Capic v Ford Motor Company of Australia Pty Ltd

Federal Court of Australia|2021-11-03|Before: Mr P, Perram J

The parties confer and, within 14 days of these orders, submit to the Associate to Justice Perram a consolidated list of revised common questions and answers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

PERRAM J: 1 Judgment was delivered in this class action trial on 29 June 2021: Capic v Ford Motor Company of Australia [2021] FCA 715 ('Trial Reasons'). These reasons assume familiarity with the Trial Reasons and the terms defined therein. Although the common questions were determined near the beginning of the trial, the Trial Reasons exposed deficiencies in the initial form of the questions: [960]-[969]. The parties are not in agreement about the form of the revised questions or their answers. The debates may mostly be grouped into two categories: (1) whether the Trial Reasons mean that the aggregate damages issue has been concluded and that there is to be no award of aggregate damages or whether they mean that the issue has been postponed to a later date when aggregation may become possible; and (2) whether the common questions should be framed in terms of the allegations of material fact in the Fourth Further Amended Statement of Claim ('4FASOC') or in some other terms.

Aggregate Damages 2 The Applicant pursued a case at trial that the group members were entitled to recover damages on an aggregate (i.e. group-wide) basis. This was based on economic evidence that the existence of the defects had become known in the market and had impacted the rate at which Affected Vehicles depreciated in value. The case was that it was possible to look at the entire group and to say that there was an average level of excess depreciation that could be ascertained and from this an award of money, for the entire group, could be calculated. 3 This case encountered a practical difficulty at trial. It concerned the Respondent's ('Ford') defence that it had repaired the component deficiencies in a number of the vehicles by replacing their input shaft seals, their TCMs and the B8080 clutch lining material. Whether that is a defence to the Applicant's claim under s 272(1)(a) of the Australian Consumer Law ('ACL') (being Sch 2 to the Competition and Consumer Act 2010 (Cth)) for reduction in value damages turns upon whether Ford effected these repairs within a reasonable time: ACL s 271(6). The parties did not attempt to suggest that this issue could be resolved by means of a common question. This was consistent with common sense. Whether the repair could be said to have been undertaken within a reasonable time in any given case would, on its face, appear to turn upon facts which are individual to the vehicle in question. Of course, it may be possible to formulate sub-groups where the repair questions could at least be clumped together into a manageable form, but neither party suggested at trial that this should be done. 4 At trial the Applicant submitted that Ford bore the onus of proving that it had made good its repair defence. Since there was no evidence, it followed - so the argument ran - that Ford had failed to make good the defence at trial. I did not accept this submission because I concluded that the issue of whether the repairs had been effected within a reasonable time had not been the subject of trial. Indeed, I went further and said that because it presented no common issue it could not have been the subject of the trial, being as it was a trial on: (a) the whole of the Applicant's claim; and (b) a set of issues common to the claims of group members. In other words, the fact that neither party had attempted to prove anything about the issue reflected the underlying reality that neither could have done so in the context of a trial concerned with common issues. 5 Thus, whilst I have resolved what ACL s 271 means and that Ford bears the onus of making good its repair defence, nothing else has been determined so far as the claims of group members other than Ms Capic are concerned. In particular, I have not determined either that Ford has or has not made good that defence. The explicit finding is that that issue has not yet been determined. 6 The consequence of the repair defence not yet having being determined is that it cannot be known which members of the class have an action under s 272(1)(a) for reduction in value damages and which do not. That being so I concluded that I could not begin the task of determining whether there should be an award of aggregate damages because it could not presently be known who amongst the group members had claims for damages under s 272(1)(a) and who did not. When the issue of whether Ford can make good its repair defence is tried then it will be known whose claims are to be aggregated. When it is known whose claims are to be aggregated then a claim for aggregate damages may make sense. 7 I do not accept, therefore, Ford's submission that the question of aggregate damages has been determined and therefore that the answer to proposed question 23 ought to be 'no'. I dealt with this topic briefly in the Trial Reasons at [39] and at length at [844]-[853]. In the former I said 'The result therefore is that there can yet be no award of aggregate damages'; in the latter, speaking of the requirements of s 33Z(3) of the Federal Court of Australia Act 1976 (Cth) (which deals with when aggregate damages may be awarded) I said 'As I have explained, this is not at present possible because the full picture under ACL s 271(1) and s 271(6) is not yet known' (emphasis added). 8 In effect, Ford invites the Court to revise these aspects of the Trial Reasons and substitute in place of them a conclusion that 'aggregate damages are not, and in practice never will be, available'. This is said to follow from the fact that the entitlement to reduction in value damages turns on the individual position of each group member in the way I have just described. As such, Ford argues, any answer to proposed question 23 other than 'no' would give group members false hope that an award of aggregate damages may one day eventuate. I do not accept this submission. The question of whether the Trial Reasons were wrong to defer the claim for aggregate damages rather than rejecting it outright is one for the Full Court not me. 9 I therefore accept the Applicant's submission that proposed question 23 should be answered 'Not at this stage: see [39] and [853] of the judgment.' 10 On the other hand, the Applicant cannot on this issue have it both ways. In her proposed questions and answers she seeks to include questions of whether the vehicles failed to comply with the warranty in s 54 whilst excluding any entitlement of Ford to rely upon the defences under ACL s 271(6) and s 54(4). In broad terms, s 54(4) would confer a defence where the only reasons why a vehicle was non-compliant with the guarantee of acceptable quality were brought to the consumer's attention at the time of purchase. This is particularly (but perhaps not only) relevant to the position of group members who were second-hand purchasers of Affected Vehicles. These two issues travel together. If aggregate damages are yet to be available it is only because that defence, like the repair defence in ACL s 271(6), is yet to be determined. I reject the Applicant's attempts to shut Ford out of making good these defences which rest on issues not litigated at the trial. Accordingly, I have adopted the approach below that references to the as-yet-undetermined statutory defences should be included in the questions and answers where appropriate.

