A1 Perfect Plumbing v BMW Prestige
[2006] FMCA 674
•11 May 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| A1 PERFECT PLUMBING & ANOR v BMW PRESTIGE | [2006] FMCA 674 |
| TRADE PRACTICES − Where theft of motor vehicle held in defendant’s possession for the purpose of repairs − whether misleading or deceptive conduct under s.52 Trade Practices Act 1974 in representing respondent would service and return the motor vehicle to the applicant − whether unconscionable conduct in business transaction under ss.51AB & 51AC of the TPA. BAILMENT − Where bailment of hire of work and labour − whether defendant bailee discharged burden to prove appropriate care was taken of the bailed good − whether defendant bailee discharged onus to prove failure to take appropriate care did not contribute to loss of bailed good − whether defendant provided sufficient security measures and took reasonable precautions to prevent theft and ensure safety of motor vehicle. |
| Trade Practices Act 1974, ss.52, 51AB, 51AC, 51A Federal Magistrates Court Rules 2001, Pt 21 Rule 21.10 |
| Mooregate Tobacco v Phillip Morris (1981) 45 CLR 457 Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd (1994) ATR 81-292 Frank Hauser v Mark Dykes Pty Ltd [1960] VR 376 Davis v Pearce Parking Station [1954] 91 CLR 642 Edelson v Musty’s Service Station & Garage (1956) OWN 848 Houghland v RR Low (Luxury Coaches) Ltd (1962) 2 All ER 159 Gerrard & Anor v Slamar [2004] WASCA 253 Hobbs v Petersham Transport Pty Ltd [1971] 124 CLR 220 Scoway Pty Ltd v Faxon Pty Ltd [2004] FCA 249 |
Halsbury’s Laws of Australia [40-385], [40-405]
Palmer on Bailment, 2nd Edition (1991) (The Law Book Company Limited, Sydney), [49]
Court Forms, Precedents and Pleadings – NSW [15,005]
| First Applicant: | A1 PERFECT PLUMBING PTY LIMITED |
| Second Applicant: | REEMA TOUMA |
| Respondent: | BMW PRESTIGE PTY LIMITED T/AS ALTO BMW |
| File number: | SYG 1555/2005 |
| Judgment of: | Raphael FM |
| Hearing date: | 3 May 2006 |
| Date of last submission: | 3 May 2006 |
| Delivered at: | Sydney |
| Delivered on: | 11 May 2006 |
REPRESENTATION
| Counsel for the Applicant: | C. Evatt |
| Solicitors for the Applicant: | Teakle Ormsby George |
| Counsel for the Respondent: | A. Parker |
| Solicitors for the Respondent: | Moroney Betts |
ORDERS
Respondent to pay the applicant the sum of $89,425.80 as damages for breach of the contract of bailment made on 31 May 2004.
Respondent to pay the applicant interest upon the said damages in the sum of $15,677.69.
Respondent to pay the applicant’s costs to be assessed in accordance with Part 21 Rule 21.10 of the Federal Magistrates Court Rules 2001.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1555 of 2005
| A1 PERFECT PLUMBING PTY LIMITED |
First Applicant
REEMA TOUMA
Second Applicant
And
| BMW PRESTIGE PTY LIMITED T/AS ALTO BMW |
Respondent
REASONS FOR JUDGMENT
(As corrected)
On the morning of 31 May 2004 Ms Reema Touma drove the first applicant’s BMW 201-M3 coupe, registration number 0187, to the respondent’s service centre, where it had been booked in for some warranty and other service work to be carried out. Upon arrival at about 10:30a.m. she saw Gregory William Foster, the service advisor. She handed him the key of the vehicle and gave him certain information concerning the work needed to be carried out. The key was on a key-ring, which also contained a remote control for the car alarm and a remote control for the garage where the vehicle is usually kept. Mr Foster told Ms Touma that the vehicle would be ready at approximately 4p.m. that day, but later he telephoned to advise that an oil leak had been found and the car would not be ready until the following day. At about 1:10p.m. on 1 June 2004 Mr Foster telephoned Ms Touma and advised her that the car was ready for collection. She told him she would be there in about an hour. Some time after 2p.m. whilst on her way to pick up the car she was advised that the vehicle had been driven away from Alto BMW’s premises. She then received a telephone call from Mr Foster asking her whether she had picked up the car. She told him that she hadn’t and she was on her way to collect it. Mr Foster said to her words to the effect “the car is gone, someone has just driven the car out of here”. It is accepted by the parties that the respondent was a bailee for reward, that the vehicle was valued at $90, 000.00, and the vehicle has not been returned to its owner.
