High Court of Australia confirms entitlement to damages for reduction in value of Affected Vehicles

In an important judgment delivered on 6 November 2024, the High Court of Australia has:

• upheld the applicants’ appeal from a judgment of the Full Court of the Federal Court of Australia delivered in March 2023;
• dismissed Toyota’s appeal from the Full Court’s judgment; and
• in doing so, confirmed that group members who are entitled to receive damages for the reduction in value of their Affected Vehicles at the time of supply resulting from the vehicles’ defective DPF Systems, do not lose that entitlement merely because an effective fix for the defect now exists.

A copy of the High Court’s judgment is accessible here.

The High Court also accepted the applicants’ argument that the Full Court should not have discounted the trial judge’s assessment that the reduction in value of the Affected Vehicles at the time of supply resulting from the vehicles’ defective DPF Systems was 17.5%, finding that there was no basis for the Full Court to reduce the assessed reduction in value to 10%.

The High Court has remitted the Toyota class action back to the trial judge, Justice Lee, for his Honour to reassess the amount of reduction in value damages eligible group members are entitled to receive, including having regard to the time elapsed between supply and the effective fix for the defect becoming practically available and the inconvenience and cost occasioned in the meantime.

The Toyota class action has been relisted for case management by Justice Lee on 23 December 2024.

We will provide a further update following that hearing, including with respect to the likely next steps for determination of the claims of:

• eligible group members to recover reduction in value damages assessed in accordance with the High Court’s judgment;
• group members to recover damages for consequential loss suffered because of the defective DPF Systems in their Affected Vehicles;
• group members who have already had the 2020 Field Fix applied to their Affected Vehicle; and
• group members who acquired or have sold their Affected Vehicle on the secondary market.

In the meantime, group members can continue to register their interest to receive damages in the Toyota class action. If you think you are a group member and have not already done so, you can register your interest here.  If you do not register, you will not be able to receive any damages to which you may otherwise be entitled.

Group members who have already submitted their registration forms do not need to do anything else at this stage.  If you have registered, but not yet submitted your completed forms, please do so in order to complete the process.

• your status as a group members;
• any entitlement to receive compensation from Toyota which you may be found to have once the High Court of Australia delivers judgment;
• the progress of the Toyota Class Action; or
• Balance Legal Capital’s continued funding of the Toyota Class Action.

On 27 March 2023, the Full Court of the Federal Court of Australia delivered judgment in respect of Toyota’s appeal from the primary judgment delivered by Justice Lee in April 2022. An overview of the Full Court’s judgment is set out in our March 2023 update.

In late April 2023, the applicants and Toyota both applied to the High Court of Australia for leave to appeal parts of the Full Court’s judgment concerning the reduction in value damages to which group members may be entitled. The High Court will decide whether to grant the parties leave to appeal the Full Court’s judgment and, if leave is granted, determine any such appeal. This process is unlikely to conclude before mid-2024.

In the meantime, group members can continue to register their interest to receive any compensation to which they may become entitled in the Toyota Class Action. If you think you are a group member and have not already done so, you can register your interest here. If you do not register, you will not be able to receive any money to which you may otherwise become entitled.

Group members who have already submitted their registration forms do not need to do anything else at this stage. If you have registered, but not yet submitted your completed forms, please do so in order to complete the process.

Toyota Motor Corporation Australia Limited (ACN 009 686 097) v Kenneth John Williams & Anor

On 27 March 2023, the Full Court of the Federal Court of Australia delivered judgment on Toyota’s appeal from the primary judgment delivered by Justice Lee in April 2022.

A copy of the judgment delivered by the Full Court can be found here.

The Full Court has confirmed the primary judge’s findings that:

• the Relevant Vehicles were not of acceptable quality because of their defective DPF systems;
• Toyota engaged in misleading or deceptive conduct in connection with marketing and selling the vehicles; and
• the value of the Relevant Vehicles at the time of initial supply was reduced because of their DPF systems.

