FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Mazda Australia Pty Ltd [2021] FCA 1493

ORDERS

THE COURT ORDERS THAT:

1.    On or before 14 December 2021, the parties are to confer and submit to the Court a joint proposal, or if they are unable to agree, separate proposals for the further conduct of this proceeding, including the determination of the questions of remedies, the costs of the proceeding, and any other orders to give effect to these reasons.

2.    A case management hearing be fixed on a date convenient to the parties.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

O’CALLAGHAN J:

INTRODUCTION

1    The respondent, Mazda Australia Pty Ltd (Mazda), is an Australian corporation wholly owned by Mazda Motor Corporation (Mazda Corp), a Japanese corporation which manufactures motor vehicles.

2    Mazda Corp supplies motor vehicles to Mazda pursuant to an agreement between the two corporations. In turn, Mazda supplies those vehicles to dealers throughout Australia.

3    Mazda does not have any retail facilities and, other than to a minimal extent, does not engage in the retail sale or supply of vehicles to end consumers. Mazda appoints dealers to sell, service, and repair Mazda vehicles, and to supply Mazda parts, pursuant to individual dealer agreements. Dealers engage in the retail sale of Mazda vehicles, and the repair and sale of parts, to consumers in Australia.

4    The Australian Competition and Consumer Commission (the ACCC, or the applicant) seeks declarations that between 2015 and 2019, Mazda, in respect of nine identified consumers who owned seven vehicles:

(1)    engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of s 18 of the Australian Consumer Law (ACL) (Schedule 2 to the Competition and Consumer Act 2010 (Cth));

(2)    made false or misleading representations concerning the existence, exclusion or effect of the consumer guarantees under Part 3-2 of the ACL, and the rights or remedies available under Part 5-4 of the ACL, in contravention of s 29(1)(m) of the ACL; and

(3)    engaged in conduct that was unconscionable, in contravention of s 21 of the ACL.

5    The ACCC’s amended concise statement alleged, and Mazda in its concise response denied, that Mazda made the following representations to those consumers:

(1)    certain faults with Mazda vehicles owned by the consumers were not “major failures” under the consumer guarantee provisions of the ACL;

(2)    the consumers were not entitled to a refund or replacement vehicle at no cost to them under the consumer guarantee provisions of the ACL;

(3)    the consumers did not have any ability under the ACL to seek to obtain a refund or replacement vehicle, because Mazda was entitled to repair the vehicles regardless of the number of attempts made to repair the faults, the time it took to repair the faults, the consumers’ rejection of the vehicles and requests for a refund or replacement vehicle, and/or Mazda’s obligation under the ACL to repair the vehicle;

(4)    Mazda was not required to provide a refund or replacement vehicle at no cost to the consumers because of the age and/or mileage of the vehicles; and/or

(5)    a major failure within the meaning of the consumer guarantee provisions of the ACL in respect of a motor vehicle is limited to a failure of a major component of the vehicle.

6    The ACCC’s amended concise statement further alleged, and Mazda denied, that each of those representations was false or misleading because:

(1)    the faults with the vehicles were major failures for the purposes of s 260 of the ACL, or the faults were otherwise failures to comply with the consumer guarantees that the consumers required to be remedied and that Mazda had not remedied (either at all or within a reasonable time) for the purposes of s 259(2) of the ACL, and the consumers were entitled to refunds or replacement vehicles at no cost pursuant to s 263(4) of the ACL in accordance with their requests;

(2)    the representations incorrectly represented the position under the ACL in that:

(a)    the consumers did have an ability under s 263(4) of the ACL to seek to obtain a refund or replacement vehicle;

(b)    the right to a refund or replacement vehicle under s 263(4) was not confined by the age and/or mileage of the vehicle; and

(c)    a major failure within the meaning of s 260 of the ACL in respect of motor vehicles was not limited to a failure of a major component of the vehicle;

and/or

(3)    at the time the representations were made, Mazda had not given any proper consideration to whether the consumers were entitled to refunds or replacement vehicles at no cost pursuant to the ACL; and in circumstances where the representations impliedly conveyed that Mazda had reasonable grounds for making the statements, Mazda did not have reasonable grounds for making the representations.

7    The allegation that Mazda made the representations that certain faults with Mazda vehicles owned by the consumers were not “major failures” to comply with a consumer guarantee was narrowed during the course of the hearing. The ACCC’s case did not involve seeking to prove that the relevant vehicles in fact suffered major failures within the meaning of the ACL. Rather, its case was that Mazda misrepresented the position as to the consumers’ legal rights because Mazda’s customer representatives expressed an opinion that there was no major failure, in circumstances where they could have had no basis for holding such an opinion, because Mazda had not considered whether or not the issues complained of were, in fact, major failures. The ACCC submitted such statements about the exercise of rights were misleading or deceptive because the opinion was not genuinely held and there was no reasonable basis for it, citing Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 88; and Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 at [598].

8    At some points in the ACCC’s written submissions with respect to the statements made by Mazda’s representatives that were said to constitute misleading or deceptive representations, reference is made to “the Consumers” not being entitled to a refund or replacement vehicle and not having any ability under the ACL to seek a refund or replacement vehicle. These references are not to be understood as references to consumers generally, because the case was not put that way.

9    The ACCC’s unconscionable conduct case was not a “system” or “pattern” case. It was, rather, a case directed at Mazda’s conduct concerning the nine individual consumers the subject of the proceeding. That conduct, it was alleged, must be considered in light of Mazda’s institutional practices, including “internal compliance documentation, process and culture”. This was said to be relevant when examining what were alleged to be the common features of Mazda’s conduct in relation to each of the consumers. Those common features may be summarised as follows:

(1)    Mazda did not give any, or any proper or genuine, consideration to the consumers’ entitlement under the ACL to a refund or replacement vehicle, and failed to comply with its own internal policies and procedures in dealing with the consumers’ requests for refunds or replacement vehicles in accordance with the ACL;

(2)    Mazda, by its customer advocates, made false or misleading statements to the consumers in contravention of ss 18 and 29(1)(m) of the ACL;

(3)    Mazda customer advocates made further false or misleading statements to the consumers, in particular, telling them on a number of occasions that their request had been escalated to “senior management” or “legal”, when the evidence demonstrated that no such escalation had occurred;

(4)    Mazda did not give any proper or genuine consideration to the consumers’ expressed safety concerns arising from the faults with their vehicles;

(5)    Mazda was in a dominant bargaining position in relation to the consumers’ requests, and engaged in unfair, unjustified, and unreasonable dealings with the consumers, and placed unfair commercial pressure on them to accept offers rather than pursue their requests (including by summarily rejecting requests without consideration on the merits; seeking to dissuade consumers from continuing with their requests, often in favour of repair, free services or extended warranty; and treating their requests as if they were a matter of commercial negotiation); and

(6)    the sum of Mazda’s conduct led to long, drawn-out discussions between the consumers and Mazda customer advocates, often numerous times per day over months, and this frustrated the consumers and their requests.

10    The ACCC submitted that Mazda’s conduct was clearly beyond conscience in all the circumstances of each case. It was “irreconcilable with what is right or reasonable”, and it involved “unfairness of a significant order, a lack of good faith, or the exercise of economic power in a way worthy of criticism”, a “sufficient departure from the norms of acceptable commercial behaviour as to be against conscience or to offend conscience”, and “misrepresentation, commercial … pressure and sharp practice, using a superior bargaining position”, as those expressions are used in the cases (to which reference will be made below).

11    There were four main areas in respect of both the misrepresentation and unconscionability cases where the characterisation of the facts (and thus the outcome of the case) was disputed, namely whether or not:

(1)    Mazda gave any proper or genuine consideration to whether the individual consumers were entitled to a refund or replacement car;

(2)    Mazda made the representations alleged;

(3)    to the extent that representations were in the nature of opinions, there was a reasonable basis for making them; and

(4)    taken as a whole, and in all the circumstances, Mazda’s conduct was unconscionable.

12    Mazda rejected the ACCC’s characterisation of any of the alleged conduct. It contended, among other things, that both elements of the case against it “rely upon selective use of facts and words divorced from a fuller consideration of the circumstances in which they occurred” and that other “significant factual, temporal and legal dimensions … must be taken into account”. In its synopsis of its position in written closing submissions, Mazda submitted that such circumstances or “dimensions” included the following:

(1)    Mazda was not obliged to become involved in the process of assisting consumers whose vehicles had reported problems. That obligation was on the dealer. However, Mazda became involved in order to assist consumers and to give certainty to dealers.

(2)    Once Mazda became involved, only part of its involvement related to the entitlement of the consumer under the ACL. That involvement was also aimed at providing assistance under Mazda’s warranties and providing good consumer service by offering solutions which dealt with the reason the consumer was approaching Mazda.

(3)    The consumers did not approach Mazda for legal advice. They approached Mazda looking for an agreed solution to their reported problem. Mazda responded to their concerns by offering solutions in the form of paying for the investigation of the cause of the reported problem, paying for the repair of the vehicles, providing loan cars and other forms of compensation and, in two cases, either giving the replacement or the refund sought.

(4)    Ultimately, the ACCC’s case about Mazda’s conduct reduced to a complaint that Mazda did not sufficiently separate its consideration of ACL issues from other legitimate considerations. More specifically, the ACCC’s case was effectively that Mazda failed to document that “multifactorial” consideration to the extent that the ACCC said should have occurred. However, even if true, that did not constitute unconscionable conduct.

(5)    The fact that Mazda did not always give the consumers precisely what they were seeking was not unconscionable conduct. It was a reflection of the fact that the information before Mazda did not require the conclusion that it was obliged to provide a refund or replacement vehicle, based on its multifactorial approach to meeting the consumers’ concerns.

(6)    In the context of the claim for unconscionable conduct, Mazda was entitled to deny a consumer’s asserted ACL entitlement unless and until the only response conscionably open to it was to accept it.

13    Most of the “circumstances” and “dimensions” that Mazda attempted to employ by way of defence were, it seems to me, ultimately beside the point. By way of example, the ACCC did not contend that Mazda was “obliged to become involved in the process of assisting customers”. Its case was that once it did become involved, it rendered itself liable for any false or misleading conduct of its employees, or to a finding that it (or they) engaged in unconscionable conduct, despite the fact that it was not a “supplier” of the vehicles. Likewise, the fact that Mazda was endeavouring to provide “good consumer service” goes nowhere to meet the misleading or deceptive conduct case put against it. And as to the assertion that the consumers did not ask Mazda for legal advice, there was (unsurprisingly) never a contention put by the ACCC that the consumers ever did.

