Williams & Anor v Toyota Motor Corporation Australia Limited (ACN 009 686 097); Toyota Motor Corporation Australia Limited (ACN 009 686 097) v Williams & Anor [2024] HCATrans 21 (10 April 2024)

Last Updated: 10 April 2024

[2024] HCATrans 021

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S157 of 2023

B e t w e e n -

KENNETH JOHN WILLIAMS

First Appellant

DIRECT CLAIM SERVICES QLD PTY LTD (ACN 167 519 968)

Second Appellant

and

TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED (ACN 009 686 097)

Respondent

Office of the Registry
Sydney No S155 of 2023

B e t w e e n -

TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED (ACN 009 686 097)

Appellant

and

KENNETH JOHN WILLIAMS

First Respondent

DIRECT CLAIM SERVICES QLD PTY LTD (ACN 167 519 968)

Second Respondent

GAGELER CJ
GORDON J
EDELMAN J
STEWARD J
GLEESON J
JAGOT J
BEECH‑JONES J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 10 APRIL 2024, AT 10.03 AM

Copyright in the High Court of Australia

____________________

MR J.T. GLEESON, SC: May it please the Court, I appear for the Williams parties in each appeal with MR P.A. MEAGHER and MR T.M. ROGAN. (instructed by Gilbert + Tobin)

MR B.W. WALKER, SC: May it please the Court, I appear with my learned friend MS E. BATHURST for Toyota. (instructed by Clayton Utz)
GAGELER CJ: Yes, thank you, Mr Walker. I note that the parties in the next matter of Capic and forward are represented in Court; there is no need to announce your appearances at this stage. Mr Gleeson, I think you were first.

MR GLEESON: Thank you, your Honours. Your Honours will see from our outline that we wish to commence with a clear understanding of the breach of section 54 that grounds the dispute as to evaluation under section 272. After dealing with that first topic, I will then deal with our approach to section 272, which embraces Justice Lee and Justice Perram in the Capic matter. I will then deal in an anticipatory fashion with the Toyota approach which, we submit, has no support in any known principle to law. Then, I will come to the Full Court’s hybrid approach, which I will call the lonely orphan in our appeal ‑ ‑ ‑

GAGELER CJ: It is not really being supported, is it?

MR GLEESON: It is not supported by anyone, so I will need to deal with it as far as I need to deal with it, but I can say now the formula of a x ^b/_c, which was proposed in a letter, was argued for by no one; it has no support in principle, and it does not get much better when one reads the way the court sought to support it between paragraphs 95 and 136 of the Full Court. Amongst its many other problems, we are trying to ascertain a reduction in value on supply. Toyota and Williams now agree we are looking on supply; we are comparing the statutorily guaranteed value from the manufacturer, which is defined as the lower of price paid and average retail price against the value of what you got on supply. To turn that into an approach as per the Full Court of saying, let us try and look at what you got over the life of your vehicle, having regard to events which occurred in the actual world, we submit, is not supported in the statute and would not have been supported in a contract.

Your Honours, my fifth topic, I will have to say little under ground 2, we submit that Justice Lee’s seventeen and a half per cent assessment of the diminution in value was amply supported and there was no appealable error in it. If anything, with respect to his Honour, he was a little on the miserly side, but we are not complaining about seventeen and a half per cent. Your Honours, if that is convenient – I know you do not want to hear about the facts for too long, but can I just ground the breach because it explains why, in Justice Lee’s approach, the damages are correct. Your Honours will have seen in the core appeal book at paragraph 15, on pages 18 to 21, there is, with respect, an amply concise summary of the sad history of the DPF system in the 264,000‑odd VW vehicles.

The basic problem was that, as designed in head office, the car itself and the exhaust was not intended to meet Australian emissions standards. In order to try and meet those standards, decisions were made in the design process which led to the DPF and the DOC that you see depicted on page 19 at the top. They were designed as an intermediary between the exhaust and the muffler to get rid of the dangerous diesel particles, which otherwise would breach Australian law. In doing so, because they were defectively designed, they became blocked for reasons that are now common ground. When they became blocked – you see in paragraph 15(6) – regeneration failed or was ineffective, blockage occurred and then these were the consequences. Number one:

The DPF System was defective for the whole of the Relevant Period –

that is the period between some time in 2016 and prior to May 2020. Number two:

the DPF system was not designed to function effectively during all reasonably expected conditions of normal operation –

and the reasons for that are given. Number three, what it led to under normal driving conditions, including driving at 100 kilometres per hour, a normal driving condition, is:

excessive white smoke and foul‑smelling exhaust during regeneration –

process, plus indications from the dashboard that the system “was full” and that led to the problem that you were told you had to take your car in immediately for service. If you did not, the car went into limp mode, fifth gear was disabled, acceleration was limited.

They are the consequences you start to see over the page, at subparagraphs (8) and (9). So, that is a little introduction to the defect. As to the consequences which were likely to emerge, you will see them at paragraph 59, on page 32, and you will see, importantly, in paragraph 62, the referee’s finding – which was accepted – was that every vehicle had the propensity to suffer at least one of the defect consequences when driven in the high‑speed pattern. They are set out there, the consequences I have mentioned, and 63 confirms it was a propensity case.

So, the case was run based on the Medtel‑type of case, that the defect had a propensity to exhibit unacceptable behaviours in ordinary driving and it did, in fact, so exhibit those behaviours, which you see from paragraph 64. Even on Toyota’s assessment, 50 per cent of the vehicles would fail after five years and 94 per cent would after 10 years. So, effectively, every vehicle if driven under these normal conditions had the propensity to fail in one of those fashions.

The primary judge made a finding of fact which the Full Court did not overturn, and could not, which was that these were serious consequences and they substantially interfered with the normal use and operation of the vehicle. That is tolerably obvious from what I have already said, but to emphasise it – back on paragraph 21, on page 22 – even the respondent recognised that these issues posed a serious threat to their market reputation. They were a serious matter deserving of urgent attention and substantial resources and TCM has offered refunds to hundreds of customers.

Your Honours might add together with that, between paragraphs 78 and 86 of Justice Lee, issues which are now not open in this Court. Perhaps bizarrely, TCMA tried to argue that none of this was serious because you could still limp from A to B even though you had a foul‑smelling exhaust, you are being pulled up by the police for a bad muffler and you were being abused by the motorists for your car.

Now, Justice Lee, between 78 and 86, rejected all of that. Paragraph 81 explains why these were incredibly serious issues, including the limp mode, the disabling of the fifth gear, the limitation of acceleration. Paragraph 85, “tens of thousands of customer complaints”, and 86, TCMA’s internal appreciation that this was a very major problem. Now, based on those findings of fact, if your Honours have section 54, which is on page 115 of volume 1 of the materials in the ACL. The guarantee was that the goods would be of “acceptable quality”, defined as – and then there is a double test:

they are as:

(a) fit for all purposes . . .

(b) acceptable in . . . finish; and

(c) free from defects . . .

. . .

(e) durable;

as a reasonable consumer fully acquainted with the state and condition . . . (including any hidden defects . . . would regard as acceptable –

So, one attributes to the reasonable consumer a full knowledge of this sad, sad situation with VW’s vehicle and says would the consumer regard that as acceptable, and I am emphasising this because this is the finding that will then carry through to the valuation exercise.

His Honour reached his conclusions on this question commencing at paragraphs 153, but, in particular, I would emphasise the findings that commence at paragraph 173 where his Honour went through each of the breaches of the guarantee. What is put at paragraph 183 is hard to gainsay, including not only the discomfort for those in the car who were experiencing “the foul-smelling white smoke”, “being pulled over by the police”, “abuse” from other drivers, frustration, frustration, anger, et cetera. And those conclusions, this Court will now act upon.

So far, I have looked at the major aspect of the problem. This was a defect with a propensity to cause significant defect consequences. Can I then turn to what is in the balance of paragraph 2 of our outline, which is, what were the facts as they were known or knowable at the date of supply about the possibility, if any, of a repair. At paragraphs 168 to 170, his Honour, correctly concentrating on the text of section 54, focused on:

the state and condition of the vehicles at the time of supply –

rather than things that might occur after supply, and at 170 said:

it is inappropriate to imbue the “reasonable consumer” with knowledge that an effective fix will ultimately become available . . . This is not a matter that goes to “the state and condition of the goods” at the time of supply –

And then we see a finding of fact:

nor is it a fact that could have been known at the time of supply –

There is then a reference to Medtel and Henry Kendall and, importantly, in the last sentence, his Honour made a finding of fact that:

no fix is presently available, and it is not known when –

or one might interpolate, whether:

a fix will become available –

GAGELER CJ: Why so interpolate “whether”?

MR GLEESON: It follows from the “when”. So, his Honour’s finding is, as we would seek to summarise in paragraph 2: is there a fix available today? Answer: no. That is the known known. Paragraph 2(b), the known unknown, is there can be no certainty today or even reasonable expectation of whether, when or on what terms a fix might become available.

GAGELER CJ: Do you say that comes from the finding?

MR GLEESON: It comes from this finding, read with the findings I am now going to take your Honours to. So, if I might go to those additional findings, what they are is that over the four and a half year period, despite enormous attempts to seek to solve the problem, Toyota failed to solve the problem and, indeed, some of its purported solutions made the problem worse. That is material which can be taken into account in respect to each consumer at the date of supply to indicate there could be no confidence whether, when or on what terms a fix might become available.

Can I take your Honours to the additional findings and evidence that support that submission. Firstly, at paragraph 16, you have the overall finding that over the four years, despite enormous attempts:

the number of complaints increased dramatically; the issues were escalated . . . and a number of countermeasures were introduced, tested and failed.

Next, you have paragraph 44, which is the referee’s finding that:

The countermeasures attempted . . . during the Relevant Period were ineffective and in some cases caused the DPF System to malfunction . . . which had not previously suffered –

problems. At 46, his Honour made clear that that finding applied to the 2018 production change, and 49 confirms that finding. I would like to take your Honours to take our chronology, just to highlight the references which support that finding. So, this is the appellants’ chronology in appeal 157/2023. Item 3, the problem starts to emerge, and item 4, it is reported to head office. Item 6 is the first Toyota Global Registration Notice, recording that the:

“Failure strongly affects the reputation . . .

There is no current repair method.

So, that confirms our paragraph 2(a):

A quick Production [countermeasure] & supply of service parts is required.”

Now, that is a correct recognition by Toyota of what the reasonable consumer would demand, that if you do not have a current repair method, you must find a quick and readily available supply. Item 7 shows that by June 2016 they had:

identified the High Speed Driving Pattern as a root cause –

As, likewise, item 10. Importantly, item 11 is the first field fix. December 2016, it:

was ineffective, and in some cases, caused the DPF System to malfunction –

where there was no previous malfunction. So, if we pause the frame at the end of 2016, we have no repair, attempts at repair are ineffective, there could be no confidence when a better result would be achieved. In 2017, item 16 is the internal document of April 2017 that 50 per cent will fail:

within 5 years and 94% within 10 years.

Item 18, it is mid-2017 that the first field fix starts to be deployed. And then, over the page at item 21, by September 2017, there is a further Global Registration Request indicating that the First Countermeasure has failed and caused problems in vehicles with no previous problems. Item 22 makes clear the seriousness of that situation. Over the page, item 31 is the second field fix – that is the 2018 one; that failed. And then, over the page at item 36, October 2018, they start rolling out the second field fix, but that continues to cause problems. And then, by item 43, by January 2019, they are on the fourth Global Registration Notice:

“Vehicles which have received the latest CSC (ECU reprogram) continue to fail post repair. As the number of occurrences is increasing and a large number of vehicles are effected an urgent Field Fix and root cause investigation is necessary.”

So, if your Honours recall, I had started with the entry at item 6, which is, a quick fix was necessary. We are now close to three years in, and they are saying the current fixes have failed and we still need an urgent fix. Then, at item 45, we get the fifth GRN, the number of occurrences is still “increasing”, the fix is needed, and, over the page at item 49 – you can see the fix, item 57, first starts to be offered to some customers from May 2020.

Now, across that entire four-year period, the situation that we say has been found by his Honour at paragraph 2(b) remains constant: no certainty or expectation whether, when or on what terms a fix might become available. The 2020 field fix, I have shown your Honours, emerged in May 2020. In terms of the nature of the fix, if your Honours have the parties’ book of further materials – that is the Williams book – at page 135, paragraph 171 of the agreed facts, that is what it involved.

STEWARD J: Sorry, Mr Gleeson, what was the page number, again?

MR GLEESON: Page 135 of the Williams book, paragraph 171. That is what the fix involved – a new Euro 6 unit with “a modified substrate”, “a modified additional injector housing assembly”, reprogrammed software. We would describe that as a reconstitution of the exhaust system achieved four and a half years after the problem was first identified. So, we would submit, coming to section 272, it is that set of failures to honour the guarantee that form the substratum of the remedy.

If your Honours have section 271 and 272, can we make these construction submissions? It is page 314 of the book. So, the action for damages against the manufacturer is conferred under section 271, by reference to the non‑compliance with the guarantee. It is conferred upon affected persons who are defined in section 3, on page 44, to include the consumer but also certain privies of the consumer. It is to:

recover damages from the manufacturer –

Under section 272(1), in that action for damages, the affected person has an entitlement to recover damages for two separate matters, (a) and (b), and the first matter is damages for:

any reduction in the value of the goods, resulting from the failure to comply with the guarantee . . . below . . .

(i) the price paid or payable . . .

(ii) the average retail price –

Pausing there, we submit that the paragraph (a) entitlement protects the performance interest of the affected person. What it does is to secure to the person a sum of money, measured by reference to the diminished value following the failure to comply, which, when taken together with the defective goods, puts the consumer in as good as position as money can, as if section 54 had been complied with. It does that at the date of supply by comparing a creature known at the date of supply – which is price paid or average retail price, whichever is lower – with the value of the goods reduced, as at that date, resulting from the breach.

Therefore, it requires very close attention to what is the breach and if the breach lies in the goods containing a defect which gives them a propensity to exhibit troubling behaviours with no known or knowable ready remedy. It is that propensity and that absence of a known or knowable ready remedy which is fed into the value calculation. One way we would put it, your Honours, is that it is contemplating a hypothetical transaction between the reasonable marginal consumer and the supplier in – which with full knowledge of the defect, and full knowledge of the lack of any ready repair – what would the consumer have paid.

EDELMAN J: It is a form of, effectively, monetised specific performance, is it not?

MR GLEESON: It is, and it is done at that date based upon knowledge of the defect. So, that knowledge is brought to the parties, and it can include the knowledge that there is no ready repair – I am sorry, your Honour?

JAGOT J: In Spencer’s Case dealing with hypothetical transactions, the purchaser is assumed to be fully informed, as is the vendor, about the actual attributes and condition of the land. So, why is the line of knowledge drawn at – because it is hypothetical, you are attributing to them knowledge of the defect or the failure – why is the fully‑informed hypothetical parties, about attributes of the vehicle, not attributed with further knowledge? There seems to be a line as to where you draw the attribution of knowledge. Not to do with events after sale, it is all hypothetical; it is not an actual transaction, it is by definition hypothetical. So, why can you not attribute other knowledge?

MR GLEESON: I agree with your Honour, it is by definition hypothetical, and we know from section 54 you have to attribute knowledge about the defect – the true nature of the hidden defect – you attribute that as part of the hypothetical calculation. So, the consumer and Toyota are hypothetically engaged in a negotiation: I am not now selling you a brand new well‑functioning Prado, I am now selling you a Prado which has an unacceptable propensity to exhibit all those consequences.

JAGOT J: But why not? Why do you not also, including that – if it is a fully informed about all the attributes Justice Isaacs, then why do you not attribute knowledge that these defects are ultimately repairable after four and a half years of hell?

MR GLEESON: What we are content to attribute is what is in paragraphs 2(a) and (b) of our outline, which is you can first attribute the fact that there is no known remedy currently available. So, that is easy; 2(a). And 2(b), at that date what you are attributing is an uncertainty of knowledge. There can be no certainty whether, when or on what terms a fix might become available in the future. That is the knowledge that is reasonably available in the hypothetical bargain.

JAGOT J: Then the parties are not fully informed.

MR GLEESON: They are informed of all the matters that they are capable of being informed of at the time the bargain is being made, which is the time when the breach occurred.

EDELMAN J: Suppose you had the converse of this situation where I manufacture or sell to you goods that, at the time, nobody could have known had some major latent defect, maybe they contained carcinogens or something like that. Years later that major latent defect is discovered. Is the difference in value not substantial even though, at the time that I have supplied the goods to you, nobody could have known, on the state of scientific knowledge, the defect in the goods?

MR GLEESON: Well, the defect is – the difference is substantial in that example.

EDELMAN J: So, why is the state of knowledge relevant in the case before us then?

MR GLEESON: I am sorry, I missed your Honour’s question. Why is it relevant at all or how is it relevant?

EDELMAN J: Well, as I understand your submission, it is that one does not look to the fact that a fix was later discovered because you could not have known at the time of supply that there would be a fix that was later discovered and then offered for free. In the example that I am giving you, on the state of scientific knowledge, nobody could have known that there was a major latent defect in the goods that are supplied.

MR GLEESON: Your Honours, our answer lies in two things, which is that this is protecting the performance interest, we are not in the field of tort where we are trying to put someone back in a position they were in, we are protecting a performance interest. To identify that performance interest, this Court in Clark v Macourt, that I would like to go to, provided some discussion of it. That is at tab 8.

GAGELER CJ: There is a whole contestable philosophy that lies behind that label of performance interest.

MR GLEESON: Yes.

GAGELER CJ: Are you attributing that philosophy to the Parliament in enacting this provision?

MR GLEESON: No, I am trying to attribute some plain sense meaning to some plain sense words. What was the Parliament trying to do in this case? What it was trying to do, we say, was you are trying through money to put you in the position the statute guaranteed the manufacturer would put you in and how do you do that in a practical sense, having regard to the breach that has occurred in the particular case.

Now, what we take from Clark v Macourt [2013] HCA 56; 253 CLR 1 are two things. The first thing, in paragraph 67 in your Honour the Chief Justice’s judgment, dissenting in the result but not on this issue, when your Honour described – admittedly, this was a context of a non‑delivery case, not a defective delivery case, but in paragraph 67 your Honour was speaking of the “hypothetical sale” and the ordinary position, which is the position under the statute, and your Honour in the middle referred to:

The value to the buyer of having ownership of, and control over, contractually compliant goods that can be bought and sold in a market . . . ordinarily equates to the market value –

So, the performance interest we identify is having ownership and control over goods which comply with the statutory guarantee as compared with having ownership and control of the defective goods you have been given. That is what you are trying to measure in the process. I draw attention to that because when the Full Court tries to conduct a life in use utility analysis in fact we would submit that is wrong because that is almost looking at it like the revenue account, this is trying to look at, almost on the capital account at the date of the transaction, what was the value in terms of ownership and control over statutorily compliant goods as compared with the ownership and control of the goods I had in fact.

That is one aspect in Clark which we submit is of some assistance. Secondly, in Justice Keane’s judgment, there is a lengthy discussion of the principles from 106 and following, but in, for example, 107 where his Honour refers to Bellgrove v Eldridge in this Court in 1954, and in turn what this Court said in Tabcorp [2009] HCA 8; (2009) 236 CLR 272, at 286, paragraph 13, this Court said, in the middle:

in the case of the supply of defective goods, the prima facie measure of damages is the difference in value between the contract goods and the goods supplied.

Then it goes on to reference Ruxley for “a notional transaction”, and so on. So, your Honour Justice Jagot, part of our answer would be that the inquiry here is not an acquisition of property with an attempt to establish just terms. The inquiry is in this framework of either contract or statutorily guaranteed performance, and what we are seeking to do is to say, when this consumer leaves the shop with a defective car, what is the sum of money which when added with the defective car puts the consumer in as good a position walking out the door as if the guarantee was complied with.

JAGOT J: I understand that, but Spencer is just about market value, not necessarily in a compulsory acquisition. It is just market value traditionally requires a fully‑informed purchaser, not of supervening events – I accept that, and that may be the question of what is a supervening event and what is not – but certainly fully informed about the attributes of the thing to be valued. That is what you have. That is what you are taken to be fully informed about.