However, the Full Court has found that the amount of that reduction in value was 10%, rather than 17.5% as found by the primary judge.  The Full Court also held that it is necessary and appropriate to take into account the fact that Toyota developed an effective fix for the defect in May 2020 and began offering it for free after the Relevant Period.  The Full Court has remitted the proceeding back to the primary judge for re-assessment of the amount of compensation to be paid to eligible group members taking into account the period of time they held their vehicle before the fix became available.

We are considering the Full Court’s judgment carefully and will provide a further update to group members about next steps as soon as possible.

In the meantime, group members can continue to register their interest to receive any compensation they are found to be entitled to following re-assessment by the primary judge. If you think you are a group member and have not already done so, you can register your interest here. Group members who have already submitted their registration forms do not need to do anything else at this stage.  If you have registered, but not yet submitted your completed forms, please do so in order to complete the process.

Kenneth John Williams & Anor v Toyota Motor Corporation Australia Limited (ACN 009 686 097) (Toyota Class Action)

Toyota has lodged an appeal from the judgment delivered by Justice Lee on 16 May 2022.  A copy of Toyota’s notice of appeal is available here.

Summary of Toyota’s Appeal

The Federal Court’s findings appealed by Toyota include that:

• the Relevant Vehicles did not comply with the guarantee as to acceptable quality under the Australian Consumer Law;
• Toyota made representations about the Relevant Vehicles which were misleading or deceptive;
• the value of the Relevant Vehicles at the time of initial supply was reduced because of their defective DPF systems;
• the amount of that reduction in value was 17.5% (measured against Average Retail Price); and
• eligible Group Members are entitled to be paid money to compensate them for this reduction in value and for the excess GST they paid as a result of acquiring their vehicles at prices which were higher than the true value of those vehicles.

Toyota’s Appeal listed for hearing in November 2022

Toyota’s appeal has recently been listed for a 3-day hearing before the Full Court of the Federal Court of Australia, commencing on 14 November 2022.

The Full Court will deliver judgment in respect of Toyota’s appeal at an undetermined time following the conclusion of the hearing of the appeal.

Registration of Group Members’ interests to receive compensation will continue

Group members do not need to do anything in response to Toyota’s appeal.

However, the process for group members to register their interest to receive any compensation to which they are entitled under the judgment will continue while Toyota’s appeal is being determined.

If you think you are a group member and have not already done so, please register your interest to receive any money to which you may be entitled under the judgment here.  It is in group members’ interests to register.  If group members do not register, they will not be able to receive any money to which they may otherwise be entitled under the judgment.

Group members who are eligible to receive compensation under the judgment will not receive any compensation until after Toyota’s appeal is determined.  If the Applicants are successful in defending Toyota’s appeal, the claims of group members who have registered their interest to receive compensation will begin to be individually assessed at that point.  If Toyota’s appeal is successful, group members may lose their present entitlement to receive money under the Judgment and/or the amount of money to which they are entitled may be reduced.

For more information regarding this process, please refer to our frequently asked questions here.

Kenneth John Williams & Anor v Toyota Motor Corporation Australia Limited (ACN 009 686 097) (Toyota Class Action)

On 7 April 2022, we sent you an update regarding an important judgment delivered by the Court in the Toyota Class Action following the initial trial which took place in December 2021.  A copy of that update is accessible here.  As explained in more detail in that update, the Court found overwhelmingly in favour of the applicants and group members on key issues of liability and damages.

On 16 May 2022, the Federal Court of Australia made orders giving effect to the judgment delivered on 7 April 2022.  A copy of the Court’s orders is accessible here.

Court’s orders in respect of damages

Under the Court’s orders, eligible Group Members are entitled to receive:

• an amount of money equal to 17.5% of the average retail price of their vehicle (when new), less any amount by which the average retail price of their vehicle exceeds the price the Group Member paid to acquire the vehicle (“reduction in value damages”);
• an additional amount of money equal to 10% of the amount of the Group Member’s reduction in value damages (“excess GST damages”); and
• interest on the above amounts.

