Takata Air Bags Class Action – Common Questions

[2018] NSWSC 1868

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Takata Air Bags Class Action – Common Questions [2018] NSWSC 1868
Hearing dates:	16 November 2018 (Hearing) , 26 November, 29 November, 4 December 2018 (written submissions)
Decision date:	11 December 2018
Jurisdiction:	Equity
Before:	Sackar J
Decision:	See Consideration paras [15]-[43]
Catchwords:	REPRESENTATIVE PROCEEDINGS – common questions – determination of common questions in representative proceedings – representative proceedings brought in relation to manufacture and installation of Takata airbags
Legislation Cited:	Civil Procedure Act 2005 (NSW) Competition and Consumer Act 2010 (Cth) Trade Practices Act 1974 (Cth)
Cases Cited:	Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12 Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 Owen Brewster v BMW Australia Ltd [2018] NSWSC 1602 Potts v Miller (1940) 64 CLR 282; [1940] HCA 43 Scenic Tours Pty Ltd v Moore [2018] NSWCA 238 Wong v Silkfield Pty Ltd (1999) 199 CLR 255; [1999] HCA 48
Texts Cited:	n/a
Category:	Procedural and other rulings
Parties:	Plaintiffs: Camilla Coates Phillip Dwyer Kimley Whisson Akuratiya Kularanthne Jaydan Bond Louise Haselhurst Owen Brewster   Defendants: Mazda Australia Pty Limited Volkswagen Group Australia Subaru (Aust) Pty Limited Honda Australia Pty Limited Nissan Motor Co (Australia) Pty Limited Toyota Motor Corporation Australia Ltd BMW Australia Limited
Representation:	Counsel: J Sheahan SC, Ms R Mansted (plaintiffs) C Bannan (Mazda) S Free SC, I Ahmed (Volkswagen) M Darke SC, T Boyle (Subaru) D T W Wong (Honda) Dr R Higgins SC, J Entwisle (Nissan) G Rich SC, T Kane (Toyota) T Prince (BMW)   Solicitors: Quinn Emanuel Urquhart & Sullivan (plaintiffs) Mills Oakley (Mazda) Clayton Utz (Volkswagen) Clayton Utz (Subaru) K + L Gates (Honda) Allens Linklaters (Nissan) Herbert Smith Freehills (Toyota) Ashurst (BMW)
File Number(s):	2018/422442018/3226482017/3530172017/3785262018/95652017/3408242018/9555

Judgment

Procedural history

1. This judgment involves representative proceedings brought by the Plaintiffs against a number of car manufacturers, namely Mazda Australia Pty Ltd, Subaru (Australia) Pty Ltd, Honda Australia Pty Ltd, Nissan Motor Co (Australia) Pty Ltd, Toyota Motor Corporation Australia Ltd, BMW Australia Ltd and most recently Volkswagen Group Australia Pty Ltd (the Defendants).

2. The pleadings have gone through several iterations since approximately November 2017 and now broadly are at the stage of Further Amended Statements of Claim filed by the parties in September 2018 followed by Amended Defences also filed in September 2018.

3. The exception is the Volkswagen Group Australia Pty Ltd (Volkswagen) matter, in which Philip Dwyer filed a Statement of Claim on 22 October 2018 seeking in effect the same relief as the other matters, making it a relatively new addition to these proceedings. By reason of this new addition to the proceedings Volkswagen has not provided submissions on the issue of common questions.

Background facts

4. These matters are a series of representative proceedings which all involve, broadly, claims relating to the installation and removal of Takata airbags from the various car manufacturers listed above.

5. During the course of case management of this representative proceedings, there has been preliminary issues raised concerning applications for the making of a common fund order pursuant to s 183 of the Civil Procedure Act 2005 (NSW), the issuing of opt out notices and the issuing of notices to all group members.

6. All of these issues above have presently been deferred. That is, save for on 22 October 2018 when I ordered that there be a separate question determined by the Court of Appeal in the Owen Brewster v BMW Australia Ltd matter, to the effect of whether the Court has power to make common fund orders pursuant to s 183 of the Civil Procedure Act 2005 (NSW): Owen Brewster v BMW Australia Ltd [2018] NSWSC 1602.

