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I recently won an auction on Trademe after having tested the vehicle and was happy with the condition I found it in.
However, after winning the Auction and making contact with the Dealer, was advised firstly that there was a mechanical issue they were looking into, which they did not say what it was.

On followup call three hours later, I was told that the vehicle had not been WOF or Registered although this is what the CIN claimed it had been.
They say it was human error and that they were now waiting on paperwork from Japan in order to process the vehicle before they could actually proceed with this sale!!
So now I am without a car which I had expected to pickup today (three days to pay as per their term and conditions) and in a very inconvenient situation.
They have not kept their side of the bargain as they have falesly declared the readiness of the vehicle!!
I know I am now not obligated to continue with the trade but I want to know how I can take them to task for the inconvenience they have caused me.

As you say, you can back out of the deal and if the dealer has seemingly misled you to this extent before the sale, I'd be asking myself if they're the type of business I'd be comfortable dealing with.
However, assuming you are wishing to proceed with the purchase, I would have thought a reputable business would at least offer you a loan vehicle while they resolve the paperwork and registration issues.
From a legal standpoint they probably aren't obligated to do so, but as a goodwill gesture it might go some way towards demonstrating to you that they take the matter of customer satisfaction seriously and that your business is important to them.