Australian Competition & Consumer Commission v BMW Australia Limited - [2003] FCA 727 - FCA 2003 case summary — Zoe

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Australian Competition & Consumer Commission v BMW Australia Limited

[2003] FCA 727

Federal Court of Australia|2003-07-16|Before: Marshall J

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Source facts

Court

Federal Court of Australia

Decision date

2003-07-16

Before

Marshall J

Source

Original judgment source is linked above.

Judgment (48 paragraphs)

[1]

THE COURT DECLARES THAT: 1. The Respondent, by supplying, during 2002, BMW 318i vehicles equipped with a vehicle jack and a vehicle owner manual, has in trade or commerce, supplied goods that were intended to be used, or were of a kind likely to be used, by a consumer and which did not comply with the prescribed consumer product safety standard relating to vehicle jacks, namely Australia and New Zealand Standard AS/NZS 2693:1993 Vehicle Jacks, contrary to section 65C(1)(a) of the Trade Practices Act 1974 (Cth).

[2]

THE COURT ORDERS THAT: 1. On and from 6 August 2003 the Respondent by itself, its employees, agents and servants or otherwise howsoever, be restrained for a period of 3 years from 6 August 2003, from supplying: a) vehicles fitted with vehicle jacks that do not comply with the prescribed consumer product safety standard; b) vehicle jacks that do not comply with the prescribed consumer product safety standard; and c) vehicle jack instructions, in addition to the instructions marked on the vehicle jack itself, that do not comply with the prescribed consumer product safety standard. 2. The Respondent appoint, within 3 calendar months of the date of this order, and retain for a period of 3 years, an independent external auditor with experience in trade practices law and approved by the Applicant to: a) audit the Respondent's Compliance Program before 1 September 2003, and again before 1 September 2004, and again before 1 September 2005; and b) provide written reports to the Applicant and the Respondent in relation to each audit within 14 days of the completion of the audit. 3. The Respondent conduct a recall, in accordance with the recall program detailed at Annexure "A", of: a) BMW vehicle jacks; and b) Vehicle jack instructions, in addition to the instructions marked on the BMW vehicle jacks, which do not comply with Australia/New Zealand Standard AS/NZS 2693:1993: Vehicle Jacks. 4. The Respondent, at its own expense, cause to be published within 21 days in a major daily newspaper in each State and Territory, in which any BMW vehicle jack and vehicle jack instructions were supplied by the Respondent, a notice in the form of Annexure "C" hereto and further that the Respondent take all reasonable steps to ensure that each notice be: a) within the first 5 pages of the newspaper or magazine; b) of a size not less than three columns wide by 20cm deep; c) in text which is in a type not less than 12 point; d) in black text on a white background; and e) published again in the newspapers once per week over two further consecutive weeks. 5. The Respondent, at its own expense, cause to be published within 21 days on its internet site located at url (universal resource locator) > ('the BMW website') a notice in the form of Annexure "C", which will be: a) on the home page of the BMW website; b) of a size that occupies at least 20% of the home page and is not less than three columns wide by 20 cm deep; c) in text which is in a type not less than 12 point; d) in black text on a white background; e) placed on the BMW website; and f) maintained on the BMW website for a period of not less than 30 continuous days.

[4]

Annexure "A" RECALL PROGRAM The Respondent ('BMW') will implement a recall program as follows: 1. By 6 August 2003, BMW will take all reasonable steps to identify all owners of the BMW 318i, 2002 model, vehicle jacks or BMW 318i, 2002 model, vehicles fitted with a vehicle jack at the date of this Undertaking ('the BMW jack owners') including obtaining information available to it from State and Territory motor vehicle registries located in Australia. 2. By 27 August 2003, BMW will send by registered mail to the BMW jack owners that it has identified pursuant to paragraph 1 above, a letter in the form of Annexure "B". 3. By 6 August 2003, BMW will, at its own expense, cause to be published: 3.1 in a major daily newspaper in each State and Territory in which any BMW vehicle jack and vehicle jack instructions were supplied by the respondent, a notice in the form of Annexure "C" hereto, which notice BMW will take all reasonable steps to ensure is: (a) within the first 5 pages of the newspaper or magazine; (b) of a size not less than three columns wide by 20cm deep; (c) in text which is in a type not less than 12 point; (d) in black text on a white background; and (e) published again in the newspapers once per week over two further consecutive weeks. 3.2 on its internet site located at url (universal resource locator) >> ('the BMW website'), a notice in the form of Annexure "C", which notice will be: (a) on the home page of the BMW website; (b) of a size that occupies at least 20% of the home page and is not less than three columns wide by 20cm deep; (c) in text which is in a type not less than 12 point; (d) in black text on a white background; (e) placed on the BMW website; and (f) maintained on the BMW website for a period of not less than 30 continuous days. 4. By 27 August 2003, BMW will issue a service bulletin to all of its authorised BMW dealers and service centres in Australia: (a) providing a copy of Annexures "B" and "C"; (b) setting out any steps the dealer and service centres may need to take to assist consumer; and (c) in a form agreed with the Australian Competition and Consumer Commission ('ACCC'). 5. By 27 August 2003 BMW will provide a written report to the ACCC, prepared by a suitably qualified compliance professional who is independent of BMW and has no conflict of interest or duty in providing audit services to it, detailing BMW's adherence to paragraphs 1 to 3 of this Recall Program.

