Second-hand Vehicle Dealers (Miscellaneous) Amendment Bill

Introduction and First Reading

The Hon. A. MICHAELS (Enfield—Minister for Small and Family Business, Minister for Consumer and Business Affairs, Minister for Arts) (15:40): Obtained leave and introduced a bill for an act to amend the Second-Hand Vehicle Dealers Act 1995. Read a first time.

Second Reading

The Hon. A. MICHAELS (Enfield—Minister for Small and Family Business, Minister for Consumer and Business Affairs, Minister for Arts) (15:41): I move:

That this bill be now read a second time.

I am pleased to introduce the Second-Hand Vehicle Dealers (Miscellaneous) Amendment Bill 2023. This bill proposes to amend the Second-Hand Vehicle Dealers Act 1995, to streamline purchases, reduce red tape for second-hand vehicle dealers and strengthen protection for consumers.

For many, the purchase of a motor vehicle can be one of the most expensive undertakings in a lifetime. There are more than one million licensed drivers in South Australia who may purchase multiple vehicles to suit different stages in life, from their first car to retirement. Many of these consumers prefer to purchase a second-hand vehicle from a licensed dealer rather than through a private sale, knowing that there are greater consumer protections in place and they are covered by applicable warranties.

The Second-Hand Dealers Act 1995 oversees the licensing of motor vehicle dealers to ensure an informed and reputable industry, and strong consumer protections. Despite minor amendments over the years, the act and the Second-Hand Vehicle Dealers Regulations have not been comprehensively reviewed since 2009. Since this time, the Australian Consumer Law has been introduced, and there have been changes to technology that have impacted vehicle standards, the way that dealers operate their businesses and the expectations of consumers.

This bill will modernise and improve parts of the act relating to the duty to repair vehicles, cooling-off periods, disclosure of information about previous vehicle owners, electric and hybrid vehicles, contracts of sale and penalties for non-compliance by dealers. These changes have been subject to consultation with key industry groups, including the Motor Trades Association and the Royal Automobile Association of South Australia, and have strong support.

A key reform in the bill will allow second-hand vehicle dealers to disclose defects which will not be subject to the duty of repair, provided that the vehicle remains roadworthy. Under current provisions in the act, dealers have a duty to repair a defect that arises during or after the sale of a vehicle. There are a number of exemptions to this requirement, including vehicles that are over 15 years old or have been driven more than 200,000 kilometres before the sale.

It is proposed that this duty will not apply where a dealer provides clear written notice to the consumer identifying a defect, and the consumer acknowledges receipt of the information. This reflects arrangements in the majority of jurisdictions and is consistent with the duty to repair under the Australian Consumer Law. The Second-Hand Vehicle Dealers Regulations will also be amended to include a prescribed form that must be used when providing notice about a defect.

As an added protection for consumers, the bill will also remove current provisions that allow a purchaser to waive their general right to have a vehicle repaired by the dealer under duty to repair obligations. This approach is consistent with Australian Consumer Law requirements that purchased goods must be of acceptable quality and fit for purpose.

To accommodate new vehicle technologies, the bill will expand the duty to repair to cover the main propulsion battery for hybrid and electric vehicles within the statutory warranty period specified in the act. This change will support continued interest in electric and hybrid vehicles by South Australians and ensure that access to repair rights is consistent for owners of second-hand vehicles.

A transitional provision has also been included in the amendment bill to cover hybrid and electric vehicle batteries in vehicles purchased either prior to or following commencement. This provision will begin when clause 9 of the amendment bill comes into operation and will allow electric and hybrid vehicles that are still under the statutory warranty period to receive the new protections.

The bill also makes changes to reduce red tape for consumers and dealers where a consumer exercises their right to waive the cooling-off period after buying a vehicle. Currently, consumers have two clear business days to consider the purchase of a second-hand vehicle from a dealer. A consumer may cancel the sales contract by written notification before the end of the cooling-off period unless they have chosen to waive this right. To waive the right to a two-day cooling-off period, a separate form must be signed by the purchaser and a person independent of the sale. This requirement imposes an extra burden on consumers to obtain a witness who will sign the form.

Amendments to the act will now specify that a consumer does not require an independent witness to sign the form waiving the cooling-off period. In these circumstances, the cooling-off period will expire when the form is signed by the consumer. Consumers and dealers will also benefit from changes to disclosure requirements about previous owners of a vehicle. Currently, when a vehicle is being offered for sale it must include a public notice with the name and address of the last owner. While this requirement provides some transparency for purchasers, it raises privacy and safety concerns for previous owners and imposes an administrative burden on dealers.

