Application for aggregate damages fails in Ford transmission action

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This was a class action on behalf of vehicle owners in respect of certain models of Ford motor vehicles (comprising some 70-odd thousand vehicles in total). Those vehicles contained a ‘DPS6’ dry dual-clutch transmission, which it was alleged contained several defects which not only affected the driving experience and performance of the vehicles, but in some respects rendered the vehicles unsafe. Claims were brought based on a contravention of the ‘acceptable quality’ guarantee contained in s 54 of the Australian Consumer Law (ACL), and for misleading or deceptive conduct.

Following a lengthy trial, Perram J upheld the applicant’s claims in part. Specifically, although his Honour held that the applicant had not succeeded in proving all of the alleged defects in the DPS6 transmission, and that her misleading or deceptive conduct claims  failed, nevertheless, she did succeed in proving some of the alleged defects (the precise details of which are not relevant for present purposes), and that those defects were such as to amount to a contravention of the ‘acceptable quality’ guarantee contained in s 54 of the ACL, so as to entitle her to an award of damages.

Of particular note, the applicant sought an award of ‘aggregate damages’ on behalf of the class members under s 33Z of the Federal Court of Australia Act 1976 (Cth), and in that regard claimed ‘reduction in value’ damages under s 272(1)(a) of the ACL, and other losses under s 272(1)(b) of the ACL. Although her personal claim for damages was largely successful, her claim for ‘aggregate damages’ on behalf of the class members was not. The primary reasons for this were that:

• section 33Z permits an award of aggregate damages to be made in respect of the claims of class members, but only where “a reasonably accurate assessment can be made of the total amount to which [they] will be entitled under the judgment”; 

• under s 272 of the ACL, the damages that may be recovered for a contravention of the ‘acceptable quality’ guarantee are in effect two-fold, being: (i) any reduction in value of the goods as a result of the defect(s) in the goods (s 272(1)(a), referred to generally as ‘reduction in value’ damages); and (ii) any other losses that were ‘reasonably foreseeable’ (s 272(1)(b));

• however, under s 271(6) of the ACL (as to the drafting of which his Honour said (at [726]): “even by the lamentable standards of Commonwealth drafting, [it] lurks near the bottom of the barrel”), ‘reduction in value’ damages under s 272(1)(a) may not be awarded where the consumer has, in accordance with an express warranty relating to the goods, required the goods to be repaired or replaced by the manufacturer of the goods, and the manufacturer has done so, unless they failed to do so within a ‘reasonable time’ – in other words, a claimant will only be entitled to recover ‘reduction in value’ damages under s 272(1)(a) of the ACL where there has been no repair or replacement of the defective goods by the manufacturer, or any such repair or replacement did not occur within a ‘reasonable time’ (albeit, that does not affect any entitlement to other losses under s 272(1)(b));

• in the case of the applicant’s vehicle, although the defects had, for the most part, been repaired, his Honour was not satisfied that they had been repaired within a ‘reasonable time’ – as such, the applicant was entitled to an award of ‘reduction in value’ damages under s 272(1)(a) of the ACL (in addition to other losses under s 272(1)(b));

• however, as the claims of individual class members had not been litigated as part of the initial trial, it was not possible to say, in relation to any particular class member, whether repairs to their vehicle had been effected by the respondent, and if so, whether they had been effected within a ‘reasonable time’ – that issue is, quintessentially, an individual issue, such that it was not presently possible to know how many (if any) of the class members may be entitled to an award of ‘reduction in value’ damages under s 272(1)(a) of the ACL (in addition to their claim for other losses under s 272(1)(b)); 

• as that issue went directly to the basis of quantification of the class members’ claims, it was not presently possible to make “a reasonably accurate assessment … of the total amount to which group members will be entitled under the judgment” (emphasis added) within the meaning of s 33Z (even if it may have been possible to make such an estimate in relation to parts of the class members’ claims).

Thus, the applicant’s claim for an award of ‘aggregate damages’ on behalf of the class members failed (at least until it was known which (if any) class members may be entitled to ‘reduction in value’ damages under s 272(1)(a) of the ACL).

Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715

Federal Court of Australia, Perram J, 
29 June 2021

Applicant’s Solicitors: Corrs Chambers Westgarth;
Respondent’s Solicitors: Allens;
Applicant’s Funder: N/A

Austlii Link: Accessible here

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