Legal development

You can't serve two masters: High Court says Australian Consumer Law gives way to specialised consumer protection legislation 

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    Mitsubishi Motors Australia Ltd v Begovic [2023] HCA 43

    What you need to know

    • The High Court of Australia has decided mandatory representations under specialised consumer protection legislation will generally not be misleading under section 18 of the Australian Consumer Law (ACL) — overturning the Victorian Court of Appeal's decision on the matter.
    • This case does not affect voluntary representations, which can still be misleading or deceptive.

    What you need to do

    • The High Court decision provides reassurance that complying with mandatory obligations will generally not expose businesses to a risk of misleading conduct claims, even if the mandatory obligations could lead a person into error, in circumstances where the business has complied with the requirements of the mandatory regime (in this case, conducting standardised fuel consumption testing).
    • The decision has implications for a range of businesses that must comply with specialised consumer regimes with mandatory requirements — for example, under energy and telecommunications legislation.
    • However, be careful: voluntary statements that go beyond the mandatory wording will not be protected, and context will continue to matter.

    Background

    In 2017, Mr Zelko Begovic purchased a new Mitsubishi motor vehicle from Northpark, a car dealer. There was a fuel consumption label on the vehicle's windscreen at the time of purchase. The Motor Vehicle Standards Act 1989 (Cth) (MVS Act) mandated that label, and dictated its wording and layout. The fuel consumption figures on the label were from a standardised test of a new vehicle of the same model purchased by Mr Begovic, and were accurate for that test vehicle (as required by the MVS Act). However, Mr Begovic had provided evidence to show that his particular vehicle did not meet the declared fuel consumption under other tests.

    Mr Begovic became dissatisfied with the vehicle's fuel consumption exceeding the figures on the label. He brought a claim (among others) that both Mitsubishi and Northpark had engaged in misleading or deceptive conduct under section 18 of the ACL.

    History of proceedings

    Mr Begovic succeeded in his claim before the Victorian Civil and Administrative Tribunal, and successfully defended appeals in the Supreme Court of Victoria, and the Victorian Court of Appeal.

    The Court of Appeal found that the label was misleading or deceptive because it misrepresented that the fuel consumption figures on it could be substantially replicated for Mr Begovic's specific vehicle (under standardised testing at the time of purchase).

    Relevantly, the Court of Appeal rejected the argument that the conduct of Mitsubishi and Northpark was mandated by law and could not be misleading or deceptive. While the law required them to affix the label to vehicles being offered for sale, it did not require them to offer vehicles for sale in the first place (especially where the representation in the label was misleading or deceptive).

    High Court decision

    Mitsubishi and Northpark successfully appealed to the High Court of Australia.

    In a unanimous judgment, the High Court applied its decision in R v Credit Tribunal; Ex parte General Motors Acceptance Corporation (1977) 137 CLR 545 (GMAC). GMAC concerned apparent inconsistency between the predecessor of section 18 of the ACL, and State legislation requiring an inaccurate notice to be given by a credit provider to consumers.

    Here, the High Court noted that GMAC reflects the following principle: where there appears to be conflict between statutory requirements regarding the same subject matter (here, consumer protection) and enacted by the same legislature, the general provision (here, section 18 of the ACL) may need to be subordinated to the specific provision (here, the fuel consumption labelling standard under the MVS Act) to alleviate the apparent conflict.

    The High Court found that the conduct of Mitsubishi and Northpark (ie applying and maintaining the fuel consumption label on Mr Begovic's vehicle) was not misleading or deceptive under the ACL because it was mandatory under the MVS Act.

    Relevantly, the High Court expressly rejected the argument that it would have been open for Mitsubishi to have chosen a different vehicle to test, or chosen to test more vehicles, or chosen to test every vehicle's fuel consumption and applied individualised fuel consumption labels to each vehicle tested, as that approach would not have been consistent with the scheme established by the MVS Act. Consequently, provided that Mitsubishi had complied with the regime under the statutory scheme, it could not now be held to have engaged in misleading conduct even if the representations made in accordance with the statutory scheme could otherwise be misleading.

    The MVS Act prohibited Mitsubishi from importing the vehicle, and supplying it to Northpark or any other person, without the fuel consumption label. Similarly, the MVS Act prohibited Northpark from supplying the vehicle to Mr Begovic without the fuel consumption label. It was irrelevant that Mitsubishi and Northpark had chosen to manufacture, import, and supply new Mitsubishi vehicles — arguably, no one is required by law to engage in trade or commerce.

    Implications

    The ACL can give way to specialised consumer protection legislation

    Compliance with consumer protection legislation (under the ACL) may require conduct that is potentially misleading or deceptive under the ACL. In these cases, considering the detail of the legislation is required to determine whether that legislation might take precedence over the ACL.

    More generally, if compliance obligations arise under a specific legislative scheme, but appear to be inconsistent with more general legislation on the same subject matter, it is important to consider how to resolve any inconsistency.

    Risks remain the same for voluntary representations

    For voluntary representations that are not mandated by legislation, the risk of being misleading or deceptive remains the same. As the High Court suggested, if Mitsubishi or Northpark had voluntarily misrepresented that the vehicle sold to Mr Begovic confirmed to the test vehicle that was used to the produce the label, they might well have been misleading or deceptive under the ACL.

    Measures to reduce risk (eg, disclaimers) should continue to be considered. If Mitsubishi and Northpark had been allowed to include their own disclaimer in the fuel consumption label, these proceedings might have taken a different course. As noted in a previous article, however, disclaimers cannot exclude liability for misleading or deceptive conduct: Contract Law Update – You can't exclude liability for misleading or deceptive conduct: Victorian Court of Appeal.

    The High Court case is Mitsubishi Motors Australia Ltd v Begovic [2023] HCA 43.

    Authors: Justin Jones, Partner; Amanda Tesvic, Counsel; and Oscar Han, Lawyer.

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