The evidence which I heard, and in respect of which there was really very little dispute, was that Ms Touma was aware of the existence of three keys to the vehicle. She had been told that in addition to the key which he used to drive the car into the garage, there was another key in the console. She did not know that there was such a key in the console. She knew there was also a key at 20 Cherrybrook Road, Pennant Hills. Although Ms Touma was made the second applicant to these proceedings, she has no interest financial or otherwise in the vehicle. After the car had been booked in through Mr Foster the job sheet prepared by him was handed to the work-shop controller, Mr Gray. Mr Gray then allocated the work to a Mr Willard. Mr Willard carried out the repair work having inspected the car and identifying a number of additional repairs that were required. After the work was completed on 1 June Mr Willard took the car for a road test. He then returned the vehicle to the parking lot in the common area between the panel shop and the service area underneath the dealership. He returned the vehicle’s key to the downstairs key safe where all vehicle keys are kept. In order to obtain access to the safe it is necessary to have an electronic swipe card. Mr Willard had noticed an unstable feeling in the rear of the vehicle when he was road-testing it. He asked Mr Gray whether he could carry out a road test and Mr Gray did that. On his return he placed the vehicle on a hoist where he determined that there were some problems existing in the rear trailing arm bushes. The vehicle was then moved into the wash bay area for it to be cleaned by Mr Cregan. Mr Gray stated that the procedure for washing vehicles included internal cleaning by vacuum and high pressure cleaning of the wheels. The vehicle is thereafter moved inside an automatic car wash to be cleaned. In order to carry out the cleaning effectively and to prevent leakages all the windows are secured in an upright position. Mr Cregan told Mr Gray that the vehicle had been cleaned and Mr Gray then relocated it to a car park in position G1.
The evidence is that there was a large car park on the Alto premises which was shared between vehicles which had been serviced and were waiting for collection, new vehicles that were not in the showroom, and used vehicles that were not in the showroom. Although there are gates to the car park, these are open during business hours. In order to get to the car park it is necessary to pass nearby and within visual distance of the service centre where the service advisors work.
Mr Gray recalled taking the vehicle to car park spot G1. He recalled that he did not wind up or down the windows because to have done so would have caused smearing to the newly washed glass. He recalled getting out of the vehicle and locking it by pressing the button on the key. He recalled hearing the car lock. He was not able to say whether or not the “snipper button” was down because he says it was difficult to see through the tinted glass in the vehicle. He was satisfied the vehicle was secure, and then he returned the key to the key safe. Mr Foster gave no evidence about seeing persons going into the car park but said that when the vehicle was being driven out of the premises he was unable to see the driver of the vehicle, but could observe the occupant in the passenger seat who he described as a person of Middle Eastern appearance, with dark hair and wearing a cap. When he went to car space G1 he noticed that the vehicle was no longer there and he also noticed that there was nothing, such as broken glass, on the ground. Mr Gibbons believed that the only way to access this vehicle if it was locked was to have broken the glass on the window or using the key. I heard evidence from Mr Willard and a Mr Gibbons (by way of affidavit) that although the vehicle might have been entered without a key it could not have started without a key. The applicants accept that the vehicle required a key to start it because of the sophisticated immobilisation equipment onboard. After Mr Gibbons and Mr Foster had inspected car park space G1 they returned to the service office and opened the safe where the key to the vehicle that had been provided by Ms Touma was found.
The claims made by the applicant in its amended application and points of claim, filed on 14 September 2005, commenced with the claim the respondent had engaged in conduct which was misleading or deceptive, or likely to mislead or deceive contrary to s.52 Trade Practices Act 1974, which was particularised as being a representation that the respondent would service and return the motor vehicle to the applicant. It also made a claim under ss.51AB and 51AC Trade Practices Act, particularised as being an undertaking to service and return the vehicle but did not do so, which conduct was alleged to me unconscionable. The amended application then proceeded to make a claim in negligence, and finally one in bailment. Whilst it seems to be that any representation alleged to have been made by the respondents was an implied representation as to future conduct, the return of the vehicle at a future time, and therefore subject to the provisions of s.51A Trade Practices Act and although I am quite satisfied from the evidence that the respondents when making that representation had reasonable grounds for making it, I do not believe that the commencement of the proceedings in this court by the utilisation of a claim under the Trade Practices Act in conjunction with other claims in negligence and bailment was “colourable”. In those circumstances, and for the reasons discussed in Mooregate Tobacco v Phillip Morris (1981) 45 CLR 457 at [476] this court has accrued jurisdiction to hear and determine all the claims made. By the end of the hearing the parties accepted that the only relevant claim was the claim in bailment, and it is with this claim that I shall deal.
