A loophole in used-car laws has caught out luxury car owners who sold vehicles on consignment. Rare or expensive cars are often sold through dealerships that do not purchase cars from customers, but hold the vehicle on the promise that they will pay the car's owner when it is sold.
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Australian laws require car dealers to hold money from consignment sales in a separate trust fund so sellers are guaranteed payment for their cars.
But figures from Fair Trading reveal at least one motorist a month is ripped off by financially stricken dealers who do not pass on proceeds from the sale of their car.
A Fair Trading spokeswoman says the department received 33 complaints relating to the sale of cars on consignment in the past two financial years, including 15 between July 2012 and June 2013.
Richard McKell got in touch with the department in March 2012 after he asked Audi Central Coast to sell his Audi TT-S sports car. A customer bought the car for more than $60,000, but Mr McKell did not see a cent.
''I've never been paid,'' Mr McKell said. ''I'm retired now, I have no way of making up that money. I've got to write it off.''
He lost out when the company behind Audi's Central Coast Franchise, Belcooma Pty Ltd, collapsed. Its owner, George Savva, died not long afterwards.
Mr McKell hired lawyers to help him pursue Belcooma, who eventually told him that he would not recap his losses, and was ''throwing good money after bad''.
''For some reason it didn't occur to me that I was buying or selling a car through a franchise,'' he said. ''I thought it was a branch of Audi - it said Audi Central Coast … Audi said, 'We don't have anything do to with our franchises, go suck eggs'.''
A spokeswoman for Audi Australia said their hands were tied.
''The financial difficulties experienced by the Central Coast franchise are unfortunate, and we sympathise for Mr McKell's situation, however it's important to note that each dealership runs its own franchise and is a separate and distinct legal and business entity to Audi Australia Pty Ltd. Our customer service team encouraged Mr McKell to seek legal advice in this situation, and to contact the trustee of the franchise to recoup his costs from the consignment sale of his car.''
The Fair Trading spokeswoman said protections are in place to prevent motorists from being ripped off when a dealer collapses after a consignment sale.
''Consumers who suffer a financial loss when a licensed motor dealer fails to pass on the proceeds of a consignment sale because the dealer has ceased trading may be eligible to make a claim on the Motor Dealers Compensation Fund,'' she said.
Mr McKell did not get compensation because luxury cars such as his Audi do not meet criteria for the compensation fund.
Stuart Bailey, a director of Sydney City Prestige, which often sells cars on consignment, said people should do their homework before selling a car that way.
''Check that the people you're dealing with are reputable,'' he Bailey said. ''It's caveat emptor, you have to be aware.''
