Capic v Ford Motor Company of Australia Pty Ltd ACN 004 116 223 [2024] HCATrans 24 (12 April 2024)

Last Updated: 12 April 2024

[2024] HCATrans 024

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S25 of 2024

B e t w e e n -

BILJANA CAPIC

Appellant

and

FORD MOTOR COMPANY OF AUSTRALIA PTY LTD ACN 004 116 223

Respondent

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

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 12 APRIL 2024, AT 9.59 AM

(Continued from 11/4/24)

Copyright in the High Court of Australia
GAGELER CJ: Mr Finch.

MR FINCH: Thank you, your Honour. Your Honours, this morning I have to deal as quickly as I can with three topics: the affected persons topic; a quick summary of the effect of repairs on the analysis; and I return to the question raised by Justice Beech-Jones of how one can deal with use, which I said I would come back to. I apologise for yesterday, your Honour the Chief Justice, saying I would fit in with the original timetable – I had forgotten that I started late, and I will still endeavour to go as quickly to that timetable as I can.

Before I go to anything else, may I quickly correct an answer I gave at transcript 46, at line 2044. Justice Beech-Jones asked me if all the component defects were fixed:

do the architectural deficiencies not matter?

and I agreed with that proposition. I should not have, because I was forgetting that, ten minutes earlier, I had said that one of the architectural defects had its own propensity, so that fixing the component defects would not fix that propensity of that architectural defect; to that extent, that answer was wrong, and I should have given the answer I have just given.

I do not know whether your Honours have a hard copy of an aide that we have circulated, which simply has the numbers in them for the purposes of my affected persons argument. If not, there are some copies here, and my learned friend has one. This is simply so your Honours do not have to write down all the numbers; it does not introduce anything new.

The point of this exercise – and I can start before your Honours have seen the numbers – is that we raise what I will refer to as the affected persons conundrum to make two related points. The first point is we say that Ms Capic’s approach to 272(1)(a) leads to consequences that are unlikely to have been intended by Parliament. Secondly, that the way to avoid those consequences is to recognise that by using the word “damages”, Parliament has shown an intention to invoke the compensatory principle, that a person on whom an action for damages has been conferred under 271(1) should not recover more than she has lost.

I need to start with a little attention to the meaning of the word “consumer” and the “affected person” definition. Your Honours have seen all of this, so you will forgive me if I go rather quickly through the introduction. Section 54 provides, as your Honours have seen, that there is a:

Guarantee as to acceptable quality

(1) If:

relevantly:

(a) a person supplies, in trade or commerce, goods to a consumer –

and your Honours see that in the joint bundle of authorities at page 49. Secondly, if the goods are supplied other than in trade or commerce – so, for instance a private sale – the guarantee does not apply to that supply but it does persist for the benefit of possible affected persons. Section 3 of the Act, which is at the joint bundle at 38, defines when:

A person is taken to have acquired particular goods as a consumer –

And your Honours have seen that many times, I will not drag you back through it. Section 271(1), which is in the joint bundle at page 83, provides, as your Honours have now seen, that if the guarantee of acceptable quality:

applies to a supply of goods to a consumer –

that is the first acquisition, if one wants to conceive it that way, “and”:

(b) the guarantee is not complied with;

an affected person –

that might be the second acquisition here:

may . . . recover damages from the manufacturer.

Section 2(1) of the Act, which is at the joint bundle at page 23, provides that an:

affected person . . . means:

(a) a consumer who acquires the goods; or

(b) a person who acquires the good from the consumer (other than for the purpose of re‑supply) –

So, for instance, a used car dealer who bought is not such a person, and then:

(c) a person who derives title to the goods through or under the consumer.

Your Honours might forgive me if, in my limited time, I am not going to spend any time on what “through or under” might mean, given that I might need a couple of days for that. I will keep the examples as simple as I can.

GAGELER CJ: Mr Finch, one question I wanted to about that definition is that the word “or” appears between each paragraph, and one way of reading the definition into section 271, is that there is only one affected person ‑ ‑ ‑

MR FINCH: Yes.

GAGELER CJ: ‑ ‑ ‑ that is, the person having title at the time, who has the cause of action under section 271.

MR FINCH: Yes, yes.

GAGELER CJ: Is that – are you ‑ ‑ ‑

MR FINCH: It does not do any violence to my example – and it may well be the way of looking at it. It has a significance, which I think will become apparent to your Honour, if it happens that the person is a consumer as well, under the definition, that is all. The real importance of that is, if you acquire as a consumer, then a section 54 guarantee reappears – a new one appears – whereas if it an affected person, that is the original section 54 guarantee which persists. That has some importance, which I want to come back to.

Pausing there, a second‑hand purchaser may in her own right be a “consumer” in a supply of goods to which a guarantee of acceptable quality applies. For instance, if the goods are supplied to her in trade or commerce or – to re‑enliven the example I just gave – she acquires from an interposed car dealer, who would not qualify, but the sale to her would because she acquires in trade and commerce and otherwise ticks all the relevant boxes – including that she acquires the goods as a “consumer” under section 3.

Going back to something which arose, at least in my mind, from something that Justice Edelman said yesterday – I will not go back to the transcript – this might bring in third‑ and fourth‑hand purchasers not because they fall within the definition of an “affected person” in relation to that first acquisition, but because the guarantee might independently arise to the supply to them if, for instance, there is ‑ ‑ ‑

GORDON J: But that is a new guarantee.

MR FINCH: Yes.

GORDON J: That is not the same guarantee.

MR FINCH: No, it is a new 54 guarantee in respect of that supply, and that is the ‑ ‑ ‑

GORDON J: So it just means that the ‑ ‑ ‑

MR FINCH: The exercise starts again.

GORDON J: It is a different exercise involving a different set of circumstances and facts.

MR FINCH: Yes, yes. I will come back to what we say flows from that. The importance is to recognise that there might be a new guarantee in a particular chain of supply and acquisition. It will not always be the original guarantee in all the circumstances.

Now, if goods are supplied to a second‑hand purchaser not in trade or commerce – so, let us say Ms Capic supplies the good to a friend in a private sale – there is no separate new guarantee that arises; it is the original section 54 guarantee which arose at the time of supply to Ms Capic. And the new purchaser, the second‑hand purchaser – there, the friend – is an “affected person” because she acquired the goods from the first purchaser in accordance with the definitions I have just gone through, and the first guarantee, if I can call it that, is still live.

I am going to leave aside, as I say, for the purpose of keeping the examples sensible, “through or under”, because I can imagine so many different permutations of that phrase that I will be here forever.

EDELMAN J: It would be pretty remote, though, to have a situation where you had a new guarantee applying to the third purchaser.

MR FINCH: I accept that, your Honour, I am just saying it is a possibility, when you look at the words.

EDELMAN J: Yes. You would almost have to have a second‑hand dealer selling to another second‑hand dealer selling to a consumer.

MR FINCH: Yes, I accept that, your Honour. With respect, your Honour is precisely right, it is just that as, on the words, it is a possibility which one cannot exclude. Nothing in particular for my example turns on that, it is just recognising the scope of the potential chains of acquisition in respect of different guarantees from time to time. Now, the Court has seen that section 272, which is in the joint bundle at page 84, provides that:

In an action for damages . . . an affected person . . . is entitled to recover damages –

as we have seen, for a reduction in value below the lower of those two integers which we looked at:

the price paid or payable by the consumer –

that is the first acquisition in the examples that I have been working up to, and:

the average retail price of the goods at the time of supply –

Now, there is a slight wrinkle in that, which I will come back to, but let us assume again that is working as a reality check for the most part in respect of the propriety of that first retail price. But, in any event, can I underline the word “retail”.

BEECH-JONES J: Mr Finch, you are treating “at the time of supply” as at the time of the supply to the original consumer?

MR FINCH: That is the wrinkle I am going to come back to. At first instance, that is good enough, but I will come back to a wrinkle about which is a possible argument which we think is probably wrong, but it is an example of slightly rough drafting. This arrangement then gives rise to two problems. They arise in different ways.

The first problem is that if one adopts the construction propounded by Ms Capic, we say there is an effect, although Ms Capic denies it, that the manufacturer appears to be liable for at least some of the same reduction in value twice. Now, that is a possible consequence. It is possible that the Parliament might have intended that, we say it is unlikely, and this problem arises whether the second‑hand purchaser is a consumer in her own right or a non‑consumer affected person, and I will work through how that happens in a moment.

