You’ve bought a faulty car, a caravan that leaks, or an appliance that stops working after a few months. You know your rights under the Australian Consumer Law. You ask for a refund. And then the pushback starts.
In our experience, most manufacturers and suppliers don’t simply say no. They give you a reason — often a legal-sounding one. The arguments tend to be the same across industries, and some of them are genuinely believed by the people making them. The problem is that several are wrong, and a few are wrong in ways that the Federal Court has specifically and repeatedly called out.
Below are the seven most common responses we see, and what the law actually says about each one.
In this article
- “We’ve repaired it, so the matter is closed”
- “We can only refund you a depreciated amount”
- “It’s a complex product — some issues are expected”
- “The recall was precautionary — your unit was fine”
- “We couldn’t reproduce the fault in the workshop”
- “You’ve left it too long to reject”
- “You need to let us try to fix it first”
1. “We’ve repaired it, so the matter is closed”
This is probably the one we hear most. The goods develop a problem, the supplier fixes it under warranty, and the supplier tells you it has satisfied your rights. If you keep having issues and keep asking for a refund, the response is the same: “We repaired it. The matter is resolved.”
There’s a kernel of truth buried in here. Under the Australian Consumer Law, a supplier can insist on a repair where the failure is a minor one — something that doesn’t rise to the level of a major failure. But a major failure is a different situation, and people regularly conflate the two.
Section 260 of the ACL defines a major failure. A failure is major if a fully informed reasonable consumer would not have bought the goods, if the goods are substantially unfit for purpose and cannot be easily fixed, or if they are unsafe. Where a failure is major, the consumer can choose the remedy.. They can reject the goods and demand a full refund, or they can ask for a replacement. The supplier doesn’t get to insist on repair. And a repair the supplier has already performed doesn’t wipe out a right that the consumer hasn’t yet exercised.
Sections 259(3) and 263 of the ACL make this clear: the consumer’s entitlement to reject arises upon a major failure, and the remedy is the consumer’s election. Nothing in those provisions conditions that entitlement on whether the supplier has already attempted a repair. In Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672, Wheelahan J found major failures in three of the four consumer cases before him, despite the supplier performing repairs in each case. He specifically rejected Jayco’s argument that repairable defects could not amount to a major failure. He stated that whether the RV was easily repairable was only one permissible consideration under the statutory test: at [1614].
The short version: A repair doesn’t cancel your ACL rights. If the failure was major, the right to reject is yours to exercise — and a subsequent repair doesn’t take it away.
2. “We can only refund you a depreciated amount”
This one is perhaps the most financially significant argument, because the numbers can be large. You paid $90,000 for a vehicle three years ago. You’ve driven 40,000 kilometres. Now you want a refund. The supplier comes back with $65,000 — reflecting, they say, the depreciation in value and your use of the car.
It sounds reasonable. It isn’t.
Section 263(4)(a) of the ACL is unambiguous: on a valid rejection, the supplier must repay the money paid for the goods. The provision contains no mechanism for reducing that amount to reflect use, kilometres, or depreciation. Parliament knew how to include such a mechanism — the equivalent UK provision (Consumer Rights Act 2015, s 24(8)) expressly allows a use deduction. Ours doesn’t.
Derrington J confirmed this in Vautin v BY Winddown Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426 at [286]. The case involved a $4.2 million motor yacht that had been used for years before rejection, and the court ordered repayment of the full purchase price. Wheelahan J in Jayco put it plainly at [582]: the ACL’s “imperative terms do not authorise any abatement or adjustment of the amount paid on account of depreciation, or any use of the goods by the consumer.”
When a supplier offers you less than the full purchase price and frames it as a reasonable commercial settlement, they’re asking you to accept something the law doesn’t require you to accept. That’s worth knowing before you sign anything.
The rule in plain terms: If you paid $80,000 for a vehicle and drove it for two years before the major defect emerged, the supplier must repay $80,000. Not $65,000. Not market value at rejection. $80,000.
3. “It’s a complex product — some issues are expected”
Motor vehicles, caravans, boats, and other complex goods involve thousands of components and intricate manufacturing processes. Suppliers rely on this to argue that minor defects are part of the ordinary course, that a reasonable consumer accepts some teething problems, and that warranty repairs resolve those issues. Often they cite Jayco for this proposition.
The problem is that Jayco doesn’t actually support it — at least not the way they use it.
Yes, Wheelahan J acknowledged that a reasonable consumer of complex goods has some tolerance for defects that can be repaired. But his Honour was equally clear that “whether that is so in a particular case will depend upon the nature of the defect, and other circumstances” and that “in those cases that are not clear-cut, the resolution of the issue will turn upon questions of fact, degree, and value judgment”: at [492]. In practice, he found major failures in three of the four consumer cases, including cases where individual defects were minor.
