FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v BMW Australia Limited [2003] FCA 727

TRADE PRACTICES – Consumer protection – s61C of the Trade Practices Act 1974 (Cth) – compliance with prescribed product safety standard – wording of warning to be placed on vehicle jacks – whether warning is dangerous - meaning of “words to the same effect” – whether warning on BMW jacks are words to the same effect as mandated warning – whether a prescribed consumer product safety standard declared under s65E of the Trade Practices Act must objectively withstand the test that it be reasonably necessary to prevent or reduce risk of injury

Trade Practices Act 1974 (Cth) ss 65C, 65E, 80C, 87B

Acts Interpretation Act 1901 (Cth) ss15AA and 46

Australian/New ZealandStandard AS/NZS 2693: 1993 – Vehicle Jacks

In re Black Bolt and Nut Association’s Agreement (No 2) [1962] 1 WLR 75, referred to

CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384, applied

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, applied

Hamlyn v Norman Ross Stores Pty Ltd (1985) ATPR 40-514, followed

Trade Practices Commission v BMW Australia Ltd. (1985) ATPR 40-620, followed

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v BMW (AUSTRALIA) LTD (ACN 004 675 129)

V 746 OF 2002

MARSHALL J

MELBOURNE

16 JULY 2003

THE COURT DECLARES THAT:

1.         The Respondent, by supplying, during 2002, BMW 318i vehicles equipped with a vehicle jack and a vehicle owner manual, has in trade or commerce, supplied goods that were intended to be used, or were of a kind likely to be used, by a consumer and which did not comply with the prescribed consumer product safety standard relating to vehicle jacks, namely Australia and New Zealand Standard AS/NZS 2693:1993 Vehicle Jacks, contrary to section 65C(1)(a) of the Trade Practices Act 1974 (Cth).

THE COURT ORDERS THAT:

1.         On and from 6 August 2003 the Respondent by itself, its employees, agents and servants or otherwise howsoever, be restrained for a period of 3 years from 6 August 2003, from supplying:

a)         vehicles fitted with vehicle jacks that do not comply with the prescribed consumer product safety standard;

b)         vehicle jacks that do not comply with the prescribed consumer product safety standard; and

c)         vehicle jack instructions, in addition to the instructions marked on the vehicle jack itself, that do not comply with the prescribed consumer product safety standard.

2.         The Respondent appoint, within 3 calendar months of the date of this order, and retain for a period of 3 years, an independent external auditor with experience in trade practices law and approved by the Applicant to:

a)         audit the Respondent’s Compliance Program before 1 September 2003, and again before 1 September 2004, and again before 1 September 2005; and

b)         provide written reports to the Applicant and the Respondent in relation to each audit within 14 days of the completion of the audit.

3.         The Respondent conduct a recall, in accordance with the recall program detailed at Annexure “A”, of:

a)         BMW vehicle jacks; and

b)         Vehicle jack instructions, in addition to the instructions marked on the BMW vehicle jacks,

which do not comply with Australia/New Zealand Standard AS/NZS 2693:1993: Vehicle Jacks.

4.         The Respondent, at its own expense, cause to be published within 21 days in a major daily newspaper in each State and Territory, in which any BMW vehicle jack and vehicle jack instructions were supplied by the Respondent, a notice in the form of Annexure “C” hereto and further that the Respondent take all reasonable steps to ensure that each notice be:

a)         within the first 5 pages of the newspaper or magazine;

b)         of a size not less than three columns wide by 20cm deep;

c)         in text which is in a type not less than 12 point;

d)         in black text on a white background; and

e)         published again in the newspapers once per week over two further consecutive weeks.

5.         The Respondent, at its own expense, cause to be published within 21 days on its internet site located at url (universal resource locator) <<http:www.bmw.com>> (‘the BMW website’) a notice in the form of Annexure “C”, which will be:

a)         on the home page of the BMW website;

b)         of a size that occupies at least 20% of the home page and is not less than three columns wide by 20 cm deep;

c)         in text which is in a type not less than 12 point;

d)         in black text on a white background;

e)         placed on the BMW website; and

f)          maintained on the BMW website for a period of not less than 30 continuous days.

6.         The Respondent pay the Applicant’s costs of the proceeding, such costs to be agreed between the parties and paid within 28 days, or in default of agreement, to be taxed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Annexure “A”

RECALL PROGRAM

The Respondent (‘BMW’) will implement a recall program as follows:

1.         By 6 August 2003, BMW will take all reasonable steps to identify all owners of the BMW 318i, 2002 model, vehicle jacks or BMW 318i, 2002 model, vehicles fitted with a vehicle jack at the date of this Undertaking (‘the BMW jack owners’) including obtaining information available to it from State and Territory motor vehicle registries located in Australia.

