconscionable conduct under s 21 of the ACL – where no allegation of “system” or “pattern” of conduct – whether respondent’s conduct unconscionable
Legislation: Competition and Consumer Act 2010 (Cth) Schedule 2 ss 3, 7, 18, 18(1), 21, 22, 29(1), 29(1)(m), 54, 54(2)(c), 259, 259(2), 259(2)(b), 259(3), 259(3)(a), 260, 260(1)(a), 260(1)(c), 260(1)(e), 262, 262(1), 262(2), 263, 263(4), 263(4)(a), 263(4)(b), 263(6), Parts 3‑2, Part 5‑4, Part 5‑4 Div 1
Federal Court Rules 2011 (Cth) r 5.04(3) item 19
Cases cited: Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2021] FCAFC 121; (2021) 153 ACSR 522
Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672
Australian Competition and Consumer Commission v Jewellery Group Pty Ltd [2012] FCA 848; (2012) 293 ALR 335
Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40; (2021) 388 ALR 577
Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640
Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2020) 278 FCR 450
Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196; (2016) 337 ALR 647
Australian Securities and Investments Commission v AGM Markets Pty Ltd (No 3) (2020) 275 FCR 57
Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Capic v Ford Motor Company (No 3) [2017] FCA 771
ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302
Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939
Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82
Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435
Medtel Pty Ltd v Courtney (2003) 130 FCR 182
Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525
Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125
Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631
Vautin v By Winddown, Inc. (formerly Bertram Yachts) (No 4) [2018] FCA 426; (2018) 362 ALR 702
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub‑area: Economic Regulator, Competition and Access Number of paragraphs: 957 Date of hearing: 9‑12, 15‑19, 22‑23, 25 March, 20‑21 May, 29 June 2021 Counsel for the Applicant: Mr NP De Young QC with Ms NJ Hickey and Ms AF Garsia Solicitor for the Applicant: Webb Henderson Counsel for the Respondent: Mr MR Scott QC with Mr MJ Hoyne Solicitor for the Respondent: Mills Oakley ORDERS
VID 1169 of 2019 BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Applicant
AND: MAZDA AUSTRALIA PTY LTD
Respondent
ORDER MADE BY:
O'CALLAGHAN J
DATE OF ORDER:
30 NOVEMBER 2021
THE COURT ORDERS THAT:
1.On or before 14 December 2021, the parties are to confer and submit to the Court a joint proposal, or if they are unable to agree, separate proposals for the further conduct of this proceeding, including the determination of the questions of remedies, the costs of the proceeding, and any other orders to give effect to these reasons.
2.A case management hearing be fixed on a date convenient to the parties.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
O’CALLAGHAN J:
INTRODUCTION
[1]
MAZDA’S ROLE
[23]
Mazda’s role with consumers
[23]
Mazda’s role with its dealers
[26]
How Mazda’s internal structures were designed to deal with customer complaints
[46]
THE FACTS
[50]
THE WITNESSES
[55]
ACCC witnesses
[55]
Mazda witnesses
[70]
THE LAW
[79]
Misleading or deceptive conduct
[79]
Unconscionable conduct
[89]
Statutory guarantees
[97]
CONSUMER CONTACT WITH MAZDA CONCERNING VEHICLE FAULTS
[131]
Some general points about the unconscionable conduct claims
[134]
Consumer RC
[150]
Representation 1
[152]
Relevant facts – 2017
[152]
Consideration of representation 1
[177]
Representations 2 – 4
[183]
Relevant facts – 2018
[183]
Consideration of representations 2 – 4
[205]
Representations 5 – 12
[223]
Relevant facts – 2018
[223]
Consideration of representations 5 – 12
[232]
Unconscionable conduct – RC
[246]
Consumers CT and MT
[283]
Representations 1 and 2
[286]
Relevant facts – 2017
[286]
Consideration of representations 1 and 2
[304]
Representation 3
[312]
Relevant facts – 2017
[312]
Consideration of representation 3
[317]
Representations 4 and 5
[322]
Relevant facts – 2017
[322]
Consideration of representations 4 and 5
[326]
Representations 6 – 8
[328]
Relevant facts – 2017
[328]
Consideration of representations 6 – 8
[349]
Representations 9 and 10
[360]
Relevant facts – 2017
[360]
Consideration of representations 9 and 10
[370]
Remaining facts – 2017
[375]
Unconscionable conduct – CT and MT
[393]
Consumers SB and KB
[402]
Representations 1 and 2
[405]
Relevant facts – 2015
[406]
Relevant facts – 2016
[426]
Relevant facts – 2017
[433]
Consideration of representations 1 and 2
[446]
Representation 3
[456]
Relevant facts – 2017
[456]
Consideration of representation 3
[460]
Representations 4 and 5
[464]
Relevant facts – 2017
[464]
Consideration of representations 4 and 5
[473]
Representations 6 – 8
[478]
Relevant facts – 2017
[478]
Consideration of representations 6 – 8
[485]
Remaining facts
[491]
2017
[492]
2018
[495]
Unconscionable conduct – SB and KB
[501]
Consumer MG
[511]
Representations 1 – 6
[513]
Relevant facts – 2014
[514]
Relevant facts – 2015
[517]
Relevant facts – 2016
[534]
Relevant facts – 2017
[536]
Relevant facts – 2018
[541]
Consideration of representations 1 – 6
[570]
Unconscionable conduct – MG
[589]
Consumers TK and MK
[595]
Representation 1
[597]
Relevant facts – 2017
[597]
Representation 1
[607]
Representation 2
[612]
Relevant facts – 2017
[612]
Relevant facts – 2018
[616]
Relevant facts – 2019
[619]
Consideration of representation 2
[646]
Representations 3 and 4
[653]
Relevant facts – 2019
[653]
Consideration of representations 3 and 4
[719]
Representations 5 and 6
[727]
Relevant facts – 2019
[727]
Consideration of representations 5 and 6
[736]
Remaining facts – 2019
[741]
Unconscionable conduct – TK and MK
[769]
Consumer LC (formerly LS)
[776]
Representations 1 and 2
[781]
Relevant facts – 2016
[781]
Consideration of representations 1 and 2
[789]
Representations 3 – 5
[791]
Relevant facts – 2017
[791]
Consideration of representations 3 – 5
[806]
Representations 6 and 7
[811]
Relevant facts – 2017
[811]
Consideration of representations 6 and 7
[821]
Representations 8 and 9
[824]
Relevant facts – 2017
[824]
Consideration of representations 8 and 9
[832]
Representations 10 and 11
[835]
Relevant facts – 2017
[835]
Consideration of representations 10 and 11
[844]
Unconscionable conduct – LC
[847]
Consumer EG
[856]
Representations 1 and 2
[863]
Relevant facts – 2018
[863]
Consideration of representations 1 and 2
[936]
Remaining facts – 2019
[939]
Unconscionable conduct – EG
[950]
DISPOSITION
[957]
INTRODUCTION
The respondent, Mazda Australia Pty Ltd (Mazda), is an Australian corporation wholly owned by Mazda Motor Corporation (Mazda Corp), a Japanese corporation which manufactures motor vehicles.
