Commr for Consumer Affairs v Gilbert - [2005] SADC 75

DISTRICT COURT OF SOUTH AUSTRALIA
(District Court Administrative and Disciplinary Division)
COMMR FOR CONSUMER AFFAIRS v GILBERT
Judgment of His Honour Judge Robertson, Assessor MacDonald and Assessor Sewell
8 July 2005
ADMINISTRATIVE LAW
SECOND-HAND VEHICLE DEALERS ACT
Disciplinary proceedings brought against second-hand motor vehicle dealer - dealer's business the sale of cars of $3,000 or less - issue by police of major vehicle defect notices and minor vehicle defect notices on three occasions - vehicles the subject of major vehicle defect notices were unroadworthy - sale by dealer of a motor vehicle with a jerry can used as a petrol tank - vehicle also had defective brakes - evidence that jerry can "fuel tank" potentially dangerous - vehicle unroadworthy - principles applicable to disciplinary proceedings - dealer's licence suspended for two years - registration of dealer's premises suspended for two years.
Second-hand Vehicle Dealers Act 1995 s16, 23, 27, 31; Road Traffic Act 1961 s160, referred to.
Commissioner for Consumer Affairs v Sollars (2001) 79 SASR 145; Craig v Medical Board of South Australia (2001) 79 SASR 545, applied.
Schombergk v Petty Judgment No. S6629, considered.

COMMR FOR CONSUMER AFFAIRS v GILBERT
[2005] SADC 75
JUDGE ROBERTSON, ASSESSORS MACDONALD AND SEWELL
ADMINISTRATIVE & DISCIPLINARY DIVISION

In these proceedings the Commissioner for Consumer Affairs (“the Commissioner”) is seeking disciplinary action be taken against Stephen Michael Gilbert (“Mr Gilbert”) who, at all relevant times, has been a Licensed Dealer under the Second-hand Vehicle Dealers Act 1995 (“the Act”).
These proceedings are brought by way of a Complaint containing four Counts in which it is alleged that Mr Gilbert has acted improperly, negligently or unfairly in the course of conducting his business of a second-hand motor vehicle dealer in contravention of Section 27(1)(c) of the Act.
Mr Gilbert has admitted, with respect to each of the four Counts, that his conduct was in breach of Section 27(1)(c). The matter comes before the Court to determine the nature of the disciplinary action to be taken.
We mentioned earlier that at all material times, Mr Gilbert was a Licensed Dealer under the Act. He carried on the business of selling second-hand motor vehicles under the business name of “Steve’s Cheap Cars” from premises at 606 North East Road Holden Hill. It is accepted that at all relevant times his business was the sale of early model second-hand cars priced at about $3,000 or less.
The circumstances relating to Count One arose when the police attended at Mr Gilbert’s car yard at North East Road on 28 July 2003 for the purpose of carrying out an inspection of the motor vehicles in the yard. Prior to the inspection, Mr Gilbert confirmed that all the vehicles located in the yard were for sale except those which did not have a “For Sale” sign attached. The police reported that fifteen motor vehicles were inspected. Of the fifteen vehicles inspected, eleven were discovered to have a defect or defects.
To understand the actions taken by the police it is necessary to pause here and make reference to the provisions of the Road Traffic Act 1961 (as amended) (“the RTA”). Section 160(2)(a) of the RTA authorises a member of the police force to attend at premises where motor vehicles are kept for sale for the purposes of determining whether any vehicle kept for sale has deficiencies and to examine vehicles for that purpose. Section 160 also contains a provision which describes when a vehicle has deficiencies. Relevant to these proceedings, a vehicle has deficiencies when it does not comply with vehicle standards or when it has not been maintained in a condition that enables it to be driven or towed safely.
Section 160(5) provides that if after the inspection of a motor vehicle a member of the police force is of the opinion that a vehicle has deficiencies and reasonably believes that further use of the vehicle on roads would give rise to a safety risk, then that police officer may issue a written Defect Notice which respect to that vehicle. Where the police officer reasonably believes that further use of the vehicle on roads after the time specified in that Notice would give rise to an imminent and serious safety risk, then the police officer is required to issue a Major Vehicle Defect Notice. In any other case the police officer is required to issue a Minor Vehicle Defect Notice.