[5]

Annexure "B" [to be typed on BMW's letterhead] Insert date Insert name and address Insert VIN, Rego, make & model Dear insert name WARNING - BMW VEHICLE JACK SAFETY RECALL The Australian Competition and Consumer Commission ('the ACCC') recently brought proceedings in the Federal Court of Australia against BMW (Australia) Limited ('BMW'). BMW imported and supplied vehicle jacks with the BMW 318i, 2002 model, vehicle to dealers and consumers throughout Australia. The Federal Court has found that the BMW 318i, 2002 model, vehicle jack and vehicle owner manual do not comply with the Australian and New Zealand safety standard (namely AS/NZS 2693:1993 - 'Vehicle Jacks'), in breach of the Trade Practices Act 1974 (Cth). The Federal Court has granted an injunction against BMW in relation to its vehicle jacks and owner manuals and made orders that BMW recall the offending vehicle jacks and manuals. The offending vehicle jacks are not marked as follows: "WARNING: DO NOT GET UNDER A VEHICLE THAT IS SUPPORTED ONLY BY A JACK: USE VEHICLE SUPPORT STANDS". The offending vehicle owner manuals contain vehicle jack instructions, which do not include the following direction: "No person should place any portion of their body under a vehicle that is supported only by a jack; use vehicle support stands." Our records and enquiries indicate that you own a BMW vehicle that was supplied with an offending jack and owner manual. As required by the Federal Court, BMW is conducting a product safety recall of vehicles supplied with offending jacks and owner manuals. BMW wishes to ensure that the recall is conducted as efficiently and with as little inconvenience to you as possible. Enclosed with this letter is new jack labelling and an insert for your vehicle's owner manual, which will together ensure that your vehicle jack and the instructions in your owner manual comply with the vehicle jack safety standard. You must either attach the jack labelling and add the insert to the owner manual yourself, following the enclosed instructions, or contact your nearest BMW dealer to arrange for a mutually convenient time for them to do so for you. Enclosed with this letter is a current list of all BMW Dealers and authorised Service Centres within Australia. For the safety of any person using the vehicle jack, it is important that the labelling is affixed and insert added as soon as possible. We apologise for any inconvenience but assure you of our best efforts to maintain your driving pleasure and satisfaction with BMW vehicles. If you have any questions relating to this recall please do not hesitate to contact your nearest BMW Dealership or Service Centre. The ACCC is responsible for the administration of the Trade Practices Act 1974 (Cth). This includes the enforcement of compulsory consumer product safety standards (such as the vehicle jack safety standard) that have been declared under the Act. For further information on the role and functions of the ACCC, visit its web at http://www.accc.gov.au. Yours sincerely

[33]

