El Masri v Director-General, Department of Fair Trading

[2002] NSWADT 257

CITATION:	El Masri -v- Director-General, Department of Fair Trading [2002] NSWADT 257
DIVISION:	General Division
PARTIES:	APPLICANT Mustapha El Masri RESPONDENT Director-General, Department of Fair Trading
FILE NUMBER:	023173
HEARING DATES:	27/09/2002
SUBMISSIONS CLOSED:	11/21/2002
DATE OF DECISION:	12/06/2002
BEFORE:	O'Connor K - DCJ (President)
APPLICATION:	Fair Trading Act 1987 - Motor Dealer - suspension of licence - Motor Dealer - suspension of licence
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Fair Trading Act 1987 Motor Dealers Act 1974
CASES CITED:	RJK Automotive Pty Ltd -v- Director-General, Department of Fair Trading [2002] NSWADT 158 Rizen Smash Repairs Pty Ltd and Alfar v Director-General, Department of Fair Trading [2002] NSWADT 173 Tropea -v- Director-General, Department of Fair Trading [2001] NSWADT 158 Washington Gray Pty Ltd & Gough -v- Director-General, Department of Fair Trading [2001] NSWADT 209 Hutchings Electrical Pty Limited & Anor v Director-General, Department of Fair Trading [2002] NSWADT 192 Travel Action Pty Limited -v- Director-General, Department of Fair Trading [2002] NSWADT 241 Wong v Director-General, Department of Fair Trading [2002] NSWADT 197
REPRESENTATION:	APPLICANT B Galloway, solicitor RESPONDENT A Wilson, solicitor
ORDERS:	1. Determination under review set aside.

1 On 31 July 2002 the Director-General, Department of Fair Trading (the Director-General) exercising the non-delegated powers conferred on his office by the Fair Trading Act 1987, s 64A(2) suspended Motor Dealer Licence No MD 17483 held by Mustapha El Masri trading as Masri Motors in respect of premises at 6 Knight Street, Lansvale.

2 Section 64A (which commenced 1 August 2000) provides:

‘ 64A. Suspension of licences

(1) In this section, "licence" means any licence, permit or other authority granted or issued (whether before or after the commencement of this section) under any legislation administered by the Minister, and "licensee" means the holder of the licence, permit or authority.
(2) If the Director-General is of the opinion that there are reasonable grounds to believe that:

(a) a licensee has engaged in conduct that, under legislation administered by the Minister, constitutes grounds for suspension or cancellation of the licence, and
(b) it is likely that the licensee will continue to engage in that conduct, and
(c) there is a danger that a person or persons may suffer significant harm, or significant loss or damage, as a result of that conduct unless action is taken urgently,
the Director-General may, by notice served on the licensee, suspend the licence for a period of not more than 60 days specified in the notice, commencing on service of the notice.
(3) A notice under subsection (2) has effect according to its terms, whether or not the licensee has been afforded an opportunity to be heard as to whether the licence should be suspended.
(4) Within 7 days after a licence has been suspended under this section, the licensee must:
(a) lodge the suspended licence at an office of the Department of Fair Trading, or
(b) if unable to lodge the suspended licence, lodge at an office of the Department of Fair Trading a statement signed by the licensee and providing accurate and complete details of why the licence cannot be lodged.
Maximum penalty: 10 penalty units.
(5) If, during the suspension of a licence under this section, the Director-General is satisfied that the facts and circumstances that gave rise to the suspension have so altered that the suspension should be terminated, it is the duty of the Director-General, by further notice specifying the date of termination, to terminate the suspension without delay and restore the licence to the licensee.
(6) Without affecting the generality of subsection (2):
(a) a second or subsequent notice may be served on a licensee under that subsection in respect of conduct of the kind to which that subsection refers, and
(b) any such notice may be served during a period of suspension of the licence concerned.
(7) This section has effect despite the provisions of any other Act, and the power conferred by this section is in addition to, and does not limit or displace, a power conferred by or under any other Act that authorises the Director-General or any other person to suspend or cancel a licence or take other action in respect of a licence or in respect of the conduct concerned.
(8) A licensee may apply to the Administrative Decisions Tribunal for a review of a decision of the Director-General under this section.’
(The Motor Dealers Act 1974 under which motor dealers licences are issued is legislation administered by the Minister responsible for the Fair Trading Act, the Minister for Fair Trading.)

3 Mr El Masri (sometimes referred to, in these reasons, as ‘the applicant’) exercised his right to apply for review, lodging the application for review on 7 August 2002.

