Fagan v Mitsubishi Motors Australia Ltd [2025] QCAT 466

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Fagan v Mitsubishi Motors Australia Ltd [2025] QCAT 466 PARTIES: MICHAEL FAGAN (applicant) v MITSUBISHI MOTORS AUSTRALIA LTD (respondent) APPLICATION NO/S: MVL159-23 MATTER TYPE: Motor vehicle matter DELIVERED ON: 14 November 2025 HEARING DATE: 30 April 2025 HEARD AT: Brisbane DECISION OF: Member D Brown Member Lee Benjamin ORDERS: Mitsubishi Motors Australia Ltd is to pay Michael Fagan $14,500 within 28 days. CATCHWORDS: TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – GUARANTEES, CONDITIONS AND WARRANTIES IN CONSUMER TRANSACTIONS – whether motor vehicle of acceptable quality – liability of manufacturer – measure of damages Australian Consumer Law (Cth) Fair Trading Act 1989 (Qld) Motor Dealers and Chattel Auctioneers Act 2014 (Qld) Queensland Civil and Administrative Tribunal Act 2009 (Qld) Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd (2020) FCA 1672 Campbell v Caravan & RV Central Pty Ltd t/as Avan New South Wales & FCA Australia Pty Ltd [2016] NSWCATCD 90 Capic v Ford Motor Company (No 3) [2017] FCA 771 Medtel Pty Ltd v Courtney (2003) 130 FCR 182 Morphy v Beaufort Townsville Pty Ltd [2018] VCAT 1520 Nuth v Soel Products Australia Pty Ltd trading as Caravan RV CQ [2020] QCAT 369 -- 1 of 14 -- 2 Williams v Toyota Motor Corporation Australia Ltd [2022] FCA 344 APPEARANCES & REPRESENTATION: Applicant: Self-represented Respondent: F Islam – Senior Manager of legal for Mitsubishi Motors REASONS FOR DECISION Background [1] On 26 July 2023 the applicant Mr Michael Fagan (‘Mr Fagan’) filed an application – motor vehicle dispute with the tribunal, seeking the replacement of a drive battery or in the alternative compensation in the amount of $14,500 from the respondent, Mitsubishi Motors Australia Ltd (‘Mitsubishi Motors’), being the cost of a battery and the labour costs to install. The claim was purported to be made under both the Fair Trading Act 1989 (Qld) (‘Fair Trading Act’) s 50A (which related to an action under the Australian Consumer Law ‘ACL’) and the Motor Dealers and Chattel Auctioneers Act 2014 (Qld) (‘Motor Dealers Act’). [2] On 29 February 2020 Mr Fagan purchased a 2019 Mitsubishi Outlander Exceed PHEV 4WD for $47,873.05 from Norris Motor Group, trading as Redcliffe Mitsubishi, Suzuki and MG (‘the supplier’). The vehicle was an ex-demo model and came with a five-year unlimited kilometre warranty and eight-year driver battery warranty. Mitsubishi Motors is the manufacturer. It is unclear what the exact odometer reading was at the time of purchase, but it was known to be 1,334 km two weeks prior to purchase.1 [3] Mr Fagan asserts that the motor vehicle was not of acceptable quality as required under section 54 of the Australian Consumer Law (‘ACL’) due to the significant loss in the electric battery use resulting in a reduction of his ability to use the vehicle as an electric motor vehicle. The Jurisdiction of the Tribunal in Motor Vehicle Disputes [4] The Tribunal is empowered to hear and determine disputes in accordance with the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) and the ‘enabling Act’.2 Mr Fagan purports to bring these proceedings relying on both s 50A of the Fair Trading Act and Schedule 1, s 14 of the Motor Dealers Act as the enabling Acts. The relief sought by Mr Fagan was the replacement of the battery or the cost to repair the battery. At the hearing Mr Fagan confirmed he no longer wanted Mitsubishi Motors to repair the vehicle and simply sought damages for the cost of a replacement battery. [5] The Motor Dealers Act provides for a statutory warranty for ‘warranted vehicles’ sold by a motor dealer in particular circumstances. These statutory warranties are in 1 There is an unsigned contract of sale attached to the application which states the odometer reading was 39,537 km, which is clearly wrong as this is the odometer reading when the vehicle was serviced on 6 June 2023. The vehicle service on 17 February 2020 noted the odometer reading was 1,334 km. The following service a year later on 9 March 2021 noted the odometer reading was 13,169 km. 2 QCAT Act ss 9(1), 10(1)(a). -- 2 of 14 -- 3 Schedule 1 to the Motor Dealers Act and warrant that the vehicle is free from defects at the time of taking possession and for the warranty period; and any defects in the vehicle reported during the warranty period and covered by the warranty will be repaired by the warrantor free of charge.3 [6] The maximum warranty period under the Motor Dealers Act is three months from the date of possession. Noting the issues arose in Mr Fagan’s vehicle three years after possession, he has no valid claim under the Motor Dealers Act. [7] Section 50A of the Fair Trading Act provides that the tribunal has jurisdiction in relation to motor vehicle matters where an application is brought under a relevant provision of the ACL against a supplier or manufacturer for failure to comply with statutory guarantees, provided no more than $100,000 is sought. ‘Motor vehicle’ is defined in s 12(1) of the Motor Dealers Act and Mr Fagan’s Mitsubishi Outlander Exceed PHEV 4WD clearly