Is the standard dangerous? 26 BMW submitted that the standard may be confusing to motorists and may cause them to jack up their vehicles in order to place vehicle support stands under them or use the jack in conjunction with vehicle support stands. 27 I accept that a person with no knowledge of vehicle support stands may conclude, on a literal reading of the warning, that vehicle support stands can be used in conjunction with a specific vehicle jack. However, sufficient evidence has not been provided to the Court to establish that the activity feared, that is, people getting under a vehicle supported by a jack in conjunction with a vehicle support stand, actually results from the literal reading of the warning, or that the warning currently on the BMW jacks would be more successful in preventing injury. The evidence only demonstrated that it is dangerous to put vehicle support stands under a BMW 318i that has been raised by a specific vehicle jack and that it is dangerous to get under a vehicle supported by both a jack and a vehicle support stand. 28 The "once size fits all" approach of the standard is arguably problematic for all vehicle models, not just BMW models. BMW, nonetheless, is obliged to place the warning on its jacks as required by the standard. While criticisms of the standard may be valid, BMW has not shown that any danger can be best remedied by the Court amending the warning to remove reference to vehicle support stands. There was no conclusive evidence that the warning on BMW's jacks would more effectively prevent people from getting under a vehicle and injuring themselves. Some people will not be satisfied that they must not get underneath their vehicle in any circumstances. It also remains possible that on reading BMW's warning, people may still get under a BMW by using makeshift supports, other than the specific vehicle jack or vehicle support stands. 29 The experts who wrote the standard, rather than the Court, better resolve issues of safety in relation to the use of vehicle jacks. After a request from BMW to amend the warning in 1995, Standards Australia decided that the warning should remain as written. It is not the role of the Court, without conclusive evidence that a warning is manifestly dangerous, to rewrite a warning when, in the opinion of Standards Australia Joint Technical Committee on Vehicle and Trolley jacks, the warning is appropriate. 30 The Court has no power to review the standard. If BMW considers that the standard creates a risk of danger it may lobby for it to be amended, or for the Minister to revoke the declaration made under s65E. BMW should also understand that the standard sets minimum compliance requirements and that it is open to it to provide further information concerning the use of the jack or alternative methods of raising the vehicle for the purpose of maintenance. BMW may allay its concerns about the safety of its customers by writing to each of them and/or by inserting words in its owners manual to the following or like effect: "The warning on the jack is mandated by s65C of the Trade Practices Act. It is a general warning which may be misleading to some consumers. Please note that the jack should not be used for any purpose other than wheel changing. It should not be used in conjunction with a vehicle support stand to raise a vehicle. Indeed, vehicle support stands should not be used to raise this vehicle. The vehicle should only be raised by the use of hoists at the premises of an authorised BMW repairer."

[34]

"To the same effect" 31 BMW submitted that the warning on the jack complies with the standard because it is "to the same effect" as the words in cl 7.1(g) of the standard. Counsel acknowledged that the phrase "to the same effect" has not received judicial consideration. Counsel referred to In re Black Bolt and Nut Association's Agreement (No 2) [1962] 1 WLR 75 at 85 where Lord Evershed said that the words "to like effect" meant "intended to operate in substantially the same way". 32 It is trite to observe that "to the same effect" is a different concept from "to like effect". Words to the same effect as others, in my opinion, are words which although may differ from another set of words, produce the same result. For example, a product safety standard may require a warning to say that a product "must be kept out of the reach of children". A warning which says that the product "must not be near or available to children" would convey words to the same effect as the words in the product safety standard warning. Here the standard mandates that, in addition to what BMW have written on their jacks, extra words appear, that is, "use vehicle support stands". No words "to the same effect" are there in the warning on the BMW jack in lieu of the extra words required by the standard. I do not consider that the warning on the BMW jack contains words "to the same effect" as those in the standard. 33 In its written submissions, BMW applied a purposive interpretation to argue that its warning was to the same effect. Counsel for BMW submitted, and I agree, that the meaning of the words in an Act are first to be considered by reference to their context; see CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 and Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 - 382. Counsel then submitted that pursuant to ss15AA and 46 of the Acts Interpretation Act 1901 (Cth), the standard should accordingly be interpreted in a manner consistent with the purpose and object of s65C, and Part V of the Act. I do not believe the particular purposive approach argued by counsel for BMW is appropriate in this case for the reasons that follow. 34 Counsel for BMW asserted the purpose and object of s65C is to prevent the supply of goods to consumers which pose a risk of injury to any person using the goods. I do not accept the characterisation of the purpose of the product safety provisions contended by counsel for BMW. I agree, with respect, with the observation of Wilcox J in Hamlyn v Norman Ross Stores Pty Ltd (1985) ATPR 40-514 at 46,162, where his Honour said: "The policy behind Part V is that corporations engaged in trade and commerce bear the responsibility of compliance with the standards prescribed by or under that Part for consumer protection of which personal safety is perhaps the most fundamental matter." 35 The standard was not written as an instrument of the Act, but as a stand alone document, written by an organisation independent of government. The intent and purpose of the writer of the standard was not determined by the Act. As Spender J said in Trade Practices Commission v BMW Australia Ltd. (1985) ATPR 40-620 at 47,004: "There was much discussion during the argument as to the proper approach to the construction of the Standard. It is not itself a legislative instrument. Rather it is picked up and applied by the relevant legislation here in question." 36 There may be circumstances where the purpose of the Act will be instructive as to the operation of the standard, or of other product standards. BMW has argued that the words "to the same effect" should be interpreted to remove the reference to vehicle support stands from the warning. However, where the mandated warning is otherwise clear, it is not appropriate to amend the wording of the warning using a purposive interpretation of the Act and the standard, particularly when the mischief can be remedied in another way. The people with experience and practical knowledge who write the standard are the most appropriate people to deal with issues of safety. While criticisms of the standard, based on BMW's interpretation, may arguably be valid, BMW has not shown that the apprehended risk of danger is best remedied by removing the reference to support stands in the standard. 37 Counsel for BMW submitted that BMW's interpretation of the standard must be favoured, as a purposive approach showed that the warning created an absurdity and was in conflict with the provisions of the Act. However, there was no conclusive evidence that the warning is manifestly dangerous. Also, although problematic, the wording of the mandated warning has been drafted with the purpose of protecting consumer's personal safety and of preventing injury, which is consistent with the purpose of s65C, and of Part V of the Act. It is arguable that when instructing a consumer not to get under a vehicle it is dangerous to leave a consumer without any information as to the proper instrument to be used in order to safely get under a vehicle. There is no need to favour BMW's interpretation of the warning based on the purpose and object of s65C of the Act, as there is no need to avoid an absurdity, capricious result or conflict, in the circumstances. 38 It is no function of the Court to perform the role of Standards Australia and consider potential dangers of the words in the standard to determine if the standard is met. The role of the Court, for the purposes of the interpretation argument raised by BMW, is to examine the words on its jack to see if they contain words "to the same effect" as those in the standard. A comparison of the two sets of words reveals a disparity. Extra words are contained in the standard, which are not reflected in the warning on the BMW jack. I reject the contention that the warning on the BMW jack complies with standard. In these circumstances an appropriate remedy, with the safety of all consumers in mind, would be to require a manufacturer, where necessary, to provide any further clarifying statement deemed necessary. Arguably, this was the intention of the drafter of the standard when the words "or words to the same effect" were included.