MR GLEESON: So, if one asks a first question, which is, is remediability of the defective goods an attribute of the goods – that is the question – we would not argue against remediability being a relevant attribute of the goods.

JAGOT J: Right.

MR GLEESON: That is one question. The next question along is, what is known or capable of being reasonably known at the time you engage in the transaction, the voluntary transaction, about that question of remediability, and this is a voluntary transaction that has been diminished by reason the breach of the guarantee.

BEECH-JONES J: Mr Gleeson, if you had the fix that had been fixed first time within about eight months, would that be a material difference on your case?

MR GLEESON: Yes.

BEECH-JONES J: My follow up question is, what is the rationale for the difference?

MR GLEESON: Well, let us take Dwyer. Mr Walker tries to map himself on Dwyer. Dwyer is possibly the opposite extreme of this case. In Dwyer – we can go through the findings, but the essential finding is there was no breach of the guarantee because the problem, first of all, never came home for anyone in the real world and, in any event, was fixed on a routine service after a recall notice without anyone ever experiencing the slightest problem. Now, in that case the Court of Appeal says no breach of the guarantee.

It is a difficult exercise to do the alternative in that case because on those findings of fact you got what you were entitled to get, but in the alternative the court says, in this sort of set of facts, we do not detect a reduction in value at the date of supply because the ready ease and availability of that fix to you occurring before any problem ever emerged in the real world is such that you suffered no loss on the capital account. So, it is the factual case at the opposite end of the extreme.

BEECH-JONES J: Is that to say we attribute to the hypothetical purchaser in that case a knowledge of some reasonable likelihood of the reasonably easy fix?

MR GLEESON: Yes. You attribute first the knowledge, which you might in every case, that if you are dealing with a reputable manufacturer, if a problem emerges, they will try to fix it. There is no problem with that attribution. In a Dwyer case, you then add to it what your Honour has just put to me. In the present case, the reason I have gone through these sorry facts is to say the only conclusion you can draw is that no one – not Toyota, not the consumer – could have had any confidence in the ready availability of a fix at any point in time.

JAGOT J: But you have accepted, I thought – maybe you did not but I thought you accepted – that remediability – capacity to remediate of the problem is properly attributable knowledge. That means both it can be remediated, or it cannot be remediated of its nature, the defect.

MR GLEESON: What I accepted, your Honour, was remediability could be an attribute of the goods.

JAGOT J: Okay. So, once you get to that, it is time, is it not? The only difference between you and Toyota becomes when, because this defect was ultimately remediable. So, inherent in the nature of the defect, that it was able to be remediated. I was saying that if you accept that either being remedial or being not remedial is properly attributable knowledge to the hypothetical buyer and seller, this fell into the remediable category, ultimately, and therefore the real difference between you and Toyota seems to be four and a half years.

MR GLEESON: I am not accepting that knowledge of remediability is attributable, because that is where ‑ ‑ ‑

JAGOT J: You are not?

MR GLEESON: I am accepting that remediability is an objective quality. There may be some goods where objectively you can say: with that defect it can never be remedied. Your Honours are going to hear that in the Capic appeal because there were some defects in Capic where the findings are ‑ ‑ ‑

JAGOT J: It can never be remedied. But why is that not an inherent attribute of the good?

MR GLEESON: And that is an inherent attribute of the good. So, remediability, whether it can or it cannot, could be such, but what is critical is, with this close attention to the facts, how do you respond to a situation where the responsible manufacturer spends four and a half years trying and failing to fix the goods and, in fact, purports to remediate the goods of many people and makes their goods worse? So, you have the whole of that sorry history, and then you have, yes, at the end of it: four and a half years, eureka, happy day.

Let me put positively what we are accepting. It would be consistent with the authorities to look at the whole of that course of conduct, that sorry experience, together with a happy day at the end, and look back and say: how does that bear upon what could reasonably have been known by the parties in 2016 when they were negotiating the hypothetical bargain? What that would tell you, looking back, on this set of facts, is the propensity you have to exhibit these troubling behaviours is a very real, likely, problem, because whether you ever get to the happy day, you can have no certainty whether it is now, three years, four years, six years, or eight years. And so what the consumer would say – the consumer cannot have perfect knowledge.

That is where I am, with respect, disagreeing with your Honour. You cannot attribute to the consumer under 272 perfect knowledge that a fix occurs four years later. What you can attribute is, by looking back, from this sorry history, what would I pay if I was told, on the one hand, I am likely to exhibit the foul smoke, et cetera, over the life of this vehicle, and on the other hand, there is at best a chance that at some point – which, today, cannot be known, because we do not know what Toyota is going to do – in the life of the vehicle, my problem might go away. That is what we are saying you would attribute to the consumer.

JAGOT J: I understand that.

GORDON J: But the difficulty with that, Mr Gleeson, is this: if one takes the facts you have put to us, and one has this inquiry as at the date of supply, by reference to the matters that you set out in (a) and (b), the guillotine comes down at the date of judgment. So, one ends up with a test which, in effect, flips and flops depending upon where you are at the time of judgment. In effect, the Capic Case proves the point.

There are fixes and fixes, the known knowledge at the time when you – the fully informed on the known is known, but it is not known in relation to those fixes which are not available. So, one has a concrete assessment by reference to knowledge at the time of supply, without this need to sort of undertake some inquiry about, do I have it or do I not have it?

MR GLEESON: We are not encouraging any ample inquiry like that. What we are ‑ ‑ ‑

GORDON J: Well, you must, on your analysis, because it is undertaking an inquiry about whether or not the knowledge to be attributed to the purchaser at the time is something whether they could have – to pick up your language – propensity to have troubling behaviour and not know whether it is going to be fixed or not.

MR GLEESON: I do not retreat from propensity. The case is run as a propensity case. You have a defect – it is a dud exhaust system. It is likely, as in a certainty, to manifest in one of the troubling behaviours as soon as you put your foot down. That is the defect. Now, because it is being assessed – and I am agreeing here with your Honour – looking forward, it is not an inquiry into how many times those defect consequences manifested for each person. What it is saying is: because you have a car with that propensity, how much less is it worth?

STEWARD J: Can I ask you a question. Based on your submission, does a member of the class who purchased a car in, say, March 2020, suffer any actionable loss or damage?

MR GLEESON: Yes, on the findings of fact in this case. They suffer exactly the same actionable loss. The reason being that, on the findings of fact, across the four-year period there was no difference either in the propensity for the defect consequences to come home or, if it be relevant, no difference in the knowledge as to whether there would be a repair. So, what I mean by that, your Honour, is if you walk out the door in March 2020, what you have is a car which has exactly the same propensity as each of the earlier cars over the whole of its life to exhibit the same troubling behaviours.

STEWARD J: But is that person not in the Dwyer category?

MR GLEESON: No, no, because that person, based on the findings in this case – it is important to understand this whole issue about knowledge of repairability was never the issue before Justice Lee. That was why ‑ ‑ ‑

GORDON J: That is because it is fixed.

MR GLEESON: It is fixed, Toyota ‑ ‑ ‑

GORDON J: That is the difficulty you have in your case; that is the thing that makes it different.

MR GLEESON: But what was run – let us be clear about what was run at trial. Toyota’s position at trial was to say, do not assess the date of supply, assess the loss at trial.

GORDON J: Well, that is now moved. It seems to be common ground that it is a date of supply; the question is, what do you take into account, and how you adjust it?

MR GLEESON: That is right, but I am mentioning that because it explains why the findings on repairability are as limited as they are, because it was not Toyota’s case, for example, to take your Honour Justice Steward’s question and say that person is in a different position. So, because it was run as a Medtel case, it is like the defective pacemaker; it is saying each car, even the ones supplied in March 2020, has exactly the same propensity to exhibit those troubling behaviours. Each car suffers the same reduction in value on supply.

GORDON J: Was there any argument run – as you know, there is a time limit on the actions here that are able to be brought; I think it is three years. Was there any suggestion that this assessment should be limited by reference to those sorts of time limits?

MR GLEESON: I think the answer is no, your Honour.

GORDON J: I ask this question because otherwise we have this inquiry that you would have us to undertake, which is unlimited.

MR GLEESON: Your Honours, the fault is mine. I am not urging the unlimited inquiry. What I am trying to respond to is the case that says, you give centrality to this fact that has occurred by the time of trial. The case we are trying to run, which we were trying to conceive of as a tolerably simple case, was each vehicle had this unacceptable propensity at the date of supply, and you are trying to work out a sum of money, which, on the capital account, restores you to the position as if it did not have that unacceptable propensity at the time you walked out the shop.

GAGELER CJ: Mr Gleeson, you mentioned earlier the New South Wales Court of Appeal’s decision in Dwyer. There is a statement of principle, really, an extensive statement of principle in paragraphs 225 through to 240 of that judgment before one gets to the heading, “Application to the facts”. Do you accept the statement of principle in those paragraphs and simply distinguish the case on the facts, or do you take issue with what is said there?

MR GLEESON: We take issue with parts of that principle, and perhaps I should show your Honours which, but we also distinguish the facts; I can do both. So, can I do the principle first and then go back to the facts? At 229 and 230 – this is Dwyer, which is in tab 18, volume 4 – we accept paragraphs 229 and 230, which follow what your Honour Justice Edelman in Moore v Scenic Tours at 64, and it is the performance interest that is being respected. Paragraph 230 says:

subsequent events are potentially relevant because they may illuminate or indicate or reflect the true value at the time of supply.

That is correct, provided it is understood appropriately. Where we start to have a word of caution is at 231, which is the reference to HTW Valuers. What this judgment appears to do is to assimilate the principles in deceit in assessing true value with the principles in contract or section 272. We suggest that there needs to be some caution at that point because, although both are an inquiry into true value, they are doing it for a different reason.

In deceit – and this is the reason the distinction arose between extrinsic events and supervening matters – one is trying to make sure that the wrongdoer is not held liable for more loss flowing from, in the world, the inducement than is appropriate under the policy of the law. So, if the reduction in value has flowed from something truly intrinsic in the goods which you were induced by deceit to buy, the wrongdoer is responsible for it. If there is further reduction in value by reason of extraneous events, the wrongdoer is not responsible for it. In the course of tort law, following the loss a decision is being made when the wrongdoer’s responsibility must come to an end.

In contract, or in section 272, although we are asking about true value, it is for a different reason. We are trying to – as your Honour Justice Edelman put to me – monetise the specific performance and give you the sum of money so that from that moment going forward, the money plus the defective car puts you in as a good a position as if the contract was being performed. That is why in contract, sale of goods, or in section 272, subsequent events may be irrelevant. So, if the buyer has a fortuitous sale into a different market in contract, that does not reduce the damages because of the way the performance interest is being honoured.

So, what we would suggest, your Honours, we submit, is that, with 231 and 232, our submission would be yes, but one needs care in transposing deceit principles into contract or the statute. We strongly disagree with paragraph 235 – and that is for a textural reason. It may or not intersect with your Honour Justice Gordon’s question. If the Court has section 271(6), we submit it is of critical importance in understanding the section 272 remedy. What it does is to incentivise the manufacturer, if you give an express warranty, and if you are called upon to perform it, and if you repair within a reasonable time, you turn off the tap to the reduction in value remedy.

One view, which gives a very simple answer to the present problem, is if you are relying upon the remedy occurring in fact in the subsequent world, you can only do so under the 271(6) banner and, absent that, the remedy occurring in the actual world cannot impede your remedy under 272(1)(a).

STEWARD J: Do you say that the legislative scheme gives the consumer a right to elect between monetising the defect or getting it fixed?

MR GLEESON: Yes, and Justice Perram – I will just give the reference, it is 719 of Capic at first instance – said that, we submit, correctly. It is an election to the consumer. If you go down the route of repair and you get it within a reasonable time, you have lost your reduction in value remedy. If you do not go down that route or it is not in a reasonable time, you get your reduction in value and you ignore the repair in the actual world.

STEWARD J: Is there anything in the extrinsic materials that support that? Or is it just an implication from the terms of (6)?

MR GLEESON: I think it is an implication, your Honour, but it can be strengthened by comparing what happens with the action against the supplier.

STEWARD J: This is 259?

MR GLEESON: Yes. I think what you do get from the extrinsic materials is the common sense that the manufacturer is deemed to be the primary person that has created the problem. Therefore, the remedy against the manufacturer is the most powerful remedy available, which is you get the reduction in value damages unless 271(6) has turned off the tap.

The contrast with the supplier under 259 is that there is a more stringent gateway before you can get into reduction in value damages. Under 259(3), you will either have to prove it “cannot be remedied” or you will have to prove it is a “major failure” before you can get the reduction in value remedy. If I can draw attention to 260(1)(c), one of the examples of a “major failure” is where:

the goods are . . . unfit . . . and they cannot, easily and within a reasonable time, be remedied –

So, what has happened with the remedy against the supplier is the supplier has two abilities to turn off reduction in value damages either through the remediability of the goods, whereas with the manufacturer, the consumer has the election your Honour Justice Steward raised with me.

GLEESON J: Mr Gleeson, was there expert evidence that remediability in four years’ time had a material value?

MR GLEESON: The expert evidence from Mr Cuthbert was directly to the contrary of that. So, he was – perhaps I should just give your Honour the reference. In the Williams book of materials at page 229, after Mr Cuthbert had given his evidence – which I will come to on the other ground – Justice Lee, at lines 25 to 45, put some assumptions for the expert to consider overnight. The six assumptions are found at page 198. Each of those assumptions was made out on the evidence, and the present one is the fifth assumption.

BEECH‑JONES J: What pages are those assumptions again, sorry?

MR GLEESON: Page 198. Then, his Honour asked two questions. What would be the reduction in value if you only used the information at purchase or, secondly, if you used it today? Mr Cuthbert’s answer to question 2 on the next page and over the page was that his view on value would be exactly the same even if you took the fix into account, and his reasons were it was:

a long period of time.

The consumer would have:

extra servicing and possible repairs . . . hesitations . . .

. . .

constant thought –

that the vehicle was going to:

leave him in an embarrassing situation with the issuing of white smoke and/or the foul odour –

So, in other words, four and a half years was too long to have any difference. Now, that is the evidence. So, that is the sort of approach we commend as acceptable. Just while your Honours have that, so I do not have to come back to it, if you could go to the bottom of page 200 ‑ ‑ ‑

EDELMAN J: Can I just ask about that question 2? Is that not conflating the value question with the consequential loss question?

MR GLEESON: Some of Mr Cuthbert’s reasoning might look like consequential loss reasoning, but it can be both, because if one is trying to say, what is the value of leaving the shop with a car with this defective exhaust, one starts to think, what is the expected utility over the full life of a vehicle that is going to be diminished for me by driving? And to have the white smoke coming out the back, to smell it in the car and so on, that is a diminution in the goods, we would submit, even if it is also causing consequential loss. That is why the statute has addressed that in section 272(3) by saying that you cannot get the consequential loss under (1)(b) to the extent that it is:

suffered through a reduction in the value of the goods.

You cannot get it twice, but you can get it as part of that reduction in value.

GLEESON J: I do not want goods that have to be repaired; I want goods that conform to the guarantee.

MR GLEESON: Yes. And in the hypothetical bargain, that is the position the consumer is in.

EDELMAN J: But if, contrary to your primary submission, one were to be factoring in all of the knowledge of the later repairs availability and that it will be performed by the manufacturer, would not the comparison be between buying a car that is free from defects and buying a car that is defective but can be repaired for nothing, and all of the inconvenience and the difficulties over the four and a half year period is then the question of consequential loss?

MR GLEESON: I am sorry, I missed your Honour’s comparison, it was between two vehicles?

EDELMAN J: Between going into the shop and saying, well, I want a vehicle that is free from defects and being told, well, you can have either a vehicle that is free from defects or you can have a vehicle that is defective but can be repaired free of charge, without taking into account four and a half years of inconvenience and difficulties and so on, because that would be the consequential loss that you might suffer.

MR GLEESON: Well, I am sorry, I cannot agree with your Honour on the facts, and it comes back to your Honour Justice Beech‑Jones’ question. On the facts, you might have been able to have that hypothetical conversation in Dwyer, but in the present case, the only conversation that could have been had with Toyota is when the consumer asks, how long am I going to suffer those problems?

GLEESON J: Well, it might be a different thing if you are in the showroom and someone is saying to you: this has a defect but I am going to repair it before you leave the showroom. You might say, all right, well, that will not affect the value of it. But once you are saddled with something that you are actually going to have to take back, unless you have a servant to do it for you, it is much less valuable.

MR GLEESON: It is less valuable. It is less valuable. Take Mr Williams, he has to go back 17 times to the repair shop. Seven of them are unscheduled. He has it replaced three times. He still does not have a fix, because they have not rung him up to say it is ready. Now, that is not just mere consequential loss, we would say. That is a reflection of the intrinsic nature of what Mr Williams was offered.

GORDON J: Is Mr Cuthbert’s evidence the high mark of that evidence in terms of the findings about value?

MR GLEESON: Yes, as to expert evidence – I will come to it on ground 2 – he is the high point. But the survey evidence – actually, I should give your Honours the reference. This is the heat map ‑ ‑ ‑

GORDON J: If you broke it up into component parts, as Justice Edelman just tried to do a moment ago, and we deal with inconvenience in the sense of, I had to take time off work and had to incur cab fares and the like to go and have it repaired, they are clearly 272(1)(b) damages. We will park those for the moment.

Then we are left with the availability and the assessment of taking into account at the time of supply the comparison between a good which is 54‑compliant and a good which is 54‑compliant but only after fixes have been applied to bring it up to compliance. And one says, well, what do I take into account, and that is a debate we have been having, about the extent to which you take into account supervening events in getting to that calculation.

Is this now a third category? And that is that, notwithstanding that one has a fix available and it makes it 54‑compliant, I still have a good which is of a lesser value at the time of supply, i.e., a person who walks in is going to pay a different price for a good which is clearly 54‑compliant and a good which is only 54‑compliant after fixing.

MR GLEESON: Yes, that is so.

GORDON J: Was that put at trial?

MR GLEESON: Well, Mr Cuthbert was there to ‑ ‑ ‑

GORDON J: That is why I am asking where the high point is. So I had not understood that that was a claimed head of loss.

MR GLEESON: No, not as a claimed head of loss, but as part of ‑ ‑ ‑

GORDON J: Sorry, that is a wrong description – a claimed category of loss.

MR GLEESON: Not as a claimed separate category, but as an aspect of evaluating the true reduction in value of the goods. That was part of the way it was put not only because of Cuthbert, but I will give you the other reference, which is in Justice Lee’s judgment at paragraph 363 to 378. The survey evidence of Mr Boedeker – you will see from 363, the screenshot.

What happened was, people were asked the sort of question your Honour Justice Gleeson and Justice Gordon have put to me, what would you pay for these cars if you had this information about – and you can see in the small print, whether the defect is present or not, the probability that the defect effects were manifest, the elapsed time to fix the defect. So, people were given different assumptions as to how long you will be driving the bad car before the defect is fixed.

You do not have to worry about the detail, but the heat map, which is on page 118, what that shows as you go from yellow to orange to a whole lot of nasty red is the unsurprising conclusion that, as the probability of the defect manifesting increased and the length of time before you could get a fix increased, the consumers’ willingness to pay reduced.

JAGOT J: Mr Gleeson, could I just ask – I have no problem with the concept that things might come under the label “inconvenience” can go to value as opposed to consequential losses. In Toyota’s outline of submissions at paragraph 10, they say the experts concluded that:

there was no ongoing reduction in value in the relevant vehicles –

once the 2020 field fix became available. That does not ‑ ‑ ‑

MR GLEESON: That is wrong. It is wrong, your Honour.

JAGOT J: This certainly does not fit with Mr Cuthbert.

MR GLEESON: No.

JAGOT J: No, this is other experts?

MR GLEESON: No, there is – no experts said that.

JAGOT J: Okay.

MR GLEESON: So, we want to show that is wrong. Should I just deal with that now, to get it out of the way?

JAGOT J: No, I do not want to take you off your course.

MR GLEESON: No, no, let me – could I just complete your Honour the Chief Justice’s question, which was about ‑ ‑ ‑

GAGELER CJ: Yes, we are bombarding you with questions from different angles.

MR GLEESON: No, no, that is good. Very happy.

GAGELER CJ: So – whatever is the most convenient course for you.

