NCAT orders refund and return for lemon vehicle in the case of Irons-McLean v Autonation NSW Pty Ltd & Stellantis (Australia and New Zealand) Pty Ltd
In a decisive win for consumers under Australian Consumer Law, the NSW Civil and Administrative Tribunal (NCAT) found that a brand-new Jeep Wrangler Overland was a defective motor vehicle suffering from a major failure within the meaning of the Australian Consumer Law. The Tribunal ordered the dealer to accept the return of the vehicle and refund $93,524.65 to the purchaser, with the manufacturer indemnifying the dealer for the same amount.
Arida Lawyers assisted Ms Irons-McLean throughout the dispute, including preparing the formal letter of demand and rejection notice, drafting the Points of Claim, and assembling evidence that ultimately secured a successful outcome.
This case is a powerful reminder that when you are dealing with a lemon vehicle, prompt legal engagement and a carefully prepared claim can be the difference between walking away empty-handed and securing a full refund with damages.
Dealers and manufacturers may dispute your rights, but, as this case shows, the law is on the side of the consumer when the evidence is presented clearly and strategically.
If you believe you have purchased a defective motor vehicle, or a dealer or manufacturer has refused your request for a refund or replacement, contact Arida Lawyers today for a free 10-minute telephone consultation. We will assess your situation, advise on the strength of your claim, and outline the best strategy to protect your rights and achieve the remedy you are entitled to under the Australian Consumer Law.
Irons-McLean v Autonation NSW Pty Ltd & Stellantis (Australia and New Zealand) Pty Ltd [2025] NSWCATCD
Key Takeaways
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Multiple safety-critical faults, repeated over months, made the vehicle unsafe and not of acceptable quality.
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The consumer’s formal rejection under the ACL, prepared by Arida Lawyers, was valid and binding on the dealer.
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Multiple warranty repairs failed to resolve the defects, strengthening the major failure finding.
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Refund of purchase price plus hire car, toll costs, and expert and filing fees were ordered. Legal fees were not recoverable as the applicant self-represented at the hearing.
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The manufacturer was ordered to indemnify the dealer under s 274 of the ACL.
Introduction
This case concerns a lemon vehicle, a 2023 Jeep Wrangler Overland, that developed serious, safety-related faults within months of delivery. The purchaser, assisted by Arida Lawyers, rejected the vehicle under the ACL and sought orders for a refund, damages, and costs. NCAT agreed that the vehicle had suffered a major failure, awarding comprehensive relief against both the dealer and the manufacturer.
Factual Background
The proceedings in Irons-McLean v Autonation NSW Pty Ltd & Stellantis (Australia and New Zealand) Pty Ltd [2025] NSWCATCD was heard in the Consumer and Commercial Division of the NSW Civil and Administrative Tribunal. The dispute arose from the purchase of a brand-new 2023 Jeep Wrangler Overland in mid-October 2023 for a total price of $86,000, comprising a $26,000 trade-in and further payments totaling $60,000. The vehicle was delivered around 20 October 2023 and was covered by a five-year or 100,000-kilometre manufacturer’s warranty.
Initially, the Jeep performed without incident. However, in April 2024 the owner began experiencing mechanical issues. The first was a repeated failure to start, which was reported to the dealer. Later that same month, the vehicle suffered a sudden and complete loss of power while being driven, accompanied by stiff steering. The Jeep was towed to the dealer, who undertook warranty repairs that included software updates and replacement of suspected faulty components.
In August 2024, the vehicle again experienced an unexpected loss of power while in motion, creating a serious safety risk. It was towed for a second time to the dealer. Further warranty repairs were carried out, including inspections of the electrical and fuel systems. Despite these measures, in early September 2024 a third incident occurred in which the Jeep lost power and steering responsiveness, again necessitating a tow to the dealer.
On 5 September 2024, after repeated failures and multiple unsuccessful repair attempts, the owner engaged Arida Lawyers to prepare a formal letter of demand and rejection notice under the Australian Consumer Law. The letter formally rejected the vehicle, demanded a refund, and was delivered to the dealer the same day. The Jeep was left at the dealer’s premises in accordance with the rejection.
