Mitsubishi Motors Australia Ltd v Begovic [2023] HCA 43 - High Court Clarifies: Compliance with Mandatory Fuel Labels Does Not Constitute Misleading Conduct Under Australian Consumer Law

​Mitsubishi Motors Australia Ltd v Begovic [2023] HCA 43

 

Summary

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In December 2023, the High Court handed down a unanimous judgement in what is referred to as the Mitsubishi fuel consumption labelling case finding in favour of Mitsubishi.

 

Mitsubishi successfully appealed an earlier decision that it had engaged in misleading and deceptive conduct because the fuel consumption exceeded the levels of those found on the fuel consumption label which was affixed on the windscreen of a consumer’s vehicle. The High Court held that affixing a label in the form required by law will not give rise to a breach of the misleading and deceptive conduct provisions of the Australian Consumer Law.

 

The High Court provides the much needed clarity to all goods and service providers regarding the nexus between mandated statutory requirements and the provisions of the Australian Consumer Law (ACL).

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Key Takeaways

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1. As a matter of statutory interpretation, where there is inconsistency between two pieces of legislation, the courts will look to read down general prohibitions in light of more specific / mandatory ones.

 

2. Compliance with mandatory requirements (such as those for product labelling, food, beverage, appliances and other forms of mandatory conduct) will not expose manufacturers to findings they have engaged in misleading or deceptive conduct or breaches of the consumer protection legislation.

 

3. Any voluntary conduct which goes beyond mandatory conduct prescribed by legislation may be found to be misleading or deceptive in breach of section 18 of the ACL.

 

Factual Background

 

In 2017, Mr Begovic purchased a new 2016 Mitsubishi MQ Triton (manufactured by Mitsubishi) from a Mitsubishi dealer in Northpark.

 

Under the Motor Vehicles Standards Act 1989 (Cth) (MVS Act) and a legislative instrument under that Act – the Vehicle Standard (Australian Design Rules 81/02 – Fuel Consumption Labelling for Light Vehicles) 2008 (Cth) (ADR 81/02) – a new vehicle sold in Australia must have a fuel consumption label affixed to its windscreen.

 

Mr Begovic’s vehicle had a fuel consumption label applied to its windscreen in compliance with the MVS Act. The form and content of the fuel consumption label as applied were dictated and prescribed by ADR 81/02. The fuel consumption figures on the label were from a standardised test of the same model of vehicle.

 

Mitsubishi had conducted the requisite testing of a 2016 Mitsubishi Triton of the relevant type and caused the required label, which accurately displayed the results from the test, to be affixed to the vehicle before it was sold to Mr Begovic.

 

Following the purchase, Mr Begovic became dissatisfied with the fuel consumption of the vehicle and alleged that it exceeded the fuel consumption values on the label affixed to his vehicle at the time of purchase.

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Decision at first instance in VCAT

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In 2019, Mr Begovic commenced a proceeding in the Victorian Civil and Administrative Tribunal (VCAT) against Mitsubishi Motors Australia and the Mitsubishi dealership at Northpark who sold the vehicle to him (collectively Mitsubishi) alleging that the vehicle consumed significantly more fuel than the figures displayed on the fuel consumption label which was affixed to the front windscreen of his vehicle. Around the time of bringing the claim, Mr Begovic's vehicle had been driven for nearly 50,000km.

 

Mr Begovic claimed that Mitsubishi had contravened both sections 18 and 54 of the ACL, in that the fuel consumption label was misleading or deceptive as it was inaccurate, and therefore the vehicle was defective and not of acceptable quality as required by the consumer guarantee.

 

As part of his claim, Mr Begovic adduced expert evidence of tests undertaken to his vehicle which showed that the fuel consumption of his vehicle was significantly higher than the figures displayed on the label.

 

At VCAT, Mitsubishi did not put on its own expert evidence and Mr Begovic's expert evidence was accepted.

 

Mr Begovic’s claim was successful with VCAT finding that Mitsubishi had engaged in misleading or deceptive conduct (in breach of section 18 of the ACL) on the basis that the fuel consumption of his vehicle substantially exceeded the fuel consumption values on the label and therefore was not of acceptable quality (in breach of section 54 of the ACL). The dealer was ordered to buy back Mr Begovic’s vehicle.