MR GLEESON: No, no, I will try and remember the questions, but I did want to make sure that your Honours knew which part of the Court of Appeal we disagreed with, and I have not finished that yet.

EDELMAN J: I think you have done 235.

MR GLEESON: Yes, and 235 led me to the hopefully not unhelpful diversion that 271(6) has a pretty important role to play in the construction here, and it is one of the simplest answers to why you do not look at the repair in fact. Then, at 237, there is a little bit of a flavour of the Full Court in Williams that you should look more generally at universal rules. We would submit that is unhelpful, because 272 has given you, very precisely, the relevant rule.

The areas we really disagree with are from 240 onwards, because it starts from the premise that we are comparing the damages with contract, which is okay, but we are then comparing with statutory damages and HTW Valuers. We are now in tort, so that is the caution I mentioned about do not rush to tort too quickly – and then the next sentence, if it is read literally is a problem:

If the replacement of the airbag . . . is a consequence of intrinsic or inherent factors in the nature of vehicle, it is an event which must be taken into account –

Now, if you read that literally, we submit it cannot be right, because if it were saying whenever you replace a defective part of a good, in whatever circumstances, at whatever point in time, you are simply responding to intrinsic or inherent factors, and, therefore, the person never suffered reduction in value loss at the beginning, if that is what it is saying, it must be wrong in terms of the statute and in terms of contract. I think there is a better reading of it, which is that it is a fact-specific finding. We make the same submission about 241. If you read 241 literally:

Given that a vehicle should remain safe for use, it is inherent in the nature of a vehicle that upon recognising a latent defect, the defective part will be repaired or replaced as necessary.

Now, there must be some words missing; it must mean that the defective part will need to be repaired or replaced as necessary, because whether it “will” be replaced or repaired as necessary is wholly fact-specific. And as your Honour Justice Gordon raised, if this trial had occurred about a year or so earlier, it would not have been fixed at all. So, we would submit that ‑ ‑ ‑

GLEESON J: Is it relating to safety defects?

MR GLEESON: Well, as expressed, it is unlimited. Any latent defect:

will be repaired or replaced as necessary.

It can only mean, will need to be repaired or replaced as necessary. And then it says:

that is what occurred in this case.

That can only be read as fact-specific, that in this particular case, VW, when the problem arose, fixed it with little difficulty before the consumer ever suffered a problem.

BEECH‑JONES J: And on your analysis, that was something that could be attributed to the hypothetical purchaser at the time of supply.

MR GLEESON: On the factual findings made in Dwyer.

BEECH‑JONES J: In Dwyer, yes.

MR GLEESON: And you see a hint of that factual anchoring of the proposition in 242. It:

has been fully rectified, at no cost, in a manner that a reasonable consumer would have always expected given the nature of goods of this kind, if the vehicle contained a latent defect. On the present assumption, that was an event that arose from the nature of the vehicle.

So, the real difference between us and Toyota – you are about to hear from them – is they are reading these paragraphs as canonical statements, that whenever there is a latent defect and wherever there is a latent fix, you treat the latter as intrinsic and you get no damages.

GORDON J: Well, I think it might be – whether they are doing that or not may be irrelevant. But for present purposes, it is drawn on the authorities which you say caution should be attributed to.

MR GLEESON: Yes.

GORDON J: I mean, it is not without principle. It is just a question of whether the principle is the right principle.

MR GLEESON: Yes. So, can I just show your Honour why it is factually distinguishable, but also perhaps it explains these paragraphs. If you go back to the beginning, paragraph 7, the airbag was replaced:

at no cost during a routine service –

you can hardly compare that to Mr Williams’ unhappy experience. Paragraph 24: despite the overseas reports, there has never been a reported instance of the Takata airbag causing a problem. And 26: VW’s view was there was no risk, but – 27 to 28 – following the recall notice from the government, they did the right thing, they recalled them, on a routine service they put in the replacement. Paragraph 59:

some 440,000 of those vehicles had been involved in a collision that had resulted in the deployment of an airbag –

That is an unhappy fact. But two bullet points down:

there was no evidence of any mis‑deployment of a Takata airbag in any Volkswagen.

So, this is why there was no breach, but it also tends to explain what is happening in the damages finding. In the hypothetical bargain, VW could honestly have said, across our entire experience of 20 million vehicles worldwide, this problem has never eventuated, and yet, we will treat it as routine, we will fix it if we get a recall notice. You will see that in 147 they failed to prove there was a relevant risk. At paragraph 155, it was:

a merely speculative theoretical possibility –

And paragraph 202 is important. These are Justice Stevenson’s findings, which remained intact. It was not just the airbag had been “replaced at no cost”, there had been “full use of the vehicle” up until then with no performance issue, no accident, and the vehicle continues to be as valuable as it was, and at paragraph 223, the VW argument, which was accepted by the court, had as an essential premise:

any notional reduction in value based on abstract propositions could not be shown to have caused the appellant any loss in circumstances where the appellant had experienced no detrimental impact –

Now, that is not this case.

EDELMAN J: But that is consequential loss.

MR GLEESON: No, that is the argument as to why you get no reduction in value damages. We do not fully embrace this reasoning, but the reasoning seems to be – maybe a jury would be permitted to do it – that after the event, you got a replacement, it cost you nothing, in the period up to the replacement the airbag never caused you a problem in fact. No breach, alternatively, no damages. That is the sort of reasoning being deployed in Dwyer.

In our case, propensity to exhibit troubling behaviours, 50 to 94 per cent will exhibit them in fact, well before any fix ever can be achieved, monstrous efforts to try to achieve a fix, they failed for many years and eventually they succeeded. So, we would urge your Honours both in principle and fact to treat Dwyer with a lot of caution. Is that a convenient time, your Honours?

GAGELER CJ: Yes, you are finished with Dwyer, at this stage?

MR GLEESON: I think that is enough for Dwyer, your Honour.

GAGELER CJ: Thank you. Yes, we will take morning adjournment.

AT 11.18 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.31 AM:

MR GLEESON: Your Honours, I may need to come back to it, but with your Honour Justice Jagot’s questions about the relevance of resumption cases, could I just give the reference to Bwllfa and Merthyr Dare Stream Collieries v Pontypridd Waterworks Company [1903] UKLawRpAC 46; [1903] AC 426, which has some discussion in the resumption context which I might come back to.

Your Honours, I was proposing then to move to what we consider to be the battleground which is between us and Toyota, before saying something about the Full Court’s approach and ground 2. Can I take up what your Honour Justice Jagot raised with me about what was the evidence as to the propositions of fact advanced by Toyota. Just to be clear, what we disagree with in the Toyota reply, at paragraph 8, it is said:

It is that the critical fact – that the 2020 field fix was available by the time of the initial trial with the effect that there was no ongoing reduction in value –

Then, the last sentence is:

the expert evidence was not only that the 2020 field fix itself would prospectively restore the value of the vehicle, but that the availability . . . would have that prospective effect –

see, Mr Cuthbert.

GORDON J: Can I just add one reference to that, which is the matter that I was raising just before the break, and that is the finding of the Full Court, at paragraph 123 at page 291, where, at the foot of that page, it says that, after taking into account some of the things we have discussed this morning:

Their significance is exposed by the fact that, by the time of the initial trial, it was known that the 2020 field fix was available and the experts agreed that, in consequence, there was no ongoing reduction in value.

Then, the next sentence:

It may be observed that the prospective reinstatement of value reflected the fact that the fix would restore the utility of the vehicle, noting that for some buyers there remained a considerable period when the utility of the vehicle had been diminished.

MR GLEESON: So, that is wrong – that statement.

GORDON J: So, do you seek to challenge that statement?

MR GLEESON: Yes, it is wrong. It is wrong because, first of all, the only expert that is said to be relied upon is Mr Cuthbert, at the paragraph I am about to come to ‑ ‑ ‑

GORDON J: The reason why – I am sorry to interrupt – they say “experts”.

MR GLEESON: Experts, yes.

GORDON J: Is there someone other than Mr Cuthbert?

MR GLEESON: We do not see “experts” supporting a proposition.

GORDON J: Thank you.

MR GLEESON: But can I break down the elements? First of all, if there is a restoration, it can only be prospective. So, from the point at which restoration of value occurs, it can only be prospective. There is no expert – Cuthbert or otherwise – who suggested the implausible proposition that a fix four years into the life of a vehicle somehow eviscerated a reduction in value suffered on supply. No one said that. It does not match any principle of economics or valuation. So, there is no expert for that.

Secondly, no one said that the mere availability of the fix, short of application to the vehicle, would restore value. Again, it would be a bizarre proposition. So, Mr Williams’ position at trial – he has had three repaired exhausts and the problems are still there. He is waiting to be told when he can come in to get the fix. He has not had the fix applied to his car. No expert said, Mr Williams, prospectively, your value has been restored. They could not, it would just be a ridiculous proposition.

Third proposition, restoration can only occur if and to the extent that it is applied to a particular vehicle. And fourth proposition, the evidence I will show you unsurprisingly said that with 260 000 vehicles, it was going to take quite a few years before it could be rolled out.

Firstly, with Mr Cuthbert, in the Williams book of materials, the supplementary report, which was at 199 and 200. This was his final word on the topic, page 200 of the Williams materials, last paragraph:

if The Vehicle was to be marketed as at today’s date, and was in a well‑prepared condition –

et cetera:

and the Defect fix had been applied –

you would get a similar resale price to prices on the market – similar vehicles. So, the restoration in value is prospective and is contingent upon the fix being applied. Now, the Full Court just did not deal with that.

Next, if we go to his report, and perhaps picking it up at page 167 – perhaps I should show your Honours the questions he was asked, because it is relevant to ground 2. The questions are on page 156, particularly questions 1, 2 and 3:

Question 1: Was the value . . . reduced as a result of the Applicants’ Affected Vehicle suffering the Defect and the risk of the Defect Consequences?

. . .

Question 2: . . . by how much . . .

Question 3: Would your answers to Q1 and Q2 differ if . . . there was a real possibility that an effective fix to the Defect would become available –

His summary answers are at page 158:

My answer to Question 1 is “yes”.

There was a reduction in value. Then, question 2, he assessed it at between twenty three and a half and 27 per cent, “having regard to” four matters:

(a) the nature of the Defect and the impact of the Defect Consequences;

(b) there not being any effective fix –

in fact:

. . . as at April 2016

(c) the salvage value –

now, the Full Court criticised him for this. He did not give undue weight to salvage value; he treated that as a floor in assessing the reduced value. Then:

(d) the price at which . . . the Applicants have been able to sell the Applicants’ Vehicle –

That is, resale value. Again, he did not give resale value undue weight; he treated that as a data point to assist in his exercise. Paragraph 23, over the page, is his answer to question 3, and that comes back to the question your Honour Justice Gleeson put to me. Now, against that, there is quite a bit of detail about how he values motor vehicles, but particularly, at 69 and following, he explains how you value it when it has defects. At 73(b), a problem with an “important” part like the exhaust system reduces value. At 75, he explains why these things reduce value.

Could I just come back to your Honour Justice Edelman’s question. The reasons why value is reduced under 75, we submit, are not mere consequential loss. These are true value issues. It impacts “performance”, you need additional repairs, increased costs:

(d) reduce the resale value . . .

(e) negatively impact the owner’s experience and enjoyment –

And, most simply, makes it a “less desirable” vehicle to have overall. He then addresses, at 79, what would happen about repairs, and says:

if a repair is available which will fix the issue . . . I will typically reduce the value of the vehicle by at least the cost of that repair.

Now, obviously, he means a fix as applied in fact:

I will typically not apply this reduction if such a repair is available at the time I am valuing the vehicle and will be carried out under the vehicle’s factory warranty.

So, it is clear he is not talking about mere hypothetical availability generally. He is saying if it is carried out for free under the warranty he would then not necessarily reduce value, but he says he would still reduce value:

on account of the inconvenience associated with having to obtain the repair.

EDELMAN J: Presumably, that is ignored in Dwyer because it is almost de minimis then, is it?

MR GLEESON: He took it in for routine, yes. So, factually‑specific, this is telling you, through the expert, that repairs have to be applied for free under warranty to not reduce value, but even then, value is reduced to the extent of having to take it in for repair.

BEECH-JONES J: But that is a sort of notional – that is a sort of hypothetical of a reasonable purchaser.

MR GLEESON: Yes.

BEECH‑JONES J: And the consequential would be the particular purchaser.

MR GLEESON: The particular purchaser – so, I had to take it in nine times, and I lost a day off work. So, that does illustrate the difference between (a) and (b) of 272. Now, that paragraph there, 79, is what led to a piece of cross‑examination, which then‑counsel for Toyota is very proud of. It is at page 216. I am sorry, your Honours, but I have to do this in detail, because this is the source of the error of the Full Court and the source of Toyota’s error. At 216, Mr Dick says, at line 22, I am taking you:

a little further in your report to paragraph 79. Now, that’s where you address the availability of a repair that will fix the issue or problem; do you see that?

MR CUTHBERT: Yes.

So, the way the questions are being asked, we are not taking about repairs that might be theoretically available to someone else in the cohort of 264,000 vehicles. It is ones which will fix the actual problem for the person. Mr Dick says:

MR DICK: Then in the second sentence you say you won’t reduce the value . . . if the fix or repair is available at the time you are valuing the vehicle and will be carried out under the vehicle’s factory warrant; do you see that?

MR CUTHBERT: Yes.

So, again, we are looking at repairs not just theoretically available but carried out in fact on the vehicle. Then, the question is:

you are telling his Honour . . . that if . . . you were valuing these vehicles now . . . you firstly know, don’t you, that there is a fix available . . . developed . . . in about February/March of 2020?

MR CUTHBERT: Yes.

MR DICK: If you had been asked to value or try and work out any reduction in value . . . referable to the defect now, your answer would be, “I don’t reduce the value at all”; correct? Because of the availability of a complete fix.

The question can only mean, because of a fix available and to be carried out on the vehicle of the particular person under the warranty for free. And Mr Cuthbert says:

Well, now, correct.

Now, it is that little bit of cross‑examination which is supposedly said to be read as Mr Cuthbert saying theoretical availability, even if not applied to a vehicle, restores value. It just does not say it.

So, that is the day before. That is 30 November 2021. That is the day before he provided his supplementary report, which I have shown you, which makes his position pellucidly clear. So, your Honour Justice Jagot, it is a long way around saying our approach is – we are talking about expert, singular, and what it got to was, if you apply the repair in fact, going forward, you have reinstated your position, nothing more than that.

Now, I mentioned the obvious point that they are not going to roll out 264,000 repairs immediately. In this same book, if your Honours go to page 239, these are the supplementary submissions our side put in after the Full Court sent the infamous letter. At paragraphs 22 through to 30, one of the points being made was you cannot assume that the fix is, in the real world, going to be applied or available for every vehicle immediately. So, in paragraph 24, 18 months after the fix being developed, only 12 per cent had received the fix. So, that suggests it takes time.

Paragraph 25, there was evidence of Stockton, that he considered that it would take until March 2024 – that is four years – to implement the fix in 50 per cent of the vehicles and seven years to roll it out across all vehicles. So, Toyota presents its cross‑appeal to you on the basis that there is a finding that value has been restored in 264,000 vehicles. The actual evidence was that it will take up to seven years to roll it out across the field, and if it is not even available to a person clearly enough, value is not restored prospectively.

And then, 26 is Mr Williams’ unhappy experience, that he is still waiting to be heard when the parts are available. And 27, it gets worse, there is no evidence that Toyota has actually told everyone that it is available. And 28, the letter was sent to some but not all people. This Toyota letter failed to admit the vehicles were defective – that is because they were resisting liability at trial – and it failed to tell people that the fix was needed so it could function under all ordinary circumstances.

GORDON J: These were submissions, Mr Gleeson. Were there findings made in response to those submissions?

MR GLEESON: No, because the Full Court passed this by. They made the finding you have referred me to of paragraph 123, which just cannot sit with this evidence.

GORDON J: So, these submissions do not have all of the references here – may have some references; it is not a complete set. Do we have to go through and determine whether or not these matters should be accepted?

MR GLEESON: No, your Honour can just operate on this basis unless Mr Walker says otherwise. We have given you the chronology, which has the critical findings that underpin these submissions. So, in our outline, that is our first response ‑ ‑ ‑

STEWARD J: Just as a matter of logic, in a market for these vehicles post the fix, a purchaser buying a house second‑hand, it would not matter whether the fix had been fixed or not yet, would it? You would take into account the availability.

MR GLEESON: You might take it into account, but what you are taking into account is, it is now available, in theory. Whether and when it will be applied to your vehicle, given you are in a cohort of 264,000 people, could be anytime in the next seven years.

STEWARD J: I understand that, but you would take it into account.

MR GLEESON: In the second‑hand market, if you were doing a valuation today, yes.

STEWARD J: Yes. Okay.

BEECH-JONES J: But you say that valuation would have to take in account, one, the likely time to get it fixed, and two, the propensity that – the likelihood the risk would materialise in the meantime.

MR GLEESON: Yes, if you were doing it today.

BEECH-JONES J: Yes.

MR GLEESON: And then our primary position is, you would not be valuing it today, you are valuing it when you walk out the door with that defective car, and you would be saying, if I have a car with the foul smoke, et cetera, and I have no confidence when a fix will be discovered technically, and further, I now have no confidence when I will get it to my vehicle, do I require a reduction in value? And you say, yes, and the jury also says pretty quickly, 17.5 per cent was a very, very modest assessment as against that set of facts.

Your Honours, that is our first answer to Toyota which is, their argument is factually unsound. The second answer, at the level of principle – which is paragraph 8 of our outline – is that, on the facts we have taken into, the subsequent discovery in fact of the 2020 field fix did not reveal that retrospectively there was no reduction in value at the time of supply. We simply fail to see how a potential prospective restoration at a date uncertain could ever – even in a Kizbeau, HTW Valuers sense – tell you, I suffered no reduction in value at the time of supply.

GLEESON J: Mr Gleeson, the primary judge found that a failure to enter into a fix would not be unreasonable. How does that finding fit into the identification of the factors of the knowledge that would be taken into account in valuing – doing the valuation exercise?

MR GLEESON: Your Honour, it may factor in in this sense. His Honour, presumably, had in mind that section 271(6) gives you an election as the consumer, and you can choose to go down the path of repair under warranty and then have it done in reasonable time, but you can equally say, I simply claim my reduction in value of the goods. It is not unreasonable to claim your reduction in value and to not take up the 271(6) route. We embrace that finding, and if that finding is correct, we suggest you do not take into account the subsequent fix at all.

BEECH-JONES J: Mr Gleeson, I should know this, but was there an express warranty given in this case?

MR GLEESON: There was an express warranty but, as usual, it was limited. So, it was three years, or X kilometres. So, part of the radical absence of knowledge was if they do find a fix but they find it outside the period, I am then dependant upon whether they feel compelled to extend it to me for free. In fact, they said, we will make it available for free when we have enough available to roll out for you but, again, that could not be known at the time of supply.

So, your Honours, that is our paragraph 8(a). As to paragraph 8(b), I have put our submissions on why Dwyer – neither as a matter of principle or as a close precedent on the facts – assists the Toyota argument. As to the Kizbeau, HTW Valuers Case, I have made our submission that there should be considerable precaution in applying principles which have a fundamentally different purpose to the present context. The reconstitution of these vehicles – potentially many years after the event – could never get you a conclusion that you suffered no loss in value on supply.

Your Honours, we found no case in Australia or England, or the United States, where a subsequent event like this has been used to produce the conclusion that there is no reduction in value damages on supply.

GORDON J: You accept, though, adopting your caution that you would have us take of those principles, that these events are within the first category of the principles in Kizbeau in relation to supervening events and not the second?

MR GLEESON: I think I missed the import of your Honour’s question. Am I accepting that these are not extraneous events?

GORDON J: Yes. There are two categories – in Kizbeau, (a) and (b) – and I had understood from your submission, notwithstanding, that you tell us two things. First of all, approach it with caution for the reasons you have expressed – but, my question is more direct, and that is: do you accept that there are supervening events of the first kind and not the second?

MR GLEESON: I think the answer is yes, but I need to distinguish this, your Honour. Toyota is trying to use these events not as a hindsight to confirm a foresight, really. They are trying to use the event in fact in the world – the occurrence of the fix – to say there was never loss, there was never reduction in value.