Should The Common Questions Be Framed So Far As Possible By Reference To The 4FASOC Or More Generally? 11 The parties had been unable to determine the common questions by the commencement of the trial. On 22 June 2020 (Day 6 of the trial) I heard argument on the form of the common questions and determined issues relating to their form and later, on 7 July 2020, made orders annexing the list of common questions: Capic v Ford Motor Company of Australia Limited (Form of Common Questions) [2020] FCA 884. I commenced that judgment at [1] this way: A question has arisen between the parties as to the formulation of appropriate common questions for the trial. There are, so far as these reasons are concerned, two issues. The first is whether the common questions should be framed in terms of the pleadings or whether, instead, a paraphrasing of those pleadings will suffice. In my opinion, it would be dangerous to frame the common questions other than by reference to what is formally alleged and I therefore conclude that a form of common questions should be adopted which is done only by reference to the pleadings. 12 In the first common questions judgment, I therefore required the parties to frame the common questions by reference to the pleadings. 13 The matter is complicated, however, by the way the trial was run by the parties. Under the heading 'Procedural consequences of the way the case was run' which ran from [52]-[59] of the Trial Reasons I explained that the Applicant's case was that the vehicles suffered from the risk of identified problems. The problems were identified in s6AB of the Fourth Further Amended Statement of Claim. Particulars were provided of that paragraph, however, the Applicant sought to prove the existence of the risks identified in s6AB by means of the reports of Dr Greiner (together with the warranty and complaints data). As I observed at [55] the Applicant indicated to Ford in advance of the trial that the case on the existence of the risks would be the case advanced in Dr Greiner's reports. To be clear, this involved a distinction between the risk of the identified behaviour (catalogued in the allegations of material fact made in s6AB) and the means by which the existence of that risk would be further particularised and proved (i.e. by means of Dr Greiner's evidence). 14 I therefore accept Ford's submission that, generally speaking, the common questions should be framed by reference to the allegations of material fact contained in the 4FASOC. I do not accept that this is a universal requirement. As the Full Court observed in Ethicon Sàrl v Gill [2021] FCAFC 29; 387 ALR 494 at [56], whilst it is usual for common issues to emerge from the joinder of issues under the pleading rules it is also possible that they may emerge upon the filing of lay or expert evidence. I see no particular problem in the framing of a common question by reference to a factual matter which was squarely in issue but which did not find itself reflected in an allegation of material fact in the pleading. Whilst I accept the sentiment underpinning Ford's desire to tie the common questions to the allegations of material fact I do think that in some cases the effort to do so may result in more uncertainty. 15 I therefore reject the Applicant's suggestion that the revised common questions should be framed by reference to Dr Greiner's reports, and particularly Table 8, as though the contents of the reports stood as the allegations of material fact in place of the allegations in s6AB. The trial was not conducted on the basis that the Applicant's case was that the vehicles suffered from the problems in Table 8. It was that they suffered from the problems alleged in s6AB. Dr Greiner's reports were how the Applicant elected further to particularise and ultimately make good that case.

Revised Common Questions 16 I have considered the material submitted by the parties and arrived at these conclusions on the proposed questions and answers, referencing only those that remain in dispute.

Proposed question 1(a1) 17 The Applicant proposes this question in these terms: 1 Which Affected Vehicles, when supplied as new, contained or were part of model lines containing a PowerShift Transmission that had: … (a1) Component Deficiency - Clutch Plate Alignment (to the extent found in answer to question 3A below)? 18 The Respondent does not agree that this question should be posed but neither does it suggest an alternative question. Instead, the Respondent submits that this topic should be picked up by inclusion in the definition of Component Deficiency - Friction Material. I prefer the Applicant's approach. The issue of the geometric misalignment of clutch components was a specific subject of debate between the parties and was addressed by Dr Greiner and Mr Kuhn. Although a part of the overall case on the quality of the clutch lining material, I think it would be useful for it to be treated separately as it was in the Trial Reasons. 19 The Applicant's proposed answer is 'All Affected Vehicles manufactured before July 2013: [252] of judgment'. I agree that this is the appropriate answer based on the finding at [252].

Proposed question 3(a) 20 The Applicant proposes this question in these terms: 3 Did the Component Deficiency - Friction Material: cause, or have an unusual propensity to cause, the Affected Vehicles to exhibit any of the following issues: (a) shudder, including clutch shudder, judder, shaking, vibrating or stuttering; 21 The Respondent proposes this alternative form: 3 Did the Component Deficiency - Friction Material: cause, or have an unusual propensity to cause, the Affected Vehicles to exhibit any of the following behaviours: (a) clutch shudder 22 The question should be framed in the terms proposed by the Respondent. The parties agree on the answer but differ on the paragraphs of the judgment which support that answer. The answer is at [251] of the Trial Reasons. I therefore think, subject to one modification, the Respondent's proposed formulation of the answer is appropriate. It is in these terms: 'The use of the B8080 clutch lining material was apt to give rise to a propensity for Affected Vehicles to experience self-excited shudder, green shudder and forced-excited shudder. [251]'. 23 The one modification is this. The Applicant proposes that answers which are in the affirmative should begin with the word 'yes' even if this is then to be followed with additional detail. As a general proposition, I agree that the answers will be easier to understand if, wherever possible, they can be simplified by the addition of the word 'yes' (or, as the case may be, 'no'). At the same time, the Respondent rightly cautions against the answers being formulated in a way that embraces more than the Trial Reasons properly accommodate. In this instance, however, the Respondent takes its concern too far: where the word 'yes' begins a longer affirmative answer containing additional detail, that additional detail defines and delimits what the 'yes' signifies. Accordingly, in these reasons I have generally adopted the approach that the words 'yes' or 'no' should be added to an answer wherever appropriate. The upshot here is that question 3(a) should be answered 'Yes - the use of the B8080 clutch lining material was apt to give rise to a propensity for Affected Vehicles to experience self-excited shudder, green shudder and forced-excited shudder: [251].'

