Claims for aggregate damages allowed in Toyota class action

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This was the initial trial of a class action on behalf of motor vehicle owners (both initial and subsequent purchasers) in relation to allegedly defective diesel motor vehicles manufactured by the respondent (Toyota). The particular defect that was alleged, and essentially admitted by Toyota, related to the ‘diesel exhaust after-treatment system’ (DPF System), whose purpose was to capture and convert the pollutant emissions from the diesel engine into carbon dioxide and water vapour. The defect was that, under certain driving conditions (particularly regular continuous high speed driving, which is not uncommon on Australian roads), the DPF System would malfunction and become blocked. Whilst that did not present a safety problem per se, it did: (i) result in excessive white smoke and a foul smelling odour; (ii) require excessive visits to the dealership for servicing; and (iii) result in some level of increased fuel consumption.

The applicants brought claims based on contravention of the ‘acceptable quality’ guarantee in s 54 of the Australian Consumer Law, and for misleading or deceptive conduct. Those claims were upheld, primarily on the basis of findings made by a Court-appointed referee, and adopted by the Court. However, one issue which divided the parties was whether Lee J was able to determine those claims on a ‘common basis’ (that is, whether his Honour could determine that the vehicles supplied to all of the class members were not of ‘acceptable quality’, and whether Toyota had engaged in misleading or deceptive conduct vis-à-vis all of the class members). His Honour held that he could, because:

• in relation to the ‘acceptable quality’ issue, the identified defect in the vehicles, which caused their value to diminish, was their propensity for the DPF System to malfunction as identified above, not the actual manifestation of that malfunction (and thus vehicles which had not exhibited the malfunction because, for example, they had not been exposed to regular continuous high speed driving, were nevertheless defective and not of ‘acceptable quality’); and

• the representations relied on for the misleading or deceptive conduct claims were marketing type representations that were made to the public at large, not bespoke representations made to individual purchasers (albeit the question of reliance and causation might still be an individual issue).

In relation to damages, the applicants sought recovery of various heads of damage, some on an aggregate basis encompassing the claims of all class members, and others on an individual basis. In an earlier judgment, his Honour held that it was permissible for an applicant to do so (i.e. to seek an order for aggregate damages in relation to part only of a claim, or for certain heads of damage only) (Williams v Toyota Motor Corporation Australia Ltd (2021) 157 ACSR 186; [2021] FCA 1425). The two particular heads of damage that were sought on an aggregate basis were for:

• the reduction in value of the vehicle as a result of the DPF System defect, at least for those class members for whom the defect had not been rectified (i.e. the difference between the purchase price and the true value of the vehicle at the time of purchase having regard to the defect); and

• the additional GST paid as a result of the purchase price of the vehicle exceeding its true value.

His Honour dealt with aggregate damages at [416]ff. His Honour’s reasons may be summarised as follows:

• aggregate damages may be awarded by the Court under s 33Z(1)(e) or (f) of the Federal Court of Australia Act 1976 (Cth);

• section 33Z(1)(e) empowers the Court to “make an award of damages for group members …, being damages consisting of specified amounts or amounts worked out in such manner as the Court specifies”;

• section 33Z(1)(f), on the other hand, empowers the Court to “award damages in an aggregate amount without specifying amounts awarded in respect of individual group members”, but only if “a reasonably accurate assessment can be made of the total amount to which group members will be entitled under the judgment” (s 33Z(3));

• the reduction in value for each class member was, his Honour found, 17.5% of the purchase price of the vehicle;

• as the purchase price for each vehicle was different, it was not possible to make “a reasonably accurate assessment … of the total amount to which group members will be entitled”, and therefore s 33Z(1)(f) did not apply;

However, it was possible to make an award of aggregate damages under s 33Z(1)(e) by specifying that the amount of damages was to be worked out as being 17.5% of the purchase price of the vehicle (and likewise in relation to the excess GST paid on the purchase price, together with interest on those amounts) – thus, an award of aggregate damages was made in favour of relevant class members on that basis.

Williams v Toyota Motor Corporation Australia Ltd (Initial Trial) [2022] FCA 344

Federal Court of Australia, Lee J,
7 April 2022

Applicants’ Solicitors: Gilbert + Tobin
Respondent’s Solicitors: Clayton Utz
Applicants’ Funder: N/A

Austlii Link: Available here

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