Cromwell's Auctioneers & Appraisers Pty Ltd v Commissioner for Fair Trading

[2004] NSWADT 281

Set aside by Appeal:

CITATION:	Cromwell's Auctioneers & Appraisers Pty Ltd v Commissioner for Fair Trading [2004] NSWADT 281
DIVISION:	General Division
PARTIES:	APPLICANT Cromwell's Auctioneers & Appraisers Pty Ltd RESPONDENT Commissioner for Fair Trading
FILE NUMBER:	043008
HEARING DATES:	10/08/2004, 19/08/2004
SUBMISSIONS CLOSED:	08/19/2004
DATE OF DECISION:	12/03/2004
BEFORE:	Montgomery S - Judicial Member
APPLICATION:	Motor Dealer - grant of licence - Motor Dealers Act - motor dealer - grant of licence
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Motor Dealers Act 1974
CASES CITED:	Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Clearihan v Registrar of Motor Vehicle Dealers in the Australian Capital Territory (1994) 122 ACTR 25 Haining v Commissioner of Police, NSW Police Service (1999) NSWADT 6 Hughes and Vale Pty Ltd v New South Wales (No. 2) (1955) 93 CLR 127 McEvoy v Director-General, Department of Fair Trading [2000] NSWLEC 183 Pickles Auctions Pty Ltd v Registrar Consumer Claims Tribunal and Ors, Supreme Court of NSW 9 September 1994 unreported Raymond Robbins v Business Licensing Authority (2000) VCAT 457 Sobey v Commercial and Private Agents Board 20 SASR 70 Trlin v Commissioner of Fair Trading [2003] NSWADT 222 Young Taek Chong v Tomazin (1994) ASC 56-283
REPRESENTATION:	APPLICANT P Glissan, barrister RESPONDENT A Wilson, solicitor
ORDERS:	1. The decision of the Commissioner for Fair Trading to refuse the application by Cromwell’s Auctioneers & Appraisers Pty Ltd for a dealer licence under the Motor Dealers Act 1974 is set aside; 2. The matter is remitted for reconsideration by the Commissioner for Fair Trading with the recommendation that Cromwell’s Auctioneers & Appraisers Pty Ltd be granted the licence sought if it satisfies the other requirements provided for in s.12 of the Motor Dealers Act 1974.

Introduction

1 On 23 September 2003, Cromwell’s Auctioneers & Appraisers Pty Ltd (“the Applicant”) applied for a dealer licence under the Motor Dealers Act 1974 (“the Act”). The Applicant is a corporation of which Mr. James Warren Byrnes is the sole director. The Commissioner for Fair Trading (“the Commissioner”) administers the Act. The functions currently performed by the Commissioner were previously performed by the Director-General of the Department of Fair Trading (“the Department”). Any reference to the Director-General in the Act is to be taken to be a reference to the Commissioner.

2 On 26 November 2003 Mr. Robert Guthrie, as delegate of the Commissioner issued a Notice of Refusal to Grant a Motor Dealers Licence. The refusal was based upon section 12(4)(h) of the Act on the ground that it appeared to the Commissioner that a director of the Applicant company was "not of good reputation or character or in any other way would not be a fit and proper person to be the holder of a licence if the director ... were to apply for the licence personally".

3 On 28 November 2003 Mr. Byrnes, on behalf of the Applicant, sought an internal review of the decision and that review was conducted by Mr. Jim Vircoe, Acting Director Property and Licensing. By letter dated 17 December 2003 Mr. Vircoe informed the Applicant that the internal review had confirmed the initial decision to refuse the licence application.

4 Section 12 of the Act sets out the grounds upon which the Commissioner may grant or refuse an application for a licence. Relevantly, it provides:

“12 Grounds on which application to be granted or refused

(1) Subject to subsections (2), (4), (5), (6) and (8), the Director-General shall grant an application for a licence.

…

(4) An application for a licence made by a body corporate shall be refused if it appears to the Director-General that:

(h) a director of, or a person concerned in the management of, the body corporate is not of good reputation or character or in any other way would not be a fit and proper person to be the holder of a licence if the director or person were to apply for the licence personally,

5 Section 20F of the Act provides for the review of decisions of the Commissioner to refuse to issue a licence:

20F Reviews by the Administrative Decisions Tribunal

(1) If the Director-General:

(a) refuses to grant an application for, or suspends or (under any provision of this Act) cancels, a licence, or

(b) imposes a condition or restriction under section 14, or

(c) imposes a disqualification referred to in section 20E (1) (d),

the applicant for the licence, the person who held the licence or the person disqualified (as the case may be) may apply to the Administrative Decisions Tribunal for a review of the decisions of the Director-General.

(2) On an application for a review of a decision of the Director-General to refuse to grant a licence to a person because of a fact referred to in section 12 (3) or (5), the Administrative Decisions Tribunal may determine that the fact should be ignored on one or more of the following grounds:

(a) the triviality of the acts or omissions giving rise to the offence concerned,

(b) the time that has passed since the offence concerned was committed,

(c) the subsequent good behaviour of the offender,

(d) any other ground prescribed by the regulations.