14    Mazda also contended, in summary, that the representations alleged were not capable of being conveyed by the express words relied on, and that the ACCC’s case “depends on an artificial and detached reading of what was said and the context in which it was said to alter meaning” and that it fails on the facts.

15    Mazda submitted that:

(1)    The ACCC’s allegation that Mazda did not honestly hold, and could not reasonably form, an opinion that a consumer was not entitled to a replacement or refund unless it had undertaken a detailed review of the facts and the ACL “inverts the analysis”. The correct question “is whether the relevant consumer had, at the relevant point in time, demonstrated that there had been a major failure and they were entitled to a replacement or refund. If that had not been demonstrated then, given the onus of proof, Mazda’s opinion must have been honestly and reasonably held (at least unless and until there was an objective basis to conclude otherwise)”.

(2)    The ACCC “propounds a multitude of permutations and combinations of different representations said to be implied from a handful of words”.

(3)    The context in which those words were used is important. As an example, Mazda referred to the ACCC’s allegation “that an offer of something less than a full replacement or refund conveys a representation that the consumer was not entitled to a replacement or refund”. Mazda’s case was that no such representation was conveyed by such an offer. It submitted:

If the evidence shows that the supplier is not required to conclusively determine that the only conscionable course available to it is to conclude that there has been a major failure then the supplier is entirely justified in making an offer less than a full refund or replacement but which deals with the consumer’s stated concerns. This … does not carry a representation that the consumer is not entitled to the remedy. They may be. Equally, they may not be.

(4)    The fact that a representation is conveyed as a matter of opinion “does not necessarily carry the implication that the opinion was held … or that the opinion was reasonably held … It depends on the context. The context in this case did not involve those implications and, in particular, did not carry any implication that the opinion was based on reasonable grounds”.

(5)    Any opinions conveyed by the representations were reasonably held and “[t]here is no evidence that Mazda had no legitimate option other than to conclude that there had been a major failure. It does not matter whether the information available to Mazda at the time was sufficient. If the evidence discloses a conscionable basis (whether known to Mazda at the time or not) for refusal of relief (including that insufficient evidence is available to conclusively determine that the relief sought must be provided), that is enough”.

16    As to the unconscionable conduct claim, Mazda submitted that the ACCC’s case “ignores the totality of Mazda’s conduct”, including the other support and assistance Mazda gave to the consumers without the consumer proving a legal entitlement to that support or being troubled to do so. It also submitted that the conduct alleged did not, in any event, meet the significant hurdle required to demonstrate that conduct was unconscionable, including among other reasons because:

(1)    there was no allegation of bad faith, and no basis for concluding bad faith in the sense of an act or omission intended to preclude exercise of an established, accrued or potential statutory right;

(2)    any claim based on systems or patterns was disavowed;

(3)    when properly analysed, there was no evidence that the impugned conduct had serious consequences for the consumers;

(4)    the “round table” and “executive panel” processes which made decisions on customers’ requests for a refund or a replacement vehicle “were an authentic attempt to ensure a properly informed and rational decision was made in response to an unsubstantiated assertion of a statutory right”;

(5)    it was not fair or accurate to say that Mazda did not take consumers’ safety concerns seriously; and

(6)    Mazda was not relevantly in a dominant bargaining position.

17    I should, at this point of the introduction, mention another matter that Mazda raised in its written submissions, viz the contention that “an important matter to be confronted at the outset” was that “[t]he ACCC’s case in its closing submissions is not the case that Mazda was on notice of having to meet as set out in the amended concise statement … dated 14 December 2020”.

18    There was, however, not the slightest mention made of this contention, or any of the reasons advanced in support of it, in Mazda’s closing oral address.

19    I am entitled to infer therefore that it intended not to press the matter.

20    But in any event, to the extent that the ACCC’s case involved additional clarification or refinement of the case set out in its amended concise statement, those changes were flagged in opening. By way of example, Mazda’s written closing submission at [15] complained that “[o]n the misrepresentation case, the ACCC now alleges that the first two representations above were statements of opinion relating to the specific vehicles, rather than statements of fact, and Mazda did not hold the opinions and did not have reasonable grounds for them”. But that case was put unambiguously in opening, at [64] of the ACCC’s outline of opening submissions, as follows: “[t]he representations made by Mazda as to the [c]onsumers’ rights as to the faults with the [v]ehicles should be characterised as statements of opinion which carried an implied representation that Mazda had a basis for them and reasonable grounds for them”.

21    It is important to bear in mind that concise statements perform a different role to pleadings. It is permissible, for example, for an applicant to refine its concise case in opening. See Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2021] FCAFC 121; (2021) 153 ACSR 522 at 548 [144] (McKerracher and Colvin JJ). And as their Honours also said at [149], “what [a] party cannot do is save up its complaint that the case is stated too broadly until the conduct of the final hearing and then maintain that no detailed case can be run because no such case has been disclosed”, because “[t]o do so is to treat the concise statement as having the same character as a pleading which it is not”.

22    In my view, the amended concise statement and the ACCC’s opening submissions, both written and oral, provided a fair disclosure of the case it advanced in respect of both claims. For those reasons, even if I am wrong in the view that the “important matter” referred to in Mazda’s written closing was not pressed (because it was not mentioned in closing address), I would reject the submission on its merits.

MAZDA’S ROLE

Mazda’s role with consumers

23    When faults with the vehicles occurred, the consumers took their vehicles to authorised Mazda dealers who, often in consultation with Mazda, attempted to repair the faults. Although representatives of the dealers engaged with the consumers in relation to the faults and repairs, Mazda chose to deal with the consumers, principally via customer service representatives (or “customer advocates”). The consumers were often told to approach Mazda by the dealers. Mazda says it was under no legal obligation to become involved in any communications with the consumers, but it did so “in an effort to improve the outcome for [them]”.

24    All customer contact with Mazda (including consumer complaints) was managed by Mazda’s National Customer Support (NCS) department. The department was divided into teams which focused on different areas of complaint. The intention was that they worked collaboratively to provide an outcome.

25    The Mazda call centre operated out of Melbourne. It handled all complaints and enquiries of a technical or operational nature made directly by owners of Mazda vehicles to Mazda. Such owners were, in almost all cases, customers of Mazda dealers. Complaints and enquiries were received by the call centre either by telephone, email, or letters. Telephone calls were generally recorded if made to the customer support lines (a 1800 number) and were retained by Mazda for quality control purposes. Where complaints and enquiries were made through the Mazda website via the “Contact Us” page, they were directed to relevant staff within the call centre team. If there was an existing record of an enquiry or complaint in Mazda’s contact management system, called Maestro, the complaint or enquiry was entered into that record for review by the assigned customer advocate.

Mazda’s role with its dealers

26    The dealers were the “suppliers” of the vehicles for the purposes of Division 1 of Part 5-4 of the ACL, set out below. Mazda was the deemed manufacturer within the meaning of s 7 of the ACL. Although, as I said earlier, it had no obligation to provide a refund or replacement vehicle under the ACL, it took on the responsibility for dealing with the consumers’ requests. It did so mainly because, as a rule, Mazda bore the full cost associated with any refund or the provision of a new vehicle.

27    The dealers, from time to time, “escalated” vehicle faults to Mazda. They were required to escalate “ACL” classified repairs and faults that could not be resolved “within the first 4 steps of Mazda’s Technical Protocol”. Repairs were classified as “ACL” prior to 2016. That terminology was replaced with “Priority Vehicle Repairs” in or about 2016.

28    Pursuant to Mazda’s Service Standards (see [39] below), any technical and customer handling concerns needed to be rectified by carrying out corrective measures jointly with Mazda and by sharing information among all personnel involved.

29    Dealers were required to submit a Prior Authorisation Request (PAR) for faults in respect of which the dealer considered that Mazda had an obligation.

30    Mazda would also, from time to time, seek information from Mazda Corp in respect of some vehicle faults.

31    Mazda also operated a “Dealer Support Team”, which comprised Technical Services and Dealer Operations teams. The technical support which Mazda provided to dealers included:

(1)    conducting training on some Mazda specific systems and repair procedures;

(2)    issuing technical bulletins, as required, which dealt with specific issues with Mazda vehicles and procedures that dealers should follow to repair “Complete Built Unit” vehicles that presented with these issues;

(3)    establishing a technical protocol setting out the procedure to be followed by dealers when making technical enquiries of Mazda;

(4)    providing a technical and warranty “help desk” for dealers to contact with technical or warranty enquiries regarding Mazda products, and responding to technical reports provided by dealers in respect of specific issues with Mazda vehicles; and

(5)    providing Field Technical Specialists (FTS), whose role was to provide advisory support to dealers in relation to vehicle and customer enquiries.

32    Mazda also relied on written policies, including those contained in the following documents:

(1)    Summary Guidelines for Responding to Consumer Warranty Questions from July 2015 (Summary Guidelines);

(2)    Post Major Repair / ACL Form, renamed Priority Vehicle Repair Form in February 2016, and discontinued in May 2017;

(3)    Warranty Bulletins;

(4)    Post Warranty Support Criteria;

(5)    Knowledge Articles (offering training to the NCS);

(6)    Compliance Training Materials;

(7)    Mazda Service Standards;

(8)    CCA Compliance Manual;

(9)    Mazda Australia Buy Back Process; and

(10)    Refund Process.

33    Mazda had the following technical documents which it provided to, and intended to be relied upon by, dealers and Mazda personnel to diagnose the cause of faults and undertake repairs:

(1)    technical bulletins;

(2)    diagnostic protocols; and

(3)    Mazda’s Technical Protocol.

34    The ACCC relied on a number of Mazda’s internal compliance documents in aid of its unconscionable conduct case, including the contention that departure from the relevant terms of training documents and the like was unconscionable.

35    Mazda’s Diagnostics Training Slides (Diagnostics 2) were created by Mazda’s Technical Training team in 2008, and were last updated in 2018. Their principal purpose was to assist in delivering a two-day technical training course to Mazda dealer technicians, and also to make dealer technicians aware of the ACL, particularly when diagnosing, repairing and servicing customer vehicles.

36    Slide 28 of the Diagnostics 2 presentation was entitled “Mazda’s New VEHICLE WARRANTY” and read:

–    Important message from Mazda (First page in the new Warranty Booklet)

–    Our goods come with guarantees that cannot be excluded under the Australian Consumer Law (ACL). You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage

–    You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure.

37    Slide 29 was entitled “Determining ACL cases” and read:

–    What may constitute a Major Failure?