falls within this definition. The tribunal may make the orders including require a party to pay a stated amount to another person; or requiring a party to the proceeding, other than the applicant, to perform work to rectify a defect in goods. [8] Pursuant to s 3(1)(b) of the ACL, a person is taken to have acquired goods as a consumer if ‘the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption’. This includes Mr Fagan’s motor vehicle. [9] In this case Mr Fagan is seeking the amount of $14,500, which is well within the $100,000 limit. Accordingly, the tribunal has jurisdiction to hear the applicant’s motor vehicle dispute and to determine whether Mr Fagan can obtain relief sought in the Application – Motor Vehicle Dispute filed in the tribunal under the Fair Trading Act. Guarantee of acceptable quality [10] Section 54(1) of the ACL provides that, where a person supplies goods in trade or commerce, the goods are guaranteed to be of ‘acceptable quality’. [11] Goods are defined as being of ‘acceptable quality’ if they are: (a) fit for all the purposes for which goods of that kind are commonly supplied; (b) acceptable in appearance and finish; (c) free from defects; (d) safe; and (e) durable. [12] The construction and interpretation of s 54 of the ACL was considered in Williams v Toyota Motor Corporation Australia Ltd4 where Justice Lee stated: Despite the obscure drafting of other provisions of the ACL, s 54 is relatively straightforward. The continued use of the conjunction “and” in s 54(2) makes clear that goods must possess all of the qualities listed in s 54(2), to the requisite standard, in order to comply with the guarantee of acceptable quality. Failure to 3 Motor Dealers Act sch 1 s 7(1)(a), (b). 4 [2022] FCA 344, [164]. -- 3 of 14 -- 4 possess any one of those qualities will result in failure to comply with the guarantee… [13] The Macquarie Dictionary defines the word ‘defect’ to mean ‘a fault’ or ‘imperfection’ and ‘durable’ as ‘having the quality of lasting or enduring or relating to goods which will be good for some time, as opposed to those intended to be used or consumed immediately’. [14] The question of durability is determined by having regard to how long a ‘reasonable consumer’ would expect the goods to last, taking into account the price paid, the nature of the goods and the representations made about the goods.5 The price of the vehicle is a relevant consideration, as a reasonable consumer would be entitled to expect that a high-cost item would be durable and be capable of safe and effective use over a number of years.6 [15] The test of acceptable requires consideration of what the reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods) would regard as acceptable having regard to the following matters: (a) the nature of the goods; (b) the price of the goods; (c) any statements made about the goods on any packaging or label on the goods; (d) any representation made about the goods by the supplier or manufacturer of the goods; and (e) any other relevant circumstances relating to the supply of the goods.7 [16] Whether goods are of acceptable quality is not an absolute but rather a flexible standard depending upon the application of provisions in s 54(2) and (3). This approach has been discussed in Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd (‘Jayco’) by Wheelahan J:8 The standard of acceptable quality prescribed by s 54(2) is not absolute, or a standard of perfection. It is tempered by what a reasonable consumer would regard as acceptable having regard to the several matters in s 54(3). These matters render the standard of acceptable quality elastic, and context specific: Contact Energy Ltd v Jones [2009] 2 NZLR 830 at [95] (Miller J). The significance of the components of the guarantee of acceptable quality will therefore vary with the circumstances of each case.9 [17] The tribunal has found that the time at which goods are to be of acceptable quality is the time at which the goods are supplied to the consumer.10 In these proceedings the relevant date for the assessment of the acceptable quality of the goods is the time of sale of the vehicle on 29 February 2000. However, information available after the time 5 Morphy v Beaufort Townsville Pty Ltd [2018] VCAT 1520, [72]. 6 Campbell v Caravan & RV Central Pty Ltd t/as Avan New South Wales & FCA Australia Pty Ltd [2016] NSWCATCD 90, [57]. 7 ACL s 54(3). 8 [2020] FCA 1672, [27]. 