We would say, even if we are in tort in HTW and Kizbeau, we would be using subsequent events only to the extent they truly illuminate the reduction in value the day I walked out the door. If you look at them in that category, what do they tell you? They tell you that your inability to have confidence that you are going to get a repair is confirmed by what happened in the world afterwards – so, in the first category but confirmatory of the substantial reduction in value on supply.

Your Honours, could I come to the Full Court’s approach and start with the letter, which is at paragraph 95 – or it is set out in more legible print in the Williams book of further materials at 230. In the first substantive paragraph of the letter which commences, “Grounds 4, 8 and 9”, the court proposes an assumption that:

upon a proper construction of s 272 . . . the Court may assess the reduction in value at the time of supply or at some other appropriate time –

So that the court has a discretion to choose the appropriate time for reduction in value. We submit that that is erroneous on the statute. But in any event:

for the purpose of ensuring that any award . . . fairly compensates the claimant, the Court may assess the quantum of damages to be awarded having regard to the known circumstances at the time when the assessment is being undertaken.

What the court in fact means by that is not doing HTW Valuers and Kizbeau using those known circumstances to inform value at the time of supply, but treating them as facts occurring in the actual world, which diminish or reverse the reduction in value which has occurred on supply. That, we submit, is in error. If you then drop down to the third substantive paragraph:

The approach involves taking into account not only any reduction in the value of the vehicle at the time of supply –

So, pausing there, that is the creature that 272(1)(a) requires, but you then take into account:

the availability of the . . . field fix –

that is in fact, not as a hindsight confirming a foresight. You then take into account further facts following supply:

the period of time that the consumer owned the vehicle before the fix became available, and the effective life of the vehicle.

We submit that on the statute, the only relevant matter is the first:

the reduction in the value of the vehicle at the time of supply –

and these matters cannot be taken into account independently of reduction in value at the time of supply. You then see the formula:

a x ^b/_c –

So, (a) looks like it is the statutory creature, save that the second sentence of (a) is not the statutory creature, because you make an assumption the defect will remain in place for the whole of the effective life of the vehicle. So, it is an assumption contrary to the facts as known, both at the time of supply and at trial, so that suggests the whole process is unsound. Then you do the b divided by c which is designed not to capture reduction in value at supply but to capture the consequential effect of the reduction in the value of supply on the consumer by reference to events following supply. That, we submit, is an error under the statute.

The second‑last paragraph, you see a slight oddity that you do not take into account the extent to which the defect consequences were experienced, so you do not take into account those matters in the post‑supply world, but you do take into account the matter which the court has identified. Now, returning to the judgment, at paragraph 98, where the court says:

at least generally . . . is the time of supply –

but not always. We submit that is in error. In 99, where it says you can adjust “from the time of supply” or “to avoid over‑compensation”, we submit that is in error. Where it says:

The overarching consideration is that the amount of compensation –

that is appropriate, we submit that is in error. There are many statutes which build in the term “appropriate” as the test for the compensation, this one is not doing that. At 100, the first sentence has an error that part of the provision is “to protect manufacturers”. It is not. It is simply to create the balance between rights and consumers. But really important, your Honours, is – do you see the reference to:

compensation for actual damage suffered.

in about the middle of 100. And then the last sentence:

An assessment at a later time may be a more appropriate way to reflect the actual damage resulting from the value differential between the price paid (or average retail price) and the value of the goods.

Now, can I just pause on that. That last sentence, with respect, has completely departed from the statute, because what the statute gives you is an entitlement to damages for the value differential. What this judgment is contemplating is that that is the starting point, and you then conduct an inquiry into what is the appropriate way to reflect the actual damage which has resulted from the value differential.

So, what has happened – if your Honours go back to section 272 – is that the Full Court considers that the whole of 272(1)(a) and (b) are an exercise into actual damage resulting from certain matters, whereas on the language 272(1)(a) gives you the damages for the:

reduction in the value of the goods –

without a further inquiry into whether actual damage has flowed from the value differential. Whereas under (b), which is the consequential loss, it must be the:

loss or damage suffered . . . because of the failure to comply –

within reasonable foreseeability. So, your Honours, we think that little sentence in 100, which repeats in various ways throughout the judgment, is one of the keys to understanding that this a x ^b/_c has departed from the statute.

BEECH-JONES J: Mr Gleeson, with (a), do you say that even if under common law concepts you might result in over-compensation, it does not matter?

MR GLEESON: It does not matter, because (a) is the thing you are getting your damages for. You are not getting your damages for the consequences to you of (a). Whereas with (b), it has built into it a common law concept of causation and reasonable foreseeability as part of consequential loss.

So, your Honours, then continuing with the Full Court, between 103 and 107, the court seeks to draw support from general law authorities for departing from the date of supply. None of those authorities are remotely similar in this issue to section 272. At 107, they correctly note that the primary judge had recognised the HTW Valuers and Kizbeau principle – that is primary judge 328 – but the Full Court is not doing that. It is doing its own exercise. So, that is the first little section of the judgment.

Then, between 108 and 119, the Full Court offers a series of suppositions drawn not from the statute but from, apparently, supposed principles of economics or human behaviour as to why people buy consumer goods. Now, none of this was the subject of any argument at trial, which is why you have no detailed reflection of it from the parties. We would submit it is unmoored from the statute but, just to pause, for instance, on 111:

in most instances, the intrinsic value of consumer goods to a retail buyer will lie in their utility rather than the price at which they may be on‑sold.

Just pause there as a proposition of economics, of law, of judicial notice. Much could be said against it as a proposition. As we put this morning, the value lies in the ownership or control over the goods which carries with it an expected stream of utility in which the value may find some reflection in the price at which they may be on‑sold.

Many people buy the car and find they have to sell it, and they are then facing the second-hand market. One of the problems with buying a defective car in breach of the guarantee is you may be forced to sell it, and if you do, you are going to have trouble selling it. So, where 111 has come from, we are not sure, but it requires very, very substantial qualification. The same can be said, really, for the whole of the paragraphs over to 119 but it reaches a high point in 117, that:

the value of many consumer goods to a buyer . . . lie in their utilisation value (or life‑of‑use value) as reflected in the purchase price.

Well, again, with respect, an over‑generalisation, and an apparent attempt to look at a car as if its value lies solely on the revenue account, whereas in truth its value lies, in the first instance, on the capital account and subsequently on the revenue account.

Paragraph 118 is, with respect, odd. Having said that general law principles are consistent with its approach, the court now says that the general law approach:

concerning the defective supply of valuable assets –

and then a whole list is given:

is not apposite.

So, apparently, we are in some new universe of consumer goods and/or motor vehicles where all of the learning from the general law has been discarded and, instead, we are applying this theory of economics.

Now, the third section of the judgment is 120 through to 135. Some parts we have no difficulty with. Paragraphs 120 to 122 are a, perhaps, questionable way of summarising the judge’s findings of fact. Looking forward, we would submit the primary judge’s findings are a more precise way of looking at it. But at 123, something very odd has happened, because the court is saying:

in the particular circumstances –

of the case:

an assessment of the reduction in value . . . at the time of purchase requires appropriate allowance for those future possibilities.

At this point, the court is trying to shoehorn the formula into a time‑of‑purchase analysis which it has already told us it can depart from if it wants to. So, it is trying to look a bit like a HTW Valuers approach, but what it is in fact doing is looking at events in the actual world, as we see in the last couple of sentences. Your Honours, as to 124, time does not permit me to deal with it in detail, but it does not accurately record what the Williams parties put. The last sentence is closest to what the Williams parties put, that what we should look at is what was:

the willingness to pay of the marginal buy in a market for the defective goods.

That is the hypothetical transaction where it is known the goods are defective. At 127, the court says both sides have it wrong. At 128, you have to factor in the possibility of a fix. Then the real slide, with respect, occurs at 129:

in circumstances where those uncertainties had resolved by the time of trial –

you:

factor in the availability of the 2020 field fix when determining the reduction in value . . . at the time of purchase.

Now, with respect, we just submit that is confusing two wholly different creatures. You are not looking at reduction in value at the time of purchase if you are having regard to the fix in fact.

Two reasons are given, neither is sound. The first reason in 130 says that what you should do is replace expectations at the time of purchase with information as to what has occurred in fact. This may came back to the questions your Honour Justice Jagot raised with me, but we submit that the hypothetical expectations at the time of purchase, fully informed by the knowledge that is known or capable of being of known, are relevant to assessing the reduction in value, but to throw them away and replace them with one aspect from the world as it played out is not assessing reduction in value at the time of purchase. Paragraph 131 has the error in it of paragraph 100, last sentence. Paragraph 133 says:

the primary judge was in error because it did not factor in the fact that a fix had become available –

We would submit Justice Lee was correct in not factoring in that a fix had become available in fact, but the next part of the sentence in brackets is wrong. To say that he never factored in the possibility of a fix becoming available he is wrong, looking at how he conducted his valuation that I will come to.

Now, your Honours, can I move to ground 2, and it is important for this ground to understand what the primary judge did by way of damages, which, with respect, the Full Court has not fully or accurately appreciated. If your Honours have the primary judge’s judgment, he explained, in various places, that the possibility of a fix, as best as could be known, would be taken into account. That can be seen at paragraph 170. But at paragraph 328, near the end, the distinction he was drawing was between the fix in fact in 2020, which could not be taken into account because it could not be expected, and the matters that could be taken into account.

If your Honours consider paragraph 331, that common sense intuition that, logically, these vehicles were worth less at the time of supply than if they were not defective is fairly hard to gainsay, and given a choice between the otherwise identical vehicles, one with and without the defect, the only rational conclusion is you would pay less. Every expert accepted that. So, the finding of there being a diminution in value was soundly based.

His Honour then turned to the quantification exercise, and the approach at 342 and 343, following this Court’s decision in Milledge in 1953, is, we submit, the correct one that his Honour followed, which was, while it was essentially a jury question, it was informed by the expert evidence as well as the lay evidence, with the Court to make a critical selection of the most helpful facts from the massive information provided by the evidence and applying the correct principles to it. That is what his Honour said he was going to do in 344 in order to find the real value of the goods at the time of purchase.

He then recognised that there were three bodies of relevant expert evidence: Mr Cuthbert, you have seen, which would give a range of 23 to 27 per cent; Mr Boedeker’s survey evidence, measuring the consumer’s willingness to pay, most likely 20 to 30 per cent; and Mr Stockton, with the absolute bottom which was the cost of repair under the 2020 Fix of 2.9 to 7.3 per cent.

Now, his Honour, we would submit, did a remarkable job in surveying the whole of this evidence, in perhaps more detail than was necessary for a jury question. He set out Cuthbert’s evidence between 346 and 349. Can I just note in that, 348(3) was Cuthbert’s evidence of what a person might pay between various bookends. The bottom bookend was salvage value, the top bookend was the market price of new goods, and he recognised a person would pay somewhere in between those values. Paragraph 349 is the evidence I referred to this morning; Cuthbert did take into account the possibility of a repair.

At 350, O’Mara for Toyota – you do not need to spend much time on him. He abandoned his evidence and gave no figures. Paragraphs 352 to 356, we would submit, are a sufficient set of reasons from a trial judge on a jury question explaining that he has addressed the criticisms against Mr Cuthbert. He notes in 354 that Cuthbert was using salvage value as a bookend, and no more than that. It was a logical bookend. And 356, Cuthbert would be accepted as a useful guide, but no further than that. Then at 360 there is Mr Boedeker’s evidence on the heat map and the survey, and that evidence is given some weight at 378:

intuitive sense . . . consumers are willing to pay less for defective vehicles than . . . for identical, non‑defective vehicles, and the difference in WTP widens as the probability of manifestation of the Defect Consequences and the duration of the Core Defect increases.

So, this is evidence contrary to the Full Court at 123, that Justice Lee was taking into account the possibility of a repair. Then there is Mr Stockton with his detailed model, and that gives us a cost of repair price. So, in terms of the ultimate reasons, at 391 and following, which his Honour gives himself credit for “trudging manfully through the expert evidence”, he comes back to the basic test of valuation being an art, not a science.

He says he is going to give important weight to the primary findings of fact that the defect consequences when they manifest are a certainty in normal driving use and are serious. He is looking at the facts of the defect consequences. At 392, the expert evidence gets some attention. It makes sense the figure is above Stockton, and no reason has been advanced to dispute that proposition:

and, for the reasons reflected in the evidence of Mr Boedeker and Mr Cuthbert, to be a significant figure. The very nature of the Defect Consequences demands such a conclusion.

Then he says in 393 the applicant does not get 25 per cent; Boedeker and Cuthbert, the criticisms of them have some force, but it still must be a significant figure which aligns with common sense:

the evidence of Mr Williams and the effect of the Defect Consequences more generally, as borne out by the customer complaints –

So, that is the body of lay evidence upon which his Honour has made findings, plus limited weight being given to the experts, which confirm that conclusion. Importantly, 394, while the applicants bear the onus, no Toyota expert contended for a differing reduction in value figure. So, Mr O’Mara, they put him forward; he does not suggest a quantum figure. The “expert economists provided no positive evidence”.

If your Honours were just reviewing that as an intermediate appellate court, it is tolerably difficult to see that any appealable error has leapt out. Let alone that 17.5 per cent, which was the figure his Honour settled on, involved error. If you go, then, back to the Full Court – I want to do this in a particular fashion because it speaks with two different voices about Justice Lee’s exercise. If you start at paragraph 139, that is an accurate and commendable summary of what his Honour did. His Honour took into account the experts but felt that, ultimately, greater weight needed to be given to the primary findings of fact. If you then go forward to 281, that, again, is a tolerably accurate summary of what Justice Lee did, that his conclusions were:

principally, based upon his Honour’s assessment of the seriousness of the defect and its consequences –

based on the referee’s report:

and the evidence of Mr Williams –

and other complainants:

buttressed by the lack of any countervailing evidence from Toyota as to how the reduction in value might be quantified.

Paragraph 282:

Importantly, his Honour accepted the merit of a number or criticisms directed to the accuracy and reliability of the analysis of Mr Boedeker and Mr Cuthbert.

Paragraphs 285 to 286 are to the same vein. So, you might have thought at that point that his Honour was going to get a pass for having carried out his exercise in a commendable fashion, balancing the primary evidence, the evaluative conclusions of a jury but taking into account experts, but noting some criticisms of them. At 294, one might have thought a similar conclusion was likely to be reached. Yet, at 295 and 296, the court says that because of something set out in two earlier paragraphs:

the primary judge erred in his reliance on Mr Cuthbert’s evidence of value –

and the grounds are made out. The 17.5 per cent goes and the court can reassess. In a case where a judge has looked at the body of evidence – lay evidence, documentary evidence; given limited weight to the experts, noting the criticisms of them – it is surprising that an appellate court can then say: we have found, out of that entire survey of the evidence, an error of such a magnitude that the entire evaluative judgment has miscarried. What is that supposed error? We are told it is paragraphs 203 to 204.

In those paragraphs, it is suggested that his Honour did not sufficiently pay attention to the criticism, which was that Cuthbert was paying too much attention to salvage value and was paying too much attention to a notional buyer who might be purchasing above salvage in order to pursue the chance of a repair of the vehicle.

And 204, these issues should have led his Honour to treat Cuthbert’s evidence with “considerable circumspection”. His Honour did. His Honour told us he treated it with circumspection. His ultimate figure of 17.5 per cent was well below Mr Cuthbert’s figure, and we would submit that that type of reasoning in 203 and 204 does not satisfy the standard of appellate error to allow a court to then intervene and just substitute its own judgment.

For completeness, two additional reasons are given in 206 and 207. Paragraph 207 seems to be the ground 1‑type issues coming back in, namely that Cuthbert should be criticised for not doing the a x ^b/_c; that is bound up in ground 1. Paragraph 206 is this theme you have seen a lot of the economics part of the judgment, that you should not look at the resale price because some different considerations apply in the second‑hand market. No doubt some different considerations may apply in the second‑hand market, such as transaction costs, and your Honour Justice Steward has asked me about the second‑hand market.

The position the Williams parties always took was: the second‑hand market is not the primary market in which one is doing the valuation exercise, but it is a potential data point from which some information might be derived and therefore relevant to take into account in the primary valuation exercise. The reason that is right is if you have bought the defective car you may, for a whole variety of reasons, need to sell it. If you have to sell it, you are selling into the second‑hand market. Hypothetically, you are having to tell the buyer all the problems with the car. What is occurring in the second‑hand market is at least a data point from which the primary valuation exercise might be considered. So, to the extent 206 is the reason that Cuthbert is said to be in error, we would submit the error is in the Full Court’s approach itself.

BEECH‑JONES J: Mr Gleeson, does the seller in the second‑hand market – the hypothetical seller – have a liability to the hypothetical buyer for the defect in the car they passed on?

MR GLEESON: The answer under the statute is no, because they are not the relevant category of goods, but in the hypothetical transaction that is being considered as part of the valuation exercise, we ought to assume that the seller has to disclose the facts that we are talking about. So, Cuthbert’s point was just a basic common‑sense one. Salvage value is the bottom of the range, that is what I get if I sold at an auction house. If I sell on Cars AU I should be presumed to be passing on the knowledge that I am advancing when I am trying to claim my damages claim against the manufacturer, and in that market I might have a lot of difficulties passing on what is a brand‑new Prado that, in fact, has all these terrible consequences.

So, Cuthbert said – as between salvage at the bottom, new market price at the top, having some regard to what would happen if you try and sell into the second‑hand market, but always keeping squarely in mind the defect consequences – I would reduce it, as a person who has valued hundred of thousands of cars, by approximately 25 per cent. Justice Lee said, looking at all the evidence, seventeen and a half per cent. So, no appealable error, we would submit.

Your Honours, just finally, if you look at what the Full Court then did, having said it has the liberty to do it again, paragraph 311, the court says, in effect, they are going to put aside the expert evidence, because that is what the primary judge did, and they will do the same thing the primary judge did. At 312, we come up with 10 per cent. I just have to pause on the 10 per cent. The 10 per cent is before taking into account the availability of the fix. So, in the letter at paragraph 95 – this is the (a) factor coming back in. It is not reduction in value unadulterated at the time of supply, it is reduction in value on an artificial assumption incapable of being known that that is supply.

Then, three reasons are given. At 313, we agree with the trial judge’s general approach. So, we have no problem with 313, but that suggests we should not be in the area to re‑exercise the discretion at all. In 314:

The second is the merit of the submission advanced by Toyota to the effect that much of the utility of the vehicle was unaffected by the defect . . . even on the basis that the vehicle may be expected to exhibit the defect consequences in relatively common driving conditions.

All that is saying is, we are having a second look at Justice Lee’s assessment of seventeen and a half per cent; we of necessity, as the intermediate appellate court, have not had the benefit he has had of spending a large amount of time with the primary facts and the witnesses and the evidence, and we think 10 per cent on an artificial assumption is more accurate than 17.5 per cent. That is not, we submit, the task of the intermediate appellate court. This is mere disagreement, and there is no preponderance of evidence which justified the court to do it. Then the third, which is more strange, is that a positive reason for the 10 per cent is supposedly the criticisms Toyota addressed to Mr Cuthbert.

So, it is hardly a positive reason for coming to your assessment that you now bring back in the witness that you say the primary judge gave too much attention to. If you put 313 to 315 together, in essence there is, we would submit, nothing offered there by way of principle, by way of reasoned analysis, by way of assessment of the evidence that indicates an error in what the primary judge did.

Now, your Honours, the final matter is just this reference to Mr Cuthbert. Paragraph 315 shows the Full Court’s error in how they read Mr Cuthbert’s evidence. They read him as saying that the defect was such that the vehicle should be viewed as having little utility unless a fix could be found. So, they read Mr Cuthbert as saying, in effect, because of the defect this vehicle was of very little value to you and therefore he assesses the approximately 25 per cent reduction. I have taken your Honours to much of Mr Cuthbert’s evidence. Paragraph 315 is not an accurate summary of Mr Cuthbert. It is not an accurate summary of what the primary judge discerned from Mr Cuthbert and not an accurate summary of how the primary judge used that evidence.