–    Concern that will make the vehicle undriveable & not quickly/easily repaired

–    Concern that is safety related, even if driveable

–    Concern that is expensive to repair

–    Concern requiring replacement of major component (engine, trans, diff)

–    Major refinishing of body work

–    New vehicle sale after Jan 1st 2011

38    The Diagnostics 2 slides were provided to the court in their native PowerPoint format, including speaking notes. The speaking notes to slide 29 relevantly read: “not quickly / easily repaired – any longer than 5 working days”.

39    Mazda’s Service Standards dated October 2017, which were intended to assist dealers in their dealings with consumers, contained references to “ACL”. The Service Standards included a section entitled “ACL Service Guidelines”, which provided information on the process required by dealers and Mazda for “ACL” classified vehicle repairs. The Guidelines included a flowchart with a list of relevant (ACL) “Vehicle Repairs”:

•    Operational failures caused by major assemblies such as engines, transmissions, differential, etc.

•    Repeated occurrences of the same failure after the first repair

•    Safety [r]elated concerns

•    Concerns that make the vehicle not drivable; not quickly & easily repaired in a reasonable time, say, 5 working days

40    Mr Michael Robins, Mazda’s General Counsel, agreed in cross-examination that ACL classified repairs were a “red flag” to consumers having a right to a refund or replacement vehicle under the ACL.

41    Mazda’s July 2015 Summary Guidelines gave practical tips to NCS staff as part of their training. They were prepared for Mazda in consultation with Bird & Bird, introduced to the business by Mr Robins, and used between 2017 and 2019. Under the heading “Purpose of these guidelines” the following was included:

Many customer warranty claims and questions can be dealt with easily under the terms of our factory warranties. However, in addition to those factory warranties customers also have rights under the consumer guarantees contained in the Australian Consumer Law. Those rights can extend for longer, and give greater rights to refunds and replacements, than exist under our factory warranties. Failure to honour those consumer guarantees and/or misleading a consumer about their rights under those consumer guarantees is a breach of the law. The purpose of this summary is to assist you to know when a customer has rights under the consumer guarantees and how to respond to customer queries when those rights may be involved.

42    Mr Robins also agreed in cross-examination that one purpose was to ensure that Mazda staff understood the rights of consumers under the ACL, including consumers’ rights to a refund or replacement vehicle.

43    The Summary Guidelines included a section on “Simple rules to avoid breaching the law”, which included the following:

•    Never tell a customer that they do not have any rights or aren’t entitled a remedy because the factory warranty period has expired. Remember – the consumer guarantees do not have clear time limitations, and last for a “reasonable period”. What is a “reasonable period” may differ depending on the component which is defective. For example, a “reasonable period” for windscreen wiper blades will be much less than the “reasonable period” that applies to a transmission.

•    Never tell a customer that they do not have any rights or aren’t entitled to a remedy because they did not purchase or have not been given an extended warranty. Remember - they may still be entitled to a refund, repair or replacement under the consumer guarantees.

•    Never tell a customer the time period for a consumer guarantee has expired - if you suspect that the vehicle is so old that the “reasonable period” for the consumer guarantees has expired, please check with Legal before you advise the customer.

•    Do not tell customers that they will only be entitled to a refund or replacement if they have had the vehicle repaired first. A customer will have the right to insist on a refund or a replacement where the vehicle is a “major defect”.

…

•    Do not tell customers that you [are] providing them with a remedy as “a gesture of good will”, “as a favour” or “just this once”. Remember - the consumer guarantees are mandatory, it is not a choice to comply with them.

•    If in doubt, always seek assistance from Legal - the application of consumer guarantees can often involve difficult judgments and Legal can help.

44    The Summary Guidelines also contained a section on “Questions to ask”, which included the following:

To help determine whether a customer has a right under a consumer guarantee, ask:

•    “What is the factory warranty or extended warranty applying to the vehicle” – use this information to first determine what Mazda can do under these warranties, but remember that this will only give you part of the answer. You must consider whether the consumer guarantees apply.

•    “What is the problem with the vehicle?” – use this information to determine the nature of the defect and whether the defect is major or minor. A major defect is one where the vehicle is unsafe or a reasonable person would not have purchased the vehicle had they known about the fault, or a fault which cannot be repaired. For example, a fault requiring replacement of the engine would be a major defect. There are many shades of grey in between.

•    “How did this problem occur” – this will assist you in determining whether or not the cause of the problem is due to a manufacturing default (which is covered by the consumer guarantee), or otherwise. For example, engine seizure due to the customer’s failure to have the vehicle serviced and the oil replaced may not be covered but the same engine failure occurring where the customer has ensured that the oil levels are appropriate would be covered.

•    “When did the customer purchase the vehicle?” – this will help you determine whether a reasonable time has passed for the fault to become apparent.

…

•    “Has the vehicle been repaired previously?” – a history of repeated repairs to the same part, or repairs to multiple parts may indicate that there is a major defect.

•    “What is the customer asking for?” – remember that in the event of a major defect only, it is the customer’s choice of repair, replacement or refund.

45    Mr Robins also accepted that Mazda should not act inconsistently with the Summary Guidelines in dealing with consumers and their requests for a refund or replacement under the ACL.

How Mazda’s internal structures were designed to deal with customer complaints

46    At all material times, Mazda had the following internal structures for dealing with customer complaints, including those of the consumers the subject of this proceeding.

47    Consumers’ first point of call was Mazda’s case managers (referred to as “customer service operators” and later “customer advocates”).

48    Before June 2017, decisions on customers’ requests for a refund or a replacement vehicle were made in meetings called “round table reviews”, which could be attended by the Customer Relations Manager (Ms Han), the relevant case manager, the Senior Manager of Customer Support, and/or the Senior Manager Technical (Mr Bradford). Prior to April 2018, the round table made decisions as to whether a replacement or refund or other means of redress would be offered.

49    Following the introduction in April 2018 of an “executive panel review process”, the round table review process continued, but it no longer had authority to make these decisions on requests for a refund or a replacement vehicle. The executive panel comprised members of the NCS and a Mazda executive, and from April 2018 onwards made decisions as to whether a replacement or refund or other means of redress would be offered.

THE FACTS

50    The parties tendered a statement of agreed facts. The representations alleged arose mostly from conversations between the consumers and Mazda customer service representatives.

51    The customer complaints, and what Mazda did or did not do in response to them, are also evidenced in various documents, including in audio clips of recorded telephone calls between consumers and Mazda customer representatives. Mazda also relied on an additional document entitled “statement of agreed facts with respondent’s additions”. Those additions were mostly said to contain matters of context and the like. It was also agreed that I should treat those additions that strayed beyond the facts as submissions. I was not taken, in any substantial way, to the document in closing. Having since read it, it is tolerably clear that it does not contain any submission the substance of which was not made elsewhere. And the additional facts are mostly neither here nor there.

52    At the heart of the controversy is how properly to characterise the facts, including the (very lengthy) agreed facts.

53    In closing submissions, the parties filed, at my request, two agreed documents, the first entitled “Representations alleged to have been made by Mazda to each of the Consumers” and the second entitled “ACCC’s unconscionable conduct case: sources of Agreed Facts and Submissions per Consumer”. They are in tabular form and set out, in the case of the former, a summary of each of the representations alleged, their source, and the evidence and submissions made by both sides with respect to them; and in the case of the latter, the facts and submissions made in respect of each of the unconscionable conduct claims.

54    I asked for the documents to be prepared and agreed primarily because of the volume of material before me. The trial occupied 15 hearing days. Written closing submissions exceeded a total of 450 pages and the court book comprised ten large volumes of evidence. Consistently with the reason that I asked for the documents to be prepared and agreed, I have relied on the summary documents as defining the metes and bounds of the disputed issues.

THE WITNESSES

ACCC witnesses

55    The ACCC called nine consumers as witnesses in relation to seven vehicles. Each consumer described in their affidavits the story of their purchase of a Mazda vehicle, their reasons for purchase, and their dealings with Mazda about various issues they later experienced.

56    The ACCC also relied upon evidence from Mr Andrew Christopher, a solicitor, and Professor Harry Watson, an expert witness.

57    Each consumer witness was cross-examined, but it was to little, if any, effect.

58    The ACCC relied on the sworn evidence of the following individuals.

59    Consumer RC. RC purchased a Mazda2 in 2014, and between 2015 and 2018, had issues with the car’s engine lights coming on and the car going into “limp mode” or losing power. Her evidence described her interactions with Mazda to attempt to resolve these issues, including telephone conversations with Mazda’s customer representatives throughout 2017 and 2018. RC ultimately obtained a partial refund.

60    Consumers CT and MT are married. They purchased a Mazda CX-5 Akera in 2016. Their evidence described their individual interactions with Mazda about problems with the vehicle’s adaptive headlights, which began five months after purchase. After seeking to repair the vehicle, CT and MT told Mazda that they no longer wanted the vehicle, at which point they contacted NSW Fair Trading and the ACCC and continued to engage with Mazda, seeking a refund or a replacement vehicle. They commenced proceedings in the NSW Civil and Administrative Tribunal (NCAT) in November 2017, which resulted in consent orders requiring Mazda to replace the vehicle.

61    Consumers SB and KB are married. They purchased a Mazda CX-5 Mazz Sport Diesel in 2013 to use as a family car, including for holidays and for SB’s work. Between 2015 and 2017, they experienced a number of engine issues, including three engine failures and a starter motor failure. Initially, SB was the one who spoke with Mazda. KB became involved in August 2017. The couple lodged a complaint with NSW Fair Trading and, after further engine issues, commenced proceedings in NCAT in February 2018. Those proceedings settled, with Mazda paying SB and KB $16,000.

62    Consumer MG. MG purchased a Mazda6 in 2013, primarily to drive to work. The vehicle had three engine replacements over four years, and a number of other issues including the car displaying warning messages, the engine light coming on, a failure and subsequent replacement of the car’s turbo-charger and camshaft, and the car going into “limp mode”. In August 2018, Mazda offered to provide MG with an Atenza Auto Wagon in exchange for his vehicle and MG paying $17,700. MG accepted the offer.

63    Consumer TK. TK and her husband MK purchased a Mazda BT 50 in 2017 to travel around Australia with a new caravan. Their issues with the car included needing an engine replacement within five months of purchase and an intermittent stalling issue in 2018. The couple took the car to Mazda three times to fix the stalling issues. Mazda could not replicate the fault on the first two occasions; the third time, Mazda was able to replicate the fault and later gave a full refund to TK and MK for the car and its accessories.