2.         By 27 August 2003, BMW will send by registered mail to the BMW jack owners that it has identified pursuant to paragraph 1 above, a letter in the form of Annexure “B”.

3.         By 6 August 2003, BMW will, at its own expense, cause to be published:

3.1              in a major daily newspaper in each State and Territory in which any BMW vehicle jack and vehicle jack instructions were supplied by the respondent, a notice in the form of Annexure “C” hereto, which notice BMW will take all reasonable steps to ensure is:

(a)                    within the first 5 pages of the newspaper or magazine;

(b)                   of a size not less than three columns wide by 20cm deep;

(c)                    in text which is in a type not less than 12 point;

(d)                   in black text on a white background; and

(e)                    published again in the newspapers once per week over two further consecutive weeks.

3.2              on its internet site located at url (universal resource locator) <<http:www.bmw.com>>> (‘the BMW website’), a notice in the form of Annexure “C”, which notice will be:

(a)                    on the home page of the BMW website;

(b)                   of a size that occupies at least 20% of the home page and is not less than three columns wide by 20cm deep;

(c)                    in text which is in a type not less than 12 point;

(d)                   in black text on a white background;

(e)                    placed on the BMW website; and

(f)                     maintained on the BMW website for a period of not less than 30 continuous days.

4.         By 27 August 2003, BMW will issue a service bulletin to all of its authorised BMW dealers and service centres in Australia:

(a)                providing a copy of Annexures “B” and “C”;

(b)               setting out any steps the dealer and service centres may need to take to assist consumer; and

(c)                in a form agreed with the Australian Competition and Consumer Commission (‘ACCC’).

5.         By 27 August 2003 BMW will provide a written report to the ACCC, prepared by a suitably qualified compliance professional who is independent of BMW and has no conflict of interest or duty in providing audit services to it, detailing BMW’s adherence to paragraphs 1 to 3 of this Recall Program.

Annexure “B”

[to be typed on BMW’s letterhead]

Insert date

Insert name and address

Insert VIN, Rego, make & model

Dear insert name

WARNING – BMW VEHICLE JACK SAFETY RECALL

The Australian Competition and Consumer Commission (‘the ACCC’) recently brought proceedings in the Federal Court of Australia against BMW (Australia) Limited (‘BMW’).  BMW imported and supplied vehicle jacks with the BMW 318i, 2002 model, vehicle to dealers and consumers throughout Australia.

The Federal Court has found that the BMW 318i, 2002 model, vehicle jack and vehicle owner manual do not comply with the Australian and New Zealand safety standard (namely AS/NZS 2693:1993 – ‘Vehicle Jacks’), in breach of the Trade Practices Act 1974 (Cth).  The Federal Court has granted an injunction against BMW in relation to its vehicle jacks and owner manuals and made orders that BMW recall the offending vehicle jacks and manuals.

The offending vehicle jacks are not marked as follows:

“WARNING: DO NOT GET UNDER A VEHICLE THAT IS SUPPORTED ONLY BY A JACK: USE VEHICLE SUPPORT STANDS”.

The offending vehicle owner manuals contain vehicle jack instructions, which do not include the following direction:

“No person should place any portion of their body under a vehicle that is supported only by a jack; use vehicle support stands.”

Our records and enquiries indicate that you own a BMW vehicle that was supplied with an offending jack and owner manual.

As required by the Federal Court, BMW is conducting a product safety recall of vehicles supplied with offending jacks and owner manuals.  BMW wishes to ensure that the recall is conducted as efficiently and with as little inconvenience to you as possible.

Enclosed with this letter is new jack labelling and an insert for your vehicle’s owner manual, which will together ensure that your vehicle jack and the instructions in your owner manual comply with the vehicle jack safety standard.

You must either attach the jack labelling and add the insert to the owner manual yourself, following the enclosed instructions, or contact your nearest BMW dealer to arrange for a mutually convenient time for them to do so for you.  Enclosed with this letter is a current list of all BMW Dealers and authorised Service Centres within Australia.  For the safety of any person using the vehicle jack, it is important that the labelling is affixed and insert added as soon as possible.

We apologise for any inconvenience but assure you of our best efforts to maintain your driving pleasure and satisfaction with BMW vehicles.  If you have any questions relating to this recall please do not hesitate to contact your nearest BMW Dealership or Service Centre.

The ACCC is responsible for the administration of the Trade Practices Act 1974 (Cth).  This includes the enforcement of compulsory consumer product safety standards (such as the vehicle jack safety standard) that have been declared under the Act.  For further information on the role and functions of the ACCC, visit its web at ­http://www.accc.gov.au.

Yours sincerely

Annexure “C”

The Australian Competition and Consumer Commission (“the ACCC”) recently brought proceedings in the Federal Court of Australia against BMW (Australia) Limited (“BMW”).