6 This provision combines with section 38 of the Administrative Decisions Tribunal Act 1997 (“the ADT Act”) to give the Tribunal jurisdiction to review the Commissioner’s decisions.

7 The Tribunal’s task is to make the correct and preferable decision. Section 63 of the ADT Act provides:

“63 Determination of review by Tribunal

(1) In determining an application for a review of a reviewable decision, the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it, including the following:

(a) any relevant factual material,

(b) any applicable written or unwritten law.

(2) For this purpose, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant enactment on the administrator who made the decision.

(3) In determining an application for the review of a reviewable decision, the Tribunal may decide:

(a) to affirm the reviewable decision, or

(b) to vary the reviewable decision, or

(c) to set aside the reviewable decision and make a decision in substitution for the reviewable decision it set aside, or

(d) to set aside the reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal.”

8 The Applicant relies on evidence from a number of persons associated with its business, aimed at demonstrating that its business operates on a reputable basis with limited involvement of Mr. Byrnes and that in any event Mr. Byrnes is a fit and proper person to be the holder of a licence. Affidavit evidence was provided by:

(a) Mr. Byrnes;

(b) Mr. George Jabbour, a Car Department Specialist employed by the Applicant and nominated to be the holder of its licence as its manager

(c) Ms Mona Karam, employed by the Applicant as the Administration & Operations Manager and Financial Controller; and

(d) Mr. Steven Jurke, employed by the Applicant as Group accountant;

9 Mr. Byrnes and Mr. Jabbour also provided oral evidence and were subjected to cross-examination. The Applicant also relied on personal references for Mr. Byrnes. The references were from Mr. Robert John Hobbs, who was previously a motor dealer and who has been acquainted with Mr. Byrnes since the 1980’s but who has renewed the friendship over the last two years; and Dr Joseph Grech, who has known Mr. Byrnes since about 1989. Both Mr. Hobbs and Dr Grech provided oral evidence and were subjected to cross-examination.

10 The theme underlying the references was that over the years which have passed since his imprisonment Mr. Byrnes has changed and matured, and is now a competent and ethical businessman. Mr. Hobbs wrote that:

“I confirm that I have known James Byrnes since the mid-1980s and provide this reference in relation to an application his company is making to the Administrative Decisions Tribunal to review the granting of a Motor Dealers Licence to a company of which James Byrnes is a Director.

I was previously a motor dealer, holding a Motor Dealers licence in New South Wales for many years, having owned and being Dealer-Principal of a Ford dealership and later, a Daihatsu dealership. I was involved in both traditional used cars and a prestige used car dealership. I am now retired.

I have been in the motor trade since the 1960s, having been involved in both the new car and used car business for quite some time. In the 1980s, when I knew him, in my opinion, Jim was a young, intelligent, but impressionable young man. In the late 1980s, he resurfaced again, after a short time of incarceration, and he opened up a couple of car yards.

Things seemed to be going rather well for Jim until his father's death. Between the death of his father, and the property recession, things seemed to go downhill for Jim for a couple of years. I lost contact with him until the mid-1990s, when we would meet occasionally. Over the period of the last 2 years, I have renewed my friendship with Jim, and I am pleased to say that in my opinion, he has matured substantially as a human being. He has a different outlook and/or view as to business. He seems to be a far more responsible person than he was in his youth.

Other personal issues he has been faced with, he has seemed to overcome. I have met Jim's wife and his three children, and he seems to be a committed family man.

He is very well liked by his employees, and he seems to be acting appropriately in the way he conducts his business.

Given his financial ability to meet commitments, his current business acumen, his attention to detail, I would have no hesitation in recommending that the Department considered his application, and if thought fit, to recommend that he or his company be approved to hold a Motor Dealers licence.”

11 In his oral evidence Mr. Hobbs stated that the Applicant’s auction house is the best presented that he has seen in Australia. He conceded that he was not aware of Mr. Byrnes’ 2001 assault conviction. He said that when they meet he and Mr. Byrnes only discuss current matters and the issue had not been discussed.

12 Dr Grech wrote that:

“I confirm that I am acquainted with Jim Byrnes, who has not only been a patient, but also a friend of mine for nearly twenty years.

Jim and I have some similar interests over the past 20 years both in early Harley Davidsons, and classic cars. In more recent times, Jim bought my Dino Ferrari last year, which he may have subsequently sold. Our history goes back nearly two decades, when he and I were enthusiasts and met on various social club activities and through this, Jim and I became associated as a doctor-patient relationship. In two decades, Jim has obviously changed, as most people do.

Today, he presents himself as a businessman who I believe to be reasonably successful. I have had financial arrangements with Jim, which he has honoured. I believe him to be relatively astute. I know Jim's wife and children quite well, and I am also their doctor.

Jim presents himself to me as a both a committed husband, and a loving father. I also get the impression that he is extremely well-liked by his staff, and they have a high degree of respect for him. Respect is something that is earned, and obviously this can only be earned by doing the right thing in business.