Mazda Corp supplies motor vehicles to Mazda pursuant to an agreement between the two corporations. In turn, Mazda supplies those vehicles to dealers throughout Australia.
Mazda does not have any retail facilities and, other than to a minimal extent, does not engage in the retail sale or supply of vehicles to end consumers. Mazda appoints dealers to sell, service, and repair Mazda vehicles, and to supply Mazda parts, pursuant to individual dealer agreements. Dealers engage in the retail sale of Mazda vehicles, and the repair and sale of parts, to consumers in Australia.
The Australian Competition and Consumer Commission (the ACCC, or the applicant) seeks declarations that between 2015 and 2019, Mazda, in respect of nine identified consumers who owned seven vehicles:
(1)engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law (ACL) (Schedule 2 to the Competition and Consumer Act 2010 (Cth));
(2)made false or misleading representations concerning the existence, exclusion or effect of the consumer guarantees under Part 3‑2 of the ACL, and the rights or remedies available under Part 5‑4 of the ACL, in contravention of s 29(1)(m) of the ACL; and
(3)engaged in conduct that was unconscionable, in contravention of s 21 of the ACL.
The ACCC’s amended concise statement alleged, and Mazda in its concise response denied, that Mazda made the following representations to those consumers:
(1)certain faults with Mazda vehicles owned by the consumers were not “major failures” under the consumer guarantee provisions of the ACL;
(2)the consumers were not entitled to a refund or replacement vehicle at no cost to them under the consumer guarantee provisions of the ACL;
(3)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 vehicles regardless of the number of attempts made to repair the faults, the time it took to repair the faults, the consumers’ rejection of the vehicles and requests for a refund or replacement vehicle, and/or Mazda’s obligation under the ACL to repair the vehicle;
(4)Mazda was not required to provide a refund or replacement vehicle at no cost to the consumers because of the age and/or mileage of the vehicles; and/or
(5)a major failure within the meaning of the consumer guarantee provisions of the ACL in respect of a motor vehicle is limited to a failure of a major component of the vehicle.
The ACCC’s amended concise statement further alleged, and Mazda denied, that each of those representations was false or misleading because:
(1)the faults with the vehicles were major failures for the purposes of s 260 of the ACL, or the faults were otherwise failures to comply with the consumer guarantees that the consumers required to be remedied and that Mazda had not remedied (either at all or within a reasonable time) for the purposes of s 259(2) of the ACL, and the consumers were entitled to refunds or replacement vehicles at no cost pursuant to s 263(4) of the ACL in accordance with their requests;
(2)the representations incorrectly represented the position under the ACL in that:
(a)the consumers did have an ability under s 263(4) of the ACL to seek to obtain a refund or replacement vehicle;
(b)the right to a refund or replacement vehicle under s 263(4) was not confined by the age and/or mileage of the vehicle; and
(c)a major failure within the meaning of s 260 of the ACL in respect of motor vehicles was not limited to a failure of a major component of the vehicle;
and/or
(3)at the time the representations were made, Mazda had not given 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.
The allegation that Mazda made the representations that certain faults with Mazda vehicles owned by the consumers were not “major failures” to comply with a consumer guarantee was narrowed during the course of the hearing. The ACCC’s case did not involve seeking to prove that the relevant vehicles in fact suffered major failures within the meaning of the ACL. Rather, its case 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].
At some points in the ACCC’s written submissions with respect to the statements made by Mazda’s representatives that were said to constitute misleading or deceptive representations, reference is made to “the Consumers” not being entitled to a refund or replacement vehicle and not having any ability under the ACL to seek a refund or replacement vehicle. These references are not to be understood as references to consumers generally, because the case was not put that way.
