Calls for motor vehicle ombudsman to help Victorian consumers to resolve car disputes

In February 2020, Nicholas Moon was excited to buy a second-hand ute for more than $22,000.

The apprentice landscaper paid a small deposit, and with the help of his mother obtained finance for the remaining cost of the 2012 vehicle, paying back around $100 a week.

Four days after he left the car dealer, Cranbourne Motor Group (CMG), the vehicle broke down.

“I didn’t think that was good … so we organised a tow truck to get it sent to the mechanic.”

The ute was eventually taken back to CMG, where a mechanic replaced the turbocharger and did some other work valued at around $700, paid for by the dealer.

In June 2020, the engine suffered a catastrophic failure that required it to be replaced. The dealer quoted Mr Moon more than $10,000 for repairs.

Under Australian Consumer Law (ACL), goods sold need to be of “acceptable quality” and “fit for purpose”. If a repair is conducted, it needs to be done with “due skill and care”.

Following the second breakdown, Mr Moon’s mother, Michelle, believed CMG had breached ACL by selling a vehicle that was not of acceptable quality.

She also questioned whether the repairs conducted in March 2020 were performed with due skill and care.

Ms Moon said she tried multiple times to get a refund and requested details of the repairs conducted after the first breakdown but CMG refused, instead offering a discount on the quoted repairs.

“We’ve just paid $23,000 for a car, we’ve had it a few months, we shouldn’t have to be paying another $10,000 to get it fixed,” Ms Moon said.

“You buy a car with a roadworthy, what else are you meant to do?”

Appeal to VCAT dismissed

When Consumer Affairs Victoria was not able to resolve the dispute, the family hired lawyers and went to the Victorian Civil and Administrative Tribunal (VCAT).

The VCAT process took more than a year and cost the family thousands of dollars in legal fees.

CMG told VCAT “none of the consumer guarantees” had been breached and “it was a failure by Mr Moon to maintain the vehicle to an acceptable standard which ultimately brought about its sudden demise”.

Mr Moon’s application was dismissed by the tribunal.

“On the limited evidence available to me, I am unable to find that the issues with the vehicle which gave rise to the ultimate failure of the engine, are attributable to the condition of the vehicle at the time of purchase, as distinct from some other cause, for example, Mr Moon’s usage and maintenance in the period leading up to the breakdown,” the VCAT member said.

“No-one ever wants to go into debt to their parents, and then for this to happen and knowing full well I can’t afford to pay them back, it was quite a hard pill to swallow.”

Ms Moon said it was difficult to get independent evidence from an expert mechanic about the car’s faults due to lockdowns and the engine having already been removed by CMG.

In a statement, CMG said it welcomed “the decisive findings of VCAT that CMG fully complied with all our consumer responsibilities”.

CMG is now pursuing the family for costs.

Ms Moon said the whole process with Consumer Affairs Victoria and then VCAT had been incredibly stressful and “took over our lives”.

The family has backed calls for a motor vehicle ombudsman to help people who buy a second-hand car that breaks down shortly after purchase.

“It could have changed everything,” Mr Moon said.

“It could have helped us by having someone assess the situation.”

Faster, cheaper dispute resolution needed

Consumer Action Law Centre (CALC) chief executive Gerard Brody said cases like Mr Moon’s showed why Victoria needed a motor vehicle ombudsman.

“The current system is inaccessible, costly and slow. A motor vehicle ombudsman would provide a quick, fair and accessible access to justice,” he said.

In the lead-up to November’s state election, CALC and WEstjustice Western Community Legal Centre have called on the government to commit to implementing an ombudsman in 2023.

Ombudsman schemes exist for utilities providers, telcos, lenders and insurers — CALC says because car dealers are licensed by the government, the introduction of an ombudsman would be an “easy step” to enhance trust in the sector.

“There are a lot of barriers against taking a case against a car dealer to VCAT, including the costs; often you must get your own legal assistance and you also have to prove your case,” Mr Brody said.

“Consumers are not experts in cars and VCAT aren’t experts in cars, so you need an independent expert report to make a finding … those reports can cost thousands of dollars.”

When CALC ran a VCAT case for a client, the legal costs were estimated at more than $30,000 for an $8,000 vehicle claim, Mr Brody said, adding that around 30 per cent of calls to CALC’s legal advice lines about consumer guarantees related to defective cars.

The Australian Competition and Consumer Commission has said that at a state and territory level, complaints about motor vehicles were the most common, with thousands of disputes every year.

No promises for an ombudsman

The state government is yet to commit to a motor vehicle ombudsman.

In a statement, a spokesperson said “anyone who purchases a vehicle that doesn’t work as it should is entitled to a refund, replacement or repair under the Australian Consumer Law”.

“We encourage anyone who has an issue with a new or used motor car trader to contact Consumer Affairs Victoria who will investigate.”

The Opposition’s consumer affairs spokesperson, Roma Britnell, said rather than create another level of bureaucracy, the government needed to fix the system already in place.

“The VCAT system was set up to help people with disputes such as settling claims relating to motor vehicle purchases; the system is there, it’s just been poorly managed,” she said.