Mandatory fuel label not misleading conduct, says High Court

In a case that has been watched with bated breath by the automotive industry since April this year, the High Court has granted a reprieve to car manufacturers, and to other industries subject to mandatory labelling requirements (Mitsubishi Motors Australia Ltd v Begovic [2023] HCA 43).

Mr Begovic had bought a Mitsubishi Triton, which he said consumed fuel at a higher rate than indicated by the label on its windscreen. He alleged the label was misleading and deceptive, an argument accepted by lower courts, with the Victorian Court of Appeal holding a reasonable consumer was entitled to believe that the information on the fuel label would substantially reflect the results that their own vehicle would produce if it was tested using the prescribed method.

However, the label as affixed to the windscreen of Mr Begovic's vehicle at the time of sale was required by law. Specifically, the Motor Vehicle Standards Act 1989 (Cth) (the MVS Act) required, as a condition of supply of a new vehicle, that the vehicle display a fuel label showing the test figures achieved by a representative vehicle under certain prescribed lab conditions. To comply with that requirement, Mitsubishi could not include on the label the results of any separate testing of the actual individual vehicle (were such testing to even be feasible in practice).

The High Court was ultimately asked to determine two questions:

1. whether a manufacturer could engage in misleading and deceptive conduct under the Australian Consumer Law (the ACL) by applying to a vehicle a fuel consumption label that it is required by law to apply to the vehicle in a prescribed form (what the judgment refers to as "the mandatory conduct ground"); and
2. whether the label represented that the fuel consumption values were substantially the same as would be obtained by replicating the standardised testing on the specific vehicle in question or, alternatively, whether the only representation conveyed by the label was that the label accurately records the results of the standardised testing of the representative test vehicle for that type of vehicle.

Mitsubishi's representations on the label: the High Court decides

In reconciling the obligations under the MVS Act and the ACL, the High Court questioned whether the supplier had made false representations that the actual vehicle sold conformed to the type of vehicle referred to in the label. There was no evidence of any representations or any conduct other than applying the legally required label during importation, presentation and supply of the vehicle.

The High Court concluded that a manufacturer will not be liable for misleading and deceptive conduct where the conduct that is said to be misleading has been engaged in only because it is a requirement of law (in this case, the requirement that a fuel label in the prescribed form be applied to a vehicle in order for it to be sold).

Because it was able to find in Mitsubishi's favour in relation to the mandatory conduct ground, the Court did not offer any views about the second representation ground.