The ACCC’s unconscionable conduct case was not a “system” or “pattern” case. It was, rather, a case directed at Mazda’s conduct concerning the nine individual consumers the subject of the proceeding. That conduct, it was alleged, must be considered in light of Mazda’s institutional practices, including “internal compliance documentation, process and culture”. This was said to be relevant when examining what were alleged to be the common features of Mazda’s conduct in relation to each of the consumers. Those common features may be summarised as follows:
(1)Mazda did not give any, or any proper or genuine, consideration to the consumers’ entitlement under the ACL to a refund or replacement vehicle, and failed to comply with its own internal policies and procedures in dealing with the consumers’ requests for refunds or replacement vehicles in accordance with the ACL;
(2)Mazda, by its customer advocates, made false or misleading statements to the consumers in contravention of ss 18 and 29(1)(m) of the ACL;
(3)Mazda customer advocates made further false or misleading statements to the consumers, in particular, telling them on a number of occasions that their request had been escalated to “senior management” or “legal”, when the evidence demonstrated that no such escalation had occurred;
(4)Mazda did not give any proper or genuine consideration to the consumers’ expressed safety concerns arising from the faults with their vehicles;
(5)Mazda was in a dominant bargaining position in relation to the consumers’ requests, and engaged in unfair, unjustified, and unreasonable dealings with the consumers, and placed unfair commercial pressure on them to accept offers rather than pursue their requests (including by summarily rejecting requests without consideration on the merits; seeking to dissuade consumers from continuing with their requests, often in favour of repair, free services or extended warranty; and treating their requests as if they were a matter of commercial negotiation); and
(6)the sum of Mazda’s conduct led to long, drawn‑out discussions between the consumers and Mazda customer advocates, often numerous times per day over months, and this frustrated the consumers and their requests.
The ACCC submitted that Mazda’s conduct was clearly beyond conscience in all the circumstances of each case. It was “irreconcilable with what is right or reasonable”, and it involved “unfairness of a significant order, a lack of good faith, or the exercise of economic power in a way worthy of criticism”, a “sufficient departure from the norms of acceptable commercial behaviour as to be against conscience or to offend conscience”, and “misrepresentation, commercial … pressure and sharp practice, using a superior bargaining position”, as those expressions are used in the cases (to which reference will be made below).
There were four main areas in respect of both the misrepresentation and unconscionability cases where the characterisation of the facts (and thus the outcome of the case) was disputed, namely whether or not:
(1)Mazda gave any proper or genuine consideration to whether the individual consumers were entitled to a refund or replacement car;
(2)Mazda made the representations alleged;
(3)to the extent that representations were in the nature of opinions, there was a reasonable basis for making them; and
(4)taken as a whole, and in all the circumstances, Mazda’s conduct was unconscionable.
Mazda rejected the ACCC’s characterisation of any of the alleged conduct. It contended, among other things, that both elements of the case against it “rely upon selective use of facts and words divorced from a fuller consideration of the circumstances in which they occurred” and that other “significant factual, temporal and legal dimensions … must be taken into account”. In its synopsis of its position in written closing submissions, Mazda submitted that such circumstances or “dimensions” included the following:
(1)Mazda was not obliged to become involved in the process of assisting consumers whose vehicles had reported problems. That obligation was on the dealer. However, Mazda became involved in order to assist consumers and to give certainty to dealers.
(2)Once Mazda became involved, only part of its involvement related to the entitlement of the consumer under the ACL. That involvement was also aimed at providing assistance under Mazda’s warranties and providing good consumer service by offering solutions which dealt with the reason the consumer was approaching Mazda.
(3)The consumers did not approach Mazda for legal advice. They approached Mazda looking for an agreed solution to their reported problem. Mazda responded to their concerns by offering solutions in the form of paying for the investigation of the cause of the reported problem, paying for the repair of the vehicles, providing loan cars and other forms of compensation and, in two cases, either giving the replacement or the refund sought.
(4)Ultimately, the ACCC’s case about Mazda’s conduct reduced to a complaint that Mazda did not sufficiently separate its consideration of ACL issues from other legitimate considerations. More specifically, the ACCC’s case was effectively that Mazda failed to document that “multifactorial” consideration to the extent that the ACCC said should have occurred. However, even if true, that did not constitute unconscionable conduct.
(5)The fact that Mazda did not always give the consumers precisely what they were seeking was not unconscionable conduct. It was a reflection of the fact that the information before Mazda did not require the conclusion that it was obliged to provide a refund or replacement vehicle, based on its multifactorial approach to meeting the consumers’ concerns.
(6)In the context of the claim for unconscionable conduct, Mazda was entitled to deny a consumer’s asserted ACL entitlement unless and until the only response conscionably open to it was to accept it.
Most of the “circumstances” and “dimensions” that Mazda attempted to employ by way of defence were, it seems to me, ultimately beside the point. By way of example, the ACCC did not contend that Mazda was “obliged to become involved in the process of assisting customers”. Its case was that once it did become involved, it rendered itself liable for any false or misleading conduct of its employees, or to a finding that it (or they) engaged in unconscionable conduct, despite the fact that it was not a “supplier” of the vehicles. Likewise, the fact that Mazda was endeavouring to provide “good consumer service” goes nowhere to meet the misleading or deceptive conduct case put against it. And as to the assertion that the consumers did not ask Mazda for legal advice, there was (unsurprisingly) never a contention put by the ACCC that the consumers ever did.
Mazda also contended, in summary, that the representations alleged were not capable of being conveyed by the express words relied on, and that the ACCC’s case “depends on an artificial and detached reading of what was said and the context in which it was said to alter meaning” and that it fails on the facts.
Mazda submitted that:
(1)The ACCC’s allegation that Mazda did not honestly hold, and could not reasonably form, an opinion that a consumer was not entitled to a replacement or refund unless it had undertaken a detailed review of the facts and the ACL “inverts the analysis”. The correct question “is whether the relevant consumer had, at the relevant point in time, demonstrated that there had been a major failure and they were entitled to a replacement or refund. If that had not been demonstrated then, given the onus of proof, Mazda’s opinion must have been honestly and reasonably held (at least unless and until there was an objective basis to conclude otherwise)”.
(2)The ACCC “propounds a multitude of permutations and combinations of different representations said to be implied from a handful of words”.