Proposed questions 3(b)-(e) 24 The Applicant proposes these questions in these terms: 3 Did the Component Deficiency - Friction Material: cause, or have an unusual propensity to cause, the Affected Vehicles to exhibit any of the following issues: … (b) erratic gear shifts, including those which cause the customer to experience a jerking or jolting sensation; (c) excessive noise, including rattle, grattle or grinding noises; (d) durability problems, including the customer being required to attend servicing or to have parts replaced more frequently than acceptable from a vehicle of the same class; (e) performance decreases, including less economic efficiency and slower response times to driver instructions; 25 The Respondent proposes this alternative form: 3 Did the Component Deficiency - Friction Material: cause, or have an unusual propensity to cause, the Affected Vehicles to exhibit any of the following behaviours: … (b) loss of transmission engagement; (c) deteriorating clutch and gear selection; (d) loss of odd or even gear selection; (e) intermittent loss of power; (f) intermittent no start; (g) intermittent "check engine" light illumination; (h) delayed acceleration; (i) excessive noisiness from the transmission; and/or (j) servicing, repair/and or replacement of the dual clutch assembly (or components thereof) to be necessary or desirable earlier and more often than usual or reasonably expected. 26 The questions should be framed in terms of the pleading as the Respondent has suggested. 27 There is then a debate about how the Respondent's proposed questions should be answered. The Applicant suggests that the Respondent seeks inappropriately to answer questions 'no' which ought to be answered 'not answered', on the basis that there is no negative finding in the Trial Reasons. The Applicant's concern is misplaced for two reasons. First, the Respondent in fact does seek that the relevant questions be answered 'No' or 'No finding to this effect' and in my view the latter sufficiently highlights the absence of a specific negative finding. Secondly, in its reply submissions the Respondent clarified that it does not understand there to be a substantive difference between 'not answered' and 'no finding to this effect' and that, in its view, either could be used. I agree. On the other hand, contrary to the Respondent's proposal, for the reasons given above in relation to question 3(a), the word 'yes' should be added to answers which are cast in the affirmative. I also think the Respondent's concession that its proposed answer 3(c) could include a reference to 'harsh and jerky gear shifts' is well made in light of [251] of the Trial Reasons. 28 With all of that in mind, I consider that the appropriate questions and answers are in these terms: 3 Did the Component Deficiency - Friction Material: cause, or have an unusual propensity to cause, the Affected Vehicles to exhibit any of the following behaviours: (b) loss of transmission engagement: No finding to this effect; (c) deteriorating clutch and gear selection: Yes - The use of the B8080 clutch lining material was apt to give rise to a propensity for Affected Vehicles to experience difficulty changing gears and harsh and jerky gear shifts. [251]; (d) loss of odd or even gear selection: No finding to this effect; (e) intermittent loss of power: Yes - The use of the B8080 clutch lining material was apt to give rise to a propensity for Affected Vehicles to experience a lack or loss of power. [251]; (f) intermittent no start: No finding to this effect; (g) intermittent "check engine" light illumination: No finding to this effect; (h) delayed acceleration: No finding to this effect; (i) excessive noisiness from the transmission: Yes - The use of the B8080 clutch lining material was apt to give rise to a propensity for Affected Vehicles to experience noise, vibration and harshness issues. [251]; (j) servicing, repair/and or replacement of the dual clutch assembly (or components thereof) to be necessary or desirable earlier and more often than usual or reasonably expected: No finding to this effect. 29 For completeness, it is worth noting the Applicant's contention that the references to [251] of the Trial Reasons should be accompanied by references to [642] and [682]. I really do not think this matters. The latter two paragraphs simply summarise or refer back to findings made in Section VII of the reasons titled 'The Clutch Lining and Assembly', in which [251] is a key paragraph. It adds nothing of substance to the answer to cite each and every paragraph in the Trial Reasons which corroborates the answer.

Proposed questions 3A and 16 30 The Applicant proposes a question to which the Respondent neither consents nor counter-proposes in these terms: 3A Did the Component Deficiency - Clutch Plate Alignment cause, or have an unusual propensity to cause, the Affected Vehicles to exhibit any of the following issues: (a) shudder, including clutch shudder, judder, shaking, vibrating or stuttering. 31 It will be seen that this question exists alongside proposed common question 1(a1) discussed above and, for the reasons given there, should be posed and answered. However, for consistency with questions 3(a) above and 4 and 6 below, the question should be modified so that it simply reads 'clutch shudder' rather than 'shudder, including clutch shudder, judder, shaking, vibrating or stuttering'. The Applicant's proposed answer is 'Yes: [251]-[252] of judgment'. I agree that this answer is appropriate to apply to the question (once the question is revised in the terms just indicated). 32 To like effect, the Applicant proposes a common question 16 but the Respondent does not propose that such a question be answered. In my view it should be posed. I also consider that the Applicant's proposed answers are appropriate. Accordingly, question 16 should be posed and answered in these terms: Did any of the following steps remove the unusual propensity in certain Affected Vehicles to have the risks (or any of them) the subject of the Component Deficiency - Clutch Plate Alignment: assembly of Affected Vehicles with tighter quality control measures: This change to production, introduced in July 2013, resolved the problem in vehicles manufactured after that date but not before: [252] of judgment; and/or replacement of clutch assemblies in Affected Vehicles: Yes, where that replacement occurred from July 2013: [320] of judgment.