The second problem, which is perhaps more easily observed, is that it appears to be that they are the wrong comparator, or at least an apparently inappropriate comparator used to calculate the reduction in value damages. This arises only in the case of a supply to a second‑hand purchaser who is not in trade or commerce, so that there is no new guarantee. I will work through two examples just to explain how we say this awkwardness is apparent.

The first example is this: a person purchases a new car for $40,000. Because of an undiscovered defect, on Ms Capic’s approach – excluding, that is, all matters post supply, apart from the fact of defect and the nature of defect – the value of a car in this example is $15,000, because they are horrible defects. Then assume that that person sells the car for $30,000 before any defects have been revealed; the reduction from $40,000 to $30,000 is simply because it is a second‑hand car and there has been some depreciation. But because of a still‑undiscovered defect, on Ms Capic’s approach, the value of the car at the date of supply to the second‑hand purchaser is $10,000, because not only is it continuing to be defective, but it is also a second‑hand car. So, the value is not $15,000, as it would have been in the “but for” universe in the first acquisition, it is now $10,000 because it is old – older – and it still has the same defects.

So, if we assume that this second‑hand sale is in trade or commerce, and the second‑hand purchaser is a consumer in relation to the car, the result on Ms Capic’s approach is as follows: the first consumers gets $40,000, the price – let us leave aside the average retail price for the moment and assume that no one was doing any price gouging – minus $15,000 value because of the effect of the defects on the intrinsic value of the car. That gives rise to $25,000 reduction in value damages, plus $30,000, of course, proceeds of sale resulting in more than what she originally paid. Plus, of course, she had the use of the car unaffected by the undiscovered defect until the point of sale.

Now, the point of that second remark is really this: the whole transaction, so far as the first inquiry is concerned, is completely unaffected by defect. I admit, in the purpose of this slimmed‑down example, I am leaving out the matter which we have discussed concerning the relevance of other possible things – Justice Jagot’s misery, driving, and all the other things – but I am just concentrating on reduction of value to demonstrate how the words might work.

The second consumer in this example ends up with $30,000 being the price they paid – remember, this is a new consumer, so it is that price, their transaction, which is the starting point – minus the $10,000 in value, giving rise to $20,000 reduction in value damages. The manufacturer, thus, in the course of these two transactions, ends up paying $45,000 reduction in value damages, which is more than the original price of the car. The strangeness of that result was adverted to by the Court of Appeal in Dwyer. I will not drag your Honours back to it, but it is at paragraph 236 of the judgment in the joint bundle volume 5, tab 28, at page 1004.

JAGOT J: And also, consumer one is better off because they end up with $55,000 for a $40,000 car.

MR FINCH: Yes. Exactly, your Honour.

JAGOT J: Which, had it been worth what it was worth, they would have just sold for $30,000.

MR FINCH: Exactly. Ms Capic says this is not the result of their construction of 271(1)(a), because:

s 272(1)(a) applies to a good not to a person.

One sees that response in the written reply at paragraph 12, and I will not drag the Court back, for time. The answer to that is that 271(1) provides that:

an affected person . . . may . . . recover damages –

and 271(2) is simply stating what damages that affected person is entitled to, so that comment is simply, with respect, irrelevant. In any event, that explanation does not explain how, consistently with the text of the section and their construction of 272(1)(a), one can sensibly take the second‑hand sale into account at all.

The second example is this: we take exactly the same transaction but now assume that the supply to the second‑hand purchaser is not one in trade or commerce such that section 54 is not re‑enlivened. So, it is a normal, if one can think of it that way, private sale. The first consumer – I will not go through it again – ends up with the same windfall, because nothing changes. But the poignancy of the example comes up in the case of considering the claim then made by the affected person, the second‑hand purchaser. Their position is now different. Section 272(1)(a) provides the second‑hand purchaser, being an affected person, is entitled to reduction in damages calculated, as I pointed out yesterday, by reference to, firstly, the price paid by the consumer – that is the first acquirer, the $40,000 price – or the lower of the next integer, the average retail price at the date of supply.

Now, this is picking up the point that Justice Beech‑Jones asked me earlier. Firstly, whatever be the relevant date of supply, it is the average retail price at the date of supply, not the average second‑hand sale. The one thing we know about this sale is it is a second‑hand sale and one thing we know about the retail price, whatever be the right supply date, is it is the retail price. So, it is the wrong, or at least an inapposite, comparator.

Your Honours can immediately see the wrinkle I referred to in the brief answer to Justice Beech‑Jones is, well, could you possibly perhaps move the date of supply to that second event? That does not seem consistent with the way that the Act uses the concept of supply, which is to refer it to the first acquisition. So, the better view, we say, on the reading would be that is a further inapposite use of time because the time is the first acquirer’s time, but even if one moves it through whatever mechanism one can imagine to the time of the second‑hand acquisition, it is still the wrong conceptual amount. That is, it is the retail amount, not the second‑hand one.

A simple point I want to make is the comparator appears to be, if not wrong, at least surprisingly inapposite and of no apparent function, because no part of the transaction in the second acquisition depends for an assessment of loss or damage on the price paid by somebody else possibly years before. Assuming that one does compare the value of the goods received by the original purchaser – the consumer in this example – with the price paid by the original purchaser, or the average retail price, on Ms Capic’s approach the second‑hand purchaser gets reduction in damages of $25,000. But the difference between what the second‑hand purchaser paid and what the second‑hand purchaser received, even on Ms Capic’s approach, is only $20,000, so that there are – if I can use simple – odd results if one approaches the exercise without being able to adjust for what appears to be that oddity.

EDELMAN J: Why does the adjustment need to be through the word “damages”? Could it not be through the definition of “affected person” by reading that definition in part, as the Chief Justice mentioned, with the references to “or”, but also in part by reference to the focus upon the person who has the title to the goods? So, in both of the examples, the original purchaser would no longer have the title, and so, would no longer be an “affected person” within 272.

MR FINCH: It would not get rid of the first problem, your Honour.

GORDON J: What do you describe as the first problem?

MR FINCH: The first problem is, in the first part of my example ‑ ‑ ‑

GORDON J: You mean the double recovery?

MR FINCH: Double recovery.

EDELMAN J: So, why would there be ‑ ‑ ‑

MR FINCH: Because that part of the example does not depend on there being an affected person at all, there is simply a second sale. Whether or not they are an affected person for this purpose can be ignored.

GORDON J: I do not quite understand the wrinkle in relation to the second problem. Maybe I am being very slow, Mr Finch.

MR FINCH: No, no, not at all your Honour.

GORDON J: If you adopt the “affected person” construction put to you by the Chief Justice, so, we are dealing with one person, and if you take that person to be the person referred to in (a), because of the definition of “affected person” read that way, what is wrong and why do you get the wrinkle, if you are looking at the time of supply to them?

MR FINCH: If one did that, that might be one answer, but the one ‑ ‑ ‑

GORDON J: The reason why – I mean, the “average retail price” is an average retail price for – it is probably not going to exist – a second‑hand good.

MR FINCH: That is why I said there is a possible wrinkle here, when one looks at it.

GORDON J: But is it a wrinkle?

MR FINCH: We say it is because the scheme of the Act distinguishes between a “consumer” and an “affected person” because, if your Honour remembers, in the definition of “affected person” it assumes that they can be different. If your Honours go back to section 2 – I do not remember which bits of the Act your Honours have.

GORDON J: I think “a consumer who acquires the goods” is to attract the guarantee, and then the “person who acquires the goods” is taking the benefit of the guarantee because the guarantee continues to exist, but in a second‑hand market.

MR FINCH: Yes, my point in answer to – I do apologise, your Honour. My point was only if one looks at the definition of:

affected person, in relation to goods, means –

so, (a), the first person is:

a consumer –

GORDON J: To get the benefit of guarantee.

MR FINCH: Yes.

GORDON J: Yes.

MR FINCH: And then in (b):

a person who acquires the goods from the consumer –

That is, the Act postulates that it will be a different person to the consumer.

GORDON J: Yes, and that person is a second‑hand buyer who does not have to be a consumer in buying it in trade or commerce. They buy it on the second‑hand market, but they get the benefit of the guarantee.

MR FINCH: Yes. The first guarantee.

GORDON J: Correct.

MR FINCH: That is right.

GORDON J: So, then, when you come over to 272 and plug that into (1)(a), in relation to the second‑hand person, then why is it not that the price paid by, substitute the consumer, being the person who – and that is the wrinkle?

