Commissioner for Consumer Affairs v Schmidt No. Dcadd-03-136
[2004] SADC 23
•5 February 2004
Commissioner for Consumer Affairs v Schmidt
[2004] SADC 23Judge Lee and Assessors Griguol and Hutchinson
Civil - Administrative and Disciplinary Division
This is a complaint by the Commissioner for Consumer Affairs of unlawful conduct by the defendant as a second-hand motor vehicle dealer.
At all relevant times, the defendant was the director and employee of Smitsu Pty Ltd, trading as Grantley Schmidt & Associates, and both the defendant and his company were licensed dealers under the Second-hand Vehicle Dealers Act 1995.
The complaint alleges five occasions of unlawful conduct against the defendant between July 2000 and January 2001. The defendant admits the allegations, which means that our only function is to determine what disciplinary action should be taken under the Act.
The unlawful conduct as particularised in the complaint can be summarised as follows.
On four occasions, the defendant sold second-hand vehicles to customers, but failed to remit to Transport SA monies received from those customers for stamp duty and transfer fees. The total amount involved was $5,184.
On two of those occasions, the defendant failed to remit to warranty providers monies received from customers for the purchase of warranties. The total amount involved was $1,099.
On a fifth occasion, the defendant sold a second-hand vehicle, which he had been holding for the vendor on consignment, to a third party, but failed to account to the vendor for the proceeds. The amount involved was $5,000.
The parties are in agreement that the defendant’s unlawful conduct occurred against the background of similar conduct on seven other occasions between about March 1999 and about February 2001, and on an eighth occasion when the defendant failed to honour statutory warranty obligations with respect to repair work carried out on a car purchased from Smitsu Pty Ltd.
Other facts are also common ground between the parties, namely
1.In July 1991, the defendant was a director of Fifth Harpoon Pty Ltd trading as Southern Nissan. The company was licensed as a dealer under the Act and went into liquidation. The company surrendered its licence on 28 February 1991. So, by virtue of s.9(1)(e) of the Act, the defendant was not eligible to be licensed as a dealer under the Act for a period of five years.
2.On 27 February 2002, the defendant and Smitsu Pty Ltd surrendered their licences.
3.On 18 June 2002, Smitsu Pty Ltd was wound up for the benefit of creditors.
4.Claims against the Second-hand Vehicles Compensation Fund by all 13 customers led to orders against the Fund in the total sum of $101,337.28.
To the extent that is relevant to these proceedings, the Second-hand Vehicle Dealers Act provides:
“27. (1) There is proper cause for disciplinary action against a dealer if–
….
(d)in the case of a dealer who has been employed or engaged to manage and supervise an incorporated dealer’s business–the dealer or another person has acted unlawfully, improperly, negligently or unfairly in the course of managing or supervising, or being employed or otherwise engaged in, that business; or
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(h)events have occurred such that the dealer would not be entitled to be licensed as a dealer if he or she were to apply for a licence.
….
31. (1) On the hearing of a complaint, the District Court may, if it is satisfied on the balance of probabilities that there is proper cause for taking disciplinary action against the person to whom the complaint relates, by an order or orders do one or more of the following:
….
(e)disqualify the person from being licensed under this Act;
(f)prohibit the person from being employed or otherwise engaged in the business of a dealer;
(g)prohibit the person from being a director or having an interest in a body corporate that is a dealer.
(2) The Court may–
(a)stipulate that a disqualification or prohibition is to apply–
(i)permanently; or
(ii)for a specified period; or
(iii)until the fulfilment of stipulated conditions; or
(iv)until further order;
(b)stipulate that an order relating to a person is to have effect at a specified future time and impose conditions as to the conduct of the person or the person’s business until that time.”
The defendant is 55 years of age. He has had a number of car dealerships over the years. Three character references have been submitted on his behalf. His counsel submits that the introduction of GST in July 2000 caused financial difficulties for the defendant and ultimately the downfall of his business. He submits that suspension for a finite period would be the appropriate order in the circumstances.
Counsel for the Commissioner submits that the order should be disqualification and prohibition until further order.
Notwithstanding these submissions, and notwithstanding all that has been put to us on the defendant’s behalf, we are of the opinion that the nature and extent of the conduct which is the subject of the complaint, occurring as it did against the background of similar conduct on other occasions, makes the defendant an unsuitable person to hold a licence, whether now or at any time in the future. The purpose of these proceedings is to protect the public: cp Commissioner for Consumer Affairs v Sollars (2001) 79 SASR 145. The defendant’s conduct has caused a significant loss to members of the public, and has imposed a significant drain upon the Fund. Given the defendant’s bad record, we do not have any confidence in his capacity to reform. Nor do we consider that any outcome less than permanent disqualification and prohibition would operate as a sufficient deterrent to others in the industry who might be minded to behave in this way. Moreover, public confidence in the integrity of the industry needs to be maintained.
The order of the Court is that the defendant be permanently disqualified from being licensed under the Act, permanently prohibited from being employed or otherwise engaged in the business of a dealer, and permanently prohibited from being a director or having an interest in a body corporate that is a dealer.
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