The bill removes the requirement to display the name and address of the previous owner on a notice and replaces it with a statement that the details of the last owner of the vehicle are available from the dealer on request. This bill makes similar amendments to disclosure requirements where a vehicle has previously been used as a taxi or a hire car. Notices must currently display the name and address of the person to whom the vehicle was previously leased. However, this information can be misleading for consumers, as dealers may not receive accurate information from previous owners about the history of a vehicle. Accordingly, the bill removes this requirement to disclose personal details and replaces it with a statement that these details are available on request.

Both of these changes to disclosure requirements will also apply where vehicles are sold at auction. The bill also seeks to increase maximum penalties for unlicensed dealing and tampering with vehicle odometers. Recent prosecutions for odometer tampering have resulted in fines far less than the maximum amount, and existing fines are often a small portion of the profit made from tampering with an odometer. Penalties for odometer tampering will increase from $10,000 to $150,000 or imprisonment for two years, making South Australia the jurisdiction with the toughest penalties in Australia for this harmful activity.

Changes to the act will also allow purchasers to apply to the court for compensation from a private seller where the private seller has been convicted of odometer tampering. Previously, purchasers could only seek compensation from dealers for any disadvantage they suffered after buying a vehicle with a tampered odometer. For unlicensed dealing offences, the penalty for a first or second offence will increase from $100,000 to $150,000. The penalty for third and subsequent offences will increase from $100,000, or 12 months' imprisonment, to $250,000, or two years' imprisonment. The maximum penalty for body corporates that engage in unlicensed dealing will also increase from $250,000 to $500,000.

Increasing these penalties will act as a deterrent for those who seek to profit from unsuspecting purchasers and better protect the community and licensed dealers from the adverse impact of these activities. Additionally, a new offence will be created for false and misleading statements in relation to odometers. Further to this, the Commissioner for Consumer Affairs will be able to direct a person to rectify an odometer that has been altered and stop a person from selling or disposing of a vehicle with a tampered odometer.

These decisions will be reviewable with the South Australian Civil and Administrative Tribunal, and failure to comply with a direction will attract a maximum fine of $20,000. The commissioner will also have the option of paying to rectify an odometer where these costs are not recoverable by other means, such as compensation following a prosecution. It is expected that these new enforcement powers will reduce the risk of unsafe vehicles being driven on South Australian roads.

To accommodate changes in the industry, the bill will also allow dealers to add additional information to a contract of sale. The act currently sets out specific information that must be included in a contract, such as details of the contract parties, the vehicle and agreed purchase price and cooling-off period provisions. Dealers are required to use specific forms prescribed by the Second-Hand Vehicle Dealers Regulations to meet these requirements.

Dealers will now be able to include new information in the contract of sale form, provided that information in the prescribed form is retained. This change will provide greater flexibility for dealers to include details such as the names of salespersons, vehicle stock numbers and other identifiers that are used in sales management systems. These changes are expected to streamline vehicle sales whilst retaining important information for consumers about their rights and obligations under contracts of sale.

This bill also makes minor changes to the Second-hand Vehicle Dealers Compensation Fund. Currently, dealers provide financial contributions to this fund and it is primarily used to compensate consumers where there is no reasonable way of recovering the money they are owed by a dealer. This bill broadens the use of the fund to include programs relating to education, research or reforms that benefit dealers, salespersons or members of the public.

Finally, subject to the passage of this bill through the parliament, there will be further amendments to the regulations to support the changes in the proposed bill. This will include minor stylistic and formatting changes to forms relating to the sale of vehicles and motorcycles as requested by the industry. There will also be a reasonable transition period to ensure that existing printed forms can be phased out and new forms introduced with minimal cost or financial loss to dealers.

I commend this bill to the house and seek leave to have the explanation of clauses inserted in Hansard without my reading it.

Leave granted.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

These clauses are formal.

Part 2—Amendment of Second-hand Vehicle Dealers Act 1995

3—Amendment of section 3—Interpretation

This clause amends section 3 of the principal Act to set out what a reference to repairing a defect is taken to mean in relation to a defect in the battery of a prescribed electric vehicle or prescribed hybrid vehicle.

4—Amendment of section 7—Dealers to be licensed

This clause amends section 7 to increase the maximum penalty for the offence of carrying on a business, or holding out, as a dealer without a licence. The maximum penalty for an offence committed by an individual is $150,000 for a first or second offence and $250,000 or 2 years imprisonment or both for a third or subsequent offence. The maximum penalty for an offence committed by a body corporate is $500,000.

