Lemon car? Take the dealer to NCAT under Australian Consumer Law
If you bought a car from a dealer and it keeps breaking down, you don't have to accept "we'll have another look at it". The Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010) gives you a set of consumer guarantees that override the dealer's warranty fine print.
This page covers how NSW buyers take a dealer to NCAT for a lemon car: what counts as a "major failure", when you can demand a refund instead of another repair, what evidence the Tribunal expects, and what orders NCAT can make.
Information, not legal advice. Figures current as at 1 July 2025.
What this dispute is
A motor vehicle consumer claim at NCAT is a dispute between a buyer and a motor dealer (or sometimes a manufacturer) over a vehicle sold "in trade" — typically alleging the dealer breached the consumer guarantees in the Australian Consumer Law (ACL).
The key ACL guarantees that apply to a car purchased from a dealer are: acceptable quality (s54 — durable, safe, free from defects, fit for usual purpose); fitness for any disclosed purpose (s55 — if you told the dealer you needed it for towing, it has to actually tow); and matching description (s56 — if the ad said "sunroof", there's a sunroof).
The remedy depends on whether the fault is a major failure (s260 ACL). If it is, the consumer chooses between: rejecting the vehicle and getting a refund; keeping it and getting compensation for the drop in value; or requiring a replacement vehicle of the same type. If it's not a major failure, the supplier gets one chance to repair within a reasonable time — and only if they fail can the consumer reject or claim costs.
Section 260 lists what counts as a major failure: the goods would not have been bought if the fault was known; substantially unfit for purpose and not easily remedied; departing significantly from description, sample or demonstration model; or unsafe. Multiple non-major faults can together constitute a major failure.
Time limits that bite
These deadlines are strict. The Tribunal can extend in some cases, but extensions are not automatic — they're weighed on length, reason, prospects and prejudice.
- Reasonable timeACL rejection window — must be exercised within a reasonable time considering use, expected life, and nature of the goodsACL s262
- 1 chanceSupplier's right to repair within a reasonable time for a non-major failureACL s259(2)
- 28 daysInternal appeal window for non-residential proceedingsNCAT Act, Guideline 1
- 6 yearsGeneral limitation period for ACL damages claimsLimitation Act 1969 (NSW) s14(1)
The process, step by step
- 1
Before NCAT — write to the dealer in plain English
You need a clear written demand on record. State the fault, the impact, what you want (refund, replacement, repair), and why you say it's a "major failure" if you're rejecting the vehicle. Send by email and keep the read receipt or follow-up. Don't rely on phone calls.
If the dealer refuses or delays, you have a documented refusal — which is exactly what NCAT expects to see.
- 2
Optional — NSW Fair Trading mediation
Fair Trading runs a free motor vehicle dispute mediation. It's voluntary on the dealer's side, but many dealers will engage because it's faster and cheaper than NCAT. Lodge online at nsw.gov.au.
If mediation fails or the dealer refuses, you can move to NCAT. The Fair Trading file is useful evidence.
- 3
Lodging at NCAT
Use the Motor Vehicles Consumer Claim application via NCAT Online, in person, or by post. Standard fee $127 (corp $254, concession $32). Name the dealer entity correctly — check the receipt and the contract.
In "orders sought", be specific: "Refund of the purchase price of $34,990 less a deduction for use of $X, on return of the vehicle" or "Replacement vehicle of the same make and model" or "Compensation of $X for reduction in value plus repair costs of $Y".
- 4
Conciliation and hearing
Most motor vehicle disputes are listed for a combined conciliation and hearing. If you settle at conciliation it's recorded as consent orders. If not, you go straight to a hearing on the day or the matter is adjourned for a longer hearing.
Bring the vehicle's service history, the contract, every email, and ideally an independent mechanic's report. If you've already paid for repairs elsewhere, bring the invoices.
- 5
After the orders
Refund orders typically require return of the vehicle on payment. Money orders, if unpaid, are registered at the Local Court and enforced by garnishee or writ of execution.
Appeals to the NCAT Appeal Panel within 28 days. As of right on a question of law; with leave on facts.
Evidence that actually works
Cases are lost on missing documents more than on weak arguments. Get these in order before you file.
Contract of sale and dealer invoice
Establishes who you bought from (the supplier), what you bought, what you paid, and when.
Full service history
Logbook stamps, service invoices. Demonstrates the fault wasn't your fault.
Independent mechanic's report
Critical for 'major failure' arguments. An NRMA or similar inspection report carries weight.
Repair history with the dealer
Every job sheet, every diagnostic invoice. Multiple repair attempts for the same fault support a major-failure finding.
Photos and video of the fault
Smoke, leaks, dashboard error codes, anything visible. Dashcam footage of breakdowns is gold.
Written demand and dealer response
Your formal email setting out the fault and the remedy you want, plus their refusal or delay.
Advertisement / brochure for the vehicle
If you're running a s56 'matching description' argument, screenshot the listing and the brochure.
Receipts for related expenses
Tow trucks, hire cars, public transport, lost income — recoverable as consequential losses under s259.
Common reasons people lose
Waiting too long to reject
The ACL s262 'reasonable time' to reject runs from when you should have noticed the fault. Driving a known-faulty car for a year and then trying to reject it is hard to win.