I understand that Jim has an application to the Administrative Decisions Tribunal for a Motor Dealers licence, and the initial refusal was given, he tells me, as a result of some criminal history in his earlier years.

On a personal note, and knowing Jim socially, it is my belief that he is only a very moderate drinker. He does not smoke, and he is fervently opposed to any substance abuse and illegal drugs. It is my understanding that he had a conviction, some 20 years ago for a drug-related offence, which is completely out of character with the Jim Byrnes whom I know today.

Given this information and my current opinion of Jim, I would not hesitate in recommending Jim as meeting the licensing requirements for any licence, as in my view, he is not the sort of person who would abuse any privileges.”

13 Under cross-examination Dr Grech conceded that he had met Mr. Byrnes in 1989 and he recalled strong memories of kindness that Mr. Byrnes had shown towards him. He stated that he had not seen Mr. Byrnes for about three or four years after that meeting. He agreed therefore that in fact they had been friends for about 11 years, not 20 years as stated in his affidavit. Dr Grech also conceded that Mr. Byrnes had not told him about his 2001 assault conviction.

14 The Applicant’s evidence shows that it conducts auctions through auction houses at Pyrmont and Rozelle. The Applicant’s car auction department holds approx 30 to 35 unique vehicles at any given time but only sells about 30 vehicles per year. Stock is sourced via a number of avenues such as magazine advertisements, inbound telephone inquiries, canvassed magazine or eBay inquiries, direct purchase for resale through collectors or through relationships with motoring clubs which carry similar brand names or historic or vintage cars. The Applicant seeks a licence so that it can better use its resources by buying vehicles and then offering them for resale. It also wants to put beyond doubt that its activities regarding the auctioning of vehicles is conducted within the law.

15 Mr. Byrnes is the sole director of the Applicant but has stated that he has other commercial interests and has little involvement in the daily management of the auction houses. He receives monthly reports on business activity from the General Managers of the auction houses.

16 Mr. Byrnes concedes that in 1986 he was convicted of an offence of "deemed supply of a prohibited drug" and sentenced to 5 years imprisonment of which he served 22 months. He also concedes a number of convictions with respect to driving and other offences and that following the period of incarceration he held a strongly negative attitude towards authority. He had become incredibly bitter and disgruntled, resented authority and the system, and behaved accordingly. However, he asserts that he has not been charged with or convicted of an offence since May of 2001. In his affidavit sworn 9 August 2004 Mr. Byrnes referred to a conviction for common assault in the following terms:

“The common assault matter on 16 May 2001 arose out of a traffic incident where a motor cycle rider attempted to cause damage to our family car while it was occupied by my wife and children, at which time I alighted from the vehicle and attempted to protect both property and family.”

17 A similar account was given before the Tribunal but he also stated that he had been convicted in his absence because he had confused hearing dates with those of a civil matter he was involved in at the time. He said that he did not seek to have the conviction set aside because he had been fined $500 and the cost involved in doing so would have been between $5,000 and $10,000. He did not consider the matter to have been serious enough to warrant the expense.

18 In his affidavit sworn 19 March 2004 Mr. Byrnes stated:

“9. I refer to my last conviction for assault in 2001. This was an unfortunate minor altercation between myself and a motorcyclist. My wife and children were in the motor vehicle and the complainant was threatening them, so I overreacted. I have not committed any offence since that time.”

19 However, under cross-examination he conceded that he was subsequently convicted of driving a motor vehicle whilst his licence was suspended. On 31 May 2002 he was convicted of this offence, fined $500 and disqualified from driving for a further period of two years.

20 Mr. Byrnes provided an outline of the Applicant’s current and proposed operations if this application is successful. In his affidavit sworn 9 August 2004 Mr. Byrnes stated:

“4. As a result of successful property development projects, and other endeavours, the Byrnes Group of companies is financially viable and able to meet all of their debts as and when they fall due. It is capable of employing competent people who are to administer various Statutes, Acts, and regulations laid down by government entities.

5. The Applicant company's Motor Auction business at Pyrmont is a low volume business which predominantly deals in the auction of second-hand Classic and Collectible motor vehicles. I anticipate that, over a 12-month period, there would be an offering of between 150 and 200 cars with a likelihood of 50 -100 cars being sold. I also anticipate that some two-thirds of those cars would be offered on behalf of private vendors. If successful, the Applicant company will maintain a consignment register and will operate a Trust account into which and from which all vendor payments are made.

6. The Applicant company has conducted the business of an auctioneer for the past 2 years in the fields of Art, Furniture, Decorative Arts, Collectibles, Wine, Books & Maps and General Auctions, and conducts regular auctions of goods offered on behalf of vendors in these fields. The Applicant company holds a Liquor licence which was granted for the purposes of buying, selling or retailing or wholesaling alcohol.

7. Since its incorporation, now trading over the last 2 years, the Applicant company has turned over in the order $15,000,000. I am not aware of any complaints against the Applicant company to the Office of Fair Trading. There are no unpaid vendors outside the Applicant company's normal trading terms. All vendor payments are held in trust.