The representative applicant was awarded $18,401.76, which included $7,474.59 for the reduction in value of its Toyota Prado and a further $747.46 for the excess GST it paid to acquire the vehicle.

Next Steps

In June 2022, Group Members will be sent a notice issued by the Federal Court of Australia which will explain how they can register their interest to receive any money to which they are entitled under the judgment.

In response to that notice, Group Members will need to register their interest to receive any money to which they are entitled under the judgment.  It is in Group Members’ interests to register so that their eligibility to receive any money to which they are entitled under the judgment (and the amount of money) may be determined.  Group Members who do not register will not receive money to which they may otherwise be entitled under the judgment.

Toyota may appeal the Court’s judgment.  If Toyota does appeal and is successful, you may lose your entitlement to receive money under the judgment/or the amount of money to which you are entitled may be reduced.  The notice to be issued in June 2022 will indicate whether Toyota has appealed.  Even if Toyota appeals the judgment, the process for working out your entitlements will proceed notwithstanding the appeal.  As such, when you receive that notice in June 2022, it will be in your interests to register your interest to receive money under the judgment regardless of whether Toyota has appealed.  The litigation funder supporting the Toyota class action, Balance Legal Capital, intends to fund the applicants’ defence of any appeal by Toyota.

A case management hearing will be held on 17 June 2022 to determine how issues which still remain to be determined after the Court’s judgment will be resolved.  These issues include the claims of Group Members whose vehicles have received the “2020 Field Fix” and Group Members’ claims for additional damages of the kind awarded to the representative applicant (such as excess stamp duty, excess financing costs and income lost due to Group Members missing work as a result of needing to have the defective DPF systems in their vehicles serviced).

Following submissions by the parties in August 2022, the Court will determine the process by which money is to be distributed to eligible Group Members who register their interest (a process known as a “distribution scheme”).

We will provide a further update when notices are issued to Group Members in June 2022 and following the case management hearing on 17 June 2022.

In the meantime, keep your eye out for a formal notice issued by the Federal Court of Australia in June 2022 inviting you to register your interest.  As noted above, it is in your interests to register in response to this notice so that your eligibility to receive any money to which you are entitled under the judgment (and the amount of money) may be determined.  If you do not register in response to the notice you will receive in June 2022, you will not receive money to which you may otherwise be entitled under the judgment.

Further Information

For more information about the Court’s judgment, please refer to our frequently asked questions here.

Kenneth John Williams & Anor v Toyota Motor Corporation Australia Limited (ACN 009 686 097) (Toyota Class Action)

The Federal Court of Australia has today delivered an important judgment following the initial trial which took place in December 2021.  A copy of the judgment is accessible here.

In summary, the Court overwhelmingly found in favour of the Applicants on key issues of liability and damages.  The Court found that:

• the Relevant Vehicles were not of acceptable quality because of their defective DPF systems;
• Toyota engaged in misleading and deceptive conduct in connection with marketing and selling the Relevant Vehicles;
• the value of the Relevant Vehicles was reduced by 17.5% as a result of their defective DPF systems; and
• the representative applicant is entitled to damages totalling at least $13,191.65 (further details below).

Further details of the judgment are outlined below.

Liability

The Court found that:

• all Relevant Vehicles failed to comply with the guarantee of acceptable quality provided in the Australian Consumer Law by reason of their defective DPF systems;
• representations made by Toyota regarding the Relevant Vehicles were false or misleading in contravention of the Australian Consumer Law; and
• Toyota engaged in misleading or deceptive conduct in contravention of the Australian Consumer Law by failing to disclose, or disclose adequately, to purchasers of the Relevant Vehicles, or to the public at large, the issues with the DPF system.

