In a significant ruling, the High Court of Australia has sided with consumers in a class action against Ford Motor Company of Australia concerning defects in certain vehicles. The court determined that compensation for defective vehicles must be calculated based on their diminished value at the time they were sold, without taking into account any subsequent repairs or usage.

The class action was initiated by Biljana Capic, who became the lead plaintiff in a lawsuit involving Ford vehicles sold between 2011 and 2018. The affected vehicles, which included the Ford Focus, Fiesta, and EcoSport models, were fitted with the faulty DPS6 transmission, a critical defect that led to various mechanical issues for owners.

Capic, who had purchased a Ford Focus in 2012, encountered persistent problems with her vehicle, including vibrations, gear selection malfunctions, and a loss of power, all stemming from the defective transmission. These issues were found in over 73,000 vehicles, prompting Capic to file representative proceedings in 2016, advocating for other affected consumers.

The primary judge found that the Ford vehicles exhibited at least one of five major defects. These included poor damping of vibrations, inadequate heat management, and faulty components such as clutch linings and input shaft seals. As a result, the vehicles were prone to troubling behaviours such as shuddering, grinding noises, and unpleasant odours from the clutch. The judge determined that the vehicles breached the ACL’s guarantee of acceptable quality and awarded Capic 6,820.91 Australian dollars in damages for the decreased value of her vehicle, in addition to compensation for GST, stamp duty, and financing costs, which brought the total award to 17,248.19 dollars.

When the case went to the full Federal Court on appeal, the court upheld the findings of breach but ordered that damages be recalculated to account for post-supply factors, including any repairs and use of the vehicle. The court aimed to prevent over-compensation, considering the impact of subsequent events on the vehicle’s value. Disagreeing with this approach, Capic sought intervention from the High Court.

In its ruling, the High Court overturned the Federal Court’s decision, clarifying that damages under the ACL must be based on the vehicle’s reduced value at the time it was supplied, regardless of subsequent repairs or usage. The High Court found that the Federal Court had wrongly applied hypothetical consumer knowledge to assess the vehicle’s compliance with the ACL’s quality guarantee.

The ruling reaffirmed that consumers are entitled to compensation based on the initial defect in the product, without adjustments for later repairs or changes. As a result of this ruling, the case has been sent back to the primary judge to reassess damages in line with the High Court’s decision.