Capic v Ford Motor Company

PERRAM J: 1 The Applicant ('Ms Capic') applies for leave to amend her originating application and pleadings by the filing of a Second Further Amended Originating Application ('2FAOA') and a Second Further Amended Statement of Claim ('2FASOC'). The proceeding is a class action about an allegedly defective transmission in certain vehicles manufactured by the Respondent ('Ford'). Ms Capic is the lead applicant. 2 The application is opposed. The central issue between the parties is obscure but significant. There were also some less important points of debate. The main issue concerned the way in which Ms Capic had approached the nature of the defect in her vehicle in her pleading.

A. The Alleged Defect: Symptom or Cause? 3 Ms Capic's basic contention appears straightforward as do the claims of those class members whom she represents. She says her vehicle does not work properly or reliably. A particular kind of transmission, the DPS 6-speed dry dual-clutch PowerShift transmission, is implicated. In the interests of brevity, I will refer to it as the 'the transmission'. 4 The structure of Ms Capic's case is twofold. First, she alleges she was misled by certain promotional literature into thinking, inter alia, that she would get a smooth ride from her vehicle, but she says she did not get such a ride and that the vehicle was given to unexpected power drops and uncontrolled movements. Secondly, she alleges that Ford, as the vehicle's manufacturer, breached the statutory guarantee contained in s 54(1) of the Australian Consumer Law ('the ACL') that her car would be of acceptable quality. 5 The nature of the guarantee in s 54(1) is such that it is not necessary for Ms Capic to explain what the underlying problem with the transmission is. This is because, as a matter of law, her vehicle will not be of 'acceptable quality' if it does not meet the requirements set out in s 54(2) (as expanded upon in s 54(3)): '54 Guarantee as to acceptable quality … (2) Goods are of acceptable quality if they are as: (a) fit for all the purposes for which goods of that kind are commonly supplied; and (b) acceptable in appearance and finish; and (c) free from defects; and (d) safe; and (e) durable; as a reasonable consumer fully acquainted with the state and condition of the goods(including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3). (3) The matters for the purposes of subsection (2) are: (a) the nature of the goods; and (b) the price of the goods (if relevant); and (c) any statements made about the goods on any packaging or label on the goods; and (d) any representation made about the goods by the supplier or manufacturer of the goods; and (e) any other relevant circumstances relating to the supply of the goods. …' 6 These provisions open up the possibility for a consumer such as Ms Capic that the unacceptable quality of a vehicle might be established simply by proving it suffered from a range of aberrant behaviours. To run such a case, it would not be necessary to explain why the vehicle suffered from these problems; it would be enough to show that it was not fit for driving (subsection 54(2)(a)) or was not safe (subsection 54(2)(d)). This she might well prove simply by demonstrating that the vehicle was given to sudden powerlessness, violent shaking or other undesirable automotive behaviours. 7 Of course, Ms Capic could also seek to prove that the vehicle contained a defect in that its transmission was defective and hence bring herself instead within subsection 54(2)(c). But forensically this would be a more ambitious and difficult case because she would take upon herself the engineering burden of explaining what the problem with the transmission actually was. 8 So there is a distinction between the unacceptable quality of a vehicle being established, on the one hand, by its constellation of symptoms and, on the other, by proving the root cause of those symptoms. That distinction marks out the boundaries of the present, somewhat technical, dispute between the parties. Onto that distinction must now be projected the established necessity in class action litigation that there should exist substantial common issues of law or fact shared by the class members. The assumption of such a requirement may be observed in provisions such as ss 33C(1) and 33H of the Federal Court of Australia Act 1976 (Cth) ('the FCAA'). It may also be suggested by common sense. Low to moderate reflection will show that a case based on the contention that the transmission in the vehicles was itself defective will provide a substantial common issue of fact between the class members (and Ms Capic) for the purposes of s 33C(1) and with it, no doubt, a substantial common legal issue too viz, whether the presence of such a transmission in a vehicle entails that the vehicle is not of acceptable quality (under s 54(1) of the ACL). That issue is simply whether the transmission is defective. 9 On the other hand, if an attempt be made to ground Ms Capic's class action only on the symptomology of each vehicle and without recourse to why it is that those symptoms occur, the common issues of fact largely evaporate. Different cars may misbehave in different ways. Some may only misbehave when they are not being inspected for faults; some may be undrivable; others intermittent. The range and depth of the symptoms may be very broad indeed. 10 The difference which presents itself, therefore, is the difference between a class action about vehicles having a common defective transmission and a gaggle of unrelated cases about vehicles with various problems not united by any common link. 11 This forensic difference between a class action based on symptomology and one based on aetiology may suggest that the former is not apt to proceed as a class action. Indeed, Ford has previously suggested that just such a problem bedevilled the current form of Ms Capic's statement of claim. The suggestion formed part of the basis for its application, yet to be determined, for an order pursuant to s 33N of the FCAA that Ms Capic's case no longer proceed as a class action. 12 That application (and several others) are not presently before me. Instead, during the course of argument in those other applications, I suggested that this issue might be headed off at the pass if Ms Capic were now to amend her case to clarify that the defect was in the transmission and not the symptoms exhibited by the vehicles. That observation has now engendered Ms Capic's present application to amend which, like a Russian doll, is now an interlocutory application secreted within several other interlocutory applications. 