MR FINCH: The wrinkle is, that the scheme of the Act seems to read that “the supply” referred to throughout here is the first supply.

EDELMAN J: I do not understand that.

MR FINCH: But even if it is not – and I acknowledge your Honour immediately – if even it is not ‑ ‑ ‑

EDELMAN J: The definition of “affected person” is in the present, active tense.

MR FINCH: I understand, your Honour.

EDELMAN J: It does not say, a consumer who acquired.

MR FINCH: That is why I introduced immediately that there are two possibilities here. It is either the first supply or, if one looks at the other section, it could well be this has now moved to the second supply. The wording is a little awkward, if one reads it – but the problem then persists, which is why I mentioned it, it is the retail price at the time of the second supply.

The one thing one knows about the transaction of this sort is that it is not a retail price. It is the price – the relevant price – because if you look at the two comparators, at this second occasion, the first comparator is, plainly, the first, original acquisition price. You cannot convert this “affected person” into a “consumer” for that purpose, because they are not.

GLEESON J: The problem is just that it is difficult to quantify your client’s non‑compliance with the statutory guarantee – and this is the formula that the legislation has provided.

MR FINCH: My point is this. We acknowledge the difficulty in quantifying it, but the difficulty, we say, is exacerbated by this: the drafter does not appear to have thought about the idea that, in respect of affected person transactions, neither the first item – the original price from the consumer, who is not the affected person – or the average retail price, they are unlikely to be correct because the retail price, in a second‑hand sale, is not going to be a proper comparator.

EDELMAN J: But that is only because you are reading the second‑hand sale into (a). The second‑hand sale might just be part of the definition of “affected person”. In other words, the affected person is the standing requirement to bring an action, which is always going to be determined by reference to the first sale. So, the question is, who gets standing to bring the action, or one action – by reference to the “or” requirement – who gets standing to bring that one action? The standing rules are, either the consumer who acquires, the person who acquires, or the person who derives title, it the person who currently has the title. Then when you quantify – that is, by reference in (a) – to those rules at the date of the sale to the consumer, not to the affected person.

MR FINCH: Our example is – for this part, the example is simply directed to the recognition of the circumstance that, let us assume that Ms Capic sold to a friend four years down the track. Let us assume that none of the defects had been revealed by then. Then, the comparators in respect of that transaction – because, of course, it is that person who is granted a cause of action and that cause of action is then enlivened by the comparison in 272(1)(a), so the first is:

reduction in value of the goods –

That is not tied to anything in particular, as we have said before, in time, but the comparators are:

the price paid or payable by the consumer –

In that example that your Honour has given me, this second‑hand acquirer is not the consumer.

EDELMAN J: Yes.

BEECH-JONES J: But I think Justice Edelman’s example says, this value is fixed for all time based on the first sale.

MR FINCH: Yes. I think I am agreeing with your Honour. That is what I said in my original exposition of what the statute means. Those two integers are both fixed. My whole point was that there are three integers here. One of them is not tethered in time or amount, the other two are.

BEECH-JONES J: I think in Justice Edelman’s example, all three are fixed. In this example, all purchasers, all persons who could bring an action would always be getting the $25,000 difference, at whatever permutations ‑ ‑ ‑

MR FINCH: I understand.

BEECH‑JONES J: ‑ ‑ ‑ as a way of securing the form of the guarantee.

MR FINCH: I am not sure that affects the example I seek to give you, which is if one looks at the compensation to be gleaned by the affected person, if the comparator is a transaction not referable to them, and if the intrinsic value is a reference to the intrinsic value in that second‑hand purchaser’s hands at that time, then there is a problem.

GLEESON J: But you have avoided compensating the first car‑owner for the failure to comply with the statutory guarantee.

MR FINCH: Yes, but that still has nothing to do with the adequacy of compensation to the second person. I am looking at them on their own. The first one has its own problem.

GAGELER CJ: Perhaps one needs to take into account the time limit for the bringing of the action in section 273. Of course, this only will be kicking in once the defects become known.

MR FINCH: Yes.

GAGELER CJ: If you take the Dwyer approach at that point, it is difficult to see that there is any oddity or injustice in going back to the time of the original sale in light of the defects having been revealed only after Ms Capic’s friend takes title.

MR FINCH: Yes, I accept what your Honour says. We still say, though, that in that second circumstance, if one looks at the dollar result in the friend’s purchase, unless one has as one of the three integers the intrinsic value in their hands, what is being analysed seems wholly irrelevant to her damage.

BEECH‑JONES J: That is assuming damage is loss.

MR FINCH: Yes.

BEECH‑JONES J: So, yes, you could see a possibility of someone clever buying up all these cars and seizing on this, but it might depend on – if the statutory objective is to secure the first sale to consumers that meet the guarantee, then a system that might confer on some people windfalls may be achieving that.

MR FINCH: I admit that possibility, your Honour. My point remains simply this ‑ ‑ ‑

BEECH‑JONES J: It is unlikely.

MR FINCH: Yes. But if we focus on this second purchase, it would be odd if all three integers end up being unrelated to that purchase.

GORDON J: Well, it may not be, depending upon the way in which you look at the statute.

MR FINCH: Yes. But our solution to it is, we say we identify this oddity that two of the integers are fixed and the third is not. Two of the integers in the case of the second purchase seem to involve comparators which are unrelated to that second purchaser’s circumstances.

STEWARD J: Mr Finch, can I ask you a question apropos what Justice Beech‑Jones asked you. Much of this turns on the meaning of the word “damages”. Do you rely on 272(3) suggesting “damages” here, for (a), is loss or damage that is actually suffered by an affected person or consumer?

MR FINCH: I think the answer is yes. I think the point of our original remarks was that “damages” means, throughout the section, compensation, and possibly, with somewhat looser language – given Justice Beech‑Jones – loss or damage. The Act does seem a bit fast and loose with that, but I think the answer to your Honour’s question on our case is yes.

STEWARD J: So, your submission is the Act is directed at and concerned with, in both (a) and (b), loss and damage that is actually, in fact, suffered by a consumer or affected person?

MR FINCH: Yes. That is the whole point of our focus on how you must avoid overcompensation.

STEWARD J: Yes, I understand. All right.

MR FINCH: My point is, if one observes overcompensation, which we say results from working through this example, one asks, then, which door does the Court go through to avoid that? We say that the most obvious example is to adjust the damages in the way that the Full Court suggests. There may be other approaches ‑ ‑ ‑

BEECH-JONES J: Is that by just adjusting the date? Or by saying, what is the loss and damage caused by the reduction in the value?

MR FINCH: I am not sure I understand your Honour’s question, but I think yesterday I was easily driven to the position that our preference is that it remains the date of supply, but you bring to account matters later for the final - - -

GORDON J: Can I ask one question? You have identified an anomaly, tell me – maybe it is a further extension to Justice Beech-Jones’ question – what is your answer to the question of construction in respect of a consumer who buys in the second-hand market? So, if it is not the original consumer’s price, because that is in a - - -

MR FINCH: That is right. Well, the Act mandates that it is the original consumer’s price, or the average retail price either at the time – as I say, this is the wrinkle – either at the time of that original sale - - -

GORDON J: Assume for the moment it is. You have no other way?

MR FINCH: There is no other way out, other than observing that the outcome is now going to be too high and then adjusting damages.

GORDON J: Well, maybe not too high. The other answer is that you have a set sum. How do you bring it down?

MR FINCH: By observing that what is available under that section is damages for the reduction in value calculated in the following way, one does the calculation and observes that that seems to result in an overcompensation, so that you do not award damages for that part of it.

GORDON J: And what is the mechanism for that part of it? In other words, is there to be a second calculation done, based upon if they were the first consumer? I am asking you, what is the mechanism, statutory, that we are – what do we say to a court below in undertaking this second adjustment? Is it that you would have us take consumer number two on your chart and just adopt that? It seems to be contrary to the language of the statute.

MR FINCH: Yes – well, with consumer number two, the Court only has to do the objectively verifiable exercise in identifying one and two, which we say is simply what was the retail price paid by the original consumer and, secondly, what was the average retail price? What is then an open question is, what are your damages flowing from the result of that?

And the Court could say now, in the second consumer’s instance, where I see that you have only paid this much less, then you appear to be getting overcompensated by the imposition of that regime, which seems to have not thought about this outcome. Therefore, those are not damages suffered by you in respect of the reduction in value, so I am not going to award them.

STEWARD J: Yes, you take into account the second sale in order to ensure that you only compensate for actual loss and damage suffered from an actual reduction in value.