We mentioned earlier that on 28 July 2003, a police officer issued eleven Defect Notices. Six of those Notices were Major Vehicle Defect Notices and the remaining five were Minor Vehicle Defect Notices. In other words, with respect to the six Major Vehicle Defect Notices, the police officer was of the opinion that further use of each of those six vehicles on the roads after the time specified in the Notice would give rise to an imminent and serious safety risk. In simply expressed terms, the vehicles were unroadworthy. These opinions by the police officer were not challenged by Mr Gilbert during the course of these proceedings.
Before leaving Count One, it is necessary to mention some other matters. Section 23 of the Act requires that on the sale of a second-hand vehicle a dealer is under a duty to repair any defect that is present in the vehicle or appears in the vehicle after the sale. However, Section 23 does not apply to a defect in a motor vehicle which is sold for a price less than $3,000 unless the defect is present at the time that the purchaser takes possession of the vehicle and that, as a result of the defect, the vehicle does not comply with the RTA or cannot be driven safely or cannot be driven at all.
Mr Gilbert’s business was the sale of motor vehicles about $3,000 or under. In selling motor vehicles in his business, Mr Gilbert was required to attach a Notice in the prescribed form to each vehicle offered for sale, as required by Section 16 of the Act. This Notice indicated that there was no duty to repair where the sale was less than $3,000 but the vehicle must be roadworthy at the time of sale.
It was not suggested by Mr Gilbert that he was not aware of his obligations. Further, it was not suggested that Mr Gilbert had a practice of checking vehicles for defects prior to or at the time of sale. We infer that the condition of a motor vehicle at the time it was presented for sale remained in the same condition when it was in fact sold. In other words, if a motor vehicle had a defect when it was presented for sale that defect was present in the vehicle when it was sold.
We now turn to Count Two in the Complaint. This Count relates to the sale of a second-hand Mercedes Benz motor vehicle to a purchaser for the sum of $1,000 on 28 August 2003.
This vehicle could use either gas or petrol as fuel. To enable the gas cylinder and other apparatus relating to LPG to be installed, the fuel tank in the motor vehicle had been removed. In its place had been installed a jerry can in the boot of the motor vehicle to store the petrol required to drive the vehicle. In other words, the jerry can was installed in the boot to replace the fuel tank. The jerry can was connected to the fuel system of the motor vehicle.
The purchaser drove the vehicle for about a month after purchasing it from Mr Gilbert. During that time she became increasingly concerned about the condition of the vehicle. In the end she took the vehicle to the Royal Automobile Association (“RAA”) for an inspection.
On 29 December 2003 a mechanic employed with the RAA inspected the motor vehicle. The RAA reported to the purchaser that the vehicle was in a dangerous and unroadworthy condition and that it must not be driven. The Report identified a litany of defects. It also stated that the jerry can conversion was illegal and dangerous.
We have been provided with a Statement of Albert Martin, a Technical Support Manager, employed by the RAA. He said that in most conversions to LPG, the fuel tank is not removed. Mr Martin stated that the jerry can did not appear to be securely attached to the car. He said the method of filling the jerry can and the outlet piping to supply the motor with petrol were insecure and substandard.
Mr Martin said that LPG tanks are designed and engineered to withstand rear-end collisions. He said that it was his opinion that the jerry can would not be able to withstand the same force in a rear-end collision. He said that if the motor vehicle was involved in such a collision then this would result in the leaking of fuel. Mr Martin said that a side impact from a collision may well present a similar danger of fuel spillage. He stated that with fuel spillage, there was a potential danger of the fuel igniting.
Mr Martin said, that on inspection, all of the pads for the disc brakes had been worn to the point that there was no material remaining on them. As a result, the steel backing to the disc pads and the steel discs had no friction material between them. He said that in fine weather, the application of the motor vehicle’s brakes would result in marginal retardation but would have little or no braking effect in wet conditions. He said that he also observed one of the brake hoses was leaking brake fluid. Mr Martin concluded that the motor vehicle should not have been on the road.
The Third Count contained in the Complaint relates to a further attendance by the police at Mr Gilbert’s car yard on 17 November 2003. On that occasion, the police issued Major Vehicle Defect Notices with respect to ten motor vehicles. As we mentioned earlier, a Major Vehicle Defect Notice is issued if a member of the police force reasonably believes that further use of the vehicle on the roads after the time specified in the notice would give rise to an imminent and serious safety risk. The police also issued Minor Vehicle Defect Notices with respect to another ten motor vehicles.