4 The Director-General’s reasons for decision were attached to the notice of suspension. As to the basis upon which he concluded that there were ‘reasonable grounds to believe’ the three statutory criteria listed in sub-s (2) were satisfied so as to warrant immediate suspension rather than leaving the applicant to continue to trade and face disciplinary proceedings, the Director-General referred to the following matters:

(a): as to whether the licensee has engaged in conduct that constitutes grounds for suspension or cancellation of the licence.
On 30 July 2002 information was received from the New South Wales Police Service identifying an extensive current criminal enterprise involving motor vehicle smash repairers and motor dealers. This activity, commonly known as rebirthing, involves the theft of motor vehicles, changing the motor vehicle identity and subsequent resale of the vehicle. The information identifies Masri Motors as being involved in dealing in rebirthed motor vehicles.
(b): as to whether it is likely that the licensee will continue to engage in that conduct.
The reasons stated that the ‘details of the conduct’ given in relation to (a) ‘demonstrates’ that without suspension the conduct is likely to continue.
(c): as to whether there is a danger that a person or persons may suffer significant harm, or significant loss or damage, as a result of that conduct unless action is taken urgently.
Similarly the reasons stated that the ‘details of the conduct’ given under (a) ‘demonstrate that the criminal nature of the conduct will cause significant harm or significant loss to the community in general’.

5 The applicant applied for an urgent stay of the decision to be granted by the Tribunal pursuant to s 60(2) of the Administrative Decisions Tribunal Act 1997 (the Tribunal Act).

6 The application was heard and granted on 14 August 2002. The Director-General’s decision was stayed pending determination of the principal application for review subject to the following conditions:

(i) that the applicant not be involved in the consignment of motor vehicles
(ii) that if the applicant arranges finance for the sale of any motor vehicles he is to provide a report within 24 hours of that transaction to the nominated officer of the Department and that report is to include the identity of the customer
(iii) when dealing with the purchase of motor vehicles the applicant is to record the identity of the person from whom the vehicle is purchased and the identity should be confirmed by reference to the driver’s licence and one other form of identification
(iv) the applicant is not to deal with any of the following persons: George Elfar, Awatef Elfar (wife of George), Julie Elfar, Andrew Elfar, Michael Elfar, Yaccoub Ghandour, Khaled Elfar.

7 The hearing of the application for review occurred on 27 September 2002. There were further written submissions. The applicant has continued to trade in the meantime.

8 The following relevant directions were given at the conclusion of the hearing:

1. Director-General given leave to file and serve any further statement as to any consideration that was given to s 73A of the Fair Trading Act 1987 and to do so within 14 days. [Section 73A gives the Director-General power to accept a written undertaking given by a person in connection with a matter in relation to which the Director-General has a function under the Act (other than a function in connection with Part 7). The functions covered include the disciplinary functions of the Director-General such as those being exercised in this case under Part 6.] A statement was filed on 11 October 2002.
2. Applicant given leave to respond to that material only within a further 7 days. The applicant did not comply with that direction, the response eventually being filed on 21 November 2002.

9 The reasons lack the detail that might normally be expected, explained it would seem by the need to maintain the confidentiality of the investigation, and the fact that at that time all the relevant information was held by the police. The Director-General’s only source of information at that time was a letter from the police dated 30 July 2002 outlining the scope of its investigation, the seriousness of the matters uncovered, and providing short accounts of the circumstances under which the licence holders who had come to notice, some of whom were subsequently charged with serious criminal offences.

10 The police said that they had identified two rebirthing rackets one in which the Elfar family is said to be the principal (and in particular George Elfar) and the other in which the El Hassan family is said to be the principal. The police said that both families were directing organised criminal activity relating to car theft, rebirthing and the export of stolen cars and parts to Jordan and Lebanon. Police requested the assistance of the Department in "suspension of … licensed motor vehicle repairers and motor dealers" listed in the letter.