So, if your Honours have our paragraphs 12 and 13, ground 2 arises in two ways. If we are successful on ground 1, we would submit the 17.5 per cent diminution assessment should have stood, in which event the orders will follow in a straightforward fashion; our appeal will be allowed, Toyota’s will be dismissed, costs, et cetera. Paragraph 13 is there to indicate that if, for some reason, your Honours were persuaded by what Mr Walker is about to tell you, there was separately no error in the 17.5 per cent component of assessment – sorry, let me explain that more clearly. If your Honours were fully persuaded by Mr Walker, we lose. He says we suffered no loss at the end of the day. But if your Honours were persuaded by silence that the Full Court’s approach is correct, then the 17.5 per cent should have stood as integer a of the assessment and the only task on remittal would be to identify the b and the c ‑ ‑ ‑

EDELMAN J: Do you have an argument, as well, under 13 that the 17.5 per cent would remain if you are right about 8(a)?

MR GLEESON: Yes.

EDELMAN J: Because you say that is the exercise that Mr Cuthbert was basically doing.

MR GLEESON: Yes. He did both, he first of all excluded it and then he said, having taken it into account, in this circumstance it adds nothing. Your Honours, we seek leave to hand up – your Honours’ associates should have a copy, we provided this the other day to the Toyota parties – an aide mémoire to illustrate the three approaches, and we have included Mr Williams’ figures as an illustration.

The way Justice Lee did the damages, it is “A – B”: price paid minus value supply, 17.5 per cent reduction, damages are $7,500. What seems to have happened in the Full Court is the Full Court has sought to construct a notion or depreciation curve, and we have provided your Honours with two versions. We do not want this to become a competition case, but there is an aspect of competition floating behind the Full Court’s reasoning. The Full Court in the formula had in mind page one. They had in mind straight‑lined depreciation.

GORDON J: I was going to ask you about that. How is that taken into account in these calculations?

MR GLEESON: The Full Court, in the letter, assumed straight‑lined depreciation.

GORDON J: Is that an applicable assumption, economically or otherwise?

MR GLEESON: No, it is not sourced in the statute, and that is the end of the matter. But, what we sought to demonstrate was – when we were given a chance to respond to the letter, one point we made was: where do you get SLD from? Why would you not get some form of diminishing value depreciation? And what sort of curve would that be? The second page shows you, illustratively, what the curve might look like, but that would be a whole matter for expert evidence, none of which was ever run at the trial because no one even thought of this monstrosity.

Page 1 is designed to demonstrate, on the Full Court’s approach, in assessing reduction in value – they say at supply, we say you are not doing that – you are constructing a notional deprecation curve and the green line is that the life in use utility, which, it is said, the statute is protecting. So, it is assumed through the formula that up until C2 – C1 and C2 – that is the utility which you are guaranteed and that is what you should get back through the damages, because what happens is, when the fix is applied, you have jumped from C1 to C2. So, the green line is the guaranteed utility – according to the Full Court – and the red line – making some assumption about the shape of the depreciation curve – is what you got.

So, between supply and C1, the Full Court says you are on the red line, whereas you should be green line. You then jump back up to the green line, and once you are back on that line, you made whole for the rest of the vehicle’s life – a x ^b/_c. If it is a diminishing curve, the numbers will differ because of what, obviously, flows from the mathematics of it. So, that is the Full Court’s ‑ ‑ ‑

BEECH-JONES J: Mr Gleeson, you have not actually – the second page – we do not have the formula for the curve, that is just an illustration of a possible ‑ ‑ ‑

MR GLEESON: A possible curve.

BEECH-JONES J: A different curve. I understand.

MR GLEESON: Our party said in response to the letter, because this was never run by Toyota – still not run by them – you would have to take this into account. The Full Court said, that is all right because you can have a remitter before Justice Lee, and you can go back and argue about a curve. It is bizarre.

If you take either page, we think it is fair to Toyota to illustrate its approach as saying – we call an application of the fix not availability of the fix, but on the point that occurs in the life of the vehicle of each person, because you have jumped from C1 to C2 and jumped back onto the curve you are guaranteed to be on, because of that premise, the result is that the differential between A and B disappears.

BEECH‑JONES J: As I understand it, they say that from the beginning.

MR GLEESON: It is only when you jump from C1 to C2 from the beginning you are now to be treated – deemed as having never suffered A minus B.

GORDON J: So, there are three propositions, are there not? One is that which you just stated, that there is a differential in value at all points by reference to the availability of the fix. The application of the fix restores, reinstates value, and that is taken to be deemed from the date of supply.

MR GLEESON: Yes. Two is a ‑ ‑ ‑

GORDON J: And you seek to challenge each of those propositions?

MR GLEESON: The first we accept as a matter of fact that after the fix has been applied to a particular vehicle, then the evidence is that going forward you are in the same position as you would have been – two and three, we dispute.

GORDON J: Thank you.

MR GLEESON: Your Honours, we have put consumer surplus on the diagram for this reason. We have given your Honours the ‑ ‑ ‑

EDELMAN J: Sorry, on the first, you are accepting that once the fix has been applied or once everyone knows that the fix is capable of being, let us say, immediately applied?

MR GLEESON: No, once it has been applied to a given vehicle. Only from that point does that vehicle have the value it should have had. We have given your Honours’ associates the classic article on consumer surplus which is Contract Remedies and the Consumer Surplus (1975) 95 LQR 581, particularly up to about page 586. The reason is this. The way the statute works that the measure of the guaranteed performance interest is set at the lower of price paid or average retail price. You compare that to the actual value. The statute does not directly accord you a component of loss for your lost consumer surplus. But for many consumers – those who would have paid more than the marginal consumer to buy the goods because of the extra value to them of having these goods – their consumer surplus will be secured by the statute operating in the way we say it operates, which is you walk out the door, you have the defective car but you have the $7,474, and together you are in a position to enjoy such consumer surplus as you were entitled to expect from the contract.

One of the problems with the Full Court’s assumption of some form of depreciation curve – whether it is straight or diminishing – is that the Full Court has not unpacked the assumptions it is making about consumer surplus and the consequences of its approach for consumer surplus. Because a person for whom there is very considerable consumer surplus gets their $7,474, and then they can enjoy their promised performance over the life of a vehicle, making their own choices. They might sell the car into the second‑hand market, use the $7,000, and buy a brand new car. They might hold on to the new car, and they might use the money.

What the Full Court is assuming – without explaining in economics or law – is that each of these people is somehow put on the same red curve – the red is the critical one, that is the curve in fact – and so each person is using up utility in the good, along the red curve, over the life of the vehicle. That is just not sourced in the statute, and does not have any sourcing in any factual findings or any economic theory as applied to the people. It is really just the possibility of consumer surplus being protected by the statute is an additional reason why the formula should not be adopted. It is also an additional reason why the Toyota approach should not be adopted, because on the Toyota approach, once you jump from C1 to C2, you are deemed to have suffered no loss at the beginning, and therefore your entire consumer surplus has not been protected in any sense.

May it please the Court.

GAGELER CJ: Thank you, Mr Gleeson. The Court will take the luncheon adjournment at this stage.

AT 12.44 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.14 PM:

GAGELER CJ: Mr Walker.

MR WALKER: Your Honours, could I start by reminding you of the relief which was sought, the orders which are in question in this pair of appeals, and the nature of the group – or groups – that are involved in the claim. In general terms, you can proceed on the basis that the claimants – as I will call members of the group represented by Mr Williams – are persons who acquired one of these vehicles within what is called the relevant period.

You will have noted that the relevant period concludes, I think, just one month before the availability of the fix. That is probably a coincidence, but it is a useful one for the reasoning that we are going to explore. So, there are people who acquired during that period and did not dispose during that period, that period expiring just before, as it happens, the fix became available. Some of them acquired and did not dispose just before the period expired, so just before the fix became available.

Availability, as your Honours know, is a quality of the fix, which we combine with its restorative quality to have the effect, which is our appeal, namely, that there should not have been a remitter for further exploration of damages under 272(1)(a) because there could be none. The availability in the statement I have just made is intended to contrast with the implementation or the carrying out or the accomplishment of a fix on a particular vehicle. And your Honours will see, throughout the Full Court, the word “available” is used in at least two different ways – that is not a criticism. So there is the availability of the fix, which occurs in May 2020, meaning that the know‑how had come to hand, the expedience had been technically perfected, and there was no impediment in the nature of further research, further engineering, price – that is, cost to the consumer – to it being effected or implemented in a particular vehicle.

Of course, not all vehicles the day after that availability – that first availability – had the fix implemented. Some had it implemented. Your Honours could be forgiven for thinking, from the presentation of the Williams appeal and, in particular, the anticipated answer to our appeal by Williams, that for those for whom the fix had been implemented, there remained a claim under 272(1)(a) for a reduction of value because the implementation no more than the availability of the fix would not, on the argument against us, do anything to effect a good claim for reduction in value as at the date of purchase.

GORDON J: They were not part of the class, were they?

MR WALKER: Exactly so. Paragraph 69 shows that, so far as the presentation of the claim was concerned, that last point – which would appear to be entailed, at least in the current form of the argument against us – was not, however, presented at all. The decision below is not on an issue that refers to that at all. Paragraph 69 makes it clear no aware for so‑called:

aggregate damages for reduction in value resulting from the failure by Toyota to comply with the consumer guarantee.

was sought in respect of those group members – that is, there were members of the group, but the subgroup, if you like, for whom that award was sought – which is the one in question before your Honours – there was no such award sought with respect to those members who taken advantage of a field fix.

Now, your Honours do not need to be concerned with what I might call the calculations in the camp opposite us as to why that was a good idea, but it plainly involves at least some consideration of 271(6), to which I will be coming quite quickly.

GLEESON J: Mr Walker, does “available” in this sense mean available to any consumer who asks for it within a reasonable period of time?

MR WALKER: It probably does. It probably does. That certainly sounds – if I may say so – in a common law sense a reasonable approach. I do not mean to be facetious in that last comment at all.

So, there is available in the sense that it had become a known expedient and there were no barriers to it being taken advantage of by the consumers, but there is also availability in the sense of what I might call queues or waiting lists which may involve priorities because, as you know, this propensity did not materialise in every case, and I am guessing probably there might have been some social merit in those who are not yet suffering smoke in the windows not being at the head of the queue. But who knows, and there is nothing in record about it.

Justice Gleeson raises a question that does need to be considered in terms of the remitter – and it is the remitter, of course, that our appeal is aimed against. We say, do not remit for any of these inquiries because there cannot be an award of damages because, if you like, to borrow from the common law, avoided is no loss. If I can take your Honours, please, in the Full Court’s reasons [2023] FCAFC 50; 296 FCR 514 at 580, 327 of the book of authorities, under the heading “Conclusion and orders”, at the end of the passage where their Honours had substituted 10 per cent for 17.5 per cent and noted in paragraph 316 that that was:

before taking into account the fact that the 2020 field fix became available –

Your Honours see that word “available” – they then proceed to describe what turns out to be the content of the remitter because the order for remitter is for it to be dealt with in accordance with the reasons, and these are the reasons we think that, in particular, set out the prescription for the hearing on remitter. You see the emphasis added to the last paragraph by italics:

before taking into account the availability of the 2020 field fix –

GORDON J: What paragraph is that, sorry, Mr Walker?

MR WALKER: Paragraph 317 ‑ ‑ ‑

GORDON J: Thank you.

MR WALKER: ‑ ‑ ‑ just under the heading “Conclusion and orders”. Then apropos that emphasised matter:

We are not in a position to re‑assess the reduction in value . . . taking into account the availability –

Now, that is what, on our argument, in our appeal, was an error by their Honours because, on what we are going to put concerning the effect of the so‑called availability, there could be no damages – for reduction in value, that is. Their Honours say, or contemplate, that there will be further evidence necessary to undertake that task and lay its absence at the foot of the common error of the parties with respect to the conceptual approach. Their Honours, then, in 319, consider the remedial possibilities, and halfway down page 581 of the authorised report, they say:

The re‑assessment of reduction in value damages should take place on the basis that (as we have found) the reduction in value before taking into account the availability of the 2020 field fix is 10%.

So, that is not up for grabs in the remitter:

The aspect that remains to be determined is what allowance should be made (by way of reduction of the 10% figure) for the availability of the 2020 field fix.

Up to that point, a possible – probably preferable – reading of the notion of availability is what I will call first availability, but the next sentences suggest that that may be wrong:

Consistently with our reasons, that aspect is to be approached in a way that takes into account the period of time that the particular consumer held their vehicle before the fix became available.

It is not clear what “available” in that last use means. It could mean either – that is, what I will call the May 2020 discovery and development or, it might mean when the appointment is made at the local Toyota dealership for an individual’s individual vehicle to be fixed.

That sentence really does not assist one way or the other, although one might observe that if it was only a matter of understanding the period between purchase – which has to be known in order for somebody to be a member of the group – the date which is May 2020 for the first availability, then one would not have thought that has to be the subject of further evidence. So, that might suggest that “available” there means available in the sense of now freely open for a particular individual with a particular car to have the fix installed, whether or not they do.

STEWARD J: Mr Walker, having regard to the formula which is at paragraph 95, the second step would seem to indicate that availability in that sentence would be always May 2020.

MR WALKER: I am bound to say I think that is the better reading. On the other hand ‑ ‑ ‑

STEWARD J: If they are talking about their formula there, and I think they are.

MR WALKER: Yes. I agree, with respect. If that were so, as I say, there is no need for a further hearing to get May 2020 fixed. The period of time point is not something that I am addressing at the moment and is not of a concern for us in our appeal. If we are right in our appeal, it does not matter how long the vehicle was held, the claim for reduction in value is eliminated by the availability of the fix.

BEECH‑JONES J: Sorry, on your approach it means, provided the fix is available before the trial?

MR WALKER: Yes.

BEECH‑JONES J: That is it. That is the end of it?

MR WALKER: Yes. I would go further – before the judgment.

BEECH-JONES J: Before the judgment. And “available”, you mean “available” as either has been fixed or could be fixed at a point within a reasonable time of judgment.

MR WALKER: Yes, as Justice Gleeson puts, the notion of something being available obviously imports the real world considerations which will be informed by reasonableness, yes.

GORDON J: But, in response to that second aspect limitation that you accept, how does one determine that by reference to the findings that were – I know you might be wanting to come back to this at a later time – made below? In other words, we have seen from the facts that some people were told – by reference to the heat map, for example, in the Boedeker survey evidence – someone is 24, someone is 26; as you say, someone is on a priority list, someone is not. What is the criteria by which we determine that question and that limitation that you have accepted?

MR WALKER: May I say immediately, those are not matters for this Court, though they are important for this Court’s determination of whether there has been an error of any of the kinds that the parties contend for. But your Honours obviously will not be determining, factually, anything concerning availability.

GORDON J: It is probably that I am being too subtle here. The questions are twofold, I think; in the Capic matter, they only assessed by reference to the representative party, not the group.

MR WALKER: Yes.

GORDON J: Here, it is by reference to group, and we have seen, by reference to the heat map, there is a variety of people that are the subject of the award. So, I ask for that reason, that is, is there to be some criterion by which that – I do not want to say “concession”, but that acceptance by you is to be determined?

MR WALKER: I am so sorry, your Honour, I am being obtuse. I am not deliberately – I am not quite sure what concession or position ‑ ‑ ‑

GORDON J: I think you said, “available” means either fixed or fixed within a reasonable time.

MR WALKER: I am sorry. In these reasons, the word is perhaps used differently in different places. There is what I have called “first availability” meaning the discrete matter of history that you see in the chronologies for the development and commercialisation for no fee of the fix. And that is what we think, throughout, their Honours mean by “availability” – when they talk about the availability of a fix they mean the event or state of affairs that came into being in May 2020, notwithstanding that, obviously, the first day of that being true, nobody had in fact had the fix implemented.

Then there were some people who had the fix implemented. We say, in our reference to findings and evidence to which we will come in a moment, that it can be regarded as a fully restorative repair. And your Honours can see that there is going to have to be some consideration then to what, if any, effect the role of subsection 271(6) may have on the principles involved. And I am coming to that, as I say, soon.

But, in the reasons, “available” could also mean, in a remitter, a state of affairs which were different between individuals. And those who were at the end of the queue, if there is a queue; those who are low in priority, if there are priorities – we do not know – may well be able to say, one would have thought, very reasonably, as a matter of English, it is all very well to say it is “available”, but not to me. And when one talks about an event which ought to be taken into account in consideration of the proper reward of damages for reduction in value, it is, if I may say so, a bold proposition to extend the matters to be taken into account accordingly beyond the dates of the hearing.

It may be that “available” also means capable of being implemented for that individual and his or her individual vehicle. If that is true – and it might be true, because of the concern about period of time of holding a vehicle before the fix became available – if that is true, then, obviously enough, the remitter is one which, for the reasons we have tried to develop, is an unnecessary and inappropriate forensic exercise involving, as their Honours contemplated in paragraph 321, the possibility of completely individuated determinations, rather defeating the usual quality of a representative proceeding. That is why, in our submission, it is of importance that, if we are correct, there should not be a remitter that involves the question of reduction in value given the availability of the fix.

Now, the force of that argument will be informed, obviously enough, as well by an understanding as to what was held, or correctly held, concerning the effect of the availability of the fix on the value and, in particular, any putative reduction in value by reason of the defect. That is where, as your Honours know, there is lively contest between us at the Bar table concerning what is canvassed by their Honours in the Full Court at their paragraph 123. The sentence which has been drawn to attention by both of us, for our opposite purposes, and which is said to be wrong by our learned friends is that one towards the foot of that page, namely:

Their significance –

that is, those matters:

is exposed by the fact that, by the time of the initial trial, it was known that the 2020 field fix was available –

that presumably means it had become available in the sense that appertains to May 2020:

and the experts –

in the plural:

agreed that, in consequence, there was no ongoing reduction in value.

There has been a dispute that my friend has gone into in his address about whether that is a slip or an error concerning more than one expert and whether, in any event, Mr Cuthbert can be said to have done any such thing.

Could I, first of all, remind you of the report that you were taken to in its paragraph 79 – Mr Cuthbert’s paragraph 79 – which is in the Williams book of further materials at page 168. I do not need to dwell on it, you have already seen it. You have also seen the cross‑examination specifically on that paragraph of Mr Cuthbert in November at pages 216 and 217 of the same Williams book of further material. I do not need to dwell on it, it is plain that he is accepting that the availability of the fix was such as to eliminate any reduction in value. There were then the assumptions ‑ ‑ ‑

GLEESON J: Mr Walker, paragraph 79 of the report at book of further materials page 168, the third‑last line seems to shed some light on what he means by “availability”:

repair . . . which will fix the issue or problem at the time I am valuing the vehicle –

MR WALKER: That is that gentleman’s understanding – I do not think that can be attributed to any judge.

GLEESON J: Could that not be relevant to an understanding of the cross‑examination?

MR WALKER: Yes, of course it is, yes. It is the very paragraph that was being cross‑examined on – yes, it must be so, yes, your Honour.

BEECH‑JONES J: Sorry, Mr Walker, are you suggesting that Mr Dick got the concession that the Full Federal Court seems to have characterised it as?

MR WALKER: Yes.

BEECH‑JONES J: That is, you are saying the cross‑examination did get Mr Cuthbert to agree that even if it was not applied but was “available”, that was it. Is that what are you saying?

MR WALKER: Yes, that is right.

BEECH‑JONES J: Was there another expert on this topic?

MR WALKER: Yes, there is, in effect. Can I come to that? It is a similar view from Mr O’Mara, to whom you heard reference.

GAGELER CJ: Mr Walker, are you also going to deal with the subsequent ‑ ‑ ‑

MR WALKER: Absolutely, your Honour. I was going to be dealing with it immediately.

BEECH‑JONES J: I am sorry, I did not mean to interrupt your course, Mr Walker.

MR WALKER: Yes, and I ‑ ‑ ‑

GAGELER CJ: I do not want to interrupt you.

MR WALKER: No, no, I am grateful to your Honour. The sequence does – if I can complete my answer to Justice Gleeson – yes, the language of paragraph 79 is the evidence or the opinion upon which this gentleman was then cross‑examined in the passage that you have been taken to and I have just referenced. We say that the combination of those two texts, namely, paragraph 79, the questions and answers about it – whatever subtlety is engaged by the word “available”, it is availability as opposed to implementation. That is, having the punitive effect or not, which is ‑ ‑ ‑

GLEESON J: It is availability which will fix the issue or problem.

