Begovic v Northpark Berwick Investments Pty Ltd (Civil Claims) [2019] VCAT 772 (27 May 2019)

Last Updated: 28 May 2019

VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL

CIVIL DIVISION

ORDER

1. The first respondent must pay the applicant the sum of $39,500.
2. On payment of $39,500 in accordance with order 1, the vehicle the subject of the proceedings becomes the property of the first respondent.
3. On payment of $39,500 in accordance with order 1, the first respondent at its own expense may collect the vehicle the subject of these proceedings at a mutually agreed time and place during business hours from the applicant.

REASONS

WHAT IS THIS CASE ABOUT?

1. The applicant, Mr Begovic purchased a new Mitsubishi MQ Triton 4x4 GLS DID Auto DC-PU vehicle (vehicle) from the first respondent, Berwick Mitsubishi (dealer) in 2017. The second respondent is the manufacturer of the vehicle within the meaning of the Australian Consumer Law^[1] (manufacturer).
2. A fuel consumption label (label) was adhered to the front windscreen of the vehicle prior to purchase.
3. Mr Begovic claims that the vehicle’s actual fuel consumption is significantly higher than the fuel consumption represented on the label and the label is misleading. He also claims that the vehicle is defective because of the excessive fuel consumption.
4. The dealer did not attend the hearing. The manufacturer advised the Tribunal that it “will be handling the matter” for the dealer and confirmed that the dealer would be abiding by the Tribunal’s orders. Mr Miller was not appearing on behalf of the dealer.
5. The manufacturer’s position is that the label is correct. It is not misleading or deceptive and the vehicle is not defective.
6. Mr Begovic seeks an order that he reject the vehicle and be refunded the purchase price of $39,500.00.

WITNESSES

7. Mr Begovic and his expert, Ms A Winkelmann of Abmark gave evidence for Mr Begovic. Ms Winkelmann also authored a report dated February 2019.
8. Mr Miller, National Manager Field Services and Mr Carpenter, Central Service Manager Victoria and Tasmania, both employees of the manufacturer gave evidence on behalf of the manufacturer.

ISSUES FOR DETERMINATION

9. The issues for determination are as follows:
   1. Was the fuel consumption label misleading or deceptive?
   2. Is the vehicle defective or not of acceptable quality?
   3. Is Mr Begovic entitled to any remedy?

MATTERS NOT DISPUTED

10. The following matters are not in dispute: -
    1. At the time of purchase, the label was attached to the front windscreen of the vehicle;
    2. The label stated that the fuel consumption based on litres per 100 km was 7.6 “Combined Test”, 9.0 “Urban” and 6.8 “Extra Urban”;
    3. The label contained the words “Vehicle tested in accordance with ADR 81/02. Actual fuel consumption and CO2 emissions depend on factors such as traffic conditions, vehicle condition and how you drive;”
    4. Mr Begovic’s previous vehicle was a 2008 Mitsubishi ML Triton GLX 3.2 litre Turbo Diesel. The label on that vehicle stated the fuel consumption based on litres per 100 km was 9.1 Combined Test, 11.4 Urban and 7.8 Extra Urban;
    5. After purchase, Mr Begovic complained about excessive fuel consumption of the vehicle;
    6. In July/August 2018 the parties agreed to jointly conduct testing on the vehicle, including the use of a Dyno meter, to determine the fuel consumption. The test parameters were agreed to and documented prior to the testing. The parties agreed that if the fuel usage for Extra Urban was below 7.3 l/100 km^[2] over the specified drive route the case would be finalised with no further action required. Nothing was agreed about what would happen if the fuel usage was higher than 7.3 l/100 km; and
    7. On 9 August 2019 the parties jointly undertook three test drives of the vehicle with Mr Begovic and various representatives of the manufacturer in attendance to determine Extra Urban fuel consumption. Mr Begovic recorded an average result of 8.85 l/ 100 km and the manufacturer, an average result of 8.5 l/100 km both of which were considerably higher than the label.