Other Decisions

11 Tribunal has so far delivered seven final decisions in relation cases where notices of suspension have been challenged by the affected licence holders. A brief description of the cases and their outcomes follows:

(a) connected with the police investigation into rebirthing like the present case:
RJK Automotive Pty Ltd -v- Director-General, Department of Fair Trading [2002] NSWADT 158 (2 September 2002) (motor vehicle repairers, decisions affirmed)
Rizen Smash Repairs Pty Ltd and Alfar v Director-General, Department of Fair Trading [2002] NSWADT 173 (19 September 2002) (motor vehicle repairers, decisions affirmed)
(b) history of complaints to Department
Tropea -v- Director-General, Department of Fair Trading [2001] NSWADT 158 (24 September 2001) (home building qualified supervisor’s certificate, decision affirmed)
Washington Gray Pty Ltd & Gough -v- Director-General, Department of Fair Trading [2001] NSWADT 209 (5 December 2001) (home building contractor licence, home building qualified supervisor’s certificate, decisions set aside)
Hutchings Electrical Pty Limited & Anor v Director-General, Department of Fair Trading [2002] NSWADT 192 (1 October 2002, electrical contractor licence, decision set aside)
(c) adequacy of financial resources and other matters
Travel Action Pty Limited -v- Director-General, Department of Fair Tra ding [2002] NSWADT 241 (20 November 2002) (travel agent, decision set aside)
(d) observance of trust account requirements in relation to banking of monies received
Wong v Director-General, Department of Fair Trading [2002] NSWADT 197 (4 October 2002) (real estate salesperson, decision affirmed).

12 In RJK, the Director-General stated that information from the police disclosed that the principal of RJK, Mr Reza Kurkcu was involved with other vehicle repair companies and persons associated with those companies in the carrying out of extensive criminal insurance fraud. Kurkcu acknowledged that he had dealt on several occasions with the El Hassan family, in particular Brian El Hassan (charged and in custody awaiting trial) and Youseff El Hassan.

13 The main allegation was that Kurkcu had issued unregistered vehicle inspection reports (‘blue slips’) in relation to at least two vehicles in a dishonest or unfair manner because he knew, or should have known, that there were irregularities in relation to the identity of those vehicles. The Director-General also referred to charges laid in May 2002 alleging that he had forged letters purporting to be from Workcover so that he could finance demolition work on a property he owned; and a prior criminal conviction for making a false instrument in 1994. As to the two blue slip events, the Tribunal did not regard the first as sufficient to warrant a finding by the Director-General under criterion (a) of s 64A(2). On the other hand it was so satisfied in relation to the second blue slip event. The Tribunal was satisfied that the other criteria were met, though there was no close examination of them.

14 In Rizen Smash Repairs two motor repair businesses were the subject of suspension notices: Rizen Smash Repairs Pty Ltd (principals Jaccoub Ghandour and Khaled Alfar) and, separately, Khaled Alfar trading as Jade Automotives. The Director-General stated that information received from police indicated that Ghandour and Alfar and their associated businesses were connected to the conspiracy led by the Elfar family involving the stealing, dismantling and 'rebirthing' of motor vehicles; and in staging motor collisions and making inflated and false insurance claims. Ghandour had been charged with conspiracy to defraud, and was on bail. There was a close connection between Ghandour and Alfar and the Elfar family. George Elfar had sold Rizen Smash Repairs to Ghandour and Alfar in June 2002. In the case of Rizen Smash Repairs the police report referred to three staged collisions and the presence of a stolen motor cycle at its premises. In the case of Alfar’s separate licence connected to Jade Automotives the Director-General referred to the police investigation in particular the presence of a stolen car on the premises and more generally to Alfar’s involvement in Rizen.

15 On that occasion I noted that there was no sensible explanation on the part of Ghandour as to such matters as the giving of two damages quotes on the same day in respect of the same vehicle said to have been involved in two different accidents, an agreement to give an inflated quote and the motor scooter being in a dismantled condition. Mr Ghandour had dealt directly with members of the Elfar family. I did not regard the first ground confined to Jade Automotives on which the Director-General relied as being of great significance. I regarded as more significant the ground connecting Alfar with Rizen. I rejected Alfar’s suggestion that he was only minimally involved in the business of Rizen.

16 I was satisfied as to the Director-General’s opinion in relation to criterion (a) and (b). I had some doubt as to whether criterion (c) was satisfied, ultimately agreeing with the Director-General. Criterion (c) relates to whether the situation is a sufficiently urgent one to warrant intervention by suspension rather than leaving the licence holder in practice pending the conclusion of show cause proceedings. I concluded:

‘On this occasion, I am satisfied that criterion (c) is made out because of the number of suspicious events that Mr Ghandour and Mr Alfar have jointly or individually been associated with in the short time that they had been in business as Rizen Smash Repairs, and within the limited time span of the close surveillance. This material points to a pattern of activity that may well involve a significant proportion of their businesses .... Importantly ... there is an absence of any credible explanations for these suspicious events, giving rise to issues of honesty and candour. That leads me to conclude that there remains a danger of significant harm to third parties to which this form of urgent response is appropriate.’