The bailment in question is known as a bailment of hire of work and labour. It is a sub-species of a bailment for reward. The bailee in a hire of work and labour has the following duties:
·to do the work;
·to exercise reasonable care and skill in the task he or she has to perform;
·to personally undertake his or her obligations;
·to keep the chattels safe; and
·to comply with the terms of the bailment.
[Halsbury’s Laws of Australia, 40-385]
There is of course the overriding duty of any bailee to return the goods to the bailor. The bailee must exercise reasonable care in keeping the bailed goods safe. This duty extends until the time when the goods have been safely returned to the bailor [Halsbury’s, supra,40-405]. Where the bailed goods have been stolen from the bailee’s possession it is necessary to consider the scope of the duty owed, which depends on the circumstances of each individual case [Halsbury’s, supra, 40-405]. Where goods are injured or lost while in the possession of a bailee the onus rests on the bailee to prove either that:
·appropriate care was taken of the bailed goods; or
·that the failure to take appropriate care did not contribute to the loss; Palmer on Bailment, 2nd ed, at [49].
The scope of the duty placed upon a bailee in a case such as this was considered by a New South Wales Court of Appeal consisting of Gleeson CJ, Kirby P and Priestly JA in Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd (1994) ATR 81-292. To the extent that I set out in this judgment considerable extracts from that case and from other cases, I do so because I was regrettably not provided with any authority on the matter by either the applicant or the respondent, other than a photocopied paragraph from Court Forms, Precedents and Pleadings – NSW which referred to Frank Hauser v Mark Dykes Pty Ltd [1960] VR 376.
Tottenham was not the first case in which a stolen motor vehicle was the subject of proceedings in bailment. A car was stolen from a parking station in Davis v Pearce Parking Station [1954] 91 CLR 642. In that case the court, Dixon CJ, McTiernan, Webb, Fullagar and Kitto JJ, opined (at p. 648):
“His Honour correctly defined the duty which rests at common law on a bailee in the position of the defendant. His duty is to exercise reasonable care in and about the custody of the goods placed in his hands. In particular he is bound to take reasonable care to safeguard the property against theft….If the property is lost, stolen, damaged or destroyed the burden lies on the bailee of proving that the loss, theft, damage or destruction has not been caused by any failure on his part to exercise reasonable care.”
In Edelson v Musty’s Service Station & Garage (1956) OWN 848, the Ontario Court of Appeal heard an appeal in respect of a vehicle that was driven to a garage for a minor repair job and washing. The key which was used to drive the vehicle into the garage was secured by the garage, but there was another key onboard left in the locked (though easily opened) glove compartment of the car. The vehicle had been left in the street after the repair work had been carried out. The door of the vehicle was unlocked, but the key with which it had been driven into the garage remained inside the garage on a board. The garage was not informed that a second ignition key may have been in the car. In finding for the plaintiff Roach JA for the court said (at p. 851):
“There was a duty upon the defendant as the bailee of the plaintiff’s motor car to use that degree of care and prudence that an ordinary careful and prudent person would use in respect of his own property. The onus rested on the defendant to satisfy the court that he had exercised that degree of care. The trial judge has found that he had not satisfied that onus and we think in so finding he was correct.”
In this case, the failure of the defendant was a failure to lock the vehicle having left it in the street. The court did not consider that the existence of the second key which had been used in the theft constituted contributory negligence on the part of the plaintiff. In Houghland v RR Low (Luxury Coaches) Ltd (1962) 2 All ER 159 a passenger’s bag which had been placed in one coach that had broken down was intended to be transferred to a second coach. When the second coach arrived at the passenger’s destination the bag was not in the hold. Ormerod CJ said
“…once the failure of the bailee to hand over the articles in question has been proved, there is a prima facie case, and the plaintiff is entitled to recover unless the defendant can establish a defence to the satisfaction of the court; and that, I think, is clear by the words used by Bankes LJ in Coldman v Hill [1918] All ER Rep in a passage which appears to me to be important in this case, the Lord Justice says at p.438; [1919] 1 KB at 449
“I think that the law still is that, if a bailee is sued in detinue only, it is a good answer for him to say that the goods were stolen without any default on his part, as the general bailment laid in the declaration pledges the plaintiff to the proof of nothing except that the goods were in the defendant’s hands and were wrongfully detained…”
So far, so good; but, of course, it is, in those circumstances, for the defendant to establish affirmatively, not only that the goods were stolen, but they were stolen without default on his part; in other words, that there was no negligence on his part in the care with which he took of the goods.”