APPLICANT’S CASE

Mr Begovic’s evidence

11. Mr Begovic gave the following evidence: -
    1. At the time of purchase, he was looking to improve the fuel consumption he was achieving on his 2008 Mitsubishi Triton. He expected the vehicle to achieve 8.5 litres per 100 km on Extra Urban considering the driving conditions. The label stated 6.8 l/ 100 km Extra Urban. Consumption varies depending on factors such as weight in the vehicle, use of air-conditioning and the like. He knew this from his experience with his 2008 vehicle;
    2. He compared the fuel consumption on the vehicle’s label with the fuel consumption on his 2008 vehicle’s label. It was better. The vehicle was to be driven under the same conditions as his 2008 vehicle;
    3. He relied upon the information in the label;
    4. Fuel consumption was one reason he purchased the vehicle. He does a lot of country driving which is referred to on the label as “Extra Urban”. His 2008 vehicle under the same condition for Extra Urban used about 10 l/100 km. In the same conditions the vehicle used 12.44 l/100 km. He expected the vehicle to do 8.5 l /100 km on Extra Urban;
    5. From the outset after he purchased the vehicle, fuel consumption was much higher than the label information. He knew it would be higher given he was driving in varied conditions, but he expected it to be around 8.5 l/100 km and not 12.44 l/100 km. On the first trip he realised the vehicle used a lot more fuel. If he had known this, he would not have purchased the vehicle;
    6. Based on 19 fuel receipts for fuel purchased between January 2017 and May 2018, which he produced, and kilometre readings based on filling the fuel tank from nearly empty each time, the vehicle’s fuel consumption compared with the label was:

7. He took the vehicle to the dealer on 1 August 2017, 22 September 2017 and 6 November 2017. On each occasion he asked for the fuel consumption to be checked. Tax invoices for each service were produced and referenced his concerns;
8. The invoice for the 1 August 2017 inspection reads “Check high fuel consumption. Checked for customer concern, cleared air flow meter and carried out SQL^[3], customer advised to monitor;”
9. The invoice for the 22 September 2017 inspection reads “Check Fuel Consumption. Checked for customer concern, carried out drive record and found 9.1 l/100 km, carried out fuel pump initialization and SQL, customer advised to monitor;”
10. The invoice for the 6 November 2017 inspection reads “Checked for high fuel consumption. Carried out testing as per technical advice. Tested with Mitsubishi universal tool and no fault found. Road tested similar vehicle and also customer’s car same distance (140 km) to compare fuel usage. Customers vehicle is using 1.1 l more per 100 km (average), considering customer load and slight modifications, fuel usage is ok;”
11. He took the vehicle to Dandenong Mitsubishi on 17 April 2018 for a service and to check fuel consumption. The tax invoice for the service states “unable to fault vehicle using excessive fuel. No faults found;”
12. At the joint testing conducted on 9 August 2018 he recorded the fuel, distance and consumption for each drive and took photos of the bowsers after topping up the fuel. The test results were for Extra Urban driving. The manufacturer’s technician drove for tests one and three and he drove for test two. Both were in the vehicle for all test drives. He denies spilling any petrol when filling the vehicle after each test drive;
13. His records, which were produced, recorded an average result of 8.85 l/ 100 km. The label stated Extra Urban fuel consumption as 6.8 l/ 100 km. The individual results were

14. Detailed test procedures were agreed to and documented by the parties prior to testing. Tests were conducted in accordance with the agreed procedures;
15. He asked the manufacturer to provide its results of the tests on many occasions. It had fitted a Mitsubishi Drive Recorder to monitor the vehicle during the tests. He was not provided with the results until during the hearing;
16. The weight of equipment in the vehicle was the same as the weight of equipment he transported in his 2008 vehicle;
17. When asked how his fuel consumption changed from using standard tyres on the vehicle to all terrain tyres, he replied “very minor change.”