7. That separate question is still outstanding and does not impact on this present judgment.

8. The representative proceedings have now reached the stage where it is necessary and desirable to determine common questions. The causes of action in the pleadings broadly make claims for (1) lack of merchantable quality, (2) lack of acceptable quality, (3) misleading and deceptive conduct, and (4) unconscionability.

9. The parties have managed to reach some level of consensus as to the common questions to be posed. However there are remaining areas of dispute between the Plaintiffs and the Defendants, which I will address sequentially.

Legal principles

10. Sections 157, 161, 168 and 169 of the Civil Procedure Act 2005 (NSW) relevantly provide:

157 Commencement of representative proceedings

(1) Subject to this Part, where:

(a) 7 or more persons have claims against the same person, and

(b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances, and

(c) the claims of all those persons give rise to a substantial common question of law or fact,

proceedings may be commenced by one or more of those persons as representing some or all of them.

(2) Representative proceedings may be commenced:

(a) whether or not the relief sought:

(i) is, or includes, equitable relief, or

(ii) consists of, or includes, damages, or

(iii) includes claims for damages that would require individual assessment, or

(iv) is the same for each person represented, and

(b) whether or not the proceedings:

(i) are concerned with separate contracts or transactions between the defendant in the proceedings and individual group members, or

(ii) involve separate acts or omissions of the defendant done or omitted to be done in relation to individual group members.

161 Originating process

(1) The originating process in representative proceedings, or a document filed in support of the originating process, must, in addition to any other matters required to be included:

(a) describe or otherwise identify the group members to whom the proceedings relate, and

(b) specify the nature of the claims made on behalf of the group members and the relief claimed, and

(c) specify the question of law or facts common to the claims of the group members.

(2) In describing or otherwise identifying group members for the purposes of subsection (1), it is not necessary to name, or specify the number of, the group members.

168 Determination of questions where not all common

(1) If it appears to the Court that determination of the question or questions common to all group members will not finally determine the claims of all group members, the Court may give directions in relation to the determination of the remaining questions.

(2) In the case of questions common to the claims of some only of the group members, the directions given by the Court may include directions establishing a sub-group consisting of those group members and appointing a person to be the sub-group representative party on behalf of the sub-group members.

169 Individual questions

(1) In giving directions under section 168, the Court may permit an individual group member to appear in the proceedings for the purpose of determining a question that relates only to the claims of that member.

(2) In such a case, the individual group member, and not the representative party, is liable for costs associated with the determination of the question.

11. In Wong v Silkfield Pty Ltd (1999) 199 CLR 255; [1999] HCA 48 at [27]-[30], Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ provided an analysis of the extent to which common questions need to be “common”. Their Honours held that common questions address “substantial” common issues, stating “‘substantial’ does not indicate that which is ‘large’ or ‘of special significance’ or would ‘have a major impact on the ... litigation’ but, rather, is directed to issues which are ‘real or of substance’”.

12. In Scenic Tours Pty Ltd v Moore [2018] NSWCA 238 Sackville AJA (with Payne JA and Barrett AJA agreeing) emphasised (at [69]-[77] and again at [407]-[409]) the importance of the early determination of common questions in representative proceedings in order to facilitate the prompt and efficient resolution of such proceedings. His Honour also noted how common questions should not be contrived to be only relevant to particular group members, stating (at [72]) “[t]he trial itself was conducted without a clear differentiation between questions common to all Group Members and those common only to particular sub-categories”.

Common questions

13. As helpfully provided by the Plaintiffs, the common questions are as follows with notations indicating areas of dispute (as perceived by the Plaintiffs) between the parties:

COMMON QUESTIONS OF FACT

Supply of the Recalled Vehicles

1. Whether the Recalled Vehicles:

(a) were supplied to Group Members in trade or commerce?

(b) are goods within the meaning of the TPA and/or ACL?

Composition of the Recalled Vehicles

2. Whether each of the Recalled Vehicles is or was fitted with at least one Takata Airbag?

3. Whether the Takata Airbags in each of the Recalled Vehicles have either or both of the propensities pleaded in paragraph 7(a) of the (S)FASOC as a consequence of the use of ammonium nitrate in the propellant, and if so, what circumstances affect whether, when and to what degree that propensity or those propensities arise or manifest?

Subaru Proceedings Only - Whether the Takata Airbags in each of the Recalled Vehicles have either or both of the propensities pleaded in paragraph 7(a) of the (S)FASOC as a consequence of the use of ammonium nitrate in the propellant?