The other thing Jayco brings to this area — which suppliers tend not to mention — is the “congeries of defects” principle. Drawn from the House of Lords in W & S Pollock & Co v Macrae 1922 SC 192, it holds that multiple defects across different systems can collectively constitute a major failure even where no single fault, standing alone, would be enough. Wheelahan J applied it directly at [1614]:
“the number and disparate nature of the problems… and the way that in combination they reflected poorly on the build quality of the RV, exceeded the reasonable consumer’s levels of tolerance.”— Wheelahan J, ACCC v Jayco Corporation Pty Ltd [2020] FCA 1672 at [1614]
— Wheelahan J, ACCC v Jayco Corporation Pty Ltd [2020] FCA 1672 at [1614]
Add to that the price. The court held at [1610]:
“At that price point, a reasonable consumer was entitled to expect a commensurate level of quality.”— Wheelahan J, ACCC v Jayco Corporation Pty Ltd [2020] FCA 1672 at [1610]
— Wheelahan J, ACCC v Jayco Corporation Pty Ltd [2020] FCA 1672 at [1610]
That principle cuts both ways: the higher the price you paid, the higher the standard the law expects. The teething-problems argument doesn’t get stronger when the product costs $80,000 or $150,000.
4. “The recall was precautionary — your unit wasn’t actually faulty”
Safety recalls create an awkward situation for manufacturers. They’ve formally admitted, through the recall process, that their product has a manufacturing defect. But they still want to argue that your particular unit was fine. That you just got lucky, the problem never manifested, and therefore you don’t have an ACL claim.
The Full Federal Court addressed this squarely in Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182. The case involved pacemakers covered by a manufacturer’s hazard alert — issued after the manufacturer identified a manufacturing defect that created an elevated risk of premature battery failure. The applicant’s pacemaker had never actually failed. Medtel argued that without actual failure, there was no claim.
The Full Court rejected that argument. The court confirmed the “superadded risk” principle. Goods are not of acceptable quality if their manufacture materially increases the risk of failure above the normal background rate. At [21] the Full Court held:
“If it is reasonable to expect that products of a certain kind will not have a physical anomaly that materially increases the risk that they will not fulfil the relevant purpose, it seems to me consistent with the statutory language to hold that each item with that physical anomaly is not of merchantable quality.”— Medtel Pty Ltd v Courtney [2003] FCAFC 151 at [21]
— Medtel Pty Ltd v Courtney [2003] FCAFC 151 at [21]
The primary judge put it in plainer terms: a reasonable person would not expect a pacemaker to be manufactured in a way that creates a superadded risk of premature failure. Consumers are entitled to goods that do not carry an elevated risk of failure caused by manufacture.
A manufacturer issuing a safety recall is, functionally, making a formal admission that their product has a manufacturing defect. The argument that this admission is “precautionary” and therefore doesn’t affect your ACL rights hasn’t fared well when tested.
5. “We couldn’t reproduce the fault in the workshop”
Intermittent faults are frustrating for consumers precisely because of this dynamic. The car shudders on the highway, the dashboard throws warnings, the door locks stop working. You take it in for service. The technician drives it around the block, can’t replicate the issue, and hands the car back. A few days later it happens again.
In Australian Competition and Consumer Commission v Ford Motor Company of Australia Limited [2018] FCA 703, the court dealt with the argument that no defect exists because it could not be reproduced.
The case involved Ford’s dual-clutch PowerShift transmission: a systemic shuddering and jerking problem that manifested intermittently, often resisting replication during dealer inspections. The agreed facts record what Ford actually did:
“Ford Australia required issues the subject of Complaints to be demonstrated or replicated on demand in the presence of a Dealer in order for repairs to be undertaken, in circumstances where Ford Australia knew that the symptoms of the quality issues affecting the PowerShift Transmission were often experienced intermittently, and both Customers and Dealers found it difficult to replicate the issues on demand.”— Statement of Agreed Facts, ACCC v Ford Motor Company of Australia Limited [2018] FCA 703 at [70]
— Statement of Agreed Facts, ACCC v Ford Motor Company of Australia Limited [2018] FCA 703 at [70]
The agreed facts also record what that policy did to the people on the receiving end:
“many Customers were concerned about driving their Vehicles and experienced a loss of confidence in them. Some Customers felt their Vehicles were unsafe.”— Statement of Agreed Facts, ACCC v Ford Motor Company of Australia Limited [2018] FCA 703 at [60]
— Statement of Agreed Facts, ACCC v Ford Motor Company of Australia Limited [2018] FCA 703 at [60]
That loss of confidence was recognised as a real and cognisable harm. Ford admitted the conduct and paid $10 million for it. If a supplier is telling you they can’t fix what they can’t reproduce, that’s an operational problem on their end. It isn’t a reason your ACL rights don’t exist.