Proposed question 4 33 The Applicant proposes this question be framed in this manner: 4 Did the Component Deficiency - Input Shaft Seals: cause, or have an unusual propensity to cause, Affected Vehicles to exhibit any of the following issues: (a) shudder, including clutch shudder, judder, shaking, vibrating or stuttering; (b) erratic gear shifts, including those which cause the customer to experience a jerking or jolting sensation; (c) lack of power or response from the vehicle, including an inability to start (or restart) from a stop, an inability to shift out of park, loss, lack or delayed acceleration, lurching forward, loss or lack of power, hesitation or unresponsiveness; (d) excessive noise, including rattle, grattle or grinding noises; (e) durability problems, including the customer being required to attend servicing or to have parts replaced more frequently than acceptable from a vehicle of the same class; and/or (f) performance decreases, including less economic efficiency and slower response times to driver instructions. 34 The Respondent proposes this alternative framing: 4 Did the Component Deficiency - Input Shaft Seals: cause, or have an unusual propensity to cause, Affected Vehicles to exhibit any of the following behaviours: (a) clutch shudder; (b) loss of transmission engagement (c) deteriorating clutch and gear selection; (d) loss of odd or even gear selection; (e) intermittent no start; (f) intermittent loss of power; (g) intermittent "check engine" light illumination (h) excessive noisiness from the transmission; (i) servicing, repair/and or replacement of the dual clutch assembly (or components thereof) to be necessary or desirable earlier and more often than usual or reasonably expected; and/or (j) delayed acceleration? 35 This question should be framed by reference to the pleading in the manner proposed by the Respondent. 36 There are then various debates about the appropriate answers to the questions proposed by the Respondent. First, the Applicant says that affirmative answers should begin with the word 'yes' even if this is followed with additional detail. I agree for the reasons explained earlier. 37 Secondly, the Applicant submits that 4(b) and (e) should be answered in an affirmative manner whereas the Respondent would answer 'No' or 'No finding to this effect' for each of them. The reason for this was said to be that the Applicant's answers better accord with the findings at [225] of the Trial Reasons. That paragraph is in these terms: Where the seals failed it was common ground between the parties that this could cause lubricant to come into contact with the clutch lining. This would alter the frictional profile of the clutch lining in unpredictable ways and cause a range of problems which made it more and more difficult for the TCM to keep control of the transmission. These problems, which were all intermittent, included difficulties with gear selection, sudden deceleration, jerking, grinding noises and the appearance of the check engine light. Dr Greiner also thought they could extend to intermittent revving of the engine, slower response times, loss of power and roll back whilst in gear. There could also be rattling noises, shudder both on launch and during gear shifts and sudden or delayed gear shifts. I accept this evidence. 38 The nub of the dispute is this. The Applicant argues that the list of issues identified in [225] are, from a mechanical perspective, manifestations of 'intermittent loss of transmission engagement' and 'intermittent no start' as those terms are used in questions 4(b) and (e). The Respondent retorts that [225] does not say this and there are no such findings in the Trial Reasons. 39 In my view, the Respondent's approach is to be preferred. First, [225] does not disclose any 'intermittent loss of transmission engagement' above and beyond the phenomena of 'deteriorating clutch and gear selection', 'loss of odd or even gear selection' and 'intermittent loss of power'. Because those are already accounted for in 4(c)-(d) and (f), there is no scope for a separate affirmative answer to 4(b). To provide as such would be duplicative and apt to confuse. The alternative is that the pleader meant something else entirely by the phrase 'loss of transmission engagement' but, on that hypothesis, this other meaning is alien to the findings at [225] and question 4(b) cannot be answered affirmatively for that reason. Secondly, nothing in [225] supports a conclusion that the failure of the input shaft seals could cause 'intermittent no start', foreclosing an affirmative answer to 4(e). 40 Finally the Applicant argues that 4(i) should be answered 'Not expressly answered' rather than 'No' or 'No finding to this effect' as the Respondent suggests. For the reasons given earlier, there is no substantive difference between 'Not expressly answered' and 'No finding to this effect'. 41 It follows that question 4 should be posed and answered in these terms: 4 Did the Component Deficiency - Input Shaft Seals: cause, or have an unusual propensity to cause, Affected Vehicles to exhibit any of the following behaviours: (a) clutch shudder: Yes - The Component Deficiency - Input Shaft Seals could cause shudder on launch and during gear shifts. [225]; (b) loss of transmission engagement: No finding to this effect; (c) deteriorating clutch and gear selection: Yes - The Component Deficiency - Input Shaft Seals could cause intermittent difficulties with gear selection, including sudden or delayed gear shifts. [225]; (d) loss of odd or even gear selection: Yes - The Component Deficiency - Input Shaft Seals could cause intermittent difficulties with gear selection, including sudden or delayed gear shifts. [225]; (e) intermittent no start: No finding to this effect; (f) intermittent loss of power: Yes - [225]; (g) intermittent "check engine" light illumination: Yes - [225]; (h) excessive noisiness from the transmission: Yes - The Component Deficiency - Input Shaft Seals could cause intermittent grinding noises and rattling noises. [225]; (i) servicing, repair/and or replacement of the dual clutch assembly (or components thereof) to be necessary or desirable earlier and more often than usual or reasonably expected: No finding to this effect; and/or (j) delayed acceleration? Yes - The Component Deficiency - Input Shaft Seals could cause intermittent slower response times: [225].