13 For the purposes of understanding the parties' positions, it is convenient then, initially, to confine attention to proposed paragraphs 6A and 20A of the 2FASOC which illustrate the pith of the issue between them. Paragraph 6A is about Ms Capic's wayward vehicle whilst paragraph 20A concerns the vehicles of class members generally. Not reproducing the various underlinings and interlineations required by court rules to reveal earlier versions, these two proposed paragraphs are as follows: '6A During the relevant period the Applicant's Affected Vehicle contained a defect (the Defect in the Affected Vehicle) in that the PowerShift Transmission caused, or had the propensity to cause, some or all of the following problems: • Delayed or harsh gear shifting during acceleration; • Sudden gear change, or skipping gears, leading to shuddering, jerking, bucking or kicking of the vehicle; • Harsh transmission noise; • Unsteady and/or uncontrolled movement; • Transmission overheating and malfunction; • Loud engine noise. • Sudden loss of power in ordinary driving conditions Particulars Particulars will be provided in evidence … 20A During the relevant period Affected Vehicles contained a defect (the Defect in the Affected Vehicles) in that the DPS 6-speed dry dual-clutch PowerShift transmission caused, or had a propensity to cause. some or all of the following problems: (1) Delayed or harsh gear shifting during acceleration; (2) Sudden gear change or skipping gears, leading to shuddering, jerking, bucking or kicking of the vehicle; (3) Harsh transmission noise; (4) Unsteady and/or uncontrolled movement; (5) Transmission overheating and malfunction; (6) Loud engine noise. (7) sudden loss of power in ordinary driving conditions.' (emphasis in original) 14 The form of allegation in these two paragraphs identifies the problem as a defect in the transmission which caused, or had the propensity to cause, the seven identified mechanical difficulties. 15 Ford submitted nevertheless that this was a pleading based neither on symptomology nor aetiology. In the pleading's efforts to be both, so Ford submitted, it had succeeded in being neither. It was not, so Ford argued, an allegation based on symptomology because if it were only about the symptoms, the allegation about the propensities of vehicles fitted with the transmission would be quite unnecessary. On the other hand, it could not be read as a case alleging a defective transmission either because, if that were the allegation, the pleading of the symptoms would then be unnecessary. On that view, all that would matter would be that the transmission was itself defective. Whether the vehicles exhibited symptoms as well would be beside the point, mere legal surplusage. 16 I agree with Ford that neither proposed paragraph 6A nor 20A involves an allegation that the vehicles were defective because of the seven identified difficulties from which it is alleged they suffered or had a propensity to suffer; that is to say, the paragraphs do not advance a case that the vehicles were not of acceptable quality simply because of misbehaviours they displayed. This was, as it happens, Ms Capic's position as well. 17 The real focus of the debate then is on Ford's second contention that neither paragraph alleges a case based on a defective transmission. As already mentioned, the reason for this was said to be that this would entail that the subsequent pleading of the alleged symptoms would then be unnecessary. 18 Importantly, I think, Ford conceded that the symptoms would nevertheless remain relevant. At paragraph 13 of its written submissions it said this: 'The extent to which the problems actually manifested would be relevant, but would not itself constitute the defect'. What this means is that Ford's actual submission is that the defect cannot both be defined by the allegedly defective nature of the transmission and also by the symptoms which it is said to generate or cause. Put another way, the defect in the vehicles, i.e., what makes them not of acceptable quality, cannot be both the defective transmission and the symptoms which it engenders. It must be one or the other. 19 I agree with this submission. But the submission is well wide of the mark because it is not what either proposed paragraph 6A or 20A does. They allege a defect; being a transmission which causes, or which has the propensity to cause, particular difficulties. A pleading which said: 'The Affected Vehicles were defective because: (a) they contained a defective transmission; and (b) they exhibited the seven identified problems' would suffer from the problem which Ford identified. But proposed paragraphs 6A and 20A do not allege that. They allege that the symptoms arise from the identified defect and the identified defect is the transmission. 20 I therefore reject Ford's submission about the failure properly to plead a defect. 21 Ford went on to make some related points. First, it was said that the term 'Defect in the Affected Vehicles' was used at various point of the pleading to refer not to the transmission problem itself but to the characteristics of the vehicle. Confusion was said to abound. The paragraphs relied upon were 22, 23 (third bullet point), 25A (third bullet point), 25AB (third bullet point) and 29(3). Paragraph 22 may serve as an example: 22. The Defects in the Affected Vehicles continued after the Affected Vehicles had been purportedly repaired and after the relevant warranty had been extended by the Respondent.' 22 Bearing in mind that 'Defect in the Affected Vehicles' is a term defined in proposed paragraph 20A by reference to the transmission (see above at [13]), I do not see how this submission can be maintained, at least not without pretending the definition is not there. (I should note for completeness that the version of the 2FASOC attached to the interlocutory application does not have a paragraph 25AB). 23 Secondly, it was said that the case based on misleading and deceptive conduct was likewise based on the characteristics of the vehicles and not the deficient nature of the transmission. This is true. But where the misrepresentations pleaded relate to the performance characteristics of the vehicles I struggle to see how it could be otherwise. A representation that the 'gear shifts and acceleration would be smooth' (paragraph 8A(1)), for example, is not shown to be misleading and deceptive by a demonstration that the vehicle had a defective transmission. It is shown by proving that the gear shift and acceleration were not smooth. 24 Thirdly, it was said that 'Defect in the Affected Vehicles' in paragraphs 23 (first bullet point), 25A (first bullet point), 23B (first bullet point), 29(1), 32A(3) and 32A(4) was ambiguous and could refer both to the defective transmission or the symptomology. Once again, given the defined term in paragraph proposed 20A, I do not see how this ambiguity can arise. I note, again for completeness, that the version of the pleading attached to the interlocutory application does not have a paragraph 23B.