MR FINCH: Yes, and there are other ways in which this might arise. Let us assume, quite possibly, that the same person also had a (b) claim, a consequential loss claim. Now, it might happen that some of the integers which were brought to account in the exercise under (a) might have formed part of the exercise under (b). How does the Court adjust for that? There is no provision in the Act saying you do not get double recovery.

BEECH-JONES J: There is, is there not?

GORDON J: Yes, there is.

MR FINCH: That is a slightly more specific point. I cannot raise, in response to a claimant, matters that I raise in both (a) and (b), which is something I will come back to in terms of use. But, we say, neither can the claimant make the same claim twice. I am perhaps confusing matters by raising that in answer to your Honour Justice Gordon’s question.

GORDON J: As a matter of statutory construction, it is two things, as I understand under your argument. One is it comes from “resulting from”. Second, it comes from the idea that the chapeau is damages directed at compensation by reference to two matters, one is the performance interest of breach of statutory guarantee and the second is the consequential damages.

MR FINCH: Yes.

GORDON J: And that there is somehow some override which says that the court ‑ ‑ ‑

MR FINCH: In the course of doing that should not allow overcompensation.

GAGELER CJ: Measured by what? Are we are just going around in a loop.

MR FINCH: Yes. That is an exercise that courts are often in, though. The only live integers here are the difficulties provided by – highlighted by the use of the words in the two comparators, but allowing a third person at a later time to take advantage of the guarantee. We say what seems to have gone wrong – leaving aside Justice Edelman’s solution – is simply that they have not thought about the circumstances that apply in respect of the second acquisition.

GORDON J: They may have decided, as a result of the statutory regime, that the balance struck was that that was to be measure for the breach of the guarantee.

MR FINCH: Yes. In any event, your Honour, I hear time’s winged chariot – I have to move on. I think your Honours have the gist of what we say in respect to this example. I would largely be repeating myself if I kept going, and it gives your Honours time to work out more questions.

Can I turn to relevance of repairs, if I can briefly do it. Your Honours have heard some of this – I will do it, if you will forgive me, as quickly as I can – some of this you have heard, some of it you have not. Where goods suffer from a defect, whether the goods can be repaired will almost always, we say, bear on the price that a reasonable consumer will be willing to pay for the goods. In saying what I am about to say, I run the risk of enlivening Justice Edelman’s comment that we do not appear to be completely ad idem with the Toyota approach, but I want to seek to identify exactly what is common and what is not.

We say a reasonable consumer would be taken to pay more for defective goods that can be repaired than defective goods that cannot be repaired. Ford’s approach is that the court takes into account all known facts at the date of judgment that shed light on the real value of the car – and again, I will leave aside the debate about the two points, your Honours know that our preferred point is time of supply.

We say a repair is a concomitant incident of a defect – it is intrinsic to the goods in that sense that are repaired in the Kizbeau and HTW sense – and also in Dwyer – and again I will not drag your Honours through all that. The important concept is they are not supervening events. Neither the possibility of, or the actuality of, a repair is not a supervening event. A supervening event has nothing to do with the intrinsic quality of the car that is breached by having a defect, as it were.

GLEESON J: To understand that – what is intrinsic to the defective goods has to be the possibility that they might be repaired.

MR FINCH: Yes. I agree with your Honour. The difference to the approach mandated by looking at the Full Court’s approach is to say, given at the time of the hearing you know that possibility has matured into an actuality, what account do we take of that? And then they say, you do take it into account. On Wednesday, Justice Beech‑Jones asked my learned friend Mr Gleeson this question at transcript 13, line 486, if you have a defect:

that had been fixed first time within about eight months, would that be a material difference on your case?

MR GLEESON: Yes.

We would agree, of course, on our approach. The point of difference is we cannot see any principled approach, or principled basis for an approach, that takes into account some repairs – for instance, the one that your Honour asked about – but excludes others, depending on how soon after the supply the repair occurred. If they are all things which are known at the time of the hearing, what is the principled basis for saying yes to someone and no to others?

GORDON J: That they are valued differently.

MR FINCH: Yes.

GORDON J: Or give rise to a different value.

MR FINCH: Yes, our point, though, is that my learned friend Mr Gleeson admitted the possibility of taking into account that eight‑month repair; we say that the only door through which you do that is the Full Court door. Your Honour Justice Beech‑Jones also asked my learned friend, Mr Walker, whether he accepted:

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?

That was at transcript page 61, at line 2679. My learned friend’s answer was “no”. Our answer is that it will depend on the evidence, but most of the time the value of the car that will not be fixed for two years will be lower than one that will be fixed next week. Although, perhaps, that is not completely on point, we would embrace Justice Edelman ‑ ‑ ‑

BEECH-JONES J: When you say that is through the Full Court lens, which particular lens of the Full Court, which particular aspect of the Full Court’s reasoning?

MR FINCH: The particular aspect that says that you take into account matters that you know at the time of judgment.

BEECH-JONES J: This is the intrinsic value approach.

MR FINCH: Yes, the intrinsic value shorthand is good enough. At transcript 64, at 2804, Justice Edelman remarked, in the course of argument, that between the Williams appellant’s position and Toyota’s position:

that may be the intermediate position, that you take all of the facts into account, one of them is the period of delay –

of any repairs, and we would, with respect, agree with that as a proposition. That is because the real value or intrinsic value is determined by asking, what would a reasonable consumer pay knowing, amongst other things, whether, and if so when, a repair will be available?

GORDON J: Does this mean that, when one undertakes the 272(1)(a) exercise, you accept that one takes into account the known defects which give rise to the breach of the guarantee, and then, in relation to those defects, the range of possibilities, which includes no remedy at one level: probability of an effect of remedy in the short‑, medium‑, and long‑term; an available remedy in the short‑, medium‑, and long‑term; and then, fourth, a remedy having been applied and the defect fixed?

MR FINCH: Yes, enlivened by that which you know then at the time of hearing about those ‑ ‑ ‑

GORDON J: That is all right, I should have made that as a qualification.

MR FINCH: Yes, coincidentally, that is almost exactly what I was about to say, your Honour, which was we have said there is no conceptual difference between, and thus you would take into account, all these possible scenarios: A, where a repair is impossible; B, a repair might be possible in the future, depending on how far into the future – all of those items; C, a repair is possible within a reasonable time or otherwise; or D, the car has, in fact, been repaired. All of those areas which, I think, cover the same ground conceptually, as your Honour raised with me.

GORDON J: Thank you.

GLEESON J: That fourth one, “in fact” “repaired”, puts aside any question of possibilities. So, if, unexpectedly, something happens in the future that makes the repair.

MR FINCH: Yes, there are still going to be imponderables and guesses even on this approach, but that is nothing that your Honour has not seen before.

GAGELER CJ: Mr Finch, just to be clear, this approach seems to me to be the Dwyer approach, is there a difference between what you are putting to us and ‑ ‑ ‑

MR FINCH: Yes, yes, well, it is so close that it makes no difference. There are some wording differences which I will not bother your Honour with.

BEECH‑JONES J: Mr Finch, in the case of a car that has been repaired, do you accept that it is probably a matter for the valuers to say, well, in light of the fact that it was repaired at year three, going back to the time of supply, a car that took three years to repair is less than a car that could have been repaired the next day but – or may not, depending on what it is.

MR FINCH: Yes, and that is what I meant, I think, earlier in answer to question from Justice Steward. It is what I mean by saying it is a valuation case, that is my shorthand for the answer to that. To add to that – I think I have already said this – it also admits of the possibility that the valuer might take into account the purchaser knowing that there was going to be three years of misery, or three years of not misery, or the defect manifesting itself early or late, all of those things. So, we do not admit, for instance, of the rather more abrupt approach that Toyota takes to “repair”. On Wednesday, Justice ‑ ‑ ‑

GORDON J: Can I just ask one other question about that.

MR FINCH: Yes.

GORDON J: Do you accept that no valuer was asked of those questions?

MR FINCH: I do apologise, I did not ‑ ‑ ‑

GORDON J: Do you accept that no valuer, none of the experts, were ever asked any of those questions?

MR FINCH: Yes.

GORDON J: Thank you.

MR FINCH: That is why one reads, with a little smile – I cannot remember which Full Court said it, but they appreciated that remitting it to the trial judge would involve some imponderables. I think both trial judges would probably add a few adjectives to that, given that the evidence did not necessarily conform to the matters which need to be taken into account, at least directly. I mean, one can imagine that some, if not all, of the elements of a fair market appraisal might coincidentally be like some of the valuation exercises which are mandated by this, but that would only be by coincidence, so that there really is a factual problem of the sort that your Honour identifies.

