CB Cars 2 Pty Ltd v Phantom International Pty Ltd

[2023] NSWDC 334

District Court

New South Wales

Medium Neutral Citation:

CB Cars 2 Pty Ltd v Phantom International Pty Ltd & Anor [2023] NSWDC 334

Hearing dates:

23 and 24 August 2023

Date of orders:

25 August 2023

Decision date:

25 August 2023

Jurisdiction:

Civil

Before:

Russell SC DCJ

Decision:

(1)   Grant leave to the plaintiff to amend the Summons to delete pars 2 and 3; Amended Summons to be filed within 7 days of the date of this judgment.

(2)   Judgment for the plaintiff against the first defendant for $66,514.15.

(3)   Order the first defendant to pay the plaintiff’s costs of the proceedings on an indemnity basis.

(4)   Dismiss the proceedings against the second defendant.

(5)   Order the plaintiff to pay the second defendant’s costs on the ordinary basis.

(6)   Order the first defendant to pay to the plaintiff the costs ordered to be paid by the plaintiff to the second defendant.

(7)   Release the plaintiff from its Harman Undertaking in order that the plaintiff may use any of the evidence already tendered in these proceedings, in proceedings no. 2023/258382 in this court.

Catchwords:

DAMAGES – plaintiff owns Porsche as part of its motor vehicle hire business – first defendant transferred registration of Porsche without authorisation – plaintiff prevented from re-registering and hiring out Porsche – damages for loss of use and interest on loss

Legislation Cited:

District Court Act 1973 (NSW), s 134

Road Transport (Registration) Regulation 2007 (NSW)

Road Transport Act 2013 (NSW) ss 62, 63, 64

Category:

Principal judgment

Parties:

CB Cars 2 Pty Ltd (Plaintiff)
Phantom International Pty Ltd (First Defendant)
Transport for NSW (Second Defendant)

Representation:

Counsel:
C Carter (Plaintiff)
T Perrotta (Solicitor) (on 23 August 2023; excused from attendance on 24 August 2023) (Second Defendant)

Solicitors:
Titan Legal (Plaintiff)
McCabes Lawyers (Second Defendant)

File Number(s):

2023/162796

Judgment

Background

1. The plaintiff CB Cars 2 Pty Ltd (CB Cars) conducts a business providing rental motor vehicles to the general public. One of its vehicles was a white Porsche Macan registration no. ERL09D (the Porsche).

2. CB Cars acquired the Porsche as a new vehicle in February 2022 and became the registered owner of the vehicle. CB Cars then hired the Porsche out to its customers.

3. After a year of ownership, CB Cars took steps to renew the registration of the Porsche. To do so it dealt with the second defendant Transport for NSW (TfNSW). CB Cars was advised that re-registration could not take place, because the records of TfNSW showed that CB Cars had transferred the right to be the registered operator of the Porsche to a company called Trefle Holdings Pty Ltd (Trefle). In turn Trefle had transferred the Porsche to Phantom International Pty Ltd (Phantom), which remained recorded by TfNSW as the registered owner.

The Summons

4. By a Summons filed in this court on 22 May 2023, CB Cars sought orders in relation to Phantom as the first defendant and TfNSW as the second defendant. The orders sought in Summons were:

“For the purposes of this Summons, the motor vehicle bearing Vehicle Identification Number WP1ZZZ95NLB0194, chassis number 015613 and registration number ERL090, being a white in colour Porsche Macan is herein described as the ‘Vehicle’

1   An order for expedition of the final hearing pursuant to Civil Procedure Act 2005 section 61 (2);

2 A declaration made pursuant to section 134(1)(h) of the District Court Act 1973 that the Plaintiff is the legal owner, at both common law and in equity, of the Vehicle.

3 An order pursuant to section 134(1)(h) of the District Court Act 1973 for the Plaintiff to be identified as the ‘Registered Operator’ of the Vehicle and recorded as such in the ‘NSW Register of registerable vehicles’ maintained and kept by the Second Defendant, within the meaning of those terms for the purposes of sections 7 and 14 of the Road Transport (Vehicle Registration) Regulations 2013.

4   Damages as against the First Defendant for loss of rental income that the Plaintiff would have otherwise derived from the ability to hire out the Vehicle as part of its business operations.

