Commissioner for Consumer and Business Affairs v Gary Ronald Melrose No. Scgrg-96-2252 Judgment No. 6198 Number of Pages 7 Sale of Goods

[1997] SASC 6198

IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA

DOYLE CJ, MATHESON AND OLSSON JJ

Sale of goods - sale of motor car by auction - claim by vendor in the liquidation of auctioneer - whether Magistrate correctly authorised payment of compensation from the Second-hand Vehicles Compensation Fund - consideration of ss3, 7, 23 and 26 and Schedule 3 of Second-hand Dealers Act 1995 - ruling that auctioneer was a dealer within the meaning of Schedule 3 - appeal dismissed.

ADELAIDE, 3 June 1997 (hearing), 13 June 1997 (decision)

#DATE 13:6:1997

#ADD 16:6:1997

Appellants:

Counsel: Mr A P Moss

Solicitors: Crown Solicitor (SA)

Respondent:

Counsel: Mr D W Smith with him Mr C H Goodall

Solicitors: Leni Palk

Order:

DOYLE CJ

1. The issue in this appeal is whether compensation is payable from the Second-hand Vehicles Compensation Fund in respect of a transaction in which a person has left a second-hand vehicle in an auctioneer's possession to be offered for sale by the auctioneer on behalf of the person.

2. The relevant facts and the relevant legislative provisions are set out in the judgment of Matheson J.

3. I agree with his conclusion that the appeal should be dismissed.

4. I express my own reasons, briefly, as follows.

5. As a matter or ordinary language, an "auctioneer" falls within the statutory definition of a "dealer". That is because an auctioneer carries on the business of selling second-hand vehicles, albeit as agent. This conclusion is supported by the definition of "sell".

6. In my opinion the scheme of the Act reinforces the view that an auctioneer is a dealer. There are various provisions in the Act that impose obligations on a dealer. What one finds is that an auctioneer or, in some cases, a sale by auction, is excluded from the relevant obligation. That would be unnecessary if an auctioneer was not a dealer.

7. To my mind, there were only two matters identified which could be said to point the other way.

8. The first is the fact that the definition of "auctioneer" expressly includes a dealer. That was said to be unnecessary if an auctioneer is a dealer. In my opinion that was probably done to ensure that the provisions relating to sales by auction apply to a dealer who conducts an auction, even if the extent to which the dealer does so is not sufficient for one to conclude that the dealer carries on the business of conducting auctions.

9. The other matter said to point the other way was the fact that the terms of Schedule 3 are such that auctioneers are not required to contribute to the Fund. That is a little odd, but as Matheson J points out the same is true of a dealer who should be licensed but is not licensed.

10. In my opinion neither matter pointed to by counsel for the appellant is sufficient to displace my initial conclusion that for the purposes of the Act an auctioneer is a dealer.

11. For those reasons I agree that the appeal should be dismissed.

MATHESON J

12. This is an appeal of the Commissioner for Consumer and Business Affairs from a decision of his Honour Mr A J Cannon SSM sitting in the Magistrates Court at Adelaide authorising the payment of $8,231 compensation from the Second-hand Vehicles Compensation Fund to the respondent. The appeal has been referred to this court by consent. It involves an interpretation of the Second-hand Dealers Act 1995, and in particular whether Kearns Motor Auctions was a dealer within the meaning of Schedule 3 thereof. His Honour held that it was.

13. The following facts were agreed for the purpose of the appeal - they are an enlargement on what was agreed before the learned Magistrate: "1. The respondent was the owner of a second-hand 1987 VL Holden Commodore (Berlina) registered No. SA UJJ-538 ('the vehicle').

2. Kearns Motor Auctions at all material times was a business owned and operated by Kearns Brothers (Auctions) Pty. Ltd. at 9 Grove Avenue Marleston.

3. Kearns Motor Auctions carried on the business of conducting auctions for the sale of second-hand vehicles at its premises at Marleston.

4. In about January 1996 the respondent decided to sell the vehicle and on the 14th February 1996 entered into an agreement with Kearns Motor Auctions to sell the vehicle at auction.

5. On the 16th February 1996 the vehicle was sold at or immediately after auction by Kearns Motor Auctions to a Mr. Palolo Barilla of Flinders Park for $8,850.