GLEESON J: Would Ford accept that the parties could now adduce further evidence on that remitter?

MR FINCH: It is not a matter that is currently the subject of any form of the orders. Part of it is enlivened by our cross‑appeal, where we say if it is going to be remitted at all and this Court has a different view to the Full Court then the remitter should be considered in light of this Court’s reasoning, not the Full Court’s reasoning, but that is just a technical matter. But your Honour, with respect, raises a real point.

At the moment it would not appear to be within the range of questions that the trial judge is being asked to do on remitter to admit further evidence, different in kind but no doubt it will provoke howls of outrage behind me, but one can imagine the judge saying why should I not do that? It is pointed out to me that this was – the reason I say that what I did about it is in paragraph 316, at page 471:

The question then becomes, what order should be made as a consequence? In our view, the appropriate order is to remit the question of Ms Capic’s damages for re‑determination by the primary judge on the basis of the evidence already before his Honour. We appreciate that this might leave the primary judge with some imponderables.

Which is where my recollection came from. So, at the moment, at least, the primary judge will be constrained in that way, that is not beyond repair, of course.

BEECH-JONES J: That is because they were remitting on a particular understanding of how 272 operates.

MR FINCH: Yes, that is part of the point of our notice of cross‑appeal, that if this Court has a different view about some of these matters then the remittal should be to be determined in accordance with the reasons of this Court. I accept immediately I think what is the effect of Justice Gleeson’s point, which is that may involve moving away from the injunction not to admit any further evidence, as it were, because there seems, in a sense, an exercise in inutility in asking a judge to do something which is not covered by the evidence. Even the doing‑the‑best‑you‑can injunction does not seem to cover that circumstance because it is a defect in the evidence rather than the evidence being adequate but difficult to deal with.

The remitter is, my learned friend reminds me, it is only in respect of Ms Capic’s damages because, as your Honours remember, the group’s actions did not proceed further, at the moment before the trial judge. I am sorry, I interrupted.

JAGOT J: The primary judge was in exactly the same position, no difference, and did what he did on the principle that he had to do the best he could, and he did do the best he could.

MR FINCH: Yes.

JAGOT J: I do not see why anybody else was in a different position.

MR FINCH: The parties chose, as I think what your Honour has pointed, the evidence to deploy in front of the court.

JAGOT J: That is right. Well, that is what you are stuck with. I just do not think an invitation to call further evidence is really necessary.

MR FINCH: I am not suggesting this Court should do. I am only allowing the possibility. This Court is what it is, but ‑ ‑ ‑

JAGOT J: Well, on one basis you could say what the primary judge did is he took all of the prospective risk, which is basically a worst‑case scenario. As it turned out in Ms Capic’s case, she did suffer the worst‑case scenario. She suffered ever single risk.

MR FINCH: Yes.

JAGOT J: Logically, I mean, there does not seem any difference between what the primary – different principle, but what the primary judge posited was the risk of a worst‑case scenario. Anyone buying a big item confronted with the risk of the worst‑case scenario pays for the worst‑case scenario. I am just not sure there will be, ultimately, any difference, but anyway.

MR FINCH: I accept what your Honour says. I was going to return to a question that your Honour asked on Wednesday about the misery factor, and I think I have probably dealt with that along the way enough that the Court understands our attitude to that, and again I am under great pressure to finish. Can I finish with this. This is an answer that I promised or threatened, depending on how you look at it, coming back to the idea of use and how it should be deployed, arising from a question by your Honour Justice Beech‑Jones.

Can I say as briefly as I can, and I think Justice Gordon asked me a couple of questions on that which I did not adequately answer. Here is how we put it: we assume that we have established that we take into account post‑supply events. I am using shorthand. To qualify the event of course must be a matter capable – leaving aside its having occurred after supply of course in the way that we thought – of affecting an analysis of value. Assume that amongst these matters is the existence of actual or possible repair in the way we have heard.

We say that the fact of use – that is, the ability to use the characteristic of the car that it is capable of being used for a certain period of time – is conceptually no different to the fact of repair or the possibility of repair in the sense of a later event which could rationally affect a valuation. We are not in that sense bringing to account Ms Capic’s actual use of the car. It is that we are using her use of the car as demonstrating a characteristic or capability of the car, and you know that by the time of the hearing.

Without dragging anyone back to it, I said yes to a question by Justice Edelman at transcript 56, line 2505, and that is why I said yes. That is why the answer to his Honour Justice Beech‑Jones was our primary position was you could bring it to account in an answer to a claim under (a). Of course, remembering this is not a claim we are talking about here, this is a claim in response to a claim under (a).

GORDON J: Is that to say any more that when I am valuing a car, I am saying it is otherwise – other than the defects – able to be driven?

MR FINCH: It is the same concept.

GORDON J: In other words, the fact that it can be driven means it is worth more than a car that is stuck in a shed that cannot be driven.

MR FINCH: There might be nuances. The fact that it can be driven for a number of years over a large number of kilometres without the impact of severe defects would be different to: it can only be driven for six months at a time, then has to be off the road for six months. One would admit of a difference in valuation if that was the forecast.

STEWARD J: But again, the relevance of use would be a matter for the valuer.

MR FINCH: All hammered into a valuation case. I should observe, though, in that connection, before I sit down, a couple of things. When I say that, if your Honours would turn to the Toyota appeal book for a moment. At page 291, the Full Court in Toyota deals with this concept in four places, not necessarily all in exactly the same way. At paragraph 123 of the Full Court’s judgment – and again, given my time, can I just flag this – this apparently gives a tick to this notion, if I can put it that way. At 127, the same thing. This is the question of use.

Now, occasionally they use the expression “utility”, and it covers similar ground, if not the same ground, but I must point out to your Honours that at paragraph 165, at appeal book 300, that does not seem to be as fulsome an acceptance of the proposition, although there may be a matter of detail that I am missing. Then at paragraph 306, at appeal book 325, there is another set of remarks which do not appear to be completely on the same footing about the utility of use in their exercise.

GORDON J: I wondered how relevant those paragraphs are, because they are in the context of this formula they came up with. I mean, they are directed at a different analysis to justify an approach which really has never been defended in this Court.

MR FINCH: I understand, your Honour. I accept. I just thought I should properly bring to your Honours’ attention the idea that they were speaking with one voice at all times is slightly problematic. There is some tension, at least, in what they say. I am not going to spend any time on this. In our Full Court – in the Capic Full Court, at appeal book 468 of that appeal book, your Honours see remarks at 307(8) and 315(2) where it is clear that
our Full Court has gone with the approach in the first two of those paragraphs I have extracted.

BEECH‑JONES J: What were those paragraphs again, Mr Finch?

MR FINCH: Sorry, in our Full Court it was at appeal book 468, paragraph 307, item (8), which seemed to be to the same effect as the first two paragraphs of the ones I extracted from Toyota.

BEECH‑JONES J: Yes.

MR FINCH: And the second paragraph is appeal book 470, at paragraph 315, item (2).

BEECH‑JONES J: Thank you.

MR FINCH: Can I finalise it this way: firstly, we say, that is where the Court in our case has adopted the “use” analysis that we would adopt. That is, it can be adopted in respect of an item A exercise. Also, it explains the relevance of our notice of cross‑appeal, which I am reminded that I think I need to file.

GAGELER CJ: It is not opposed. You have that leave.

MR FINCH: I do not think it is opposed, your Honour, but your Honours can see the relevance of it in the way I think I have just explained. Unless your Honours want me to entertain you with any further explanation of why that is needed.

GAGELER CJ: No.

MR FINCH: If the Court pleases.

GAGELER CJ: Thank you. Ms Roughley.

MS ROUGHLEY: May it please the Court. Your Honours, the issues, as joined in this case, are those as identified in the notice of appeal and the notice of contention and the notice of cross‑appeal. Ms Capic objects to Ford’s attempt, to the extent that this was what was being done yesterday, to enlarge the issues that are in this appeal beyond those that are the subject of the grounds of appeal or in Ford’s very limited notice of cross‑appeal.

The problem with embracing Mr Walker’s submissions is that his submissions were, in effect, omnibus submissions that were directed both to his own appeal, for which there is no cognate in Ford’s notice of cross‑appeal here, as well as directed to the Williams’ notice of appeal which are not on all fours with Ms Capic’s appeal. In addition to that problem, there were various arguments put by Mr Walker. For example, the lengthy discussion about what “available” means and what his case was. It is difficult for Ms Capic to know, precisely, which form of “available” is being embraced by Mr Finch.