4. As a result of the answer to Question 3 above, in respect of each model of the Recalled Vehicles:

(a) are or were they not safe to drive; and/or

(b) if driven, do or did they expose the driver or any passengers to unnecessary danger and harm,

attributable to their construction with at least one Takata Airbag?

5. If the answer to either of the sub-paragraphs in Question 4 is “Yes”, when did each model of Recalled Vehicle become unsafe to drive or expose the driver or passenger (as relevant) to unnecessary danger or harm?

6. In circumstances in which an Affected Takata Airbag has been replaced with another airbag that uses PSAN as a propellant, but contains a desiccant other than calcium sulphate, is the answer to Questions 3, 4 and 5 any different in relation to that replacement airbag? If so, how?

BMW and Subaru Position – this question does not arise in their proceedings.

7. Whether the defendant took any or adequate steps to:

(a) warn members of the public that the Recalled Vehicles were not safe to drive; or

(b) prevent the Recalled Vehicles being driven; or

(c) ensure that Recalled Vehicles were not sold as second-hand vehicles; or

(d) warn members of the public that the Recalled Vehicles were not safe for passengers,

and if so, when?

Agreed as between Plaintiff and all Defendants save for Toyota, which objects to this question.

Unconscionable Conduct

8. Plaintiffs position: If the answers to Questions 2, 3, 4, 5 and/or 6 are “Yes”, whether the defendant in each proceeding knew, or ought to have known, of those matters, in respect of each of the Recalled Vehicles, as at the times pleaded at paragraph 48 of the (S)FASOC in each proceeding.

COMMON QUESTIONS OF LAW (OR MIXED LAW & FACT)

Application of TPA and ACL

9. Do the transitional provisions in item 6 of Schedule 7 of the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 (Cth) have the effect that:

(a) sections 74D and 74J of the TPA apply to all Affected Vehicles supplied by the Defendant to another person for re-supply before 1 January 2011, regardless of whether the Affected Vehicle was supplied to a Group Member after 1 January 2011; and

(b) sections 54, 271, 272 and 273 of the ACL do not apply to Affected Vehicles that were supplied by the Defendant to another person for re-supply before January 2011, regardless of whether the Affected Vehicle was supplied to a Group Member after 1 January 2011?

BMW Position – this question does not arise in its proceedings.

Merchantable Quality Claim and Acceptable Quality Guarantee

10. Was any Recalled Vehicle acquired by a Group Member not of merchantable quality within the meaning section 74D of the TPA at the time of supply to the Group Member by reason of the answers to Questions 2 to 6?

11. Whether a reasonable consumer fully acquainted with the state and condition of the Recalled Vehicles at the time of supply would not regard the Recalled Vehicles as:

(a) acceptably fit for all the purposes for which goods of that kind are commonly supplied?

(b) free from defects?

(c) safe?

for the purposes of section 54 of the ACL?

Misleading or Deceptive Conduct

12. Whether, by the conduct in paragraph 42 of the (S)FASOC, the defendant made any of the following representations (Representations) in respect of each of the Recalled Vehicles:

(a) the Recalled Vehicles were safe to drive;

(b) it was safe to transport passengers in the Recalled Vehicles;

(c) the airbag(s) in the Recalled Vehicles did not contain any defect that made the airbag(s) or the vehicle unsafe;

(d) the construction of the Recalled Vehicles would not expose the driver or passengers to unnecessary harm;

(e) the Recalled Vehicles airbag(s) would deploy properly in the event of an accident or collision;

(f) the defendant would notify any purchaser (past or prospective) of any issue with the Recalled Vehicle’s construction that had the potential to affect the vehicle’s safety at the time of purchase, or as soon as the defendant became aware of it?

If so, when and to what extent were those representations qualified (including considering the Voluntarily Initiated Recalls issued by the defendant)?

13. Whether, if any of the Representations (as set out in Question 12) was a representation of opinion, the defendant had a reasonable basis for making that Representation?

14. Plaintiffs' Version - Whether the defendant:

(a) engaged in Misleading Conduct (as defined in paragraph 42 of the (S)FASOC)?

(b) engaged in Misleading Conduct by Silence by virtue of the matters alleged in 42C(b) of the (S)FASOC?