BMW imported and supplied vehicle jacks and vehicle owner manuals providing instructions in the use of vehicle jacks with the BMW 318i, 2002 model, vehicles to dealer and consumers throughout Australia.

The Federal Court has found that the BMW 318i, 2002 model, vehicle jack and the instructions in the use of vehicle jacks provided in the vehicle owner manuals do not comply with the Australian and New Zealand safety standard (namely AS/NZS 2693:1993 – ‘Vehicle Jacks’), in breach of the Trade Practices Act 1974 (Cth).  The offending vehicle jacks are not marked as follows: “WARNING: DO NOT GET UNDER A VEHICLE THAT IS SUPPORTED ONLY BY A JACK: USE VEHICLE SUPPORT STANDS”.  The offending vehicle owner manuals contain vehicle jack instructions which do not include the following direction:  No person should place any portion of their body under a vehicle that is supported only by a jack; use vehicle support stands.”  The Federal Court has granted an injunction against BMW in relation to its vehicle jacks and owner manuals and made orders that BMW recall the offending vehicle jacks and owner manuals.

If you have purchased a BMW vehicle jack or a BMW 318i, 2002 model, vehicle fitted with a vehicle jack, please contact us and arrangements will be made to recall the offending vehicle jack and owner manual and provide appropriate replacements.

You can contact us at:

[insert contact details here]

Vehicle jacks supplied by BMW are intended by BMW to be used only for jacking a vehicle to enable the changing of wheels and tyres.  They are not intended by BMW to be used for jacking a vehicle for any other purpose whatsoever.  BMW discourages consumers from lying under or placing any part of their body under vehicles.  BMW recommends that if consumers need to get under a vehicle they first obtain specialist advice as to the equipment to be used and always ensure that the vehicle is supported by vehicle support stands complaint with Australian Standard for Support Stands (AS/NZS 2538:1995).

This corrective statement and recall notice has been placed pursuant toan order of the Federal Court of Australia.  It is a result of action taken by the ACCC against BMW for contravention of section 65C of the Trade Practices Act 1974 (Cth) and is paid for by BMW (Australia) Limited.

REASONS FOR JUDGMENT

1                     On 28 October 2002 the applicant, Australian Competition and Consumer Commission (“ACCC”), applied to the Court for declaratory, injunctive and ancillary relief against the respondent, BMW (Australia) Ltd (“BMW”).

2                     The principal issue for determination in the proceeding is whether BMW is in breach of s65C of the Trade Practices Act 1974 (Cth) (“the Act”) by supplying goods that are intended to be used by consumers, which do not comply with a prescribed product safety standard. The goods in question are the vehicle jacks supplied by BMW with vehicles manufactured by it.

3                     ACCC has alleged that the vehicle jacks supplied with BMW vehicles do not comply with Australian/New ZealandStandard AS/NZS 2693: 1993 – Vehicle Jacks (“the standard”), contrary to s65C(1)(a) of the Act.  The alleged breach of s65C(1)(a) relates to non-compliance with the standard in relation to wording of a warning required to be placed on vehicle jacks.

4                     ACCC has sought a declaration of contravention and an injunction prohibiting further breaches of s65C. ACCC has also sought ancillary relief for the appointment of an external auditor to audit BMW’s trade practices compliance program, a recall of the vehicle jacks and the placement of notices in newspapers and on BMW’s website.

Factual background

5                     The standard specifies requirements for the design construction, performance and labelling of jacks designed to raise vehicles.

6                     Under the heading “MARKING AND INSTRUCTIONS”, cl 7 of the standard provides, so far as is material:

“7.1     Jack marking. Jacks shall be permanently and legibly marked with the following information:

…

            (g)        A warning notice as follows, or words to the same effect:

'WARNING: DO NOT GET UNDER A VEHICLE THAT IS SUPPORTED ONLY BY A JACK: USE VEHICLE SUPPORT STANDS.'

…

7.3       Instructions. In addition to the instructions marked upon the jack in accordance with Clause 7.1(e), the following shall be supplied with the jack:

…

(b)        Safe usage instructions - recommendations for safe usage of the jack, including the following:

…

                       (iii)       No person should place any portion of their body under a vehicle that is supported only by a jack; use vehicle support stands.”

7                     The standard was prepared by the Joint Technical Committee CS/55 on Car Jacks and Trolley Jacks. It was approved on behalf of the Council of Standards Australia on 17 May 1993 and on behalf of the Council of Standards New Zealand on 23 May 1993. The standard was published on 16 August 1993.

8                     On 3 March 1997, the then Minister for Small Business and Consumer Affairs in the Commonwealth Government (“the Minister”) declared, pursuant to s65E(1) of the Act, that the standard was “a consumer product safety standard” for the purpose of s65C of the Act.