Damages

The Court found that:

• Toyota’s failure to comply with the guarantee of acceptable quality resulted in a reduction in the value of the Relevant Vehicles in the amount of 17.5% of the average retail price of those vehicles;
• at this time, Group Members, other than 2020 Field Fix Group Members and Partial Period Group Members (defined below), are entitled to an award of damages under the Australian Consumer Law for that reduction in value;
• 2020 Field Fix Group Members and Partial Period Group Members may be entitled to an award of damages at a later time:
  • 2020 Field Fix Group Members are those Group Members whose Relevant Vehicles have received the “2020 Field Fix” (a specific countermeasure introduced by Toyota from May 2020); and
  • Partial Period Group Members are those Group Members who have “bought and/or sold a Relevant Vehicle on the secondary market”;
• Group Members, other than Partial Period Group Members, are entitled to an award of damages under the Australian Consumer Law for the excess GST they paid as a result of acquiring their Relevant Vehicle at a price which exceeded its true value (calculated as 10% of the reduction in value of their vehicle);
• Group Members are entitled to pre-judgment interest on any reduction in value and GST damages award;
• Group Members did not have a duty to mitigate their losses;
• the representative applicant is entitled to damages totalling at least $13,191.65, including:
  • $7,474.59, for the reduction in value of his Relevant Vehicle;
  • $745.46, for excess GST paid in connection with acquiring his Relevant Vehicle;
  • $246.60, for excess stamp duty paid in connection with acquiring his Relevant Vehicle; and
  • $4,725, for income he lost due to having to have his Relevant Vehicle serviced for issues associated with the DPF system;
• the representative applicant is not entitled to damages for excess fuel costs incurred as a result of issues with the DPF system. However, the Court noted that other Group Members may be able to prove that they suffered such loss.

Next steps

The class action is listed for a case management hearing on 28 April 2022, at which time the Court may make orders to give effect to the judgment.  We will provide you with a further update following that case management hearing, including in respect of the next steps in the proceeding.

Kenneth John Williams & Anor v Toyota Motor Corporation Australia Limited (ACN 009 686 097) (Toyota Class Action)

Below is a summary of the key developments in the class action since the last update you received on 26 November 2021.

Initial Trial

As foreshadowed in our last update, the initial trial for the class action took place between 29 November and 21 December 2021.

The issues that were the subject of the initial trial included:

• whether the affected vehicles were not of acceptable quality (as required by the Australian Consumer Law) because of their defective DPF systems;
• whether Toyota engaged in misleading or deceptive conduct in connection with marketing and selling the affected vehicles;
• whether the value of the affected vehicles was reduced as a result of their defective DPF systems, and if so, by how much; and
• the representative applicant’s personal claim for loss and damage.

Prior to the initial trial, each party provided the Court with comprehensive written submissions outlining their positions in respect of these issues.

During the initial trial, each party called lay and expert witnesses to give evidence concerning the issues before the Court.

The witnesses called by the applicants were:

• Mr Kenneth Williams: the representative applicant;
• Mr Graeme Cuthbert: a motor vehicle valuation expert;
• Mr Ted Stockton: an econometric expert; and
• Mr Stefan Boedeker: a conjoint and statistical analysis expert.

The witnesses called by Toyota were:

• Mr Martin Nelson: Divisional Manager at Toyota;
• Mr Tim O’Mara: a valuation expert;
• Dr Christopher Pleatsikas: an econometric expert; and
• Dr Peter Rossi: a statistical analysis expert.

After these witnesses gave their evidence, both parties provided the Court with written and oral closing submissions. Having heard these oral closing submissions, the Court reserved its judgment to be delivered at a future, unspecified date.

Judgment

We anticipate that the Court will deliver its judgment in early 2022. We confirm that group members do not need to do anything at this stage of the class action.

We will provide a further update to you as soon as possible after judgment is delivered to inform you of the Court’s decision and of any likely next steps.

Kenneth John Williams & Anor v Toyota Motor Corporation Australia Limited (ACN 009 686 097)

Federal Court Proceeding No. NSD 1210 of 2019

Below is a summary of the key developments in the class action since the last update you received on 8 June 2021.

Supplementary Reference

 The last update (found here), indicated that the independent referee who conducted the first reference in the class action was conducting a supplementary reference to address technical issues which remained in dispute after the first reference.