Defendants' Version - During the Relevant Period (as defined in the (S)FASOC)), did the defendant in each proceeding engage in the Misleading Conduct (as defined in paragraph 42 of the (S)FASOC in each proceeding) in respect of each of the Recalled Vehicles?

15. If the answer to Question 14 is “Yes”, were the Misleading Conduct or the Misleading Representations (as applicable), in respect of each of the Recalled Vehicles:

(a) false or misleading in contravention of section 53(a) of the TPA and/or section 29(1)(a) of the ACL;

(b) misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the TPA and/or section 18 of the ACL; and/or

(c) misleading as to the nature, characteristics and/or the suitability of each of the Recalled Vehicles in contravention of section 55 of the TPA and/or section 33 of the ACL?

Unconscionable conduct

16. Plaintiffs' Version - Whether the defendant engaged in Unconscionable Conduct as pleaded in 49 of the (S)FASOC in contravention of section 51AB of the TPA or section 21 of the ACL?

Defendants' Version – Not agreed. Whether there has been unconscionable conduct within the meaning of s51AB of the TPA or s21 of the ACL is not a common question. It depends on the individual position of Group Members.

Loss or damage

17. For the purposes of section 273 of the ACL:

(a) did some or any Group Members become aware, or ought they reasonably to have become aware, that the guarantee had not been complied with (assuming that the answer to Question 14 is “Yes”) if and when they received a recall notice from the Defendant or were otherwise notified that vehicles of the same model as their Recalled Vehicle were the subject of a recall; and

(b) is the cause of action under section 271 of some or any Group Members who received a recall notice from the Defendant, or were otherwise notified or ought reasonably to have become aware that vehicles of the same model as their Recalled Vehicle were the subject of a recall, time-barred by operation of section 273 of the ACL?

18. Plaintiff’s Version – If the answer to Question 13 is “Yes”, have Group Members suffered loss or damage, in the form of a reduction in the “true value” of that Recalled Vehicle as at the date of purchase, attributable to the Recalled Vehicle not being of merchantable quality, including in circumstances in which:

(a) the Group Member has had the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement; or

(b) the Group Member is able to have the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement?

Defendants' (except Toyota) Version - If the answer to Question 13 is “Yes”, have Group Members suffered loss or damage, in the form of a reduction in the “true value” of that Recalled Vehicle as at the date of purchase, attributable to the Recalled Vehicle not being of merchantable quality, in circumstances in which:

(c) the Group Member has had the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement; or

(d) the Group Member is able to have the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement?

Toyota Position – objects to all versions of the question.

19. If the answer to Question 14 is “Yes”, was any non-compliance with section 54(1) of the ACL only because of any act, default or omission of Takata Corporation (or its related entities, including TK Holdings Inc) and not because of any act, default or omission of the Defendant?

20. Plaintiffs' Version – If the answer to Question 14 is “Yes”, and the answers to Question 23 and (if applicable) 26 are “No”, have can Group Members have suffered any loss or damage, in the form of a reduction in the “true value” of that Recalled Vehicle as at the date of purchase, attributable to the Recalled Vehicle not being of acceptable quality, including in circumstances in which:

(a) the Group Member has had the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement; or

(b) the Group Member is able to have the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement?

Defendants' (except Toyota) Version – If the answer to Question 14 is “Yes”, and the answers to Question 23 and (if applicable) 26 are “No”, have Group Members suffered loss or damage, in the form of a reduction in the “true value” of that Recalled Vehicle as at the date of purchase, attributable to the Recalled Vehicle not being of merchantable quality, in circumstances in which:

(c) the Group Member has had the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement; or

(d) the Group Member is able to have the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement?

Toyota Position – objects to question.

21. Plaintiffs’ Version – If the answer to Question 19 is “Yes”, have Group Members suffered loss or damage, in the form of a reduction in the “true value” of that Recalled Vehicle as at the date of purchase, attributable to alleged misleading and deceptive conduct, including in circumstances in which:

(a) the Group Member has had the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement; or

(b) the Group Member is able to have the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement?

Defendants' Version – If the answer to Question 19 is “Yes”, have Group Members suffered loss or damage, in the form of a reduction in the “true value” of that Recalled Vehicle as at the date of purchase, attributable to alleged misleading and deceptive conduct, in circumstances in which:

(c) the Group Member has had the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement; or

(d) the Group Member is able to have the Affected Takata Airbag in their Recalled Vehicle replaced at no cost for the replacement?