9 Ibid. 10 Medtel Pty Ltd v Courtney (2003) 130 FCR 182, [64], [70]; Williams v Toyota Motor Corporation Australia Ltd [2022] FCA 344, [165]. -- 4 of 14 -- 5 of supply may be taken into account in deciding whether the goods were of acceptable quality at the time of supply.11 Relief under the Fair Trading Act and Australian Consumer Law [18] Remedies available to consumers in relation to failure to comply with the consumer warranties are available under the ACL against both a supplier and the manufacturer. In this case Mr Fagan has not sought to include the supplier (Norris Motor Group) in the proceedings and has only named Mitsubishi Motors as a respondent, who are the manufacturers. Accordingly, the remedies available to Mr Fagan are limited to those against manufacturers in Division 2. [19] Section 271 of the ACL provides that where a guarantee under section 54 in relation to the supply of goods has not been complied with, an affected person12 may recover damages against the manufacturer, subject to some exemptions including if the guarantee is not complied with due to an act, default or omission of a person other than the manufacturer or a cause independent of human control that occurred after the goods left the control of the manufacturer. [20] Section 272 of the ACL provides that an affected person is entitled to recover damages for: (a) any reduction in the value of the goods, resulting from the failure to comply with the guarantee to which the action relates, below whichever of the following prices is lower: (i) the price paid or payable by the consumer for the goods; (ii) the average retail price of the goods at the time of supply; and (b) any loss or damage suffered by the affected person because of the failure to comply with the guarantee to which the action relates if it was reasonably foreseeable that the affected person would suffer such loss or damage as a result of such a failure. [21] This is subject to section 271(6) of the ACL which states that if an affected person has required a manufacturer to remedy a failure to comply with a guarantee by seeking they repair or replace the goods with an identical type, in accordance with an express warranty given or made by the manufacturer, the consumer is not entitled to commence an action seeking damages for the reduction in value of goods resulting from the failure to comply with the guarantee, unless the manufacturer has refused or failed to remedy the failure within a reasonable time. [22] There is a time limit for actions against manufacturers which state an affected person must commence an action for damages within three years after the day on which they first became or ought reasonably to have become aware that the guarantee had not been complied with.13 [23] Section 50A of the Fair Trading Act also provides that in motor vehicle matters where an application is brought under a relevant provision of the ACL against a supplier or manufacturer in addition to or instead of an order to pay a stated amount the tribunal 11 Nuth v Soel Products Australia Pty Ltd trading as Caravan RV CQ [2020] QCAT 369, [9]. 12 ‘Affected person’ is defined in the Schedule to include a consumer who acquires the goods. 13 ACL s 273. -- 5 of 14 -- 6 has jurisdiction to make an order to require a party to the proceeding, other than the applicant, to perform work to rectify a defect in goods. [24] In this case the application was filed within a couple of months of Mr Fagan becoming aware of a defect, so is within the required time limit. Mr Fagan as the consumer/purchaser of the vehicle meets the definition of an affected person, and therefore subject to proving that the guarantee of acceptable quality has not been complied with and evidencing any loss and damages sought, Mr Fagan is entitled to seek orders for loss or damages against Mitsubishi Motors as the manufacturer. [25] This onus is on Mr Fagan as the applicant to provide evidence to support the application. The requisite standard of proof is the balance of probabilities The applicant’s position [26] Mr Fagan identified issues with his electric battery in his plug-in hybrid vehicle in or around mid-May 2023. At the time, the vehicle was just over three years old and remained under its new car warranty which was valid for five years and the drive battery warranty which was valid for eight years or 160,000 km. Prior to the issues arising in May 2023, Mr Fagan’s evidence is that he was consistently getting between 38 to 41 km from a fully charged driver battery. In mid-May 2023 this dropped down to approximately 30 km from a fully charged driver battery. [27] Ms Fagan raised the issue with Mitsubishi Motors and the vehicle was inspected by Norris Motor Group on 6 June 2023 and Mitsubishi Motors provided a report to Mr Fagan on 20 June 2023 that the drive battery capacity had degraded by 28%. No faults or manufacturer defects were identified at that time and the cause of the degrading was deemed to be a naturally occurring phenomena due to the age and usage. At the time of the inspection of the vehicle on 6 June 2023 the vehicle had a mileage reading of 39,537 km. [28] Mitsubishi Motors declined Mr Fagan’s request to replace the drive battery under the warranty stating that the cause of concern is not considered a manufacturing defect and as such a replacement of the battery is not covered under the terms and conditions of the manufacturer’s warranty. On 4 July 2023 Mr Fagan made a further request in writing to Mitsubishi Motors to replace the battery under warranty. Mitsubishi Motors responded on 25 July 2023 confirming they would not be replacing the drive battery for the vehicle. [29] Mr Fagan noticed further reduction in the battery capacity and by the start of June 2024 he was only receiving 25 km from a full charge. Mr Fagan requested Mitsubishi re-test the battery and on 10 June 2024 Norris Motor Group reinspected the vehicle. At this time