Count Four in the Complaint relates to a further visit by the police to Mr Gilbert’s yard on 19 April 2004. On this occasion, the police issued five Major Vehicle Defect Notices with respect to vehicles being offered for sale by the Dealer and fifteen Minor Vehicle Defect Notices.
Pursuant to Section 31 of the Act, the Commissioner seeks the cancellation of Mr Gilbert’s licence to carry on business as a second-hand motor vehicle dealer under the Act. The Commissioner further seeks a cancellation of the registration of the premises registered in the name of the Dealer. Ms Makiv, Counsel for the Commissioner, submitted that the basis for seeking such orders are:
First, the continuing conduct of Mr Gilbert of offering for sale defective motor vehicles;
Secondly, the failure of Mr Gilbert to meet his responsibilities as a dealer to offer for sale roadworthy cars;
Thirdly, the nature of the defects associated with the sale of the Mercedes Benz motor vehicle on 28 August 2003;
Fourthly, Mr Gilbert’s failure to take heed of warning by the police not to sell unroadworthy vehicles.
Mr D’Angelo, Counsel for Mr Gilbert, submitted that Mr Gilbert’s licence should not be cancelled. It was his submission that Mr Gilbert had restructured his business. He said that Mr Gilbert has obtained further finance to support his business and this has enabled him to acquire vehicles for sale, which are not at the cheapest end of the market. We were told Mr Gilbert now employs a full-time mechanic, for the purpose of attending to defects in motor vehicles acquired by Mr Gilbert for the purpose of sale. The effect of Mr D’Angelo’s submission is that Mr Gilbert has undergone a “sea change”, in that he recognises the responsibility that he has, not to sell defective motor vehicles and, in particular, motor vehicles with defects which render them unroadworthy. Mr D’Angelo reminded us that Mr Gilbert has co‑operated with the Commissioner of Consumer Affairs’ investigation and has accepted responsibility for his conduct. The effect of Mr D’Angelo’s submission that if all the circumstances are taken into account, including Mr Gilbert’s better understanding of his responsibilities and the fact that he now has an inspection and repair system in place through his mechanic, an order for cancellation of his licence would be too harsh and is not warranted.
Before turning to the question of disciplinary action to be taken, it is relevant to refer to some of the personal particulars of Mr Gilbert.
He is now about twenty four years of age. At the time of events to which the Counts in the Complaint took place he was twenty two years of age.
Mr Gilbert was educated to Year 9 and left school when he was fifteen years of age. He commenced work as a car washer in an Auto Dismantler business owned by his father. After the age of sixteen he worked as a car washer in another business until he was eighteen years of age.
In 1999 Mr Gilbert obtained his second-hand motor vehicle dealer’s licence which enabled him to commence business as the seller of second-hand motor vehicles. He established the business of “Steve’s Cheap Cars”. He has been the only full-time person in the business. At the time of the events in each of the Counts he employed three persons part-time in his business. We were told that about eighty percent of his stock was purchased from auction. As we mentioned earlier, he sold cars at a price of approximately $3,000 or less.
We now turn to the principles which apply with regard to disciplinary action sought by the Commissioner of Consumer Affairs pursuant to the Act.
Section 31 of the Act sets out the orders a Court may make where it is satisfied that there is proper cause for taking disciplinary action. Included in the order or orders a Court may make, is the issue of a reprimand, the imposition of a fine and the suspension or cancellation of the licence of a licensed second-hand dealer.
In exercising the power to make orders in disciplinary proceedings under the Act, punishment of a person is not a relevant fact. It is the protection of the public which is paramount. These points were made clear by Doyle CJ in Commissioner for Consumer Affairs v Sollars (2001) 79 SASR 145 when he stated (at 148):
Be that as it may, the question for the Court, bearing in mind that proper cause for the taking of disciplinary action had been made out, was which of the orders provided for in s 29 of the Act should be made.