6. The commission due to Kearns Motor Auctions was 7% and so the respondent was entitled to $8,231, taking into account the deduction of the commission of $619.00.

7. Following the auction, despite requests by the respondent, Kearns Motor Auctions did not pay the sum due to the respondent.

8. On the 7th March 1996 Mr. Barrie Mansom was appointed Administrator of Kearns Brothers (Auctions) Pty. Ltd. and on the 16th May 1996 Mr. Mansom was appointed Liquidator.

9. The respondent has made a claim in the liquidation. There is no prospect of him being paid.

10. The respondent was not a dealer within the meaning of the Second-Hand Dealers Act, 1995 (the 1995 Act).

11. The Commissioner for Consumer Affairs, the appellant, is responsible for the administration of the Act subject to the directions of the Minister.

12. Pursuant to section 28 of the repealed Second-Hand Motor Vehicles Act, 1983 (1983 Act), a compensation fund was established and it was contributed to by dealers licensed pursuant to that 1983 Act.

13. The fund and the right to claim against it is and was preserved by the 1995 Act.

14. Neither Kearns Brothers Auctions Pty. Ltd. nor its trading entities such as Kearns Motor Auctions were licensed under either the 1983 Act or the 1995 Act and further did not contribute to the fund.

15. On the 19th November 1996 the respondent claimed against the said fund pursuant to Schedule 3 of the 1995 Act and in particular sought an order from the Court authorising payment of compensation to him from the fund.

16. On the 14th November 1996 the Learned Supervising Magistrate, Mr. A. J. Cannon, granted the respondent's application and authorised the payment of $8,231 from the fund." 14. It is necessary to look at a number of the definitions in s3 of the 1995 Act which provides that: "... unless the contrary attention appears - 'auctioneer' means a person who carries on the business of conducting auctions for the sale of goods, and includes a dealer who in the course of business conducts an auction for the sale of a second-hand, vehicle;

'dealer' means a person who carries on the business of selling second-hand vehicles;

'licence' means a licence under Part 2 and 'licensed' and 'licensee' have corresponding meanings;

'second-hand vehicle' means a vehicle that has been used for a purpose not connected with its manufacture or sale, including a vehicle that has been used for the purpose of demonstration in connection with the sale of another vehicle;

'sell' includes sell on behalf of another person and 'sale' , 'offer for sale' and 'expose for sale' have corresponding meanings." 15. It is also necessary to look at s7: "7.(1) A person must not carry on business, or hold himself or herself out, as a dealer unless licensed under this Act.

Penalty: Division 5 fine.

(2) This section does not apply to -

(a) a person lawfully carrying on business as a credit provider within the meaning of the Consumer Credit Act 1972 -

(i) whose business as a dealer is incidental to the credit business; and

(ii) who, in carrying on business as a dealer, observes any requirements imposed by regulation for the purposes of this paragraph; or

(b) an auctioneer who sells second-hand vehicles on behalf of other persons -

(i) by auction; or

(ii) by sales negotiated immediately after conducting auctions for the sale of the vehicles,

and who does not otherwise carry on the business of selling second-hand vehicles; or

(c) the Crown." 16. It is also necessary to quote, so far as is material, from 3 which forms part of the Act (see Acts Interpretation Act 1915 s19): "SCHEDULE 3

Second-hand Vehicles Compensation Fund

1. The Second-hand Vehicles Compensation Fund continues and will continue to be administered by the Commissioner.

Claim against Fund

2.(1) This clause applies to a claim -

(a) arising out of or in connection with the sale or purchase of a second-hand vehicle before or after the commencement of this Act; or

(b) arising out of or in connection with a transaction with a dealer before or after the commencement of this Act.

(2) If the Magistrates Court, on application by a person who purchased a second-hand vehicle from a dealer, is satisfied that -

(a) the Commercial Tribunal or a Court has made an order for the payment by the dealer of a sum of money to the purchaser; and

(b) the purchaser has no reasonable prospect of recovering the amount specified in the order (except under this schedule),

the Court may authorise payment of compensation to the purchaser out of the Fund.