the mileage reading was 49,109 km. On 13 June 2024 Norris Motor Group provided an email to Mr Fagan confirming that the battery had now degraded by 36%. No manufacturing defect could be identified at that time and the cause was deemed to be natural occurring phenonium with lithium-ion batteries due to the age and usage of the vehicle. [30] As a result of the further degradation of the battery, on 4 September 2024 Mr Fagan wrote to Mitsubishi Motors asking them to replace the driver battery under warranty. Mitsubishi Motors responded on 26 September 2024 stating that as the matter was before the tribunal and the hearing had not been adjudicated, they cannot comment further on the matter. -- 6 of 14 -- 7 [31] Mr Fagan conducted his own research and determined that natural degradation in lithium-ion batteries does occur, but the natural degradation level is normally 1–2% per annum with a maximum of 4% per annum. As such the maximum degradation of his battery should be no more than 14% in three and a half years, not 28%. [32] In support of his claim that the degradation of the battery in his vehicle is outside of what is natural or normally expected and that the Australian industry standard is to replace batteries which go below 70% retention, Mr Fagan provided: (a) Three internet articles which give opinion on standard lithium battery degradation; (b) Evidence of the Telsa battery warranty which confirms a minimum 70% retention of battery capacity; and (c) A NSW Civil and Administrative Tribunal (‘NCAT’) order in relation to an unrelated matter where Mitsubishi Motors were ordered to supply and fit a new traction or drive battery and a print out from a web page where the applicant in the NCAT matter discussed their case. [33] Mr Fagan provided evidence of his usage and storage of the vehicle, discharge and charge of the battery and high energy demand to demonstrate that he has not contributed to abnormally high rates of battery loss.14 [34] Mr Fagan asserts that Mitsubishi Motors marketed the PHEV Outlander as a vehicle which would provide electric vehicle mode for home use, and the loss of battery capacity of 36% (as at June 2024) is a defect and does not provide the vehicle with that ability. Therefore, the vehicle is no longer ‘fit for purpose’. As it is less than five years old and continues to be under a manufacturer’s warranty, the drive battery should be replaced under that warranty by Mitsubishi. The respondent’s position [35] There is a dearth of evidence filed by Mitsubishi Motors and the limited information filed is of little assistance to the tribunal in determining the issues in dispute. [36] There is an affidavit of service confirming Mitsubishi Motors was served with the application by posting it to the company on 1 August 2023. The application has a notice on page 5 which states within 28 days after a respondent is given copy of the application they must respond to the application by completing and filing a form 60 response and/or counter application – motor vehicle dispute. Despite this notice, Mitsubishi Motors has filed no response in the proceedings. As such, other than what can be gleaned from the letters and emails from Mitsubishi Motors as filed by the applicant, there was little evidence provided to the hearing outlining Mitsubishi Motors’ defence to the claim against them. [37] The only evidence filed by Mitsubishi Motors was a copy of the warranty and submissions in response to the interlocutory application made by the applicant in which Mitsubishi Motors assert that no weight should be placed on Mr Fagan’s evidence from internet articles about the standard level of degradation in a lithium- ion battery due to issues of hearsay, lack of expertise and lack of relevance. However, 14 Statement of Mr Fagan provided on 25 October 2024. -- 7 of 14 -- 8 they provided no evidence of their own to counter the information or to evidence what is the usual degradation in the lithium-ion batteries used in this vehicle. [38] Even when directions were made by the tribunal on 16 October 2024 that Mitsubishi Motors must file any further statements of evidence relied upon by 29 November 2024, no statements were provided in response. The only evidence which Mitsubishi Motors filed to rely upon was a copy of the warranty document. The Hearing [39] Mr Fagan was the only witness for the applicant, and he was cross examined by Mitsubishi Motors. He presented as an honest and credible witness. His statements in the hearing were consistent with his written evidence. [40] Mitsubishi Motors presented as underprepared for the hearing. The representative appearing had misunderstood their obligations to file a response, misunderstood the nature of application being under the ACL and did not appear to have all of the material which had been served on Mitsubishi Motors. Despite this, they did not seek to request an adjournment when given the opportunity to do so. [41] Mitsubishi Motors presented no witnesses at the hearing. Their representative advised they were going to make a member of the technical team available for cross examination, but that person was on leave. Despite this, Mitsubishi Motors did not