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Oh no – your new car is a dud! Can the Australian Consumer Law help you?

Gene Schirripa

25 Feb 2019

Topics

  • Business Law

Thousands of Australian’s purchase new cars each year, but what happens if you new car is faulty? In this article, Gene Schirripa discusses a recent case that shows how the Australian Consumer Law (ACL) can protect consumers in situations like this.

Unlike some other jurisdictions, Australia doesn’t have ‘lemon laws’ to protect new car buyers. Lemon laws define when car manufacturers must repair, replace or refund defective new cars. However, in Australia, the ACL provides some protections for consumers more broadly, as this case shows.

The case

The case – Morphy v Beaufort Townsville Pty Ltd (Civil Claims) [2018] VCAT 1520 (Morphy’s case) – is about a new Range Rover, bought by Sally Morphy. The Range Rover demonstrated serious mechanical issues soon after purchase. Mrs Morphy brought proceedings against the manufacturer of the vehicle, Jaguar Land Rover Australia (JLRA), and the licensed dealer, who acted as retailer and had dealt directly with Mrs Morphy.

Mrs Morphy began to experience a number of issues with the Range Rover within the first 19,000 kilometres of use. The car’s coolant was contaminating the engine oil, which caused the issues. An expert automotive engineer gave evidence at the hearing that the contamination had led to ‘catastrophic failure’ to the engine.

The decision

The Victorian Civil and Administrative Tribunal (the Tribunal) awarded the significant sum of $283,000 in favour of Mrs Morphy. This case represents one of Australia’s largest ever reported refunds for a defective vehicle.

The Tribunal held that the Range Rover was unfit for its basic purpose and was ultimately unsafe. It said that a reasonable consumer wouldn’t accept the safety risks presented by the engine failure, especially as the Range Rover was regularly used to transport children through remote country roads. Due to these factors, the Tribunal awarded Mrs Morphy a full refund of the purchase price, plus damages and interest. Orders have not yet been made with respect to legal costs.

What does the decision mean for consumers?

If you’ve bought a vehicle, or any other product, that you believe may be defective, you may be entitled to a repair, refund or replacement under the ACL. This is the case even if the product is out of warranty. Under the ACL, the manufacturer/supplier of a good provides certain guarantees to purchasers, notwithstanding any warranty periods or other contractual terms of which the purchase is subject.

Where a ‘major failure’ can be established, as the consumer, you might be entitled to a replacement or refund of the purchase price of the defective product, as occurred in Morphy’s case.

Morphy’s case is an important decision for car purchasers in Australia and sets the standard for car manufacturers.

How can we help you?

If you’ve purchased a vehicle or other product that you think is defective, we can help you. We can advise you about your rights and entitlements under the ACL. We can also help you by preparing a claim or seeking to resolve your issues by an alternative method. Please contact us on 02 6285 8000 or by email to speak to a member of our experienced Business Law team.