17 Mr El Masri had opened his dealership in about April 2002, though he had held a motor dealer’s licence for about two years. By the time of hearing the Director-General had a detailed police briefing. At the hearing he relied on a 117 page brief, based on material supplied by the police (Ex A).

18 There were objections by Mr El Masri, through his solicitor, on grounds of relevance to parts of the brief. The Director-General withdrew pages 18-31 of the brief; and agreed not to rely upon pages 90-106 of the brief. The Tribunal rejected the other objections.

19 The brief highlights two suspicious transactions, both occurring in May. In contrast to the RJK case, Mr El Masri has no criminal history of any kind.

20 The picture that emerges from the material is that Masri Motors traded at the low end of the market mainly dealing in cars around the $1000 to $5000 mark.

21 The first transaction in question involved Mr El Masri facilitating what was in essence a private sale between George Elfar and a person named Milad Goryia for $23,500 of a 1997 Nissan Maxima sedan registration number XSG 957.

22 Mr El Masri lent his car yard to the transaction, by issuing official documentation to the effect that the car had been sold to the yard for $23,500 and that he had on-sold it to Goryia for $25,000. He never met Goryia. He left his son to do the paperwork. The paperwork was completed by George Elfar away from the yard. George Elfar regularly visited the yard on a social basis. Mr El Masri said he believed that Elfar owned the car as it was the one he drove when he visited the yard; and that he was simply doing him a favour. It turned out to be a stolen car. The applicant said he did not know it was stolen, and would never have handled it had he known.

23 Masri Motors made the formal application for finance on behalf of Goryia. Elfar, it is said, conspired with Goryia to complete the loan application by giving him a false employment and payroll history. The whole amount of $25,000 - the price Elfar had agreed privately with Goryia - was disbursed by the finance company. The payment was made to Masri Motors. Mr El Masri then paid the amount to the Elfar family that he had purportedly paid Elfar to buy the car from him, $23,500. He disbursed this by way of $5000 in cash to Mrs Elfar, $10,000 in the form of a cheque, then in varying cash amounts (he mentioned $1000, $2000, $3000 amounts as estimates) until the balance of $8,500 was exhausted. The car was never held overnight at the car-yard.

24 The required entries were not entered in the Register, called in the proceedings the ‘Police Book’, until well after the ‘sale’ and ‘purchase’ events. Those events occurred in the period 24-27 May 2002. The entry was not made until around 18 June 2002. The explanation given by his father for this delay was that his 19 year old son did the bookwork and was sometimes lazy in doing it. The son, Bassam, supported this explanation. In my view the Register was a reasonably-managed book. All of the entries (except the one in question) are in exact or close date order, particulars are recorded satisfactorily. This evidence does not support the ‘laziness’ explanation.

25 Mr El Masri said that this had been the first time since they had opened in April that had arranged finance for a car.

26 The second irregular transaction involves the son. On the occasion of its search of the premises the police found a 2001 Nissan Coupe 300ZX in the vicinity. There was some lack of clarity at hearing as to whether it was inside or outside the car-yard. The Nissan Coupe was owned by the son, Bassam. He had acquired it from a person (also named El Masri but said not to be related) who had in turn acquired it from a dealership at Campbellfield on the Hume Highway in Melbourne. That person had picked it up in Melbourne and driven it back to Sydney. Bassam had swapped a Holden Commodore he owned for the Nissan Coupe. The police view, based on their scrutiny of stolen vehicle reports, is that it is a stolen vehicle, stolen from an owner at Mt Evelyn near Melbourne (see police brief, 83). There has not as yet been a forensic examination of the vehicle. This is in my view an irregular transaction: a young person (and son of the owner) working in a dealership is, first, privately trading in cars, and doing so not by usual methods of payment but by way of exchange.

27 In both instances there was a failure to check identifying details of the cars being dealt with. In the first case Mr El Masri did not check the details provided by Mr Elfar, nor did Bassam, by inspecting the identification marks. The same occurred in the instance of the vehicle swap, Bassam saying that he relied on the fact that the relevant details were recorded on the typewritten invoice issued on the letterhead of the Melbourne car dealer.