8. The motor vehicles which the Applicant company auctions are predominantly vehicles manufactured 15 years ago or more. The majority of these vehicles are of special interest to collectors, often for restoration.

9. The Applicant company has a General Auction House in Rozelle. My group of companies is currently acquiring other General Auction houses.

10. If successful, Mr. George Jabbour is nominated to be the holder of the Applicant company's licence as its manager. I have every confidence in Mr. Jabbour's fitness for this purpose.

11. The Applicant company is a member Motor Traders Association. ”

21 Mr. Jabbour has been employed by the Applicant as Car Department Specialist since 11 March 2004. All financial and administration issues are handled by Ms Mona Karam, the Applicant’s Operations Manager & Financial Controller. Ms Karam’s responsibilities include the administration of all staff in the Pyrmont and Rozelle auction houses, and the systems and technology that supports their activities, as well as responsibility for finances within the Applicant. Her day-to-day responsibilities include the management of the Applicant's cash flow and supervision of moneys in and out of the Applicant's trust accounts, ensuring timely payments to all vendors. Both Mr. Jabbour and Ms Karam provided evidence as to their involvement with the Applicant.

22 In his affidavit tendered to the Tribunal Mr. Jabbour wrote:

“2. In the event that the Applicant company is successful, it will nominate me to be the holder of its licence as its manager, and I will be prepared to hold such licence on its behalf in that capacity.

3. I am familiar with all relevant rules and regulations to be adhered to in the maintenance and trading of business as regulated under a Motor Dealers Licence.

4. All financial and administration issues are handled by Mona Karam, the Group's Operations Manager & Financial Controller. I refer all issues of the Applicant company relating to administration and payments to her.

5. The Applicant company has a system in place to control and maintain expenditure and cash flow. During my period of employment, on my observations, the Applicant company has always dealt with vendors in a proper, correct and efficient manner.”

23 In her affidavit Ms Karam wrote:

“1. I am employed by the Applicant company as the Administration & Operations Manager and Financial Controller.

2. My responsibilities include the administration of all staff in the Pyrmont and Rozelle auction houses, and the systems and technology which supports their activities, as well as responsibility for finances within the Applicant company.

3. I have introduced new systems for various Departments for their improved maintenance of proper books and records in relation to consigned goods and vendor records and entitlements, and reporting measures to senior management.

4. My day-to-day responsibilities include the management of the company's cash flow and supervision of moneys in and out of the Applicant company's Trust accounts, ensuring timely payments to all vendors in accordance with the Applicant company's Terms & Conditions.

5. I have a period of 5 years employment in positions involving similar duties to those undertaken for the Applicant company.”

24 In his affidavit Mr. Jurke wrote:

“1. I have been employed by various Byrnes Group companies as Group accountant over a period of the last 10 years.

2. In my role as Group accountant, I confirm that all vendors who have sold items through the Applicant company, have their funds placed into the Applicant company's specific Trust account. I confirm that those funds are paid out to vendors from the Trust account in accordance with the Terms and Conditions as set down by the Applicant company.

3. I am aware of Mr. Byrnes' criminal record. During my said period of employment as Group accountant for his various companies, I have always found him to be honest and conscientious in his directorships of those companies, and In his dealings generally.

4. The Applicant company provides each Applicant member of staff with its Code of Ethics and on-going Training Manuals.”

25 Both Mr. Jabbour and Mr. Byrnes stated in their evidence before the Tribunal that the Applicant does not take vehicles on consignment. While it is conceded that the Applicant’s documentation with respect to the vehicles suggests an agency arrangement, the Applicant’s case is that it has not been trading in a manner that requires a licence. In fact the Applicant had received legal advice that it is a grey area of the law and while it does not concede any breach of the law to date, the issue would be of no consequence if the licence were granted.

The Commissioner’s case

26 The Commissioner relies on two grounds for refusing the licence application. The first relates to Mr. Byrnes reputation, fitness and propriety. The second is that the Applicant is not likely to carry on the business honestly and fairly. The Commissioner relies on a number of documents that evidence conduct by Mr. Byrnes that is said to be relevant to this matter. A Police Criminal History Search shows that Mr. Byrnes has a number of convictions. In addition to the matters referred to above there is also evidence of a number of convictions for driving offences dating from 1998. The most recent of these was dated 31 May 2002 when Mr. Byrnes was convicted for driving while disqualified.

27 It is submitted that the number and nature of the Mr. Byrnes' convictions is a serious impediment to the Tribunal being able to reach a conclusion that Mr. Byrnes is a person of good character. These convictions suggest that Mr. Byrnes has contempt for laws relating to the regulation of traffic, which does not augur well for a person who wishes to work in the motor trade industry.