(3) If the Magistrates Court, on application of a person not being a dealer who has -

(a) purchased a second-hand vehicle from a dealer; or

(b) sold a second-hand vehicle to a dealer; or

(c) left a second-hand vehicle in a dealer's possession to be offered for sale by the dealer on behalf of the person,

is satisfied that -

(d) the person has, apart from this Act, a valid unsatisfied claim against the dealer arising out of or in connection with the transaction; and

(e) the person has no reasonable prospect of recovering the amount of the claim (except under this schedule),

the Court may authorise payment of compensation to that person out of the Fund.

3. ...

Licensed dealers may be required to contribute to Fund

4.(1) Each licensed dealer must pay to the Commissioner for payment into the Fund such contribution as the licensee is required to pay under the regulations.

(2) If a licensee fails to pay a contribution within the time allowed for payment by the regulations, the licence is suspended until the contribution is paid.

5 - 7 ..." 17. During the course of argument a question was raised as to whether auctioneers were required to be licensed under any other legislation. The Auctioneers Act 1934 was repealed by the Appraisers Act and Auctioneers Act Repeal Act 1980. To ascertain the history, and for no other purpose, I refer to Hansard dated 14 August 1980 p360 which records that the Hon J C Burdett (then Minister of Community Welfare) said:

"Unlike most occupational licensing statutes, no body is established under the Acts to hear applications or to regulate the conduct of licensees, nor is there any power to discipline licensees if proper cause exists. In effect, the protection afforded to members of the public from objectionable behaviour of auctioneers or appraisers is negligible. Once a licence has been issued, there is no power vested in any authority to cancel or suspend it. Very few complaints are received about these classes of occupation. The complaints that are received concern auctioneers and valuers of land and auctioneers of secondhand motor vehicles, and these occupations are already subject to stringent controls under the Land and Business Agents Act, 1973-1979, the Land Valuers Licensing Act, 1969-1974, and the Secondhand Motor Vehicles Act, 1971." 18. The Acts just mentioned have all been repealed, but it would appear that auctioneers are to some extent currently controlled by the Land Agents Act 1984 (see definition of "sell" in s3 and see ss4 and 20), the Sale of Goods Act 1895 s57, the Second-hand Dealers and Pawnbrokers Act 1996, (see definition of "sell" in s3), and of course by the Second-hand Dealers Act 1995.

19. I refer to the words I have underlined in 3. In my view, they require the conclusion that the respondent would have a valid claim if the second respondent was a dealer.

20. Mr Moss, counsel for the appellant, pointed out that the learned Magistrate's interpretation meant that compensation would be paid out of the Fund in relation to transactions in which the selling auctioneers were not required to contribute to the Fund. Whilst he conceded that such compensation would also be payable in the case of an unlicensed dealer who was not an auctioneer, and who was therefore required to be licensed under the Act and had not contributed to the Fund, he argued that Parliament could not have intended the interpretation of the Act for which the first respondent had successfully contended.

Mr Moss sought to rely on the definition of "auctioneer", supra. He argued that an auctioneer is not to be treated in the Act as a dealer, because if that were so, there would have been no need for Parliament to have added the words "includes a dealer ...". He, however, conceded in the end that the Act was ambiguous, and in my view there are in fact strong indications in other parts of the Act that are contrary to his interpretation. First, there is s7(2)(b), supra, which provides that auctioneers who sell second-hand vehicles on behalf of other persons by auction are not required to be licensed. Second, there is s23 which provides that a dealer is under a duty to repair any defect present or appearing after the sale, but it specifically provides that it does not apply to "the sale of a vehicle on behalf of a person who is not a dealer, if the sale is by auction". Third, there is Part 5 of the Act which is headed "Discipline", and includes s26 which reads: "26. In this Part - 'dealer' means -

(a) a dealer or former dealer required to be licensed under this Act or a corresponding previous enactment (whether or not currently or previously licensed); or

(b) a licensee (whether or not carrying on business as a dealer);

'director' of a body corporate includes a former director of a body corporate." Finally, 3 itself speaks both of dealers and licensed dealers.

21. I have reached the conclusion that Parliament actually intended to discriminate between auctioneer/dealers on the one hand and licensed dealers on the other hand. If that is not what Parliament in fact intended, it can easily amend 3 to insert the word "licensed" before the word "dealer" wherever appearing in clause 2 thereof.

22. In my opinion, the learned Magistrate reached the correct decision.

23. I would dismiss the appeal.

OLSSON J

24. I agree.