Applicant’s Expert Evidence

12. Ms A Winkelmann was engaged as an expert witness. She is the Director of Engineering at ABMARK Pty Ltd. She authored a report dated 19 March 2019. She holds a Bachelor of Engineering (Automotive) and has more than 25 years’ automotive engine, calibration and fuels/fuel systems test and development experience. Her expertise was not challenged.
13. Ms Winkelmann’s evidence can be summarised as follows: -
    1. vehicle manufacturers are required by Australian Design Rules (ADR 81/02) to provide vehicles’ Combined, Urban and Extra Urban fuel consumption (as obtained during Euro 5 NEDC^[4] testing during certification) to the Australian government. This information must also be provided to consumers on a removable label on the windscreen of all new vehicles sold in Australia;
    2. The testing procedure is detailed under ADR 81/02 Fuel Consumption Labelling for Light Vehicles. The procedure is conducted over a continuous period of 20 minutes and is split into an urban and extra-urban cycle. Urban cycle testing accounts for around 2/3rds of the test and the extra-urban cycle accounts for the remaining 1/3. Extra-urban is the portion of the NEDC test that is higher speed, representing rural and highway driving. Urban is the portion of the NEDC test that is lower speed, representing city driving. Combined is the average results of both Urban and Extra-Urban portions of the NEDC test;
    3. She reviewed a report by Vipac Engineers & Scientists Ltd (Vipac) dated 7 September 2018. The testing carried out by Vipac and referred to in the report is not comparable with testing under the ADR. Vipac undertook a fuel consumption test only and not an ADR NEDC test. (The manufacturer agreed and stressed this position also). The results are not comparable and Vipac’s results can be disregarded;
    4. She used the same book value co-efficient and inertia figures provided in the ADR in her testing as used by Vipac.
    5. The Vipac report lacks information about the testing process. The report states that three NEDC test cycles were completed. Cycles must be tested on a cold vehicle. As stated in the report, the vehicle was driven to Vipac on 5 September, underwent testing and departed Vipac on 6 September 2018. It is unknown whether the first test cycle was conducted from cold or hot. She must assume that the subsequent test cycles were conducted hot as all tests are stated to have occurred on the same day. The NEDC specifies a minimum of six hours cold soaking between tests or longer to ensure the engine cools. ADR 81/02 requires that the NEDC is performed on a cold engine for the purposes of determining fuel consumption. Engines use significantly more fuel when cold than when hot. The results of the three NEDC test cycles have been averaged by Vipac. When she conducts NEDC testing, the variation between tests, in identical conditions, is less than 1%. The variations in the Vipac testing shows that the conditions were not identical which suggests the engine condition was not the same at the start of each test or the driver did not follow the driving boundaries. For these reasons the Vipac report does not reflect accurate or reliable testing;
    6. For the purposes of her report, the vehicle was tested for fuel efficiency twice under different conditions. Test one was the standard NEDC test in accordance with ADR 81/02. Test two with a heavy high-speed drive cycle and increased load to simulate customer in use driving conditions. The results are as follows

7. The NEDC results for the vehicle are significantly higher than the fuel consumption results on the label - 26.7% combined. The difference between ABMARC’s measurements on the NEDC and the manufacturer’s label data is unusual and excessive;
8. Typically, the discrepancy between NEDC testing conducted by different test organisations on the same vehicle is small;
9. Based on previous ABMARK test programs, real world fuel consumption of Euro 5 vehicles is on average 19% higher than the NEDC fuel consumption figures claimed by manufacturers. ABMARK conducted a heavy high speed drive cycle test on the vehicle in order to compare the results to previous real-world measurements. In this case the test was performed in a laboratory rather than on the road due to budgetary constraints. The vehicle has a significantly higher fuel consumption than expected on the heavy high speed test which far exceeds the average previously measured for Euro 5 vehicles - 56.3%. The highest she has seen before was 35% and this was a case where the manufacturer (not Mitsubishi) later admitted having falsified their NEDC tests. In her opinion it is unusual to see such a large discrepancy but particularly very unusual to see such a discrepancy (36.8%) on an Extra Urban test;
10. When questioned about her testing using PEMS ^[5], she confirmed that PEMS testing is now a requirement of compliance testing in Europe but was not required when the vehicle was tested. PEMS testing has a higher accuracy than laboratory equipment;
11. She adopted a multiplier of 1.3 in her road load coefficient testing. She agreed with Mr Miller that manufacturers have a choice under the ADR of testing methodology when gaining compliance. Manufacturers can use actual known figures (not available publicly) whereas she had to adopt the book values specified in the ADR in the absence of the manufacturer’s information.
12. In the past, she has undertaken testing using a manufacturer’s book value as opposed to the 1.3 multiplier for road load coefficient and the results come very close to the values achieved by the book value multiplier. The discrepancy is less than a 1% or 2% variance. The discrepancy does not account for the discrepancy in this case;
13. In her opinion the difference between the manufacturer’s testing within the ADR standard using the road load curve and the testing adopted by her using book values might give a slight percentage change or small difference to the results but not the percentage difference seen in this vehicle. The adoption of the manufacturer’s figures would not make a 20 or 30% difference to the results; and
14. When questioned by Mr Miller about her use of PEMS in her testing and it not being a requirement of the ADR, she said it made her report more accurate.