In Tottenham Kirby P commences his judgment by setting out nine legal principles relating to theft from a bailee. He notes first the duty to take care of the bailed goods as is reasonable in the circumstances and restore the property to the bailor. He notes that in the event of loss the onus is on the bailee to disprove that the loss is the result of any negligence on its part. He notes that the duty of the bailee is not that of an insurer so that “the bailee is not obliged to take every conceivable precaution to prevent loss of the goods. Its duty is simply to act reasonably”. The fourth principle adumbrated by His Honour is:
“In respect of goods lost during bailment by theft, the bailee must show that it took steps which were reasonable in the circumstances to keep out intruders who might otherwise be tempted to misappropriate the bailor’s goods or damage them. See Pitt Son & Badgery Limited v Proulefoc SA (1984) 153 CLR 644, 646; Houghland v RR Low (Luxury Coaches) Ltd [1962] 1 QB 694 (CA), 700. The relevant circumstances will include such matters as the value of the goods bailed; the location of the place of bailment; the costs paid to the bailee by the bailor; the extent of knowledge of the bailor of the circumstances of safekeeping; and the extent (if any) of evidence of the theft of goods in the vicinity of the place in which the bailee held the subject goods.” [at 61,554]
But His Honour goes on to consider modern circumstances with the prevalence of theft, particularly of mobile or transportable goods having a ready resale market. He considered that these circumstances impose upon a bailee a duty to take positive steps to deter would-be thieves and prevent them from gaining access to buildings in which bailed goods are kept.
“Further, it will be reasonable to impose upon a bailee the positive duty to impede the egress of thieves with bailed goods, if security is breached and access is gained to them. See British Road Services v Arthurv v Crutchley & Co Ltd (Factory Guards Ltd, Third Parties) [1968] 1 All ER 811 (CA); Nibali v Sweeting & Denney (WA) Pty Limited (1989) Aust Tort Reports 80-258. The standard remains one of reasonable care not every conceivable or possible precaution to prevent loss as with insurance.” [at 61,554]
In regard to foreseeability His Honour suggested that the appropriate test of a defendant’s attempt of rebuttal of its suggested negligence is, to ask whether
“theft of the kind which occurred was “not unlikely to occur”. Of obvious relevance to that question are the valuable and mobile qualities of the goods typically bailed to the bailee, the ready market for their sale and the ease of their removal once the security of the building was breached.” [at 61,555]
The other matters raised by His Honour are not strictly relevant in this case where, although contributory negligence is raised by the respondent in its pleadings, it was not pursued. The contributory negligence which was pleaded related to the leaving of the key in the consul. I offered Mr Parker the opportunity to accept that the key may have been left in the consul so that an argument for contributory negligence could be made, but he declined. There is no evidence before me that there was a key in the consul and so I do not think this is a case in which I need to be concerned about contributory negligence.
In Tottenham a 1988 RS Camaro Coupe motor vehicle was taken into the defendant’s premises by the plaintiff for repair work on its carburettor. The vehicle was left in the garage overnight with the key in the ignition. It was established the thieves had entered into the premises by breaking a skylight which had been made of reinforced mesh glass and was incapable of being opened. They then opened the secured roller door and drove the Camaro motor vehicle and a BMW belonging to the owner of the business away. Before the judge at first instance, Levine DCJ, much emphasis was placed on the fact that the key had been left in the ignition. Kirby P says at [61,533]:
“However, leaving the keys in the ignition was not the only case presented for the appellant at the trial. Reference was also made to the precautions for the security of the premises which, in my view, were much more relevant to the suggested fault of the respondent. If the intruders could either not enter the premises or not secure egress from the premises of motor vehicles, the presence of the ignition keys in them would be relevant to the loss of the appellant’s Camaro. Similarly, if accomplished car thieves could enter premises from which it would be known or inferred that vehicles might be kept overnight, it seems scarcely likely that the absence of an ignition key would have necessarily prevented the theft of the appellant’s Camaro. On the contrary, police evidence tendered at the trial that “hotwiring” would be known by expert car thieves and would have permitted the removal of the Camaro, keys or no keys.”
