This week the High Court effectively ruled that a vehicle can be sold with a misleading label on fuel efficiency provided the label complies with the mandatory labelling regime.

 

On 13 December 2023, the High Court handed down its decision in Mitsubishi Motors Australia Ltd (Mitsubishi) & Anor v Begovic.[1] The High Court unanimously ruled that Mitsubishi had not contravened section 18 of the Australian Consumer Law (ACL) in its application of fuel consumption labels to its Triton model vehicles which the respondent had alleged was misleading and deceptive. What started as a small claim in the Victorian Civil and Administrative Tribunal, subsequently found itself as the subject of an appeal in the highest Australian court several years later – a long way to travel on a lack of fuel efficiency.

Facts

The respondent, Mr Begovic purchased a new 2016 Mitsubishi MQ Triton 4×4 GLS motor vehicle from a car dealership (Northpark), having been attracted by the fuel consumption results displayed on the fuel consumption label applied to the car’s windshield.

Mitsubishi’s 2016 MQ Triton 4×4 GLS DID Auto DC-PU displayed the following fuel consumption data on the fuel consumption label applied to it:

9.0L/100km – Urban conditions;

6.8L/100km – Extra Urban conditions; and

7.6L/100km – Combined.

These figures were gathered from tests conducted by the Mitsubishi Technical Centre (MTC) in Japan between August and September 2014, and were done so in accordance with UN ECE Regulation 101.  The results were approved by the Commonwealth Department of Infrastructure and Regional Development.

Following the purchase of the car, Mr Begovic was disappointed with the fuel efficiency of the car, being unable to achieve the fuel efficiency displayed on the label.

VCAT [2]

Mr Begovic took the matter to the Victorian Civil and Administrative Tribunal (the VCAT), where the parties arranged for testing of Mr Begovic’s vehicle. The purpose of the testing was to replicate the testing performed on the model in 2014 by the MTC, and the expert evidence found that there was a substantial discrepancy between the tests (the 2019 test).  Mr Begovic’s car, albeit 2 years old and with 50,000 kms on the odometer, achieved the following consumption:

10.6L/100km – Urban conditions (17.8% higher);

9.3L or 10.6L/100km – Extra Urban conditions (36.8% or 56.3% higher)[3]; and

9.6L/100km – Combined (26.6% higher).

The VCAT concluded that Mitsubishi had contravened section 18 of the ACL, finding that the fuel consumption label applied to the car conveyed a representation as to the fuel efficiency of Mr Begovic’s car, and that in purchasing the vehicle, Mr Begovic “did not get what was represented to him by the fuel label”.[4]

Supreme Court of Victoria and Court of Appeal of the Supreme Court of Victoria [5]

Mitsubishi obtained leave to appeal to the Supreme Court of Victoria on a mandatory conduct ground.  Mitsubishi claimed that it was required by law under the Motor Vehicle Standards Act 1989 (Cth) (the MVS Act)[6] and the Vehicle Standard (Australian Design Rule 81/02 – Fuel Consumption Labelling for Light Vehicles) 2008 (Cth) (ADR 81/02)[7], to apply a fuel consumption label to a vehicle. where “the form and content of which are prescribed by law”, and therefore, Mitsubishi could not be found to have engaged in misleading or deceptive conduct under 18 of the ACL.  The Supreme Court held that the fuel consumption label applied to the vehicle represented, and  if the vehicle was tested in accordance with the prescribed testing protocols, the results for fuel consumption should be similar to or substantially the same as the values on the label.  In this regard, compulsory labelling that inaccurately records information about goods could be misleading or deceptive and therefore in contravention of the ACL.

The Court of Appeal further decided in Mr Begovic’s favour, concluding that Mitsubishi had not challenged the finding that the 2019 test disproved the replicability of the figures on the fuel consumption label, and as a result, the representation of the fuel consumption label was misleading and deceptive conduct.  Further, that the mandatory conduct ground was not available to Mitsubishi on the basis that Mitsubishi was not required under the MVS Act and ADR 81/02 to “offer such a vehicle for sale in the first place”.[8]

High Court [9]

Mitsubishi’s appeal to the High Court was allowed with the High Court unanimously finding in favour of Mitsubishi on the mandatory conduct ground.

In its reasons, the Court turned to its decision in R v Credit Tribunal; Ex parte General Motors Acceptance Corporation (1977) 137 CLR 545 (GMAC).[10]

The Court held that, as a part of a national legislative scheme, it was necessary to read section 18 of the ACL consistently with the relevant provisions of the MVS Act, and by extension ADR 81/02, as a safety standard under the ACL.

As a result and in applying the decision in GMAC, the Court found that as a matter of interpretive principle, a specific provision must be interpreted as to prevail over a general provision in relation to the same subject matter and when enacted by the same legislature To supply the vehicle for sale, Mitsubishi was required to comply with its obligations under the MVS Act and ADR81/02 to apply the fuel consumption label to the vehicle, and by that conduct (according to the Court), it had not breached section 18 of the ACL.

Given Mitsubishi’s success on the first ground of appeal, the High Court stopped short of commenting on Mitsubishi’s further ground of appeal that the fuel consumption label did not make representations as to the replicability of the testing.

Mr Begovic’s costs of the proceedings were ordered to be paid by Mitsubishi.

Implications of the decision

The decision is a big loss for consumers.

In the words of the Green Vehicle Guide, a Commonwealth Government initiative, “[t]he label is designed to [help consumers] make informed choices about the environmental impact of new cars and the cost of running a particular vehicle.”[11]

If it is the case that fuel consumption labels are not necessarily required to be an accurate representation of what one would reasonably expect a like vehicle to achieve, it would call into question the utility of the fuel consumption label scheme in its entirety.

In our view, there should be law reform to ensure that consumers receive accurate and reliable information on fuel efficiency.

 

Authors: Michael Daniel, Hugo Hosie, Jacinta Milenkoski

15 December 2023

 

 

[1] Mitsubishi Motors Australia Ltd (ACN 007 870 395) & Anor v Begovic [2023] HCA 43 (‘High Court Decision’).

[2] Begovic v Northpark Berwick Investments Pty Ltd [2019] VCAT 772 (‘VCAT Decision’).

[3] Noting here that the expert evidence given before VCAT included a further heavy high-speed drive cycle and increased load to simulate customer in-use driving conditions.

[4] VCAT Decision (n 2).

[5] Mitsubishi Motors Australia Ltd v Begovic [2021] VSC 252 (‘Supreme Court Decision’); Mitsubishi Motors Australia Ltd v Begovic [2022] VSCA 155 (‘Court of Appeal Decision’).

[6] Motor Vehicle Standards Act 1989 (Cth).

[7] Vehicle Standard (Australian Design Rule 81/02 – Fuel Consumption Labelling for Light Vehicles) 2008 (Cth)

[8] Court of Appeal Decision (n 5) [115].

[9] High Court Decision (n 1).

[10] R v Credit Tribunal; Ex parte General Motors Acceptance Corporation (1977) 137 CLR 545.

[11] Commonwealth Government Green Vehicle Guide, Fuel consumption label | Green Vehicle Guide (Webpage), available at https://www.greenvehicleguide.gov.au/pages/ToolsAndCalculators/FuelConsumptionLabel.