So, Ms Capic’s position is that the issues have been joined as they are and in written submissions, and this appeal cannot go beyond those matters. That is not to say that there is not some degree of overlap, which is obvious, and your Honours would be well‑capable of recognising where that is. On Ms Capic’s appeal, to put it in three propositions: Ms Capic and Williams’ parties are aligned on the proposition that is advanced at paragraph 4 of Mr Gleeson’s oral outline. That is a statement of outcome or effect of the provisions. As to why that is the effect of section 272(1)(a), that is where there is a slight difference.

Ms Capic’s primary position is the blunt position I advanced yesterday, i.e., that the reason why the section 272(1)(a) valuation exercise does not build into it when working out leave – to use Justice Gordon’s words – “range of possibilities as at supply of a repair becoming available” – does not – it is a long sentence, let me start again. Justice Gordon made the proposition that at supply one is looking at the range of possibilities for the section 54 failure to comply as found. We all agree to work out the section 54 failure to acquire as found, there is no guillotine in the sense that one does not look beyond the moment of supply to work out what is the failure to comply; of course one can use the post‑supply information that reveals the failure to comply at the time of supply.

BEECH-JONES J: But what you deny is any information that reveals the consequences of that. So, if you have a defect that you believe, a year later when you find the defect, has a 40 per cent chance of being repaired, you say, we will take the defect but not the 40 per cent. If you learn six months later that it has a 60 per cent chance, you say, do not take that. Even, I think on your argument, if you learn the defect can never be repaired, you do not take that knowledge, as well.

MS ROUGHLEY: That is right. That is the blunt position, and then our fallback position is the argument advanced at paragraph 55 of Mr Gleeson’s oral outline, which I understand to be I think what Justice Edelman called the alternative argument yesterday. If we were at cross-purposes, can I just indicate that is what I understand to be Ms Capic’s alternative position.

BEECH-JONES J: So, that alternative position is, you do take into account what you know about the defect from time to time?

MS ROUGHLEY: You would definitely take into account what you know about the defect; that is common. Its events post supply can be taken into account insofar as they truly illuminate the propensity which constitutes the breach. It does not give you the certainty that you will in fact get a remedy four years and five months later. What it does is illuminate that the range of possibilities at the time of supply are pretty much what you would think would be the range of possibilities for a defect of the kind that Ms Capic and group members had: highly complicated ‑ ‑ ‑

GORDON J: So, do you accept the list I put to Mr Finch that there is a spectrum? I gave him four categories.

MS ROUGHLEY: We do accept that ‑ ‑ ‑

GORDON J: And that is your alternative case?

MS ROUGHLEY: I think those range of possibilities would arise in either case; the question is, how do you answer them? Are you in category 1, category 2, category 3 ‑ ‑ ‑

GORDON J: Correct, yes.

MS ROUGHLEY: So, on the blunt case, you are not using the fact that a remedy is developed in the future to work out which category you are in and what weighting you place on the particular remedy. On what is my alternative case, what you do is you go: well, what would you be thinking at the time of supply, by the way, look at what actually happened, that looks about right, the assessments you would make at the time of supply about the possibility for this to be remedied, how complicated would it be, when it might be available, how costly will it be to you, how much of a run‑around you might get, that is illuminated by what happens in the real world.

EDELMAN J: How is that different from Mr Finch’s approach?

MS ROUGHLEY: As things were developing it did not sound like we were all that far apart. I think the difference is that, on Mr Finch’s approach, one is backdating the real world knowledge to tell you precisely how events are going to play out for you.

EDELMAN J: I am not sure it is. I asked him a question as to whether there was a difference between subsection (b), where you take into account exactly what happened for the purposes of the effect on the person, and subsection (a), where you use it as a data point to illustrate what the tendency was, and he accepted that.

BEECH‑JONES J: So, you say, if you know it is going to take four and a half years but you will get a fix, you do not take that into account, whereas I think Mr Finch says you do, is that right? You just say all you know is that confirms there was a possibility of a fix, is that the difference?

MS ROUGHLEY: Yes, possibility, and where you fit within Justice Gordon’s range of possibilities is somewhere in the middle, in the middle ground.

BEECH‑JONES J: Yes. You accept that that would illustrate Justice Gordon’s possibilities, but you do not accept that you would take into account what you know about where you are on those possibilities?

MS ROUGHLEY: That is correct. You do not, at the time of supply, become someone who is in the last category.

STEWARD J: Ms Roughley, do you agree with Mr Finch’s statement that, really, the relevance of post events would be a matter for the valuer, particularly these sorts of nuanced observations?

MS ROUGHLEY: No. First, it is a question of statutory construction, and your Honours have our arguments on that. Second, depending on what your Honours find in answer to that, it will be a question for whoever is doing the assessment, which does not need to be a valuer. Many times, it was said by Mr Finch, yesterday and then this morning, that it is a question for the valuer. The primary judge rejected all the valuation evidence and said this is something that judges can do and made a judicial estimation on what the value should be.

That was the subject of an appeal to the Full Court as to whether that was within the realm of things that the primary judge could do. If all that the effect of what your Honours’ judgment on this case is, if you are against me and you decide that what needed to happen was that the primary judge, in addition to taking into account – as he did, and I will come to this – all of his findings of failure to comply on section 54 – hundreds of paragraphs of it with a very concise conclusion at the end, challenged in the Full Court, failed and not challenged here. So, he took into account all of those section 54 failures to comply.

If the only effect of your Honours’ decision, if your Honours are against me, is to say that in addition to that, instead of saying, I am just not going to take into account the fact that there was a later-developed remedy, I should either take the approach of using the later development of a remedy to inform the possibilities of a remedy at supply, then that is not a change in the law’s construction and its consequences that would mean a primary judge could not do what the primary judge did here and make an assessment in the absence of a valuation.

We would say, having not cross‑appealed, the Full Court’s rejection of that ground of appeal, which is paragraphs 299 to 303 of the Full Court, it is not open to the respondent – to the extent it is, it may be a little unclear – to say that this has to be a question for valuation evidence.

STEWARD J: So, you say you can run a case on (a) without any experts?

MS ROUGHLEY: Yes. And that is what has happened in the end ‑ ‑ ‑

STEWARD J: Ultimately, here, yes it has.

MS ROUGHLEY: Ultimately, yes. And, can I say that, if your Honours are against our primary case, it makes it very difficult for any claimant bringing a section 272(1)(a) claim to give assumptions to an expert in advance as to what to find. Because, on the respondent’s case, they can change what the assumptions are to be about possibility of remedy as the case develops – it can change up to five minutes before judgment.

EDELMAN J: That is what happens in every valuation case. If you get a comparative sale of the house next door five minutes before judgment, that might affect the valuation evidence.

MS ROUGHLEY: That would be a question for whether you could re‑open your case to adduce that evidence. That is the real issue here.

EDELMAN J: Yes.

MS ROUGHLEY: There are many times – doing a discounted cash flow evaluation of a company, for example – where you have to make a decision about where to draw the line and value it on that basis.

BEECH‑JONES J: Ms Roughley, as I understand it, you say, look, if we were against you on this aspect of the relevance of repair, you accept that it should be remitted but you do not accept there should be any indication one way or another about whether further evidence should be allowed? Or it should be against that?

MS ROUGHLEY: Should be against that, because that has been decided by the Full Court, no cross‑appeal. Your Honours, I would seek the liberty to provide the Court – I think it would be instructive to do this by giving it to my friends first – with a form of order that would meet – if your Honours were to do that, obviously we hope you do not, but if you do that – what that would look like, because there is some complexity in the Full Court’s orders dealing with other grounds of appeal and cross‑appeal that complicate the position.

In particular, in the Full Court’s orders, part of the remitter is to deal with an issue on which Ms Capic was successful, extra damages which she had not yet got. That is Full Court paragraphs 318 to 319, and it would be appropriate for the parties, if we can agree it, to provide that.

GAGELER CJ: That can be done within seven days.

MS ROUGHLEY: And if we cannot agree it, can we provide – if we cannot agree, can it our competing forms of order, your Honour?

GAGELER CJ: It would be much better if there are no competing formulas.

MS ROUGHLEY: I am not against that. That is why I asked for the opportunity to agree it first. I was trying to deal with this through the prism of the ground of appeal, and if I can ask your Honours to take up the grounds of appeal that are in volume 2 of the core appeal book, tab 14.