9                     On 19 March 1997, the standard was published in the Commonwealth Gazette at pages 664 and 665.

10                  BMW wrote to Standards Australia on 7 March 1995 expressing its concern regarding the warning in cl 7.1(g) and asked that it consider an amendment to omit the reference to vehicle support stands.  On 18 April 1995, the Standards Australia committee responded that after discussing the topic fully, it had decided the standard should remain as written.

11                  This proceeding followed an investigation conducted by ACCC of the BMW 318i, 2002 model (“the BMW 318i”), to assess user information and safety warnings. It was discovered that vehicle jacks supplied with the BMW 318i are permanently and legibly marked with the following wording:

“WARNING: DO NOT GET BODILY UNDER A VEHICLE THAT IS SUPPORTED BY A JACK!"

12                  This warning omits the words “ONLY” and “USE VEHICLE SUPPORT STANDS.”

13                  The BMW 318i vehicle owner’s manual contains the following information about the vehicle jack:

·        at p139, “(w)hen the car has been jacked up, do not lie under it or start the engine since either could lead to potentially fatal accidents”;

·        at p185, “(w)hen the car has been jacked up, do not get under it…since [this] could lead to potentially fatal accidents”.

The Vehicle

14                  The BMW 318i contains a specific vehicle jack in the boot of the car. There are four jacking points under the vehicle to be used with the specific vehicle jack. There are two points on each side of the vehicle, located behind the front wheels and in front of the rear wheels. There are no points on the vehicle designed for the use of vehicle support stands. The BMW 318i has independent suspension and does not have a solid axle to be used in conjunction with vehicle support stands.  Reinforced points under the vehicle, suitable for the use of support stands, can only be found by getting underneath the vehicle after raising it with a trolley jack or workshop hoist. There is a risk that injury will occur if the BMW specific vehicle jack is used to either place support stands under the vehicle or to investigate whether there are points underneath the vehicle for support stands.

15                  Like many other vehicle models, the BMW 318i does not come equipped with vehicle support stands. Maintenance on the vehicle is intended by BMW to be effected by skilled mechanics using hoists at workshops rather than by vehicle owners using support stands.

16                  The vehicle and the jack are designed so that a wheel can be replaced with a spare wheel without any part of a person’s body being placed under the vehicle.

The Correspondence

17                  ACCC and BMW engaged in extensive correspondence about whether the warning on the BMW 318i vehicle jack breached Pt V of the Act. On 28 August 2002, ACCC wrote to BMW drawing its intention to the standard. On 12 September 2002, BMW responded to ACCC’s letter stating that it did not believe that it was in breach of cl 7 of the standard.  It said that it would “replace existing labels with the exact form of words contained in cl 7.1(g)”. On the same day BMW’s solicitors wrote to ACCC. The solicitors expressed the view that its client was not in breach of the standard as the warning on the jack contained words “to the same effect” as the standard. The letter suggested a meeting be held to discuss the desirability of suggesting that consumers use vehicles support stands. On 17 September 2002, ACCC wrote to BMW's solicitors and, inter alia, informed them that it considered that:

·        BMW was in breach of the standard; and

·        an undertaking under s87B of the Act “was an appropriate means of resolving this matter”.

18                  By letter dated 20 September 2002, BMW’s solicitors sought clarification from ACCC about the content of a proposed undertaking. In a letter dated 25 September 2002, the solicitors stated that they did not believe a formal undertaking was appropriate as it:

“…would achieve no material end beyond that which our client has voluntarily agreed to achieve.”

19                  BMW’s solicitors said that their client voluntarily agreed, without admission of wrongdoing, to:

·        replace existing labels with the exact form of words contained in clause 7.1(g);

·        update the text of [BMW's] owners handbook to reflect the exact form of words contained in clause 7.3(b)(iii);

·        review and ensure that [BMW's] trade practices compliance programs complies with the ‘best practice’;

·        directly mail each current BMW owner, advising them of the terms of the Standard, and enclosing an updated safety label.

20                  By letter dated 10 October 2002, solicitors for ACCC wrote to BMW’s solicitors seeking a response to a series of questions about compliance with the standard. By letter dated 16 October 2002, BMW's solicitors responded by raising issues concerning the dangers which may be involved in changing the warning on the jack. The specific questions raised in the 10 October 2002 letter appear not to have been addressed. The solicitors and their clients did not resolve the issue of the necessity or otherwise for an undertaking to be given and this proceeding was issued.

BMW’s position – in outline

21                  BMW has contended that its existing warning complies with the Act. Its position is that its warning contains words “to the same effect” as those appearing in the standard.

