Buying a used car can be a stressful experience as there is an inbuilt asymmetry of knowledge between the buyer and the seller of the used car. The buyer cannot know from an external inspection of the car what problems (if any) are present in the car and will manifest after sustained use.
In September 2019, the Queensland Government introduced amendments to the Motor Dealers and Chattel Auctioneers Act (MCDA Act) which reduced the risks arising from this inherent asymmetry of knowledge between the buyer and the seller by mandating statutory warranties with respect to defects in used cars.
After nearly two years in operation, decisions are now being reported in the Queensland Civil and Administrative Tribunal (QCAT) which provide guidance as to how the statutory warranties will be applied and enforced.
Statutory Warranty Explained
The statutory warranty for used cars set out in the Schedule 1 to the MCDA Act.
The warranty is divided into two classes being Statutory Warranty A and Statutory Warranty B and only applies to vehicles which on the day of its sale, have an odometer reading of less than 160,000km.
The Statutory Warranty A applies to vehicles which are less than 10 years old.
The Statutory Warranty B applies to vehicles which are more than 10 years old.
The Statutory Warranty A lasts up until either 3 months has elapsed since the buyer took possession of the car or the vehicle travels 5,000 kilometres,
The Statutory Warranty B lasts until either 1 month has elapsed since the buyer took possession of the car or the car travels 1,000 kilometres.
The statutory warranty is that the vehicle (see section 7 of schedule 1 to the MCDA Act):
- is free from defects at the time of taking possession and will remain so for the duration of the warranty period; and
- in the event that there are defects with the vehicle which are reported during the warranty period, those defects will be repaired by the warrantor free of charge.
The statutory warranty does not extend to all defects as there is a large list of exclusions (see section 47 of the Regulations to MCDA Act). Some examples of excluded items are defects to the upholstery, airbags, radios, hoses).
In the event that the warrantor fails to honour the statutory warranty, the buyer may seek redress through QCAT (see section 14 of the MCDA Act).
Contrary to normal jurisdiction of QCAT (which is $25,000), claims under the MCDA Act may be brought with respect to amounts up to $100,000 (see 14 of the MCDA Act).
The tribunal has a wide jurisdiction to make orders for redress including orders requiring repair work to be carried out or compensation to be paid (see section 15 of the MCDA Act).
Recent Decision relating to statutory warranty
A statutory warranty was recently enforced in QCAT earlier this year in the decision of Boers v Blue Star Auto Sales Pty Ltd & Anor  QCAT 17 (Blue Star Auto).
In Blue Star Auto, the Buyer purchased a car which was subject to statutory warranty B in December 2019. Within the statutory period, the Buyer notified the warrantor as to various issues with the car. These issues were not addressed.
The buyer than arranged for the defects to the car to be fixed and sought compensation from Blue Star Auto in QCAT for the costs of those repairs.
In the decision, QCAT found that the Buyer was entitled to be compensated for the costs of repairs notified to the warrantor during the warranty period stating as follows.
“ I am satisfied that the problems identified by Mr Boers in his emails – apart from one which will be discussed later – constituted defects for the purposes of the statutory warranty. They did not render the car undrivable, but they did prevent the performance of function in a broader sense. In relation to the coolant and oil problems, for example, a car excessively losing oil or coolant for an unidentified reason might drive just as well as one that is not, in the short term at least. However, it is not functioning as intended because it is not a normal expectation of the functioning of the car that the oil or coolant must be frequently topped up.
 Further, I am satisfied that Mr Boers gave adequate written notice of the defects to Blue Star Auto Sales Pty Ltd within the warranty period. There was a series of relevant email notices sent by Mr Boers within the warranty period, which at its earliest would have ended on 8 or 9 January 2020.”
Given the changes to the MCDA Act, the market for used car is no longer as asymmetric as it once was as Buyer’s can seek redress for defects to the used car which emerge during the statutory warranty period.
Should you have recently purchased a used car and want advice regarding your rights under the statutory warranty, please call Rose Litigation Lawyers to discuss.