Michael Smith v Central Coast Automotive & SAIC Motor: NSW Tribunal Reinforces Consumer Rights on Defective Vehicles
The recent case of Michael Smith v Central Coast Automotive Pty Limited and SAIC Motor Australia Pty Ltd [2025] NSWCATCD is an important win for everyday Australian consumers dealing with defective or “lemon” vehicles. The Tribunal reinforced that the Australian Consumer Law gives you real rights when your new car has ongoing faults, even if the dealer keeps attempting repairs.
Arida Lawyers assisted Mr Smith by preparing the letter of demand and notice of rejection, and by providing guidance throughout the NCAT proceeding. The Tribunal ultimately ordered a full refund after repeated failed repairs, demonstrating that statutory guarantees have practical force.
The decision confirms that you don’t need a catastrophic failure to take action, as recurring issues that affect reliability and confidence in the vehicle are enough to establish a major failure under the Australian Consumer Law.
If you’re experiencing ongoing faults with your car, or if repairs just aren’t fixing the problem, you may be entitled to a refund, replacement, and/or compensation under the Australian Consumer Law.
Not sure where you stand? We offer a free 10-minute telephone conference to help you understand your options.
Michael Smith v Central Coast Automotive Pty Limited and SAIC Motor Australia Pty Ltd [2025] NSWCATCD
Key Takeaways
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The case confirms that the Australian Consumer Law provides real protection for people who buy defective vehicles.
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A full refund was ordered after multiple unsuccessful repair attempts.
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You don’t need a single catastrophic defect to take action, as repeated defects that cannot be repaired within a reasonable time are enough.
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Statutory guarantees are enforceable rights, not empty promises.
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If your car keeps having problems, you may be entitled to a refund, replacement or compensation.
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You can speak with us in a free 10-minute telephone conference to understand your rights and options.
Overview
The decision in Smith v Central Coast Automotive Pty Ltd [2025] NSWCATCD serves as an important illustration of how the Australian Consumer Law is applied to defective vehicles and the extent to which the Tribunal is prepared to declare a car a “lemon” where faults are persistent, unresolved or undermine the vehicle’s fitness for purpose. The case reinforces the rights of consumers in Australia who acquire newly manufactured vehicles that later reveal major or recurring defects, and it underscores the obligations of dealers and manufacturers to provide remedies consistent with statutory guarantees.
Factual Background
Mr Smith purchased a new vehicle from Central Coast Automotive Pty Ltd. Within a short period of ownership, the car began exhibiting mechanical issues that were neither trivial nor cosmetic. Mr Smith returned the vehicle to the dealer for repair on multiple occasions, each time raising concerns about performance, safety and reliability. Although the dealer attempted several repairs, the problems remained unresolved or re-emerged soon after collection. Mr Smith contended that the defects substantially impaired the vehicle’s use and value, and that repeated repair attempts failed to remedy the contravention of the guarantees under the Australian Consumer Law.
As the defects persisted and the vehicle continued to malfunction, Mr Smith instructed Arida Lawyers to issue a formal letter of demand and notice of rejection to Central Coast Automotive Pty Ltd. He subsequently commenced proceedings in the Consumer and Commercial Division of the NSW Civil and Administrative Tribunal, with ongoing assistance from Arida Lawyers throughout the process. Mr Smith contended that the defects, coupled with the manufacturer’s repeated inability to properly rectify them, rendered the vehicle unfit for its intended purpose. He argued that the pattern of breakdowns and unsuccessful repairs constituted a major failure under the Australian Consumer Law, entitling him to a refund or replacement rather than further repair attempts.
Key Legal Issues
The Tribunal was required to determine whether the defects complained of amounted to a major failure within the meaning of the Australian Consumer Law. This involved an assessment of the seriousness, recurrence and practical effect of the mechanical issues, and whether a reasonable consumer would have purchased the vehicle had they known of the faults. The Tribunal also had to consider whether the dealer’s repair attempts were carried out within a reasonable time, and whether they repaired each of the defects.