STEWARD J: This is your appeal?

MS ROUGHLEY: My appeal, page 528. Yes. Ground 1 attacks two aspects of the Full Court’s decision. The first is that there can be:

a departure from assessment at the time of supply –

On this, I understood my friend’s submission to say, yes there can be, no they cannot. I embrace both, but I think, ultimately, he stuck with: there can be a departure from the time of supply and continued to defend that part of the Full Court’s decision.

We oppose that, for the reasons that are set out in our written submissions, and rely on what is said in Dwyer, this part of Dwyer, at paragraph 215, where in that case it had been common ground, the issue did not need to be decided and so, at 218 the Court of Appeal left it open. But those matters of text and context, some of which your Honours referred to in questions yesterday, would all support time of supply being it. Of course, if your Honours are with me at least to that extent, ground 1(i) succeeds.

The second part of ground 1 is that part of the Full Court’s decision which embraced the idea that one can go through the exercise of the statutory criteria, but that there is some freewheeling discretion left over at the end of that to adjust the outcome. We say there is no textual, structural, or purposive – to the extent we can do that – rationale for having some freewheeling discretion that exists after applying the statutory criteria.

BEECH‑JONES J: That might turn on the word “damages”. The meaning of the word “damages” might not ‑ ‑ ‑

MS ROUGHLEY: That is how it was put. But then, the way that was justified was it is either at large – damages is then at large; what is the point of the statutory criteria? Parliament is saying you get (a) and (b), but “damages” opens up the discretion, as was indicated in one of your Honour the Chief Justice’s questions: according to what normative standard is the court to decide it?

So, we would submit, there are plenty of provisions of Parliament that indicate what a discretion to the court would look like. This is not a discretionary statute. And all of the extrinsic materials I took your Honours to yesterday would indicate that the purpose was not to leave it at large, let us go fight about it in court and see where we go, see where we get to.

The second reason it was suggested that “damages” needs to have some level of discretion in there is because it was suggested that it is necessary to import the discretion at large in order to deal with the potential for anomalous outcomes where there are multiple people in the chain of title, and so there is the judicial reserve necessary to do what is just, not only for that purpose, but it opens a gateway for a larger freewheeling discretion to adjust.

The primary argument we make is that, on its text and in its context, “damages” would not be construed that way in order to avoid a possibility not raised by any of the facts in Ms Capic’s appeal that it may not work in that situation, depending on how the statute is interpreted. But secondly, Ms Capic’s primary position is that your Honours do not need to determine how it works for consumer, affected person, and chain of title. I will provide your Honours with a construction if you need to decide it; I am not scrupling it entirely, but can just I indicate one of the reasons for ‑ ‑ ‑

GAGELER CJ: Mr Finch advances it as part of the context in which the competing constructions need to be understood, so you need to address it, at least at that level.

MS ROUGHLEY: Yes, and I will, but can I just indicate this, because it explains why the primary position is that this Court does not need to decide it. As I say, Ms Capic’s appeal to this Court is only on her own claim for damages, but she is, of course, a representative applicant of a group of people who fit within the chain of title, and if the question is to be determined at a trial level at first instance, it may be one of those things where it would be appropriate to have two different counsel representing different members of the group if there is a conflict between if it the first in time who gets it or the second in time who gets it.

That is part of the reason why, if it does not need to be decided, my submission would be that can wait until another day, at least as long as your Honours are comfortable that there would be ways to resolve this question potentially, but it would be for another day to finalise the question.

Can I come to potential ways to resolve the question. Your Honour the Chief Justice suggested – and it then was the lens through which the debate happened, so I will do that too – that one way it might be resolved is through the definition of “affected person”, and that then supplies, with its disjunctive “or”, a way to think that the affected person for the purposes of 271 is the person with title to the goods.

Ms Capic’s submission would be that need not be embraced as a proposition for both 272(1)(a) and 272(1)(b), and this hypothesised problem for affected persons is only an issue in (a). Textually, there is a difference in 272(1)(a) and (b), of course. Subsection 272(1)(a) speaks of the good, it does not mention a person, it speaks of:

any reduction in the value of the goods –

And (b) is:

any loss or damage suffered by the affected person –

So, whilst the chapeau in 272(1) is talking about “an affected person”, it could be that, sort of taking your Honour the Chief Justice’s suggestion but qualifying it slightly, “affected person” starting with the chapeau could be any of the three, but when one looks at (a), because it is a reduction in value of the good, this is a bucket of damages in respect of the good, it is not a bucket of damages in respect of each person in the chain of title and because it is in the value of the good it could travel with the good.

Another textual basis for that being the solution may be section 271(6), because it provides that if – section 271(6) is only there to deal with the 272(1)(a) problem. So, 271(6) is precluding an affected person who has sought to get a repair under an express warranty and it has been provided within a reasonable time, that person’s action goes.

That rather suggests there is a correlation between the person who is entitled to recover the 272(1)(a) damages, meaning the person who holds the good, and is at that point in a position to make the election that 271(6) provides them, which is, do I just want to go and enforce my statutory rights and get what I am entitled to get, or do I want to go and seek to get a remedy through the express warranty, knowing that if the manufacturer does not do it quickly enough I can still go back to my statutory rights and get the (1)(a) damages as well as my (1)(b) damages.

GORDON J: Does that mean, just so I understand it, that on your construction of reading in the three categories of “affected person” into 272, with the value of the good going with the good, that somebody who had sold the good but had suffered (b) damages as a result of the defect could come along later and have an action under 272(1)(b) only?

MS ROUGHLEY: Yes. And there is a real reason of fairness here. If that is the way that the law works, if a consumer – I am using “consumer” to mean the first person who buys the car in trade and commerce from a Ford dealer – if the consumer has bought the car, discovered the problem and, in fact, sells it to their neighbour privately – I am going to call that affected person “the neighbour”.

If they have sold it to their neighbour and honestly said, it is really rubbish, it shudders quite often, in normal driving conditions I have this noise that is pretty annoying and these are all the things that are happening, if that is what they do and the effect of the law is as I just suggested it could be, then the bargain between consumer and neighbour is: I am selling you this car that seems to be a dud, and I have had it inspected and I have had some repairs done and I paid for them myself because I do not trust the Ford dealers and went to a local mechanic – I have done that, but you will get the benefit of the 272(1)(a) if you can be bothered and fight with these people, but I have had enough, so I want to cut my losses, I will sell it to you.

Their bargain is whatever they, as contracting parties, decided to put as the value on the bargain for the good plus the (1)(a) right. The consumer can still, if they can be bothered to keep going and to keep fighting with the manufacturer, say that my costs of inspection – which are in 272(2) – my costs of getting this good inspected and my costs of getting it repaired by the local mechanic, they are still damages that I suffered as an “affected person”.

BEECH‑JONES J: And also the loss on the sale would be (1)(b), on your approach, would it not? So, if they sold it for $10,000 less, they would recover that as – that would be the loss suffered by the affected person because of the failure to comply with the guarantee, would it not?

MS ROUGHLEY: Can I say that it is in my interests to embrace that, but I think it could be that it also is not a question arising on this appeal.

EDELMAN J: Well, there are questions of remoteness and scope of liability for damages as well, under (1)(b), that might come in.

MS ROUGHLEY: Yes. But the submission we would say there is, the reasonably foreseeable test is the one that Parliament has decided to impose. The alternative could be – as your Honour the Chief Justice suggested – that the consumer and the neighbour are entitled to (1)(a), but 273 is, in practice, the practical limitation that avoids this being an artificial issue.

GAGELER CJ: I am not sure I was actually suggesting that.

MS ROUGHLEY: Then I misunderstood. I have misunderstood, I am sorry, your Honour.

GAGELER CJ: You suggested there was a bucket of damages, which I take to mean the bucket only gets filled once?

MS ROUGHLEY: Yes. That is what we put in our reply at paragraph 12. That is what we said. We do not make the concession that was made by counsel for Dwyer that the Court of Appeal was so alarmed by of this possibility of anomalous consequences. Once you make the concession that we make, it is one bucket. It is a question of who – it seems to be there are ways to resolve it.