5   The First Defendant pay the legal costs of the Plaintiff and of the Second Defendant on an indemnity basis.”

5. The Summons proceedings were heard by me on 23 and 24 August 2023. There was no appearance for Phantom. An Affidavit of Service (PX 1) proved that Phantom had been served with the Summons. An examination of the court file shows that Phantom has never appeared at any time at directions hearings conducted by the Judicial Registrar. The name of Phantom was called outside the court at the commencement of the hearing, but there was no appearance for Phantom. The matter proceeded in its absence.

6. On 23 August 2023 TfNSW was represented by Ms Perrotta, solicitor. Ms Perrotta indicated to the court that her client neither consented to nor opposed the orders sought in relation to, in effect, correction of the register so as to record CB Cars as the registered operator of the Porsche. Ms Perrotta was excused from attendance at the second day of the hearing which took place on 24 August 2023.

Doubts Concerning Equitable Jurisdiction of the District Court

7. On the first day of the hearing I raised with Mr Carter, counsel for CB Cars, my own doubts as to whether the District Court had equitable jurisdiction under s 134(1)(h) of the District Court Act 1973 (NSW) to make the declaration sought in par 2 of the Summons or the order sought in par 3 of the Summons.

8. On the second day of the hearing, Mr Carter indicated that an arrangement had been reached between CB Cars and TfNSW, which was set out in an email dated 23 August 2023 (PX 3). The email was sent by Ms Perrotta to the solicitors for CB Cars. Omitting formalities, Ms Perrotta said:

“I confirm my client is agreeable to accept a written Judgment from His Honour based on his fact findings that the Plaintiff is and should be the registered owner of vehicle bearing registration ERL09D on the NSW Register of Registerable vehicles instead of requiring an order from the District Court compelling TfNSW to amend their records.

I am also instructed that the registration department within TfNSW may require some other documents from your client before they are able to complete the change as sought by your client and I will be in a position to advise what those documents will be tomorrow.

For the purposes of tomorrow, as I have been excused in attending the part heard hearing, we ask that your Counsel ensure His Honour is prepared to provide a written Judgment to the effect noted above.”

9. Upon that agreement being announced, counsel for CB Cars indicated that the plaintiff no longer sought the orders in pars 2 and 3 of the Summons. This meant that there was no longer any issue about the equitable jurisdiction of the District Court, and the matter proceeded to a hearing limited to common law damages sought against Phantom, and costs (see pars 4 and 5 of the Summons).

Evidence for CB Cars

10. The evidence in relation to the damages claim brought by CB Cars against Phantom was contained in the affidavit of Mr T Domni dated 26 July 2023 (PX 2). Mr Domni is Head of Operations for CB Cars. He referred in his affidavit to a paginated bundle of document marked TD1. These documents formed part of Exhibit PX 2.

11. In PX 2 Mr Domni said that CB Cars is in the business of providing rental vehicles to the general public. CB Cars operates its business for the purpose of making a profit. It purchases vehicles new and then hires those vehicles out on a daily hire rate to customers. CB Cars recoups the cost of purchasing and maintaining its fleet of vehicles from the monies it receives from these hiring arrangements. There are a large number of vehicles in the hire fleet. Included in the fleet are prestige vehicles, including the Porsche the subject of these proceedings.

12. Mr Domni gave evidence that on 25 February 2022 CB Cars purchased the Porsche as a new vehicle. He provided a copy of the tax invoice issued by the dealer. CB Cars then applied pursuant to the Road Transport (Registration) Regulation 2007 (NSW) to register the Porsche with TfNSW. In turn TfNSW accepted the application to record the Porsche on the register of vehicles that it maintains. TfNSW allocated the Porsche the registration no. ERL09D. Mr Domni annexed a copy of the vehicle registration papers issued by TfNSW dated 27 February 2022.

13. CB Cars kept records of the rent charged for hire of the Porsche by its customers between 28 February 2022 and 21 February 2023 (the rental period). From these records Mr Domni calculated that the “utilisation rate” for the Porsche was 329 days out of the 359 days in the rental period. This meant that the Porsche was used for hire by CB Cars for 91.64% of that period. Mr Domni made a calculation, by reference to the records of CB Cars, that the average daily rate of hire was $388.28.

14. Mr Domni gave evidence that on 20 February 2023 an employee of CB Cars took steps to renew the registration of the Porsche. However TfNSW advised that re-registration could not be granted, because its records showed that CB Cars had transferred the right to be the registered operator of the Porsche from CB Cars to Trefle, and further that Trefle had transferred the registration to Phantom.