B. 'Propensity' 25 Ford submitted that the use of the word 'propensity' in proposed paragraphs 6A and 20A was vague and lacked precision. It was said to obfuscate the causal connection between the alleged defect in the transmission and the problems exhibited by actual vehicles. I do not accept this submission. It is simply a reflection of the fact that the difficulties do not always become manifest. 26 A related argument was that whatever the propensity of the transmissions might be, it was clear that it was not alleged to give rise to identical behaviours in the various vehicles of the class members. It was therefore said that any finding about 'propensity' would not assist in the resolution of the class members' claims. Again, I cannot agree. One arrives at the stage of the case where this is relevant only after at least three findings have been made: (i) the transmission is defective; (ii) the defect has a propensity to cause one or more of the seven identified symptoms; and (iii) the class member's vehicle exhibits one or more of the seven symptoms. 27 No great legal ingenuity is required to deduce that (3) arguably results from (1) and (2). No doubt, Ford may seek to prevent the drawing of such a conclusion by proving that (3) is derived from something else altogether (bad driving, potholes etc). But in the absence of such a contention, I do not see that the problem to which Ford points has much substance as a pleading contention. 28 I reject the related argument that the pleading of 'propensity' would not permit the formulation of a clear question for the Court to determine. Although concepts such as propensity and tendency are evaluative standards ultimately requiring the application of judgment, this does not mean they are uncertain or that a question posed in terms of propensity is unclear or indeterminate. Precise legal questions are often posed about tendency: see, for example, the tendency rule erected by s 97 of the Evidence Act 1995 (Cth). I struggle to see that the concept of propensity is not the same in that regard. 29 Ford also submitted that it was not obvious that a transmission which exhibited only one symptom - such as noise - would involve a breach of the guarantee of acceptable quality. That seems to me a triable issue not to be determined in a pleading debate. It may even be arguable - I express no firm view either way - that a transmission having the tendencies alleged would breach the guarantee even without the manifestation of any symptom. Certainly, I would not, at this stage, foreclose a trial of this family of issues. I would also not embrace at the level of a pleading debate the proposition put forward at paragraphs 25-26 of Ford's submissions that just because there is something wrong with a vehicle does not mean that there is breach of the guarantee.

