Second-hand cars: No warranty? No worries

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Victorians have been handed a huge win after the Victorian Civil and Administrative Tribunal (VCAT) confirmed that a car dealer can still be responsible for problems with a faulty car even where there is no warranty.[1]

Consumer Action’s client, Ehsan Talaeibarforous, issued legal proceedings against car dealer Kayenne Pty Ltd after the transmission in his car failed three weeks after purchase in April 2015.

VCAT found that Kayenne Pty Ltd had breached the Australian Consumer Law guarantee that the car be of ‘acceptable quality’ because the faulty transmission was significant, and its costs of repair, being between $4,000 and $10,000, were too high considering the car had been purchased for $9,700.

While the car was not covered by a statutory warranty under the Motor Car Traders Act 1986 (Vic), Deputy President Lulham confirmed that that ‘the absence of a statutory warranty does not remove the consumer guarantee’.

Deputy President Lulham stated that the Australian Consumer Law operates differently from the statutory warranty under the Motor Car Traders Act because ‘rather than merely requiring a trader to do a repair which will put the car “in a reasonable condition having regard to its age”, it may allow the purchaser to reject the car and obtain a refund’.

Mr Lulham found that ‘a “reasonable consumer” would not regard the car as “acceptable” even knowing that it had travelled almost 200,000 kilometres, it cost… a fair market price for a car with a durable transmission, it came with a free Integrity Warranty… but did not come with a statutory warranty. The defective transmission is too significant a defect, and its costs of repair are too high compared to the price of the car.’

Under the Australian Consumer Law, if goods are not of acceptable quality then regardless of whether the defect is major or minor, the supplier must carry out an effective repair. If the supplier refuses to carry out such a repair, the consumer has a right to reject the good and seek a refund.

Mr Talaeibarforous incurred in excess of $4,177.70 in costs after the transmission failed. The excessive cost and delay incurred by Mr Talaeibarforous highlights the need for a specialised dispute resolution forum for consumers grappling with motor car traders. The establishment of such a forum was a recommendation of the State Government’s Access to Justice review, released in October 2016.

This client is not available for comment.

Media contact: Jonathan Brown, 0413 299 567, media@consumeraction.org.au

[1] Talaeibarforous v Kayenne Pty Ltd (Civil Claims) [2016] VCAT 1523.

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