(3)The context in which those words were used is important. As an example, Mazda referred to the ACCC’s allegation “that an offer of something less than a full replacement or refund conveys a representation that the consumer was not entitled to a replacement or refund”. Mazda’s case was that no such representation was conveyed by such an offer. It submitted:
If the evidence shows that the supplier is not required to conclusively determine that the only conscionable course available to it is to conclude that there has been a major failure then the supplier is entirely justified in making an offer less than a full refund or replacement but which deals with the consumer’s stated concerns. This … does not carry a representation that the consumer is not entitled to the remedy. They may be. Equally, they may not be.
(4)The fact that a representation is conveyed as a matter of opinion “does not necessarily carry the implication that the opinion was held … or that the opinion was reasonably held … It depends on the context. The context in this case did not involve those implications and, in particular, did not carry any implication that the opinion was based on reasonable grounds”.
(5)Any opinions conveyed by the representations were reasonably held and “[t]here is no evidence that Mazda had no legitimate option other than to conclude that there had been a major failure. It does not matter whether the information available to Mazda at the time was sufficient. If the evidence discloses a conscionable basis (whether known to Mazda at the time or not) for refusal of relief (including that insufficient evidence is available to conclusively determine that the relief sought must be provided), that is enough”.
As to the unconscionable conduct claim, Mazda submitted that the ACCC’s case “ignores the totality of Mazda’s conduct”, including the other support and assistance Mazda gave to the consumers without the consumer proving a legal entitlement to that support or being troubled to do so. It also submitted that the conduct alleged did not, in any event, meet the significant hurdle required to demonstrate that conduct was unconscionable, including among other reasons because:
(1)there was no allegation of bad faith, and no basis for concluding bad faith in the sense of an act or omission intended to preclude exercise of an established, accrued or potential statutory right;
(2)any claim based on systems or patterns was disavowed;
(3)when properly analysed, there was no evidence that the impugned conduct had serious consequences for the consumers;
(4)the “round table” and “executive panel” processes which made decisions on customers’ requests for a refund or a replacement vehicle “were an authentic attempt to ensure a properly informed and rational decision was made in response to an unsubstantiated assertion of a statutory right”;
(5)it was not fair or accurate to say that Mazda did not take consumers’ safety concerns seriously; and
(6)Mazda was not relevantly in a dominant bargaining position.
I should, at this point of the introduction, mention another matter that Mazda raised in its written submissions, viz the contention that “an important matter to be confronted at the outset” was that “[t]he ACCC’s case in its closing submissions is not the case that Mazda was on notice of having to meet as set out in the amended concise statement … dated 14 December 2020”.
There was, however, not the slightest mention made of this contention, or any of the reasons advanced in support of it, in Mazda’s closing oral address.
I am entitled to infer therefore that it intended not to press the matter.
But in any event, to the extent that the ACCC’s case involved additional clarification or refinement of the case set out in its amended concise statement, those changes were flagged in opening. By way of example, Mazda’s written closing submission at [15] complained that “[o]n the misrepresentation case, the ACCC now alleges that the first two representations above were statements of opinion relating to the specific vehicles, rather than statements of fact, and Mazda did not hold the opinions and did not have reasonable grounds for them”. But that case was put unambiguously in opening, at [64] of the ACCC’s outline of opening submissions, as follows: “[t]he representations made by Mazda as to the [c]onsumers’ rights as to the faults with the [v]ehicles should be characterised as statements of opinion which carried an implied representation that Mazda had a basis for them and reasonable grounds for them”.
It is important to bear in mind that concise statements perform a different role to pleadings. It is permissible, for example, for an applicant to refine its concise case in opening. See Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2021] FCAFC 121; (2021) 153 ACSR 522 at 548 [144] (McKerracher and Colvin JJ). And as their Honours also said at [149], “what [a] party cannot do is save up its complaint that the case is stated too broadly until the conduct of the final hearing and then maintain that no detailed case can be run because no such case has been disclosed”, because “[t]o do so is to treat the concise statement as having the same character as a pleading which it is not”.
In my view, the amended concise statement and the ACCC’s opening submissions, both written and oral, provided a fair disclosure of the case it advanced in respect of both claims. For those reasons, even if I am wrong in the view that the “important matter” referred to in Mazda’s written closing was not pressed (because it was not mentioned in closing address), I would reject the submission on its merits.
MAZDA’S ROLE
Mazda’s role with consumers
When faults with the vehicles occurred, the consumers took their vehicles to authorised Mazda dealers who, 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 customer service representatives (or “customer advocates”). The consumers were often told to approach Mazda by the dealers. 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]”.
All customer contact with Mazda (including consumer complaints) was managed by Mazda’s National Customer Support (NCS) department. The department was divided into teams which focused on different areas of complaint. The intention was that they worked collaboratively to provide an outcome.
The Mazda call centre operated out of Melbourne. It handled all complaints and enquiries of a technical or operational nature made directly by owners of Mazda vehicles to Mazda. Such owners were, in almost all cases, customers of Mazda dealers. Complaints and enquiries were received by the call centre either by telephone, email, or letters. Telephone calls were generally recorded if made to the customer support lines (a 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 call centre team. 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
The dealers were the “suppliers” of the vehicles for the purposes of Division 1 of Part 5‑4 of the ACL, set out below. Mazda was the deemed manufacturer within the meaning of s 7 of the ACL. Although, as I said earlier, it 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.
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.
Pursuant to Mazda’s Service Standards (see [39] 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.
Dealers were required to submit a Prior Authorisation Request (PAR) for faults in respect of which the dealer considered that Mazda had an obligation.
Mazda would also, from time to time, seek information from Mazda Corp in respect of some vehicle faults.