Subsequently, on 8 September 2024, the owner lodged a complaint with NSW Fair Trading. On 16 December 2024, an application was filed with NCAT seeking orders for the return of the purchase price, consequential losses, and costs. The vehicle has not been driven since 16 December 2024. It was later retrieved from the dealer and stored at the owner’s home for safekeeping, without any intention to revoke the rejection.
Expert evidence was obtained by both sides. The applicant’s expert, Mr Seddigh of Last Check Pty Ltd, concluded that the Jeep exhibited severe, frequent, and unpredictable faults that rendered it mechanically unreliable and unsafe. The dealer’s expert, Mr Buccini of MTA Vehicle Inspections, similarly found the vehicle to be “unroadworthy” and in urgent need of repairs.
Tribunal’s application of the ACL and prior authorities
In assessing whether the Jeep was of “acceptable quality” within the meaning of s 54 of the Australian Consumer Law (ACL), the Tribunal applied the objective “reasonable consumer” test, taking into account the nature and price of the goods, any representations made, and the actual state of the vehicle, including latent defects. The Tribunal found that repeated, unresolved, and safety-critical faults in a near-new, high-value vehicle meant it was not free from defects, lacked durability, and was unsafe to drive. These findings aligned with s 54(2)(a), (c) and (e) of the ACL.
On the issue of whether the faults constituted a “major failure” under s 260 of the ACL, the Tribunal referred to the reasoning in Safi v Heartland Motors Pty Ltd [2017] NSWCATCD 68, which established that a major failure may consist of a single defect or a combination of defects and that the relevant question is whether a reasonable consumer, fully acquainted with the defects, would not have acquired the goods. The Tribunal also considered that multiple limbs of s 260 were engaged in this matter, including that the goods were substantially unfit for purpose (s 260(1)(c)), unsafe (s 260(1)(e)), and could not be remedied within a reasonable time.
The Tribunal reaffirmed that the time for assessing acceptable quality is the time of supply, but that the vehicle’s subsequent performance can be used as evidence of its state at that time. In doing so, it referred to Medtel Pty Limited v Courtney [2003] FCAFC 151, which held that subsequent failure may demonstrate an inherent defect present at supply, and to Alliance Motor Auctions Pty Ltd v Saman [2016] NSWCATAP 149, which confirmed that proof of the precise cause of the defect is not required to establish a breach of the guarantee of acceptable quality. The Tribunal also cited Matumaini v Alramadan [2016] NSWCATCD 63 in support of the principle that consumer guarantees are assessed objectively and from the perspective of a reasonable consumer in the purchaser’s position.
In relation to the consumer’s rejection of the goods, the Tribunal applied Avci v Parramatta Motor Group Pty Ltd [2020] NSWCATAP 188, which confirms that a valid rejection obliges the supplier to accept the return of the goods and provide a refund. The Tribunal found that the applicant’s removal of the vehicle from the dealer’s premises for safekeeping after rejection did not invalidate the rejection, as there was no evidence of any intention to withdraw it.
When considering consequential loss, the Tribunal applied the principles from Hadley v Baxendale (1854) 9 Exch 341, namely that damages are recoverable if they arise naturally from the breach or were within the reasonable contemplation of the parties at the time of contracting. On costs, the Tribunal referred to Oshlack v Richmond River Council (1998) 193 CLR 72 and Rekrut v Rekrut [2017] NSWCATAP 35 in noting that the Consumer and Commercial Division will only depart from the usual position on costs in special circumstances. Expert report fees and filing fees were allowed, but legal fees were not awarded, as the applicant was self-represented at the hearing and had not sought leave for legal representation.
Finally, in ordering the manufacturer to indemnify the dealer for the refund, the Tribunal applied s 274 of the ACL, which imposes such liability on a manufacturer where goods fail to comply with a consumer guarantee. The Tribunal also relied on s 272 of the ACL to require the manufacturer to bear the inspection costs.