64    Consumer LC (previously LS). LC purchased a Mazda CX-3 A 6A Akari Diesel All Wheel Drive in 2015. She deposed that she wanted a car that was reliable and safe for personal and business use. Several months after her purchase, LC experienced issues with the car losing power while driving. After discussions with Mazda, Mazda offered LC an extended warranty and free service, which she accepted in December 2017. LC said the issues with the car were ongoing as at the date of her affidavit (April 2020).

65    Consumer EG. EG bought a Mazda2 in 2014 to use for travel to work, as well as in her daily life. Her issues included the car going into “rough idle”, an issue which began several weeks after purchase, and “limp mode”, a problem which began in February 2018. She left her car at a Mazda dealer for repairs in early July 2018. EG had several discussions with NSW Fair Trading and Mazda, and ultimately commenced NCAT proceedings in January 2019, seeking a replacement vehicle or services to the value of the purchase price. The matter was resolved, with Mazda agreeing by consent to pay EG $303 and to provide a one year extended warranty on the car, a two year extended warranty on new parts, and three free car services.

66    Andrew Christopher was (and is) a partner at Webb Henderson, the solicitors for the ACCC. Mr Christopher’s affidavit annexed copies of Mazda Recalls’ reports in relation to vehicles the subject of recalls. He deposed that the model of vehicles owned by consumers SB and KB, consumer MG, and consumers MT and CT were affected by recalls (although MT and CT’s specific car was not relevantly affected). Mr Christopher was not cross-examined and the ACCC did not rely upon his affidavit in either written or oral closing submissions.

67    Professor Harry Watson was the Head of the Department of Mechanical Engineering at the University of Melbourne. Professor Watson has expertise in the field of the design of engines for motor vehicles, among other areas. Professor Watson’s evidence concerned his opinions about questions relevant to assessing the nature, extent, and cause of the vehicle faults.

68    Before turning to a summary of Mazda’s witnesses, I should mention one other point. Some of the evidence given by some of the consumers concerned their “understanding” of things that they had been told by customer advocates, and others, employed by Mazda. For example, the ACCC relied on evidence given by LC in her affidavit that, based on what she had been told:

LC understood Mazda to be saying that the loss of power issue and the replacement engine with the car were not major failures. She understood Mazda to be saying that she was not entitled to a replacement car at no cost under consumer laws, and that they did not have to give her a replacement car under consumers [sic] laws because they could fix her car under warranty. She also understood Mazda to be saying that a replacement engine was not a major failure under consumer laws.

69    I have not had regard to evidence along those lines from any of the consumers, because the standard is an objective one. See Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 at [630], and Australian Competition and Consumer Commission v Jewellery Group Pty Ltd [2012] FCA 848; (2012) 293 ALR 335 at 348 [62] (Lander J).

Mazda witnesses

70    Mazda relied on evidence from the following individuals, each of whom was cross-examined. Again very little, if anything, turned on it, other than the cross-examination of Ms Han, which the ACCC relied on in closing.

71    Chooi-Lin Han was (and is) the Customer Relations Manager at Mazda and a leader of Mazda’s Customer Relations team. Ms Han gave evidence about how the Customer Relations team responded to requests for refunds or replacement, both generally and in relation to each specific consumer. Ms Han described her involvement in the round table – and later, the executive panel – discussions which led to the offers made to the consumers.

72    In the course of cross-examination, Ms Han revealed that she had obtained a legal degree and was admitted as a legal practitioner, although she had never held a practicing certificate, and did not hold herself out as a lawyer within Mazda.

73    Michael Robins was (and is) the Head of Legal for the National Legal Department at Mazda, and a member of Mazda’s executive management team. He described the organisation and structure of Mazda, including the relationships between Mazda, its dealers, and Mazda Corp. He also described the structure and processes for handling customer complaints, including the role of customer advocates, processes for managing requests for refunds or replacements, and ACL training.

74    Shane Bradford was (and is) the Senior Manager, Customer Service at Mazda. He gave expert evidence in his capacity as a qualified automotive technician with over 30 years’ experience, including 13 years at Mazda. During the hearing, the parties agreed, and I made an order to the effect, that certain paragraphs of Mr Bradford’s evidence were to be received by way of submission pursuant to r 5.04(3) item 19 of the Federal Court Rules 2011 (Cth). But in the end, nothing turned on it.

75    Mr Bradford was also responsible for matters involving technical issues with Mazda products in Australia. He explained Mazda’s Technical Protocol (developed to assist dealers with complex technical issues), technical reports provided by Mazda’s Technical Support team, the role of FTS, how dealers submitted requests for warranty and ACL claims, and the availability of loan vehicles to customers while their vehicles were being repaired. He also gave evidence about the technical elements of the problems exhibited by each consumer’s vehicle.

76    Mr Bradford also explained the following technical aspects of vehicle operations and repair:

(1)    critical aspects of car engine operation;

(2)    the complexity in diagnosing problems;

(3)    an explanation of carbon build up and how it could be addressed, including through engine replacement (excessive build up occurred in the engines of several of the vehicles);

(4)    the function of fuel injectors and transmissions;

(5)    the operation and significance of dashboard lights, and the related diagnostic trouble codes which are used to diagnose faults, including within an engine; and

(6)    the “limp mode” feature, which “refers to a ‘limited power’ mode which is included in Mazda vehicle control systems that reduces engine output if the system detects operation outside the designed operational parameters”.

77    Steven Groves was (and is) the Customer Relations Operations Specialist at Mazda, and reported to Ms Han. He explained Mazda’s internal record keeping system, referred to as Maestro, and annexed the Maestro records relevant to each vehicle the subject of this proceeding. Mr Groves also described the steps Mazda took in relation to each consumer, how they aligned with the general Mazda processes, and Mazda’s decision making during the repairs process. He had some involvement in Mazda’s dealings with consumers in relation to four of the vehicles the subject of this proceeding, largely limited to authorising communications with the consumers. Mr Groves did not contact consumers directly.

78    Andrew George was a mechanical engineer, with over 31 years of experience in the automotive industry. He provided his expert opinion about the causes of the defects of vehicles the subject of the proceeding, and participated in a concurrent evidence session with Professor Watson. In the end, not much turned on the evidence of Mr George or Professor Watson, and no party suggested that it did. That was so primarily because the experts had been retained at a time when the ACCC was pressing a case that each of the vehicles had at various points in time in fact suffered a “major failure” within the meaning of the consumer guarantee provisions of the ACL. None of the expert witnesses had the benefit of inspecting the vehicles.

THE LAW

Misleading or deceptive conduct

79    Section 18(1) of the ACL prohibited a person from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive. It provided:

18    Misleading or deceptive conduct

(1)    A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

80    In determining whether a contravention of s 18(1) has occurred, “the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation’s conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct”. See Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 341–342 [102] (Gummow, Hayne, Heydon and Kiefel JJ), citing McHugh J in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 625 [109].

81    Where the conduct in issue consists of an express representation which is demonstrably false, it is not usually necessary to go beyond that finding to conclude that it is misleading or deceptive. See ConAgra Inc v McCain Foods (Aust) Pty Ltd (1992) 33 FCR 302 at 380 (French J).

82    The central question is whether the impugned conduct, viewed as a whole, has a sufficient tendency to lead a person exposed to the conduct into error, that is, to form an erroneous assumption or conclusion about some fact or matter. See, by way of example, Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at 651 [39] (French CJ, Crennan, Bell and Keane JJ).

83    Conduct is likely to mislead or deceive if there is a real and not remote possibility of it doing so, regardless of whether it is less or more than a 50 per cent chance. See, by way of example, Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 87 (Bowen CJ, Lockhart and Fitzgerald JJ); Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2020) 278 FCR 450 at 459 [22(a)] (Wigney, O’Bryan and Jackson JJ). It is not sufficient if the conduct merely has a sufficient tendency to cause confusion or wonderment. See, by way of example, Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at 443 [8] (French CJ, Crennan and Kiefel JJ).

84    It is not necessary to prove an intention to mislead or deceive, nor is it necessary to prove that the conduct in question in fact misled or deceived anyone. See, by way of example, Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435 at 443 [6], [9] (French CJ, Crennan and Kiefel JJ).

85    Further, although representations to the public must be considered by reference to the class of customers likely to be affected by the conduct, “where the conduct is directed to a single person … attention must be directed to the relationship between the two persons, the context in which the statement is made, the reasonably known characteristics of the recipient of the statement, and the effect on a reasonable person in the position of the recipient of the statement”. See Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196; (2016) 337 ALR 647 at 691 [219] (Edelman J). See too Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at 604 [37] per Gleeson CJ, Hayne and Heydon JJ (“it is necessary to consider the character of the particular conduct of the particular agent in relation to the particular purchasers, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known”).

86    This is a proceeding, like Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 (Wheelahan J), where the ACCC alleged that the conduct alleged to be misleading or deceptive, or likely to mislead or deceive, included the making of representations as to the law or legal rights. As Wheelahan J said in that case at [598]-[599]:

[R]epresentations as to the law or legal rights … may relate to the existence of rights in a particular relationship or arising from a particular transaction, in a general sense: see, for example, Valve Corporation v Australian Competition and Consumer Commission [2017] FCAFC 24; 351 ALR 584, and Australian Competition and Consumer Commission v LG Electronics Australia Pty Ltd [2018] FCAFC 96. Others may relate to the exercise of rights in particular circumstances that may depend upon questions of judgment involving fact and degree. In considering such representations, it is necessary to be mindful that a representation in the nature of an appraisal or opinion does not necessarily give rise to a contravention of s 18 because it later proves to be inaccurate. An opinion, so expressed, at least if it is genuinely held and there is a basis for it, however erroneous, misrepresents nothing: Global Sportsman v Mirror Newspapers at 88 (Bowen [CJ], Lockhart and Fitzgerald JJ). The High Court made this point in Campbell v Backoffice Investment, in which it was held that the provision of financial estimates in pre-contractual documents before a corporate transaction, which were believed to be true but which turned out to be inaccurate, was not misleading or deceptive. In circumstances closer to the present proceeding, Dowsett J in Australian Competition and Consumer Commission v Bunavit Pty Ltd [2016] FCA 6 at [29], commented on the potential danger of penalising suppliers for bona fide denials of liability, such as denials that a defect in goods amounts to a major failure of a statutory warranty, which later turn out to be wrong …

Such cases involving representations as to the law or legal rights may involve claims under both ss 18 and 29(1)(m) of the ACL, such as the ACCC has made in the present proceeding. The general prohibition on misleading or deceptive conduct in s 18 operates concurrently with the more specific prohibitions in s 29: see, s 18(2).