15. Mr Domni annexed TfNSW documents which showed the following:

1. On 23 November 2022 the Porsche was purportedly transferred from CB Cars to Trefle.

2. On 24 November 2022 the Porsche was further purportedly transferred from Trefle to Phantom.

3. On 19 December 2022 a purported transfer from Phantom to Buzz Motors (Buzz) was lodged.

4. On 24 February 2023 Buzz submitted a request to TfNSW for deletion of the transfer by Phantom to Buzz.

16. In relation to these purported transfers, Mr Domni said:

1. Trefle is not a company associated with CB Cars.

2. CB Cars did not sell the Porsche to Trefle.

3. CB Cars did not consent to the lodgement of the application to transfer the name of the registered operator of the Porsche to Trefle.

4. Phantom is not a company associated with CB Cars.

5. CB Cars did not sell the Porsche to Phantom.

6. CB Cars did not consent to the lodgement of the application to transfer the name of the registered operator of the Porsche to Phantom.

7. Buzz is not a company associated with CB Cars.

8. CB Cars did not sell the Porsche to Buzz.

9. CB Cars did not consent to the lodgement of the application to transfer the name of the registered operator of the Porsche to Buzz.

10. CB Cars did not consent to the withdrawal of the application to transfer the Porsche made by Buzz on 23 February 2023.

11. CB Cars was not aware of any of the purported transfers prior to attempting to re-register the Porsche in February 2023.

17. Mr Domni said that at all relevant times CB Cars had retained possession of the Porsche and had hired it out to customers. Once it was discovered that the Porsche had purportedly been transferred to a third party, and that CB Cars could not re-register the vehicle, it was taken out of service and remained in a secure area in a holding yard.

18. Since 21 February 2023 the Porsche has been removed from the list of available vehicles as it was not able to be insured. Thus, the Porsche was not available for commercial hire after 21 February 2023 and CB Cars has been deprived of the opportunity to earn rental income from hiring the Porsche to its customers.

19. In his affidavit Mr Domni made a calculation of a loss of $53,466.16, being loss of income between 21 February 2023 and 23 July 2023. This was calculated using the utilisation rate and the average daily hiring charge.

20. Evidence was presented (PX 4) which updated this figure so as to claim a loss of $65,223.27 up to 24 August 2023. Interest upon this loss was calculated at $1,290.88. The total claim against Phantom for damages and interest was thus $66,514.15.

Findings of Fact in Relation to Ownership and Registration

21. I make the following findings of fact concerning these issues:

1. CB Cars purchased the Porsche as a new vehicle on 25 February 2022.

2. From 25 February 2022 onwards CB Cars was the legal owner of the Porsche.

3. Thereafter CB Cars never sold or in any way transferred ownership of the Porsche to any other party.

4. CB Cars became the registered operator of the Porsche, when the vehicle was registered in the name of CB Cars on the registrable vehicles register conducted and maintained by TfNSW.

5. CB Cars did not authorise, in any fashion, the purported transfer of the registration of the Porsche to Trefle.

6. CB Cars did not authorise, in any fashion, the purported transfer of the registration to Phantom.

7. CB Cars did not authorise, in any fashion, the purported transfer of the registration to Buzz.

8. CB Cars was entitled, at all times from the initial registration of the Porsche until the present day, to be recorded on the register of registrable vehicles maintained by TfNSW as the operator of the Porsche.

9. Neither Trefle nor Phantom nor Buzz had any right to purport to transfer the registration of the Porsche away from CB Cars.

22. As a result of these findings of fact, and as a result of the agreement reached between CB Cars and TfNSW, I find that CB Cars should be recorded as the registered operator of the Porsche on the NSW register of registrable vehicles.

23. Part 4.1 of the Road Transport Act 2013 (NSW) (the RT Act) provides a registration system for vehicles in this State. Division 1 of Pt 4.1 sets out the functions and powers of TfNSW. By s 62(b) TfNSW has the function of maintaining a NSW registrable vehicles register in accordance with the RT Act.

24. By s 63 of the RT Act TfNSW has the power to register or refuse to register a registrable vehicle and the power to transfer or refuse to transfer the registration of a registrable vehicle from one person to another.