28 In the ultimate the Director-General relied on the above and the following circumstances. The Tribunal has interpolated some comments:

1. The nature of the criminal conspiracy led by the Elfar family, as described at 17 of the brief. There is no specific mention of El Masri at this point.
2. Police facts sheet relating to the conduct of Milad Goryia, giving rise to a charge of obtaining money by deception, yet to be heard. Milad is the brother of Hikmat Soruya. Hikmat in a police statement dated 11 September 2002 (see 111-117) links Hikmat, Milad, a cousin Imad Hermiz and his father, Nilad Goryia with George Elfar and the Elfar family. He refers to several contacts between them and George Elfar over the purchase of cars in May 2002.
3. Milad Goryia is linked in turn to Mr El Masri. The police facts sheets (34-35) outlines Milad Goryia in the loan application to Esanda Finance.
4. The Motor Dealers’ and Wholesalers Register (the ‘Police Book’) recovered from Masri Motors. This vehicle is the subject of a log entry entered as item 92 on 24 May 2002 at Masri Motors. The log shows that the vehicle was acquired from George Elfar on 24 May 2002 and disposed of on 27 May 2002 to Milad Goryia for $25,000.
5. Entry No 92 gives the prescribed particulars in relation to the Nissan Maxima - date of acquisition, how acquired, make and body type, model designation and date of manufacture, registration no (if any), engine no, VIN or chassis no, odometer reading, date of disposal, how disposed, type and serial no of disposal form, cash price at which vehicle disposed including GST, name and address of person to whom vehicle disposed. There are a number of suspicious aspects to this entry. The entry in an otherwise orderly sequence of entries for June. The adjacent entries (91 and 93) are for 18 June 2002 and 20 June 2002. The June entries commence with Item No 65 on 3 June 2002 and continue in an orderly sequence apart from Item 92 for the whole of the month until Item 101 (28 June 2002). The other noteworthy feature was the cash price for which the vehicle was disposed is well outside the band of virtually all other disposals. In the 35 items dated June (item 92 is not counted) the highest price paid for any vehicle was $8800, and there were only seven sales recorded over $4000. This points to a business that deals in low-priced vehicles. In the book presented in the police brief (36-53) there are 120 entries, of which 80 per cent show a disposal for cash. The highest disposal price shown is $9650. There are entries showing disposals in April to Rizen Smash Repairs. This was at a time when it is known from other cases that Rizen Smash Repairs was owned by George Elfar.
6. Business records relating to the sale, records from Masri Motors and Esanda, as well as police comments and reports (54-106). The records include instructions to disburse the amount lent of $25,000 to Masri Motors.
7. The records show at 66 and 77 two versions of the Form 4 (Motor Dealers Act Warranty Form). The first sent to Esanda by fax on 27 May 2002 has omitted the Register Details, Book No, Entry No. The second at 77 has completed the Book No with ‘2’ and the Entry No with ‘92’. This points to the possibility that there may have been an intention on the part of Masri Motors not to record the transaction in the Register as at 27 May 2002. There is also an amendment to the registered number affecting the last digit making it a clear ‘7’ rather than what appears to have been a ‘4’. The two versions of the Form 4 show a ‘cash price’ of $25,999 (i.e. the advertised price). There was no satisfactory explanation at hearing from Mr El Masri’s son, Bassam, who filled out the form, as to why it was necessary to show a ‘cash price’ higher than the one for which it was sold, $25,000, when the purchaser had been introduced for a price which had already been agreed; and the car was never displayed for sale at the yard. He said he ‘negotiated’ the price with Goryia. I am satisfied that this answer was false.
8. Masri Motors had lodged payment for the registration certificate to issue in its name on 19 June 2002, and certificate issued marked ‘usage held for re-sale by a licensed motor dealer’. At this point the vehicle had long been sold.
9. Certificate of Expert Evidence (107-108) provided by Const B J Williams following an engineering investigation into the Nissan Maxima. He examined three identification numbers. As to the Vehicle Identification Number (VIN) stamped on the firewall of the vehicle, he observed that the number appeared to have been painted and that the last five digits did not appear to be original. This was confirmed by a scientific examination. The original VIN was ascertained on further examination. This VIN belonged to Nissan Maxima reported as stolen on 20 December 2001. As to the Engine Number, he was satisfied that the number shown was an original that had not been interfered with, and found that that number belonged to the car reported stolen on 20 December 2001. As to the Vehicle Identification Plate, he noted that it bore the same number as the altered VIN, and that there was evidence that the two plastic rivets holding that plate had been removed and were now, as a result, loose. His conclusion was that the vehicle examined was originally the one stolen in December, as was the engine.
10. Synopsis of interview conducted with Milad Goryia on 14 August 2002.Goryia states that he first saw the car at George Elfar’s workshop (Rizen Smash Repairs). George said he would arrange finance. Alleged that Elfar concocted the documentation (pay slips, employment record) to enable Goryia to get finance approval. Goryia stated that he did not know anything about the car going through the books of Masri Motors. Goryia stated that George did the application form for him, George had the car at his house and he (Goryia) picked up the car from George’s house. He stated that he had never seen the paperwork from Masri Motors. This evidence raises questions as to whether it was falsified by Mr El Masri or his son, Bassam.