MR WALKER: That is right, so what I will call ‑ ‑ ‑

GLEESON J: But that could mean, will fix at some time, but we do not have any idea.

MR WALKER: Yes, that is right.

GLEESON J: But it could also mean a repair is available, which, if undertaken, will fix the problem at the time I am valuing the vehicle.

MR WALKER: Quite. If you look at paragraph 79, he – and do not forget, this is a witness who insisted that the four years plus was a very material factor, I will come back to that – but in his paragraph 79, he is saying that:

if –

there is what I am going to call a “restorative repair”:

available –

and that does not mean “implemented”, it means “available”:

and will be carried out –

that means it has not yet been carried:

out under the vehicle’s factory warranty.

Which means no cost – then he will not apply a reduction by reference to what I will call a notional cost of repair, that is, reduction in value. He then goes on to refer, sensibly, as a layman, but relevantly, for our legal issues, to inconvenience, and then goes on to posit:

If no repair is available which will fix the issue at the time I am valuing the vehicle –

So, he is not talking about implementation; he is talking about it being available in the sense that, if implemented, it will restore – he:

will typically reduce the value of the vehicle more than if such a repair exists.

And that really just seems to be a corollary of what he has already said – that he will not reduce if there is such a fix available. When he was cross‑examined on that, at 216 in the same bundle, he says there will not be a reduction:

“I don’t reduce the value at all” . . . Because of the availability of a complete fix.

. . . correct.

So, there cannot be much doubt that the Full Court correctly understood the import of that evidence by him. And if I can take you in the Toyota book of further materials – I am sorry, before I do that, I should complete what I want to say about Mr Cuthbert. He was then invited or directed to respond on the basis of the assumptions crafted by the judge that you will have seen the Williams book of further materials at pages 199 and 200, with which you are now familiar.

Can I remind you, however, that of the assumptions that you will find at page 198, there is used by the trial judge the expression “countermeasures are now available”. That is the fifth assumption:

countermeasures are now available to address . . . at no cost . . . These countermeasures have not been implemented –

so, “plainly available” does not mean implemented:

but if they were they would be effective to remedy the defect.

So, the assumption is about a restorative repair. I think I am right in saying that it is not set against us. That is an assumption not borne out by the facts. It is an assumption borne out by the facts, namely, a restorative repair is the nature of the fix and then we say that has certain legal consequences bearing in mind the nature of the claim. But as to availability, the judge wanted an answer from this witness on a basis which regarded the countermeasure as now available.

Now, it could be, as I have tried to point out, that the Full Court had in mind that the terms of their remitter might permit – I do not know, it is not clear – some differentiation between availability in the sense of it has been devised, developed and it can now be rolled out, on the one hand, and on the other hand it is not available until it is actually the subject of an immediately acceptable opportunity for each individual to have it done to their vehicle.

BEECH-JONES J: So, do you accept that if at the time of judgment there are two vehicles, one which is going to be fixed next week and one which will not be fixed for another two years, that the one that will not be fixed for two years has a lesser value because of the propensity that may materialise in the meantime?

MR WALKER: I think the short answer is no, I do not. Jumping ahead a bit ‑ ‑ ‑

BEECH-JONES J: I am sorry, I have taken you out of order. Please go back to ‑ ‑ ‑

MR WALKER: No, it is valuable if I can just flag some things. Neither the claim under the statute, nor, as it happens, the way in which the case has been run, we think, pace the formula which the Full Court proposed but did in fact fully take up, has presented the matter as value over a period. The statute, as you would expect in the tradition of the law and damages and accrual of causes of action and the like, points to an instant. Potts v Miller is a paradigm, though, as we know, not a complete description. So, over a period does not really matter.

Now, it may be that there is a time value of money question which Parliament we do not think has, in these provisions, attended to. Why should it? Because there are court provisions for interest, for example, highly individuated and maybe unwelcome to those conducting representative proceedings, but there is that possibility. In other words, you can be said to have been kept out of the money necessary to make the price you paid a proper one for more or less a period, depending upon when you purchased, which will be separate for the individuals. That has nothing to do with this case, in our submission.

GORDON J: Mr Walker, I just want to understand why that is not open. Is that because the case that was run below was a case about assessment at trial date, not at supply date? I mean, the whole case has shifted. That is the difficulty. That is the first proposition. The second is that when you look at availability, as you point out, it is used in different ways.

MR WALKER: Yes.

GORDON J: In response to Justice Beech‑Jones’ question, your answer was there is no difference in value in terms of loss; it is zero for both that vehicle which gets fixed tomorrow and that vehicle which gets fixed in two years’ time. Why is that argument about a difference in value not open now? I mean, either as a matter of principle – I understand the argument on that, but assume you are wrong about that. Why is that not available as a matter of factual analysis?

MR WALKER: That is one of the reasons I have pointed to what might be involved in a remitter, because what your Honour has just raised with me would require exploration of that for individuals. If there is going to be a claim that there is a difference in the assessment of any surviving reduction in value, according to how long between your purchase and your fix – your actual fix, as opposed to the availability – if that is to be run – and, at the moment, unless we win our appeal, that could be run – that will the subject of factual exploration on remitter.

STEWARD J: Is not another answer – a more basic one – that there was no expert evidence led on this issue below by any party.

MR WALKER: I am not sure of whether that is an answer, apart from what I might call, perhaps, a boulder in the way. No one is here complaining about having not got our desserts on evidence which did not exist. I accept that. No one has a case here – a grievance here – about that aspect of determination because it has not been reached.

STEWARD J: We do not know whether some members of this class are going to refuse to have their car fixed.

MR WALKER: That is right – because they have never experienced any adverse ‑ ‑ ‑

STEWARD J: They might want to monetise their defect.

MR WALKER: They may regard sustained driving at 100 kilometres an hour as furious driving of a kind that should never be contemplated.

STEWARD J: Can I just try to get something clear about what you will say about these materials. As I understand it, what you are saying is that in the cross‑examination of Mr Cuthbert, Toyota secured a concession that the value would be restored because of the presence of the fix – if I can use that language ‑ ‑ ‑

MR WALKER: Yes.

STEWARD J: ‑ ‑ ‑ and that in the document that Mr Cuthbert was required to produce for the very next day, he gives an answer which is narrower – namely, he is talking about value restored when it is fixed.

MR WALKER: That is right.

STEWARD J: He does not know, deny, in any way the answer he gave the day before.

MR WALKER: No. That is why I wanted to draw to attention the paragraph commencing, “overall”, is not, with respect, at all felicitously phrased if it is intended to convey the proposition. But, until it has been actually applied, absolutely there will not be any difference.

STEWARD J: There may be no inconsistency between the answer he gave in the witness box and in this report. They both will restore value.

MR WALKER: That is correct.

STEWARD J: Can I ask you a separate question. Are you going to take any point about the fact that this attack on the finding at paragraph 123 does not appear to have been a ground of the notice of appeal?

MR WALKER: No, I am not going to take a point in terms of the significance of the – sorry – the reasoning concerning availability, but there is no ground of appeal before your Honours raising a factual dispute concerning the effect of availability on value, namely, what we call the restorative repair. We have come to this Court, and it is, we thought, common ground, that the repair is restorative. There is a difference between us – is that only if implemented, or if and when implemented, or is it because of the availability? We say the evidence was all one way, and I have taken you to some of it.

EDELMAN J: The problem is there might be an intermediate position. The appellant’s position is that you bring the guillotine down at the point of supply. Your position is that you bring the guillotine down at the point of trial, taking into account all of the facts that have occurred in the meantime, but not, apparently, the fact that is the delay in obtaining the fix.

MR WALKER: May I say, your Honour, yes, that is something.

EDELMAN J: And that may be the intermediate position, that you take all of the facts into account, one of them is the period of delay.

MR WALKER: I was trying to convey that I do accept that that is a question that may or may not have been intended to be encapsulated in the terms of the remitter, because I should make it clear that our main argument is availability – in the sense of first availability – is the answer, availability of that – but I accept that that raises a question: what about any people – that is, if there are any people – to whom that soi‑disant available remedy is not in fact factually, actually, available until after the trial was had?

BEECH-JONES J: So, Mr Walker, you are not in the business of making concessions, but are you saying, look, if we win, we still see that there is an argument for a very narrow scope of remitter on that question?

MR WALKER: That is – if you like, yes, by way of a concession that, if you follow through that reasoning – which involves speculation, by the way, about matters which are not in the factual record – then we could be correct in principle, but the principle would not apply in our favour for persons to whom, in the sense I have been trying to tease out from the ambiguous use of the expression by the judges below, that fix was not really available.

GORDON J: Can I put it to you in three propositions, just to make sure I have it right. The first is that when I assess, for the purposes of 272(1)(a), at the time of trial, the availability of the fix at large must be taken into account, because you take into account all facts that have occurred in the meantime between the date of supply and date of judgment.

MR WALKER: Yes.

GORDON J: And on your primary case, that is limited to mere availability and not application of the fix.

MR WALKER: Yes, our primary case is ‑ ‑ ‑

GORDON J: And if you are wrong about that, then you accept that there may be a question live for remitter on that issue alone?

MR WALKER: On date of implementation, if it is implementation, contrary to our argument, rather than availability to be implemented.

GORDON J: Recognising that that was not run below and has not been the subject of argument, and therefore the matters that are raised at the end of the Court of Appeal’s judgment about it, it is a matter for the trial judge if they want to re‑open and reconsider additional evidence, are left for the trial judge?

MR WALKER: Yes.

GORDON J: Thank you.

MR WALKER: All of that.

GLEESON J: Mr Walker, just looking at the questions that were asked of Mr Cuthbert, and particularly question 3, the concept of availability is described as availability from around 2020.

MR WALKER: Yes.

GLEESON J: That certainly seems to suggest an idea of availability to the consumer.

MR WALKER: No, not to the individual consumer at all.

GLEESON J: What does “availability from” mean, except availability to consumers?

MR WALKER: I am not intent on questioning that. If “availability” means anything, it must mean that the procedure can be implemented in a vehicle, otherwise it is absurd misuse of language, I agree with that. But the ambiguity arises because it can be said that the procedure is “available” from just before the first time it is implemented. It could not be implemented if it were not available.

But for the claim by a consumer – which is, notwithstanding it is in a representative proceeding, it is still a claim with respect to a consumer’s purchase of a vehicle on a particular date – I accept that the word “available” might be understood in terms of what might be called commercial decency necessarily to involve, can it be implemented, can I now have it implemented in my vehicle so as to restore the value – the restorative repair. That has not been explored. That is why I have drawn to attention the different contexts and, we think, the ambiguity that follows in the way the Full Court uses the notion of “available” but also, with respect, the way in which the trial judge used it in his fifth assumption to Mr Cuthbert.

It is, in our submission, clear that the question of whether there is going to be an effect on a claim for reduced value, depending whether a particular consumer has had their particular vehicle restored by the repair, that is, the fix being implemented – that question is not the subject of any findings of fact and has not been, for that matter, the subject of what I will call a judicial recipe for guidance of the remitter.

EDELMAN J: Assuming, just for the moment, that that delay were legally relevant, why would not a delay between 2016 and 2020 also be relevant?

MR WALKER: I think the answer to that involves me arguing against my basic premise. My basic premise is that all availability is enough. It is only if I am wrong on that and that it is only implementation that does the trick, that one gets into this possibly differential effect according to the arbitrary dating of the end of the trial – that is, the last receipt of evidence and argument, I should say. My principal argument is no, for all cases, as soon as it is the case that this so‑called “defect” is something that, at no cost, can be fixed, then there is an end of reduced value. If there are amenity – to use, I hope, a neutral expression – claims, they are under paragraph (b), not paragraph (a).

EDELMAN J: Would that mean, then – you can go into this when you get to the submissions – that there would be a difference between situation one where, with full knowledge, a purchaser is told, you have a defective vehicle, we can repair it but there is a four‑year waiting list for the implementation of your repair; and situation two, where the purchaser is told, we do not know whether there is a defect, and four years later we discover there is a defect and it can be implemented immediately. There is a difference between those two situations, is there?

MR WALKER: It may not be a difference of outcome, but there is certainly a difference of reasoning.

EDELMAN J: Yes, but legally, as I understand your submissions, there would be a difference in outcome.

MR WALKER: There may well be, yes.

GAGELER CJ: Mr Walker, I am sorry to bother you again about this, but if we look at page 198 of the book of further materials and the assumptions put to Mr Cuthbert by the trial judge, do I understand it that the fifth assumption, treating the word “available” as meaning technically available, as it must, in that context, is one that you would accept is made out on the evidence?

MR WALKER: Yes.

GAGELER CJ: And then his Honour asks three questions, which were alternative questions. Am I right in understanding that you say that the correct question is question 2?

MR WALKER: Yes.

GAGELER CJ: And am I right in understanding that ‑ ‑ ‑

MR WALKER: Yes, I do not quite understand what question 3 means, to tell you the truth.

GAGELER CJ: On one view, question 3 was what Mr Dick was asking Mr Cuthbert in cross-examination, which has nothing to do ‑ ‑ ‑

MR WALKER: I understand why your Honour says that, but no, it is really – his question in substance is focusing on the second half of question 2:

using the information available today?

GAGELER CJ: That is a comment on Mr Dick’s question to Mr Cuthbert. See, it is put against you that, really, the third question:

Assessed as at today’s date?

Nobody contends for; that is what Mr Cuthbert says at the bottom of page 200 on the assumptions that he puts there, and that is really all that Mr Dick got out of him out of page 216 in cross-examination. That is why it is put against you, as I understand it.

MR WALKER: I think I understand that that is so, but no, we do not accept that at all. The passage at 216 is a passage which is, after all, cross-examination before these questions were asked on these assumptions, so it is not to be read by reference to the text of the letter that came after the cross-examination; it is not directed to the third question, so-called. But paragraph 79, that it was directed to, is concerning the effect of the availability in the sense – I think your Honour just called it the “technical availability”, and that, in our submission, is what manifestly is being talked about at lines 28 to 30 on that page, page 216 in the book:

you won’t reduce the value of the vehicle if the fix or repair is available . . . and will be carried out –

In other words, it is before it has been implemented. And the question that follows then, at line 34 and following, involves the question of putting what was known – he says, “February/March”, but we can call it May – concerning the fix being available. And so, it is very much question 2 – the second half – that is, taking into account information available at the time of the ‑ ‑ ‑

GAGELER CJ: Although, it is all couched in terms of, if you were asked a different question, and you were asked to value the vehicles now. That is in the question, it is in the answer, it just ‑ ‑ ‑

GORDON J: Just because that was the focus at the time of the trial ‑ ‑ ‑

MR WALKER: It was, indeed, and may I say, that word “now” – which is, how should I say, embarrassing but not necessarily for us – is completely ambiguous. There has to be a judicial adjudication, which will happen over a particular time – call it “now” – and it is about something, which, by definition, is in the past – we are not talking about the future prospects of anything; and it has been tested by questions concerning taking into account information that becomes available up to the point of that adjudication, that is, available today. And that is what the judge meant in question 2:

using information available today –

And that, I would press upon your Honours, is a better way of understanding the witnesses’ adoption of and insistence on the word “now” in that passage. Suffice to say, that up to that point there is, in our submission, no reason to doubt that Mr Cuthbert had the view that we have attributed to him.

That letter by him to the judge was not the last word. Could I take you, in Toyota’s book, please, to page 24. At page 24 in the Toyota book of further materials, at line 13 and following of the transcript, that picks up the reference to question 3, to which I have taken your Honours just now:

what is the reduction in the value of the vehicle attributable to the defect assessed as at today’s date.

That is, after all, what question 3 says:

That was the question . . .

. . . even though you haven’t seemed to have put a sentence into this effect, that the answer is none – or, “None that I can find”?‑‑‑There is none that was quantifiable.

So, that is the effect of the defect, given what is now known. And that, in our submission, completely accords with the notion that Mr Cuthbert regarded the repair as restorative in the sense that either upon it being implemented or upon it being available – I do not need to return to those matters – it would reverse any reduction in value, or the reduction in value.

But the context includes the questions and answers that you will find on the two preceding pages, 22 and 23 of the bundle. At the foot of 22 – and I will not read it, but your Honours will see that the valuer – the expert valuer – was at ease with the proposition that there was in fact what might be called a happy or favourable market outcome with respect to value – it might be depreciation, it might not be – of these particular vehicles.

Now, that is a question of fact, if you like, concerning the power of the brand, or whatever. It certainly suggests that, in terms of asking a question about reduction in value, the practical response by that valuer that upon either implementation or availability there would be no effect, that is, no continued effect on value so as to reduce is, in our submission, highly significant, and the Full Court was correct to place that at the centre of reasoning concerning the possible approach to the matters that the Full Court, we say wrongly, thought ought to be explored upon a remitter. Question 2, which is, as I say, the question asked by the judge of more centrality in principle on our argument, is then the subject of questioning on page 23 of the bundle. And you see at the foot of that page:

with the benefit of that assumption –

which there involved questions of market fluctuations:

and all information available to you today –

That certainly includes the restorative repair:

you need to grapple . . . with how that information does not support a valuation opinion and puts any loss of value –

et cetera, et cetera:

Do you agree that you should be trying to do that exercise?‑‑‑Yes.

Because if you don’t do that . . . your opinion as to value . . . does not really assist . . . no.

He does not agree with that:

I do not know that I have a – an answer.

And then he moves to question 3 which, as I say, contains an element, obviously, that is entirely consistent with what he had said in cross‑examination the day before. Now, Mr O’Mara in the Toyota bundle at page 4, at the foot of that page, item 2:

Assessed as at the time of purchase, assuming the information available today –

On that supposition:

It is clear the defect and defect consequences had no negative impact on Fair Market Value . . . no signs of applying a discount greater than average depreciation –

Then item 3:

Assessed as at today’s date

. . . after considering all 6 assumptions . . . clear the defect and defect consequences have had no negative impact . . . The market has shown no signs of applying –

So, that was his approach and, in our submission, there, one has two experts to the same effect, though in different language. So, paragraph 123 of the Full Court reasons does not include any fatal error – that is, fatal for our argument – as had been argued against us.

Your Honours, responding to the way the matters were put this morning and some of the propositions your Honours have asked my friend to consider, could I just now go straight to the statute. Your Honours are, of course, familiar with all the relevant provisions. They ought, logically, start with noting the existence of section 54 – the acceptable quality guarantee, as it is called. And in this Court, contravention of that guarantee is taken for granted. We then come to Part 5‑4 in Chapter 5, “Enforcement and remedies” and, in particular, Division 2, “Action for damages against manufacturers of goods” as opposed to sellers.

Your Honours are familiar from the companion proceedings, that is, Capic [2021] FCA 715; 154 ACSR 235, that section 271 was scrutinised, if I can use that expression, by Justice Perram at first instance in that case. In particular, there is a long passage that I am not going to dwell on that really starts at page 394 of that report.

It is paragraph [698], page 1047 in the authorities book. I simply draw that to attention because it is not the case that all of the argument that I am going to put about 271(6) is consistent with the way his Honour, at first instance in Capic, proceeded. As you know in our case, 271(6) in the Full Court, gets barely any consideration at all – apart from being described as a provision which does not affect the approach that their Honours regarded as proper.

We urge that 271, including subsection (6), is, of course, part and parcel of the scheme which is contained in Division 2 of Part 5‑4 in Chapter 5. It contains three provisions, two of which are at the heart of the argument. Pace Justice Perram in Capic, there is, obviously, a relation – an integral relation – between section 271 action and section 272 stipulation for an entitlement to recover damages; and that is carried out, of course, by the opening words of subsection 272(1), itself. The only action for damages under this division is, of course, under section 271.

The “affected” person, so‑called – being an affected person in relation to goods – can recover damages from the manufacturer and then, after that not particularly helpful description – that is, it creates an action but does not tell you much about its metes and bounds – immediately there are exclusions. Subsection (2), obviously, represents a balance struck by Parliament concerning activities in the relevant market. Then when we come to subsection (3), another creation of an action. It immediately is followed by an exception in subsection (4); again, a balance concerning the roles and functions, activities of particular people in question. The same is to be seen in subsection (5).

