Did you buy an extended warranty product from National Warranty Company between 1 July 2013 and 28 May 2015 when you purchased a second-hand vehicle including a car, caravan, motorhome and/or watercraft? If so, you may have an entitlement to recover the cost of the warranty, plus interest, along with finance charges (if you took out a loan to pay for the purchase). This may amount to several thousand dollars.

1. Introduction

International litigation funder Vannin Capital (Vannin) is funding a class action proceeding against Davantage Group Pty Ltd (trading as National Warranty Company) (Davantage). On 10 August 2018 proceedings were issued in the Federal Court of Australia on behalf of persons or entities who acquired discretionary risk products issued by the Respondent, Davantage, during the period July 2013 to May 2015. Davantage is a wholly owned subsidiary of Presidian Holdings Pty Ltd (Presidian) which was acquired by ASX listed McMillan Shakespeare Limited (ASX:MMS) in February 2015.

Vannin Capital is one of the world's largest and pre-eminent litigation funders. It has staff in London, Jersey, Paris, Washington, New York, Sydney, Melbourne and Bonn. Vannin is presently funding claims worth billions of dollars.

2. Background

From 1 July 2013 to 28 May 2015, Davantage issued discretionary risk products for second hand vehicles including cars, caravans, motorhomes and watercraft. Most warranty products were issued to the customer by the vehicle dealer at the time they purchased the vehicle.

The warranties were often issued under the product name of “Sentinel Warranty” and purported to reduce the financial impact of unexpected mechanical or electrical failure to the vehicle by providing parts and labour cover on covered components for an agreed period (typically a few years).

Our investigations show that the amount of premium paid for the warranty products ranged from a few hundred dollars up to a few thousand dollars, depending on the features of the warranty product selected and the period of the warranty.

However, each warranty product disclosure statement contained numerous exclusions from cover, such as in relation to wear and tear, and fixed monetary limits for the cover of certain components (eg, transmissions).

Most significantly, even if a claim was otherwise within the terms and conditions of the warranty product, Davantage retained a discretion under each product disclosure statement as to whether they would pay any claim, and if so, what amount.

The product disclosure statements we have reviewed are not contracts of insurance. Significantly, this means that the protective provisions of the Insurance Contracts Act 1984 (Cth) do not apply and Davantage is not subject to the regulation that an insurer would be. Our investigations lead us to believe that many people who purchased the extended warranty products may not have properly understood this.

As a result, the claim against Davantage is that the warranty products are virtually worthless.

3. The case against Davantage

The Applicant alleges in the Further Amended Statement of Claim in Federal Court proceeding Brett William Evans v Davantage Group Pty Ltd (Proceeding Number VID 982/2018) that during the period 1 July 2013 to 28 May 2015:

  • (a) Davantage (the Respondent) issued warranties (NWC Warranties), which were constituted by the following:
    • (i) the execution of a document titled "Customer Contract and Declaration" by an authorised representative of the Respondent and the person to whom the NWC Warranty was issued;
    • (ii) a Product Disclosure Statement (NWC PDS) provided by an authorised representative of the Respondent prior to or at the time of executing the Customer Contract and Declaration;
  • (b) the NWC PDSs contained a clause stating that the NWC Warranties were discretionary risk products, which meant that even if a consumer made a claim that fell within the terms of the warranty and was not the subject of any exclusion, the Respondent was not obliged to pay all claims that fell within the terms and conditions of the NWC Warranties;
  • (c) by reason of the discretion which the Respondent retained, the NWC Warranties did not give rise to legally valid and binding contracts. Specifically, the premium payments made to the Respondent by persons who purchased the NWC Warranties were unsupported by consideration because the Respondent’s promises in return to make a payment in response to a claim under the NWC Warranties were illusory;
  • (d) the Respondent's conduct in issuing the warranties was unconscionable conduct in contravention of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act); and
  • (e) if any contract was formed between the Respondent and purchasers of the NWC Warranties, the contracts contain unfair contract terms within the meaning of the ASIC Act.

The Applicant seeks the following relief:

  • (a) declarations from the Court that:
    • (i) the NWC Warranties did not constitute or give rise to legally binding contracts;
    • (ii) the Respondent's conduct in issuing the warranties was unconscionable under the ASIC Act; and
    • (iii) alternatively, the contracts are void under the ASIC Act, by reason of their containing unfair contract terms;
  • (b) a refund of the premiums he (and class members) paid to the Respondent; and
  • (c) interest charges and transaction costs associated with the purchase of the NWC Warranties by some Class Members.

4. You may be entitled to recover your premium, finance charges and interest

Our investigations reveal that many people purchased the warranty products at the same time they purchased a second-hand vehicle, often with the use of finance. As a result, the cost of the premium of the warranty product is likely to have been included in the amount financed.

We intend to seek orders from the Federal Court to recover the amount of the premium paid to Davantage (together with interest at applicable Court rates) along with the amount of any interest and finance charges that were paid to a financier for any loan amount taken out to pay for the premium.

In many cases, individual losses could run into several thousands of dollars.

5. How do I register my interest in participating?

Please complete the information below to register your interest. Registering does not commit you to joining the class action proceeding funded by Vannin but enables us to keep you informed

6. Will the information I provide be kept confidential?

Vannin will only use and/or disclose your personal information strictly for the purpose of the legal proceedings or as required by the Court or by law.

We may contact you to discuss your participation in the claim.

7. What happens once I have registered?

In the coming weeks, Vannin will provide you with the following information by email:

  • Copy of a Litigation Funding Agreement.
  • Disclosure information, including a claim summary and FAQ list.

If you have any queries, you may contact us at nwcclassaction@vannin.com.

Register your interest

Accordingly, we encourage you to register your interest here:

Personal Information
Contract information

“You may upload a copy of your warranty contract and any other supporting documents if you wish.”