Manufacturer’s evidence

14. Mr Miller did not profess to have any technical expertise. During the hearing he contacted his office by phone to obtain further information about testing under the ADR which he relayed to the Tribunal. Neither Mr Miller nor Mr Carpenter held themselves out to be technical experts.
15. The Tribunal notes that this is not a case where a party was taken by surprise about matters raised at the hearing. The case has proceeded through two directions hearings and a compulsory conference. Orders were made on 3 December 2018 addressing the filing of expert reports. Orders were made on 4 February 2019 following the request of Mr Begovic to extend the time for him to file an expert report. The dealer and manufacturer did not request, as they could have, an extension of time in which to file any expert reports. The expert report of Ms Winkelmann was filed with the Tribunal on 27 March 2019. The dealer and manufacturer did not seek an adjournment of the hearing to consider the expert report or to file any report in reply.
16. Mr Miller’s evidence can be summarised as follows: -
    1. There is no evidence of any defect in the vehicle. No defect exists;
    2. Vipac was engaged to undertake a fuel consumption test on the vehicle. Vipac was not engaged to produce a NEDC report. The manufacturer is not saying that the Vipac report is a NEDC report;

3. The “coast down method” is one of the available testing methods under the ADR. It was used by the manufacturer and it was appropriate for it to be used.^[6] This method provides for 20 km increment brackets, no gradient and no wind greater than 10m/second. As you get slower the resistance becomes less and significantly you get different values. Under the ADR, manufacturers can choose the method which is most attractive to the results. The coast down method works out the coefficient rather than relying on the book value coefficient in the ADR. Therefore, one can get significantly different values from “plugging in a pre-programmed number which is also technically correct.” The coast down method works out the load and gives the number to use in the dyno.
4. The results of the joint 9 August 2018 on road tests on the vehicle for Extra Urban driving taken from the manufacturer’s testing equipment are

(The average of these results is 8.5 l/100km Extra Urban.);

5. Ms Winklemann did not use the coast down method. She used book values provided in the ADR. This explains the different test results;
6. The figures on the label were from tests conducted using the coast down method. Using the road load coefficient can greatly affect the result and not give an accurate figure; and
7. Ms Winklemann’s report states that she did the testing “generally” in accordance with the ADR. She used PEMS testing which is not a requirement of the ADR. On that basis he questioned whether one should rely upon her report.

17. Mr Miller did not reject or comment on Ms Winklemann’s evidence about the percentage difference expected from testing using the coast down method and testing relying upon book values provided for in the standard.
18. Mr Carpenter, Technical Officer gave evidence about the joint testing conducted on 9 August 2018. He was present during the testing. He disputes the results are accurate. He says that Mr Begovic spilt petrol on the ground when filling the car after each test and this made the fuel consumption look higher. When asked about the spillage he agreed that it was no more than half a cup of fuel.
19. The Vipac report dated 10 September 2018 was a five page report commissioned by the dealer. The report states that testing was conducted using the New European Drive Cycle at Vipac’s Melbourne laboratory on 6 September 2018. The combined results of the three tests conducted by Vipac were an average of 7.67 l/100 km.
20. The author of the Vipac report, Mr Michael Burke was not called to give evidence, or his qualifications made known to the Tribunal.

LEGAL FRAMEWORK

21. By s 18(1) of the ACL, a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
22. Section 29(1) provides, relevantly:

(1)A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

(a) make a false or misleading representation that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or previous use; or

...

(g)make a false or misleading representation that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits.

23. While s 29(1)(a) and (g) each use the expression “false or misleading” rather than “misleading or deceptive” (as in s 18(1)), there is no meaningful difference between these expressions.^[7]:
24. Section 33 provides:

A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any goods.

25. Section 236 of the ACL provides

(1) If:

(a) a person (the claimant ) suffers loss or damage because of the conduct of another person; and

(b) the conduct contravened a provision of Chapter 2 or 3;

the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.

26. Sections 18, 29 and 33 are provisions found within Chapters 2 and 3 of the ACL.
27. To succeed in his claim, Mr Begovic must establish the following elements:

(a) the dealer and/or manufacturer;

(b) in trade or commerce;

(c) engaged in conduct;

(d) which was misleading or deceptive or likely to mislead or deceive; and that

(e) because of the conduct;

(f) he suffered loss or damage.