make any other alternative witness available and did not request an adjournment to enable the witness who was on leave to attend. As a result, Mr Fagan’s evidence was largely uncontested. Findings [42] The applicant has provided evidence which is accepted by Mitsubishi Motors that as of 6 June 2023, when Mr Fagan had owned the vehicle for just over three years and three months and the vehicle had been driven 39,537 km, the drive battery capacity had reduced by 28%. Further as of 10 June 2024, when Mr Fagan had owned the vehicle for just over four years and three months and the vehicle had been driven 49,109 km, the drive battery capacity had reduced by 36%. This demonstrates in 12 months and just under 10,000 km, the battery had degraded a further 8%. [43] The key issue to be determined is whether this loss in battery capacity is a defect or fault which makes the vehicle not fit for purpose or whether it is natural degradation, within a range to be expected and is not a fault or defect. [44] Whether goods are of acceptable quality is not an absolute or a standard of perfection and while it is accepted that it is reasonable to accept that some parts of a motor vehicle may have to be adjusted, repaired, or replaced within a manufacturer’s warranty period,15 a consumer should not expect that a brand-new or near new motor vehicle would come with major defects that need to be repaired or replaced within the first few years. In Campbell v Caravan & RV Central Pty Ltd t/as Avan New South Wales & FCA Australia Pty Ltd16 NCAT stated: 15 Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd (2020) FCA 1672. 16 [2016] NSWCATCD 90, [57]. -- 8 of 14 -- 9 A reasonable consumer would also be entitled to expect that such a high-cost item would be durable being capable of safe and effective use over a number of years (or at least many thousands of kilometres). [45] Mr Fagan accepts that natural degradation of electric car batteries does occur but states the normally degradation of electric batteries in vehicles occurs at 1–2% per annum with a maximum of 4% per annum. As the battery in his vehicle has degraded significantly more than this, he asserts it demonstrates a fault which existed at the time of purchase as his battery capacity is reducing at approximately 8% a year. Mr Fagan asserts you pay a premium of between $10,000 to $15,000 for a PHEV (plug in hybrid electric vehicle) above a hybrid and a normal petrol or diesel vehicle and as such he wants a PHEV not a hybrid. However, due to the loss in battery capacity his car is no longer fit for purpose as a PHEV. [46] Mr Fagan’s evidence is that no one at Mitsubishi Motors would speak to him about how they assessed the loss of the battery was natural degradation or explain to him what the acceptable range of loss is for a lithium-ion battery of this nature, which is why he had to do his own research into the issue. He came to the hearing wanting to ask someone from Mitsubishi Motors why they say this is natural degradation, what tests they conducted to come to that conclusion and why they won’t comply with the warranty on the car when he has a battery that does not work. He was unable to ask any of those questions, as no witnesses from Mitsubishi Motors were made available. [47] In absence of advice from Mitsubishi Motors, he states he was forced to seek advice from elsewhere and did his own research, which is why he provided three articles about lithium-ion batteries to the tribunal. In his research he found no articles that indicate there is an average of 8% natural degradation. The articles he provided indicate natural degradation occur at rate of 1–2%. He accepted under cross examination that he had not sought expert advice from an EV specialist, but he did seek advice from Mitsubishi Motors, who he thought were the experts, but they refused to provide it. [48] No weight has been placed on the information provided by Mr Fagan in relation to an NCAT order made in 2021. Each case must be determined on their own individual factors and just because Mitsubishi Motors had to replace a battery in another vehicle, does not demonstrate a fault in this vehicle. In addition, from the limited information available about the matter it appears this was a claim for an express warranty under s 56 of the ACL, which is different to the basis of this claim in relation to the vehicle not being of acceptable quality. [49] No weight has been placed on the information provided by Mr Fagan about the warranty for Telsa vehicles. This is of no relevance to these proceedings as it is a different manufacturer and relates to fully electric vehicles not plug in hybrid electric vehicles. [50] Mitsubishi Motors assert that the level of degradation is acceptable given the circumstances how the vehicle was operated and that there is a lack of evidence of any defects. They assert that no weight should be placed on the website articles provided by Mr Fagan to evidence the usual natural degradation of the battery as being between 1–2% per annum based on the fact the expertise of the writers of the articles are unknown and the articles do not appear to relate to the specific battery within his