Why consumers should not simply accept a dealer or manufacturer’s rejection of their claim
It is common for dealers and manufacturers to initially reject a consumer’s complaint about a defective motor vehicle. This is often accompanied by assurances that “the vehicle meets specifications” or that “the problem cannot be replicated.” Many consumers, unaware of their full statutory rights under the Australian Consumer Law, accept these rejections at face value and walk away without further action. That can be a costly mistake.
Under the ACL, the consumer guarantees in ss 54–59 are not optional, they apply automatically to vehicles sold in trade or commerce, regardless of any manufacturer warranty. Where a defect amounts to a major failure within s 260, you are entitled to reject the goods and demand a refund or replacement. The supplier does not have the right to overturn your rejection simply by refusing to agree with it.
The case of Irons-McLean v Stellantis is a clear example. The dealer and manufacturer did not voluntarily accept the purchaser’s rejection, despite repeated safety-critical faults and multiple unsuccessful repairs. The consumer, assisted by Arida Lawyers, persisted, serving a formal letter of demand and rejection notice, lodging a Fair Trading complaint, and commencing NCAT proceedings.
NCAT ultimately found that the Jeep had suffered a major failure, ordered the dealer to accept its return and refund $93,524.65, and required the manufacturer to indemnify the dealer. Had the consumer simply accepted the dealer’s initial position, this outcome, including the refund, damages, and costs, would never have been achieved.
This case demonstrates why you should not abandon your claim just because a dealer or manufacturer refuses to acknowledge a breach of the consumer guarantees. Their position is not determinative. The Tribunal or court decides based on the evidence and the law. By seeking legal advice early, documenting faults meticulously, and asserting your statutory rights, you can overcome an initial rejection and secure the remedy the law provides.
FAQs for Defective and Lemon Motor Vehicles
Q1. What is a “lemon vehicle” under Australian consumer law?
There’s no standalone “lemon law” statute. In Australia, a lemon vehicle is one that fails to comply with the consumer guarantees under the Australian Consumer Law, most commonly the guarantee that goods be of acceptable quality (s 54). If the failures amount to a major failure (s 260), the consumer may reject the vehicle and choose a refund, replacement or repairs.
Q2. What counts as a “major failure” for a new car?
A major failure exists when a reasonable consumer, fully informed of the defects, would not have bought the car, or the car is unsafe, substantially unfit for its normal use or a disclosed purpose, or cannot be repaired within a reasonable time. Repeated loss of power, steering/brake issues, or persistent, unfixable electronics faults in a near-new vehicle are classic examples.
Q3. Do I have to give the dealer a chance to repair before I can reject?
If the problem is not a major failure, you should provide the dealership with an opportunity to repair the vehicle. If it is a major failure, you can reject the vehicle immediately and demand a refund or replacement. In practice, many lemon vehicle cases involve multiple failed repair attempts, which provides evidence that the issue cannot be remedied within a reasonable time.
Q4. How do I formally reject a defective motor vehicle?
Put it in writing. A clear letter of demand and rejection notice should:
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identify the car VIN;
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summarise the defects and repair history;
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state why the defects constitute a major failure, and elect your remedy (refund, replacement or repairs); and
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keep copies and proof of delivery.
Arida Lawyers routinely drafts these notices and coordinates next steps.
Q5. Can I keep driving the car after I reject it?
If the vehicle is unsafe, stop driving. Practical storage for safekeeping after a valid rejection usually doesn’t undo the rejection. But driving it extensively post-rejection can muddy the waters on acceptance and use. Get advice before moving the vehicle.
Q6. What evidence helps win a lemon vehicle case?
Meticulous fault logs (dates, symptoms, warning lights), service and tow records, dealer communications, and an independent expert report explaining why the vehicle is not of acceptable quality and/or unsafe. Photos, videos, and scan reports are valuable. Keep all invoices and out-of-pocket receipts (hire car, tolls, tows).
