Many of Australia's most popular diesel vehicles are involved in "one of the biggest claims in Australia's legal history" alleging Toyota used "defeat devices" to hide vehicle emissions and evade Australian standards.
Up to half a million Australian car owners could be represented in the class-action lawsuit lodged in Victoria's Supreme Court on Monday by Maddens Lawyers, with its lead lawyer warning the company could be forced to pay out up to $1 billion.
Popular vehicles targeted in the lawsuit range from four-wheel drives to utes and vans including the Toyota Hi-Lux, LandCruiser, RAV4, Prado, Fortuner, Granvia and HiAce.
Toyota vehicles purchased since February 2016, whether new or second-hand, will be included in the case.
In a statement, however, Toyota said it stood by its reporting of all vehicle emissions and would defend itself "rigorously".
Maddens Lawyers special counsel Brendan Pendergast said the lawsuit would claim some Toyota vehicles used "sophisticated engineering" and "multiple sensors" to comply with emissions standards during test conditions but not in real-world use.
"We allege that not through accident but through deliberate engineering intervention, these vehicles are fitted with what are generically called defeat devices," he said.
"When the vehicle comes under load or achieves speeds commonly required in the usual purchaser of a vehicle, the vehicle no longer complies with the emission standards."
Mr Pendergast claimed the vehicles' true emissions would appear only when the vehicle was driven at higher speeds, outside testing, and may have convinced buyers to invest in Toyota vehicles under false pretences.
"Many Toyota owners would be shocked, disappointed," Mr Pendergast said.
"'This class action is one of the biggest claims in Australia's legal history. It could result in each participant receiving tens of thousands of dollars of compensation."
The lawyer estimated a settlement in the case, if proven in court, could reach between $500 million and $1 billion.
Maddens Lawyers, whose court action is being funded by a British legal firm, is calling on Toyota vehicle owners to join its class action online.
But Toyota Australia issued a statement rejecting claims made in the lawsuit.
"Toyota Australia stands by its reporting, monitoring and evaluation standards in relation to the emissions for all its vehicles," it said.
"We will defend the class action announced today rigorously."
Toyota is the largest vehicle manufacturer in Australia by a significant margin, according to the Federal Chamber of Automotive Industries, selling more than 14,000 vehicles in September. The Toyota Hi-Lux was Australia's top-selling vehicle for the month.
Greenpeace Australia Pacific senior campaigner Lindsay Soutar said claims made in the lawsuit would be "incredibly disappointing" for Australian motorists.
"If the allegations are made out, the case is another alarm bell to Toyota that it needs to clean up its act and get in the fast lane with electric vehicles," Ms Soutar said.
The class-action lawsuit is the latest in a series of court cases against vehicle manufacturers over defeat devices, or hardware, software and designs that change the way vehicles operate during emission testing to evade standards.
Another two Australian law firms are pursuing class-action lawsuits against Toyota subsidiary Hino over emissions from its trucks.
In a March statement, the company it had "identified misconduct" related to its compliance with emissions regulations.
In December 2019, Australia's Federal Court ordered Volkswagen to pay $125 million for masking emissions from its diesel vehicles - the second largest penalty issued for a breach of Australian Consumer Law.