vehicle. -- 9 of 14 -- 10 [51] Mitsubishi Motors’ position appears to be that as no manufacturing defect could be identified as there was a warning system which had not provided any warning lights/notifications, the cause of the loss in battery capacity must be the natural occurring degradation phenonium within lithium-ion batteries which deteriorate with the aging and use of the vehicle. They did not however provide any evidence of what testing had been undertaken in the vehicle and what the results show. They also did not provide any evidence to demonstrate what the standard level of natural degradation is to be expected in this battery, or in lithium-ion batteries used in PHEV as a whole. Nor were they able to confirm what the level would be when the battery would no longer be viable and not fit for purpose [52] Mitsubishi Motors accept that there is a warranty in relation to the battery but assert that this issue with the battery is not covered under the warranty as the warranty only covers for defects of material and workmanship and does not cover any wear and tear or gradual reduction of the operating performance of the vehicle consistent to the age of the vehicle or distance travelled. Mitsubishi Motors assert that the loss of battery capacity is the latter, but again provided no evidence to support how 36% loss in battery capacity is to be expected after driving just under 50,000 km in four and a quarter years. [53] Mitsubishi Motors assert that they have not made any representation about the level of degradation which will occur in the car’s electric vehicle. It was conceded by Mitsubishi Motors that prior to 2018 there was information on their website that said the battery in their PHEV vehicles should not go below 20% which was held to be an implied warranty and for all new vehicle from 2022, as the technology has improved, they now provide a warranty that the battery will not reduce below 66% of usable capacity. However, there was no expressed warranty about the level of degradation of the battery in vehicles manufactured from 2019 to 2021. [54] Mitsubishi Motors conceded that if the battery ceases to work entirely, they would likely replace it, but at present it is still working. They assert the battery has not failed, just degraded. The vehicle still meets its purpose in that it is still able to be driven but it just uses more petrol. [55] It is unclear as to what testing has occurred to make the assertion that this is natural degradation. There are two invoices filed by Mr Fagan from when the battery capacity was checked by the supplier, Norris Motor Group. The first invoice dated September 2023 states Norris Motor Group checked for fault codes and observed there was none, carried out a drive test and then complied data to send to Mitsubishi Motors for advice. Mitsubishi Motors’ response was the snapshot shows natural degradation of 28% of the drive battery due to age and usage which is a naturally occurring phenomena with lithium-ion batteries and no manufacturer defect can be identified. No evidence was provided however to demonstrate what data was relied upon for that finding, other than the fact no fault codes were recorded, or how they determined that this was natural degradation and not a defect or fault in the battery. [56] The second invoice from the test the following year in June 2024 provides largely the same information. It confirms an inspection was carried out on the battery which demonstrated 36% loss of capacity in the drive battery which was considered to be natural degradation due to the age and usage of the vehicle and no manufacturing defect can be identified. Again, no information has been provided to evidence what testing was undertaken, what the results showed and why this led to the assertion that this was natural degradation. -- 10 of 14 -- 11 [57] Mitsubishi Motors rely on the case of Capic v Ford Motor Company (No 3)17 (‘Capic’) to assert that Mr Fagan has the engineering burden of proof to evidence what the problem with the battery is. The tribunal does not accept that this case supports that proposition. Respectfully, the respondents appear to have misunderstood the findings and relevance of the Capic case to this matter. The facts in that case are significantly different to this matter, as Capic was a class action matter about an allegedly defective transmission in certain vehicles manufactured by the respondent motor vehicle company. [58] As noted at paragraph [8] of Capic, there is a distinction between the unacceptable quality of a vehicle being established, on the one hand, by its constellation of symptoms and, on the other, by proving the root cause of those symptoms. The engineering burden only arises when a party is trying to prove the latter, as is necessary in a class action case. In this case Mr Fagan is not providing evidence to demonstrate the root cause but is asserting the symptoms of the loss of battery capacity demonstrates that his vehicle is not of acceptable quality. He is not suggesting that there is some inherent defect in the 2019 Mitsubishi Outlander Exceed PHEV 4WD as a whole, simply that his vehicle is not of acceptable