25. Division 2 of Part 4.1 of the RT Act deals with the NSW registrable vehicles register. Section 64(2) provides that the NSW registrable vehicles register does not provide evidence of title to any registrable vehicle. In accordance with my findings above, CB Cars has always held the legal title to the Porsche and remains the legal owner.

26. Section 64(10) of the RT Act provides as follows:

“Correction of Register Without limiting s 62 or any other provision of this section, Transport for NSW may correct any mistake, error or omission in the NSW Registrable Vehicles Register subject to the requirements (if any) of the statutory rules.”

27. I presume that in accordance with this power, and the findings in this judgment, TfNSW will exercise its power to correct the register so as to record CB Cars as the operator and registered owner of the Porsche.

28. Given those findings of fact I move to consider the damages claim against Phantom.

Findings of Fact in Relation to Damages

29. In relation to the claim for damages I make the following findings of fact:

1. The unauthorised transfer of the registration of the Porsche to Phantom on 24 November 2022 prevented CB Cars from re-registering its Porsche on 21 February 2023.

2. The consequence was that CB Cars could no longer hire the Porsche out to its customers after 21 February 2023.

3. As a result, CB Cars suffered loss of use of the Porsche, which led to it suffering damages, which were caused by the actions of Phantom.

4. The Porsche had a utilisation rate of 91.64% and an average daily hire rate of $388.28.

5. The loss suffered by CB Cars up to 24 August 2023 is the sum of $65,223.27.

6. Interest at court rates on that loss is the sum of $1,290.88.

30. There will be a judgment for CB Cars against Phantom in the sum of $66,514.15.

Other Orders Sought

31. As previously recited, CB Cars sought leave to amend the Summons by deleting orders 2 and 3. In the circumstances I will grant such leave.

32. CB Cars asked for an order dismissing the proceedings against the second defendant TfNSW. Such an order is appropriate, as the issue between the plaintiff and the second defendant has been resolved by agreement rather than by court hearing.

33. CB Cars asked the court to make an order that the plaintiff pay the second defendant’s legal costs on the ordinary basis. CB Cars also sought a “Bullock” order that Phantom pay to the plaintiff the costs which are ordered to be paid by the plaintiff to the second defendant. In the circumstances it is entirely appropriate to make that order.

34. CB Cars also sought an order that Phantom pay the plaintiff’s costs on an indemnity basis. That was sought in order 5 in the Summons. Phantom has chosen not to participate in the proceedings to put forward any reason why that order should not be made. In the light of my findings that Phantom was entirely unauthorised to become the registered owner of the vehicle, and that such action on the part of Phantom has caused the loss suffered by CB Cars, I find that the actions of CB Cars, and its conduct of the litigation (by its absence) justifies an order for indemnity costs.

35. Finally, CB Cars asked to be released from its Harman Undertaking, in order to use the evidence in these proceedings in a second set of proceedings brought by a Statement of Claim in this court with the file no. 2023/258382. The Statement of Claim in those proceedings was marked as MFI 2 in these proceedings. In those proceedings CB Cars seeks damages against Trefle and Phantom, and against two individuals said to be responsible for lodging the purported transfer of registration applications with TfNSW. Those proceedings were listed for mention only before me on 23 August 2023. I have stood them over before the Judicial Registrar on 7 September 2023 for directions.

36. CB Cars seeks to be released from its Harman Undertaking, so that it can tender the evidence from these proceedings, in those Statement of Claim proceedings. That seems a sensible course, and one directed towards reducing costs and obtaining a quicker disposal of the Statement of Claim proceedings. I will grant the requested release.

Orders

37. The orders of the court are:

1. Grant leave to the plaintiff to amend the Summons to delete pars 2 and 3; Amended Summons to be filed within 7 days of the date of this judgment.

2. Judgment for the plaintiff against the first defendant for $66,514.15.

3. Order the first defendant to pay the plaintiff’s costs of the proceedings on an indemnity basis.

4. Dismiss the proceedings against the second defendant.

5. Order the plaintiff to pay the second defendant’s legal costs on the ordinary basis.

6. Order the first defendant to pay to the plaintiff the costs ordered to be paid by the plaintiff to the second defendant.

7. Release the plaintiff from its Harman Undertaking in order that the plaintiff may use any of the evidence already tendered in these proceedings, in proceedings no. 2023/258382 in this court.

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Decision last updated: 25 August 2023