87    Section 29(1) of the ACL prohibited a person from making false or misleading representations about goods or services. Section 29(1)(m) provided:

29    False or misleading representations about goods or services

(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:

…

(m)    make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2); or

…

88    There is generally no relevant distinction between the phrases “misleading or deceptive” in s 18 and “false or misleading” in s 29, and the parties argued the case on that basis.

Unconscionable conduct

89    The relevant provisions in the ACL relating to the question of unconscionable conduct are found in ss 21 and 22.

90    At the time of the relevant conduct, those sections were in these terms:

21    Unconscionable conduct in connection with goods or services

(1)    A person must not, in trade or commerce, in connection with:

(a)    the supply or possible supply of goods or services to a person (other than a listed public company); or

(b)    the acquisition or possible acquisition of goods or services from a person (other than a listed public company);

engage in conduct that is, in all the circumstances, unconscionable.

(2)    This section does not apply to conduct that is engaged in only because the person engaging in the conduct:

(a)    institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition; or

(b)    refers to arbitration a dispute or claim in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition.

(3)    For the purpose of determining whether a person has contravened subsection (1):

(a)    the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and

(b)    the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.

(4)    It is the intention of the Parliament that:

(a)    this section is not limited by the unwritten law relating to unconscionable conduct; and

(b)    this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and

(c)    in considering whether conduct to which a contract relates is unconscionable, a court’s consideration of the contract may include consideration of:

(i)    the terms of the contract; and

(ii)    the manner in which and the extent to which the contract is carried out;

and is not limited to consideration of the circumstances relating to formation of the contract.

22    Matters the court may have regard to for the purposes of section 21

(1)    Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 21 in connection with the supply or possible supply of goods or services to a person (the customer), the court may have regard to:

(a)    the relative strengths of the bargaining positions of the supplier and the customer; and

(b)    whether, as a result of conduct engaged in by the supplier, the customer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and

(c)    whether the customer was able to understand any documents relating to the supply or possible supply of the goods or services; and

(d)    whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the customer or a person acting on behalf of the customer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; and

(e)    the amount for which, and the circumstances under which, the customer could have acquired identical or equivalent goods or services from a person other than the supplier; and

(f)    the extent to which the supplier’s conduct towards the customer was consistent with the supplier’s conduct in similar transactions between the supplier and other like customers; and

(g)    the requirements of any applicable industry code; and

(h)    the requirements of any other industry code, if the customer acted on the reasonable belief that the supplier would comply with that code; and

(i)    the extent to which the supplier unreasonably failed to disclose to the customer:

(i)    any intended conduct of the supplier that might affect the interests of the customer; and

(ii)    any risks to the customer arising from the supplier’s intended conduct (being risks that the supplier should have foreseen would not be apparent to the customer); and

(j)    if there is a contract between the supplier and the customer for the supply of the goods or services:

(i)    the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the customer; and

(ii)    the terms and conditions of the contract; and

(iii)    the conduct of the supplier and the customer in complying with the terms and conditions of the contract; and

(iv)    any conduct that the supplier or the customer engaged in, in connection with their commercial relationship, after they entered into the contract; and

(k)    without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the customer for the supply of the goods or services; and

(l)    the extent to which the supplier and the customer acted in good faith.

(2)    Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the acquirer) has contravened section 21 in connection with the acquisition or possible acquisition of goods or services from a person (the supplier), the court may have regard to:

(a)    the relative strengths of the bargaining positions of the acquirer and the supplier; and

(b)    whether, as a result of conduct engaged in by the acquirer, the supplier was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the acquirer; and

(c)    whether the supplier was able to understand any documents relating to the acquisition or possible acquisition of the goods or services; and

(d)    whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the supplier or a person acting on behalf of the supplier by the acquirer or a person acting on behalf of the acquirer in relation to the acquisition or possible acquisition of the goods or services; and

(e)    the amount for which, and the circumstances in which, the supplier could have supplied identical or equivalent goods or services to a person other than the acquirer; and

(f)    the extent to which the acquirer’s conduct towards the supplier was consistent with the acquirer’s conduct in similar transactions between the acquirer and other like suppliers; and

(g)    the requirements of any applicable industry code; and

(h)    the requirements of any other industry code, if the supplier acted on the reasonable belief that the acquirer would comply with that code; and

(i)    the extent to which the acquirer unreasonably failed to disclose to the supplier:

(i)    any intended conduct of the acquirer that might affect the interests of the supplier; and

(ii)    any risks to the supplier arising from the acquirer’s intended conduct (being risks that the acquirer should have foreseen would not be apparent to the supplier); and

(j)    if there is a contract between the acquirer and the supplier for the acquisition of the goods or services:

(i)    the extent to which the acquirer was willing to negotiate the terms and conditions of the contract with the supplier; and

(ii)    the terms and conditions of the contract; and

(iii)    the conduct of the acquirer and the supplier in complying with the terms and conditions of the contract; and

(iv)    any conduct that the acquirer or the supplier engaged in, in connection with their commercial relationship, after they entered into the contract; and

(k)    without limiting paragraph (j), whether the acquirer has a contractual right to vary unilaterally a term or condition of a contract between the acquirer and the supplier for the acquisition of the goods or services; and

(l)    the extent to which the acquirer and the supplier acted in good faith.

91    Section 21(1) was amended in 2018 to remove the words “(other than a listed public company)”, but those amendments do not affect the analysis here.

92    This is not the occasion to write at length about the meaning of the term “unconscionable”. There was no dispute between the parties about the relevant principles. The question involves the court making an evaluative judgment, which requires close attention to all the relevant facts and circumstances.

93    As the Full Court of this Court said in Unique International College Pty Ltd v Australian Competition and Consumer Commission (2018) 266 FCR 631 at 667 [155] (Allsop CJ, Middleton and Mortimer JJ), an allegation of unconscionability is a serious allegation, sufficient to warrant censure for the purpose of deterrence by the imposition of a civil penalty:

To behave unconscionably should be seen, as part of its essential conception, as serious, often involving dishonesty, predation, exploitation, sharp practice, unfairness of a significant order, a lack of good faith, or the exercise of economic power in a way worthy of criticism. None of these terms is definitional. The Shorter Oxford Dictionary on Historical Principles (1973) gives various definitions including “having no conscience, irreconcilable with what is right or reasonable”. The Macquarie Dictionary (1985) gives the definition “unreasonably excessive; not in accordance with what is just or reasonable”. (The search for an easy aphorism to substitute for the words chosen by Parliament (unconscionable conduct) should not, however, be encouraged …) These are descriptions and expressions of the kinds of behaviour that, viewed in all the circumstances, may lead to an articulated evaluation (and criticism) of unconscionability. It is a serious conclusion to be drawn about the conduct of a businessperson or enterprise. It is a conclusion that does the subject of the evaluation no credit. This is because he, she or it has, in a human sense, acted against conscience. The level of seriousness and the gravity of the matters alleged will depend on the circumstances. Courts are generally aware of the character of a finding of unconscionable conduct and take that into account in determining whether an applicant has discharged its civil burden of proof.

94    That passage was cited with approval in Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40; (2021) 388 ALR 577 at [88] (Allsop CJ and Besanko and McKerracher JJ).

95    The values that inform the standard of conscience include “certainty in commercial transactions, honesty, the absence of trickery or sharp practice, fairness when dealing with customers, the faithful performance of bargains and promises freely made, and … the protection of those whose vulnerability as to the protection of their own interests places them in a position that calls for a just legal system to respond for their protection, especially from those who would victimise, predate or take advantage”. See Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1 at 17 [14] (Kiefel CJ and Bell J) (internal quotation and citation omitted). The task of the court is to “assess whether [the conduct] is to be characterised as a sufficient departure from the norms of acceptable commercial behaviour as to be against conscience or to offend conscience”. See Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40; (2021) 388 ALR 577 at [92].

96    I should also add that it is not necessary under ss 21 and 22 of the ACL to find “some form of pre-existing disability, vulnerability or disadvantage of which advantage was taken”. See Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40; (2021) 388 ALR 577 at [78].

Statutory guarantees

97    Section 54 of the ACL provided for a guarantee that the goods are of acceptable quality, relevantly as follows:

54     Guarantee as to acceptable quality

(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

…

(6)    Goods do not fail to be of acceptable quality if:

(a)    the consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and

(b)    they are damaged by abnormal use.

…

98    There was no issue that Mazda engaged in the impugned conduct in trade or commerce in connection with the supply of goods (the vehicles); each of the consumers was a “consumer” within the meaning of that term in s 3 of the ACL; in the case of each of the seven vehicles, a Mazda dealer was the “supplier” of the goods; and Mazda was the manufacturer of the vehicles.

99    Section 259 of the ACL provided relevantly as follows:

259    Action against suppliers of goods

(1)    A consumer may take action under this section if:

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

(b)    a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with.

(2)    If the failure to comply with the guarantee can be remedied and is not a major failure:

(a)    the consumer may require the supplier to remedy the failure within a reasonable time; or

(b)    if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time—the consumer may:

(i)    otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or

(ii)    subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection.

(3)    If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:

(a)    subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or

(b)    by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods.

…

100    Section 260 of the ACL provided relevantly as follows:

260    When a failure to comply with a guarantee is a major failure

A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if:

(a)    the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or

(b)    the goods depart in one or more significant respects:

(i)    if they were supplied by description—from that description; or

(ii)    if they were supplied by reference to a sample or demonstration model—from that sample or demonstration model; or

(c)    the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or

(d)    …

(e)    the goods are not of acceptable quality because they are unsafe.

101    It was also common ground that the hypothetical question whether the reasonable consumer would have regarded the quality of the goods as acceptable is to be determined at the time of supply. But for the purposes of determining that question, the reasonable consumer may be acquainted with information known at the time of trial. See eg Medtel Pty Ltd v Courtney (2003) 130 FCR 182 at 206 [70] (Branson J, Jacobson J agreeing).

102    There was also no dispute that, as a general rule, a manufacturer’s warranty has no bearing on the question whether the goods comply with the statutory guarantee of acceptable quality. See: Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 at [43] (Wheelahan J).

103    Section 262 of the ACL provided relevantly as follows:

262    When consumers are not entitled to reject goods

(1)    A consumer is not entitled, under section 259, to notify a supplier of goods that the consumer rejects the goods if:

(a)    the rejection period for the goods has ended; or

(b)    the goods have been lost, destroyed or disposed of by the consumer; or

(c)    the goods were damaged after being delivered to the consumer for reasons not related to their state or condition at the time of supply; or

(d)    the goods have been attached to, or incorporated in, any real or personal property and they cannot be detached or isolated without damaging them.