quality. [59] Mitsubishi Motors also appear to be asserting that Mr Fagan has to prove the negative, that the battery loss is not natural degradation. That is not the test. An applicant must prove their case on the balance of probabilities, meaning a claim is proven if it is more likely than not to have occurred (over 50%), proving the negative is not the goal. To prove a case, an applicant must present evidence that convinces the tribunal that their case/version of events is more probable than the opposing one. [60] Mitsubishi Motors accept the battery capacity had reduced to 64% of its original capacity as of June 2024 but does not accept that this is a defect or fault as the battery monitoring unit which monitors the battery had not illuminated an error. They however provide no explanation as to why the battery has had such a marked reduction in capacity, other than stating this natural degradation. While Mitsubishi Motors have explained in theory all the potential ways a battery can derogate as they filed limited material and made no witnesses available at the hearing, they provided no cogent evidence to demonstrate why or how Mr Fagan’s battery has derogated. [61] Mitsubishi Motors sought to make submissions as to that the cyclical nature of degradation being higher for a PHEV than EV and that degradation may be higher in a hotter country like Australia. They however provided no cogent evidence to support either of these propositions and despite knowing Mr Fagan relied on articles to support his argument that the standard level of natural degradation was only 1–2%, they provided no evidence to contradict this evidence and could not even provide a clear answer as to what was considered usual or reasonable battery loss from natural degradation of this type of lithium-ion battery. [62] This was an almost new vehicle purchased for $47,873.05. It had been used for approximately six months as a test car and driven potentially around 1,500 km at the time Mr Fagan had purchased it. At that price and being a near new vehicle, it is expected that the vehicle would be durable and be fit for purpose for some time. The battery itself is integral to the performance of the electric vehicle. Mitsubishi Motors conceded that if battery is not acceptable quality the car is not of acceptable quality. 17 [2017] FCA 771. -- 11 of 14 -- 12 [63] The degradation of the battery of 36% as at June 2024 does seem high and the battery is continuing to lose capacity. Based on fact that battery appears to be losing capacity at 8% a year (noting the battery had lost 28% after three and a quarter years of ownership and lost a further 8% in the next year) by the timing of this decision, it is likely the battery capacity may now be little over 50% of the original capacity. [64] Mr Fagan asserts the battery capacity has reduced from an average of 38–41 km per charge to only 20–25 km per charge. This means Mr Fagan can only go on a 10–12.5 km round trip using the electric vehicle without needing to convert to the petrol engine. Mr Fagan asserts that as a result he can now no longer go to his local shops and home, without needing to resort to the petrol engine. This hardly seems fit for purpose for a plug-in hybrid electric vehicle. [65] Mitsubishi Motors state the battery loss is consistent with the age and use of the vehicle, however provided no evidence about Mr Fagan’s specific use of the vehicle. There is no suggestion that anything Mr Fagan has done has contributed to the loss in battery capacity. Mr Fagan’s evidence, which is undisputed, is that when he bought the vehicle he was aged in his early seventies, and he is the sole driver of the vehicle. He drives the vehicle in a manner to maximize distance covered by the home charge and only drives approximately 12,000 km per year.18 [66] Mr Fagan has attempted to store and use the vehicle in a manner to maximise the battery life. The vehicle is garaged in a cool, underground ventilated carpark and the battery has never been subject to a fast charge and is home charged by a normal single phase power outlet, which he understands to be considered the optimum method to minimize natural degradation. The battery has never been completely discharged as this is controlled by the car’s computer, as programmed by Mitsubishi Motors.19 [67] The tribunal does not need to make a determinative finding on what is the usual level of natural degradation of lithium-ion batteries as used in the 2019 Mitsubishi Outlander Exceed PHEV 4WD in order to determine if the vehicle is of acceptable quality and has not been provided sufficient evidence from the parties to make any clear finding. The question is whether this particular vehicle bought by Mr Fagan is of acceptable quality, regardless of what the level of natural degradation is. [68] Considering all of the evidence in the proceedings, and particularly noting that it is accepted by all parties that after four and a quarter years and driving only around 48,000 km (which is only 30% of the maximum allowable kilometres under the eight year battery warranty) the vehicle’s drive battery had reduced to only 64% of the original battery capacity, and only