New Zealand Law
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Under the Consumer Guarantees Act you are entitled to a refund or replacement if the phones are not fit for purpose. From your description these phones had major defects which entitles you to ask for a refund. Their company policy of 14 days doesnt mean anything because they cannot contract out of their obligations under the act.
The relevant sections are
6 Guarantee as to acceptable quality
(1)Subject to section 41, where goods are supplied to a consumer there is a guarantee that the goods are of acceptable quality.
(2)Where the goods fail to comply with the guarantee in this section,—
(a)Part 2 may give the consumer a right of redress against the supplier; and
(b)Part 3 may give the consumer a right of redress against the manufacturer.
Yes, you should cite the act and tell them they have to refund, and also they cannot charge the restocking fee, as that is something extra. I was just about to add this section as well
18Options against suppliers where goods do not comply with guarantees
(1)Where a consumer has a right of redress against the supplier in accordance with this Part in respect of the failure of any goods to comply with a guarantee, the consumer may exercise the following remedies.
(2)Where the failure can be remedied, the consumer may—
(a)require the supplier to remedy the failure within a reasonable time in accordance with section 19:
(b)where a supplier who has been required to remedy a failure refuses or neglects to do so, or does not succeed in doing so within a reasonable time,—
(i)have the failure remedied elsewhere and obtain from the supplier all reasonable costs incurred in having the failure remedied; or
(ii)subject to section 20, reject the goods in accordance with section 22.
(3)Where the failure cannot be remedied or is of a substantial character within the meaning of section 21, the consumer may—
(a)subject to section 20, reject the goods in accordance with section 22; or
(b)obtain from the supplier damages in compensation for any reduction in value of the goods below the price paid or payable by the consumer for the goods.
(4)In addition to the remedies set out in subsection (2) and subsection (3), the consumer may obtain from the supplier damages for any loss or damage to the consumer resulting from the failure (other than loss or damage through reduction in value of the goods) which was reasonably foreseeable as liable to result from the failure.
So you have given them a reasonable time to fix and they have failed to do so
They cannot contract out of the obligations under the Consumer Guarantees Act. If they cannot fix the phone then they must either replace or refund your money. If they aqre avoiding the issue, then a claim in the Disoutes Tribunal may well be the best step as this will force them to answer. You can apply online at this site http://www.justice.govt.nz/tribunals/disputes-tribunal/apply-online