22                  In the alternative, BMW's position is as follows:

·        it would be contrary to public safety and public policy to comply with the standard;

·        the standard is only valid to the extent that its requirements “are reasonably necessary to prevent or reduce the risk of injury to any person”;

·        the direction in the standard to use vehicle support stands, in the case of BMW vehicles, is not reasonably necessary to prevent or reduce the risk of injury;

·        the declaration of the Minister is ultra vires the Act and consequently invalid.

23                  BMW contended that the warning in the standard may give the wrong impression to consumers that the BMW specific vehicle jack could be used in conjunction with vehicle support stands to raise a vehicle. Compliance with the standard may lead, in BMW's view, to injuries to consumers as the BMW jack is only to be used to change a tyre and vehicle support stands are not capable of being used with a jack to raise a vehicle.

The ACCC response – in brief

24                  ACCC submitted that it was not for BMW to second guess the standard, but it was its duty to comply with it. It contended that the required warning includes advice to use vehicle support stands and that there was nothing to that effect in the wording adopted by BMW.  ACCC did not accept the argument that the wording of the warning in the standard was dangerous, but if BMW had such a concern, it asserted that BMW could issue a warning either on the jack or in the owners manual to the effect that the jack is not suitable for raising the car onto vehicle support stands.

The points in dispute

25                  In its written submissions, as confirmed orally by counsel, BMW contended that there were three issues before the Court in this proceeding. At [4] of these submissions, those issues were described as:

·        “the BMW warning on the jack complies with the standard because the warning notice is “to the same effect” as the words in 7.1(g);

·        alternatively, on the proper construction of Section 65C of the Act and the standard its purpose is to require only such warnings as are reasonably necessary to prevent or reduce risk of injury to any person. To hold that all of the words in 7.1(g) must be marked on the specific vehicle jacks and stated in the Owner’s Manual would defeat the purpose of Section 65C; and

·        alternatively, the standard warning is ambiguous and increases the risk of injury to the public and is to that extent beyond power.”

The reasons which follow examine those three points in the sequence they were dealt with in BMW’s written submissions.

Is the standard dangerous?

26                  BMW submitted that the standard may be confusing to motorists and may cause them to jack up their vehicles in order to place vehicle support stands under them or use the jack in conjunction with vehicle support stands.

27                  I accept that a person with no knowledge of vehicle support stands may conclude, on a literal reading of the warning, that vehicle support stands can be used in conjunction with a specific vehicle jack.  However, sufficient evidence has not been provided to the Court to establish that the activity feared, that is, people getting under a vehicle supported by a jack in conjunction with a vehicle support stand, actually results from the literal reading of the warning, or that the warning currently on the BMW jacks would be more successful in preventing injury. The evidence only demonstrated that it is dangerous to put vehicle support stands under a BMW 318i that has been raised by a specific vehicle jack and that it is dangerous to get under a vehicle supported by both a jack and a vehicle support stand.

28                  The “once size fits all” approach of the standard is arguably problematic for all vehicle models, not just BMW models. BMW, nonetheless, is obliged to place the warning on its jacks as required by the standard. While criticisms of the standard may be valid, BMW has not shown that any danger can be best remedied by the Court amending the warning to remove reference to vehicle support stands.  There was no conclusive evidence that the warning on BMW’s jacks would more effectively prevent people from getting under a vehicle and injuring themselves. Some people will not be satisfied that they must not get underneath their vehicle in any circumstances. It also remains possible that on reading BMW’s warning, people may still get under a BMW by using makeshift supports, other than the specific vehicle jack or vehicle support stands.

29                  The experts who wrote the standard, rather than the Court, better resolve issues of safety in relation to the use of vehicle jacks.  After a request from BMW to amend the warning in 1995, Standards Australia decided that the warning should remain as written.  It is not the role of the Court, without conclusive evidence that a warning is manifestly dangerous, to rewrite a warning when, in the opinion of Standards Australia Joint Technical Committee on Vehicle and Trolley jacks, the warning is appropriate.

30                  The Court has no power to review the standard.  If BMW considers that the standard creates a risk of danger it may lobby for it to be amended, or for the Minister to revoke the declaration made under s65E.  BMW should also understand that the standard sets minimum compliance requirements and that it is open to it to provide further information concerning the use of the jack or alternative methods of raising the vehicle for the purpose of maintenance. BMW may allay its concerns about the safety of its customers by writing to each of them and/or by inserting words in its owners manual to the following or like effect:

“The warning on the jack is mandated by s65C of the Trade Practices Act.  It is a general warning which may be misleading to some consumers.  Please note that the jack should not be used for any purpose other than wheel changing.  It should not be used in conjunction with a vehicle support stand to raise a vehicle.  Indeed, vehicle support stands should not be used to raise this vehicle.  The vehicle should only be raised by the use of hoists at the premises of an authorised BMW repairer.”