In subsection (6), there is a general prohibition on commencement of an action – I stress, “commencement of an action” – under one of those subsections – subsection (1), subsection (3), or subsection (5) – which are the statutory actions for damages in the circumstances each of them, respectively, addresses. We stress that what 271(6) does, is to prohibit the commencement of an action if something has already occurred before then. Plainly enough – to adopt and adapt some of the approach taken by Justice Perram in Capic at first instance – subsection (6) contemplates that there will be a role for decision‑making by the so‑called “affected person” in the application, potentially, of subsection (6) if an affected person required the manufacturer to remedy. In other words, in particular to which one would direct attention.

In that event – that is, if that has happened – and there has been the accomplishment – that is, the successful accomplishment within a reasonable time of the repair or replacement as the case may be – then there is a disentitlement of commencing any action which might otherwise have been available.

Then there is a disentitlement of commencing any action which might otherwise have been available. What that plainly demonstrates is that in this balance being struck in a statutory code of recovery for the statutory guarantee – in this case under section 54 – that it was accepted that remedying a failure – that presumably means making it good – by repair, so the restorative repair – the effective fix in our case would be an example – is something which, if required by the consumer in accordance with an express warranty if there is an express warranty and if carried out within a reasonable time, means that according to Parliament you should not have the entitlement and should not even be able to commence proceedings claiming the entitlement under 272(1)(a) – I stress, (1)(a).

That, in our submission, makes sense because if there has been by that subsequent event of a remedy of the failure by repair in accordance with an express warranty, it obviously being part of Parliament’s intention to encourage compliance with out of court calling‑on and honouring of warranties, then you cannot come to court to complain about reduction in value. Notwithstanding, of course, that remedying a failure by repairing does not involve any handover of money in order to compensate for some effect in the market, and that is because the basis of subsection (6) application is that there is a requirement to remedy by repair, not to fail to remedy by an inadequate repair but to remedy by repair.

That, in our submission, is a significant indication of the concern of section 272 with respect to the position of an aggrieved person – sorry, an affected person aggrieved by a failure to comply with a guarantee under section 54. When we come to that, in our submission, and contrary to the way in which the case has been argued against us, there is, of course, significance in the word “damages” being the critical object of the proceedings for this statutory action, a statutory action under section 271(1), which is then prescribed as to certain matters that might be raised in it by section 272.

Section 272(1)(a) is not, of course, the only way in which a claim can be put under section 271(1), and that is plain from the inclusion significantly of paragraph (b) and the intended operation when there has been the election by the affected person of 271(6). Your Honours will have seen, in the papers in our case and in our written submissions, that we are saying nothing to the effect that there cannot be claims, by persons who do not have a claim under paragraph (a), under paragraph (b). Of course they can.

It is important, of course, to remember that subsection (3) prevents paragraph (b) claims which – my paraphrase – are, as it were, completely parasitic upon a reduction in the value of goods, and the commercial effect of what might be, say, the reduction in the hypothecation value accorded by your lender might be an example. But the consequential losses – which is obviously enough the object of paragraph (b) of subsection 272(1) – so long as they do not result from reduction in the value of the goods, will be captured within paragraph (b).

That is where periods, if any, of loss of amenity – perhaps a reduction in fuel economy, to use matters germane to our proceedings – will be properly recovered and are not before this Court. Nothing in our argument is intended to preclude the liability of a party like Toyota upon appropriate proof for damages in favour of individuals who can bring themselves within the terms of paragraph (b).

STEWARD J: Mr Walker, do you agree with Mr Gleeson’s contention that, because of the terms of 271(6), a consumer who might invoke (6), given its circumstances are satisfied, might nonetheless elect not to seek a repair, and seek damages instead?

MR WALKER: Yes, and can I build upon that in this way. One, we agree that subsection (6) has its prohibitory effect that “not entitled to commence an action” only if the affected person acts as the opening words contemplate and the manufacturer performs as the terms of the subsection require. That is the first thing.

Second, it follows, without any qualification on our part, that there can be an action commenced in which an issue will be the extent of entitlement under section 272(1)(a), yes. Our whole case is to say, but that is an entitlement to recover damages – and I will come back to what “damages” imports. If there is a state of affairs – in this case it is what we call the availability of the fix – which means that there is a restoration of lost value – that is, reduction in value – then there cannot be, after a trial, a judgment for that avoided loss.

BEECH‑JONES J: Do you say that follows from (6) or do you say (6) is neutral on this?

MR WALKER: Subsection (6) is a rocket that never took off.

BEECH‑JONES J: Right.

JAGOT J: But on your case, someone makes that election, they get no damages anyway.

MR WALKER: No, they can sue with damages under (b).

JAGOT J: Subsection (b) yes, I meant under (a).

MR WALKER: I am so sorry, I want to emphasise damages under (b) will include the – we accept – affecting matters such as being mucked around, inconvenienced, and having horrible smoke through your back window. I am not saying anything against any of that, not in issue in these proceedings in this Court at the moment.

JAGOT J: No, I am only talking about (1)(a).

MR WALKER: No, and that is why – perhaps I need to ‑ ‑ ‑

JAGOT J: It would be perverse for someone to say, I am not going to request the person to remedy the failure because I want to get (1)(a) damages, but you cannot because as soon as you get – the repair is available.

MR WALKER: I do not think there is anything perverse, if I may so. Why would you not prefer a vehicle that is being restored to how it should be in accordance with section 54?

JAGOT J: No, I think we are on the same page.

MR WALKER: I am sorry, perhaps we are then, yes.

JAGOT J: I cannot see someone – it being a meaningful election, leave aside (b) – leave aside (b) damages, it is not a meaningful election to say, I am not going to force or ask the manufacturer to remedy a failure.

MR WALKER: I would prefer an outing in the District Court, yes.

JAGOT J: But you are going to get nothing anyway because the whole premise of (6) is that you would get nothing under (a), so that is not realistic.

MR WALKER: I agree with that and would add to it. It would, depending on the facts, raise serious questions, mercifully absent from the argument in this case today, about litigation.

JAGOT J: No, I am just saying there is no real election, here, about (a) damages, to me.

MR WALKER: The only reason I called it an election is ‑ ‑ ‑

STEWARD J: In fairness, it was because it was the way I put the question to you and to Mr Gleeson.

MR WALKER: Yes, the only reason I called it an election is that there needs to be a choice made. That is, there has to be a requirement by an affected person. The way we read subsection (6) is that it is recognising the desirability of there being action taken out of court relying upon express warranties by the person who has the benefit of the warranty and the person who is bound by the warranty. In such a case, the latter will be spared litigation and the former will have the happy outcome of the repair. There is a spur to it, namely you, as a manufacturer, will not be spared 272(1)(a) proceedings unless you do so within a reasonable time.

BEECH-JONES J: You are not saying the presence of (6) is an indication that the availability of a repair, if not taken under (1), necessarily means no damages under (1)(a).

MR WALKER: All the emphasis in my agreement with that is on the word “necessarily”, but I am saying this: that subsection (6) certainly indicates that an equivalence – that is, one cancelling the other out – of getting a remedy by way of repair, compared with a reduction in value for breach of section 54. Parliament has made it pretty clear that if that occurs, pursuant to an expressed warranty being invoked against the manufacturer by the affected person, and it occurs within a reasonable time, then that outcome eliminates your right even to claim under paragraph (a).

The step we have to take, because that did not apply in this case, is what happens when there is something which, outside that contemplation by Parliament in subsection (6) but with exactly the same material effect on the vehicle – namely, a restorative repair – what happens when that has happened without there being an expressed warranty, or without there being a requirement under expressed warranty, or without there being accomplishment of the repair within a reasonable time. Is that to be ignored – as we understand the argument is against us – simply because subsection (6) could not be or had not been invoked in such a case, and we say no, not unless the word “damages” is appearing in a mutilated fashion in section 272; damages are a term of legal art.

STEWARD J: Can I ask you a question about 272(1)(a)? Is it your case that whilst you accept that damages would be assessed at the date of breach, that is supply here, that the words in (a):

any reduction in the value of the goods –

must persist until the date of trial?

MR WALKER: Yes, that is right.

STEWARD J: So, whether the finding about restorative value can be backdated to 2016 does not really matter on your case, the fact is that it is a fact now.

MR WALKER: That is right.

STEWARD J: That is buttressed by, as you say, the fact we are talking about damages.

MR WALKER: That is right. When I say “damages”, we are also talking in a context where the very same section – that is, in subsection (3) – uses language, again equally terms of art; they use the language of “loss or damage”. So, we have technical legal language being used when, obviously enough, technical legal language is used in common law and analogous statutory considerations in this Court concerning resort to subsequently occurring matters of a kind in ascertaining the value of something – property – at an earlier time, usually the time upon which the cause of action accrues, because it is not only the statute, obviously, it is Potts v Miller that has an effect by looking at the instant upon which you have parted with good money for something which, unbeknownst to you at the time, was defective.

In our submission, it is a furphy to suppose that it is simply a matter of observing that the combination of section 54, section 271(1) and 272(1)(a) blinkers the Court against anything that happens the instant after you take delivery of your defective vehicle. We know that is not true for paragraph (b). How could it possibly be? No one would argue to the contrary of that.

It is because of some magic in the notion of reduction in value of goods which, in theory and no doubt in practice, would occur if immediately after you have paid your money and taken delivery the world becomes aware of the defect and, in particular, the world in which persons would offer money for an identical kind of vehicle. I do not mean on a second‑hand market, I mean in the market that you have just acted in, ex hypothesi to your detriment by paying a price which, on the theory of the case against us, is more than you should have paid by reference to a market informed of the defect which exists so as to bring about a contravention of section 54.

Now, as soon as one utters that mouthful, which is necessary in order to identify the nature of the claim under paragraph (a), you are, for paragraph (a), by definition saying to the consumer that you are going to have to, in court, talk about things that have happened or have come to light or about which knowledge has become available only after you bought, because, after all the balancing in section 54 itself would mean that if you knew of the defect when you bought it, there is not going to be a claim. So, by definition, it is only upon your discovery of a defect.

Now, when you discover a defect, you discover something which may or may not be capable of remedy, and “remedy” is the word which, after all, is used in the not‑unrelated provision, 271(6). Whether something is remediable obviously involves finding out what has brought about the defect, and in this case you have seen the common expression “root case analysis”. So, as Toyota made its enquiries, its expert engineering investigations with the evident intent of stemming the damage to its reputation and the harm to its ultimate customers by reason of the defect in question. Those are matters that will unfold in time after, relevantly, the discovery of the defect and, therefore, for some of these people after they have purchased not knowing of the defect.

It would be, in our submission, absurd to suppose that the Court is to close its eyes to the unfolding of events which show that, for example, far from being an intractable problem, it is easily fixed or, for example, far from being an easily fixed problem, it is close to intractable. The Court would run the inevitable course of never getting a right answer in assessment of damages, were it to close its eyes to what happens – and it might happen very quickly after the sale has been completed – when the manufacturer discovers what was hoped to be easily fixed was not, or the converse, what was feared to be very difficult can now be easily fixed.

BEECH-JONES J: So, that is, any matter at all known up to trial that bears on the value of the goods at the time of supply?

MR WALKER: I am cautious about any at all. Can I recognise here that this is one of those areas which is overpopulated with epithets. The one that seems to be head of the mob at the moment is “intrinsic”, but there are the other ones, “inherent” – and there are the opposites, “extraneous”, “extrinsic”. In our submission, we think the paradigm case of something which is relevantly intrinsic, which, in Justice Beech‑Jones’ question to me, bears upon the value, will be, with respect to the effect of a defect on value, the capacity of the defect to be remedied.

Now, obviously, defects vary as to their remediability and they no doubt vary even as to those that can be fully remedied as to the continuing market effect by way of what is sometimes called blight – the simple knowledge that the car has been the subject of a recall might mean that it will never recover the value, notwithstanding the thing which was the original defect has been fully remedied and the car is as good as ever. That is not this case – there is no evidence about any of that. In fact, as you have seen, there was expert evidence that, happily, these people’s motor vehicles did not depreciate more than cars that did not have this defect.

JAGOT J: All defects are an attribute of the vehicle. I mean, you can easily contrast that with – this is my point about attributing knowledge, again, it is nothing to do with compulsory acquisition, just the fully informed parties, hypothetical parties, are taken to have knowledge of the attributes of the land – or the item, or the good, or whatever it is – but not of, for example, that there was going to be a COVID‑19 pandemic and the resale price of vehicles would jump.

MR WALKER: If I may say so, that is a good example, your Honour.

JAGOT J: Because that is totally extraneous to an attribute of the vehicle. So, would it just be any attribute of the vehicle which must, logically, include a defect? You say you have ‑ ‑ ‑

MR WALKER: I am only interested in the defect because ‑ ‑ ‑

JAGOT J: Because that is the assessment of the damage.

MR WALKER: That is the only thing I can rely upon, yes. The claim – the action against us – is for the effect of the defect on value, nothing else. It is not a generalised complaint about depreciation – curved or straight‑lined, it does not matter which. And our answer, in principle, is simply that, upon that defect being remedied, for those who did not dispose – and that is very important – those who had disposed in a market affected by knowledge or fear of the defect – knowledge of its existence; fear that it would not be properly remedied – they have, one would have thought, a red‑hot claim under paragraph (a), to which none of our arguments would have any purchase.

How could one possibly say that there is retrospective benefit to be enjoyed by their purchaser somehow so as to eliminate their cause of action for the crystallised – to use an idiom – a crystallised loss by them by having sold at a lesser price than they would have but for the defect.

JAGOT J: That is because you are pushing all the inconvenience into (b).

MR WALKER: Yes.

JAGOT J: Which would mean that these cannot be limited to out‑of‑pocket kind of expenses.

MR WALKER: No, no.

JAGOT J: Right. Because, I mean, in one sense, there is principle against double recovery, so why could you not either say, taking perfect knowledge about attributes of the vehicle at the date of supply, looking forward, I know that this particular car is going to be remedied in four and a half years and it is going to be a miserable experience to drive it for the next four and a half years, I would not pay 60,000, I would only pay – whatever it is – 50,000; whatever it be – that is under (a) – a reduction of $10,000.

MR WALKER: Yes.

JAGOT J: But that means you cannot get, under (b), the misery factor, because you have already compensated for it under (a).

MR WALKER: On the scenario your Honour puts to me, the misery factor is not peculiar to the plaintiff – it is something which is appreciated by the market. That is the only way it is going to affect value.

JAGOT J: Yes, that is what I mean – a hypothetical purchaser saying, you are going to have four and a half years of miserable driving in this car. Are you going to pay 60,000?

MR WALKER: But it is the hypothetical vendor who is making the claim under (b).

JAGOT J: Sorry, the hypothetical vendor?

MR WALKER: Sorry, I might be at cross‑purposes. I do not know whether your Honour is asking me about somebody who ‑ ‑ ‑

JAGOT J: I am talking about someone going to the dealer – you attribute them with the ‑ ‑ ‑

MR WALKER: I am sorry, the original purchaser, yes.

JAGOT J: ‑ ‑ ‑ the original purchaser, you attribute them with perfect knowledge. It is worth 60,000. They know, because this is the hypothetical, they are attributed with, I am going to have a miserable driving experience for four and a half years and I will not be able to get it fixed for four and a half years. Will I pay 60,000? It seems to me that someone might well say, no, I am not going to pay this.

MR WALKER: I would not resist that at all. In fact, your Honour, there is an air of unreality in proposing that anyone would pay anything.

BEECH‑JONES J: You would have a case ‑ ‑ ‑

MR WALKER: We would have to – we are required by the law to suppose that there is ‑ ‑ ‑

JAGOT J: Then, I do not understand the difference between you and Mr Gleeson. Well, he is going a step further, he is saying you do not attribute them with perfect knowledge, that is, there will be a repair in four and a half years’ time after your misery. He says you attribute them with the possibility only, which further reduces the value. But you accept that if that person knows – or is taken to know, I should say, the hypothetical person – it is going to take you four and half years to get a fix ‑ ‑ ‑

MR WALKER: Your Honour, we should not be fastening upon four and a half years without attending to the question I tried to raise at the beginning concerning the ambiguity of “availability”.

JAGOT J: This is a person buying in 2016 and the fix – just leave aside that point – you buy in 2016, it does not become available, technically ‑ ‑ ‑

MR WALKER: Until May – yes.

JAGOT J: ‑ ‑ ‑ until May 2020. So, you have four and a half years of driving misery, why does that not – this is Justice Beech‑Jones’ question, but just taken at the time of supply – why is that not compensable under (a)?

MR WALKER: Because, before you come to trial, your vehicle is made good in such a way that the evidence shows – this is not challenged, as we understand it – the evidence shows the reduction in value has been reversed or restored.

JAGOT J: This is based on what the experts, you say – based on your interpretation of the experts?

MR WALKER: And what the Full Court said about it.

JAGOT J: And at 123, yes.

EDELMAN J: But there is a legal question that you have to ask before you examine the expert evidence, and the legal question, as I understand the difference between the appellants and you, is whether you take into account later knowledge of remediability or whether you take into account later knowledge of both remediability and remediability within a 4.5 year period.

Your submission, as I understand it, is that it is the narrower – you only consider remediability, not remediability within a 4.5 year period, so that they hypothetical purchaser is simply asking themselves, do we know that these goods are remediable? Yes, so we stop there. The hypothetical purchaser does not say, do we know that these goods are remediable within a 4.5 year period?

MR WALKER: One of the difficulties with my friend’s bandying about of more than four years is, of course, section 273. Parliament does not contemplate that you will be able to wait longer than three years before you sue for such a claim. So, we really should be thinking about three years.

GAGELER CJ: It is three years from the date of ‑ ‑ ‑

MR WALKER: From:

first became aware, or ought reasonably become aware, that the guarantee has not been complied with.

It would be a very unfortunate, if perceptive, purchaser for whom that was the day of purchase. Disappointment does not ordinarily come as you drive out of the showroom – not in my experience. So, it has to be some time after purchase. But there is then three years – so, it is three years from what I will call knowledge of defect – that is, knowledge of breach.

JAGOT J: It is only three years to commence.

MR WALKER: Three years to commence ‑ ‑ ‑

JAGOT J: And it might be five years of misery ‑ ‑ ‑

MR WALKER: Then it might – I am so sorry to interrupt, your Honour ‑ ‑ ‑

JAGOT J: No, do not worry. No, I thought I interrupted you.

MR WALKER: Can I try and explain it this way. We say that the junctures, which are significant for our argument, is not only date of purchase – that is important because of the definition of the relevant part of the group – it is also the date to which section 273 speaks; not an issue in the proceedings before you, but it tells you that Parliament expects these things to be sued on within three years of whatever date that is, presumably, the knowledge of the breach of the guarantee became, as it were, in the relevant car‑owning segment of the population, notorious. So, there will be a later state, presumably, easily fixed and we are not concerned with disputes about it.

But thereafter, the time before which a trial is had, and I should say, a trial that looks at all the facts including, explores, if it be necessary, the difference between availability technically and availability in the sense of it actually being an opportunity to have it implemented in a particular vehicle. The representative proceedings have not raised those questions. It may be the currently‑ordered remitter permits of that to be explored – who knows – but what we do know is that there is going to be a lapse of time before there is a trial and a judgment. And the question in this case is: is there to be advantage taken of that effluxion of time and the increase of knowledge about the matters in hand in order to assess entitlement to damages, that is, to measure the damages for something which we accept is the reduction in value at the date of purchase?

BEECH-JONES J: Mr Walker, do you take as the proposition that all repairs might be theoretically fixable, but we do not worry about anything beyond that; we just look at the state of knowledge at the time of the trial, regardless of whether that was known, unknown, unthinkable, or even contrary to that at the time of supply?

MR WALKER: Probably. Contrary to that at the time of supply is odd, if nobody knows about the defect.

BEECH-JONES J: True, fair enough.

MR WALKER: But if one says – how shall I put it? I am sure my client would not mind me saying this: that manufacturers as eminent as Toyota come up with innovations, and some of them are groundbreaking. In other words, it is in the nature of things that what might be appear to be an intractable problem comes to be fixed.

BEECH-JONES J: But it does not matter – that that is not the relevant knowledge you say you are looking at in assessing value of the goods at the time of supply.

