Williams v Toyota Motor Corporation Australia Limited; Toyota Motor Corporation Australia Limited v Williams

The High Court of Australia heard appeals concerning the assessment of damages under the Australian Consumer Law (ACL) in representative proceedings brought by Mr Williams and Direct Claim Services Qld Pty Ltd (the "Williams parties") against Toyota Motor Corporation Australia Limited ("Toyota"). The dispute centred on vehicles fitted with a defective diesel exhaust after-treatment system, which were found not to comply with the guarantee of acceptable quality under s 54(1) of the ACL at the time of supply. The core issue was how damages, specifically the reduction in the value of the vehicles under s 272(1)(a) of the ACL, should be assessed when an effective, free repair became available after the time of supply.

The legal issues before the High Court were whether the Full Court of the Federal Court erred in permitting the assessment of damages under s 272(1)(a) of the ACL to depart from the time of supply or to be adjusted to avoid over-compensation, particularly by considering the availability and timing of a repair. The Court was also asked to determine whether the Full Court erred in failing to conclude that damages are not recoverable under s 272(1)(a) if there is no ongoing reduction in value at the time of trial due to the availability of a repair.

The High Court allowed the appeal in part, finding that the Full Court had erred in its approach to the assessment of damages. The Court reasoned that while s 272(1)(a) of the ACL allows for recovery of damages for any reduction in the value of goods resulting from a failure to comply with a guarantee, this assessment must be grounded in the loss suffered by the consumer. The Court held that the availability of a free and effective repair, even if not known or available at the time of supply, is a relevant factor that can mitigate or eliminate the reduction in value at the time of trial, thereby preventing over-compensation. The primary judge's approach, which largely excluded post-supply information about the repair from the valuation, was therefore set aside.

Consequently, the High Court remitted the matter to the primary judge for a reassessment of damages under ss 271(1) and 272(1)(a) of the ACL, directing that the assessment should be conducted in accordance with the High Court's reasons, which permit consideration of the impact of the repair on the reduction in value. The Court also ordered that the respondent pay half of the appellants' costs of the appeal.