5—Amendment of section 16—Notices to be displayed

This clause amends section 16 to require a notice attached to a vehicle for sale to include a statement that the name and address of the last owner of the vehicle or last person who hired the vehicle under a leasing agreement is available on request from the dealer rather than requiring that information to be in the notice. It also makes it an offence for the dealer to fail to disclose, before a purchase contract is made, the name and address of the last owner or lessee of the vehicle to a potential purchaser who requests that information.

6—Amendment of section 17—Form of contract

This clause amends section 17 to clarify that a dealer may include such other information as the dealer thinks fit in a contract for the sale of a second-hand vehicle by the dealer.

7—Amendment of section 18B—Cooling-off

This clause amends section 18B to delete references to faxes.

8—Amendment of section 20—Notices to be displayed in case of auction

This clause requires a notice attached to a vehicle for sale by auction to include a statement that the name and address of the last owner of the vehicle or last person who hired the vehicle under a leasing agreement is available on request from the auctioneer rather than requiring that information to be in the notice. It also makes it an offence for the auctioneer to fail to disclose, before a purchase contract is made, the name and address of the last owner or lessee of the vehicle to a potential purchaser who requests that information.

9—Amendment of section 23—Duty to repair

This clause amends section 23 to provide that the duty of the dealer to repair a defect that is present in the vehicle at the time of sale or that appears in the vehicle after the sale applies to a defect in the battery of a prescribed electric vehicle or prescribed hybrid vehicle (except in certain circumstances already provided for in that section).

10—Insertion of section 23A

This clause inserts a new section 23A:

23A—No duty to repair where defect disclosed prior to sale

This section sets out that there is no duty on a dealer or auctioneer to repair a defect that is present in a vehicle prior to the sale of the vehicle if that defect does not, or could not reasonably be expected to, affect the ability of the vehicle to be driven safely on a road and if the dealer or auctioneer discloses the defect to the purchaser and the purchaser acknowledges receipt of that information.

11—Amendment of section 33—No waiver of rights

This clause amends section 33 to disallow a person proposing to purchase a second-hand vehicle from being able to waive, in accordance with the regulations, a right to have a defect repaired that is present in the vehicle at the time of sale. It also removes the requirement for a waiver of cooling-off rights to be witnessed by a third party.

12—Amendment of section 34—Interference with odometers prohibited

This clause amends section 34 to increase the maximum penalty for the offence of interfering with the odometer on a second-hand vehicle to $150,000 for a first or second offence and $150,000 or 2 years imprisonment or both for a third or subsequent offence. It also allows the court to order that a person (rather than just a dealer) compensate a purchaser for any disadvantage suffered as a result of the purchase of a vehicle in which an odometer has been interfered with, deletes the requirement for the purchaser to apply for such an order and clarifies that disadvantage suffered by the purchaser includes any costs reasonably incurred, or likely to be incurred, in rectifying the odometer.

13—Insertion of sections 34A and 34B

This clause inserts new sections 34A and 34B:

34A—False or misleading statements in relation to odometers

This section makes it an offence to knowingly make a statement that is false or misleading in a material particular in information provided to a purchaser or prospective purchaser of a second-hand vehicle, or to a dealer to whom a second-hand vehicle has been or is to be sold, relating to the accuracy of the odometer reading of the second-hand vehicle.

34B—Commissioner may direct owner of second-hand vehicle to correct odometer and refrain from selling vehicle etc

This section allows the Commissioner for Consumer Affairs to give directions to the owner of a second-hand vehicle of which the Commissioner believes on reasonable grounds the odometer has been interfered with or is otherwise substantially inaccurate. It also allows the person to whom such a direction is given to seek a review by SACAT of the decision to give the direction.

14—Amendment of section 51—Service of documents

This clause amends section 51 to delete references to facsimiles.

15—Amendment of Schedule 3—Second-hand Vehicles Compensation Fund

This clause amends Schedule 3 to allow the Minister to approve amounts to be paid out of the Second-hand Vehicles Compensation Fund to fund programs relating to education, research or reform for the benefit of dealers, salespersons or members of the public.

Schedule 1—Transitional provision

1—Duty to repair

This clause provides that the duty to repair the battery of a prescribed electric vehicle or prescribed hybrid vehicle applies regardless of whether the sale of the vehicle occurred before or after the commencement of the clause of this measure that amends section 23 of the principal Act.

Debate adjourned on motion of Hon. D.J. Speirs.