(2)    The rejection period for goods is the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to comply with a guarantee referred to in section 259(1)(b) to become apparent having regard to:

(a)    the type of goods; and

(b)    the use to which a consumer is likely to put them; and

(c)    the length of time for which it is reasonable for them to be used; and

(d)    the amount of use to which it is reasonable for them to be put before such a failure becomes apparent.

104    As Wheelahan J said in Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 at [46]-[47] (emphasis in original):

As set out above in s 262(2), the rejection period is the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to become apparent. This is a reference to the failure to comply with the statutory guarantee becoming apparent, rather than any underlying defect becoming apparent, which may occur at an earlier point in time. In Nesbit v Porter [2000] NZCA 288; 2 NZLR 465 at [40], the New Zealand Court of Appeal explained in relation to the corresponding New Zealand provision –

In some instances the defect will be of a kind where it may be obvious that something is wrong with the goods but the supplier or someone else to whom the consumer turns for help may be in doubt about the exact nature of the problem and thus about how serious it is. For example, the operation of a motor vehicle may be affected by the failure of a small and comparatively obscure part, say, a waver spring in an automatic transmission; until the transmission is dismantled a mechanic cannot be sure what the defect is. Or the cause of malfunction, particularly one which occurs intermittently, may be hard to detect even upon inspection. It may be necessary to carry out a series of tests or even to wait and see what, if anything, develops. Or the repairer may think the fault has been identified and that the correct repair or adjustment has been made but this view may prove to be wrong and the problem may manifest itself again. … In all such cases, a reasonable period will not elapse before the consumer has had the opportunity to become properly informed about the nature of the defect and has also had a little time then to consider an appropriate decision, whether or not to reject the goods. It almost goes without saying that the period will be correspondingly longer where the supplier has taken steps which effectively conceal a defect or has withheld relevant information.

The Court in Nesbit v Porter at [41] went on to refer to the practical utility to a consumer of the right of rejection as informing what is a reasonable period within which to exercise a right to reject goods –

In considering what is a reasonable period in a particular case it is necessary also to bear in mind the practical utility to a consumer of the right of rejection given by s 18 of the [Consumer Guarantees Act 1993 (NZ)]. Ms Nield submitted persuasively that, although a right to damages survives the loss of the right to reject, in pursuing it the consumer may face substantial litigation costs where the claim is for a sum exceeding the jurisdiction of the Disputes Tribunal (now $7500, or $12,000 by agreement of both parties). Replacement (under s 19(1)(b)) or repair by or at the cost of the supplier or rejection of the goods, where that is available in terms of s 18, are more “user-friendly” solutions to a consumer’s problem with goods, although of course it may still prove to be necessary to litigate in order to recover all or part of the price.

105    Justice Wheelahan at [49] also approved of the following statement in Vautin v By Winddown, Inc. (formerly Bertram Yachts) (No 4) [2018] FCA 426; (2018) 362 ALR 702 at [265] (Derrington J):

… the section requires a sufficiently high level of certainty in relation to the knowledge of the relevant failure including its nature and extent and what it will cost to remediate it. If the level of knowledge required is as identified above, it follows that if there exists doubt about the consequences of a defect in an item and, therefore, the cost of repairing it, the failure of the statutory guarantee has not become apparent.

106    Section 263 of the ACL provided relevantly as follows:

263    Consequences of rejecting goods

(1)    This section applies if, under section 259, a consumer notifies a supplier of goods that the consumer rejects the goods.

(2)    The consumer must return the goods to the supplier unless:

(a)    the goods have already been returned to, or retrieved by, the supplier; or

(b)    the goods cannot be returned, removed or transported without significant cost to the consumer because of:

(i)    the nature of the failure to comply with the guarantee to which the rejection relates; or

(ii)    the size or height, or method of attachment, of the goods.

(3)    If subsection (2)(b) applies, the supplier must, within a reasonable time, collect the goods at the supplier’s expense.

(4)    The supplier must, in accordance with an election made by the consumer:

(a)    refund:

(i)    any money paid by the consumer for the goods; and

(ii)    an amount that is equal to the value of any other consideration provided by the consumer for the goods; or

(b)    replace the rejected goods with goods of the same type, and of similar value, if such goods are reasonably available to the supplier.

(5)    The supplier cannot satisfy subsection (4)(a) by permitting the consumer to acquire goods from the supplier.

(6)    If the property in the rejected goods had passed to the consumer before the rejection was notified, the property in those goods revests in the supplier on the notification of the rejection.

107    Subsection 263(6) was not the subject of any substantial submission by the parties, who agreed, when I raised it with counsel, that it had no bearing on the issues in dispute.

108    There was some divergence between the parties about the operation of the consumer guarantee provisions, which, it was agreed, provided the statutory context for the misrepresentation and unconscionable conduct claims.

109    Mazda contended that some consumers were not entitled to a refund or a replacement vehicle because a reasonable consumer would not have considered their vehicle as supplied as being of unacceptable quality at the time of supply (under s 54) and in other cases because they had not notified the supplier that they rejected the goods, within the meaning of s 259(3)(a).

110    Mazda also contended that the ACCC’s approach to the meaning of the guarantee as to acceptable quality contained in s 54 was in a number of respects incorrect, including because the question of whether a vehicle is safe or durable is not based on symptoms alone and it is necessary to identify a “mechanical” fault with the vehicle at the time of supply.

111    I turn to Mazda’s submissions concerning those contentions below, but it is convenient first to set out the matters concerning the operation of the consumer guarantee provisions that were not in dispute.

112    As the ACCC submitted (and Mazda did not dispute), upon a breach of a statutory guarantee (such as the guarantee of acceptable quality under s 54 of the ACL), there are three “pathways” (to adopt the ACCC’s term) by which a consumer can reject the goods and then elect for a refund or replacement under the ACL, should they so wish.

113    The first pathway is where there is a failure that can be fixed but it is not fixed within a reasonable period of time (s 259(2)(b)). Here, the failure to comply with the guarantee can be remedied and is not a major failure, but the failure has not been remedied within a reasonable time.

114    The second pathway is where there is a failure that cannot be fixed (s 259(3)). Here, the failure to comply with the guarantee cannot be remedied but does not have to be a major failure (see “the guarantee cannot be remedied or is a major failure” in s 259(3)).

115    The third pathway is where there is a major failure (ss 259(3), 260).

116    Accordingly, two of the three pathways do not require there to be a major failure. They rely on whether the failure can be remedied at all, or within a reasonable time.

117    The third pathway does require there to be a major failure, relevantly as follows:

(1)    If the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure, this constitutes a major failure: s 260(1)(a). For example, if the guarantee as to acceptable quality has failed because the goods are not durable, such that a reasonable consumer would not have acquired them had this history been known, the test of major failure will be met.

(2)    If the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose, this constitutes a major failure: s 260(1)(c).

(3)    If the goods are not of acceptable quality because they are unsafe, this automatically constitutes a major failure: s 260(1)(e).

118    Section 262(1) of the ACL sets out grounds where the consumer is not entitled to reject the goods, including where the “rejection period” has ended. The rejection period is the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to become apparent. See s 262(2).

119    Although Mazda never conceded the point expressly, in the end it did not dispute the proposition that if a consumer rejects the goods and seeks a refund such that s 263 applies, there is no scope of reduction of the amount paid on account of depreciation, or any use of the goods by the consumer or the like.

120    The position is the same if the consumer seeks replacement. In that case, the rejected goods must be replaced with goods of the same type, and of similar value, if they are reasonably available.

121    Those propositions follow from the plain language of s 263(4)(a) and s 263(4)(b), which do not admit any relevant scope for reduction or, in the case of a replacement, the provision of something other than a new vehicle of a similar type and value (where the “goods” are motor vehicles). See also Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672 at [51] (Wheelahan J) (“The imperative terms of the statutory obligation under s 263(4)(a) do not authorise any abatement or adjustment of the amount paid on account of depreciation, or any use of the goods by the consumer…”).

122    Mazda’s written closing submissions under the rubric “The Consumer Guarantees” were lengthy, but not all of the submissions there made bore directly on the case advanced by the ACCC. The submissions that did bear on the case, and which it is convenient at this point to address (because they were in dispute) are these.

123    First, Mazda submitted that in the context of motor vehicles, the relevant statutory factors provided for in s 54 (fit for purpose, free from defects, safe and durable) “reduce to mechanical defects existing at the time of supply”.

124    Secondly, Mazda submitted, it follows that “[t]he question of what constitutes acceptable quality at the time of supply therefore presents a practical difficulty in the context of motor vehicles that have been extensively used over a period of time”.

125    Thirdly, Mazda submitted that “there are at least four potential factors which preclude a ready conclusion of unacceptable quality on the mere symptom or manifestation of a fault” and that “[t]his is so even if … a mechanical fault (as distinct from user education or expectation) is clearly identified”. Those factors are whether:

(1)    the vehicle has been subject to repairs since its supply;

(2)    accessories have been installed on the vehicle since its supply;

(3)    there has been fair wear and tear; and/or

(4)    there has been abnormal use of the vehicle, or some other action after the supply of the vehicle (such as the use of contaminated fuel),

which may have caused the manifested fault.

126    Fourthly, Mazda submitted that “it is not sufficient for an applicant to show that the reasonable consumer would conclude that the vehicle was not safe or durable based on symptoms alone”.

127    There are a number of difficulties with those submissions, and I do not accept them.

128    First, there is no warrant for reading into the words of s 54(2)(c) (“Goods are of acceptable quality if they are as … free from defects … as a reasonable consumer … would regard as acceptable”) the word “mechanical” before the word “defects”. And no reason for doing so was given, other than that the other factors (that is, that the goods be fit for purpose, free from defects, safe and durable) were somehow said to “reduce” to the “mechanical”. There is not, with respect, any suggestion in the text of the ACL or the statutory history that the legislature intended, in the case of goods like automobiles, to limit the operation of the guarantee to “mechanical” defects. To the extent that any other submission was founded on the necessary presence of such mechanical defects at the time of supply, I do not accept any such submission.

129    Secondly, although it may be accepted that the older a vehicle, and the more repairs that have been carried out on it, the more it may mean that it is more forensically difficult to make good a case brought under the ACL and that there may therefore be “practical difficulties” in relation to such claims, the experts who gave evidence agreed that none of the factors listed at [125] above was relevant to the faults experienced with any of the seven vehicles the subject of the ACCC’s case. So Mazda’s submission about the potential factors listed above is beside the point on the facts in any event.