[40]

42 Counsel for BMW submitted that the object of s65E is to provide a mechanism for making prescribed consumer product standards for the purposes of s65C and that the purpose of s65C is as stipulated in s65C(2), that is, to prevent the supply of goods to consumers which pose a risk of injury to any person in using the goods. 43 Focusing on the context in which s65E appears in the Act, counsel for BMW submitted that any standard declared under s65E is subject to s65C. Otherwise, they submitted, a two tier system of standards would be established. The first tier would comprise standards which are subject to s65C(2), where the standard is for the purpose of reducing the risk of injury to any person. The second tier would consist of prescribed standards under s65C(1) declared by notice under s65E, irrespective of whether the standard is reasonably necessary to prevent or reduce the risk of injury. It was contended that a legislature could not have intended such an absurd result. 44 Section 65C(1) prohibits, inter alia, the supply of goods, in respect of which there is a prescribed consumer product safety standard, where these goods do not comply with the standard. Under s65C(2), regulations may be made prescribing a consumer product safety standard as to, inter alia, "warnings" as are reasonably necessary to prevent or reduce the risk of injury to any person. There was no evidence before the Court of the existence of any such regulations. 45 Section 65E allows the Minister to declare that a particular standard is a consumer product safety standard for the purposes of s65C. However, it is not just any standard at the whim of the Minister. The standard must be "prepared or approved by Standards Australia International Limited or by a prescribed association or body." 46 The publication of a notice of a s65E declaration deems the standard to be one for the purposes of s65C. 47 In my view, s65E(3) and the deeming provision made in s65E(2) make it clear that the declaration route under s65E is an alternative and distinct path to producing a consumer production standard capable of being enforced as a regulation to the Act under s65C(2). The Minister is not required, in making the s65E declaration, to form a view that the standard is reasonably necessary to prevent or reduce the risk of injury. Standards Australia International Limited or a like prescribed body would have already completed that task. It is important to note that the declaration under s65E is not made on the whim of the Minister but effectively upon expert advice. It is beside the point that the s65E declaration is immune from the legal challenge that may be made to a regulation made under s65C(2). The reality is that the imprimatur of a specialist standards body is the means by which the Minister acts to assume the necessity of the standard for the purpose of protecting consumers. Viewed in that context, the submission of BMW that a s65E declaration must objectively withstand the test provided for by regulations under s65C(2) is not a preferable construction. 48 In my opinion, the Minister's declaration under s65E has the effect of deeming a standard to be a prescribed consumer product safety standard for the purpose of s65C(1). BMW's submissions on this aspect of its defence to the application are rejected.

