BMW Australia Finance Ltd v Mehajer Vision Pty Ltd (No2)

[2021] NSWSC 1379

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

BMW Australia Finance Ltd v Mehajer Vision Pty Ltd (No2) [2021] NSWSC 1379

Hearing dates:

26 October 2021

Date of orders:

27 October 2021

Decision date:

27 October 2021

Jurisdiction:

Common Law

Before:

Schmidt AJ

Decision:

1. The orders made by consent were:

(a) the Plaintiff is entitled to possession of a motor vehicle better described as a 2011 Ferrari 458 ITA Coupe motor vehicle (Engine No. XXXXX XXXXX XXXXX XXXX, VIN No. XXXXX XXXXX XXXXX XX);

(b) the Plaintiff is entitled to sell the Vehicle; and

(c) the amendment demand given by the Plaintiff to the First Defendant in respect of Personal Property Securities Register registration numbered XXXXX XXXXX XXXXX , by letter dated 17 July 2020, is and was authorised under section 178 of the Personal Property Securities Act 2009 (Cth).

2. Pursuant to section 182(4)(a) of the PPSA, the Second Defendant shall remove from the PPSR the registration numbered XXXXX XXXXX XXXXX .

3. The First Defendant be restrained from registering further interests in respect of the Vehicle on the PPSR until the conclusion of the Sale referred to in paragraph 1 of the notations to this Order.

4. The Plaintiff's costs of the Proceeding (including the costs order made by Schmidt AJ on 24 August 2021) be fixed on a full indemnity basis in the sum of $58,708.95, payable:

(a) in the first instance, out of the proceeds of the Sale referred to in paragraph 1 of the notations to this Order; and

(b) in the second instance, by the First Defendant.

Catchwords:

PROPERTY — Priority of Interests — Personal Property Securities Act 2009 (NSW) — s 55(3) — s 55(4) — Evidentiary basis for priority given to plaintiff under the chattel mortgage agreement — Declaratory relief granted

MORTGAGES AND SECURITIES — Personal Property Securities Act 2009 (Cth) — Security interest — Interest in personal property — Where party claiming an interest in the property is bankrupt — Where party has not taken any steps to advance a claim in the proceedings or register a security interest — Where trustee in bankruptcy has not exercised any right to be joined in the proceedings and has not asserted any interest in the property

MORTGAGES AND SECURITIES — Personal Property Securities Act 2009 (Cth) — Possession

Legislation Cited:

Bankruptcy Act 1966 (Cth) s 58(1), 116(a)

Personal Property Securities Act 2009 (NSW) s 182, 55(3), 55(4), 177, 178, 182

Cases Cited:

Australasian Oil Exploration Ltd v Lachberg (1958) 101 CLR 119; [1958] HCA 51

BMW Australia Finance Ltd v Mehajer Vision Pty Ltd [2021] NSWSC 1057

Capital Finance Australia Limited v Clough [2015] NSWSC 1327

Jones v Sutherland Shire Council [1979] 2 NSWLR 206

National Australia Bank Ltd v Garett (2016) 340 ALR 532; [2016] FCA 714

Repatriation Commission v Tsouranakis (2007) 239 ALR 491; [2007] FCAFC 29

Category:

Principal judgment

Parties:

BMW Australia Finance (Pty Ltd) (Plaintiff)
Mehajer Vision Pty Ltd (First Defendant)
Registrar of Personal Property Securities (Second Defendant)

Representation:

Counsel:
Mr M Gunning (Plaintiff)

Solicitors:
Mills Oakley (Plaintiff)
Rockliffs Lawyers (First Defendants)
Australian Government Solicitor NSW (Second Defendant)

File Number(s):

2021/28898

Judgment

1. BMW sought various declarations in relation to a Ferrari which it has repossessed; an order under s 182 of the Personal Property Securities Act 2009 (NSW) requiring that the Registrar of Personal Property Securities remove from the Personal Property Securities Register, a registration concerning the Ferrari and an order restraining Mehajer Vision Pty Ltd from registering further interests in the Ferrari, in order that it can be sold.

2. The orders BMW sought were initially resisted by Mehajer Vision, who also claimed that the proceedings had been settled. That was disputed by BMW and for reasons given in BMW Australia Finance Ltd v Mehajer Vision Pty Ltd [2021] NSWSC 1057, I concluded that there had been no settlement. Before the adjourned hearing, however, the parties did reach an agreement, with the result that I made orders in terms agreed, for the reasons which follow.

3. The Registrar had filed a submitting appearance and initially sought leave to advance submissions about the operation of the statutory scheme, which had not been addressed by the parties. When the proceedings settled, the Registrar did not seek to be heard.

Reasons why the consent orders were made

4. The orders made included declarations which required BMW to prove the facts necessary to enable the Court to grant the relief the parties had agreed: Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 212. Such declarations only bind the parties to the proceedings: Australasian Oil Exploration Ltd v Lachberg (1958) 101 CLR 119; [1958] HCA 51. They will thus not prevent a third party pursuing a claim of ownership.