The independent referee delivered his supplementary reference report on 31 August 2021.  A copy of this supplementary independent referee’s report can be found here.

On 7 September 2021, the Federal Court ordered that the supplementary reference report be adopted in whole.

The supplementary reference report concluded that:

• one of the consequences of the defect was increased fuel consumption; and
• a field fix released by Toyota in mid-2020 is effective to remedy the defect.

Mediation

A mediation of these proceedings was held on 27 and 28 September 2021.  The mediation was conducted by Peter Jacobson QC.

The class action was not resolved at the mediation.  As such, the class action will proceed to an initial trial.

Initial Trial

The class action is listed for an initial trial commencing on 29 November 2021 and is scheduled to run for 4 weeks.

No action required from you

We confirm that group members do not need to do anything at this stage of the class action.

We will provide a further update after the conclusion of the initial trial.

Kenneth John Williams & Anor v Toyota Motor Corporation Australia Limited (ACN 009 686 097)

Federal Court Proceeding No. NSD 1210 of 2019 (the Proceedings)

A further case management hearing in these Proceedings took place on 7 May 2021.

At the hearing, the Federal Court made procedural orders setting out the various steps the parties must take between now and the trial due to commence on 29 November 2021.

We summarise the key steps below.

Supplementary Reference

In our last update (found here), we told you that additional technical issues remaining in dispute had been referred to the independent referee who conducted the first reference in these Proceedings.

The independent referee is currently conducting this further reference (also known as a “supplementary reference”). He has indicated that he expects to complete his supplementary reference and provide a report by 30 July 2021.

The Proceedings have been listed for a hearing on 27 August 2021 of any application in respect of the adoption of this report.

Evidence

The Applicants must prepare and exchange their evidence, both lay (i.e., non-expert) and expert, by 16 July 2021. Toyota must do the same by 1 October 2021. The Applicants may then serve any evidence in reply to Toyota’s evidence by 22 October 2021.

Common Questions

 The Court has ordered a process by which questions of fact and/or law which are common to the claims of group members (also known as “common questions”) are to be decided prior to the trial.

The parties must confer and attempt to agree on the common questions. The Proceedings have been listed for a hearing on 8 October 2021 to decide the common questions in the event the parties are unable to reach agreement.

Mediation

At this stage, the Proceedings will be referred to mediation by 17 September 2021. The mediation will be conducted by either Ray Finkelstein AO, QC or Peter Jacobson QC.

Trial

The Proceedings remain listed for a four-week trial commencing on 29 November 2021.  The trial will be conducted electronically.

Further Case Management Hearing

The next case management hearing is set down for 17 September 2021.

Further information about the case will be provided as the case progresses.

Kenneth John Williams & Anor v Toyota Motor Corporation Australia Limited (ACN 009 686 097)

Federal Court Proceeding No. NSD 1210 of 2019 (the Proceedings)

On 19 January 2021, the Court made orders regarding the next steps in the Proceedings. The orders were made following a case management hearing that took place on 19 January 2021.

We summarise the key case management outcomes below.

Pleadings

The Court made orders permitting the applicant to file a Further Amended Originating Application, and a Further Amended Statement of Claim, both of which were filed on 20 January 2021.

A copy of the Further Amended Originating Application and Further Amended Statement of Claim can be found here.

Toyota was ordered to file its defence by 15 February 2021.

Supplementary Reference

The Court has ordered that additional technical issues remaining in dispute be referred to the independent referee who conducted the first reference in this matter, which resulted in the adoption of the report dated 15 October 2020.

The Court has ordered the supplementary reference commence by 27 January 2021, and a process by which the supplementary reference is to be conducted has also been ordered.

By 30 April 2021, the referee is to indicate to the Court how long he expects to require to complete the reference and provide a report, and by 5 May 2021, the Court will determine the date by which the supplementary reference is to be completed and a report provided.