28. The following principles, which were helpfully set out by Gleeson J in Reckitt Benckiser (Australia) Pty Limited v Procter & Gamble Australia Pty Ltd ^[8] are relevant to an assessment of the manufacturer’s conduct in this case:

[34] The applicable legal principles in respect of misleading or deceptive conduct in advertising are well-established. They are summarised in the recent decisions of Allsop CJ in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634; (2014) 317 ALR 73 (“ACCC v Coles”) at [35]-[47] and Nicholas J in Samsung Electronics Australia Pty Ltd v LG Electronics Australia Pty Ltd [2015] FCA 227 (“Samsung v LG”) at [60]-[76].

[35]A two-step analysis is required, addressing the following issues:

(1) whether each or any of the pleaded representations is conveyed by the advertisement; and

(2) whether each of the representations conveyed is false, misleading or deceptive or likely to mislead or deceive: Novartis Pharmaceuticals Australia Pty Ltd v Bayer Australia Ltd [2015] FCA 35 at [200].

[36] The causing of confusion or questioning is insufficient; it is necessary to establish that the ordinary or reasonable consumer is likely to be led into error: ACCC v Coles at [39].

[37] It is necessary to view the conduct as a whole and in its proper context (ACCC v Coles at [41]). The question whether conduct is misleading or deceptive or likely to mislead or deceive is a question of fact that must be determined in light of the relevant surrounding circumstances: Samsung v LG per Nicholas J at [61], applying Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at [109] per McHugh J. The dominant message will be of crucial importance: ACCC v Coles at [42], citing Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; (2013) 250 CLR 640 (“TPG”) at [45].

29. Section 54 of the ACL contains a guarantee as to acceptable quality and provides:-

(1) If:

(a) a person supplies, in trade or commerce, goods to a consumer; and

(b) the supply does not occur by way of sale by auction;

there is a guarantee that the goods are of acceptable quality.

(2) Goods are of acceptable quality if they are as:

(a) fit for all the purposes for which goods of that kind are commonly supplied; and

(b) acceptable in appearance and finish; and

(c) free from defects; and

(d) safe; and

(e) durable;

as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3).

(3) The matters for the purposes of subsection (2) are:

(a) the nature of the goods; and

(b) the price of the goods (if relevant); and

(c) any statements made about the goods on any packaging or label on the goods; and

(d) any representation made about the goods by the supplier or manufacturer of the goods; and

(e)any other relevant circumstances relating to the supply of the goods.

30. Under s 259 the consumer can bring an action against suppliers of goods for breach of the consumer guarantees including s 54 guarantee. The relief available will depend upon whether there has been a major failure in the goods. A consumer can elect whether to have goods repaired or to reject the goods and claim damages if there is a major failure.

