Can affixing labels required by mandatory standards lead to misleading and deceptive conduct?

In December 2023, the High Court found that a representation made by a business that was required by specific piece of consumer protection legislation will, generally, not constitute misleading or deceptive conduct under the Australian Consumer Law (ACL), even if the representation has misled a consumer.

In July 2023, we reported on a consumer complaint over a mandatory fuel consumption label that went all the way from VCAT to the Victorian Court of Appeal, where it was held that the label was misleading and deceptive. The High Court’s recent decision reverses the prior decision of the Court of Appeal.

Recap of the facts

In 2017, Mr Begovic purchased a new 2016 Mitsubishi Triton vehicle from a car dealer, Northpark. In 2019, he commenced proceedings in VCAT against Mitsubishi Motors and Northpark, claiming that the vehicle consumed significantly more fuel than the figures displayed in the fuel consumption label affixed to its front windscreen.

The fuel consumption label was mandated by the Motor Vehicle Standards Act 1989 (Cth) (MVS Act), and the form and content of the label were prescribed by associated vehicle standards. As part of the statutory requirements, the label was required to prominently display figures representing certain laboratory tests for the relevant vehicle type. The procedures and protocols for the tests were also prescribed.

Mitsubishi Motors had conducted the requisite testing of a 2016 Mitsubishi Triton of the relevant type and caused the required label, which accurately displayed the results from the test, to be affixed to a vehicle before it was sold to Mr Begovic. However, Mr Begovic provided expert evidence that the fuel consumption of his vehicle was significantly more than the figures displayed on the label.

Preceding history

VCAT held that Mitsubishi Motors and Northpark had engaged in misleading and deceptive conduct in breach of section 18 of the ACL.1 Mitsubishi Motors and Northpark appealed to the Supreme Court of Victoria, then the Court of Appeal, and failed on both occasions.

The Court of Appeal found the label to be misleading and deceptive, as it reasonably conveyed that the fuel consumption figures could be substantially replicated if the prescribed laboratory tests were conducted. It also rejected the argument that the application of the label to the vehicle was mandated by law and therefore could not constitute misleading or deceptive conduct.

The High Court decision

Mitsubishi Motors and Northpark successfully appealed to the High Court.2

In a unanimous judgment, the High Court applied its earlier decision in R v Credit Tribunal; Ex parte General Motors Acceptance Corporation3 (GMAC). The GMAC case was said to reflect the principle that, in the event of apparent inconsistency of statutory requirements relating to the same subject matter (relevantly, consumer protection), the general provision may need to be subordinated to the specific provision in order to alleviate the apparent conflict.

Here, the specific consumer protection legislation (i.e. the MVS Act and the associated standards) required Mitsubishi Motors to apply, and Northpark to maintain, the fuel consumption label on the vehicle sold to Mr Begovic. The form and content of the label were dictated by that specific legislation. As the fuel consumption figures on the label were validly obtained during the prescribed laboratory testing under the specific legislation, Mitsubishi Motors and Northpark had to display these figures on the label.

Accordingly, the conduct of Mitsubishi Motors and Northpark in applying and maintaining the fuel consumption label to Mr Begovic’s vehicle, was found not to be misleading or deceptive under section 18 of the ACL.

In reaching its decision, the High Court also noted that section 18 of the ACL assumes conduct “in trade or commerce” involves a choice to engage in that kind of trade or commerce. As the appellants’ conduct of applying and maintaining the fuel consumption label was mandatory, that conduct was not characterised as “in trade or commerce”. The High Court noted that “where the conduct in trade or commerce said to contravene s 18 of the ACL is the same conduct which is required by another consumer protection law to be carried out only in a prescribed manner, the need to reconcile s 18 of the ACL with that other law cannot be avoided by characterising the conduct (such as presentation and supply) as voluntary”.

Implications for suppliers

The High Court’s decision in this case provides some reassurance for businesses, that a mandatory representation made in compliance with statutory obligations (such as applying product labels required by specific consumer protection legislation, whether it be motor vehicle laws, food laws, therapeutic goods laws for instance) is unlikely to expose them to misleading and deceptive conduct claims under the ACL, even if a consumer has been misled by the representation.

However, businesses should bear in mind that the protection afforded by the mandatory obligation will not extend to a representation made voluntarily over and beyond what is required by the specific legislation.

For more information contact the Addisons Competition, Consumer & Antitrust team.

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1 VCAT also found that Mitsubishi Motors and Northpark had breached the consumer guarantees under section 54 of the ACL (namely the vehicle was defective and not of acceptable quality). This finding was overturned by the Supreme Court of Victoria.
2 There were two grounds of appeal at the High Court – the “mandatory conduct” ground, and the “testing replicability representation” ground (i.e. the fuel consumption label did not make a representation that the figures can be replicated, but rather it was a representation that the label accurately recorded the results of prescribed testing on a test vehicle). As the appellants succeeded on the mandatory conduct ground, the High Court did not need to determine the “testing replicability representation” ground.
3 (1977) 137 CLR 545

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