Proposed question 6 42 The Applicant proposes a question in these terms: 6 Did the Component Deficiency - TCM Solder Cracks: cause, or have an unusual propensity to cause, Affected Vehicles to exhibit any of the following issues: (a) shudder, including clutch shudder, judder, shaking, vibrating or stuttering; (b) erratic gear shifts, including those which cause the customer to experience a jerking or jolting sensation; (c) gear selection problems, including deteriorating gear selection, loss of odd or even gear selection, skipping and missing gears or unexpectedly changing gears; (d) lack of power or response from the vehicle, including an inability to start (or restart) from a stop, an inability to shift out of park, loss, lack or delayed acceleration, lurching forward, loss or lack of power, hesitation or unresponsiveness; (e) illumination of the "check engine light" and other vehicle warning lights; (f) durability problems, including customer being required to attend servicing or to have parts replaced more frequently than acceptable for a vehicle of the same class; and/or (g) performance decreases, including less economic efficiency and slower response times to driver instructions? 43 The Respondent proposes this alternative form: 6 Did the Component Deficiency - TCM Solder Cracks: cause, or have an unusual propensity to cause, Affected Vehicles to exhibit any of the following behaviours: (a) clutch shudder; (b) deteriorating clutch and gear selection; (c) loss of odd or even gear selection; (d) loss of transmission engagement; (e) intermittent no start; (f) intermittent loss of power; (g) intermittent "check engine" light illumination; (h) excessive noisiness from the transmission. (i) servicing, repair/and or replacement of the dual clutch assembly (or components thereof) to be necessary or desirable earlier and more often than usual or reasonably expected; and/or (j) delayed acceleration? 44 This question should be framed by reference to the pleading in the manner proposed by the Respondent. 45 There are three areas of disagreement about the proper answers to the question thus framed. First, the Respondent seeks to preface the affirmative answers to 6(a) and (d)-(g) with the phrase 'If the ATIC 91 chip was affected and not repaired'. The Applicant objects to this on the basis that this was a case about propensities or risks and the actual state of any ATIC 91 chip is immaterial to the existence of propensities or risks. The Respondent defends its approach by observing that the TCM solder crack issue was 'progressive over time' and that the answers would therefore be incomplete if they did not advert to whether the ATIC 91 chip was affected and not repaired. The Applicant's position is to be preferred. The 'Component Deficiency - Solder Cracks' to which question 6 refers is not the presence of cracked solder but rather the risk that the solder would crack, setting in motion the progressively worsening range of problems outlined in the Trial Reasons. The question therefore is whether the presence of that risk meant that the Affected Vehicles were unusually likely to exhibit the range of problems in (a) to (j). Accordingly, it makes no sense to include within the answers a reference to the actual state of the ATIC chip. 46 Secondly, the Respondent proposes that 6(b) and (c) be answered 'Not proved: [369]'. The Applicant cavils with this, arguing that the Respondent relies erroneously on the findings in [369] which relate to the ATIC 106 chip rather than those in [368] which relate to the ATIC 91 chip. The Applicant suggests that [368] supports affirmative answers to questions 6(b) and (c). That paragraph is in these terms: Consequently, I find that there was a real risk of the solder cracking on the original ATIC 91 chip. Where this risk eventuated, it would cause, in turn, the series of steadily worsening symptoms to which I have already referred. Whether the most serious of those symptoms - complete loss of motive power for several seconds - would occur depended on how long the vehicle continued to be driven once the initial less serious symptoms were manifest. Those symptoms included, as noted above, shudders and brief power drops as well as various warning messages lighting up on the dashboard such as flashing of the 'D' symbol on the gear selector. It will be necessary to return to this topic when assessing the Applicant's submission that the ATIC 91 posed a safety risk. 47 Paragraph [369] is in these terms: I am unable to make a similar finding about the ATIC 106 chips. There is no material which allows me to assess the existence of any independent risk that they posed. As I have said, the Applicant made no submissions about the existence of a risk of failure arising from the ATIC 106 chips. The best that can be said is that there was a sufficient problem for Ford US to think it profit maximising to replace the chips in production and, eventually, for some vehicles on the road. However, I do not think that is sufficient for me to make any sensible assessment of the risk it posed independent of the ATIC 91 chip. The evidence is consistent with the ATIC 106 problem being regarded as minor but with Ford US deciding that since it was going to have to change the entire TCM it might as well take the opportunity to fix a somewhat smaller problem. The situation of the ATIC 106 chips was, in a real sense, overshadowed by that of the ATIC 91 chips and this had the consequence that it is not possible to make a finding about it. No doubt, there is a more detailed story to be told about the ATIC 106 chips but neither party really embarked upon it and it would be inappropriate for me to try and guess about it. 48 As the Trial Reasons explain, the ATIC 106 chip and ATIC 91 chip perform different functions in the DPS6. The former carries out the four control functions associated with the movement of the clutches and gear changes. The latter, on the other hand, is responsible for a fifth control function, being the distribution of electrical power within the TCM: [331]. Given that the chips perform different functions, failure of one or the other type of chip manifests in a different set of symptoms. These are assayed from [332]-[334] and [344]-[349] of the Trial Reasons. Importantly, there is no finding in those paragraphs (or in [368] upon which the Applicant presently relies) that failure of an ATIC 91 chip could manifest in difficulty selecting or changing gears or the loss of odd or even gears. This is not unexpected because gear selection and clutch control is not the province of the ATIC 91 chip. 49 Of course, the Applicant might have in mind that the progressively lengthening interruptions of electrical power associated with the failure of an ATIC 91 chip could manifest in misbehaving gears. The Trial Reasons do not say this. Moreover, the Respondent proposes an affirmative answer to 6(d) concerning 'loss of transmission engagement'. In my view, even if the loss of electrical power could manifest in gear slippage or selection problems, this pathology is already adequately addressed in 6(d) under the rubric of 'loss of transmission engagement'. Consistently with what I have held above in relation to question 4, answers that are duplicative and conceptually muddled are best avoided. Accordingly, I agree with the Respondent's proposed answers to 6(b) and (c). 50 Finally the Applicant says that question 6(h) should be answered 'Not expressly answered'. The Respondent's proposal of 'No finding to this effect' is appropriate. 51 It follows that, adding the word 'yes' where applicable, question 6 should be posed and answered in this form: 6 Did the Component Deficiency - TCM Solder Cracks: cause, or have an unusual propensity to cause, Affected Vehicles to exhibit any of the following behaviours: (a) clutch shudder: Yes - the course of symptoms could progress over time to include a disengagement of the transmission for a matter of milliseconds that might be experienced as shudder: [346]; (b) deteriorating clutch and gear selection: No finding to this effect; (c) loss of odd or even gear selection: No finding to this effect; (d) loss of transmission engagement: Yes - the course of symptoms could progress over time to include a loss of transmission engagement, which could manifest as shudder, followed by a brief but discernible loss of driving power, and finally could include a loss of driving power for many seconds. [344]-[347]; (e) intermittent no start: Yes - the course of symptoms may progress over time to include intermittent no start. [344]; (f) intermittent loss of power: Yes - the course of symptoms could progress over time to include a loss of transmission engagement, which could manifest as shudder, followed by a brief but discernible loss of driving power, and finally could include a loss of driving power for many seconds. [344]-[347]; (g) intermittent "check engine" light illumination: Yes - the course of symptoms could progress over time to include the illumination of the "check engine" light. [344]-[345]; (h) excessive noisiness from the transmission: No finding to this effect; (i) servicing, repair/and or replacement of the dual clutch assembly (or components thereof) to be necessary or desirable earlier and more often than usual or reasonably expected: No finding to this effect; and/or (j) delayed acceleration? Yes - the course of symptoms could progress over time to include a loss of transmission engagement, which could manifest as shudder, followed by a brief but discernible loss of driving power, and finally could include a loss of driving power for many seconds. [344]-[347]

Proposed question 6A 52 The Applicant proposes a question in these terms: 6A Existence of Safety Risk - TCM Solder Cracks: Did the Component Deficiency - TCM Solder Cracks cause Affected Vehicles to: (a) Have, or have an unusual propensity to have, a non-transitory loss of power and, if so, was that a safety risk? (b) Continue to have, or continue to have an unusual propensity to have, a non-transitory loss of power after receiving any 15B22 software update and, if so, was that a safety risk? 53 The Respondent does not consider that this question or an equivalent ought to be posed. I do not agree. Since the question of whether the TCM posed a safety risk was debated at the trial and is an issue common to the claims of group members it should be the subject of a question. I agree with the Applicant's proposal that the question should be answered in this fashion: 6A Existence of Safety Risk - TCM Solder Cracks: Did the Component Deficiency - TCM Solder Cracks cause Affected Vehicles to: (a) Have, or have an unusual propensity to have, a non-transitory loss of power and, if so, was that a safety risk? In relation to the risk of a non-transitory loss of power, yes: [399] of judgment. In relation to whether this was a safety risk, yes: [399] and [411] of judgment. (b) Continue to have, or continue to have an unusual propensity to have, a non-transitory loss of power after receiving any 15B22 software update and, if so, was that a safety risk? In relation to the risk of a non-transitory loss of power, yes: [399] of judgment. In relation to whether this was a safety risk after receiving any 15B22 software update, no: [411] of judgment.

