Responding to a Faulty-Car Claim at NCAT: a NSW Motor Dealer’s Defence Guide

You have just been named in a faulty-car claim. A buyer has applied to the NSW Civil and Administrative Tribunal (NCAT) saying the vehicle you sold was not up to standard, and you have a notice of listing in front of you. This page explains, for a licensed NSW motor dealer, what your obligations actually are, how NCAT works, the deadlines you cannot miss, what a proper defence looks like, and what you are not allowed to do. The guiding idea is simple: know your obligations, prepare your response, and protect your business.

For the forms, fees and each step, see our guide to making an NCAT application.

Being named in a claim is not the same as losing one. NCAT makes orders against a dealer only if the buyer proves their claim. Your job is to work out, honestly, whether the claim is actually made out on the facts, to meet any obligation you genuinely owe, and to put your case clearly and on time. Dealers get into trouble in two ways: by ignoring a claim that is well founded, and by fighting a claim with arguments the law does not allow. This page helps you avoid both.

Your obligations come first

Two sets of rules apply when you sell a vehicle in NSW, and they sit side by side. The national Australian Consumer Law (ACL) guarantees that a vehicle sold to a consumer is of acceptable quality, judged by what a reasonable person, aware of its state and condition, would accept given the vehicle’s age, kilometres and price (ACL s 54). On top of that, the NSW dealer guarantee under the Motor Dealers and Repairers Act 2013 (Part 4, Division 4) requires a dealer to repair or make good a defective vehicle at its own expense, within the limits in the Act.

For a used car that had travelled not more than 160,000 km and was not more than 10 years old at sale, the dealer-guarantee limit is 5,000 km after sale or 3 months, whichever comes first (s 69). Time while the car is back with you for assessment or repair does not count towards that limit. The ACL consumer guarantees apply alongside the dealer guarantee and are not tied to that period.

One point decides most disputes: whether the failure is major or minor. For a minor failure that can be fixed, the buyer must give you a reasonable opportunity to repair, and you choose whether to repair, replace or refund (ACL s 259(2), s 261). For a major failure, or one that cannot be remedied, the buyer chooses between handing the car back and keeping it with compensation (s 259(3), s 260). Classifying the failure honestly, for a vehicle of that age and price, is where a sound defence starts.

What you cannot do

Some arguments simply are not open to a dealer, whatever a contract says, and running them tends to make things worse:

• You cannot use an “as is”, “no warranty” or “no refund” clause to escape the guarantees. Section 64 of the ACL makes such terms void.
• You cannot send the buyer to the manufacturer for a remedy; you must assist them yourself.
• An expired manufacturer’s warranty is not a defence. A problem arising shortly after that warranty ends can still be your responsibility.
• You cannot require the buyer to have serviced the car at a licensed dealer to keep their guarantee rights.
• Items that make a vehicle unsafe, such as tyres or brakes, cannot be excluded from the dealer guarantee, and the guarantee cannot be ignored by either side.
• You must not misrepresent a buyer’s rights or remedies. Section 29 of the ACL makes a false or misleading statement about a guarantee, right or remedy unlawful, and a penalty can follow.

You are not required to refund a change of mind, a buyer who found the car cheaper elsewhere, or a buyer who simply does not like the car. Those are not guarantee failures.

The lawful defences, if the facts support them

Where the facts genuinely support it, the law gives a dealer real answers to a claim. A defect specifically disclosed in writing before the sale can mean the car is taken to be of acceptable quality for that defect (ACL s 54(4)-(5)), and the dealer guarantee has a parallel mechanism in a signed defect notice with a current inspection report (s 74). A fault the buyer caused, or that came from abnormal use, may not be a failure at all (s 54(6)) – though the ACCC notes that “abnormal use” is not defined and ordinary use that merely exposed a pre-existing fault does not count. Normal wear and tear is not a failure, but deterioration that is faster or greater than expected for the car’s age and use may be. And if you offered to repair a non-major failure within a reasonable time, the buyer generally cannot leapfrog to a refund.

Each of these depends on evidence, and each has honest limits. A pre-sale inspection by the buyer can remove your responsibility for a defect that inspection ought reasonably to have revealed (s 54(7)), but the ACCC is clear that a buyer is not expected to find hidden or hard-to-detect faults such as engine, brake or gearbox problems. The lesson is the same throughout: the defence is only as strong as the records behind it.

How NCAT works, and your deadlines

NCAT hears these disputes in its Consumer and Commercial Division, and a motor vehicle consumer claim must be against a supplier carrying on a business. You will receive a copy of the buyer’s application and a notice of listing. The matter is first listed for conciliation and hearing – conciliation is an informal attempt to settle, and if it does not resolve, the matter may be heard that same day. Bring every document and witness to the first listing.

You may lodge a written reply within 14 days of being notified (Civil and Administrative Tribunal Rules 2014 r 26), and if you lodge one you must serve a copy on the buyer. Even where a reply is not strictly required, putting your position in writing is the safe course. If you do not attend, NCAT can hear the matter in your absence and make enforceable orders against you; a decision made in your genuine absence can be set aside only if you apply within 7 days. NCAT can make consumer-claim orders up to $100,000. Each party usually pays its own costs (CAT Act s 60). If one party lives interstate the matter may have to go to the Local Court instead, which can make the same orders – there you have 28 days to file a defence to a Statement of Claim.

What a good defence looks like

A strong dealer defence is methodical and honest. Assemble your bundle early: the sale contract and invoice, any signed defect notice and inspection report, the pre-sale inspection and odometer reading, full service and repair records (including the dates the car was in your hands), all correspondence with the buyer and any repair you offered, dated photographs, and any independent expert report on the fault. Keep a simple document register so nothing is missed. Prepare witness statements in the person’s own words; at NCAT a statement needs only to be signed, not sworn.

Be aware of NCAT’s rules on generative tools (Procedural Direction 7), which bar using such tools to generate or rephrase the content of witness statements and require citations in submissions to be verified, and of its expert-evidence direction (Procedural Direction 3) where it applies. Above all, every statement you make and document you rely on must be true: under CAT Act s 71, knowingly giving false or misleading information to the Tribunal is an offence carrying a penalty of up to 50 penalty units or 12 months imprisonment, or both. Honesty is not just required; it is your best protection.

Get the full NSW Defence Guide

The full guide is a practical Business Defence Toolkit for a NSW dealer responding to an NCAT (or Local Court) faulty-car claim. It walks through your obligations under the ACL and the Motor Dealers and Repairers Act in detail, a sober checklist for testing whether the claim is actually made out, every deadline and step in the NCAT and Local Court process, the evidence bundle and document register to build, plain response templates you can adapt (a without-admission reply, a repair offer that preserves your rights, and a settlement proposal), how to settle and record binding consent orders, and what to expect at the hearing. Every legal point is referenced to its primary source.

Get the full NSW Defence Guide – $29

This is general information about the law and procedure in New South Wales, not legal advice, and it does not take account of your particular circumstances. Claim Done is not a law firm and does not provide legal advice. Laws, forms, fees and figures change; confirm the current position against the official sources before you act.

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