Following the completion of the supplementary reference, the Proceedings will be listed for the hearing of any application in respect of the adoption of the referee’s report.

Mediation

 The Court made orders that the Proceedings be referred to mediation to be conducted by either Ray Finkelstein AO, QC or Peter Jacobson QC, within 21 days of the hearing of any application in respect of the adoption of the referee’s report.

Trial

 The Proceedings has been set down for a four-week trial commencing on 29 November 2021.

Further case management hearing

The next case management hearing is set down for 7 May 2021.

Further information about the case will be provided as the case progresses.

Independent referee’s report

On 23 October 2020, the Federal Court of Australia adopted an independent referee’s report which concludes that the Diesel Particulate Filter System (DPF System) in all Toyota Hilux, Prado and Fortuner diesel vehicles sold in Australia between October 2015 and April 2020 was defective.

These findings are of great significance to the owners of the 250,000 affected vehicles subject of the class action, and an important step towards obtaining compensation for group members who were sold defective vehicles by Toyota.

The independent referee found that the DPF System was not designed to work effectively during normal use of the vehicles in the Australian market, and the DPF System was designed with both mechanical and software defects.

The independent referee also found that countermeasures attempted by Toyota during the relevant period were ineffective and, in some cases, made the problem worse.

A copy of the independent referee’s report can be found here.

Despite these problems, Toyota continues to market the Hilux as “unbreakable” and the Prado as being “built to take on Australia’s toughest terrain”.

A short summary of the key findings from the referee’s report can be found below.

If you are a group member, and would like to become a Represented or Registered Unrepresented Group Member, you can complete the form online here.

Summary of the independent referee’s report

What is the DPF System?

 The DPF is a filter which is intended to capture harmful pollutants, such as carbon monoxide, nitrogen oxides and diesel particulate matter, which are emitted by diesel engines. These pollutants must be continually removed from the DPF for it to remain effective and the DPF System uses a process called “regeneration” to achieve this.

What are the key defects and defect consequences found by the independent referee?

The key defects and defect consequences found by the independent referee are that regeneration of the DPF System fails to remove sufficient particulate matter from the DPF to prevent it from becoming blocked and ceasing to function effectively. This causes:

• damage to parts of the DPF System;
• excessive, foul-smelling white smoke (unburned diesel fuel) to be emitted from the vehicles;
• vehicles to require unusual or abnormal maintenance, such as repeated, unscheduled inspections, services and repairs.

Toyota claims that the countermeasures introduced in mid-2020 fix the issue. Is this correct?

The independent referee did not determine that countermeasures introduced by Toyota in mid-2020 are effective. Rather, the referee found that they were designed to eliminate the core defect and appeared to remedy the defect.

It was submitted on behalf of the applicant that it is too early to tell whether these countermeasures provide a long-term fix to the defects. The independent referee found that other countermeasures attempted by Toyota were ineffective and, in some cases, made the problem worse.

Even if the 2020 countermeasures do prove to be effective, group members in the class action will still be able to claim damages. Toyota sold defective vehicles for 5 years which continue to cause many consumers problems. Consumers did not receive what they paid for and have suffered the consequences ever since.

Did the independent referee find that fuel consumption is impacted?

The independent referee did not find that the defects do not increase fuel consumption. Rather, the effect of the independent referee’s findings was that the defects identified would have an impact on fuel efficiency, but he did not have the information needed to quantify the impact and reach a conclusion.

It was submitted on behalf of the applicant to the Court that the defects do increase fuel consumption.  Even a ‘marginal’ impact on fuel efficiency over the course of the life of a vehicle and across a class of over 250,000 affected vehicles will amount to significant damages having been suffered by the class. For example, if each group member spent an extra $200 on fuel across the life of the vehicle, across 250,000 vehicles, that amounts to the class having incurred an extra $50 million in fuel costs alone.

Mediation

At the hearing on 23 October 2020, the Court indicated that the date by which a mediation between the parties is to take place will be set at a hearing in December.

 Further information about the case will be provided as the case progresses.