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Mitsubishi appealed to the Supreme Court of Victoria

 

Mitsubishi obtained leave to appeal the VCAT decision to the Supreme Court of Victoria. Mitsubishi argued whether a manufacturer who is required by law to apply a fuel consumption label to a vehicle – ‘the form and content of which are prescribed by law’ – could be found to have engaged in misleading and deceptive conduct contravening section 18 of the ACL when the actual results differed.  Otherwise referred to as the ‘mandatory conduct ground’. Mitsubishi also challenged the finding that it had breached the consumer guarantees under s 54.

 

The Supreme Court ultimately dismissed Mitsubishi's appeal in respect of the misleading or deceptive conduct claim, concluding that the fuel consumption label was effectively a representation by the manufacturer that – if the particular vehicle it was affixed to was tested in accordance with ADR 81/02 – the results for that vehicle's fuel consumption would be similar to or substantially the same as the label. As a result of the variation between Mr Begovic's test results and those stated on the label, Mitsubishi had engaged in misleading or deceptive conduct.

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Mitsubishi appealed to the Victorian Court of Appeal

 

Mitsubishi appealed the decision to the Court of Appeal but was unsuccessful in overturning the decision on section 18 of the ACL.

 

While the Court of Appeal agreed that the label accurately represented the results of the ADR 81/02 testing, it found that there was still misleading or deceptive conduct in contravention of s 18 due to the differences in the results obtained by Mr Begovic.

 

The Court of Appeal also rejected the ‘mandatory conduct ground’ argument on the basis that the MVS Act and ADR 81/02 did not require Mitsubishi to "offer such a vehicle for sale in the first place", still less "require that a vehicle be offered for sale in circumstances where the representation in the label is misleading or deceptive in respect of that vehicle".

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Mitsubishi sought special leave to appeal to the High Court of Australia

 

Mitsubishi obtained a grant of special leave to appeal the decision of the Court of Appeal to the High Court of Australia on two grounds:

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1. that performing the ADR 81/02 test and affixing the prescribed label was 'mandatory conduct', and that section 18 of the ACL did not apply to mandatory conduct; and

2. that the label did not represent that the results of the test were replicable; rather the label only showed the results of ADR 81/02 testing on a test vehicle of the relevant type at a particular time.

 

The High Court found that the first ground was made out, such that it did not need to consider the second ground. In light of this finding, Mitsubishi succeeded in setting aside the orders of the lower courts, and dismissing Mr Begovic's application to VCAT.

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‘Mandatory conduct ground’

 

Mitsubishi (and its dealer) argued that they could not have breached section 18 of the ACL as they were merely complying with the MVS Act’s legislative requirement to affix a prescribed label. Mitsubishi did not freely choose the form or content on the label or the circumstances of testing – these were matters which Mitsubishi was mandated to carry out in accordance with the government's legislated requirements.

 

In reconciling the tension between the MVS Act and the ACL, the High Court read down the latter (that is the provisions of the ACL) only insofar as Mitsubishi engaged in conduct it was 'required to engage [in] by, or under the compulsion of, some other law’.

 

In other words, as a matter of statutory construction – when faced with an inconsistency or conflict between two statutory provisions (or two pieces of legislation), such as the MVS Act and the ACL – the court is required to attempt to reconcile the two. In doing so, a court will generally seek to read down more general prohibitions (such as those concerning misleading or deceptive conduct) in light of more specific ones (such as particular statutory labelling requirements).

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In reaching its decision, the High court also noted that:

 

(a) section 18 of the ACL assumes conduct “in trade or commerce” and always involves at least an initial a choice to engage in that kind of trade or commerce. As Mitsubishi’s conduct of applying and maintaining the fuel consumption label was mandatory, that conduct was not characterised as “in trade or commerce”. ​

 

(b) “where the conduct in trade or commerce said to contravene s 18 of the ACL is the same conduct which is required by another consumer protection law to be carried out only in a prescribed manner, the need to reconcile s 18 of the ACL with that other law cannot be avoided by characterising the conduct (such as presentation and supply) as voluntary”.

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The MVS Act therefore bound Mitsubishi to apply the label in order to import the vehicle into Australia. It also bound the Mitsubishi’s dealer to ensure it remained affixed to the windscreen as a safety standard so as not to contravene section 106 of the ACL (supplying consumer goods that do not comply with safety standards).

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Do you need help with your defective or lemon vehicle or caravan?

 

Since 1 January 2011, the Australian Consumer Law has introduced consumer guarantees on products and services including that they must be of acceptable quality, match descriptions, have spare parts and repair facilities available for a reasonable time.

 

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