“To the same effect”

31                  BMW submitted that the warning on the jack complies with the standard because it is “to the same effect” as the words in cl 7.1(g) of the standard. Counsel acknowledged that the phrase “to the same effect” has not received judicial consideration. Counsel referred to In re Black Bolt and Nut Association’s Agreement (No 2) [1962] 1 WLR 75 at 85 where Lord Evershed said that the words “to like effect” meant “intended to operate in substantially the same way”.

32                  It is trite to observe that “to the same effect” is a different concept from “to like effect”. Words to the same effect as others, in my opinion, are words which although may differ from another set of words, produce the same result. For example, a product safety standard may require a warning to say that a product “must be kept out of the reach of children”. A warning which says that the product “must not be near or available to children” would convey words to the same effect as the words in the product safety standard warning. Here the standard mandates that, in addition to what BMW have written on their jacks, extra words appear, that is, “use vehicle support stands”. No words “to the same effect” are there in the warning on the BMW jack in lieu of the extra words required by the standard. I do not consider that the warning on the BMW jack contains words “to the same effect” as those in the standard.

33                  In its written submissions, BMW applied a purposive interpretation to argue that its warning was to the same effect.  Counsel for BMW submitted, and I agree, that the meaning of the words in an Act are first to be considered by reference to their context; see CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 and Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 - 382.  Counsel then submitted that pursuant to ss15AA and 46 of the Acts Interpretation Act 1901 (Cth), the standard should accordingly be interpreted in a manner consistent with the purpose and object of s65C, and Part V of the Act.  I do not believe the particular purposive approach argued by counsel for BMW is appropriate in this case for the reasons that follow.

34                  Counsel for BMW asserted the purpose and object of s65C is to prevent the supply of goods to consumers which pose a risk of injury to any person using the goods. I do not accept the characterisation of the purpose of the product safety provisions contended by counsel for BMW. I agree, with respect, with the observation of Wilcox J in Hamlyn v Norman Ross Stores Pty Ltd (1985) ATPR 40-514 at 46,162, where his Honour said:

“The policy behind Part V is that corporations engaged in trade and commerce bear the responsibility of compliance with the standards prescribed by or under that Part for consumer protection of which personal safety is perhaps the most fundamental matter.”

35                  The standard was not written as an instrument of the Act, but as a stand alone document, written by an organisation independent of government.  The intent and purpose of the writer of the standard was not determined by the Act.  As Spender J said in Trade Practices Commission v BMW Australia Ltd. (1985) ATPR 40-620 at 47,004:

“There was much discussion during the argument as to the proper approach to the construction of the Standard. It is not itself a legislative instrument. Rather it is picked up and applied by the relevant legislation here in question.”

36                  There may be circumstances where the purpose of the Act will be instructive as to the operation of the standard, or of other product standards.  BMW has argued that the words “to the same effect” should be interpreted to remove the reference to vehicle support stands from the warning. However, where the mandated warning is otherwise clear, it is not appropriate to amend the wording of the warning using a purposive interpretation of the Act and the standard, particularly when the mischief can be remedied in another way.  The people with experience and practical knowledge who write the standard are the most appropriate people to deal with issues of safety.  While criticisms of the standard, based on BMW’s interpretation, may arguably be valid, BMW has not shown that the apprehended risk of danger is best remedied by removing the reference to support stands in the standard.

37                  Counsel for BMW submitted that BMW’s interpretation of the standard must be favoured, as a purposive approach showed that the warning created an absurdity and was in conflict with the provisions of the Act. However, there was no conclusive evidence that the warning is manifestly dangerous. Also, although problematic, the wording of the mandated warning has been drafted with the purpose of protecting consumer’s personal safety and of preventing injury, which is consistent with the purpose of s65C, and of Part V of the Act.  It is arguable that when instructing a consumer not to get under a vehicle it is dangerous to leave a consumer without any information as to the proper instrument to be used in order to safely get under a vehicle.  There is no need to favour BMW’s interpretation of the warning based on the purpose and object of s65C of the Act, as there is no need to avoid an absurdity, capricious result or conflict, in the circumstances.

38                  It is no function of the Court to perform the role of Standards Australia and consider potential dangers of the words in the standard to determine if the standard is met. The role of the Court, for the purposes of the interpretation argument raised by BMW, is to examine the words on its jack to see if they contain words “to the same effect” as those in the standard. A comparison of the two sets of words reveals a disparity. Extra words are contained in the standard, which are not reflected in the warning on the BMW jack. I reject the contention that the warning on the BMW jack complies with standard.  In these circumstances an appropriate remedy, with the safety of all consumers in mind, would be to require a manufacturer, where necessary, to provide any further clarifying statement deemed necessary.  Arguably, this was the intention of the drafter of the standard when the words “or words to the same effect” were included.