MR WALKER: We should simply look at the fact that according to these experts, including the other side’s valuer, upon the fix being available there was no reduction in value. That is, it was restored. The reduction in value which we accept is now, in this Court, held against us as having occurred by reason of the breach of the guarantee is eliminated as a fit subject of damage and damages to recognise the damage because the loss has been avoided. So, the state of affairs that rendered the vehicle less deserving of the price has been reversed.

It does not alter history, it is not retrospective in that fact, it is simply that between the accrual of the cause of action and the time for measuring damages – measuring damages, for what we can now call the conceded loss things have happened which, in a perfectly ordinary way familiar in common law and related statutory fields, the amount of money necessary to compensate is affected. In our submission, it is sauce for the goose, sauce for the gander if things happen that rendered the expert evidence of – imagine one gets a valuer straight away upon an early discovery of defect and gives, let us assume, a correct respectable estimate of the decrement in value as a result of the defect, taking into account, in other words, the unknown defect at the time of sale known for the purposes of the valuation as at the date of sale in orthodox fashion.

But after that valuation has been achieved things happen, and they might be, as one of the valuers in fact posits in this case, supply chain problems as a result of a pandemic. Things happen which affect the availability or the efficacy of a proposed fix, a proposed fix which though not a complete remedy perhaps ameliorated the reduction in value. Of course, we would – someone in our position could not be heard to say, but look the first time somebody looked at this they thought it was reduced in value only by 10 per cent, we cannot suffer by the fact that since then things have happened to ameliorative expedience which means that in fact it was so much more difficult to fix, if it could be fixed at all, and it now should be reduced in value by 20 per cent. We would have to suffer that and that is because the endeavour in each case is an inquiry into damages, a term of art which inescapably involves compensation.

STEWARD J: So, you say, I take it, that where as a fact that all of the value is restored, (a) is turned off but (b) is still available for the period prior to the fix?

MR WALKER: Yes, that is right, that is our case. Yes, it does mean it is turned off for the earliest purchaser in the group as for the latest purchaser in the group.

BEECH‑JONES J: Is it fair to characterise it as restored or are you simply saying we are making a better assessment now of the value of the goods at the time of supply?

MR WALKER: I am bound to say I think we prefer “restored”, but your Honour’s question raises a difficult matter, at least for me, and that is this. Whether one uses “restored” or you use those figures of speech about casting light on the state of affairs, et cetera, unmistakably we are calling in aid something that did not in truth exist, though occult, at the date of purchase. So, the eventually devised fix did not exist at the time of the purchase, like many other things which, for example, under paragraph (b), would be the heart and soul of a claim.

GORDON J: Another way of looking at it is to say at the date of purchase we did not know the defect existed, and so what we are bringing to account is the fact that we now have a reinstatement of that which we had assumed by reference to – you would say the availability as a fix; some might say availability in implementation. I wonder if that is why, at 123, the Full Court took that reinstatement – in other words, there is probably not that distinction from “restore”, but it underlies the idea that we are, in effect, taking one fact and adjusting it according to that which existed both at time of supply and subsequently.

MR WALKER: Yes. One of the problems about “restore” or “reinstate”, et cetera, is that it may wrongly give the impression that we are saying it rewrites history. The history was, just as the purchasers did not know about the defects, nobody knew about the fix. Like any defect upon being known, it carries with it a potential to be fixed unless you are a particularly gloomy individual, particularly if you are talking about machinery.

In our submission, by “reinstate” or “restore” or “reverse”, we are talking about removing the thing which is the object in court of the plaintiff’s claim to money, and the thing that is removed is the value measured at the date of acquisition of something which the plaintiff for this subgroup – I stress, for this subgroup – remains the owner – has not sold, has not realised this marketable asset – and before that occasion comes along, for them to realise it and suffer the disadvantage in the market that it has been known to be a car with white smoke, et cetera, the fix is available at no cost. According to the valuers, who do not appear to have adverted to questions of queuing or priorities, et cetera, that is something which restores in the market that which, up to that point, had been suffered by reason of that defect being known of that vehicle.

It does not mean that there was not a loss in terms of the difference between what you thought you were buying and what you were buying, bearing in mind the breach of section 54. That is why the notion of monetising specific performance, or my friend’s reference to the performance interest, is obviously significant in understanding an action for breach of section 54. We are not at pains to disturb any of those fundamentals. We are simply saying that Parliament intended that there would be an action in litigation for damages, and that the damages would be assessed at a trial in the ordinary way by a consideration of all relevant evidence.

Now, we have drawn to attention – I think all parties have drawn to attention – a collection of cases which might be summarised as being the admonition to prefer fact to prophecy from a number of different areas, all of which involved the suffering of loss at a point before the judgment. In other words, if you are valuing something – be it your earnings, land that has been acquired, damage which your chattels have suffered as a result of somebody’s trespass, or the Potts v Miller measure, not just in fraud but also for breach of a statutory warranty by paying a price for something which was not what it was meant to be – in all of those cases, notwithstanding that in all those different areas, the same common element exists – namely, that as at an earlier time, acquisition for compensation – the first injury in personal injuries, the purchase, parting with your good money for the bad product in a section 54 or a fraud case – in all of those cases, the court is after the event asking itself, what is the relevant evidence; what are the facts that can or should be taken into account in ascertaining what is necessary by way of damages.

That is why a maxim such as “avoided loss is no loss” is just common sense and bespeaks the critical need for courts in all of those areas that involve compensation for wrongdoing – as opposed to compensation for taking – in all of those cases, the court will always take into account something which shows that the plaintiff does not need as much damages as it would have, but for some supervening event, so long as it is intrinsic.

If it is personal injury, then your root of recovery is something which will be relevant – you either do or do not recover well – but, on the other hand, the negligence of a treating surgeon, notoriously, may not be. That may be too extraneous. All of those are matters which will involve questions of causation but, at the end of the day, will come down to asking: what is the measure of damages for the particular loss in question?

GAGELER CJ: Mr Walker, can I just go back a step – and I am sorry if this is unduly reductionist or simplistic – but, if we look at section 272(1)(a), as I understand it, you accept that there is a comparison to be made between the price paid on the day it was paid and the value of the goods on the day they were acquired. The “value” I take to mean the market value, at least in the context of this litigation.

MR WALKER: That is how this case has been fought and we think that will do for present purposes.

GAGELER CJ: You say, in assessing the market value of the goods on the day of acquisition, one takes into account all information available at the date of the trial – at lease insofar as that bears upon the value of the goods?

MR WALKER: The value. Yes.

GAGELER CJ: Why? This is really just, perhaps, repeating what the trial judge said, but knowing that you would have years of misery from purchasing these goods – or if the market were to have known at that time that there would be years of misery associated with purchasing these goods, why would not the value be reduced?

MR WALKER: I am not suggesting the value would not be reduced, your Honour. I have accepted – it is a premise of my argument – that there is a reduction in the value of the goods experienced at the instant of parting with the money, in the sense that the Court cares about, because it does not matter that everyone was ignorant of the defect at that point. You ask the question by assuming knowledge of the defect.

I am frankly saying that there are matters that later happened which reflect on, which cast better light, which are facts rather than prophecy, are history rather than prediction, which permits the measure of damages for that defective quality of the goods to be better appreciated so as to compensate the person who still has that on that account only. We are talking about reduction in the value of the goods.

Now, that is why paragraph (b) exists, because the misery is obviously available under paragraph (b). There has not been any talk about emotions in the evidence in this case that produce ultimately at trial 17.5 per cent, or 10 per cent in the Full Court. Certainly, as I say, there is an air of unreality as to why, if there were other vehicles available, anyone would buy a vehicle knowing of this defect, but judicial valuing necessarily requires that hypothesis.

BEECH‑JONES J: Mr Walker, do you accept that if a trial was held six months after the date of purchase of, say, the lead applicant, they would recover under 272(1)(a)?

MR WALKER: Yes, I do. It is a function of the lapse of time during which relevant knowledge comes to light – if you like, relative matters come to exist. In our submission, that is difficult to see as anything other than a mainstream approach by both the common law and this Court applying by mere analogy common law approaches to relevant statutory claims such as, obviously, you see discussed in Kizbeau to which I will come but briefly.

Could I return to the Chief Justice’s questions to me. The rhetorical questions attributed to the trial judge – why would there not be a reduction in value – is not a question that troubles us. There would be, but we would, I hope, by also a rhetorical question, extend it. If a fortnight after the purchase and the dawning of the defect you open the newspaper and you find that Toyota has recalled or whatever, it is made known that there is an easy fix immediately available for something which but for the fix would mean you, for example, could not drive over 30 kilometres an hour – which would obviously be devastating to the value of a Toyota Prado – you really would be in salvage value territory.

Now, no one surely would say that there could be a claim for damages that had the headline proposition this vehicle cannot go more than 30 kilometres an hour, its value is utterly ruined, without taking into account that before even the commencement of proceedings and certainly before the trial, the whole thing has been made good.

STEWARD J: Is another way of looking at it, Mr Walker, that we are talking here about a species of unrealised loss in a ‑ ‑ ‑

MR WALKER: We use the word “crystalised”, you have seen.

STEWARD J: But the misery people feel in the four‑year period is not the diminution in loss, in value during that time, it is all the irritation of ‑ ‑ ‑

MR WALKER: It is the smoke through the window, et cetera, yes.

STEWARD J: ‑ ‑ ‑ taking it back to the dealership and being mucked around a bit. And so, when they come to trial, that unrealised loss has now been restated so that it does not exist. That is the end of it.

MR WALKER: And it is a happy end.

GORDON J: If it has been remedied.

MR WALKER: Only if it has been remedied. My whole argument is that it is a restorative repair, otherwise we are just doing rats and mice on quantification.

EDELMAN J: Would it make a difference if you knew – suppose you knew at the date of purchase that there was a defect, but you knew that it would take, let us say, three months for the repair to occur. Would there be a difference in value then, given there would be three months of inconvenience of not having the vehicle, or three months of waiting for it to be repaired?

MR WALKER: Now, what your Honour puts to me obviously needs to be considered against the background of how section 54 operates with respect to inspection and what you ought to have known about goods. And obviously ‑ ‑ ‑

EDELMAN J: Suppose you did not know it then, to remove that difficulty. Is there a difference in value for the inconvenience to wait for three months for a repair to occur?

MR WALKER: Yes.

EDELMAN J: Why, then, would there be a difference in value to wait for three years or 4.5 years for repairs to occur? Why would there not be?

MR WALKER: Your Honour, I may be misunderstanding, I apologise. We say that what matters is that when the court comes to consider the claim, it has to assess the damages for the loss. I use the word “loss” because it is found in the section, and because it would appear that, like The Wind in the Willows, where there are damages there must have been a loss. That may be tendentious on my part because we do say “damages” means “compensatory”, and for the reason we have put in our written submissions, that is a mainstream proposition for which there is really no contrary authority.

If that is so, then one takes into account everything relevant, and one accepts, in our submission, that in the main – that is, before I come to diminished value claims – everything up to the hearing that can be fairly accommodated in the hearing, that bears upon the value, or, in this case, the quantification of the claimed loss, will be grist to the mill – must be considered, and you do not rule off on the day the cause of action accrues. That is true whether it is a contractual claim for wrongful dismissal, where obviously subsequent events concerning your good fortune in the employment market will affect the quantum of damages; whether it is in personal injuries, where the course of your recovery will obviously be subsequent; and up to the hearing, the court will prefer fact to prophecy about that. And it is certainly, in our submission, true with respect to the value to a person of a chattel they still have – that is, that they have not converted to money.

That is why there is real significance in this group not including those who sold, so there is no inquiry as to whether anybody ever sold at a price less than they would have got but for the defect – that is not before the Court.

GAGELER CJ: But that would not be the measure provided by the statute, would it? You have to look at the date of purchase.

MR WALKER: I am not disputing that at all, your Honour. I have to live with that. Not that it is alien to our proposition, because what we say is that the damages which are assessed at trial must relate to the infringed interest, which in this case is in obtaining a valuable item commensurate with observance of section 54, and to be compared to, relevantly, the price you paid. Because, after all, section 272 makes it clear that in the event that there is no reduction below the price you paid then, obviously, you will not be getting compensated under those provisions.

We are therefore talking about an object which is still in the hands of the person whose ownership interest, by reference to the exchange value, the price paid – the section 54 compliance was on a day in the past – where one can say that that ownership interest as to the value of the item has, before the trial – certainly before judgment, if things move in that fashion – been restored in the sense that they still have item in ownership – that is, the ownership interest is unaltered – and they no longer suffer a decrement in its financial reflex – that is, the so‑called market value – of that item.

GLEESON J: Ironically, the longer the manufacturer fails to comply with the guarantee, the more likely they will be not to suffer any adverse consequence as a result if they are able eventually to make good their guarantee, having failed to make good their guarantee for years.

MR WALKER: Your Honour, there is an obvious answer I need to put, which is not intended to be offensive to anyone, but that will be a function of how long it takes in court. Because it is not on the never‑never, it is only events up to the trial ‑ ‑ ‑

GLEESON J: That is one function. That is not the only function.

MR WALKER: No, no. What I am saying is that – you are right, of course. The longer the period available, just as a matter of ordinary probabilities and experience with the world, the more something might turn up. If something turns up that avoids loss, that is happy, that is good. There is nothing ironic about that. That is in the nature of things. That period will only be long – it has to be pre‑trial – depending upon the delays of the court system, and that is not something which, evidently, Parliament has done anything to regulate except by the three‑year commencement period that it stipulates in section 273.

EDELMAN J: The longer that period, the more consequential loss there might be under (b).

MR WALKER: Absolutely. And if I may say so, the longer that period, the more likely someone fed up to the back teeth will be to realise their loss by selling.

GLEESON J: This does raise the question of what is the statutory explanation for having (a) and (b) instead of just having (b), where it is clear that the loss of value could have been counted under that heading. It must be ‑ ‑ ‑

MR WALKER: Your Honour, guessing – I do not the extrinsics will help me here; I do not think they help anyone – it is in order to give utility to the carve‑out in 271(6). The common law could have been adapted and made available against a manufacturer – that is, abolishing privity, relevantly – in very few words indeed. May recover damages for any loss or damage, full stop – resulting therefrom, if you really needed to say that – would be all you would need, I agree. But the fact that (a) and (b) have been split out certainly fits with a scheme that includes 271(6), and in particular does not cast any doubt on the notion that loss by reason of reduction in the value of goods is something for which damages, compensatory in nature, are to be awarded after a trial where, between the suffering of that reduction, the loss, which is upon purchase – we agree with that – and trial, matters turn out such as to eliminate any claim.

One of the things that could turn out is that somebody manages to sell at a price which comfortably exceeds. There may be some special reason why a particular vehicle sells at a particularly high price. That will be avoided loss. Nobody could possibly say, that is subsequent, you cannot take that into account because there is no mention of subsequent events in 272(1). The tired answer to that is: that is because there are damages, and you do not get damages for an avoided loss. If you have managed to offload your vehicle for a price handsomely in excess of its value when you purchased it, then you have no loss under paragraph (a).

BEECH-JONES J: Mr Walker, if you had a simple class of the two people, one who had sold and one who had not, you accept that the one – and the person sold at a discount, because of what was known about the defect and that it could not be remedied ‑ ‑ ‑

MR WALKER: Would get damages accordingly.

BEECH-JONES J: They would get damages for the reduction in the value of the goods?

MR WALKER: Yes.

BEECH-JONES J: But the other one would not have suffered a reduction in the value of the goods?

MR WALKER: That is right, because they still have the goods, they still have the ownership interest in full.

BEECH-JONES J: But the difference between the two turns on the word “damages”.

MR WALKER: Yes.

GORDON J: Another way of putting it is to say, consistent with your comparator you put at the beginning, is on one hand you have the price paid, and the other is the value of the good at the date of supply with the known defects.

MR WALKER: Yes.

GORDON J: This bit you might take issue with. In light of the state of the remedy.

MR WALKER: In light of the state of remedy?

GORDON J: Yes. So, it might be there is a remedy available; it might be that it has been remedied.

MR WALKER: I am so sorry – and that last matter can change over time.

GORDON J: That is correct.

MR WALKER: Yes. So, that is inherent – tempted to say intrinsic – in the nature of a defect that – its potential to be addressed completely or partially is ‑ ‑ ‑

GORDON J: And that would cover all cases then sufficiently, on your case, to enable a valuation to be undertaken, a comparison to be done and damages to be assessed.

MR WALKER: That is right.

STEWARD J: In that sense, are there two ways in which you are putting your case? You are putting it in the way that Justice Gordon has suggested to you that takes us into that area of intrinsic attributes of the goods as at the date of breach or, alternatively, that you accept that there was a loss in value as at the date of breach, but that loss was restated by the time of the trial and had disappeared, and thus you are not entitled to damages.

MR WALKER: The short answer is yes, but the second is a way of explaining why the first is correct, or vice versa.

STEWARD J: I see, all right.

GAGELER CJ: Mr Walker, I am sorry to take you up on that. I thought we were talking about the language and application of section 272(1)(a).

MR WALKER: We are.

GAGELER CJ: I thought, though, that what you have done is somehow introduce some qualification or cap, perhaps, on that paragraph by reference to the word “damages” in the chapeau. Is that where we have got to now?

MR WALKER: Yes.

GAGELER CJ: I see.

MR WALKER: I hope that is apparent from our written submissions. Yes, that is important. These are terms of art; you are entitled to recover damages, and in subsection (3) in a carve out for paragraph (b) of subsection (1), and by reference to reduction in the value of the goods, the terms of art “loss or damage” are used. So, Parliament is signifying its holus-bolus adoption of the notion that the money to be the subject of a judgment is to be understood as being damages.

There is no definition of damages that says, do not worry about what damages means at law it just means a sum of money. So, you have loss, damage, and damages. Yes, we absolutely say that in the chapeau the word is repeated twice, and it picks up, for our case, 271(1) itself. So, 271(1) creates the statutory actions to recover damages, 272(1) in such an action says that there is an entitlement to recover damages. There might be an apparent difference in the written submission that let me resolve now between the parties. We do not say that there are discretions involved, we say there are simply the ordinary assessments of damage.

EDELMAN J: The problem is the ordinary use of the word “damage” and the ordinary assessment of the word “damage” is not monolithic. Section 272(1)(a) and (b) really reflect some common law notions of very different concepts of damages.

MR WALKER: Yes.

EDELMAN J: Subsection (b) is much more comfortably aligned with the notion of loss, (a) is not.

MR WALKER: Subsection (a) is absolutely custom‑made. I do not think one would find (a) perfectly reproduced in any common law analogue. It is obviously borrowing from it, that is, the notion of a:

reduction in the value of goods, resulting from failure to comply with the guarantee –

is not a long way away from Potts v Miller and similar cases. It is when you get to the yardsticks that one finds that this really is a consumer statute which is dealing with manufacturers not in privity with claimants, et cetera, et cetera. May I make this clear: we do not say there is any discretion involved and we do not say that the Full Court was obliged to apply some kind of discretion in our favour so as to not have the remitter, we simply say that the entitlement is to something called “damages” which arises because of a loss or damage which is:

suffered through a reduction in the value of the goods.

That is the phrase in subsection (3).

BEECH‑JONES J: But it is the value of the goods at the time of supply.

MR WALKER: There is no doubt about that, that has always been common ground. What we say is that that is a matter which, for people who still hold the asset, will fall to be considered in light of up‑to‑date information. Just as with a person who has sold, the fact that they have done so much better than market value at the date of their purchase would be avoided loss. They would not get damages on top of what they have got from their own purchaser.

EDELMAN J: I am not sure. That may certainly be right about (1)(b), where ‑ ‑ ‑

MR WALKER: I am suggesting about (1)(a) ‑ ‑ ‑

EDELMAN J: ‑ ‑ ‑ notions of avoided loss comfortably fit within the idea of consequential loss, but there is certainly a common law that proposition would be very controversial in relation to a loss of value claim.

MR WALKER: If you have suffered a loss in value, you have retained the ownership interest, and later you sell considerably in excess of the value you have obtained by your price then, in our submission, it would be difficult to say that that is not an avoided loss. Your ownership interest has never suffered the crystallised decrement. I note the time, your Honours.

GAGELER CJ: Yes. We will adjourn until 10.00 am tomorrow.

AT 4.19 PM THE MATTER WAS ADJOURNED
UNTIL THURSDAY, 11 APRIL 2024