28 The Commissioner contends that the 2001 conviction for assault is also of some concern because the lack of control shown by Mr. Byrnes places doubt about his ability to keep his emotions in check when challenged. The Commissioner refers to views expressed by Miles CJ in the Supreme Court of the Australian Capital Territory in the matter of Christopher Alfred Clearihan v The Registrar of Motor Vehicle Dealers in the Australian Capital Territory No. SCA55 of 1994 where the Chief Justice stated at paragraph 24 of the decision:

“24. In the present case the Tribunal considered that the circumstances relating to the prior convictions were relevant, and so they were. They showed that the appellant had a tendency to uncontrollable anger when frustrated by what he regarded as officiousness on the part of public officials. The obligations of a licensed motor vehicle dealer are such as to make it likely that the dealer will be brought into contact more than occasionally with public officers. Furthermore there is a heavy duty to keep proper records and accounts, the completeness and accuracy of which might be called into question by such public officers. These are relevant considerations in assessing the character of a person who has a history of ill-concealed hostility towards police and parking attendants and who has displayed truculence when questioned on such matters before the Registrar. The Tribunal did not err in taking these matters into account.”

29 The Commissioner also refers to documents concerning a Motor Dealer's licence held by Mr. Byrnes’ mother. That licence was granted on 25 July 1989 and it was endorsed with a restriction that "James Warren Herbert Byrnes is not to be involved, either directly or indirectly, in the day to day management of the business to which this licence relates". The licence was cancelled on 16 January 1991. The notice of cancellation stated that, despite a condition on the licence prohibiting him from doing so, Mr. Byrnes was knowingly involved, both directly and indirectly, in the direction management and conduct of the business to which the licence related and it was determined that Mr. Byrnes be disqualified from holding a licence or being concerned in the direction, management or conduct of a business for the carrying on of which a licence is required for a period of five years, commencing 18 January 1991. The Commissioner points to evidence given by Mr. Hobbs to the effect that Mr. Byrnes had operated car yards in the 1980s. The Commissioner asserts that this is significant because Mr. Byrnes has never held a motor dealer’s licence. The Commissioner further asserts that Mr. Hobbs' evidence does not assist Mr. Byrnes' claim of good character as it is apparent that Mr. Hobbs bases his good opinion of Mr. Byrnes upon conduct that was in contravention of the very legislation under which Mr. Byrnes now seeks to be licensed. It is also submitted that Mr. Hobbs' evidence in support of Mr. Byrnes good character was further weakened by the fact that he had not been told of Mr. Byrnes 2001 conviction for assault.

30 Similarly, the Commissioner contends that the evidence of Dr Grech is of little assistance to Mr. Byrnes as he too had not been told of the recent conviction for assault.

31 The Commissioner relies on affidavits from two investigators, Ms Shanne Moore and Mr. Louis Busuttil. The thrust of this evidence is to recount a visit by the investigators to the Applicant’s premises on Thursday 1 April 2004 and their attempts to obtain documents in relation to an alleged breach of section 9(1)(a) the Act. The affidavits annex photographs of vehicles housed at the Applicant’s premises and other material obtained in relation to the visit. They recount the intransigence with which the investigators were met when they attempted to obtain documents from the Applicant’s offices. The Commissioner argues that this illustrates the contempt with which Mr. Byrnes treats representatives of regulatory authorities.

32 Ms Moore stated that when she and Mr. Busuttil attended the Applicant’s Rozelle premises they were informed that the majority of the Applicant’s records concerning the acquisition and disposal of motor vehicles are kept at the Applicant’s Pyrmont office and that Mr. Byrnes is in charge of that office.

33 At the Applicant’s Pyrmont office Ms Moore and Mr. Busuttil met the General Manager, Mr. Gary Bigelow. Mr. Bigelow stated that he was happy to co-operate with the investigators but that Mr. Byrnes was the only one that knew where the information they sought was stored and that he was not there at that moment.

34 Mr. Bigelow offered to try to phone Mr. Byrnes and declined to allow Ms Moore to photograph the motor vehicles on the premises. Some time later Ms Moore and Mr. Busuttil were introduced to Mr. Monty Gildea, the Applicant’s solicitor. Mr. Gildea also told them that only Mr. Byrnes knew where the information they sought was stored. Mr. Gildea also declined to allow Ms Moore to photograph the motor vehicles on the premises and stated that Mr. Byrnes would be really angry if she was allowed to do so.

35 Some time later Mr. Gildea managed to speak with Mr. Byrnes who said that he would be happy to provide the information requested if the investigators made an appointment and came back another day.

36 Mr. Busuttil submitted a formal written request for the Applicant to produce the specific documents that had been requested verbally. After further discussion Mr. Bigelow agreed to let Ms Moore and Mr. Busuttil photograph the vehicles that were on the premises. Whilst doing so Ms Moore met Mr. Jabbour. She stated that he was looking through a newspaper that she recognised as the Trading Post and heard him make two telephone calls inquiring about cars for sale. A label on a computer disc on the counter where Mr. Jabbour was sitting advertised vehicles for sale at an auction at 2.00 p.m. on 18 May 2004.

