ACCC and Mazda chalk up a win and a loss in Federal Court appeals

The Federal Court has dismissed an appeal by the top consumer watchdog in a case that alleged Mazda had engaged in “unconscionable conduct” over certain warranty claims. However Mazda lost its appeal after being found to have engaged in “misleading conduct”.

Australia’s top consumer watchdog – and Japanese auto giant Mazda – each had a win and a loss in Federal Court yesterday in a protracted case over warranty claim denials that is likely to set a precedent for how conked-out cars will be repaired in future.

Australia’s top consumer watchdog lost an appeal against a Federal Court judgement that had previously determined Japanese auto giant Mazda had not engaged in “unconscionable conduct” when it knocked back certain warranty claims – including one case which saw an engine replaced three times within the first two years of purchase.

Nine owners of Mazda motor vehicles in Australia had previously requested a refund or replacement vehicle from Mazda after experiencing “recurring and serious faults with their new Mazda vehicles” within a year or two of purchase. One vehicle had three engine replacements within that time.

The peak consumer body, the Australian Competition and Consumer Commission (ACCC), alleged Mazda “pressured the consumers after repeated failed repairs to accept offers that were below what they were entitled to,” a statement from the ACCC said. 

“For example, Mazda offered to refund only a fraction of the car’s purchase price, or offered a replacement car only at a significant cost to the consumer.”

“We appealed this case because we believe that it is not acceptable business practice for businesses to give consumers the ‘run around’ and discourage consumers from pursuing their rights for a refund or replacement vehicle,” ACCC Commissioner Liza Carver said in a media statement.

The ACCC says it will carefully consider the Federal Court’s most recent judgement. 

While the ACCC lost its appeal – which exonerated Mazda for “unconscionable conduct” – the Federal Court dismissed Mazda’s appeal from the trial judge’s finding that the Japanese company made “49 false representations to consumers about their consumer rights.”

The case is now due to be referred back to the trial judge for a hearing at a later date on “the penalties and other orders sought by the ACCC in relation to the false representations made by Mazda.”

While the Mazda case may not be over yet, a statement from the Japanese company following yesterday’s findings said it is “pleased that the Federal Court by majority has upheld Justice O’Callaghan’s finding that it did not engage in unconscionable conduct.”

“This decision is an acknowledgment that Mazda acted within the law and that Mazda was, and remains committed to ensuring that its customers are treated fairly within the law,” the Mazda statement continued.

However, the Mazda statement noted: “We are disappointed that the Court upheld Justice O’Callaghan’s finding that (Mazda) engaged in misleading conduct and are carefully reviewing the Court’s decision in that regard.”

The ACCC instituted proceedings against Mazda in October 2019. The Federal Court handed down its original decision on 30 November 2021. The ACCC filed a Notice of Appeal against the Federal Court’s decision on 14 April 2022.

This case covered seven vehicles  – and nine individual consumers – including models such as the Mazda 2 small car, Mazda 6 mid-size car, Mazda CX-3 small SUV, Mazda CX-5 mid-size SUV and a Mazda BT-50 ute purchased between 2013 and 2017.

“Consumer guarantees under the Australian Consumer Law provide remedies for consumers if their product is not of acceptable quality,” the ACCC said in a media statement. 

“Consumers can choose to have a product replaced, repaired or refunded if there is a major failure. There is a major failure if a product is not fit for purpose, cannot be fixed within a reasonable time, or is unsafe.”

The ACCC has put the car industry under the spotlight since 2015, after it revealed motor vehicles were among the single biggest source of complaints to the top consumer watchdog.

Since then, the ACCC has issued court-enforceable undertakings from  Volkswagen, Holden, Hyundai and Toyota to ensure they meet their warranty obligations under Australian Consumer Law.

In April 2018, after action taken by the ACCC, the Federal Court found US car giant Ford engaged in unconscionable conduct in the way it dealt with complaints and ordered the company to pay $10 million in penalties.

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