C. Generality 30 It will follow from what I have said that I can see no substance in Ford's complaint that the pleading is pitched at too high a level of generality. It seems to me clear what is being alleged: the transmission is defective and this occasions a kaleidoscope of mechanical problems.

D. Reliance 31 At paragraphs 7-8 of her current and proposed pleading, Ms Capic alleges that Ford made various statements such as that the gear shift and acceleration would be smooth. These statements are alleged to have been made in 2010 (paragraph 7) and between January 2011 and May 2016 (paragraph 8). Paragraph 8F of the current pleading avers that 'Group Members relied on the Representations pleaded above when making their decision to purchase an Affected Vehicle'. Under the proposed amendments the word 'Powershift' would be added before the word 'Representation' which is innocuous. Ford's point is that Ms Capic herself alleges that she purchased her vehicle on 24 December 2012. Ford submits that this was before the date of the representation in paragraph 8 and so Ms Capic cannot prove reliance on that representation. But the representation in paragraph 8 began on January 2011 so this contention appears simply to be wrong. In any event, this issue has nothing to do with the amendment application because it is already in the current pleading.

E. The Proposed Second Further Amended Originating Application 32 Proposed Question 2A in the 2FAOA is: 'Is the DPS 6-speed dry dual-clutch Powershift transmission (the Powershift transmission) a Defect in the Affected Vehicles (as defined in the Second Further Amended Statement of Claim)' 33 Ford submitted that this was circular. 'Defect in the Affected Vehicles' is defined in proposed paragraphs 6A and 20A of the 2FASOC. Translating that definition back into the question it will be seen that the question becomes: 'Is the transmission a transmission which caused, or had a propensity to cause, the various problems.' 34 This is not circular, just clumsy. It asks, in substance, whether the transmission caused, or had a propensity to cause, the identified problems. A question which read "Does the transmission cause or have a propensity to cause the identified difficulties' would be better expressed but I do not think that Question 2 conveys anything different. 35 I conclude therefore that there are no pleading obstacles standing in the way of the proposed amendments. Nevertheless, Ford submitted that leave should be refused on five discretionary bases. These were that: (a) the amendments were substantive; (b) Ms Capic has amended several times already; (c) Ford has repeatedly tried to persuade Ms Capic's representatives of the pleading difficulties but to no avail; (d) 'propensity' merely replaced the word 'prone' in an earlier version of the pleading; and (e) the pleading was too complex. 36 I accept (a) to (d). As to (e), I certainly think that this is not the finest pleading I have seen but I would hesitate to say it was 'too complex'. 'Ugly' perhaps, 'ungainly' - certainly - but in that regard the pleadings in this case are, I regret to say, about par for the course. 37 I do not think these matters provide any basis for refusing leave. This is because:

1. The amendments are necessary to avoid Ford's own s 33N application which it has indicated it proposes to pursue. It is, with respect, a little odd to complain about a pleading and then to complain that your complaint has been addressed.
2. The trial is well off into the distance and there is no suggestion that the amendments will prejudice the trial dates.
3. Whilst Ms Capic's advisors could have attended to Ford's complaints about the pleading with more alacrity, they are not required to treat everything emanating from Ford's advisors as procedural gospel. As Ford's position on this very application shows, its procedural instincts are not always sound. In any event, I see nothing approaching the kind of dilatoriness that would be required to refuse leave, especially with a trial date well over the horizon.

F. Conclusion 38 I make the following orders:

1. Grant leave to the Applicant to file a Second Further Amended Originating Application and Second Further Amended Statement of Claim in the form annexed to the Applicant's interlocutory application dated 26 May 2017.
2. The Applicant pay the Respondent's costs thrown away by reason of the amendments.
3. Stand over the question of the costs of the amendment application to 13 July 2017 at 9.30 am. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.