Mazda also operated a “Dealer Support Team”, which comprised Technical Services and Dealer Operations teams. The technical support which Mazda provided to dealers included:
(1)conducting training on some Mazda specific systems and repair procedures;
(2)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;
(3)establishing a technical protocol setting out the procedure to be followed by dealers when making technical enquiries of Mazda;
(4)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
(5)providing Field Technical Specialists (FTS), whose role was to provide advisory support to dealers in relation to vehicle and customer enquiries.
Mazda also relied on written policies, including those contained in the following documents:
(1)Summary Guidelines for Responding to Consumer Warranty Questions from July 2015 (Summary Guidelines);
(2)Post Major Repair / ACL Form, renamed Priority Vehicle Repair Form in February 2016, and discontinued in May 2017;
(3)Warranty Bulletins;
(4)Post Warranty Support Criteria;
(5)Knowledge Articles (offering training to the NCS);
(6)Compliance Training Materials;
(7)Mazda Service Standards;
(8)CCA Compliance Manual;
(9)Mazda Australia Buy Back Process; and
(10)Refund Process.
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:
(1)technical bulletins;
(2)diagnostic protocols; and
(3)Mazda’s Technical Protocol.
The ACCC relied on a number of Mazda’s internal compliance documents in aid of its unconscionable conduct case, including the contention that departure from the relevant terms of training documents and the like was unconscionable.
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.
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.
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
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”.
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
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.
Mazda’s July 2015 Summary Guidelines gave practical tips to NCS staff as part of their training. They were prepared for Mazda in consultation with Bird & Bird, introduced to the business by Mr Robins, and used between 2017 and 2019. Under the heading “Purpose of these guidelines” the following was included:
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.
Mr Robins also agreed in cross‑examination that one purpose was to ensure that Mazda staff understood the rights of consumers under the ACL, including consumers’ rights to a refund or replacement vehicle.
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.
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.
Mr Robins also accepted that Mazda should not act inconsistently with the Summary Guidelines in dealing with consumers and their requests for a refund or replacement under the ACL.
How Mazda’s internal structures were designed to deal with customer complaints
At all material times, Mazda had the following internal structures for dealing with customer complaints, including those of the consumers the subject of this proceeding.
Consumers’ first point of call was Mazda’s case managers (referred to as “customer service operators” and later “customer advocates”).
Before June 2017, decisions on customers’ requests for a refund or a replacement vehicle were made in meetings called “round table reviews”, which could be attended by the Customer Relations Manager (Ms Han), the relevant case manager, 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.
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, and from April 2018 onwards made decisions as to whether a replacement or refund or other means of redress would be offered.
THE FACTS
The parties tendered a statement of agreed facts. The representations alleged arose mostly from conversations between the consumers and Mazda customer service representatives.
The customer complaints, and what Mazda did or did not do in response to them, are also evidenced in various documents, including in audio clips of recorded telephone calls between consumers and Mazda customer representatives. Mazda also relied on an additional document entitled “statement of agreed facts with respondent’s additions”. Those additions were mostly said to contain matters of context and the like. It was also agreed that I should treat those additions that strayed beyond the facts as submissions. I was not taken, in any substantial way, to the document in closing. Having since read it, it is tolerably clear that it does not contain any submission the substance of which was not made elsewhere. And the additional facts are mostly neither here nor there.
At the heart of the controversy is how properly to characterise the facts, including the (very lengthy) agreed facts.
In closing submissions, the parties filed, at my request, two agreed documents, the first entitled “Representations alleged to have been made by Mazda to each of the Consumers” and the second entitled “ACCC’s unconscionable conduct case: sources of Agreed Facts and Submissions per Consumer”. They are in tabular form and set out, in the case of the former, a summary of each of the representations alleged, their source, and the evidence and submissions made by both sides with respect to them; and in the case of the latter, the facts and submissions made in respect of each of the unconscionable conduct claims.
I asked for the documents to be prepared and agreed primarily because of the volume of material before me. The trial occupied 15 hearing days. Written closing submissions exceeded a total of 450 pages and the court book comprised ten large volumes of evidence. Consistently with the reason that I asked for the documents to be prepared and agreed, I have relied on the summary documents as defining the metes and bounds of the disputed issues.
THE WITNESSES
ACCC witnesses
The ACCC called nine consumers as witnesses in relation to seven vehicles. Each consumer described in their affidavits the story of their purchase of a Mazda vehicle, their reasons for purchase, and their dealings with Mazda about various issues they later experienced.
The ACCC also relied upon evidence from Mr Andrew Christopher, a solicitor, and Professor Harry Watson, an expert witness.
Each consumer witness was cross‑examined, but it was to little, if any, effect.
The ACCC relied on the sworn evidence of the following individuals.
Consumer 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.
Consumers 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.
Consumers 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.
Consumer 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.
Consumer 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.
Consumer LC (previously LS). LC purchased a Mazda CX‑3 A 6A Akari 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).
Consumer 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.
Andrew Christopher was (and is) a partner at Webb Henderson, the solicitors for the ACCC. Mr Christopher’s affidavit annexed copies of Mazda Recalls’ reports in relation to vehicles the subject of recalls. He deposed that the model of vehicles owned by consumers SB and KB, consumer MG, and consumers MT and CT were affected by recalls (although MT and CT’s specific car was not relevantly affected). Mr Christopher was not cross‑examined and the ACCC did not rely upon his affidavit in either written or oral closing submissions.
Professor Harry Watson was the Head of the Department of Mechanical Engineering at the University of Melbourne. Professor Watson has expertise in the field of the design of engines for motor vehicles, among other areas. Professor Watson’s evidence concerned his opinions about questions relevant to assessing the nature, extent, and cause of the vehicle faults.