Q7. What remedies can NCAT or a court order
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Refund of the purchase price, replacement or repairs.
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Damages for reasonably foreseeable losses (e.g., hire car, insurance, registration, towing, inspection fees).
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Costs such as filing fees and, in suitable cases, expert fees.
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Manufacturer indemnity orders may also be made so that the manufacturer reimburses the dealer.
Q8. How much refund can I get?
Typically, the purchase price plus eligible damages and allowed costs. Arida Lawyers can assist you in identifying the damages you are entitled to.
Q9. What if the dealer refuses to accept my rejection?
Escalate, but do it strategically. Before taking the next step, contact Arida Lawyers to assess the facts, evidence, and jurisdiction. We can identify the best strategy moving forward before commencing NCAT proceedings (should the amount be less than $100,000), helping you avoid the common pitfalls that cause claims to fail or be delayed, and ensuring you maximise your chances of success.
If the matter proceeds, the usual path in NSW is to first lodge a complaint with NSW Fair Trading, then, if unresolved, file in NCAT or the relevant tribunal/court in your state. We can assist by preparing and issuing the letter of demand and rejection, the NCAT Application and Points of Claim, which outline the ACL breaches and remedies sought. We can also assist with preparing your evidence, including obtaining an independent expert report, and provide legal representation in the NCAT proceeding.
Q10. Are manufacturers liable, or only the dealer?
Your claim for a refund/replacement is against the supplier (dealer). The manufacturer can be ordered to indemnify the dealer and may be liable for certain costs (e.g., inspection). Strategically, we often join both where appropriate.
Q11. Do consumer guarantees apply to used cars and dealer demos?
Yes, used and demonstrator vehicles supplied in trade or commerce also carry the ACL guarantees. What is “acceptable quality” is determined by price, age, kilometres travelled, and pre-sale representations made. A three-year-old dealer sold SUV is still expected to be safe, durable, and free from defects.
Q12. What about private sales and auctions?
Private sales are generally not covered by the ACL guarantees. Dealer auctions can be complex and depend on the auction terms. Get tailored advice before bidding or if a fault emerges.
Q13. Do extended warranties change my ACL rights?
No. Extended warranties and manufacturer warranties operate in addition to the ACL rights. They do not replace or limit them. If there’s a major failure, you can reject your lemon vehicle under the ACL regardless of the warranty terms.
Q14. How long do I have to act?
Move promptly. Rejection must occur within a reasonable period, having regard to the vehicle and defect history. Don’t wait for months of unsuccessful repair attempts if the car is unsafe. Separate limitation periods can apply to damages claims under the ACL and related causes of action. Because time limits vary by remedy and jurisdiction, we recommend getting advice early to preserve all options.
Q15. Can I claim for loss of use or inconvenience?
Tribunals regularly award hire car and related out-of-pocket costs where reasonably incurred. Pure “inconvenience” is not a recoverable cost. It is best practice to retain receipts and evidence as to why a hire vehicle was necessary (work, medical, school runs, lack of public transport).
Q16. What if I financed the vehicle or have a secured loan/novated lease?
Notify the lender/lessor when you reject the vehicle. On a refund, the payout often goes first to discharge the finance with any remaining balance payable to you.
Q17. Will modifications or off-road use affect my claim?
Not automatically. Reasonable accessories (tow bar, dash cam, roof racks) usually won’t. However, misuse, lack of maintenance, or damage caused by modifications can be a defence. Expert evidence can help determine whether aftermarket modifications or the vehicle's use caused/or contributed to the defects.
Q18. What does “cannot be remedied within a reasonable time” look like?
Multiple failed repair attempts, lengthy parts delays, or intermittent faults that technicians can’t isolate despite comprehensive inspections. Maintain a timeline of repair bookings, days off the road, and dealer promises versus outcomes. This timeline often proves the point.
This article provides general information relevant to our legal services. It is not legal advice and should not be relied upon as such. If you are seeking legal advice, you should contact us for a free initial consultation.
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