That was a decision to be made taking account of the fact that the purpose of the statutory scheme is the protection of the public. Although the consequences of the making of an order may appear to operate as a punishment for Mr Sollars, it needs to be understood that the order itself is not punitive in character, nor is the decision as to the order to be made to be reached by reference to considerations relevant to the sentencing of an offender. The observations made by the High Court in NSW Bar Association v Evatt (1968) 117 CLR 177 are as applicable to this case as they are to disciplinary proceedings against members of the legal profession. There the Court said (at 183-184):
“The power of the Court to discipline a barrister is, however, entirely protective, and, notwithstanding that its exercise may involve a great deprivation to the person disciplined, there is no element of punishment involved.”
The Court went on to refer to remarks with like effect that it had made in Clyne v NSW Bar Association (1960) 104 CLR 186 at 201-201 where it said:
“…[A] disbarring order is in no sense punitive in character. When such an order is made, it is made from the public point of view, for the protection of those who require protection, and from the professional point of view, in order that abuse of privilege may not lead to loss of privilege.”
Thus, although the operation of the order on the agent in question may appear to be punitive, the issue for the Court is the protection of the public.
Whilst these remarks were made in the context of disciplinary proceedings under the Security and Investigations Act, they are equally apposite in disciplinary proceedings brought under the Second‑hand Vehicle Dealers Act.
Chief Justice Doyle had occasion to make further observations regarding the making of orders in disciplinary proceedings in Craig v Medical Board of South Australia (2001) 79 SASR 545. Whilst the observations were made in the context of disciplinary proceedings under the Medical Practitioners Act 1983 in many respects they are relevant to disciplinary proceedings under the Second-hand Vehicle Dealers Act.
At pages 553 – 554 Doyle CJ said:
The purpose of disciplinary proceedings is to protect the public, not to punish a practitioner in the sense in which punishment is administered pursuant to the criminal law. A disciplinary tribunal protects the public by making orders which will prevent persons who are unfit to practise from practising, or by making orders which will secure the maintenance of proper professional standards. A disciplinary tribunal will also consider the protection of the public, and of the relevant profession, by making orders which will assure the public that appropriate standards are being maintained within the relevant profession.
After referring to the decision in NSW Bar Association v Evatt his Honour went on to say:
Apart from emphasising that the purpose of disciplinary proceedings is the protection of the public, and not punishment for wrongdoing, this passage makes the point that sometimes the protection of the public will require the making of an order with a greater adverse effect on the practitioner than might be warranted if punishment alone were the relevant consideration. The protection of the public did not permit mercy to be shown in that case.
This statement by the Court has often been cited as stating the basis upon which orders are made by professional disciplinary tribunals. A contrast is often drawn between orders made for the protection of the public, against professionals who have departed from proper professional standards, and orders or sentences by way of punishment as part of the administration of the criminal law.
While there is a fundamental difference between an order made by a professional disciplinary tribunal for the protection of the public, and a punishment imposed by a court administering the criminal law, disciplinary orders made by professional bodies may nevertheless have elements in common with criminal sanctions.
In the case of a professional disciplinary tribunal, an obvious type or order protective of the public is an order cancelling the registration or recognition of a person as a member of a profession. Such an order removes the right to practise in the profession, thereby protecting the public against a person found unfit to be a practitioner. And, as Evatt shows, such an order will be made even though, if punishment of the practitioner were the only consideration, considerations of mercy might lead to a less severe order.
In other cases the protection of the public or the public interest may justify an order intended to bring home to the practitioner the seriousness of the practitioner’s departure from professional standards, and intended to deter the practitioner from any further departure. …. An order might also be made in professional disciplinary proceedings to emphasise to other members of the profession, or to reassure the public, that a certain type of conduct is not acceptable professional conduct. In the latter case the order is made in part to protect the profession, by demonstrating that the profession does not allow certain conduct. This, in the end, is also in the public interest.
(See also: Schombergk v Petty Judgment No. S662 delivered on 9 April 1998.)

It can be seen from these passages that there are many aspects relevant to the protection of the public in disciplinary proceedings.
We are satisfied on the balance of probabilities that there is proper cause for taking disciplinary action against Mr Gilbert. In our opinion, Mr Gilbert’s conduct in presenting motor vehicles for sale at his yard with defects which would give rise to an imminent and serious safety risk if any of those vehicles were used on the road is a serious abrogation of his responsibilities of a second-hand motor vehicle dealer. Such conduct needs to be seen in the context that there was no system in place in Mr Gilbert’s business to rectify defects which had rendered a motor vehicle unroadworthy. As mentioned earlier, it has not been suggested that before any of the vehicles, the subject of Major Vehicle Defect Notices, were sold that they would have been inspected by Mr Gilbert and the defects rendering the vehicles unroadworthy would have been rectified. These vehicles would have been sold in the condition they were in when the police inspected them on the three occasions the subject of the charges.
