Assessment of damages for breach of consumer guarantees addressed by Full Federal Court

29 March 2023

On Monday the Full Federal Court handed down a judgement which addressed the proper approach to assessing claims for damages under section 272(1)(a) of the Australian Consumer Law for breach of the consumer guarantees.

The judgment arose from the representative proceedings against Toyota in respect of defects in the Diesel Particular Filters of certain Toyota models prior to 2020. In the initial trial before Lee J, his Honour found that it was appropriate to make an aggregate damages award on the basis that the vehicles were defective and that the loss in value suffered by group members pursuant to s 272(1)(a) was an amount equal to 17.5% of the purchase price (or average retail price) of group members’ vehicles. By May 2020, the defect was no longer present in new vehicles and Toyota had commenced rolling out a fix for the existing defective vehicles. The trial judge found that the fix in 2020 was not relevant to the damages calculation, which was to be calculated as at the date of purchase by group members.

The Full Federal Court (Moshinsky, Colvin and Stewart JJ) set aside the orders of the trial judge in respect of damages. The Full Court found that the conceptual approach adopted by the trial judge was in error because it did not take the 2020 fix into account. It was necessary to do so because the word “damages” in section 272(1)(a) was concerned with compensation for loss or damage. Section 272(1)(a) does not require the assessment of damages to be based on the time of supply in all cases. The Full Federal Court also reduced the initial damages proportion from 17.5% to 10%. The proceedings will now be remitted to the trial judge to determine how the 2020 fix should be taken into account.

Robert Dick SC and Anais d’Arville appeared for Toyota. Peter Strickland was junior counsel for the representative class.

Link to judgment: https://lnkd.in/gdBMvZhW