Vehicle dispute: Owner of Mercedes-Benz CLS550 that suffered catastrophic engine failure a year after purchase compensated

Mercedes-Benz has a CLS series of cars in its range, but one buyer who bought a 2015 model successfully argued his purchase had a hidden defect. Photo / File

• A man has won compensation after his Mercedes-Benz’s engine failed a year after purchase.
• The Motor Vehicle Disputes Tribunal ruled the car had a defect that meant no typical consumer would’ve bought it had they known.
• The Consumer Guarantees Act protects consumers from buying defective products.

A man who bought a luxury Mercedes-Benz for his wife has won compensation after the engine blew up barely a year after purchase.

Dion Gough, who bought the car using his company name Full on Repairs and Contracting, paid $50,000 for the 2015 Mercedes-Benz CLS550 in May 2023.

But the following year it suffered “catastrophic engine failure” and required more than $18,000 in repairs, a recently released Motor Vehicle Disputes Tribunal decision says.

Gough was able to recover $10,000 from his insurance.

But he sought the other $8000 from the car’s seller, Wholesale Cars Direct, after dealing with an old schoolmate there called AJ Hoare.

Gough argued he had been sold a car with a hidden defect in breach of the guarantee of quality the average consumer expects.

He also said he told the seller about the engine damage after it happened but they did not respond to him.

For their part, the seller argued the buyer had used the car for business purposes. They also argued the purchase agreement had included a clause that opted out of the Consumer Guarantees Act 1993, which protects consumers by setting minimum standards for products and services.

However, the buyer said the car had been driven by his wife for personal use.

The tribunal adjudicators ruled the parties had not opted out of the CGA, in part because the buyer had not counter-signed the part of the purchase contract stating that.

The adjudicator acknowledged that under consumer law the seller should have been given the first chance to repair the car.

The car’s repairer instead decided upon a “blanket parts replacement approach”, the tribunal said.

Despite this, the tribunal ordered the seller to pay Gough $4000.

It said the defect already existed in the car at the time of sale and was a substantial defect that was known to occur in a range of car models and makes, including the Mercedes-Benz sold.

“The engine failure was caused by a latent manufacturing defect, where oil passes through sensor connectors and wicks up the wiring harness, causing sensor feedback issues and eventually leading to complete component failure,” the tribunal said.

It concluded no reasonable consumer would buy the car had they known it had a defect that could lead to a major engine failure soon after purchase.

However, the tribunal only ordered the seller to pay $4000, instead of the $8000 sought, because the repair work included replacement of some parts that made the car better than at the time of purchase.

Sign up to The Daily H, a free newsletter curated by our editors and delivered straight to your inbox every weekday.