Proposed question 11A (apart from torsional damping) 54 The parties are aligned as to the form of proposed question 11A but disagree as to the appropriate answers to some of its sub-questions. Leaving aside the last two sub-questions which deal with the torsional damping issue addressed in the following section, the disputed elements of proposed question 11A are in the following terms. The dispute is indicated in parentheses. 11A When the Affected Vehicles were supplied as new (including prior to 31 December 2010) and were subsequently supplied to a person by a Dealer between 1 January 2011 and 29 November 2018, did they fail to comply with the guarantee of acceptable quality within the meaning of s 54 of the ACL at the time of the subsequent supply because of that deficiency? Clutch Lining To the extent that the supply of the Affected Vehicles, new and subsequent, was with the B8080 clutch lining material - (Applicant: yes) (Respondent: yes, subject to the application of s 54(4) ACL). Seals To the extent that the supply of the Affected Vehicles, new and subsequent, was with the Original Seals - (Applicant: yes) (Respondent: yes, subject to the application of s 54(4) ACL). TCM To the extent that Affected Vehicles were supplied as new with the Original ATIC 91 chip and supplied subsequently with the Original ATIC 91 chip having not received the 15B22 software update - (Applicant: yes) (Respondent: yes, subject to the application of s 54(4) ACL). To the extent that Affected Vehicles were supplied as new with the Original ATIC 91 chip and supplied subsequently with the Original ATIC 91 chip having received the 15B22 software update at a time when the Revised ATIC 91 chip was not available in service - (Applicant: yes) (Respondent: not determined: [379]). 55 There are thus two disputes. The first is whether the Respondent's proposed references to the defence in ACL s 54(4) should be included. For the reasons given above at [10], they should be. 56 The remaining dispute is reflected in the last sub-question. This concerns the position of vehicles supplied second hand which still had the original ATIC 91 chip but had received the 15B22 software update. As the Trial Reasons explain at [384]-[387], the efficacy of the 15B22 software update as a fix turns on the availability in service of new ATIC 91 chips. In short, it is not a fix for a driver to be alerted to the deterioration of their vehicle's ATIC 91 chip only to bring their vehicle in for service and receive another ATIC 91 chip afflicted with the same problem as the one replaced. In its written submissions at [25] the Applicant proposed an alternative question and answer format that would resolve the impasse: To the extent that Affected Vehicles were supplied as new with the Original ATIC 91 chip and supplied subsequently still with the Original ATIC 91 chip but having received the 15B22 software update - yes if at the time of subsequent supply the Revised ATIC 91 chip was not available in service; otherwise, no: [384], [387]. 57 The Respondent did not address this proposal in its reply submissions. It seems to me, with respect, to be a good one that accurately captures the findings at [384]-[387]. Accordingly, this should be substituted in place of the last sub-question above, however the first half of the answer should be modified to include the phrase 'subject to the application of s 54(4) of the ACL' for consistency with the other questions. The Respondent's answers to the other sub-questions should be adopted.

