Court orders refund for buyer who unwittingly bought written-off car

The Gauteng regional court has found in favour of a consumer who unsuspectingly bought a previously written-off car.

The court ruled that to preserve the consumer’s right to be informed of the true condition of the vehicle, the dealer should refund the client the full outstanding financed value thereof, plus interest, even though the dealer was unaware the vehicle was previously written off.

The South African Motor Body Repairers' Association (Sambra) has applauded the judgment as a milestone.

Its national chairperson, Charles Canning, said the association has been lobbying the South African Insurance Association (SAIA) for a number of years for the public release of a vehicle salvage database (VSD) that will inform prospective used-car buyers, whether private individuals or user-car dealers, of the status of a vehicle.

“This will ensure buyers of used vehicles have access to and are fully aware of the condition and status of the vehicle. It will prevent situations such as that which the Gauteng regional court has ruled on."

Canning added that an accident-damaged vehicle is written off by an insurer if deemed uneconomical to repair.

“When this happens, the vehicle should be recoded on the National Traffic Information System (NaTIS) as a code 3 vehicle, which will inform any future or prospective buyers of the damaged or salvaged vehicle that will require extensive expenses to restore.

"Typically, insurers dispose of these vehicles at auctions, where they are bought and repaired, often to substandard specification, by unscrupulous repairers, and subsequently sold to unsuspecting consumers,” said Canning.

The car in this ruling was sold online and even though it was available on the date of sale, it was not subjected to any detailed inspection by any parties to the transaction. The plaintiff relied on disclosures made on behalf of the defendant and accepted, at face value, the multi-point-check report thereon.

The plaintiff accepted the report would have disclosed major flaws. As it turned out, the vehicle had a damaged chassis and was not mechanically sound.

The buyer approached Sambra, which provided him with an assessment from a specialist assessor who established the vehicle had been involved in a major accident. It was written off, then sold at auction and put back in the market.

Canning said SAIA has agreed a vehicle salvage database (VSD) will be published towards the end of the first quarter of 2023.

"Sambra welcomes this undertaking by SAIA as it will ensure that unsuspecting buyers ... do not end up with the proverbial 'lemon'."

Previously, SAIA did not want to make the information public as it contained policyholder information which is subject to the Protection of Personal Information Act (Popi). It argued that the VSD was created to combat crime and if the database was made public, criminals would have access to it. This would see a dramatic increase in false financing and insurance of cloned vehicles.

Jakkie Olivier, CEO of the Retail Motor Industry (RMI), said: “South Africa is suffering from one of the highest road-death rates in the world. Many of these tragic deaths are caused by unroadworthy or poorly repaired vehicles. 

"We support publication of the VSD list so there is finally transparency and owners and drivers of vehicles will be able to establish the roadworthiness of their newly acquired vehicles and take the necessary precautionary steps to ensure the vehicle they operate is safe.

"We do, however, need to caution that even with publication of the VSD, it will only pertain to the 30% of cars on South African roads that are insured, so consumers are still urged to exercise caution and get an independent assessment.”