But compensation payouts for more than 260,000 Toyota HiLux, Prado and Fortuner owners will be reduced
The Federal Court has dismissed Toyota Australia’s June 2022 appeal against its April 2022 decision to force the nation’s number one auto brand to pay compensation to the owners of almost 265,000 Toyota HiLux, Prado and Fortuner owners due to defects linked to diesel particulate filters (DPFs) in their vehicles.
But at the same time, Justice Moshinsky and the Full Court of the Federal Court capped compensation payments to 10 per cent (down from 17.5%) of the value of each model’s “average retail price” – before Toyota’s 2020 ‘field fix’ is taken into account when determining RIV (reduction in value) damages.
The matter of assessing damages on this amended legal basis has now been referred back to the original trial judge, but Toyota’s potential payout figure will be far less than the $1.85 billion previously estimated – and less than the $1.3 billion suggested by some media outlets today.
The exact compensation figure that might be received by affected owners in the class action lawsuit is now also impossible to calculate, but will be far less than the $7000 previously estimated (based on the original ruling of 17.5 per cent of each model’s average retail price) and also less than the $5000 amount estimated by one report – which appears to be a simple calculation of 10 per cent of $50,000.
In April 2022, the Federal Court ruled that 264,710 Toyota HiLux, Prado and Fortuner vehicles – sold between October 2015 and April 2020 – failed to comply with the statutory guarantee of “acceptable quality” under Australian Consumer Law.
Toyota Fortuner
Toyota appealed that decision in June 2022, after it first publicly addressed the DPF issue in June 2020, confirmed a DPF upgrade for affected vehicles in August 2020 and avoided fines from the Australian Competition and Consumer Commission (ACCC) when it agreed to ‘review and improve’ its compliance processes in December 2020.
All of the 264,000-plus vehicles involved are fitted with a four-cylinder turbo-diesel engine – either the 2.8-litre 1GD-FTV or the 2.4-litre 2GD-FTV – that was found to produce excessive white smoke due to its exhaust system’s DPF, which was strongly criticised in a technical report presented as part of the class action.
Toyota’s 2020 ‘field fix’, which amounted to a DPF software update and manual override switch, put many fleet and privately-owned vehicles out of action for extended periods after requiring several dealership visits.
But in effect, the latest hearing has now found that the value of these rectified vehicles has not reduced as much as it previously estimated, due to these ongoing running changes.
Toyota HiLux
In his summary of the Full Court hearing, Justice Moshinsky said:
“In relation to the grounds of appeal relating to liability issues, i.e., Grounds 1, 2 and 3, we have decided that those grounds should be rejected.
“In relation to the grounds of appeal relating to construction of the relevant provisions and the conceptual approach to reduction in value damages, i.e., Grounds 4, 8 and 9, we have decided that those grounds should be upheld.
“In brief summary, we consider it necessary and appropriate in the circumstances of this case to have regard to the availability of the 2020 field fix in determining reduction in value damages.
Toyota LandCruiser Prado
“In relation to the grounds of appeal relating to the assessment of the reduction in value of the relevant vehicles, we have decided that Grounds 10 and 12 succeed in part, but otherwise that these grounds should be rejected.
“We have reassessed the reduction in value of the relevant vehicles, before taking into account, as we consider necessary, the availability of the 2020 field fix, as being 10 per cent of the [average] price.
“We have set aside the primary judge’s aggregate damages award and certain related orders, including the award for excess GST damages.
“In these circumstances, we consider it appropriate for the matter to be remitted to the primary judge for reassessment of the reduction in value damages and damages for excess GST in accordance with the reasons of the Full Court.”
Toyota says is now reviewing the decision of the Full Court of the Federal Court of Australia.
“We remain committed to assisting any customer whose vehicle has experienced the DPF issue and to providing a free-of-charge remedy that has been available since 2020,” said Toyota Australia in a statement today.
“We believe we have implemented customer-focused and technically grounded measures to resolve customer concerns.
“Toyota will consider the judgment carefully before making any further comment.”
The matter will now be remitted for reassessment of reduction in value damages under Sections 271 (1) and 272 (1a) of the ACL, after which each party will file written submissions on consequential orders and costs within 14 days, and responses to them within 28 days.
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Keyword: Toyota Australia loses DPF class action appeal