lasted 20–25 km per charge, the tribunal finds on the balance of probability that there was a defect with the electric battery in the vehicle. The tribunal does not accept the respondent’s submission that as the vehicle can be driven it still meets its purpose. The ongoing reduction of the battery capacity, reducing to 72% capacity within three and a quarter years and then to 64% a year later, with an average battery loss of 8% per annum, demonstrates a lack of durability with the electric battery, which means the vehicle is no longer fit for its purpose as a PHEV vehicle. [69] As no other cause has been identified and there is nothing to suggest that Mr Fagan’s use or storage of the vehicle has contributed to any issue and given it is accepted by 18 This is consistent with the odometer readings on the car service manual. 19 Statement of Mr Fagan provided on 25 October 2024. -- 12 of 14 -- 13 all parties that there is an ongoing, increasing level of loss of battery capacity, the tribunal accepts that this is a latent defect that would have been present at the time of purchase, but only became evident at the later date. The tribunal accepted Mr Fagan raised the defect in a very timely way with both the supplier and Mitsubishi Motors as the manufacturer once he became aware of it and requested it be repaired under the warranty which was refused. [70] The tribunal finds that a reasonable consumer fully acquainted with the state of the motor vehicle at the time of purchase would not regard it as free from defects and durable. The tribunal finds on the balance of probabilities that the vehicle was not of acceptable quality, as it was not free from defects. Entitlement to damages [71] Damages are designed to compensate the consumer for the amount of loss they have sustained. Section 272 of the ACL sets out two bases for damages against a manufacturer. The first is for any reduction in the value of the goods, resulting from the failure to comply with the guarantee, below the price paid or the average retail price at the time of supply.20 This involves an assessment of the true value of the vehicle at the time of supply, taking into account the hidden defect. This has not been sought by Mr Fagan and the tribunal does not have evidence to award damages under this basis. The second is for loss or damage suffered by the affected person because of the failure to comply with the guarantee if it was reasonably foreseeable that the affected person would suffer such loss or damage as a result of the failure.21 Mr Fagan’s claim for $14,500 appears to be brought under s 272(1)(b). [72] The tribunal finds there is jurisdiction to award damage as the guarantee under s 54 of acceptable quality apply to this vehicle and the tribunal has found that guarantee has not been complied with. None of the exemptions in s 271(2) of the ACL apply in this case and there is no express guarantee being relied upon in these proceedings, but in any case, Mr Fagan did request Mitsubishi Motors replace the battery and they refused to do so. [73] Mr Fagan’s request for $14,500 in damages consists of $13,500 being the cost of a replacement battery and $1,000 for the labour costs to have the battery. He is not seeking any additional costs of the hearing, such as reimbursement of the filing fee. Mr Fagan’s evidence was that these figures are based on what the Mitsubishi dealer at Redcliff told him would be the cost of a new battery. [74] Mr Fagan was not challenged or questioned about the basis of how the $14,500 was calculated and no evidence was provided by Mitsubishi Motors to contradict or dispute this cost. Mitsubishi Motor’s argument was simply that Mr Fagan is not entitled to damages and has not proven his damages. [75] As the tribunal has found that the vehicle is not of acceptable quality due to the loss of battery capacity, the tribunal accepts that the requirement to replace the battery is a reasonably foreseeable cost, as a consequence of the fault or defect in the battery resulting in significant loss in battery capacity. As there is no evidence to the contrary and Mr Fagan asserts the damages he seeks is based on the cost the local Mitsubishi dealer advised him would be the costs, the tribunal accepts the amount of $14,500 is 20 ACL s 272(1)(a). 21 Ibid s 272(1)(b). -- 13 of 14 -- 14 a fair and reasonable cost to rectify the faulty battery, and accordingly the tribunal will order these damages be paid to Mr Fagan. [76] Section 50C of the Fair Trading Act provides that the tribunal may make a costs order against the respondent in the amount of the prescribed filing fee paid by the applicant. This power is subject to s 102(1) of the QCAT Act which provides that the tribunal may make a costs order if the interests of justice require it. Mr Fagan has indicated he is not seeking costs and therefore it would not be appropriate to stray from the ordinary position that each party bear their own costs. [77] Accordingly, the tribunal orders that Mitsubishi Motors is to pay Michael Fagan $14,500 within 28 days being damages in relation to the loss associated with the failure to comply with the guarantee of acceptable quality. -- 14 of 14 --