29 Mr El Masri and his son gave oral evidence. The solicitor for the Director-General questioned this element of the proceedings, in light of the Practice Note which governs them. (It may be that the extent to which oral evidence is to be permitted in this class of proceedings will have to be reviewed.)

30 Mr El Masri said that he had started his own car yard in April 2002 after working in the industry for a number of years. He said he had worked in a smash repair workshop at Smithfield, near Mr Elfar’s business. He said in evidence in chief that he had met George Elfar about 3 to 4 years ago. He had understood Elfar to be a legitimate businessman connected with the car trade, and knew he owned a smash repair business (at one time, Rizen). He was cross examined on his degree of association with George Elfar and his wife Awatef Elfar.

31 The Tribunal is satisfied that Mr El Masri knew both of them well, and has had a regular association with them in recent years; one that went beyond the account he gave in evidence in chief. This is apparent from the picture given by Mr El Masri of Mr Elfar visiting his yard regularly and staying for 15-20 minutes to have coffee. It is also reflected in the way in which he dealt with Mrs Elfar in handing over the receipts of the sale. He was behaving more like a private banker than a dealer carrying on an arms-length commercial business.

32 As to the main transaction in issue (the Nissan Maxima) he said that he been told by his son, Bassam, that George Elfar wanted to do the finance through the yard. He said that he himself had had no involvement in the transaction. He said that George had supplied the chassis no and the engine no. He said that he will now ensure that every engine number and vehicle number is checked, and he said that he doubts that he would ever buy a private car again.

33 Mr El Masri said in cross examination that he did not buy the car. He simply sought to do Mr Elfar a favour. He acknowledged that nonetheless he changed the car into his name; and that Mr Elfar was the author of the hand-written receipt purporting to show that Mr El Masri had bought the car for $23,500; and that no money ever changed hands. He said that he obtained the various details recorded in the Register Book from George. He agreed that he did fill out the forms as needed for the application to Esanda.

34 As to why the entry in the Register Book was not made (as it should have been) on or around 27 May 2002, he said that he did not know why that had not occurred. He said it was his son’s fault and that he was sometimes lazy in relation to the paperwork. I have commented on this explanation earlier in my reasons.

35 I have also referred to the way in which the payment received from Esanda was disbursed to Mrs Elfar. Mr El Masri said he kept $1500 and that he did not make much (about $600-$1000) as he had to look after the GST component.

36 He denied any knowledge that the Nissan Maxima was stolen. He said if he had known that he would never have let it into the place or put it in the Register Book. He denied having any knowledge that the identification details had been tampered with.

37 His son, Bassam, gave evidence. He said that he thought that Mr Elfar was an honest person. I have referred to his evidence in relation to the recording of a ‘cash price’ of $25,999 in the documents, and $25,000 as the ‘sale price’. I have referred to his evidence in relation to the Nissan Coupe swap.

38 There was no evidence from either of the El Masris of them ever having any contact with Mr Goryia.

The Criteria for Immediate Suspension

39 Turning to the criteria which the Director-General is required to consider.

40 (a): reasonable grounds to believe that the licensee has engaged in conduct that constitutes grounds for suspension or cancellation of the licence

The allegation is that Masri Motors may be dealing in rebirthed motor vehicles. Under s 20D of the Motor Dealers Act 1974, the Director-General may undertake a disciplinary inquiry on a number of grounds. The grounds set out in sub-s (1) include ground (d2) that ‘in the light of evidence acceptable to the Director-General, the holder of the licence is probably receiving or dealing in stolen goods’; and (e) the business to which a licence relates ‘is being carried on in a dishonest or unfair manner’. The Tribunal is satisfied that criterion (a) is established in respect of the events surrounding the acquisition, disposal and financing of the Nissan Maxima. I am also inclined to the view that the material in relation to the Nissan Coupe would be sufficient to constitute ‘evidence acceptable to the Director-General’ that the holder of the licence is probably dealing in stolen goods, though I acknowledge that the police position is less certain on that matter than in respect of the Nissan Maxima.

41 (b): reasonable grounds to believe that it is likely that the licensee will continue to engage in that conduct, and

(c): reasonable grounds to believe that there is a danger that a person or persons may suffer significant harm, or significant loss or damage, as a result of that conduct unless action is taken urgently.