130    Thirdly, there is also no textual or any other warrant for excluding from the operation of the guarantee provisions faults that are said to be “the mere symptom or manifestation of a fault” or “symptoms alone”. As Perram J said (admittedly in the context of a pleadings summons) in Capic v Ford Motor Company (No 3) [2017] FCA 771 at [6]-[8]:

[The] provisions [contained in s 54 of the ACL] open up the possibility for a consumer such as Ms Capic that the unacceptable quality of a vehicle might be established simply by proving it suffered from a range of aberrant behaviours. To run such a case, it would not be necessary to explain why the vehicle suffered from these problems; it would be enough to show that it was not fit for driving (subsection 54(2)(a)) or was not safe (subsection 54(2)(d)). This she might well prove simply by demonstrating that the vehicle was given to sudden powerlessness, violent shaking or other undesirable automotive behaviours.

Of course, Ms Capic could also seek to prove that the vehicle contained a defect in that its transmission was defective and hence bring herself instead within subsection 54(2)(c). But forensically this would be a more ambitious and difficult case because she would take upon herself the engineering burden of explaining what the problem with the transmission actually was.

So there is a distinction between the unacceptable quality of a vehicle being established, on the one hand, by its constellation of symptoms and, on the other, by proving the root cause of those symptoms.

CONSUMER CONTACT WITH MAZDA CONCERNING VEHICLE FAULTS

131    I now turn to consider each of the seven individual cases and the evidence in respect of them. I will take each case, and the ACCC’s case in respect of each such case, in turn.

132    In order to explain how the representations and alleged unconscionable conduct is said to arise, I have structured these reasons in respect of each consumer as follows. First, I have set out the relevant background facts that the ACCC claimed gave rise to each representation (or group of representations, where it is convenient to deal with them in such a manner). I then turn to consider, in respect of each representation said to arise from those facts, whether those representations were false or misleading in the manner that the ACCC claimed. I then continue to set out the relevant facts for the next representation or group of representations, and so on.

133    Having considered each representation in turn, and in the course of doing so, having described all the facts relevant to the consumer, I then consider the ACCC’s case on unconscionable conduct in respect of that consumer. As will become apparent, there is a considerable, but necessary, degree of repetition.

Some general points about the unconscionable conduct claims

134    For reasons that I explain below in the context of each of the separate cases the subject of this proceeding, I have formed the view that Mazda’s conduct was not unconscionable as alleged. The ACCC’s submissions regarding unconscionable conduct, like Mazda’s response, turn on how properly to characterise the detail of conduct and communications between Mazda and each consumer.

135    I have formed the view that although Mazda’s conduct can accurately be characterised as constituting what I describe as appalling customer service, and although customers were rightly frustrated at Mazda’s delays and excuses for not squarely addressing their complaints and their requests for a refund or replacement vehicle, Mazda’s conduct was not, in my view, to be characterised as unconscionable (as I say, for reasons that I explain below).

136    That said, there were a number of submissions made by Mazda with respect to the ACCC’s unconscionable conduct claims that I do not accept. It is convenient to deal with them now.

137    Counsel for Mazda insisted that in many of the cases alleged, the consumers had not suffered or endured “harm”, and that that counted in favour of the contention that Mazda’s conduct was not unconscionable.

138    In each of the cases, as the lengthy recital of the facts below makes apparent, it is however, self-evident that the consumers suffered relevant harm. Two of the consumers wanted to drive their utility vehicle with a caravan to the Birdsville Races. They never got there because of failures with their (new) vehicle. Instead, they ended up in Rockhampton and were forced to stay in a caravan park, where they had never intended to stay, and were provided with a loan vehicle without a tow bar so that the caravan remained in situ for some time. And of course, as the facts will show with respect to those consumers, they spent a lot of time engaging in interminable phone conversations with Mazda’s “customer advocates”.

139    In some other instances, consumers missed work because their vehicle had broken down or they had not been given a loan vehicle. In the case of RC, as I explain below, she complained that the loan vehicle that she had been given had a higher insurance excess payment. And all of the consumers, as I will explain, were justified in feeling distressed at the disruption that inevitably ensues when one’s motor vehicle repeatedly fails for one reason or another. I do not propose to address in detail the minutiae of the competing submissions about whether particular instances of the kind I have described constituted relevant harm. It suffices to say that I accept the ACCC’s submissions that in each instance where it alleged unconscionability, the consumers suffered relevant harm.

140    Mazda also submitted that its conduct was not unconscionable viewed in its “totality” because it provided support and assistance to the consumers, including by providing loan vehicles, repairing the vehicles, and paying various amounts of money which it described as “compensation”. But that submission does not address the ACCC’s case, which was that the provision of such support and assistance was in each instance insufficient, and that it formed part of the (unconscionable) process of “obfuscation”, delay, and failure to have regard to the statutory guarantee rights of the consumers.

141    I also reject Mazda’s assertion that the round table and executive panel processes, which even Mazda conceded (eg in its “Summary of respondent’s key propositions” document, filed on 14 July 2021) were “imperfectly undertaken” and “imperfect”, were nonetheless “authentic” attempts to “ensure an informed and rational decision was made in response” to what Mazda insisted were “unsubstantiated assertion[s] of a statutory right”. As the evidence will show, at no point did the round table or executive panel processes make any genuine attempt to consider and apply the consumer guarantee provisions of the ACL to the circumstances of the individual consumer. That is, of course, a very unsatisfactory state of affairs, including because Mazda by doing so did not comply with its own internal ACL compliance standards and processes. Again, however, it seems to me that such failings are more appropriately characterised as very bad management, rather than unconscionable conduct.

142    Some other of Mazda’s submissions confounded me, I have to confess. To take one such example. Mazda submitted that “[t]he application of the statutory test to complex machines such as motor vehicles is not straight forward, particularly where vehicles have been subjected to significant use over time. Mazda took ACL principles and sought to give them real world application”. I have no idea what giving legal principles “real world application” means, and counsel did not endeavour to explain what the phrase meant. As will be demonstrated, the simple fact of the matter is that in each case the subject of this proceeding, Mazda made no sufficient attempt to seek technical advice about the particular issues experienced by the consumers and then to have regard to such advice in applying the statutory guarantee provisions. Instead, Mazda decided that in most instances, its interests were best served by engaging in commercial negotiations which had no regard to the parameters or requirements of the consumer guarantee provisions. To say that such conduct was “imperfect” is a considerable understatement.

143    But whatever descriptors one might choose to describe the conduct (and I do not accept, in many instances, Mazda’s descriptors), the relevant conduct was not in my view, for reasons which are explained below, unconscionable.

144    Mazda also submitted that any opinions conveyed by the representations in each case were reasonably held and that there was no evidence that Mazda “had no legitimate option other than to conclude that there had been a major failure” and that it does not matter whether the information available to Mazda at the time was sufficient. It submitted that if the evidence disclosed a conscionable basis for refusal of relief, whether known to Mazda at the time or not, that sufficed. The ACCC disagreed. I was not taken to any authority on the point, and in the end, Mazda did not place any particular significance on it in any of the individual cases the subject of this proceeding. In those circumstances, I will put the question aside.

145    I should also mention some aspects of the ACCC’s case.

146    First, one of the contentions made by the ACCC was that, in assessing the “relative strengths of the bargaining position” of the parties in each of the cases the subject of the proceeding, I should conclude that Mazda was in a dominant bargaining position. It is important, however, to bear in mind in assessing that question (necessarily on a case by case basis) what Keane J said in Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525 at 619 [293] about a cognate provision contained in s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth):

The appellants submitted that s 12CB of the ASIC Act was introduced to address “the general disparity of bargaining power” between financial services providers and consumers. That submission may be accepted as far as it goes; but it does not go very far. While a disparity in bargaining power may be necessary to attract the operation of the provision, the mere existence of the disparity is not sufficient to do so. The existence of a disparity in bargaining power, which is an all-pervading feature of a capitalist economy, does not establish that the party which enjoys the superior power acts unconscionably by exercising it.

(Footnote omitted.)

147    Secondly, there was no allegation in the case of any consumer that Mazda acted in bad faith or dishonestly. As Kiefel CJ and Bell J said in Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1 at 31 [59]:

It may be accepted that conduct in the supply of a financial service may be unconscionable in circumstances in which the supplier’s conduct does not involve dishonesty. This is not to say that the absence of dishonesty, or other moral taint, is not a material consideration in determining whether, objectively, the supplier’s conduct involves such a departure from accepted community standards in the supply of the financial service as to warrant the characterisation that it is unconscionable (citing Ipstar Australia Pty Ltd v APS Satellite Pty Ltd (2018) 329 FLR 149 at 187 [195] per Bathurst CJ).

148    And thirdly, as I have already noted, the ACCC eschewed any case based on a pattern or system of conduct. (Compare, by way of example only, Australian Securities and Investments Commission v AGM Markets Pty Ltd (No 3) (2020) 275 FCR 57.) It is therefore necessary to consider each alleged contravention separately.

149    Having made those general observations, I will now turn to deal with the ACCC’s case for each consumer in turn.

Consumer RC

150    RC, a dietician who lived in Brisbane, purchased a Mazda2 (Neo, 5 door hatch, manual) in November 2014 for a total price of $18,990 including accessories, government charges and insurance, from Eagers MD Pty Ltd in Newstead, Queensland (Eagers or the dealer). She bought it primarily for work purposes, which involved her driving as far as 100 km away from her home. She relied on the car to earn an income.

151    RC gave evidence that between August 2015 and June 2017, the engine warning light in her vehicle illuminated intermittently. The alleged problems were not recorded in any of the dealer’s service records prior to 22 August 2016.

Representation 1

Relevant facts – 2017

152    On 8 May, RC raised with Mazda via the “contact us” form on the Mazda website various issues she had experienced with the vehicle. Her email commenced:

I am writing to make a complaint in regard to my dealings with Mazda. I purchased a brand new Mazda 2 in December 2014 and have had ongoing, unresolved issues since. I travel a lot for work and thought that Mazda, being a well-known and respected brand would give me the reliability I need. Unfortunately, this has not been the case.

153    RC experienced a further issue with the engine light illumination on 18 May. One of the fuel injectors needed to be replaced. The dealer record disclosed the following:

ENGINE LIGHT BACK ON

LAST TIME IN FOUND CODE P0300 and P0303

Inspected coil and plug of cylinder 3 swapped plug to cylinder 1 and swapped coil to cylinder 2

FOUND MISFIRE IN CYLINDER #3. SWAPPED COIL TO CYLINDER #2 AND PLUG TO CYLINDER #3. FOUND VEHICLE TO STILL HAVE MISFIRE COUNTS IN CYLINDER #3. INSPECTED AND FOUND CYLINDER #3 INJECTOR TO BE3 [sic] FAULTY. CARRIED OUT INJECTION REPLACEMENT - REMOVED AIR BOX, THROTTLE BODY, WIRING HARNESS AROUND THE MANIFOLD TO ACCESS. REMOVED INTAKE MANIFOLD ASSEMBLY. REMOVED FUEL RAIL FROM INJECTORS AND REMOVED INJECTORS. CLEANED ALL RAIL AND FITMENT POINTS. REASSEMBLED VEHICLE AND CLEARED CODES. ROAD TESTED VEHICLE AND FOUND NO FURTHER FAULT.

