News flash – complying with the law is still the best way to reduce your risk of legal liability. A note on the recent decision in Mitsubishi Motors Ltd v Begovic [2023] HCA 43

You may have noticed that new cars sold in Australia come with a fuel consumption label. This is a requirement imposed on motor vehicle dealers by Commonwealth legislation, namely the Motor Vehicle Standards Act 1989 (which has been repealed and replaced by the Road Vehicle Standards (Consequential and Transitional Provisions) Act 2018) and the Vehicle Standard (Australian Design Rule 81/02 – Fuel Consumption Labelling for Light Vehicle) 2008 (ADR).

As the name suggests, a fuel consumption label indicates to the prospective purchaser how much fuel the vehicle is likely to use during normal use in both urban and extra urban settings.

In May 2019, Mitsubishi was ordered by VCAT to refund Mr Begovic the purchase price of a 2016 Mitsubishi Triton (the vehicle) that it had sold to Mr Begovic. Ultimately, the matter found its way to the High Court, where the decision was overturned.

The facts are these:

  1. In 2017, Mr Begovic purchased the vehicle new from Mitsubishi via their dealer, Mitsubishi Berwick;
  2. As required by the ADR, a fuel consumption label was affixed to the vehicle at all necessary times;
  3. The form and content of the fuel consumption label were those prescribed in the ADR;
  4. The fuel consumption rates stated on the fuel consumption label were derived from testing conducted in Japan in accordance with UN ECE Regulation 101 and reported to the Commonwealth Department of Infrastructure and Regional Development who subsequently approved the reported fuel consumption values. Clause 6.1 of the ADR operated to make these values the values required to be displayed on the label under cl.4.1 of the ADR; and
  5. Following a period of use, Mr Begovic noticed that the vehicle used more fuel than the fuel consumption label had indicated. Testing, conducted in 2019, indicated that the vehicle’s fuel consumption was 26.6% worse than stated on the fuel consumption label (the 2019 testing).

Mr Begovic successfully argued before VCAT that Mitsubishi had engaged in misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law (ACL) and supplied goods that were not of acceptable quality in contravention of s 54 of the ACL, in that the fuel consumption label understated the actual fuel consumption of the vehicle.

The matter found its way to the High Court of Australia via the Victorian Supreme Court and Court of Appeal.

In the Supreme Court of Victoria, Mitsubishi’s appeal in relation to s.54 of the ACL was allowed but dismissed in relation to s 18 of the ACL. The Court of Appeal then affirmed the Supreme Court’s decision in relation to s 18 of the ACL on the basis that the fuel consumption values displayed on the label were misleading because the values were not substantially the same as those that would be obtained under standardised testing, as the 2019 testing showed.

The matter proceeded to the High Court of Australia on the question of whether Mitsubishi had contravened s 18 of the ACL in circumstances where the offending conduct was conduct that was a mandatory requirement of the ADR.

In other words, Mitsubishi argued that they could not have contravened s 18 of the ACL if they were following a mandatory requirement of the ADR. Much to the relief of Mitsubishi, the High Court, unanimously found that Mitsubishi had complied with the requirements of the ADR in the way in which it derived and displayed the fuel consumption values for the vehicle and therefore could not, in doing so, be held to have breached s 18 of the ACL.

This decision is an affirmation of the mandatory conduct exclusion that derives from a previous decision of the High Court in R v Credit Tribunal; Ex parte General Motors Acceptance Corporation (1977) 137 CLR 545. Essentially, the principle is that where the conduct that is said to contravene one piece of legislation (in this case, s 18 of the ACL) is the same conduct that is mandated by some other piece of legislation (in this case the ADR), then the apparent conflict is resolved by subordinating the general provision (in this case the general prohibition on misleading and deceptive conduct under s 18 of the ACL) to the specific provision (in this case the prescriptive requirements of the ADR).

The content of this article is intended to provide a general guide to the subject matter. Specific advice should be sought about your specific circumstances.

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