Before turning to a summary of Mazda’s witnesses, I should mention one other point. Some of the evidence given by some of the consumers concerned their “understanding” of things that they had been told by customer advocates, and others, employed by Mazda. For example, the ACCC relied on evidence given by LC in her affidavit that, based on what she had been told:
LC understood Mazda to be saying that the loss of power issue and the replacement engine with the car were not major failures. She understood Mazda to be saying that she was not entitled to a replacement car at no cost under consumer laws, and that they did not have to give her a replacement car under consumers [sic] laws because they could fix her car under warranty. She also understood Mazda to be saying that a replacement engine was not a major failure under consumer laws.
I have not had regard to evidence along those lines from any of the consumers, because the standard is an objective one. See Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 at [630], and Australian Competition and Consumer Commission v Jewellery Group Pty Ltd [2012] FCA 848; (2012) 293 ALR 335 at 348 [62] (Lander J).
Mazda witnesses
Mazda relied on evidence from the following individuals, each of whom was cross‑examined. Again very little, if anything, turned on it, other than the cross‑examination of Ms Han, which the ACCC relied on in closing.
Chooi‑Lin Han was (and is) the Customer Relations Manager at Mazda and a leader of Mazda’s Customer Relations team. Ms Han gave evidence about how the Customer Relations team responded to requests for refunds or replacement, both generally and in relation to each specific consumer. Ms Han described her involvement in the round table – and later, the executive panel – discussions which led to the offers made to the consumers.
In the course of cross‑examination, Ms Han revealed that she had obtained a legal degree and was admitted as a legal practitioner, although she had never held a practicing certificate, and did not hold herself out as a lawyer within Mazda.
Michael Robins was (and is) the Head of Legal for the National Legal Department at Mazda, and a member of Mazda’s executive management team. He described the organisation and structure of Mazda, including the relationships between Mazda, its dealers, and Mazda Corp. He also described the structure and processes for handling customer complaints, including the role of customer advocates, processes for managing requests for refunds or replacements, and ACL training.
Shane Bradford was (and is) the Senior Manager, Customer Service at Mazda. He gave expert evidence in his capacity as a qualified automotive technician with over 30 years’ experience, including 13 years at Mazda. During the hearing, the parties agreed, and I made an order to the effect, that certain paragraphs of Mr Bradford’s evidence were to be received by way of submission pursuant to r 5.04(3) item 19 of the Federal Court Rules 2011 (Cth). But in the end, nothing turned on it.
Mr Bradford was also responsible for matters involving technical issues with Mazda products in Australia. He explained Mazda’s Technical Protocol (developed to assist dealers with complex technical issues), technical reports provided by Mazda’s Technical Support team, the role of FTS, how dealers submitted requests for warranty and ACL claims, and the availability of loan vehicles to customers while their vehicles were being repaired. He also gave evidence about the technical elements of the problems exhibited by each consumer’s vehicle.
Mr Bradford also explained the following technical aspects of vehicle operations and repair:
(1)critical aspects of car engine operation;
(2)the complexity in diagnosing problems;
(3)an explanation of carbon build up and how it could be addressed, including through engine replacement (excessive build up occurred in the engines of several of the vehicles);
(4)the function of fuel injectors and transmissions;
(5)the operation and significance of dashboard lights, and the related diagnostic trouble codes which are used to diagnose faults, including within an engine; and
(6)the “limp mode” feature, which “refers to a ‘limited power’ mode which is included in Mazda vehicle control systems that reduces engine output if the system detects operation outside the designed operational parameters”.
Steven Groves was (and is) the Customer Relations Operations Specialist at Mazda, and reported to Ms Han. He explained Mazda’s internal record keeping system, referred to as Maestro, and annexed the Maestro records relevant to each vehicle the subject of this proceeding. Mr Groves also described the steps Mazda took in relation to each consumer, how they aligned with the general Mazda processes, and Mazda’s decision making during the repairs process. He had some involvement in Mazda’s dealings with consumers in relation to four of the vehicles the subject of this proceeding, largely limited to authorising communications with the consumers. Mr Groves did not contact consumers directly.
Andrew George was a mechanical engineer, with over 31 years of experience in the automotive industry. He provided his expert opinion about the causes of the defects of vehicles the subject of the proceeding, and participated in a concurrent evidence session with Professor Watson. In the end, not much turned on the evidence of Mr George or Professor Watson, and no party suggested that it did. That was so primarily because the experts had been retained at a time when the ACCC was pressing a case that each of the vehicles had at various points in time in fact suffered a “major failure” within the meaning of the consumer guarantee provisions of the ACL. None of the expert witnesses had the benefit of inspecting the vehicles.
THE LAW
Misleading or deceptive conduct
Section 18(1) of the ACL prohibited a person from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive. It provided:
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.
In determining whether a contravention of s 18(1) has occurred, “the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation’s conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct”. See Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 341–342 [102] (Gummow, Hayne, Heydon and Kiefel JJ), citing McHugh J in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 625 [109].
Where the conduct in issue consists of an express representation which is demonstrably false, it is not usually necessary to go beyond that finding to conclude that it is misleading or deceptive. See ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 380 (French J).
The central question is whether the impugned conduct, viewed as a whole, has a sufficient tendency to lead a person exposed to the conduct into error, that is, to form an erroneous assumption or conclusion about some fact or matter. See, by way of example, Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 651 [39] (French CJ, Crennan, Bell and Keane JJ).
Conduct is likely to mislead or deceive if there is a real and not remote possibility of it doing so, regardless of whether it is less or more than a 50 per cent chance. See, by way of example, Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 87 (Bowen CJ, Lockhart and Fitzgerald JJ); Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2020) 278 FCR 450 at 459 [22(a)] (Wigney, O’Bryan and Jackson JJ). It is not sufficient if the conduct merely has a sufficient tendency to cause confusion or wonderment. See, by way of example, Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at 443 [8] (French CJ, Crennan and Kiefel JJ).