In concluding that the appeal should be allowed and that the bailor should succeed His Honour stated at [61,559]
“In my opinion there is enough in this case to entitle the appellant to succeed upon that footing. I would concede that the appellant’s case was not as strong as it might have been. There appears to have been undue faith placed in the onus of proof and in the mistargeted strategy of concentrating on the respondent’s act of leaving the keys in the ignition. Although reversed, the onus can be discharged, as Nibali and many other cases show. A bailor will be wise to be ready, in cases of theft, with more substantial evidence of an expert in security than was tendered in this case. The keys only became relevant when the security of the respondent’s building was breached. The case should have been presented and fought with a focus on the alarms and other forms of anterior security. These issues were mentioned but were not given the emphasis they warranted.”
In the case before me, much emphasis and considerable expert opinion addressed the question of the ability to start this motor vehicle without a key. The applicant did not attempt to rebut this evidence but pointed to the fact that the vehicle had been removed and that the key with which it was brought into the premises remained in the premises after the vehicle had left. In contrast with the substantial evidence relating to the key, the respondent provided no real evidence about other security measures to prevent a vehicle being driven from the car park or for ingress to the car park by persons who might be intent upon stealing vehicles. The evidence was that the car park was shared by all three business units of the respondent, new car sales, second-hand car sales and service. There were gates but they were not locked during business hours. And although anyone wishing to drive a vehicle out of the car park and away from the premises would have to pass close by the service area, it is clear from what occurred in this case that this did not prevent a theft.
This court has no idea how the theft occurred. The respondent hinted that it might have been carried out by persons who knew the proprietor of the applicant company. But there was no evidence from which such an inference could be drawn, particularly as the respondent declined to accept that a key was left in the console. The applicant put up no suggestions and specifically did not suggest that the key in the console might have been found by an employee of the respondent and passed to an accomplice who later entered onto the premises and stole the vehicle. In these circumstances the court is left to apply the tests defined by Kirby P in Tottenham. In my view the respondent does not pass such tests. As Mr Evatt so succinctly put it “they protected the key and not the car”. There is no doubt in my mind that the respondent was aware of the dangers of car theft. It believed that theft could be prevented by the protection of the car keys. But beyond protecting the keys it did little. There was no security on the gate or in the car park. Kirby P, with whom Gleeson CJ and Priestley JA agreed, laid down an affirmative duty of care in respect of bailees of mobile or transportable goods having a ready resale value [at 61,554] :
“…a bailee cannot simply wait until a theft occurs before it turns its attention to the necessities of such security as is appropriate to the circumstances to ensure the provision of care to the safekeeping of the bailed goods.”
The decision in Tottenham was approved by the Court of Appeal of the Supreme Court of Western Australia in Gerrard & Anor v Slamar [2004] WASCA 253. It noted that the same rule was established by the High Court in Hobbs v Petersham Transport Pty Ltd [1971] 124 CLR 220. I am satisfied that the respondent has failed to discharge the onus of satisfying me that it took reasonable precautions for the safety of the vehicle. In those circumstances the liability of a bailee is imposed upon it. The respondent argues that it has a set-off in the sum of $574.20, being the cost of services performed on the vehicle prior to it being stolen. I heard no argument from Mr Evatt in relation to this matter. It could be said that the services were of no value because the applicant did not receive back its vehicle. This is not the correct analysis; Gerrard, supra, at [52]. The value placed upon the vehicle and claimed by the applicant is the value of the vehicle in good condition after the repairs for which it went into the respondent’s premises were carried out. In those circumstances the applicant is bound to pay for those repairs and I would allow the set-off in the sum of $574.20. I would therefore award the applicant damages in the sum of $89,425.80, being the agreed value less the set-off, and I would award the applicant interest at the court rate of 9% (Schedule J, Supreme Court Rules (NSW) (1970); as per Hely J in Scoway Pty Ltd v Faxon Pty Ltd [2004] FCA 249 at [21]) from 31 May 2004 until the date of judgment being $15, 677.69. I order that the respondent pay the applicant’s costs to be assessed in accordance with Part 21 Rule 21.10 Federal Magistrates Court Rules 2001.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Raphael FM.
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