37 Ms Moore states that within minutes of commencing to take photographs of the vehicles, she and Mr. Busuttil were confronted by Mr. Byrnes who directed them to his office. She stated that Mr. Byrnes told them that the records that they sought were at a number of locations and that he would need at least 14 days to collate them. He said that he wanted to co-operate but that he had not been given sufficient notice of the Department’s requirements and that he needed to seek legal advice. He also expressed concern that the Department was attempting to make him look bad and thereby jeopardise his application to this Tribunal. Mr. Byrnes prepared a letter outlining the Applicant’s position and faxed the letter to the Department. Ms Moore responded to Mr. Byrnes, requesting that he attend the Department’s office for a formal interview on 14 April 2004 and to produce the requested documents by that date. On 13 April 2004 Mr. Byrnes wrote to Ms Moore requesting that the interview be rescheduled and more time allowed for the production of documents. He also asserted that the Applicant had not acquired vehicles for resale, had not disposed of any vehicles in its own right and had not consigned any vehicles for resale.

38 Ms Moore stated that no representative of the Applicant attended the Department’s office on 14 April 2004 and that the documents requested had not been produced as at 18 May 2004.

39 Mr. Busuttil confirmed the details of the visit to the Applicant’s premises at Rozelle and Pyrmont on 1 April 2004. He stated that at Rozelle they obtained computer-generated documents that relate to nine vehicles and that the person who retrieved the computer records had advised him that only four cars had been sold through auction in the last six months but that cars are sold through the Applicant’s Pyrmont premises. Mr. Busuttil also confirmed the discussions that took place between the investigators, Mr. Bigelow Mr. Gildea and Mr. Byrnes at the Pyrmont premises.

40 At the time of hearing no action had been taken against the Applicant in relation to any alleged breach of section 9(1)(a) the Act.

41 Mr. Wilson, for the Commissioner, submitted that Mr. Byrnes would not be considered to be a fit and proper person to hold a dealer licence if he were applying. Accordingly, as Mr. Byrnes is the sole director of the Applicant and the person in control of its operations, the Applicant should not be granted the licence it seeks. Further, given the Applicant’s history of selling motor vehicles through its auction houses without being the holder of a licence there is cause for concern that the Applicant would not conduct its business honestly and fairly in the future.

Decision and reasons

42 I have been referred to a number of authorities that are said to be relevant to this matter. In particular I have been referred to the decision of Judicial Member Molony in Trlin v Commissioner of Fair Trading [2003] NSWADT 222 and the cases discussed in that decision. In that matter the Tribunal set aside the decision of the Commissioner to refuse Mr. Trlin a dealer licence under the Act. Mr. Trlin had previously been the subject of disqualification from holding a licence. The Commissioner has sought to draw parallels between the backgrounds of Mr. Byrnes and Mr. Trlin but asserts that Mr. Byrnes has not undergone the reformation that Mr. Trlin had demonstrated. In issue is whether Mr. Byrnes would be considered to be a fit and proper person to hold a dealer licence if he were applying personally.

43 In Hughes and Vale Pty Ltd v New South Wales(No. 2) (1955) 93 CLR 127 the High Court discussed the meaning of the term ‘fit and proper’ (at 156-7):

“The expression "fit and proper person" is of course familiar enough as traditional words when used with reference to offices and perhaps vocations. But their very purpose is to give the widest scope for judgment and indeed for rejection. "Fit" (or "idoneus") with respect to an office is said to involve three things, honesty knowledge and ability: "honesty to execute it truly, without malice affection or partiality; knowledge to know what he ought duly to do; and ability ... When the question was whether a man was a fit and proper person to hold a licence for the sale of liquor it was considered that it ought not to be confined to an inquiry into his character and that it would be unwise to attempt any definition of the matters which may legitimately be inquired into; each case must depend upon its own circumstances.”

44 The meaning of "fit and proper" is dependent on the nature and purpose of the activities that the person will undertake. In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Chief Justice Mason said at 380:

“The question whether a person is fit and proper is one of value judgment. In that process the seriousness or otherwise of particular conduct is a matter for evaluation by the decision maker. So too is the weight, if any, to be given to matters favouring the person whose fitness and propriety are under consideration.”

45 In Sobey v Commercial and Private Agents Board 20 SASR 70 Walters J said:

“In my opinion what is meant by that expression is that the Applicant must show not only that he is possessed of a requisite knowledge of the duties and responsibilities evolving upon him as the holder of a particular licence … but also that he is possessed of sufficient moral integrity and rectitude of character as to permit him to be safely accredited to the public … as a person to be entrusted with the sort of work which the licence entails.”

46 Thus the nature of the industry in which the person concerned wishes to operate affects a consideration of whether a person is a “fit and proper person” to operate in that industry. In Haining v Commissioner of Police, NSW Police Service (1999) NSWADT 6 the President of this Tribunal stated at paragraph 41 of his decision:

“Whether a person is ‘fit and proper’ to hold a licence in a regulated industry will be affected by general considerations relating to the character of the person, special considerations that take account of the nature of the industry in issue and the public policy objective leading the legislature to regulate the industry.”