The vehicles would have been driven on the roads with such defects. Vehicles carrying such defects are a potential danger not only to the occupants of the motor vehicle but to other road users.
On 28 July 2003, Mr Gilbert became aware that six of the motor vehicles in his yard for sale were the subject of Major Vehicle Defect Notices. Some four months later when the police visited his yard on 17 November 2003, the number of vehicles which received Major Vehicle Defect Notices had risen to ten vehicles. Then, in April 2004, following a further visit from the police, five motor vehicles in his yard, received Major Vehicle Defect Notices. In our opinion, these events demonstrate Mr Gilbert, in carrying on his business, continued to ignore his obligations as a second-hand motor vehicle dealer.
Mr Gilbert purchased motor vehicles for sale at very cheap prices. He sold those vehicles at cheap prices. The vehicles were generally quite old. The fact that they were cheap vehicles meant that they were not in good condition. A dealer who conducts such a business, in our opinion, needs to be even more insightful into his responsibility to ensure unroadworthy vehicles are not sold.
In our view, what is of great concern is that having been informed by the police that he was carrying unroadworthy vehicles in his yard, he was discovered to be carrying unroadworthy vehicles in his sale stock on a further two occasions.
The sale of the Mercedes Benz motor vehicle was a grave abrogation of Mr Gilbert’s responsibility. The vehicle on the road had the potential to cause serious or fatal injuries, not only to any person travelling in the motor vehicle but also to other road users.
In Mr Gilbert’s interview with representatives of the Commissioner of Consumer Affairs, he stated that he had observed the jerry can in the boot of the vehicle. He said that he thought it was properly affixed in the boot. He said that he was not sure whether it was legal or not. Having questioned in his own mind whether the jerry can was legal or not, he still proceeded to sell the motor vehicle without making any enquiries or having the vehicle checked beforehand.
We should also mention the Minor Vehicle Defect Notices. We stated earlier that on each occasion that the Police attended Mr Gilbert’s car yard they also issued Minor Vehicle Defect Notices. The obligation on Mr Gilbert, where a vehicle was sold for less than $3,000, was to repair defects where the vehicle did not comply with the RTA, or the vehicle could not be drive safely, or at all. Some of the defects listed in the Minor Vehicle Defect Notices appear to have been of the nature which would have required Mr Gilbert to repair. By way of example, there were vehicles with no brake lights operating or defective brake lights, and one vehicle had a bald tyre. Such vehicles were unroadworthy. It was likely that these vehicles would have remained in this condition and later sold.
We are of the opinion that the seriousness of the breaches by Mr Gilbert of his obligations under the Act leads to the conclusion that the Dealer’s License should be suspended for two years. In our view, in the circumstances of this case a reprimand or a fine, or both, would not give sufficient recognition of the objective in disciplinary proceedings of protection of the public. We are also of the opinion that a suspension of Mr Gilbert’s licence for two years is appropriate in the circumstances of this case rather than the cancellation of his licence.
An order suspending Mr Gilbert’s licence is necessary to bring home to Mr Gilbert the seriousness of his departure from his responsibilities. It will also emphasise to other second-hand car dealers that such failure to meet these important responsibilities will not be tolerated. The public needs to be reassured that dealers will comply with their responsibilities. As we said earlier, Mr Gilbert’s conduct in presenting unroadworthy vehicles in his yard on three occasions were serious abrogations of his obligations under the Act. He was placed on notice and thereafter he continued to deliberately ignore his obligations. In addition, he sold the Mercedes Benz when he should have recognised that it was unroadworthy or, at the very least, he should have recognised there was a potential problem and investigated it.
We are told that Mr Gilbert has changed the nature of his business and that he now has a system in place to ensure that unroadworthy vehicles are not sold. We recognise that suspension of his licence may cause him financial loss. Nevertheless, for the reasons we have expressed, it is appropriate for Mr Gilbert’s licence to be suspended.
We also consider it appropriate to suspend the registration of the premises registered in the name of Mr Gilbert until further order.
We will hear the parties regarding the precise terms of the orders.