Last week, the Federal Court of Australia dismissed a claim from the ACCC that Jayco had acted unconscionably in its dealings with four of its customers. While it wasn’t all doom and gloom for the ACCC, finding some minor wins, ultimately it was quite a convincing defeat for the regulator.
Through its suppliers, Jayco sold a number of recreational vehicles (RVs) with defects that included collapsed roofs, vibrating doors, unusable water tanks and leaking bed lids. The four customers the subject of the ACCC’s claim, who had purchased RVs subject to such defects, sought replacements or full refunds and were denied such remedies. Instead, Jayco elected to repair its defects under its 12-month warranty.
The ACCC claimed that Jayco had engaged in unconscionable conduct by refusing to offer a refund or replacement RV. In making this claim, the ACCC essentially argued that:
The RVs contained defects for which Jayco was responsible;
Under the ACL, the customers were entitled to reject the RVs and either receive a refund or replacement; and
Jayco could insist on its right to repair the RVs under their warranties, rather than provide a refund or replacement and this meant Jayco effectively controlled the process and obstructed the customers from obtaining a refund or replacement from the suppliers
The ACCC acknowledged that Jayco may not have consciously shut the customers out from the right to reject the RVs under the ACL, but that nonetheless was the effect of its conduct. They argued that Jayco had regard only to its commercial interests, and not to the rights of the customers under the warranty or the ACL, nor the distress or frustration of the customers.
While the Court found that three of the four customers were in fact entitled to a refund or replacement, it dismissed the ACCC’s claim that Jayco had acted unconscionably in its dealings. It found that Jayco had acted in good faith with all four of the customers.
Some of the key drivers behind the Court’s decision were that:
While the consultations that Jayco had with its suppliers regarding the decision to repair, rather than provide a refund or replacement, may have influenced the supplier’s decisions, Jayco did not actually have control over these decisions. The consultations were normal and acceptable business practices and the evidence fell short of proving control of the decision-making process from Jayco.
In terms of the decisions to only repair, Jayco’s assessments that the defects were only minor and capable of easy repair were reasonable and made in good faith, despite customers not having liked such assessments.
It is important to consider the place of manufacturers’ warranties within the framework of rights created by the ACL. Indeed, under the ACL, Jayco was not directly liable to provide a refund or replacement, even in the event of a major failure, but instead its liability arose under its own warranty.
It is worth noting the small win the ACCC had, proving that Jayco had engaged in misleading or deceptive conduct with one out of the four customers. Jayco was found to have misled the customer by stating that they were not able to get a refund or replacement, when in fact the Jayco warranty did not affect the customer’s rights under the ACL.
By Sam Williams and Louise Gehrig