The proper construction of ss65C and 65E

39                  Sections 65C and 65E of the Act are found in Div 1A of Pt V. Part V is concerned with consumer protection. Division 1A is entitled “Product safety and product information”.

40                  Section 65C, so far as is material, provides that:

“(1)     A corporation shall not, in trade or commerce, supply goods that are intended to be used, or are of a kind likely to be used, by a consumer if the goods are of a kind:

(a)   in respect of which there is a prescribed consumer product safety standard and which do not comply with that standard;

…

(2)       The regulations may, in respect of goods of a particular kind, prescribe a consumer product safety standard consisting of such requirements as to:

…

(c) the form and content of markings, warnings or instructions to accompany the goods;

                        as are reasonably necessary to prevent or reduce risk of injury to any person.”

41                  Section 65E provides as follows:

“(1)     The Minister may, by notice in writing published in the Gazette, declare that, in respect of goods of a kind specified in the notice, a particular standard, or a particular part of a standard, prepared or approved by Standards Australia International Limited or by a prescribed association or body, or such a standard or part of a standard with additions or variations specified in the notice, is a consumer product safety standard for the purposes of section 65C or a consumer product information standard for the purposes of section 65D.

(2)       Where a notice is so published, the standard, or the part of the standard, referred to in the notice, or the standard or part of a standard so referred to with additions or variations specified in the notice, as the case may be, shall be deemed to be a prescribed consumer product safety standard for the purposes of section 65C or a prescribed consumer product information standard for the purposes of section 65D, as the case may be.

(3)       Subsection (1) does not authorise the publication of a notice in relation to goods of a particular kind if the standard or the part of the standard referred to in the notice, or the standard or the part of the standard so referred to with additions and variations specified in the notice, is inconsistent with a standard prescribed in relation to goods of that kind by regulations made for the purposes of section 65C or 65D.”

42                  Counsel for BMW submitted that the object of s65E is to provide a mechanism for making prescribed consumer product standards for the purposes of s65C and that the purpose of s65C is as stipulated in s65C(2), that is, to prevent the supply of goods to consumers which pose a risk of injury to any person in using the goods.

43                  Focusing on the context in which s65E appears in the Act, counsel for BMW submitted that any standard declared under s65E is subject to s65C. Otherwise, they submitted, a two tier system of standards would be established. The first tier would comprise standards which are subject to s65C(2), where the standard is for the purpose of reducing the risk of injury to any person. The second tier would consist of prescribed standards under s65C(1) declared by notice under s65E, irrespective of whether the standard is reasonably necessary to prevent or reduce the risk of injury. It was contended that a legislature could not have intended such an absurd result.

44                  Section 65C(1) prohibits, inter alia, the supply of goods, in respect of which there is a prescribed consumer product safety standard, where these goods do not comply with the standard. Under s65C(2), regulations may be made prescribing a consumer product safety standard as to, inter alia, “warnings” as are reasonably necessary to prevent or reduce the risk of injury to any person. There was no evidence before the Court of the existence of any such regulations.

45                  Section 65E allows the Minister to declare that a particular standard is a consumer product safety standard for the purposes of s65C. However, it is not just any standard at the whim of the Minister. The standard must be “prepared or approved by Standards Australia International Limited or by a prescribed association or body.”

46                  The publication of a notice of a s65E declaration deems the standard to be one for the purposes of s65C.

47                  In my view, s65E(3) and the deeming provision made in s65E(2) make it clear that the declaration route under s65E is an alternative and distinct path to producing a consumer production standard capable of being enforced as a regulation to the Act under s65C(2). The Minister is not required, in making the s65E declaration, to form a view that the standard is reasonably necessary to prevent or reduce the risk of injury. Standards Australia International Limited or a like prescribed body would have already completed that task. It is important to note that the declaration under s65E is not made on the whim of the Minister but effectively upon expert advice. It is beside the point that the s65E declaration is immune from the legal challenge that may be made to a regulation made under s65C(2). The reality is that the imprimatur of a specialist standards body is the means by which the Minister acts to assume the necessity of the standard for the purpose of protecting consumers. Viewed in that context, the submission of BMW that a s65E declaration must objectively withstand the test provided for by regulations under s65C(2) is not a preferable construction.

48                  In my opinion, the Minister’s declaration under s65E has the effect of deeming a standard to be a prescribed consumer product safety standard for the purpose of s65C(1). BMW’s submissions on this aspect of its defence to the application are rejected.

Conclusion

49                  ACCC has made out its case that the BMW 318i vehicle specific jack does not comply with the standard.  BMW has not shown that the standard is invalid. The declaration under s65E having been made, and the standard being legally effective, it falls to BMW to comply with it. BMW has breached s65C(1) of the Act by failing to comply with the standard.