47 In the Victorian Civil and Administrative Tribunal, the President of the Tribunal, Kellam J, in Raymond Robbins v Business Licensing Authority (2000) VCAT 457 said:

“The nature, the number and the date of the convictions is relevant to the issue of whether or not the Applicant is a fit and proper person to be permitted to deal with the public in a motor car sales capacity … In the circumstances of this case the conduct of the applicant is such that he cannot be seen as presently fit to deal with members of the public in the motor car trade. The convictions and his behaviour go to the very heart of matters of honesty, integrity and reliability of a motor car trader. The Act has established a system which entitles a purchaser of a motor car to rely upon the honesty and integrity of a motor car trader or sales person. If that is undermined, the very structure of the Act is eroded. The offences in this case were not of a trivial or minor character, such as, some minor failure to keep proper books or records or of trading outside hours which were not permitted. The offences in this case are such that they are capable of eroding the confidence the community should have in relation to the motor car trade and in relation to the legislation which is structured to protect the public who might buy or sell motor cars.”

48 As noted above, in Clearihan Miles CJ considered an appeal against a decision to affirm the refusal to issue a motor vehicle dealer licence on the basis that the appellant was not of “good fame and character”. The Chief Justice said at paragraph 23:

“It is a matter of common experience that a person's character is capable of development over time. At the one end of the scale, a person who commits an isolated act of misconduct may afterwards indicate that he or she has learned from the experience, so that any mark on character brought about by that lapse may fade relatively quickly. At the other end of the scale, even people who have demonstrated evil character are capable of reform. A whole philosophy of sentencing for serious criminal offences is built on that principle. When character is under consideration for a purpose connected with a trade or profession, different considerations apply according to the nature of the trade or profession. A solicitor who has been disbarred for dishonesty has a heavy onus to discharge in order to prove that he or she is of good character, sufficient to justify readmission to practise, but it is an obstacle that can be overcome.”

49 Judicial Member Molony in Trlin v Commissioner of Fair Trading summaries the approach to be adopted as follows:

“The issue of whether a person who has been determined not to be a fit and proper person to hold a dealer licence has been so reformed that she or he is now fit and proper, is a matter of judgement. In considering that issue the Tribunal is required to take into account the nature and seriousness of the original misconduct, any events relevant to an assessment of the Applicant’s fitness which have occurred since then, the candour with which the Applicant has approached the issue of past misconduct, the Applicant’s explanation of the misconduct, the impact of the effluxion of time, and the Applicant’s present circumstances and reputation.”

50 This seems to me to be the correct approach. That consideration must be done in light of the nature of the industry in issue and the broad objects that lead the legislature to regulate the industry. The essence of the regulatory regime in which the Applicant seeks to operate is clearly the protection of consumers. Accordingly, the Act is to be given a broad as opposed to a narrow construction and one that is to achieve the broader objects and purpose parliament had in mind.

51 Members of the public must be able to have confidence in those licensed to operate under the Act. Consumers place their trust and their money in these licensees and often rely on their advice. They must be able to feel confident that their trust is not abused. They should be able to assume that a licensee will adhere to the proper standards of trust and honesty.

52 The ultimate question is whether the Applicant can be safely accredited to the public, without further enquiry, as a person being trusted with the sort of work which the licence entails: Young Taek Chong v Tomazin (1994) ASC 56-283 at page 58. Before a licence is issued it must be apparent that the public could have confidence in the Applicant being the holder of a motor dealers licence. The public interest in the Applicant being able to offer the motor vehicle auction services it proposes to provide must be weighed against the public interest in protecting consumers from any unfair conduct or conduct that contravenes the obligations imposed on a motor dealer.

53 It is not in dispute that Mr. Byrnes is the sole director of the Applicant. While Mr. Byrnes asserts that his involvement in the day-to-day management of the Applicant is limited, the evidence suggests that at least throughout the course of this matter his involvement has been close. This is to be expected given the importance placed on the licence application. It is also understandable that he would have had concerns for the protection of the Applicant’s records at this time and would have placed strict limits on access to those records. The response given to the Department’s investigators during their visit to the Applicant’s premises on 1 April 2004 must be seen in this light. However, if Mr. Byrnes were to continue to have that level of involvement with the Applicant, it is highly relevant whether he is considered to be a fit and proper person to hold a dealer licence.

54 In this regard I do not share the Commissioner’s concerns. While there can be no dispute as to the nature and seriousness of the misconduct that lead to Mr. Byrnes’ imprisonment and to his disqualification as a motor dealer, Mr. Byrnes has not attempted to conceal these matters. He has attempted to explain his past conduct with candour and he has openly admitted that he held a strongly negative attitude towards authority, and behaved accordingly. Witnesses who appeared for the Applicant gave evidence of the present situation and suggest a changed man but it is not suggested he is one who has undergone a total reformation. The obligation of complete candour and disclosure is an important element of good character: McEvoy v Director-General, Department of Fair Trading [2000] NSWLEC 183. Mr. Byrnes has provided an explanation for his misconduct and placed it in context without attempting to trivialise it.