Toyota Position – objects to all versions of the question.

22. Subaru Proceedings Only - Whether section 271(6) of the ACL applies in respect of the plaintiff or any Group Member, and if so, whether the plaintiff or any Group Member is not entitled to commence an action under section 54 of the ACL, due to the actions pleaded in paragraph [33(d)] of Subaru’s Defence?

Statute of Limitations

23. Is the cause of action under section 74D(1) of the TPA of any Group Member time-barred by operation of section 74J(1)?

24. Is the cause of action under section 74D(1) of the TPA of any Group Member time-barred by operation of section 74J(3)?

25. Are the claims of misleading or deceptive conduct of some or any Group Members time-barred by operation of sections 82(2) and 87(1CA) of the TPA and/or sections 236(2) and 237(3) of the ACL?

26. Is any cause of action based on unconscionable conduct under the TPA or ACL of some or any Group Members time-barred by operation of sections 82(2) and 87(1CA) of the TPA or sections 236(2) and 237(3) of the ACL (as applicable)?

Proportionate liability

27. Whether:

(a) Takata Corporation or its related entities (as specified in each defence) was a concurrent wrongdoer for the purposes of section 87CB of the TPA or CCA?

(b) if so, whether and in what proportion the defendant’s liability should be reduced in respect of the causes of action under sections 52 and 53(a) of the TPA and/or sections 18 and 29(1)(a) of the ACL?

28. Subaru Proceedings Only - Whether:

(a) Subaru Corporation is a concurrent wrongdoer for the purposes of section 87CB of the TPA or CCA?

(b) if so, whether and in what proportion the defendant’s liability should be reduced in respect of the causes of action under sections 52 and 53(a) of the TPA and/or sections 18 and 29(1)(a) of the ACL?

All Common Questions

29. Is the answer to any of the questions above not common to the claims of the Group Members?

Submissions

14. For the sake of clarity I have referenced the parties’ submissions not as a standalone section but alongside each discrete area of dispute concerning the proposed common questions below.

Consideration

15. It is important to bear in mind that common questions should be just that, and they should not pick up or pose questions more appropriately to be determined on an individual basis or idiosyncratic analysis of a particular group member. Common questions, however, need not be entirely uniform across all group members.

16. Common questions 1, 2, 3, 4 and 5 are uncontroversial between the parties and in my view they are appropriately posed as common questions.

17. There has been some suggestion that common question 6 was not agreed, with BMW and Subaru suggesting this question does not arise in their proceedings. However, this question was not the subject of substantive oral submissions or submissions in writing and in my view it is appropriate as a common question.

18. Question 7 is agreed between the Plaintiff and all the Defendants save for Toyota, which objects to this question. Its objection was not raised in Toyota’s written submissions however was raised by Senior Counsel for Toyota on 16 November 2018 in oral argument. That is, Mr Rich of Senior Counsel for Toyota submitted question 7 poses a legally meaningless analysis of whether the Defendants took “adequate” steps, and in any event, is already covered by questions 14 and 16 (T21/1-15). As question 16 is no longer pressed by the Plaintiffs, the question is whether questions 7 and 14 substantially overlap, to the extent that question 7 should not be posed.

19. In my view, insofar as there are elements of inquiry and analysis which overlap in questions 7 and 14, this is not fatal to posing question 7 as a common question. Even if there is a degree of overlap, in my view it is appropriate to pose common question 7, noting that common questions need not be entirely uniform across all group members. Whether or not there is overlap between questions 7 and 14 is a matter to be determined in the answering of these common questions, not at the outset when the answers to these questions are not fully known.

20. Questions 8 and 16 both deal with the issue of unconscionable conduct. All parties have now agreed to the insertion of “ought to have known” into question 8, and on this basis, the Plaintiffs no longer press question 16. There was some suggestion by Mr Bannan who appeared for Mazda on 16 November 2018 that “ought to have known” is an inappropriate addition to a question on unconscionable conduct because as per Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 unconscionable conduct requires actual knowledge or a “predatory state of mind” (T25/1-11) and therefore constructive knowledge of the kind contemplated by the phrase “ought to have known” is inappropriate. I note the Plaintiffs submit their case is one of statutory unconscionable conduct as per s 51AB of the Trade Practices Act 1974 (Cth) and s 21 of the Australian Consumer Law (as set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth)). On this basis they contend there is still a question of whether constructive knowledge may ground a statutory unconscionability claim.