As I noted in Rizen Smash Repairs grounds (b) and (c) will often tend to be run together. If it is thought that a licensee will continue to engage in the impugned conduct, then unless it involves relatively trivial matters, the conclusion is likely to be formed that urgent action will be needed so as to prevent significant harm to others. The Director-General did not differentiate between the two criteria. As to criterion (b), in his original written reasons the Director-General asserted that the ‘details of the conduct’ given in relation to (a) ‘demonstrates’ that without suspension the conduct is likely to continue. The two items of suspicious conduct were referred to. Similarly as to criterion (c), the original reasons stated that the ‘details of the conduct’, given under (a), ‘demonstrate that the criminal nature of the conduct will cause significant harm or significant loss to the community in general’.

42 In my view, an attempt, though difficult, must be made to differentiate the two factors. The list of factors is cumulative.

As to (b):

43 In Rizen Smash Repairs, there was a frequency of suspicious conduct soon after Ghandour and Alfar took over the business from Elfar to support the view that Ghandour and Alfar had demonstrated a propensity towards suspicious conduct of a kind that would cause significant harm, if they were not put out of business immediately.

44 The circumstances of the present case are not as significant as those in Rizen. There is, for example, no telephone intercept evidence here directly implicating the El Masris in knowing connivance with the Elfars. There is not the frequency of like transactions, as was presented in Rizen. Mr El Masri denies having any knowledge that George Elfar and his family were involved in corrupt activities.

45 The solicitor for the Department, Mr Wilson, referred to RJK, where two suspicious activities came under notice. But in addition, that case involved a significant prior criminal history. There the Tribunal concluded as to criterion (b): ‘While the Tribunal is satisfied that there are reasonable grounds for believing that he has engaged in such conduct, Mr Kurkcu has not admitted engaging in the conduct. In those circumstances, it is likely that if he has been engaging in such conduct, he will continue to do so, to assist other disreputable operators.’

46 There the Tribunal saw as the crucial matter the lack of candour on the part of Mr Kurkcu. In this case I consider that a number of Mr El Masri’s and his son’s statements were unsatisfactory.

47 Where the alleged suspicious conduct is relatively isolated, it is more difficult to see how a conclusion can reasonably be reached that it is ‘likely to continue’. The solicitor for Mr El Masri, Mr Galloway, depicted the Nissan Maxima as one transaction that was in issue in over 110 transactions, as recorded in the Book at the time of the police raid. The son’s transaction was not an official dealership transaction, and was not counted for this purpose. On the other hand it is, in my view, a suspicious transaction; and it was undertaken, as I see it, in a dealership context.

48 Another factor that was seen as relevant in Rizen was the frequency of the conduct as compared to the short time the licensees had operated under the licences. Mr Wilson submits that there is an analogy here. Mr El Masri had only started up his business in April 2002, and by late May (on the material before us) was engaging in suspicious conduct.

49 In the case of a single transaction, there may be a level of subterfuge, artifice or sophistication that suggests a degree of organisation that would favour the conclusion that there is a likelihood of repetition of the conduct. On the other hand, a high degree of carelessness in the conduct of the transaction might point the other way. Mr Galloway sought to put the situation in the latter category.

50 The son, Bassam, was left to handle an unusual transaction. His father, Mustapha, the proprietor of the business, had little direct involvement apart he says from signing off the paperwork when necessary. Mustapha and Bassam give an explanation for the delayed entering of the particulars of the acquisition and disposal in the Register Book which is not, in my opinion, credible.

51 As noted earlier, the Register Book (‘the Police Book’) was well maintained and in an orderly way. The script would appear to be that of Bassam’s in the case of most, if not all entries. Bassam, despite the suggestions of him and his father to the contrary, appears to have been a good clerk.

52 The long delay in recording the transaction points away from carelessness and, at this point, more to the possibility that consideration was being given by the El Masris to not making any entry at all. The late submission of the papers for registration of the transfer of ownership from Elfar also points towards the possibility that the initial intent of Mustapha and his son was to deal with the whole matter as an unrecorded ‘off book’ transaction.

53 At this point, I am inclined to the view that there is sufficient suspicious conduct surrounding this one transaction to justify the formation on reasonable grounds of a belief that there is a likelihood that the El Masris will continue to engage in similar conduct again in the future.

As to (c):

54 Here the question is whether there are ‘reasonable grounds to believe that there is a danger that a person or persons may suffer significant harm, or significant loss or damage, as a result of that conduct unless action is taken urgently’.

