Capic v Ford Motor Company of Australia Pty Ltd [2024] HCA 39

What the court decided

Ford Motor Company of Australia imported vehicles fitted with the DPS6 transmission and was deemed to be their manufacturer under the Australian Consumer Law [4], [44]. In 2016 Ms Capic sued Ford in representative proceedings for persons who bought the vehicles between 1 January 2011 and 29 November 2018 [5].

Five defects were found across the vehicles, and every vehicle had at least one [6], [8]. Ms Capic's vehicle had all five, two of which were remedied by replacement parts in 2016 and 2017 [8].

The primary judge awarded her $6,820.91 under section 272(1)(a), finding the vehicle worth 30% less than the price she paid, treating the later repairs as irrelevant [10]. With damages under section 272(1)(b) for excess GST, stamp duty and financing costs plus interest on the section 272(1)(a) damages only, the total award was $17,248.19 [11].

The Full Court of the Federal Court (Yates, Beach and Downes JJ) upheld the finding that every vehicle was supplied in breach of the guarantee of acceptable quality, but set aside the damages assessment [3], [12]. Following an earlier Full Court decision, it held that the repairs, her use of the vehicle and its value at trial should have been considered [14].

Ms Capic was granted special leave to appeal [15].

The joint reasons of Gageler CJ, Gordon, Steward, Gleeson and Beech-Jones JJ applied Williams v Toyota Motor Corporation Australia Ltd [2024] HCA 38, which overturned parts of that earlier Full Court reasoning [1], [3].

The joint reasons held that section 272(1)(a) supplies its own measure of damages, with no warrant to depart from the time of supply or to adjust the award to avoid over-compensation [17]. Whether the risks later materialised adds nothing to a hypothetical reasonable consumer's knowledge at supply [18].

Ford succeeded on one point: later-acquired knowledge of a defect, including the effectiveness, cost, inconvenience and timing of any repair, is attributed to that consumer as at the time of supply [20], [25]. The findings that every vehicle was supplied in breach of the guarantee were not challenged and stand [20].

Later use of the vehicle may bear on the reduction in value only so far as it bears on the performance a reasonable consumer would have expected at supply before any repair [22]. Performance worse than that consumer would have assumed at supply may be recoverable under section 272(1)(b) [22].

The joint reasons left open whether value at trial is relevant, but any relevance lies only in what it shows about value at supply [23].

Because the primary judge had not assessed damages in accordance with Williams, the joint reasons remitted the assessment to him [3], [24]. They called his approach, an impressionistic assessment with clear but brief reasons after rejecting both valuers, entirely appropriate [24].

The Court allowed the appeal, dismissed the cross-appeal and, in place of orders 1 and 7 of the Full Court, set aside the primary judge's damages order and remitted Ms Capic's damages for redetermination in accordance with the High Court's reasons, with pre-judgment interest on the damages for excess GST, stamp duty and financing costs [26]. Ford was ordered to pay 75% of Ms Capic's costs in the High Court [26].

In separate concurring reasons, Edelman J agreed with the joint reasons' application of Williams and with their orders [29], [42]. Because, outside consequential loss, the term can invite reasoning from flawed premises, his Honour said over-compensation should be used with great care and confined to consequential loss claims or avoided [32]. Separately, his Honour said the appeal turned on section 272(1)(a) not being concerned with consequential loss [32].

Jagot J, in separate reasons applying her Honour's own reasons in Williams, would also allow the appeal, because the Full Court erroneously applied the earlier Full Court reasoning [43], [59]. Her Honour's own construction ties the entitlement to recover to the loss subsisting at the date of judgment [53]. Her Honour would have reinstated the primary judge's order for $17,248.19, subject to consequential orders, rather than remit [61]. The remittal orders were therefore those of the other six Justices [26], [42].

Why it matters

It follows from the joint reasons that valuation evidence should address value at the date of supply, assuming a reasonable consumer who knows of the defects and of what was later learned about any repair [20], [22]–[23].

Jagot J alone warned that parties who do not obtain valuations at different dates and on different assumptions cannot expect another opportunity on remittal if their evidence is rejected for incorrect assumptions; the joint reasons left any further evidence to the primary judge [24], [50].

The appeal arose in a representative proceeding, but the orders remitted only Ms Capic's own damages and the reasons decide no question of representative proceedings procedure; the group members' damages had not been assessed [10], [24], [26].

Readers should check the current text of the Australian Consumer Law.

Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.