Torsional damping: proposed questions 2(a), 7 and 11A 58 The Trial Reasons found that torsional vibrations flowing from the engine meant that there was a real risk that Affected Vehicles would exhibit a slight shudder at slow speeds and a slight audible gear rattle and that the presence of that risk was sufficient to mean the vehicles were not of acceptable quality: [669]-[673]. The parties are now at issue on how this finding should be recorded in the revised common questions and answers. 59 It is useful to consider each question in turn. The Applicant proposes that question 2(a) be posed and answered in this way: 2 Which Affected Vehicles, when supplied as new, contained or were part of model lines containing a PowerShift Transmission that had: (a) Architecture Deficiency - Damping (to the extent found in answer to question 7 below)? All Affected Vehicles: [961] of judgment. 60 The Respondent proposes this alternative: 2 Which Affected Vehicles, when supplied as new, contained or were part of model lines containing a PowerShift Transmission that had: (a) Architecture Deficiency - Damping? All Affected Vehicles to the extent it led to a slight shudder at low speeds and gear rattling: [961] of judgment. 61 The only difference in the form of the question is the Applicant's proposed parenthetic cross-reference to question 7. In my view, this should not be included for, as will shortly be seen, it is possible to formulate this question and answer in a manner sufficiently precise that it would not be aided by a cross-reference. (To like effect, the parenthetic remark 'to the extent found in answer to question 8 below' should be omitted from proposed question 2(b) concerning the Architecture Deficiency - Heat. This was the only difference between the parties on proposed question 2(b)). 62 The dispute about the proper answer to proposed question 2(a) reflects other disputes dealt with above including that pertaining to the ATIC 91 chip. In short, the Applicant contends that a blanket affirmative answer is appropriate, while the Respondent contends that the answer should be qualified. The Respondent's proposed answer suffers from the same problem as that which it proposed for the ATIC 91 chip: namely, it does not reflect that the relevant defect is based on risk or propensity not on the actual condition or behaviour of any particular vehicle. The answer to this question must reflect the findings recorded at [669]-[673] of the Trial Reasons that Affected Vehicles when supplied as new were not of acceptable quality because they were 'prone to' (i.e. afflicted by a real risk that they would) exhibit a slight shudder at slow speeds and gear rattling. 63 On the other hand, the Applicant's proposed answer is insufficient because it does not qualify the finding on the Architecture Deficiency - Damping at all whereas, as both parties accept, the Applicant did not succeed on that limb of her case except insofar as the Court concluded that the extent of torsional damping created a real risk that Affected Vehicles would exhibit a slight shudder at slow speeds and gear rattle: [530] of the Trial Reasons. The answer must acknowledge this. 64 The question should be posed and answered in this form: 2 Which Affected Vehicles, when supplied as new, contained or were part of model lines containing a PowerShift Transmission that had: (a) Architecture Deficiency - Damping? All Affected Vehicles insofar as the extent of torsional damping meant they were prone to exhibit a slight shudder at slow speeds and gear rattling: [961]. 65 I accept that this departs from the form of question and answer suggested at 961(a) of the Trial Reasons. That paragraph was never intended to indicate that the conclusion on the two normal operating characteristics was not a conclusion based on risk or propensity. The revised question and answer just articulated clarifies the position. 66 Turning to question 7, the Applicant proposes this form of question: 7 Architecture Deficiency - Damping: Did the Affected Vehicles, by reason of the manner in which the DPS6 damps torsional vibrations, have, or have an unusual propensity to have, the following issues: (a) Shudder, including clutch shudder, judder, shaking, vibrating or stuttering (b) erratic gear shifts, including those which cause the customer to experience a jerking or jolting sensation; (c) excessive noise, including rattle, grattle or grinding noises; (d) durability problems, including customer being required to attend servicing or to have parts replaced more frequently than acceptable for a vehicle of the same class; and/or (e) performance decreases, including less economic efficiency and slower response times to driver instructions? 67 The Respondent proposed this form: 7 Architecture Deficiency - Damping: Did the Affected Vehicles, by reason of the manner in which the DPS6 damps torsional vibrations, have, or have an unusual propensity to have, the following issues: (a) clutch shudder; (b) loss of transmission engagement; (c) deteriorating clutch and gear selection; (d) loss of odd or even gear selection; (e) intermittent no start; (f) intermittent loss of power; (g) intermittent "check engine" light illumination; (h) excessive noisiness from the transmission; (i) servicing, repair/and or replacement of the dual clutch assembly (or components thereof) to be necessary or desirable earlier and more often than usual or reasonably expected; and/or (j) delayed acceleration? 68 Consistent with what I have held above, the Respondent's form of question is to be preferred. 69 The Applicant expressed one gripe with the Respondent's proposed answers, namely that the affirmative answers for 7(a) and (i) should be preceded by the word 'yes'. Again, consistent with the analysis above, I agree. 70 Question 7 should be posed and answered in this way: 7 Architecture Deficiency - Damping: Did the Affected Vehicles, by reason of the manner in which the DPS6 damps torsional vibrations, have, or have an unusual propensity to have, the following issues: (a) clutch shudder; Yes - Affected Vehicles had a tendency to exhibit a slight vibration or shudder at slow speeds or during a coast down, as the transmission upshifted or downshifted. [521], [524], [528]-[530] (b) loss of transmission engagement; No. (c) deteriorating clutch and gear selection; No. (d) loss of odd or even gear selection; No. (e) intermittent no start; No. (f) intermittent loss of power; No. (g) intermittent "check engine" light illumination; No. (h) excessive noisiness from the transmission; Yes - Affected Vehicles had a tendency to exhibit a slight audible rattle, particularly when operated within an enclosed area such as a carpark. [506], [521], [522], [528] (i) servicing, repair/and or replacement of the dual clutch assembly (or components thereof) to be necessary or desirable earlier and more often than usual or reasonably expected; No. (j) delayed acceleration? No. 71 The dispute regarding the torsional damping elements of question 11A takes place in a quite different domain of discourse, namely that concerned with the position of Affected Vehicles supplied second hand rather than new. 72 The Applicant proposes that question 11A include these two sub-questions and answers: 11A When the Affected Vehicles were supplied as new (including prior to 31 December 2010) and were subsequently supplied to a person by a Dealer between 1 January 2011 and 29 November 2018, did they fail to comply with the guarantee of acceptable quality within the meaning of s 54 of the ACL at the time of the subsequent supply because of that deficiency? To the extent that all Affected Vehicles are prone to exhibiting: (a) a slight vibration or shudder at slow speeds or during a coast down as the transmission upshifts or downshifts -yes. (b) a slight audible rattle, particularly when operated within an enclosed area such as a carpark -yes. 73 The Respondent accepts the framing of these sub-questions but contends that they should be answered 'no'. This is another situation where the appropriate course lies in between the positions adopted by the parties. 74 The Applicant submits, quite correctly, that the Court did not express its conclusion in respect of the slight shudder and gear rattle as being contingent on whether the vehicle was supplied new rather than second hand. And the Respondent submits, also quite correctly, that this is because the relative position of new and second hand vehicles with respect to the slight shudder and gear rattle was not a topic litigated at the trial. The fact that both of these observations are correct suggests that the sub-questions cannot appropriately be answered 'yes' or 'no'. 75 The Respondent relies on the analysis at [669]-[671] of the Trial Reasons which are in these terms: All of that leaves unanswered the questions posed by s 54(2). I have considered the matters in s 54(3) above and do not need to repeat them. However, of particular significance, is the finding that the DPS6 was marketed as providing smooth gear shifts. I do not think that characteristic (a) and (b) meet that description. Turning then to s 54(2) itself, I do not think vehicles fitted with a DPS6 are 'free from defect' within the meaning of s 54(2)(c) because they are prone to display a slight shudder in some gear change situations and exhibit firm gear shifts when driven with gusto. Whichever way one looks at these phenomena they are not smooth gear shifts. Perhaps in a vehicle not marketed as the DPS6 was marketed, the outcome might be different. However, this is how the DPS6 was marketed and viewed in that context, as required by s 54(3)(d), the vehicles fitted with the DPS6 and therefore prone to these behaviours are not of acceptable quality. I also accept that the tendency to exhibit gear rattling means that the vehicles were not acceptable in terms of their 'finish' within s 54(2)(b). Section 54(2)(b) refers to 'appearance and finish'. I do not think this is a composite expression. The presumption against superfluity therefore implies that finish has a meaning which extends beyond merely visual qualities of the goods. New cars should not have a tendency to rattle, even slightly. 76 The guarantee of acceptable quality in s 54 of the ACL attaches to goods at the time of supply. I accept, as the Respondent says, that the analysis just quoted had in view the position of Affected Vehicles when supplied as new. However, that does not entail a conclusion that no second hand Affected Vehicles were supplied contrary to the s 54 guarantee by reason of the slight shudder and gear rattle. This simply was not an issue dealt with at the trial or in the Trial Reasons. Accordingly, the two sub-questions should be answered 'no finding to this effect.' 77 I note for completeness that, contrary to the form of questions and answers which it proffered, the Respondent conceded in its written submissions that a more appropriate answer than 'no' might be 'not determined'. I prefer 'no finding to this effect' for consistency with answers to questions 3, 4 and 6 above.