The dispute centred on two key issues. The first was whether the nature and extent of the defects rendered the vehicle not of acceptable quality, unsafe, unfit for purpose and such that a reasonable consumer, fully informed of those faults, would not have purchased it, thereby constituting a major failure under the Australian Consumer Law. The second was whether the series of repair attempts failed to rectify the defects within a reasonable time, demonstrating non-compliance with the statutory guarantees, and whether that gave Mr Smith the statutory entitlement to reject the vehicle. In addressing these issues, the Tribunal examined the history of the repairs, the defects, and the inconvenience and loss experienced by Mr Smith.
Analysis of the Law Applied
The Tribunal’s reasoning centred on the statutory guarantees in sections 54 and 55 of the Australian Consumer Law. These provisions require that goods supplied to a consumer must be of acceptable quality and fit for their intended purpose (both implied and disclosed). A vehicle that repeatedly breaks down, or exhibits faults that impair its safety, performance or value, will not satisfy the requirement of acceptable quality. In evaluating whether a defect constitutes a major failure, the Tribunal referred to section 260 of the Australian Consumer Law, which sets out the criteria for determining when a failure is major. The test is both objective and hypothetical: it considers whether a reasonable consumer, fully informed of the defects, would have acquired the vehicle and whether the defects are capable of being remedied within a reasonable time.
The Tribunal examined the history of repair attempts and weighed the dealer’s efforts against the persistent nature of the faults. Although the dealer undertook multiple repair attempts, each instance of repair was followed by further breakdowns or ongoing performance concerns. This pattern supported the inference that the defects were either irreparable by conventional means or indicative of an inherent design and manufacturing defect that existed at the time of supply. The Tribunal emphasised that consumer guarantees are not satisfied by the mere willingness to repair; rather, the repairs must actually restore the vehicle to a condition that meets the standards of acceptable quality. Where attempts fail repeatedly, the law does not require the consumer to tolerate indefinite cycles of inconvenience and uncertainty.
The Tribunal also considered the concept of reasonableness in the timeframe for repairs. It acknowledged that complex mechanical systems can require investigation, but it held that the guarantee is undermined when the same issue recurs or when separate faults emerge in close succession. The cumulative evidence demonstrated that the vehicle was not of acceptable quality nor fit for purpose (both implied and disclosed), and that Mr Smith would not have purchased the vehicle had he known of the defects.
Remedies and Outcome
Having determined that the defects constituted a major failure to comply with the statutory guarantees, the Tribunal found that Mr Smith was entitled to a full refund of the purchase price together with damages. The damages awarded included the costs of hiring a replacement vehicle, expert inspection fees, lease payments and associated early termination charges, as well as the NCAT filing fee. The Tribunal ordered Central Coast Automotive Pty Ltd to take back possession of the vehicle and to repay Mr Smith the purchase price, along with the assessed damages. In addition, SAIC Motor Australia Pty Ltd, as the manufacturer, was ordered to indemnify the dealer for the sums it was required to pay to Mr Smith.
In reaching its determination, the Tribunal noted that the consumer’s patience had been tested across multiple repair attempts and that the vehicle’s defects had substantially impaired its utility and value. The order for a refund reflected the seriousness of the failures and sent a clear signal to suppliers and manufacturers that statutory guarantees cannot be diluted through repeated but ineffective attempts at repair.
Practical Implications for Consumers
This decision carries significant implications for purchasers of new vehicles in New South Wales and beyond. It demonstrates that consumers facing repeated mechanical issues are not confined to accepting ongoing repairs if the defects materially diminish the vehicle’s performance, safety and/or value. The case reinforces the principle that the burden does not rest on the consumer to prove the precise technical cause of the failure; it is sufficient to show that the car does not meet the ordinary expectations of quality, durability and functionality.
For consumers who suspect they have purchased a lemon vehicle, the case highlights the importance of documenting each instance of defect, repair and communication with the dealer or manufacturer. Written records of complaints and repair outcomes can be instrumental in persuading a tribunal that the defects are extensive and persistent enough to constitute a major failure. The decision also reassures consumers that the Tribunal will look beyond superficial repair efforts and focus on the broader pattern of performance and utility.