154    On 13 June, in a telephone call between RC and Ms Marilyn Miller (a customer advocate employed by Mazda), Ms Miller acknowledged receipt of RC’s email “going back to May”. Ms Miller apologised for the delay, and agreed that “this has gone from case manager to case manager”. Ms Miller acknowledged that the last repair “looks like a bit of a major repair actually”. RC expressed her frustration, including that she needed to take a day off work to wait around for her car to get fixed. She added, “I just feel like if I want to sell the car and the engine light’s going to be on all the time, it’s going to be impossible for me to sell because someone’s obviously going to think there’s something wrong with it”. Ms Miller responded, “Yeah, you shouldn’t be, you shouldn’t be getting that engine light on”. Ms Miller further said that “they” were “at the mercy of dealerships in doing their diagnosis”. RC confirmed that even though the engine light was coming on, it felt like nothing was wrong with the car. Ms Miller, who had no technical expertise, later said to RC:

So you’re not the first person to complain on the little Mazda2. There must have been a, just a small batch of them on assembly that just, the springs weren’t tight enough or something like that.

I’ve got a feeling [the dealer] should have - they could have maybe done a little more diagnostic work.

[After asking whether RC subscribed to a roadside assist program] Yeah, that’s good. Keep that up, make sure, because you know, a lot of people are of the impression that new cars don’t break down … When they actual - they can. We hope they don’t … But they can, it’s a possibility in the real world.

155    During the call, Ms Miller said she was going to add an additional one year manufacturer’s warranty to “this little car” to which RC replied, “Yeah, that would be great”. Ms Miller told RC she could take the vehicle to any dealership for repairs, and stated she would organise a loan car for RC for a longer period so the dealership could do detailed diagnostics on it as requested.

156    On around 15 June, when RC was driving her car, it entered “limp mode” and the engine light came on. She pulled over to the side of the road and turned off the ignition. When she started the car again, it started normally, but the engine light stayed on. She then took it to Eagers.

157    On 19 June, Mazda sent a letter to RC confirming that it had provided RC with an additional 12 month factory extended warranty.

158    Three days later, RC telephoned Ms Miller and told her that the engine light had come on again after three days but there was otherwise nothing that she noticed that was wrong with the car. Ms Miller said, “I just wouldn’t want you to be driving it, and highly likely you’re going to cause any damage … but … it’s not for me to sit here in an office and say that”. As to the replacement of parts by the dealer to date, Ms Miller said, “sometimes it can be a process of elimination when something just keeps reoccurring like that”. Ms Miller said she would call Eagers and speak to “Andrea”, and arrange for her to call RC. Ms Miller added, “And, yeah, I’m so sorry”.

159    Ms Miller organised for the dealer to call RC to arrange a diagnosis of the problem. On 10 July, the dealer submitted a technical report to Mazda describing the issues with the vehicle between 25 January and 30 June 2017.

160    In late June, after RC started driving her car, it shut down and the engine light came on. She pulled over to the side of the road and turned off the ignition. When she started the car again, it started normally, but the engine light stayed on. She took the car to Eagers, where technicians removed carbon build up from intake valves, cleared all fault codes, tested the car under various conditions, tensioned electrical connections relating to engine coils, and followed “Bulletin No NS065_09 Diagnostic Protocol”.

161    In early September, RC was driving on the Centenary Highway to Ipswich in Queensland at around 100 km per hour when the car lost power and the lights on the dashboard, including the engine light, began to flash. She estimated that the car’s speed dropped from 100 km per hour to 50 km per hour in about four seconds, and deposed that “[i]t felt like the engine cut out and when I put my foot on the accelerator nothing happened”. She was near an emergency lane, so she pulled into it and turned the ignition off, and telephoned Eagers and spoke to “Brian”.

162    RC said to Brian words to this effect: “I do not want that car back until it is 100 per cent safe. I am not confident in it at all”.

163    The vehicle was towed to Eagers, where it remained for about two months. RC said that she was going overseas for a month and had told the dealership to keep the vehicle unless “it’s going to be fixed”. RC was not provided with a loan vehicle. Her sister picked her up and took her home. RC had to cancel all her patients that day and did not get paid.

164    That same day, RC telephoned Mazda to report the fault. She reported the fault to “Rebecca”, because Ms Miller was unavailable, in these terms:

… I was not accelerating at all and it was just horrible, and I had to pull over on the side of the road … I’m going overseas for a month and I just said to [the dealer] keep it, because I just, I don’t, like I don’t want it back unless it’s going to be fixed. Like I think this is the eighth time I’ve taken it there, and they just aren’t doing whatever needs to be doing to it because it just keeps having this ongoing issue with the light, the engine light and whatever and I just, yeah, I just wanted to update her on what’s happening because it’s just getting to the point of ridiculousness.

165    RC returned from her holiday on 5 October. When she called Brian at Eagers he told her “we forgot about the car and have not touched it”.

166    The next day, RC posted the following message on Mazda’s Facebook page:

Hi Mazda,

I am not normally one for a Facebook complaint, but at the moment I am at my wits end and feel like I have no other option but to express my annoyance here. Strap yourself in because it’s a long one.

I purchased a brand new Mazda 2 in December of 2014 and it is an absolute lemon. I have had ongoing issue since purchase … But the most recent issue takes the cake. 4 weeks ago the car lost power/acceleration (with flashing warning lights to go with it) whilst I was driving at 100km/hr on the highway. I’m lucky I didn’t die. Honestly. It was a traumatic experience that I don’t wish on anyone. I had the car towed (at my own expense) back to Eagers for the 8th time (and missed a day of work due to this as no loan car was available). Really crap when you’re a contractor and that meant no pay for the day - awesome) and told them that I do not want the car back unless it can be guaranteed 100% fixed, which to be honest, I don’t think I can trust them even if they say it is, given our history. I’m actually now scared to drive my own car!!

…

167    The Facebook message concluded by referring to Mazda’s lack of responsiveness, and to the apparent unavailability of Ms Miller. RC concluded, “Bottom line is, I NEED a car (whether it’s mine, a loan car or better yet a replacement vehicle). I start back at work tomorrow and apparently no one can tell me what is going on??” That same day, upon receipt of the Facebook message by Mazda, Ms Miller was internally instructed to contact RC “asap”.

168    The same day, RC telephoned Mazda and spoke to Mr Dean Oltoumis, because Ms Miller was unavailable. RC said she needed her car the next day, because she had to go to work. She sought confirmation that Ms Miller would call her back that day. She said she felt unsafe in the vehicle, and did not want it unless they could give a 100 per cent guarantee that it was safe. Mr Oltoumis said he would pass the information on to Ms Miller.

169    Having spoken to Mr Oltoumis about RC’s call, Ms Miller called the dealer, and was told that they had ordered a clutch switch that day as they had forgotten about RC’s car. Ms Miller then called RC and:

(1)    provided this information to RC, saying “that is appalling”;

(2)    told RC, “I’m hearing you and I believe every word you’re saying … I honestly do. How disappointing”;

(3)    was informed by RC that:

But that day when I was doing a hundred and there were cars behind me and basically it just goes from a hundred and just won’t do anything else, and I was just so lucky that there was a - like, an emergency lane, pretty much, a hundred metres ahead, so I just rolled into it, I guess, but I just - I don’t - when I took the car, like, into them on that Friday, I got it towed there and I basically said to them, “I don’t want the car anymore”;

(4)    was informed by RC that, “I can’t trust that it’s fixed. I’m scared I’m going to be in some sort of accident and kill myself in this car. I don’t want it”;

(5)    told RC in relation to the work done by the dealer, “they seem to be clutching at straws”;

(6)    told RC she had “escalated it” to “our Mazda Field Technical Manager” on the basis that “[h]e’s senior at Mazda and he will just oversee the work at Eagers”;

(7)    told RC she would organise a loan car for her that afternoon; and

(8)    was informed by RC, “I’ve only ever been so nice to them, like, I’m not an angry person” to which Ms Miller responded, “And you’ve given them so many opportunities. I’ve seen that”.

170    Ms Miller then arranged with Eagers for RC to be provided with a loan car.

171    On 10 October, Ms Miller and RC spoke again on the telephone. Ms Miller told RC that the dealer had kept the vehicle following the clutch switch replacement so that they could perform an extended road test to ensure that the car was in good repair.

172    Two days later, the dealer submitted a technical report to Mazda describing the issues with the vehicle and requesting advice. Between 12 and 20 October, Mazda’s technical department instructed the dealer on the tests and repairs to be undertaken. In accordance with this advice, the dealer swapped the injectors between cylinders, carried out a carbon clean and road tested the vehicle. The engine symptoms and the clutch plate replacement were not related.

173    On 31 October, during an 18 minute telephone call between RC and Ms Miller, Ms Miller and RC discussed the various steps the dealer had taken to fix the misfire problem. RC observed that it was “now week eight that I’ve been without my car”. She then asked, “at what point – if it – if it keeps happening, like, what the next step is because obviously if it keeps happening it’s an issue that isn’t fixable”. She said she was too scared to drive the vehicle and that it was a “ticking time bomb”. She expressed misgivings about continuing with a loan car because it had a $1,000 insurance excess, $600 more than that which applied to her own car. RC sought a timeframe from Ms Miller. RC said that she was concerned that the dealership was unable to fix the vehicle. Ms Miller said she “can’t guarantee you – that this car … won’t have a problem sometime in the next six months”.

174    RC then asked, “So what happens if it’s not fixable though?” Ms Miller replied, “It will – it’s fixable. Yeah”. The following exchange ensued:

RC:    … if Mazda – the Mazda Australia technician’s looked at it and it just continues to keep having this problem …

Ms Miller:    Mmm hmm.

RC:    … what - what do you normally do in that instance?

Ms Miller:    There hasn’t been a car that they can’t fix.

RC:    Mmm.

Ms Miller:    There has never been a situation where they can’t. It’s just a matter of, ah, sometimes getting the right person on it long enough … to just persist, just absolutely persist. I mean, they’ve - they’re doing everything they possibly can and are capable of doing at this - at this stage.