Buying privately, not from a dealer
The ACL consumer guarantees apply to suppliers acting 'in trade'. Private buyer-to-buyer sales are mostly caveat emptor — no statutory guarantees. Check the seller status before lodging.
No independent mechanic's report
The dealer will say the fault doesn't exist or is your fault. Without an independent expert opinion, the Member is left choosing between two assertions.
Letting the dealer have unlimited repair attempts
The ACL gives the supplier one chance to repair within a reasonable time for non-major failures. If they keep failing, that itself becomes a major failure. Don't keep handing the car back without preserving your position in writing.
Confusing the dealer's 'extended warranty' with the ACL
Dealer warranties are extra rights, on top of the ACL. They cannot reduce, limit or override the consumer guarantees. Don't accept 'it's outside warranty' as the end of the conversation.
Asking for impossible orders
NCAT can't order punitive damages, can't force an apology, and won't usually order specific performance against a manufacturer's overseas parent. Frame orders around refund, replacement, repair cost or consequential loss.
Orders NCAT can make
This is the kind of order you can ask for — not a guarantee you'll get it. Frame your application around the order you actually want.
Refund of the purchase price
Order that the dealer refund the full purchase price (often less a deduction for use) on return of the vehicle.
Replacement vehicle
Order that the dealer supply a replacement vehicle of the same type and similar value.
Damages for reduction in value
Where the buyer keeps the vehicle but its value is lower than what was promised.
Reimbursement of repair costs
Order that the dealer pay the buyer's cost of having the fault repaired elsewhere, where the dealer refused or failed to repair.
Damages for consequential loss
Tow trucks, hire cars, public transport, lost income, missed work — quantifiable financial loss caused by the breach.
Dismissal of the dealer's counterclaim
Dealers sometimes counterclaim for storage fees, finance shortfall, or unpaid service costs. NCAT can dismiss the counterclaim if not made out.
Free help
- NSW Fair Trading — motor vehicles
Free dispute mediation, dealer licensing information, motor vehicle compensation scheme.
- ACCC — motor vehicle consumer guarantees
Plain-English explainer of the ACL guarantees as they apply to cars.
- Australian Consumer Law (Schedule 2, CCA 2010)
The legislation itself — useful to cite section numbers.
- NCAT — Motor Vehicles case type
Forms, fees, and procedure.
- LawAccess NSW — 1300 888 529
Free legal info line, Mon-Fri 9am-5pm.
- NRMA pre-purchase / fault inspections
Independent mechanical report you can rely on at NCAT (open to non-members).
Questions self-reps ask
What counts as a 'major failure'?
Section 260 of the Australian Consumer Law defines a major failure as one where:
- the consumer would not have bought the car if they'd known about the fault;
- the car is substantially unfit for its usual purpose and can't be easily remedied;
- it departs significantly from any description, sample or demonstration model; or
- it's unsafe.
Multiple non-major faults together can amount to a major failure.
Can I just demand a refund?
Only if there's a major failure under s260 ACL. For non-major failures, the supplier has the right to repair within a reasonable time.
If you bypass that step and demand a refund for a fixable fault, the dealer can refuse and NCAT may agree. But if they keep failing to fix the same fault, the cumulative failure can amount to a major failure — and then you can reject.
Does the ACL apply to private second-hand sales?
Mostly no. The ACL consumer guarantees apply to suppliers acting "in trade or commerce". A one-off sale between private individuals generally isn't covered, although misrepresentation claims can still be made.
If you bought from a dealer or licensed motor dealer, you're covered. Check the dealer licence on the NSW Fair Trading register.
What if the manufacturer is overseas?
You can claim against the dealer (who supplied the goods in Australia) under the consumer guarantees, and you can also claim against the manufacturer directly under the ACL if they have an Australian presence.
NCAT generally focuses on the dealer because that's where the contract is. Manufacturer-only claims often head to the Federal Court or Federal Circuit Court.
Can I claim for the time I lost dealing with this?
Generally no for your own time, yes for quantifiable financial loss. Section 259 of the ACL allows damages for any reasonably foreseeable loss caused by the breach — tow trucks, hire cars, public transport, missed work days where you can document lost income.
The Tribunal won't usually award a sum for stress or inconvenience.
How much does NCAT itself cost?
Motor vehicle consumer claims sit in the general application fee bracket: $127 standard, $254 corporation, $32 concession (1 July 2025 schedule). Fees are CPI-indexed annually.
Concessions cover pensioners, Legal Aid grantees, CLC clients, full-time students, and inmates. Hardship waivers are available.
Will the dealer's 'as-is' clause stop me?
No. Section 64 ACL voids any term that purports to exclude, restrict or modify the consumer guarantees. A dealer can't sell a car "as-is, no refunds" and use that to escape s54 acceptable quality.
They can describe defects honestly and adjust the price accordingly, but they cannot contract out of the statutory guarantees.
Start your lemon car case in 2 minutes
Five questions. Two minutes. You'll walk out knowing the list, the form, the fee, and your statutory deadlines.
One-off pricing, no subscription. Australian data, Sydney region.
NCAT Tracker is not a law firm. This page is information, not legal advice. Figures, fees and statutory periods cited here are current as at 1 July 2025 and are CPI-indexed or amended from time to time — verify on ncat.nsw.gov.au and legislation.nsw.gov.au before you lodge.