It is not necessary to prove an intention to mislead or deceive, nor is it necessary to prove that the conduct in question in fact misled or deceived anyone. See, by way of example, Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at 443 [6], [9] (French CJ, Crennan and Kiefel JJ).
Further, although representations to the public must be considered by reference to the class of customers 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”. See Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196; (2016) 337 ALR 647 at 691 [219] (Edelman J). See too Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 604 [37] per Gleeson CJ, Hayne and Heydon JJ (“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”).
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 at [598]‑[599]:
[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 …
Such 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).
The ACCC alleged that Mazda’s two refusals to provide EG with a replacement car, first on 19 November orally by Mr Faruquee and secondly on 28 November in writing (see [919] and [931] above) each conveyed, in the nature of an opinion, the misleading or deceptive representation that EG was not entitled to a refund or replacement vehicle at no cost to her under the consumer guarantee provisions of the ACL.
Again, Mazda disagreed, contending that both refusals were merely “a statement of position”, not “a statement of rights”.
I agree with the ACCC that the representations are made out. Again, there is no evidence that Mazda ever assessed EG’s requests for a replacement vehicle by reference to the terms of the consumer guarantee provisions of the ACL. This is evident from Mazda’s own summary of its executive panel meeting at [918] above, in which no reference is made to the ACL (or any key concepts such as a “major failure”). Instead, Mazda appears to have justified its decision on the basis that EG’s vehicle had been test driven, and Mazda’s view was that the vehicle “tested all OK”, the idle was “acceptable”, and that the vehicle “look[ed] good” with “virtually no misfire count”. For the same reasons as similar representations in respect of the other consumers, I find that the representations are made out because Mazda had no reasonable basis for expressing an opinion that EG was not entitled to a refund or a replacement vehicle at no cost to her.
Remaining facts – 2019
EG continued to have contact with Mazda in 2019. The ACCC did not allege that any false or misleading representations arose from those further interactions. I have set them out below because they are necessary to understanding the unconscionable conduct case.
On 2 January 2019, EG commenced a proceeding in NCAT, seeking a full refund of $17,350.
In preparation for the conciliation hearing, on 4 February, Ms Chiera summarised Mazda’s (internal) position:
Our position:
What is the customers [sic] actual loss? Vehicle depreciation over approx. 6 months (VOR for 4 months)
Customer remains in SLC Mazda 3 CP06PK allocated from 18/7/18
The customer is focused on the depreciated loss of her vehicle after being off road for 4 months however continues to drive a loan vehicle (no accountability for depreciation of loan vehicle)
Our offer:
Extended warranty on the whole vehicle we are confident in the repairs completed and we don’t have any concerns in the repairs or durability of the vehicle (2 years warranty from date of engine replacement).
On 4 February, Ms Chiera sent an email to West End outlining Mazda’s position on EG’s NCAT application.
On 5 February, Ms Chiera entered the following “Red Book Valuations” for EG’s vehicle into Maestro:
RED BOOK VALUATION
Valuation Prices
*Private Price Guide $7,900 ‑ $9,400
*Trade In Price Guide $5,800 ‑ $7,300
*Average Km 80,000 ‑ 130,000
*Price When New $14,990*
Price Guide (EGC)
This vehicle has approx. 70,000 kms
50,000 km difference equals approx. $1,500 difference
Ms Chiera then instructed Ms Han on the executive panel summary for presentation at the conciliation. In addition to matters set out above, the summary stated:
Pickles Auction have valued the vehicle between $5500 ‑ $6500. Pickles advised it the difference in price from July to now to be $500 due to lower Kms, but it wouldn’t be a massive difference.
Red Book Valuation indicates approximate $300 difference in the cost between 10,000 km variance of this vehicle (approximate value for 80,000 km is $9,400.00).
Mazda’s executive panel considered EG’s request for a refund on the same day. The executive panel review summary recorded that Mazda was “able to offer $500”, explaining among other things as follows:
Request: Refund
Recommendation: NO to refund request however offer $500 being approx. depreciated value of vehicle taking into account it was VOR for 4 months
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Vehicle concern/repair:
Customer’s concern is rough idle in vehicle. Vehicle VOR since 04/07/2018 (over 4 months) as a solution to the issue could not be found. During this process, PCV valve, oil separator, spark plugs and #3 engine mount was replaced with no positive outcome. Vehicle as [sic] now received a partial engine replacement as dealer found inconsistent compression readings between cylinders. Dealer submitted PAR 377463 for partial engine replacement, which has been approved. Customer has been in loan vehicle throughout diagnosis and repair period. FTS Peter Stuart has test driven the vehicle following the partial engine replacement and reported no concerns, noting idle as acceptable. IDS Session was sent to Peter Caruso of [Mazda] Technical and he advised that it looks good, virtually no misfire count. The vehicle was presented to West End Mazda on July 2018 and repairs were finalised in November 2018. The customer remains in the SLC and refuses to collect her vehicle.
Customer position:
Customer is not willing to pick up the vehicle after repair as it has been VOR for 4 months.
Customer has lost faith on the durability of the vehicle and possible loss of resale value
On the 16th November 2018, [Mazda] offered customer extended warranty. This was not accepted.
Customer is requesting $17,350.00 (full refund)
Previous Executive Panel Review 16/11/2018: Agreed unable to offer replacement vehicle. Offer extended warranty. Customer lodged NCAT Application.
Our position:
What is the customers [sic] actual loss? Vehicle depreciation over approx. 6 months (VOR for 4 months/refusal to collect vehicle for 3 months)
Customer remains in SLC Mazda 3 CP06PK allocated from 18/7/18. The Customer is focused on the depreciated loss of her vehicle however continues to use the SLC 7 months (vehicle has been ready since November)
Extended warranty on the whole vehicle ‑ we are confident in the repairs completed and we don’t have any concerns in the repairs or durability of the vehicle (2 years warranty from date of engine replacement).