Proposed questions 15(f) and 17(a), (d) 78 The parties agree that question 15(f) should be posed in this form: 15 Did any of the following steps remove the unusual propensity in certain Affected Vehicles to have the risks (or any of them) the subject of the Component Deficiency - Friction Material: … (f) replacement of clutch assemblies in Affected Vehicles, with "half-hybrid" clutch assemblies containing B8040/B8080. 79 The parties disagree, however, about whether the appropriate answer is 'no' as the Applicant suggests or 'not proved' as the Respondent suggests. The answer should be 'The Respondent bore the onus of proof and did not prove that the half-hybrid clutch assemblies removed the risks (or any of them) the subject of the Component Deficiency - Friction Material'. The same approach should be taken to proposed question 17(d) where the same 'no' and 'not proved' dichotomy was proffered in relation to this agreed form of question: 17 Did any of the following steps remove the unusual propensity in certain Affected Vehicles to have the risks (or any of them) the subject of the Component Deficiency - Input Shaft Seals: (a) assembly of Affected Vehicles with FKM seals; … (d) replacement of input shaft seals in Affected Vehicles, with FKM Seals; 80 There is also a minor disagreement about the answer to proposed question 17(a) which concerns the assembly of Affected Vehicles with the FKM seals. Both parties consider that the question should be answered 'yes' but disagree about which paragraphs of the Trial Reasons should be cited. The Applicant suggests [231] whereas the Respondent suggests [214]-[220] and [225]. Having reviewed the paragraphs, I consider that neither party is quite right and that it is most appropriate to cite [220] and [231] which together disclose the conclusions on the switch to the FKM material in production.

Proposed question 18 81 The Applicant proposes a question in this form: 18 Did any of the following steps remove the unusual propensity in certain Affected Vehicles to have the risks (or any of them) the subject of the Component Deficiency - TCM Solder Cracks: (a) assembly of Affected Vehicles with TCMs containing the Revised ATIC 91 chip and the Original ATIC 106 chips; (b) assembly of Affected Vehicles with TCMs containing the Revised ATIC 91 chip and the Revised ATIC 106 chips; (c) installation of the 15B22 software update on an Affected Vehicle, where: (i) replacement TCMs containing the Revised ATIC 91 chip and the Revised ATIC 106 chips were not yet available in Australia; (ii) replacement TCMs containing the Revised ATIC 106 chips were not yet available in Australia; (d) replacement of TCMs in Affected Vehicles, with TCMs containing the Original ATIC 91 chip and the Original ATIC 106 chips; (e) replacement of TCMs in Affected Vehicles, with TCMs containing the Revised ATIC 91 chip and the Original ATIC 106 chips; (f) replacement of TCMs in Affected Vehicles, with TCMs containing the Revised ATIC 91 chip and the Revised ATIC 106 chips? 82 The Respondent proposes this alternative: 18 Did any of the following steps remove the unusual propensity in certain Affected Vehicles to have the risks (or any of them) the subject of the Component Deficiency - TCM Solder Cracks: (a) assembly of Affected Vehicles with TCMs containing the Revised ATIC 91 chip; (b) installation of the 15B22 software update on an Affected Vehicle, where replacement TCMs containing the Revised ATIC 91 chip were available in Australia; (c) installation of the 15B22 software update on an Affected Vehicle, where replacement TCMs containing the Revised ATIC 91 chip were not yet available in Australia; (d) replacement of TCMs in Affected Vehicles, with TCMs containing the Original ATIC 91 chip. 83 I do not agree with the Applicant's proposed inclusion of questions linking the 15B22 software update to the ATIC 106 chips. The efficacy or otherwise of the 15B22 software update was unrelated to the ATIC 106 chips. The Applicant did not prove anything about the existence of a risk of failure arising from the ATIC 106 chips: Trial Reasons at [369]. In that circumstance, given that question 18 is concerned with the efficacy of fixes to established risks (as opposed to previous questions which dealt with findings about the risks themselves), I agree with the Respondent that there is no reason and indeed it would be misleading for question 18 to refer to the ATIC 106 chips. Question 18 should be posed and answered in the manner suggested by the Respondent.

Proposed question 19B 84 Both parties agree that a question should be posed in these terms: Does the Applicant or the Respondent bear the onus of proof under s 271(2) of the ACL? 85 The Applicant suggests that it be answered this way: Section 271(2) is a defence in respect of which the Respondent bears the onus. 86 The Respondent offers this alternative answer: The proviso in s 271(2) is a defence in respect of which the Respondent bears the onus. [741] 87 Although there is very little daylight between these proposed answers, I think the Respondent's is to be preferred. The inclusion of a citation is consistent with answers given to other questions and the reference to s 271(2) being a proviso in the nature of a defence most accurately reflects the construction arrived at in the Trial Reasons.

Proposed questions 21 and 22: damages 88 There is a question between the parties as to whether there was a common issue about the approach to the determination of damages for affected persons. The Applicant relies upon the approach I took to her vehicle at [880], [884]-[890] of the Trial Reasons. I do not think that was a common issue. The approach taken by the Applicant as to the determination of the value of her car proceeded along a different path to the approach to damages taken by her on behalf of the group (which was a claim for aggregate damages). I do not think that these passages in the judgment deal with a common issue. I reject the Applicant's proposed question 21. The same may be said of the attempt by the Applicant to transform findings about GST, stamp duty and financing costs made in relation to the Applicant into principles to be applied to the other group members. Those issues are addressed in the expert evidence put forward by Mr Stockton. When the parties eventually get to that part of the case the question of whether Mr Stockton's approach to those issues reflected in his model is correct will fall to be determined. That debate is not to be pre-empted by trying to turn determinations about Ms Capic's claim into common issues. I reject proposed question 22 for the same reasons.

Conclusion and Orders 89 The form of each common question and answer has now been determined, either by agreement or the reasons just given. The only order I will make is that the parties confer and submit to my Associate, within 14 days, a consolidated list of questions and answers. I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perram.

Pt IVA of Federal Court of Australia Act 1976(Cth)

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Judgment (19 paragraphs)

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