The Relief sought

50                  In the application, ACCC sought the following relief:

“1.      A declaration that the respondent, by supplying during 2002 BMW vehicles equipped with a vehicle jack and a vehicle owner manual, has in trade or commerce, supplied goods that were intended to be used, or were of a kind likely to be used, by a consumer and which did not comply with the prescribed consumer product safety standard relating to vehicle jacks, namely Australian/New Zealand Standard AS/NZ 2693:1993 – ‘Vehicle Jacks’, contrary to section 65C(1)(a) of the Trade Practices Act 1974 (Cth).

2.         A permanent injunction restraining the respondent, by its servants or agents or howsoever otherwise, from supplying:

a)      vehicles fitted with vehicle jacks that do not comply with the prescribed consumer product safety standard;

b)      vehicle jacks that do not comply with the prescribed consumer product safety standard; and

c)             vehicle jack instructions, in addition to the instructions marked on the vehicle jack itself, that do not comply with the prescribed consumer product safety standard.

3.         An order that the respondent appoint an agreed independent external auditor with experience in trade practices law to:

a)            audit the respondent’s Compliance Program annually for a period of 3 years; and

b)            provide written reports annually to the applicant and the respondent in relation to the audits.

4.         An order that the respondent conduct a recall in accordance with the recall program detailed at Annexure “A” of:

a)            BMW vehicle jacks; and

b)            vehicle jack instructions, in addition to the instructions marked on the BMW vehicle jacks,

which do not comply with Australian/New Zealand Standard AS/NZ 2693:1993.

5.         An order that the respondent will, at its own expense, cause to be published within 7 days in a major daily newspaper in each State and Territory in which any BMW vehicle jack and vehicle jack instructions were supplied by the respondent, a notice in the form of Annexure “C” hereto, and further that the respondent take all reasonable steps to ensure that each notice will be:

(a)      within the first 5 pages of the newspaper;

(b)      of a size not less than three columns wide by 20cm deep;

(c)      in text which is in a type not less than 12 point;

(d)      in black text on a white background; and

(e)      published again in the newspapers once per week over two further consecutive weeks.

6.         An order that the respondent will, at its own expense, cause to be published within 7 days on its internet site located at url (universal resource locator) <<http:www.bmw.com.au>> (‘the BMW website’) a notice in the form of Annexure “C”, which will be:

(a)      on the home page of the BMW website;

(b)      of a size that occupies at least 20% of the home page and is not less than three columns wide by 20cm deep;

(c)      in text which is in a type not less than 12 point;

(d)      in black text on a white background;

(e)      placed on the BMW website; and

(f)       maintained on the BMW website for a period of not less than 30 continuous days.

7.         A finding of fact, pursuant to s83 of the Trade Practices Act 1974 (Cth), that BMW in supplying the BMW vehicle jacks and BMW vehicle vehicle jack instructions has contravened section 65C of the Trade Practices Act 1974 (Cth).

8.         Costs.

9.         Such further or other relief as the Court deems fit.”

51                  A slightly varied form of relief was ultimately contended for by counsel for ACCC in final submissions.

Remedy

52                  Seeing that the BMW vehicle jack warning does not comply with a valid prescribed safety standard, it is appropriate to make the declaration sought in the application at para 1 together with the injunction sought at para 2. I also consider that the recall and publishing orders sought at paragraphs 4, 5 and 6 are appropriate.

53                  However, a real question arises whether BMW should be ordered to appoint an external auditor to audit its compliance program. I have no doubt that at all times BMW acted in what it believed was in the best interests of its consumers. It resisted the ACCC’s attempt to compel it to place extra words on the jack warning in circumstances where it considered that those extra words were inappropriate and could potentially lead to injury. The words are arguably problematic because vehicle support stands cannot be used in conjunction with the BMW specific vehicle jack. The words were, on one view, capable of being read by persons who would attempt to use the jack to raise the vehicle in an effort to insert vehicle support stands under it. It is possible that, under that scenario, an injury might occur. I perceived BMW to have a genuine concern for the safety of its customers in the way it pursued its defence of the proceeding in the Court.  However, I have formed the view that BMW should be ordered to appoint an external auditor to audit its compliance program for the following reasons:

·                    there is no reference in BMW’s 1997 version of its Trade Practices Compliance    program of the need to comply with s65C of the Act; and

·                    the upgraded program was not tendered in the hearing.

54                  Section 86C provides legislative authority for an order to be made for an external audit. There is no need to plead reliance on s86C of the Act in the Statement of Claim, it is sufficient that the claimed relief is identified in the Application.

55                  BMW submitted that no costs order sought be made against it. I disagree. I consider that no reason has been demonstrated why costs should not follow the event. In my view, the relief sought by ACCC is necessary and appropriate to militate against further breaches of the Act.

Associate:

Dated:              16 July 2003