55 Mr. Wilson has submitted that the evidence of Mr. Hobbs and Dr Grech is of little assistance to Mr. Byrnes, as they had not been told of Mr. Byrnes’ 2001 conviction for assault. While the evidence shows that neither was aware of the conviction I do not agree with the general thrust of Mr. Wilson’s submission. During the hearing there was some passing reference to Mr. Byrnes’ notoriety. It seems to me to be implausible to think that neither Mr. Hobbs nor Dr Grech would have had some idea of Mr. Byrnes’ background yet they nevertheless hold him in high regard. With the exception of his police record, the Commissioner lead no evidence to contradict the evidence of Mr. Hobbs and Dr Grech. I can take no account of any supposed notoriety without evidence to support it.

56 A significant amount of time has passed since Mr. Byrnes’ imprisonment and his disqualification and in my view the effluxion of time reduces the significance of his misconduct. Mr. Byrnes’ 2001 conviction for assault resulted in a relatively minor penalty and in my view suggests that the Court considered it to be on the lower end of the scale of seriousness. Nevertheless, I also agree with the Commissioner’s submission that it demonstrates a lack of control by Mr. Byrnes.

57 The more recent matters relating to Mr. Byrnes’ driving record are more troublesome. I am inclined to agree with the Commissioner’s contention that these convictions suggest that Mr. Byrnes has contempt for laws relating to the regulation of traffic. It appears curious that while Mr. Byrnes has apparently matured in other spheres of his life this area remains problematic.

58 Nevertheless, in the context of the industry in issue I do not think that there is a serious risk to the public. The evidence shows that Mr. Byrnes has adopted business practices in which he takes advice from professionals and attempts to work within the applicable regulatory regimes. The Applicant’s staff operate under a Code of Ethics and staff receive on-going training. The Applicant holds a liquor licence and there is no record of complaints in relation to its auction house activities.

59 The Commissioner contends that the evidence suggests that the Applicant has been carrying on the business of a "dealer" without being the holder of a licence. "Dealer" is defined in section 4 of the Act to mean "a person who carries on the business of buying, selling or exchanging motor vehicles, but does not include a financier". The term "sell" is defined to mean, "to sell as principal or agent". The Commissioner points to the decision in Pickles Auctions Pty Ltd v Registrar Consumer Claims Tribunal and Ors, Supreme Court of NSW 9 September 1994 unreported as authority for the principle that an auctioneer of goods acts as agent for the vendor. The Commissioner argues therefore that the Applicant is required to be licensed to undertake its motor vehicle auction activities. In contrast the Applicant concedes that its documentation uses the term “agent” but it contends that it does not operate in that capacity. Its evidence is that it does not take vehicles on consignment, but rather under a temporary bailment, and it maintains that it has not been trading in a manner that requires a licence. In fact the Applicant had received legal advice on the issue and was advised that it is a grey area of the law. At the time of hearing no action had been taken against the Applicant in relation to this issue.

60 In my view, the evidence presented by the Commissioner in support of this allegation is inconclusive. I do not share Mr. Wilson’s confidence that this is a settled area of the law. Accordingly, I am not prepared to draw any negative inferences from the Applicant’s conduct of its motor vehicle auctions to date.

61 I note the evidence of the Department’s investigators regarding their visit to the Applicant’s premises. That evidence suggests that Mr. Byrnes had adopted an antagonistic attitude to the regulator. As I have indicated above, I consider that this attitude must be seen in the light of the fact that these proceedings were underway at the time. I also accept that Mr. Byrnes could have seen the Department’s actions in arriving at the Applicant’s premises unannounced whilst these proceedings remained on foot was intimidating.

62 I agree with Mr. Glissan that the primary issue is not whether Mr. Byrnes has undergone a complete change of personality involving repentance, but rather whether he is able to demonstrate qualities that would allow the Tribunal and the public to have confidence in his honesty, knowledge and capacity to operate in the industry. It is apparent from the evidence that both Mr. Byrnes and Mr. Gildea indicated to the investigators that they wished to cooperate with the Department. It is apparent that the Applicant has sought professional assistance in relation to compliance with the regulatory regime. There is no allegation that the Applicant has engaged in dishonest, sharp or deceptive practices in the course of its various businesses. In the circumstances of the type of activity that the Applicant proposes to undertake it is my view that the public can have confidence in this continuing.

63 While I am aware of the caution that should be taken in matters of this kind, I am satisfied that within the confines of its auction operations the Applicant is likely to carry on the business of a motor dealer honestly and fairly. I cannot see any benefit flowing from continuing to exclude the Applicant from trading in that manner. However, I recommended that the Commissioner consider whether a condition should be imposed on the licence that would limit the Applicant’s activities to those that Mr. Byrnes has identified as falling within its immediate future proposed operations.

64 Accordingly, the decision of the Commissioner made on 17 December 2003 to refuse the Applicant a dealer’s licence under the Act is set aside.

Orders

1. The decision of the Commissioner for Fair Trading to refuse the application by Cromwell’s Auctioneers & Appraisers Pty Ltd for a dealer licence under the Motor Dealers Act 1974 is set aside.

2. The matter is remitted for reconsideration by the Commissioner for Fair Trading with the recommendation that Cromwell’s Auctioneers & Appraisers Pty Ltd be granted the licence sought if it satisfies the other requirements provided for in s.12 of the Motor Dealers Act 1974.