Finally, on this point, can I just indicate that there would be, in the extrinsic materials for this Act, a further basis for the construction I have advanced. I will do this quickly. If your Honours go to volume 7 of the joint bundle of authorities, tab 46, page 1510. This is the second reading speech I took your Honours to in‑chief, and on the right‑hand side, above the heading “Unsolicited selling” it refers to:

The consumer guarantees law is closely aligned to the existing New Zealand law –

and there is a reference to thanking the New Zealand colleagues. In the explanatory memorandum, there are more references to New Zealand law as well. I do that to then go to the New Zealand Act, which is in the joint bundle of authorities volume 2, tab 7. Starting on page 189 of the joint bundle, your Honours will see the definition of “consumer”. It is broadly the same as the definition in section 3 of the ACL, key points being it is:

a person who—

(a) acquires from a supplier goods or services of a kind ordinarily acquired for personal, domestic –

et cetera. And (b)(i) is the key one – it does not include people who do it:

for the purpose of—

(i) resupplying them in trade –

Then, if your Honours go to section 7, which is on page 195, it is the meaning of “ acceptable quality” in this statute – again, broadly similar, the same types of objectives. Then, on page 198, section 27 is the equivalent to section 272(1)(a):

Options against manufacturers where goods do not comply with guarantees –

is the heading. And this Act takes the approach of building it all into the one provision, and I will leave your Honours to read (1)(a). The effect of all of that is that there is a possible construction to avoid the anomalies that really lie at the heart and are the chief justification for our friends’ forward defence of a freewheeling discretion to be built into section 272(1)(a) to depart from the statutory criteria not only for affected persons but more generally. If that goes, then Ms Capic should succeed on ground 1 because the two aspects of the Full Court’s reasoning that is challenged there would not survive.

That brings me to ground 2, and this is what I sought to capture in paragraph 4 of my oral outline. Obviously, the repairs issue, which is (iii), has been the one that has occupied the largest part of debate, and I will come to my reply on that last. Dealing with (i), (ii), and (iv), your Honour Justice Gordon put to my friend yesterday some questions that suggested that might have been conceded, but then it was not; your Honour Justice Edelman gave something of a lifeline and suggested those types of things might be relevant for section 54, and come into it in that way.

Can I indicate the significance of this debate, even though it might seem quite minor. If we were starting everything from the beginning, and we were dealing with a consumer who wanted to come to court and prove that there had been a failure to comply and to claim damages for it, we accept that there is a broad range of evidence that that consumer might seek to marshal to prove the section 54 failure to comply. That could be an affidavit from the consumer detailing their use of the vehicle and all the ways in which the quality of the vehicle seemed to be affected because they had a troubling range of behaviours; we did that.

We also had, from group members, many affidavits detailing their troubling experience. The primary judge, on the respondent’s urging, said, why do I need to read these hundreds of pages of consumer evidence – it is not really sample evidence – when this case is being run not on the basis of there is a problem because Ms Capic, when she was driving it, had a gear shift problem on this day and then it manifested five minutes later – that is not how the case was run.

It was run on the basis that every single one of these cars had a problem, a single failure to comply, that was caused by five different underlying issues. So, to say that each car had a risk is not to say that each car had a risk of problem. Each car had a problem, and we had an extensive fight about that over six weeks before Justice Perram, and the chief evidence that we relied on and which his Honour found so persuasive was expert engineering evidence from a world‑renowned engineer over in Germany.

This issue has been fought, and decided, and resulted in not just findings by the primary judge, but also answers to common questions. That was all challenged on appeal by Ford, and it starts at paragraph 56 of the Full Court’s judgment. There was a change. The reasons of the Full Court record from 56, which is on page 410 of volume 2, the reasons rejecting the various arguments that Ford put that when working out the 54 question on Ford’s view it was wrong to do what Ms Capic did, which was use post‑supply events revealing that which always existed at supply – what was in the X‑ray at supply, namely, the hidden defect – but not also to bring to account, on the 54 question, the fact that there were remedies. That is the passage from 56 to 64 that I took your Honours to yesterday. They do not challenge that reasoning. When Mr Finch said there are aspects of remedy that are inherent in the defect, in the failure to comply, that case has been run and lost.

The second way it was put was really in the Dwyer way, which is the possibility of repair is something that is inherent in these types of vehicles. Your Honours heard Mr Gleeson make submissions during the Toyota appeal about those paragraphs of Dwyer; this possibility of repair in that airbag swap‑in, swap‑out situation are probably fact‑specific findings of the repairability. We would embrace that reading of Dwyer, but your Honours otherwise have our arguments on our primary argument and fallback.

Then, in the Full Court’s reasons, from paragraphs 65 through to paragraph 76 is a concise but powerful summary of why Ford’s challenge to the section 54 finding just to do with the architectural deficiency that has its own propensity associated with it, why that, what Ford wished to call “two very minor behaviours” was not a failure to comply. That failed for the reasons advanced there. Then, from paragraphs 77 to 84, the Full Court deals with the challenge to the 54 findings for each of the component deficiencies, all of them are rejected, and from 85 through to 118 dealt with a very significant issue, which is the safety aspect of the failure to comply for the transmission control module part of things.

Again, all of those findings, including having regard to Ford US documents that only came to light after the supply, were brought into the analysis to identify what the section 54 failure was, and there is no challenge, of course, to any of those findings. That has then crystallised in answers to common questions, which your Honours will find behind tab 11. These are long, and I do not propose to go through each one, but your Honours will get a sense of how all questions of liability on section 54 in respect of each and every car that is the subject of these proceedings has been decided.

So, Ms Capic’s case has never been that those findings as to what the failure to comply was, in all of its glory, having regard to all of the material post supply that revealed what the X-ray would have revealed, all of that is relevant to the section 272(1)(a) analysis, but for the purposes of identifying the failure to comply. That is not what our ground 2 of the appeal is about. And so, to the extent that the suggestion was made yesterday that ground 2 should not succeed except for the (iii) repair issue, ground 2 should not succeed because all of these things are relevant to 54 – we submit that it is wrong, because the challenge to the primary judge was not about the use of the section 54 information; that has never been something the primary judge did not do.

What is the motivating concern is that, if the effect of the Full Court’s decision is that, now having all of these liability findings, the purpose of the common questions being to resolve these disputes, each and every group member whose claims are now waiting in the wings, just at the “damages” side of things, needs to come along and write an affidavit as to their experience of the problems. That is, in effect, to unpick the liabilities findings on 54 through the damages analysis.

So, that is why we say what the Full Court meant in those parts of the judgment that are challenged by ground 2 about the claimant’s use of the good post supply, or her subjective or objective experience of the failure, or the performance of the good after supply, they are all things – the suggestion that the primary judge had erred when he did his analysis cannot stand.

The key paragraph references to the primary judge that I would make on this start at page 201 of the core appeal book. Having done a whole analysis of the mechanical things going on with this vehicle, from paragraph 603 there is a lengthy setting‑out of what the issues are in a conclusory sense. At page 204, paragraph 614, the primary judge dealt
with, seriatim, each of the issues in section 54 and made conclusions about them that apply to group members.

To take up a question your Honour Justice Gordon asked of my friend, those, necessarily, are saying this is the extent of what is wrong; read with the earlier findings of the problem, its risk and the troubling behaviours it was associated with. The flipside is, it was otherwise normal. That is the only way that this would work. One does not need affidavits to say how many kilometres you have done by the time of turning up to otherwise perfect the inquiry.

There are, then, from 638, findings specifically about each component deficiency. Then, from 652, the architecture deficiency. One finally gets, at 674, the finding as to missed Ms Capic’s vehicle of section 54, all of which relies on the earlier reasoning, not her particular unhappy experience. From 675, there is then stated the conclusions of this. So, to suggest that the primary judge has not done what was required by 272(1)(a) and have regard to the failure to comply, we would submit that does not arise on his Honour’s reasoning.

At 884, the paragraph that was challenged in the Full Court by Ford, his Honour was not saying I am not taking into account the 54 findings, what he was saying is, because Ms Capic ran her case on the propensity case, I definitely have this problem but I am not complaining about every time it in fact happened to me afterwards, then that is why he says the fact that the risks came to pass – that she lost power on the highway – that is not to the point, I have to assess the case you ran, which was the failure to comply in the terms that you did it.

That then brings me to the last issue, which is the post‑supply application of repairs, and I think in the course of the exchange earlier as to the range of possibilities and how it works on the two approaches, your Honours have heard what we wish to say in reply on that issue.

May it please the Court.

GAGELER CJ: Thank you, Ms Roughley. The Court will consider its decision in this matter and will adjourn until 10.00 am on Tuesday, 16 April.

AT 11.34 AM THE MATTER WAS ADJOURNED