[42]

The Relief sought 50 In the application, ACCC sought the following relief: "1. A declaration that the respondent, by supplying during 2002 BMW vehicles equipped with a vehicle jack and a vehicle owner manual, has in trade or commerce, supplied goods that were intended to be used, or were of a kind likely to be used, by a consumer and which did not comply with the prescribed consumer product safety standard relating to vehicle jacks, namely Australian/New Zealand Standard AS/NZ 2693:1993 - 'Vehicle Jacks', contrary to section 65C(1)(a) of the Trade Practices Act 1974 (Cth). 2. A permanent injunction restraining the respondent, by its servants or agents or howsoever otherwise, from supplying: a) vehicles fitted with vehicle jacks that do not comply with the prescribed consumer product safety standard; b) vehicle jacks that do not comply with the prescribed consumer product safety standard; and c) vehicle jack instructions, in addition to the instructions marked on the vehicle jack itself, that do not comply with the prescribed consumer product safety standard. 3. An order that the respondent appoint an agreed independent external auditor with experience in trade practices law to: a) audit the respondent's Compliance Program annually for a period of 3 years; and b) provide written reports annually to the applicant and the respondent in relation to the audits. 4. An order that the respondent conduct a recall in accordance with the recall program detailed at Annexure "A" of: a) BMW vehicle jacks; and b) vehicle jack instructions, in addition to the instructions marked on the BMW vehicle jacks, which do not comply with Australian/New Zealand Standard AS/NZ 2693:1993. 5. An order that the respondent will, at its own expense, cause to be published within 7 days in a major daily newspaper in each State and Territory in which any BMW vehicle jack and vehicle jack instructions were supplied by the respondent, a notice in the form of Annexure "C" hereto, and further that the respondent take all reasonable steps to ensure that each notice will be: (a) within the first 5 pages of the newspaper; (b) of a size not less than three columns wide by 20cm deep; (c) in text which is in a type not less than 12 point; (d) in black text on a white background; and (e) published again in the newspapers once per week over two further consecutive weeks. 6. An order that the respondent will, at its own expense, cause to be published within 7 days on its internet site located at url (universal resource locator) > ('the BMW website') a notice in the form of Annexure "C", which will be: (a) on the home page of the BMW website; (b) of a size that occupies at least 20% of the home page and is not less than three columns wide by 20cm deep; (c) in text which is in a type not less than 12 point; (d) in black text on a white background; (e) placed on the BMW website; and (f) maintained on the BMW website for a period of not less than 30 continuous days. 7. A finding of fact, pursuant to s83 of the Trade Practices Act 1974 (Cth), that BMW in supplying the BMW vehicle jacks and BMW vehicle vehicle jack instructions has contravened section 65C of the Trade Practices Act 1974 (Cth). 8. Costs.

[45]

Remedy 52 Seeing that the BMW vehicle jack warning does not comply with a valid prescribed safety standard, it is appropriate to make the declaration sought in the application at para 1 together with the injunction sought at para 2. I also consider that the recall and publishing orders sought at paragraphs 4, 5 and 6 are appropriate. 53 However, a real question arises whether BMW should be ordered to appoint an external auditor to audit its compliance program. I have no doubt that at all times BMW acted in what it believed was in the best interests of its consumers. It resisted the ACCC's attempt to compel it to place extra words on the jack warning in circumstances where it considered that those extra words were inappropriate and could potentially lead to injury. The words are arguably problematic because vehicle support stands cannot be used in conjunction with the BMW specific vehicle jack. The words were, on one view, capable of being read by persons who would attempt to use the jack to raise the vehicle in an effort to insert vehicle support stands under it. It is possible that, under that scenario, an injury might occur. I perceived BMW to have a genuine concern for the safety of its customers in the way it pursued its defence of the proceeding in the Court. However, I have formed the view that BMW should be ordered to appoint an external auditor to audit its compliance program for the following reasons: · there is no reference in BMW's 1997 version of its Trade Practices Compliance program of the need to comply with s65C of the Act; and · the upgraded program was not tendered in the hearing. 54 Section 86C provides legislative authority for an order to be made for an external audit. There is no need to plead reliance on s86C of the Act in the Statement of Claim, it is sufficient that the claimed relief is identified in the Application. 55 BMW submitted that no costs order sought be made against it. I disagree. I consider that no reason has been demonstrated why costs should not follow the event. In my view, the relief sought by ACCC is necessary and appropriate to militate against further breaches of the Act. I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall.

Australian Competition & Consumer Commission v BMW Australia Limited

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