The case further suggests that prospective litigants can seek meaningful relief through the NSW Civil and Administrative Tribunal without the expense and delay often associated with higher court proceedings (where the claim is below $100,000). The Tribunal is prepared to enforce consumer guarantees and to provide redress that restores the consumer to the position they would have been in had the vehicle met the required standard at the outset.
FAQs for Lemon Vehicles
Q1. What is considered a “lemon” vehicle under Australian Consumer Law?
A vehicle may be regarded as a lemon when it repeatedly develops defects that affect its safety, performance, or value, and when those defects are not effectively repaired within a reasonable time. The term “lemon vehicle” itself does not appear in the legislation, but the concept aligns with a “major failure” under the Australian Consumer Law.
Q2. How do I know if the defects in my vehicle amount to a major failure?
A major failure arises when the defects are so substantial that a reasonable consumer would not have purchased the vehicle had they known of them, or when the problems cannot be remedied within a reasonable time or keep recurring despite repair attempts. Evidence of ongoing mechanical faults, repeated workshop visits, or substantial loss of use often supports a finding of a major failure.
Q3. Do I have to keep letting the dealer try to repair the car?
The law permits a supplier a reasonable opportunity to repair minor defects. However, where the issues are major, recur after repairs or cannot be fixed properly, you are not required to accept repeated repair attempts indefinitely. In those circumstances, you may be entitled to a refund or replacement.
Q4. What remedies are available if my car is found to have a major failure?
Under the Australian Consumer Law, you may choose either a refund of the purchase price or a replacement vehicle of the same type and value. You are also entitled to recover associated losses reasonably incurred as a result of the defects, such as towing costs, alternative transport or interest.
Q5. Do I need to prove the technical cause of the defect?
No. You are not required to identify the specific mechanical fault. It is sufficient to demonstrate that the vehicle has not met the standards of acceptable quality, such as reliability, durability and safety, the defects existed at the time of supply and that the defects have not been remedied within a reasonable time.
Q6. Can I take my matter to NCAT instead of going to court?
Yes. The NSW Civil and Administrative Tribunal has jurisdiction to hear disputes involving consumer disputes under the Australian Consumer Law for claims up to $100,000. It offers a more accessible and cost-effective forum than court proceedings and has the power to order refunds, replacements and/or compensation.
Q7. What evidence should I keep if I suspect my vehicle is a lemon?
Consumers should retain purchase documents, service and repair records, correspondence with the dealer or manufacturer, and dated notes of mechanical problems. These materials can be critical in demonstrating the timeline and recurrence of faults before the Tribunal.
Q8. Do I need a lawyer to bring a claim?
Legal representation is not mandatory, but professional advice can be extremely valuable. A lawyer can help assess whether a major failure exists, prepare evidence, engage with the dealer or manufacturer on your behalf, and conduct proceedings in the Tribunal if necessary.
Q9. What responsibilities do dealers and manufacturers have?
Suppliers are obligated to ensure the vehicles they sell comply with statutory guarantees. They must carry out repairs promptly and effectively and cannot avoid liability through contractual terms. Where a major failure exists, they must provide a refund or replacement rather than persisting with unsuccessful repairs.
Q10. What did the Smith v Central Coast Automotive case demonstrate?
The decision confirmed that persistent mechanical defects, combined with repeated but unsuccessful repair attempts, can justify a finding of major failure. The Tribunal’s order for a full refund highlights the strength of consumer protections and shows that the law will intervene when suppliers fail to comply with the statutory guarantees under the Australian Consumer Law.
Q.11 Can I get compensation for inconvenience or loss of use?
Where a major failure is established, you may recover reasonably foreseeable losses that stem from the defects. This may include the cost of alternative transport, registration or other expenses caused by the vehicle’s unreliability. The extent of compensation depends on the evidence provided and whether it was reasonably forseeable.
Q12. What should I do if I think my case is similar?
You should document the issues carefully and seek advice early. A firm experienced in Australian Consumer Law, such as Arida Lawyers, can assess the seriousness of the defects, advise on strategy, liaise with the supplier and represent you in any negotiations or Tribunal proceedings.
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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