Analysis of facts

31. There is no dispute in this case as to whether the ACL applies. The sale of the vehicle by the dealer was clearly a supply of a good in trade or commerce. The manufacturer was at all relevant times engaged in trade or commerce as the distributor of Mitsubishi motor cars and parts in Australia.
32. Where manufacturers engage in contravening conduct by providing incorrect information, with an awareness that the information is likely to be passed to a third party a manufacturer will be liable for any loss flowing from the latter’s reliance upon the information. That is the case here. The fuel label contained information relevant to both the performance and running costs of the car. The manufacturer would certainly know that the information contained on the label would be scrutinised and, no doubt, relied upon by prospective purchasers.
33. The label was fixed to the front windscreen of the vehicle at the time of delivery to the dealer. The information in the label is a representation to the public. Again, this is not in dispute. Based upon Ms Winkelmann’s undisputed evidence the manufacturer was responsible for the label being placed for public view on the windscreen of the vehicle. The dealer was not a mere conduit. It marketed the vehicle and adopted the information in the label. It sold the vehicle with the label attached.
34. The issue is whether the label information contained a representation that was misleading or deceptive.
35. The representation was made by the manufacturer when it placed the label on the windscreen for public view and also by the dealer when it advertised the vehicle with the fuel consumption represented in the label.
36. The representation, which is not in dispute, is that the vehicle’s fuel consumption as tested in accordance with ADR 81/02 was (L/ 100 km) 7.6 combined test, 9.0 urban and 6.8 Extra Urban. The representation is qualified by the words the “actual fuel consumption and CO2 emissions depend on factors such as traffic conditions, vehicle conditions and how you drive.”
37. Mr Miller submitted that the label information was true. He said it was not misleading or deceptive. The manufacturer did not produce any evidence other than its assertion to support the contention that the label information was true. No underlying test data was provided to support the label information.
38. Mr Begovic as the person making the claim bears the onus of proof. He must satisfy the Tribunal that it is more likely than not that the information in the label was misleading or deceptive. He claims the information was false.
39. The Vipac report does not assist me. The report, as accepted by both parties, does not contain test results based on ADR 81/02 test requirements. I also accept the unchallenged evidence of Ms Winklemann that for the reasons articulated by her the Vipac report does not reflect accurate or reliable testing. Because of these matters I do not rely on the report in deciding whether the label is misleading or deceptive.
40. In relation to the test results for the 9 August 2018 jointly conducted tests, I prefer the results recorded by the manufacturer as they were taken directly from the vehicle and are likely to be more accurate. In any event, the difference between Mr Begovic’s results and the manufacturer’s results are minuscule. Those tests are not determinative that the label information is false. They support Mr Begovic’s argument that the label is inaccurate. The test demonstrated that the label results could not be reproduced in an “on-road” test and the vehicle could not reach a fuel consumption rate below 7.3 l/100 km as the parties had hoped to achieve prior to the testing.
41. This does not of itself mean the label information was inaccurate.
42. I accept that Mr Begovic’s actual experience of fuel consumption, based on 19 fuel receipts, for the vehicle was an average of 12.44 l/100 km on Extra Urban driving. This finding does not however mean that the information in the label was wrong. The label is not representing anything other than that, based on testing conducted in accordance with ADR 81/02, the fuel consumption figures are as stated in the label.
43. Ms Winklemann’s evidence is that the label information is not true for the vehicle.
44. Mr Miller submitted that the difference between Ms Winklemann’s fuel consumption results and the label information was due to the different methodologies used. This was the only reason put forward for the difference.
45. It was not in dispute that there are different methodologies available under ADR in determining fuel consumption values.
46. The difference between the parties is that the manufacturer claims the test results obtained through different methodologies under the ADR could vary significantly whereas Ms Winkelmann says the difference is minor and does not account for the large variation in results seen in the vehicle.
47. I prefer the evidence of Ms Winkelmann to that of Mr Miller where they differ for the following reasons:
    1. Ms Winkelmann is a qualified engineer and an expert in automotive engineering;
    2. There was no evidence that Mr Miller has any technical qualifications;
    3. Ms Winklemann gave her expert opinion based on testing she arranged and from her personal experience conducting fuel consumption tests based on both the coast down method and the book value method;
    4. Ms Winklemann explained the basis of her conclusions and had personal knowledge of the variances to be expected in test results using the different methodologies allowed for under the ADR.
    5. Mr Miller personally undertook no testing. He did not provide any evidence to support his statements. He relayed technical information to the Tribunal sourced from unidentified technicians. The technicians did not give evidence;
    6. The test results in Ms Winkelmann’s report were not challenged.
48. For the reasons stated, I accept Ms Winkelmann’s evidence, it being the only expert evidence in this case, that the NEDC results she obtained for the vehicle are significantly higher than the label information (26.7% combined). I accept her conclusion that the difference is unusual and excessive. I also accept her evidence that the variation expected in the results from different testing methodologies within ADR 81/02 is small, less than 1 or 2 % and does not account for the significant variation seen in this vehicle.
49. I can only make findings based on the evidence put before me by the parties.
50. I accept the uncontradicted evidence of Mr Begovic that the fuel consumption he experienced from the vehicle under the same driving conditions to his 2008 vehicle was much higher. I accept his reliance, again unchallenged, that the vehicle would have a better fuel consumption than his 2008 vehicle (6.8 l/ 100 km compared with 7.8 l/ 100 km) based on the label. I accept the, again unchallenged, evidence that his experience was that the vehicle used more fuel than the 2008 vehicle in the same driving conditions. The label represented that it was more fuel efficient than the 2008 model.

ISSUE 1 – IS THE LABEL MISLEADLING OR DECEPTIVE?