6. “You’ve left it too long — you’ve lost the right to reject”
The ACL does have a time limit on rejection. Section 262(2) provides for a “rejection period” running from the time of supply until the failure should reasonably have become apparent. Suppliers tend to read this provision as a short window — perhaps a few months — and will sometimes argue that a consumer who hasn’t formally rejected goods within that window has lost their rights.
The leading authority on this is Vautin v BY Winddown Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426, where Derrington J gave careful consideration to when a failure becomes “apparent” for the purpose of starting the clock. His Honour held at [265] that this requires “a sufficiently high level of certainty in relation to the knowledge of the relevant failure including its nature and extent and what it will cost to remediate it.” Doubt about what’s actually wrong — or what it’ll cost to fix — means the failure hasn’t yet become apparent. The clock isn’t running.
At [269], Derrington J added an important point. Even once a consumer knows a major failure has occurred, they can still work out the nature and extent of the problem and the likely remediation costs before electing a remedy. You don’t have to reject the goods immediately upon realising something is seriously wrong.
Wheelahan J followed that analysis in Jayco at [49]. O’Callaghan J also applied it in Australian Competition and Consumer Commission v Mazda Australia Pty Ltd [2021] FCA 1493.
Complex goods often have latent or intermittent defects, including electrical faults in vehicles, structural problems in vessels, and systemic machinery issues. These defects can keep the rejection period open for a long time. The principle makes sense. The law should not penalise you for not knowing the full picture of a defect the manufacturer’s technicians could not diagnose.
Who has to prove the rejection period expired? The supplier does — not you. In Vautin at [278], the court placed the burden on the supplier to plead and establish any ground under section 262(1) on which the supplier says it has lost the right to reject. Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715 confirms that burden. The supplier can’t simply assert the period has expired and leave it at that.
7. “You need to let us try to fix it first”
This argument conflates two different parts of the ACL scheme. It’s true that for minor failures, the supplier gets the first opportunity to remedy — they can choose to repair, replace, or refund. The consumer can’t immediately demand a refund for a minor fault.
But that rule has no application to major failures. Section 259(3) gives a consumer who has experienced a major failure the election: they can reject the goods and choose a full refund or a replacement. The supplier doesn’t get to insist on a repair attempt first. The whole point of distinguishing major from minor failures is that major failures give the consumer control over the outcome.
Telling a consumer they must submit to repairs before exercising their right to reject is, in the context of a major failure, a misstatement of what the law requires. It’s also the kind of misstatement the ACCC has repeatedly pursued. In ACCC v Jayco Corporation Pty Ltd [2020] FCA 1672, the court found that Jayco engaged in unconscionable conduct by obstructing consumers’ rights to reject and telling them to accept repairs, and imposed pecuniary penalties. In ACCC v Mazda Australia Pty Ltd [2021] FCA 1493, the court found that Mazda engaged in a similar pattern of conduct with consumers across Australia and imposed a $11.5 million penalty.
Getting advice
None of these arguments are invincible. Some suppliers raise them because they genuinely misunderstand the law. Others know them to be wrong but count on consumers not pushing back.
If a supplier offers you a depreciated refund, tells you repairs resolved your claim, or disputes your rejection on timing grounds, start by assessing whether the failure is a major one under section 260. That’s where the analysis begins, and it’s not always straightforward — but it’s rarely as clear-cut in the supplier’s favour as they’d like you to believe.
Jake McKinley Pty Ltd advises consumers in disputes involving defective goods across New South Wales, including motor vehicles, recreational vehicles, marine craft, and high-value goods of all kinds. Call us on 02 9232 8033 or email jacob@jakelaw.com.au.
Cases cited in this article:
- Australian Competition and Consumer Commission v Ford Motor Company of Australia Limited [2018] FCA 703; (2018) 360 ALR 124
- Australian Competition and Consumer Commission v Jayco Corporation Pty Ltd [2020] FCA 1672
- Australian Competition and Consumer Commission v Mazda Australia Pty Ltd [2021] FCA 1493
- Capic v Ford Motor Company of Australia Pty Ltd [2021] FCA 715
- Medtel Pty Ltd v Courtney [2003] FCAFC 151; (2003) 130 FCR 182
- Vautin v BY Winddown Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; (2018) 362 ALR 702
- W & S Pollock & Co v Macrae 1922 SC 192
This article contains general information only and does not constitute legal advice. The law may change after the article is written. You should obtain advice specific to your circumstances before relying on anything in this article. Liability is limited by a Scheme approved under the Professional Standards Legislation.
Jake McKinley notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Jake McKinley are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.
Article written by Jacob Carswell-Doherty, Principal