21. As all parties have now agreed to the inclusion of “ought to have known” in question 8 the statutory unconscionability and constructive knowledge point is now somewhat academic, and in my view as agreed by the parties question 8 is appropriate as a common question. Also, I am of the view question 16 now need not be asked and is superfluous given the addition to question 8 the phrase “ought to have known”.

22. There is the suggestion that question 9 does not arise in the BMW proceedings, however otherwise is agreed by the parties. As the common questions need only be “substantially” common and need not arise in all proceedings in my view question 9 is appropriate as a common question.

23. Questions 10, 11, 12 and 13 are agreed and in my view are also appropriate common questions.

24. The Plaintiffs and Defendants disagree over proposed common question 14. That is, they clearly disagree as to whether misleading conduct by silence in the pleadings (that is, [42C(b)] of the Plaintiffs’ pleadings) ought properly to be addressed as a common question.

25. In my view the Plaintiffs’ proposed common question 14 is the appropriate question to be posed, because it is open to the Plaintiffs to make a case of misleading and deceptive conduct by silence which is made on the basis of misleading conduct to the world at large, and not on factors peculiar to each group member. To be precise, relevantly [42C] of the pleadings states:

Further, or in the alternative to paragraph 42 [Misleading Conduct] and 42A [Misleading Representations]:

(a) by the conduct pleaded in paragraph 42, the Plaintiff and Group Members had a reasonable expectation that if any of the matters pleaded in paragraph 42A(a) to (f) did not exist, or were not so, that fact would be disclosed;

(b) the Defendant’s failure to disclose that any of the matters pleaded in paragraph 42A(a) to (f) did not exist, or were not so, was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the TPA and/or section 18 of the ACL.

26. In their submissions in reply, the Plaintiffs submit that question 14 does not involve any inquiry into the idiosyncratic expectations of each group member, but asks whether there was misleading conduct by virtue of “a representation made to the world at large” and does not involve “dealings between individuals”, citing French CJ in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 (at [26]) (citations omitted):

This Court has drawn a practical distinction between the approach to characterisation of conduct as misleading or deceptive when the public is involved, on the one hand, and where the conduct occurs in dealings between individuals on the other. In the former case, the sufficiency of the connection between the conduct and the misleading or deception of prospective purchasers “is to be approached at a level of abstraction not present where the case is one involving an express untrue representation allegedly made only to identified individuals”.

27. On this point French CJ cited Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45; [2000] HCA 12 to which I have also had regard, particularly the observations of Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ (at [101]-[103]) concerning the analysis of representations to the public as assessed by reference to the “ordinary” or “reasonable” members of the class of prospective purchasers.

28. Having carefully considered the pleadings and the opposing versions of question 14, in my view the above authorities make it clear the misleading and deceptive conduct claims can be made on the basis of representations to the public at large, involving a level of abstraction which considers “ordinary” or “reasonable” members of the class of prospective purchasers, which is a hypothetical exercise. In my view this properly extends to misleading and deceptive conduct by silence claims. The Plaintiffs have made the deliberate forensic choice to frame their case in this manner and at this level of abstraction.

29. Therefore in my view question 14 as posed by the Plaintiffs is the preferable version, and it is open to the Plaintiffs to pose common questions concerning misleading and deceptive conduct by silence on the basis of the “former case” as said by French CJ and to this extent common to group members. This cause of action will stand and fall on the evidence in any event. Question 14 should be posed as per the Plaintiffs’ version:

14. Whether the defendant:

(a) engaged in Misleading Conduct (as defined in paragraph 42 of the (S)FASOC)?

(b) engaged in Misleading Conduct by Silence by virtue of the matters alleged in 42C(b) of the (S)FASOC?

30. Question 15 is agreed between the parties and in my view is an appropriate common question.

31. Question 16, as noted above, need not be asked.

32. Question 17 is agreed and in my view is an appropriate common question.

33. Questions 18, 20 and 21 are not agreed and are subject to more nuanced submissions by the parties. That is, the Plaintiffs have made submissions on these questions, with Subaru, Mazda, Nissan, BMW and Honda providing aligned submissions. However, Toyota has provided its own submissions on proposed questions 18, 20 and 21. These questions relate to the losses suffered by the Plaintiffs because of the diminished true value of the vehicles at the time of purchase by reason of their construction with a Takata airbag.