Pickles Auction have valued the vehicle between $5500 ‑ $6500. Pickles advised it the difference in price from July to now may be $500 due to lower Kms, but it wouldn’t be a massive difference.
Red Book Valuation indicates approximate $300 difference in the cost between 10,000 km variance of this vehicle (approximate value for 80,000 km is $9,400.00)
[ X ] ACL considerations taken into account.
OUTCOME : Speak to Michael R re repossession of vehicle. Do we need to put this in writing. Agreed unable to provide full refund. Able to offer $500 to resolve, taking into account diagnosis/repair took 4 months.
A NCAT conciliation hearing took place on 8 February, without resolution.
The NCAT hearing took place on 22 May. The agreement was documented in an NCAT order, which included a payment to EG of $303.
EG deposed that she agreed to those orders because she was “fed up”. She deposed: “I felt like my life was revolving around file notes, NCAT hearings and phone calls with Mazda Australia and West End Mazda. I also thought by this time that there was no chance I would get a new vehicle”. As she said in the course of her cross‑examination:
But by the time the second NCAT hearing came around I had had enough of it all, to be fair. I had had enough of Mazda, I was disappointed that the vehicle couldn’t be fixed, the idle was still rough, they ‑ Mazda Australia actually said to the NCAT member that they were a bit concerned that if they couldn’t fix the rough idle that I would bring them back, straight back to NCAT. I just told them to do whatever they had to do with it to fix it because, seriously, I wasn’t keeping that car for any longer than I had to. I had had enough with it at that point, I was going to get rid ‑ I wasn’t ‑ I had lost all faith in Mazda, didn’t want another Mazda.
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So you were content to run it all the way to a final hearing to see what you could get. Is that right? Once you start the hearings and – it’s, yeah. Can you re‑question that, please? Because that sounds like you’re making an insinuation against me and I’m not – I don’t think, that is not the reason. The reason I didn’t continue it is because I didn’t have the money to have legal support and emotionally, after going through something like that for so many months and living your life around it, you become emotionally drained and you just, yeah. Let’s just let it go. Let’s, you know, kiss bygones bygones.
On 30 July, EG traded in the vehicle, for $7,500, for a Hyundai i30.
Unconscionable conduct – EG
The ACCC alleged that Mazda engaged in unconscionable conduct in its dealings with EG in respect of her request for a replacement vehicle under the ACL. It pointed to the following considerations.
The ACCC submitted that “EG had a clear and cogent request for a replacement car or refund under the ACL. She had experienced faults which Mazda were unable to fix for a period of at least 4 months. This led to the engine replacement, being a major failure in Mazda’s training guidelines”. It submitted that Mazda:
(1)summarily rejected EG’s requests without consideration on the merits;
(2)sought to dissuade EG from continuing with her requests, including by making offers for limited compensation which implied that she was not entitled to a refund or replacement at no cost;
(3)did not escalate EG’s requests in accordance with Mazda’s processes;
(4)never gave any proper or genuine consideration to whether EG had a right to a refund or replacement vehicle under the ACL;
(5)obfuscated EG’s requests, including by responding to complaints about symptoms relating to limp mode with the claim that it was just a “rough idle”; and
(6)did not take EG’s safety concerns seriously, including in circumstances where it knew that her vehicle had gone into limp mode “numerous times before [it] made serious attempts to repair the vehicle”.
The ACCC also alleged that Mazda’s conduct involved “unfair pressure tactics”, and that it “wore EG down to accept an offer of $303, an extended warranty and some free services instead of a refund or replacement vehicle … after she had sought to pursue her rights at NCAT”. It also pointed to the fact that EG could not afford a lawyer and “decided to take a pragmatic approach in resolving the matter”.
The ACCC also submitted that “EG’s circumstances bear comparison with RC’s circumstances. Both drove Mazda2 Neo vehicles. Both had engine replacements. The arbitrary nature of Mazda’s conduct is demonstrated by the differing outcomes: $303 for EG; $13,000 for RC”.
It also submitted that:
The poor consumer outcome reflected the bargaining position between the parties. Mazda is a very large and well‑resourced organisation by comparison to … EG. Mazda had the technical expertise and legal resources she lacked. There was information asymmetry between the parties. Mazda did not share its information with … EG. [EG] had outlaid significant amounts of money in purchasing the car. She relied on Mazda to address the serious and recurring faults she had experienced with their car. However, during the period the car was off the road for 4 months, she was not provided with a briefing about the precise nature of the issues and Mazda’s attempts to fix. Instead, she was met with limited information and continuing delay. Rhetorically, is it any wonder she lost faith in the durability of the [v]ehicle in these circumstances? EG was required to trust Mazda at its word when they told her that the car had been fixed, and that she had to take it back. [Her] apprehension in these circumstances was not acknowledged by Mazda at all.
I do not accept that the evidence showed that Mazda did not take EG’s safety concerns seriously. The rest of the ACCC’s propositions concerning EG may be accepted – but, again, I do not regard Mazda’s conduct as rising to the level of the unconscionable.
The ACCC is correct to say that EG ended up with a “poor consumer outcome”. And I have no doubt that EG was justified in feeling worn down and worn out by being given “the run around”. Again, however, it seems to me that the outcome and Mazda’s conduct generally was appalling customer service, not conduct that can be characterised as unconscionable.
DISPOSITION
I will hear the parties as to orders.
I certify that the preceding nine hundred and fifty-seven (957) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan. Associate:
Dated: 30 November 2021
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