51. Based upon my findings set out above, I conclude that the label was misleading and deceptive for the vehicle. My finding is limited to the vehicle subject of these proceedings.
52. The label information was false based on the expert evidence. It misled Mr Begovic to believe the vehicle had certain fuel consumption characteristics it did not have. He relied upon the representation in the label in making his decision to purchase the vehicle. He wanted a vehicle with a better fuel consumption than his 2008 vehicle. In purchasing the vehicle, he did not get what was represented to him by the fuel label. He suffered a loss by reason of increased fuel costs which he did not bargain for when purchasing the vehicle.
53. I find that both the dealer and the manufacturer engaged in misleading and deceptive conduct. As previously stated, the manufacturer was responsible for the label information and adhering the label to the vehicle knowing that the vehicle was to be sold by the dealer or at least a dealer in Australia. The dealer sold the vehicle with the label information.

ISSUE 2 – IS THE VEHICLE DEFECTIVE OR NOT OF ACCEPTABLE QUALITY?

54. Mr Begovic’s claim as set out in his application dated 6 April 2018 is that the vehicle is defective because of excessive fuel consumption. He claimed that the vehicle was not of acceptable quality given the nature of the vehicle, the price of the vehicle and statements made about the vehicle on the label.
55. Mr Miller’s position is that no defect has been identified in the vehicle.
56. No evidence of a specific defect causing the increased fuel consumption in the vehicle was identified. Ms Winkelmann’s report concludes “However I note excessive fuel consumption in the extra-urban segment is highly unusual and leads me to believe that it is possible that this vehicle has a serious technical issue of some kind. It was beyond the scope of work for this project to investigate and determine what that issue might be.”
57. On the evidence before me, I am not satisfied that the vehicle is defective.
58. The next issue is whether there has been a breach of the consumer guarantee of acceptable quality in s 54 of the ACL.
59. The test of whether the car is of acceptable quality and whether the contravention constitutes a major failure is an objective test. What would the reasonable consumer think or have done rather than what did Mr Begovic think or do. The subjective desire of Mr Begovic is relevant, but the issue is whether a reasonable consumer, desiring to purchase a fuel efficient vehicle (ie standing in the shoes of Mr Begovic) would regard the vehicle as acceptable.
60. The manufacturer made no submissions on this point.
61. As set out previously, I found that the label contained representations about the vehicle which were untrue. The label can be construed as a statement made on packaging or label under s54(3)(c). The label information is also a representation under s 54(3)(d). In the circumstances, given the matters set out in s54(3)(c) and (d) of the ACL I find that the vehicle was not of acceptable quality and the failure to be so is a major failure. A reasonable consumer in Mr Begovic’s position would not have found the vehicle to be of acceptable quality in circumstances where its fuel consumption was substantially more than represented by the label.
62. For the same reasons, there has been a breach of the guarantee contained in s 56 of the ACL. The fuel consumption of the vehicle departed in a material sense from the description of fuel consumption in the label. This provision was not raised by the parties. I raise it now for completeness. Consideration of the provision does not change the outcome.
63. Section 56 contains a guarantee relating to the supply of goods by description. It provides: -

(1) If:

(a) a person supplies, in trade or commerce, goods by description to a consumer; and

(b) the supply does not occur by way of sale by auction;

there is a guarantee that the goods correspond with the description.

64. In summary, I find that the dealer and manufacturer have breached the guarantees in the ACL as to acceptable quality and supply by description.
65. The breaches of the guarantees amount to a major failure under the ACL.

ISSUE 3 - IS MR BEGOVIC ENTITLED TO A REMEDY?