5. This was pertinent because of correspondence BMW had received from a Mr Salim Mehajer, in which he appears to claim an interest in the Ferrari. He is presently in custody and the evidence establishes, an undischarged bankrupt. There was no question that Mr Mehajer was on notice of the proceedings, Mehajer Vision having intended to call evidence from him.

6. Mr Mehajer had not, however, taken any steps himself to advance a claim in these proceedings, or to register a security interest in the Ferrari.

7. In any event, any interest which Mr Mehajer may have had in the Ferrari would have vested in his trustee in bankruptcy: ss 58(1) and 116(a) Bankruptcy Act 1966 (Cth). That includes any security interest, or any equitable interest: National Australia Bank Ltd v Garett (2016) 340 ALR 532; [2016] FCA 714 and Repatriation Commission v Tsouranakis (2007) 239 ALR 491; [2007] FCAFC 29 at [137]-[144].

8. Mr Mehajer’s trustee in bankruptcy has not sought to exercise any right to be joined in the proceedings and has also not asserted any interest in the Ferrari.

9. It is pertinent, if there is any basis for a claim of interest in the Ferrari, that under the Personal Property Securities Act a registered interest of the kind BMW has, has priority over an unregistered interest: s 55(3). An earlier registered interest also has priority over a later registered interest: s 55(4).

10. The evidence established BMW’s interest in the Ferrari. It has a first ranking security interest in the vehicle under the chattel mortgage agreement which it entered with Ahamd Yaseen, when it advanced funds to him for the purchase of the vehicle. BMW registered its interest in September 2014. There was default under that agreement, which resulted in the seizure of the Ferrari in May 2020, as the agreement provided for.

11. BMW then held the Ferrari as security for payment of what was outstanding. It intends to sell the Ferrari, as the agreement also contemplates and to apply the proceeds of the sale to what remains outstanding under the agreement.

12. It was in May 2020 that Mehajer Vision registered its purported security interest over the Ferrari. BMW later served an amended demand that the registration be removed, on grounds that the documents relied on did not give rise to any security interest and that none of the collateral described in the registration, secured any obligation owed to it: ss 177 and 178.

13. Mehajer Vision did not accede to the demand and later defended these proceedings, brought under s 182, relying on a 2017 agreement. It had the onus of establishing a basis for the security interest which it claimed, which permitted it to register its security interest: Capital Finance Australia Limited v Clough [2015] NSWSC 1327 at [12]. By the orders to which it has consented, Mehajer Vision accepts that it does not have a right to the security interest which it claimed by its defence.

14. It was thus common ground that BMW was entitled to serve its s 178 demand; that the Ferrari did not secure any obligation owed to Mehajer Vision; that there was no legal or contractual relationship between it and the purported “debtor” or “grantor”, Ahmad Yasseen or Mehajer Bros Auto Pty Ltd, which established that it had a security interest in the Ferrari, or which supported its registered security.

15. In the result I was satisfied that BMW had established an evidentiary basis for the grant of the agreed declaratory relief, it thereby having established the necessary facts which empower the Court to grant that relief.

16. This will leave Mr Mehajer’s trustee free to advance any claims which Mr Mehajer may have in relation to the Ferrari. Although it must be accepted that what Mr Mehajer advanced in his correspondence, does not make the pursuit of such claims likely.

Orders

1. The orders made by consent were:

1. the Plaintiff is entitled to possession of a motor vehicle better described as a 2011 Ferrari 458 ITA Coupe motor vehicle (Engine No. XXXXX XXXXX XXXXX XXXX, VIN No. XXXXX XXXXX XXXXX XX);

2. the Plaintiff is entitled to sell the Vehicle; and

3. the amendment demand given by the Plaintiff to the First Defendant in respect of Personal Property Securities Register registration numbered XXXXX XXXXX XXXXX , by letter dated 17 July 2020, is and was authorised under section 178 of the Personal Property Securities Act 2009 (Cth).

3. Pursuant to section 182(4)(a) of the PPSA, the Second Defendant shall remove from the PPSR the registration numbered XXXXX XXXXX XXXXX .

4. The First Defendant be restrained from registering further interests in respect of the Vehicle on the PPSR until the conclusion of the Sale referred to in paragraph 1 of the notations to this Order.

5. The Plaintiff's costs of the Proceeding (including the costs order made by Schmidt AJ on 24 August 2021) be fixed on a full indemnity basis in the sum of $58,708.95, payable:

1. in the first instance, out of the proceeds of the Sale referred to in paragraph 1 of the notations to this Order; and

2. in the second instance, by the First Defendant.

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Amendments

27 October 2021 - Consent Orders in Full placed in Decision on Coversheet

28 October 2021 - para 9 unregistered changed to registered.

Decision last updated: 28 October 2021