Court of Appeal upholds decision on “misleading” fuel labelling

Blair McEwan, Greg Williams and Adrian Kuti
18 Aug 2022 Time to read: 3.5 MIN

Last week the Victorian Court of Appeal unanimously dismissed an appeal by Mitsubishi and one of its dealers in relation to a 2021 Supreme Court decision (which in turn had partially upheld a decision by the Victorian Civil and Administrative Tribunal (VCAT)) that a fuel label affixed to a vehicle’s windscreen was part of a course of misleading or deceptive conduct where the owner had been unable to replicate through testing the fuel consumption figures displayed in the label.

The grounds of appeal were that affixing the label could not constitute “misleading or deceptive conduct” as the label:

  1. complied with and was required by the Australian Design Rules (being the relevant Australian vehicle standards);
  2. only represented the results of past testing of a test vehicle, which it represented accurately; and
  3. did not represent that past testing results could be substantially replicated in a vehicle purchased by a consumer, which was not the test vehicle.

Ultimately, this decision serves as a timely reminder for manufacturers and suppliers of high-volume consumer products that appeals to a court from tribunals such as VCAT are usually confined to legal (rather than factual) grounds – which can prove difficult to overturn where confined to consideration of evidence put to the tribunal. It may seem excessive to obtain complex, and potentially expensive, independent expert evidence to defend a proceeding in a tribunal where the applicant is only claiming a small amount in relation to one example of a product. However, the decision of the tribunal may have much wider implications, such as being used to make allegations about all examples of that product. The prospects of overturning the tribunal’s decision on appeal may be harmed without that evidence.

VCAT Decision

The applicant, Mr Begovic, made a claim in VCAT seeking a refund of the full purchase price of his 2016 Mitsubishi Triton. He claimed that the Vehicle consumed more fuel than the fuel consumption label affixed to the windscreen had led him to believe.

The fuel consumption figures contained in the label are the product of a particular type of laboratory test that is prescribed by the Australian Design Rules. Mr Begovic relied on an expert report from an engineer who had tested Mr Begovic’s vehicle using the prescribed laboratory test. At the time of this test, Mr Begovic’s vehicle was more than two years old and had driven almost 50,000 km. The figures in the label were produced by testing a brand new vehicle. The respondents (being Mitsubishi and one of its dealers) did not tender any expert report of testing using the prescribed laboratory test, but instead tendered a very short report addressing a different form of test, which the VCAT member found to be of no assistance and did not rely on. Nor did the respondents tender evidence of the prescribed laboratory test that was conducted on the test vehicle and was the basis of the figures in the label. VCAT accepted Mr Begovic’s expert evidence and made a finding that the figures displayed on the fuel consumption label were misleading for Mr Begovic’s vehicle. This was because those figures represented that his vehicle would achieve the fuel consumption rates shown in the label during the prescribed laboratory test when the expert evidence showed that his vehicle did not.

VCAT found breaches of the ACL under section 18 (misleading or deceptive conduct) as well as ss 54 and 56 (consumer guarantees) and ordered the dealer (Northpark) to refund the purchase price of the vehicle and accept the return of the vehicle.

Supreme Court Decision

VCAT’s decision was appealed to the Supreme Court of Victoria. The Court was only entitled to take into account the evidence heard by VCAT - meaning that the manufacturer (Mitsubishi) and the dealer were not permitted to serve new evidence to counter the factual finding that the fuel consumption figures could not be replicated for Mr Begovic’s vehicle with the prescribed laboratory test. The manufacturer was successful in overturning VCAT’s findings that there had been breaches of the consumer guarantees provisions but not the finding of misleading or deceptive conduct. Justice Ginnane of the Supreme Court of Victoria found that the fuel label on Mr Begovic’s vehicle represented that the fuel consumption rates in the label could be substantially replicated if Mr Begovic’s vehicle was subjected to the prescribed laboratory test and that this representation was misleading in light of the evidence. The manufacturer and dealer appealed Justice Ginnane’s conclusion on misleading or deceptive conduct to the Court of Appeal. The Court of Appeal unanimously dismissed the appeal. Among other things, it concluded that the fuel label represented that the figures in the label could be substantially replicated if the prescribed laboratory test was conducted.

Key takeaways – Court of Appeal

Central to the manufacturer’s appeal was that fuel consumption labels are required under Australian law to be affixed to vehicles before they can be sold, and that the label itself includes a standard disclaimer that:

“Actual fuel consumption and CO2 emissions depend on factors such as traffic conditions, vehicle condition and how you drive.”

While the Court of Appeal accepted that this wording “alerts the consumer to the danger of taking the figures too literally”, ultimately it rejected that “vehicle condition” was broad enough to encapsulate the difference between the figures for fuel consumption in the label and the fuel consumption found by Mr Begovic’s expert. The Court of Appeal rejected the argument that the accuracy (or otherwise) of the fuel consumption label could not be attributed to the manufacturer simply because it was legally compelled to affix it to a windscreen, noting that “[e]ven if compliance with the law motivated their conduct, it remained their own conduct”.

In dismissing the grounds of appeal, the Court of Appeal relevantly held that:

  1. the representation made by affixing a fuel consumption label is that the figures are substantially correct (under standardised testing, for the vehicle at the time of purchase) so that comparisons could be drawn, and decisions made on that basis;
  2. the label reasonably conveyed to ordinary consumers that the figures were substantially the results which would have been obtained by standardised testing of the vehicle to which that label was affixed; and
  3. an ordinary consumer would consider information on a fuel label to bear on the cost of running the specific vehicle if they were to purchase it.

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Blair McEwan

Sydney
Senior Associate
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.