34. The dispute between the Plaintiffs and the Defendants (excepting Toyota) is largely restricted to the word “including” at the end of the chapeau to each of these three questions. The Plaintiffs assert they will seek to adduce evidence that on the balance of probabilities there was a certain proportionate reduction in the value of purchased vehicles attributable to the existence of their construction with a Takata airbag. The Plaintiffs submit the word “including” in the chapeau is necessary to reflect that the question of true value is not restricted to the circumstances set out in (a) and (b) of each question, which have been included at the suggestion of the Defendants as they are reflected in the various defences filed by the Defendants.

35. In oral argument and in submissions, Subaru (with the Defendants excluding Toyota agreeing) suggested an alternative wording of the chapeau of questions 18, 20 and 21 as to ask “can the Group Members have suffered any loss or damage” (T25/48-T26/2). The Plaintiffs accept this alternate wording, provided the word “including” remains in questions 18, 20 and 21.

36. The Defendants (excluding Toyota to which I will return) resist the insertion of “including” into the chapeau of these three questions. This is because the Defendants (excluding Toyota) contend the insertion of “including” has the effect of converting questions 18, 20 and 21 away from the relatively confined issue of loss or damage as posed by the Defendants into an assessment of loss or damage of the Potts v Miller (1940) 64 CLR 282; [1940] HCA 43 (“Potts v Miller”) kind (difference between price paid and value of what was acquired). They submit the proportionate reduction approach of the Plaintiffs ignores the first element of Potts v Miller damages: purchase price paid.

37. They stress the hypothetical proportionate reduction approach of the Plaintiffs ignores the critical integer of purchase price paid for the vehicles, and that the Plaintiffs should not be permitted to raise Potts v Miller damages as a common question. The Defendants (excluding Toyota) submit this is because the purchase price paid by an individual group member is plainly something particular to each person, and is therefore not a common issue and not capable of being framed as a common question.

38. Toyota takes a more radical position and rejects questions 18, 20 and 21 entirely on the basis that whether the group members have suffered loss or damage is not a common question. It criticises the Plaintiffs’ reference to loss or damage calculated as a percentage or proportionate reduction as ignoring the basic theory of loss. This is because Toyota contends loss is always determined on the particular circumstances of each case, the facts, the price paid and the particular vehicle acquired by each group member.

39. In an aside and clearly as an alternative argument, Toyota notes its agreement with the other Defendants that “can the Group Members have suffered any loss or damage” is a preferable way to frame the chapeau to questions 18, 20 and 21.

40. In my view, the resolution of this dispute concerning proposed questions 18, 20 and 21 is resolved in part by reference to the pleadings, and particularly paragraphs [24(A)], [33(A)], [46(A)] and [50(A)] of the Plaintiffs’ pleadings, all of which reference “true value”. No objection has been made by the Defendants to this pleading to the extent that it relies on the phrase “true value” as somehow meaningless or ignoring the particularity of how much each individual group member paid for their vehicle.

41. Therefore in my view, on its face, damages (or “loss and damage”) can be phrased as a common question, and it is not correct to reject questions 18, 20 and 21 as not truly common between the parties. Framed in a sufficient level of generality, damages can be a common question. To this extent I disagree with Toyota’s submissions.

42. However, I agree with the other Defendants that “including” should not be in the chapeau to proposed questions 18, 20 and 21 because it impermissibly broadens the scope of the questions raised. In my reading of these questions, to insert “including” would invite a nebulous inquiry into damages that involves questions of damage peculiar to group members and not substantially common between the group members.

43. Questions 19, 22, 23, 24, 25, 26, 27, 28 and 29 are agreed and in my view are appropriate common questions that will assist in the resolution of these proceedings.

Conclusion

44. I invite the parties to provide short minutes that give effect to my reasons.

45. I invite the parties to provide common questions which accord with my reasons.

46. If the parties cannot agree on the form of orders and/or the question of costs I invite them to approach my Associate to have the matter relisted for argument.

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Amendments

12 December 2018 - Decision [15]

Addition of new para [46]

14 December 2018 - Solicitors for Mazda : Mills Oakley (not Bird & Bird)

Decision last updated: 14 December 2018