66. The remedies available to a consumer under the ACL for misleading and deceptive conduct and breaches of the guarantees differ.
67. I find that Mr Begovic is entitled to a remedy for misleading and deceptive conduct against the dealer and the manufacturer because he relied upon the label information in deciding to purchase the vehicle and suffered a loss. I find that he relied upon the label information for the following reasons:
    1. He gave evidence of his desire to purchase a vehicle with a better fuel consumption than his 2008 vehicle and that the vehicle’s fuel consumption stated on the label was one of the reasons he purchased the vehicle;
    2. He raised the fuel consumption as an issue immediately after driving the vehicle and continually with the dealer post purchase. This concern supports his claims that fuel consumption was a relevant factor in purchasing the vehicle;
    100. He presented as an honest witness who gave his evidence unguardedly and without exaggeration; and
    4. His evidence about his reliance on the label was not challenged.
68. In the circumstances having relied upon the label and having been misled by the label, Mr Begovic is entitled to a remedy under the ACL.
69. Section 236 of the ACL provides that if Mr Begovic suffers loss or damage because of the misrepresentation in the fuel label he is entitled to recover the amount of loss or damage. He can recover the loss from both the manufacturer and the dealer. The dealer is taken to have misrepresented the fuel consumption of the vehicle by selling it with the misleading label. No defence was raised by the dealer to the claims brought against it.
70. The ACL does not prescribe how damages are to be assessed. The High Court has held that the assessment is not constrained by the measures of damages in contract or tort. It has held that in the context of misleading and deceptive conduct the measure of damages is usually assessed as similar to the measure applied in tort.^[9]
71. In torts, damages are awarded with the object of placing the aggrieved party in the position in which they would have been had the tort not been committed.^[10]
72. The manufacturer did not make any submissions in relation to loss.
73. Mr Begovic claims his loss or damage is the purchasing of a vehicle with a much higher fuel consumption that he wanted. By using more fuel it must be more expensive to run. His unchallenged evidence was that he expected to use 8.5 l/100 km driving Extra Urban whereas he used 12.44 l/100 km. This is about 4 litres more every 100 km. He kept his 2008 vehicle for 9 years. No submissions were made, or evidence presented calculating the loss over the period Mr Begovic could be expected to have owned the vehicle.
74. Mr Begovic claims an entitlement to reject the goods and recover his purchase price. He is not seeking compensation.
75. The remedy available against the manufacturer for a contravention of the consumer guarantees contained in Part 3-2, Division 1 of the ACL is limited by s 271 to a claim for damages. The measure of those damages is specified in s. 272 of the ACL. An order for rejection of the goods cannot be made against the manufacturer.
76. Section 259 of the ACL provides for a consumer to take action against a supplier (the dealer) if there has been a failure to comply with the consumer guarantees.
77. Having found that the contravention of the guarantee in s 54 of the ACL amounts to a major failure based upon the reasonable consumer test, Mr Begovic is entitled to reject the vehicle.^[11]
78. Mr Begovic is also entitled to reject the vehicle because of a breach of the guarantee in s 55 of the ACL. I find that the vehicle departed in a material sense from the description of the vehicle’s qualities concerning fuel consumption given by the manufacturer on the label.^[12]
79. In these circumstances it is unnecessary to calculate the compensable loss under s 236 of the ACL due to misleading and deceptive conduct.
80. Mr Begovic raised issues with the fuel consumption almost immediately after purchase and repeatedly raised the issues until he issued proceedings in the Tribunal. For these reasons he is within time to reject the goods.
81. The Contract of Sale dated 3 January 2017 for the vehicle records the purchase price as $39,500. As part of the contract of sale, Mr Begovic’s 2008 Mitsubishi Triton was traded in.
82. Mr Begovic has had the use of the vehicle for about 2 years and 4 months.
83. Mr Begovic seeks an order that he reject the vehicle and recover the purchase price. He does not seek the return of his 2008 vehicle or any compensation for that vehicle or compensation for paying more for fuel.
84. I find that the trade in value of the 2008 vehicle and increased fuel costs is a fair exchange for Mr Begovic’s use of the vehicle since acquisition.
85. I find that Mr Begovic is entitled to reject the vehicle and obtain a refund of his purchase price from the dealer.
86. Although not expressly stated at the outset of the hearing, I understand there is likely to be an indemnity arrangement between the dealer and the manufacturer. If this is not the case, the dealer is not prevented by this decision from making a claim against the manufacturer.

^[1] The full text of the Australian Consumer Law (ACL) can be found in Schedule 2 of the Competition and Consumer Act 2010 (Cth)

^[2] Litres per 100 kilometres

^[3] Structured Query Language (SQL) is a standard computer language for relational database management and data manipulation. SQL is used to query, insert, update and modify data.

^[4] NEDC - New European Driving Cycle is a driving cycle designed to assess the emission levels of car engines and fuel economy in passenger cars.

^[5] Portable Emissions System measuring parts per million hydrocarbons

^[6] Coast Down method tests aerodynamic drag coefficient and the static rolling resistance coefficient for a vehicle

^[7] Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634; (2014) 317 ALR 73 at [40] per Allsop CJ.

^[8] [2015] FCA 753 at [34]- [38]

^[9] Gates v City Mutual Life Assurance Society Ltd (1986) 63 ALR 100

Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494

^[10] Ibid Gates at 47,366-7

^[11] See paragraph 59 above.

^[12] S260(b)