55 The action referred to is the action of immediate suspension. Despite my dissatisfaction as to the father and the son’s behaviour in respect of the Nissan Maxima and the son’s behaviour in respect of the Nissan Coupe, it is less clear to me whether there are reasonable grounds to take immediate action by way of suspension, as distinct from dealing with the conduct through the disciplinary process.

56 Facilitating sham transactions, as occurred here in relation to the Nissan Maxima, clearly encourages the stealing of cars. Consumers are at risk of being sold goods that have no good title. The original owners of the cars suffer loss and inconvenience. Insurers make avoidable pay-outs, and premiums are inflated for all consumers. The innocent consumer may be left without a car but a loan still to pay.

57 Stealing for this purpose will tend to be directed at the high end of the market, as there is greater scope for a ‘bargain’ to be offered. The two cars the subject of suspicion in this case were ‘high end’ cars. Their values were far higher than any other car the dealership dealt in during their first three months of operation as recorded in the Register.

58 I noted in Rizen Smash Repairs at [68]:

‘68 ... The Minister made it clear that notices of suspension would only be used 'where it is considered that the other measures available to the department, such as obtaining from the trader an enforceable undertaking not to further engage in the improper conduct, will not protect consumers from significant loss or damage.' There was no evidence of what steps had been taken by the Director-General in that regard. There was no evidence of any contact between Departmental inspectors and the applicants other than by way of service of the notices.’

59 The same is true in the present case. Mr Wilson for the Director-General said that it was the view of the Director-General that resort to enforceable undertakings was not an option to be considered in cases of the present kind reported to the Department by the police and resulting from a major criminal investigation. I sought more information on this matter. I noted that the Minister had stated that the Director-General would exercise these powers personally. Consequently, they had not been delegated.

60 An affidavit was filed in response to these observations sworn by an officer of the Department, Mr Christopher John Hanlon, Director, Compliance and Standards Division. The affidavit referred to his briefing to the Director-General on the El Masri matter, and the Guidelines issued in relation to Enforceable Undertakings.

61 The Guidelines are expressed in broad terms and could, on their face, be used in a case such as the present. Mr Hanlon stated that enforceable undertakings are not appropriate where a licence holder has engaged in or is suspected of having engaged in systematic criminal conduct that can cause significant loss or damage. This is not a case where charges have been laid against either of the El Masris. The case contrasts in this respect with RJK and Rizen where charges had been laid. It is the case that there is a charge against the ‘purchaser’ and loan applicant, Goryia; but, as the evidence presently stands, Goryia was not known to the El Masris.

62 I have had some doubt about whether criterion (c) is satisfied in this case. I should indicate once again that I see it as necessary that a cautious approach be taken to the exercise of the powers conferred by s 64A.

63 While there are a number of aspects to their conduct as so far revealed that trouble me, the practical likelihood, as I see it, of the El Masris engaging in similar conduct in the future, in particular between now and any disciplinary proceeding is, I consider, remote. They have had a clear warning through the suspension that issued. Moreover, Mr Elfar, the Tribunal is informed, has left the country; and a principal in the El Hassan ring has been charged and is in custody.

64 In my view, the public interest to which the s 64A powers is addressed could on this occasion be adequately served, pending the determination of any disciplinary proceedings, by the continuation of the strict conditions that attached to the stay order.

65 In reaching this conclusion, I do not wish to be seen to be giving any false hope to Mr El Masri in relation to the outcome of any disciplinary hearing. He faces the real possibility that he may lose his dealer’s licence. I have outlined in these reasons the seriousness of the apparent breaches of the licences.

66 I have referred also to, what I see as, a number of unsatisfactory aspects of his evidence and that of his son in these proceedings. If fuller explanations are not given to the police and the Director-General, I expect that they will count against them in any disciplinary proceedings.

67 Moreover, if further information comes to light about the transactions presently under suspicion or there is new alleged misconduct, the Director-General may see fit once again to issue a suspension, in which case that decision may fall to be reviewed by the Tribunal.

68 The Department has submitted that the Tribunal’s powers are limited to either affirming or setting aside the suspension. It is said that it is not open to the Tribunal to vary the decision. As I indicated in Rizen I have yet to hear any detailed argument on the point; so I will accept for the time being the Department’s submission.

69 Accordingly I will proceed to set aside the decision, and leave it to the Department to work out whether the same conditions should attach to the licence pending the determination of any disciplinary proceedings, and how that might be achieved.

Order

1. Determination under review set aside.