Compliance with labelling requirements leads to finding of misleading conduct

Mitsubishi Motors Australia Pty Ltd and anor v Begovic [2022] VSCA 155

In 2017, the respondent, Mr Zelko Begovic (Begovic), purchased a new 2016 Mitsubishi MQ Triton 4×4 GLS motor vehicle from the dealership, Northpark (Northpark): Mitsubishi Motors Australia Pty Ltd v Begovic [2022] VSCA 155, [1].

A vehicle standard made under the Motor Vehicles Standards Act 1989 (Cth) (the Standard) required a ‘fuel consumption label’ to prominently display figures representing the ‘urban’, ‘extra urban’ and ‘combined test’ fuel consumption for the relevant vehicle type. It also prescribed standards and procedures for the testing: [2].

After conducting the requisite testing of a representative vehicle, Mitsubishi caused the label which accurately displayed the results of that testing to be affixed to the windscreen. The fuel consumption figures displayed were attractive to Mr Begovic. However, not long after the purchase, Mr Begovic concluded that the vehicle was consuming much more fuel than he expected: [3].

Mr Begovic issued a claim against the dealership in the Victorian Civil and Administrative Tribunal (Tribunal). Mitsubishi was subsequently joined as a defendant. Mr Begovic was successful in obtaining an order for a refund of the purchase price: Begovic v Northpark Berwick Investments Pty Ltd [2019] VCAT 772. VCAT found that Northpark and Mitsubishi had engaged in misleading or deceptive conduct within the meaning of s 18 of the Australian Consumer Law (ACL): [4].

On appeal, the Supreme Court upheld the Tribunal’s finding that Northpark and Mitsubishi had engaged in misleading or deceptive conduct: Mitsubishi Motors Australia Ltd v Begovic [2021] VSC 252 (Ginnane J). In respect of the labelling requirements, it was not in issue that Mitsubishi had done anything other than comply with the law. Specifically, Ginnane J stated that he accepted that the label represented that the 2016 Triton had been tested in accordance with ADR 81/02 and that the results of those tests were as stated on the label: [117].

The parties agreed that the label represented that ‘the vehicle’s fuel consumption as tested in accordance with [the Standard] was [in litres per 100 kilometres] 7.6 combined test, 9.0 urban and 6.8 extra urban’ and that it was qualified by the words ‘the actual fuel consumption and CO2 emissions depend on factors such as traffic conditions, vehicle conditions, and how you drive’: [22].

Mr Begovic submitted that the representation was misleading or deceptive because his vehicle could not achieve the fuel consumption performance indicated by the label: [24]. This was supported by the uncontradicted expert opinion evidence which demonstrated that the label information was ‘not true for the vehicle’: [27].

The ‘relevant conduct’ for the purpose of section 18 consisted of presenting a vehicle to Mr Begovic for potential sale with a label affixed that displayed figures for fuel consumption said to have been calculated by testing done in accordance with the Standard: [79].

The Court did not accept Mitsubishi’s submission that a person’s obedience of a legal requirement cannot be regarded as the conduct of that person for the purposes of s 18. The word ‘conduct’ is an ordinary English word that describes things done (or not done) by a person, whether lawful or otherwise: [80].

The Court distinguished the cases of Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, 605 and Google Inc v Australian Consumer and Competition Commission (2013) 249 CLR 435. The Court held that an ordinary and reasonable prospective purchaser would consider that the information in the label was provided as an aid to the decision whether to purchase the vehicle: [85].

Based on this, Mitsubishi and Northpark engaged in conduct which included making any representation conveyed by the label, but also extended to affixing the label, presenting the vehicle for sale, and selling the vehicle with the label affixed: [87].

In the Court’s view, the circumstances in which the label would be read and understood include the fact that motor vehicles are mass-produced and, among other things, distinguished by make and model. The reasonable prospective purchaser would not take the words ‘vehicle tested’ to refer to the specific vehicle, but to a representative vehicle: [100]. The Court held that the label reasonably conveyed that the figures in the label were substantially the results which would have been obtained by standardised testing of the vehicle to which that label was affixed: [110].

Alternatively, Mitsubishi and Northpark submitted that the representation could not be ‘actionably’ misleading or deceptive, because they were doing what the law, in the form of the Standard, required of them: [63], [96] and [113]. Specifically, they submitted that they were not the authors of the label, had no control over its message, were not making representations or adopting the content of the label as their own, but only obeying the law: [64]. The Court did not accept this, holding that the affixing of the label was only part of the overall conduct in offering the vehicle for sale: [116]. When considered as a whole, it could not be said that any statutory obligation to engage in the conduct prevented that conduct from being actionably misleading or deceptive.

This case may have implications for vehicle manufacturers whose customers cannot match real-world fuel consumption and carbon dioxide emissions, with the ratings derived from laboratory testing results required to be displayed on the fuel consumption labels. This case did not concern the representations made concerning carbon dioxide emissions.

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