El Sayed v Commissioner for Consumer Affairs

EL SAYED v THE COMMISSIONER FOR CONSUMER AFFAIRS
[2002] SASC 416
Magistrates Appeal: Criminal

MULLIGHAN J The appellant pleaded guilty to carrying on business as a dealer in the selling of second-hand motor vehicles between 18^th July 1999 and 18^th July 2000 contrary to s 7 and s 50 of the Second-hand Vehicle Dealers Act 1995. He was convicted and fined $5,000. He appeals against that sentence on the ground that it is manifestly excessive.
During that year the appellant sold five Holden Commodore motor vehicles. The first vehicle was advertised for sale by the appellant on 15 occasions in The Advertiser newspaper, on two occasions in the Trading Post and on at least one occasion in the Sunday Mail newspaper. He sold the vehicle to a purchaser who went to his home where he lived with his parents. The appellant told him that the vehicle belonged to his mother who was selling it because she had bought a later model Commodore station wagon. He stated the purchase price to be $12,500 provided it was paid in cash and he said that there were no maintenance books or a manual because his mother had cleaned out the motor vehicle and thrown them away. The learned Magistrate was not informed as to when this vehicle was purchased and at what price.
The second motor vehicle was purchased by the appellant for $4,050 from Universal Motor Auctions on 15^thSeptember 1999. He advertised the vehicle for sale on two occasions in The Advertiser newspaper and on one occasion in the Trading Post. In January 2000 the person who eventually purchased the motor vehicle saw an advertisement in The Advertiser newspaper and went to the appellant’s home. The appellant informed him that the service history of the motor vehicle was up to date and he would have no problems with the motor vehicle. When asked why the vehicle was for sale the appellant said that he was a university student and, as his father was ill, he intended to use his father’s vehicle instead of his own vehicle. The purchaser acquired the vehicle for $12,500, $500 of which was paid in cash and the balance by a bank cheque.
The third vehicle was purchased by the appellant for $5,600 from Fowles Auction Group on 23^rd February 1999. He advertised the vehicle for sale on 10 occasions in The Advertiser newspaper between 13^th November 1999 and 17^th June 2000. The person who eventually bought the motor vehicle saw an advertisement in the newspaper in June 2000 and arranged to meet the appellant at his home. The appellant said that the vehicle had been owned by his mother for about 12 months and she had recently purchased a later model vehicle because she had received an inheritance. He also told the purchaser that the vehicle had been involved in a minor accident and $250 had been spent on repairing the front bumper bar. The appellant sold the vehicle to the purchaser for the sum of $13,250 which was paid in cash.
The only information placed before the learned Magistrate about the fourth vehicle, apart from a description of the vehicle, is that the appellant placed an advertisement for the sale of the vehicle in The Advertiser newspaper on 8^th July 2000 and in the Trading Post on 11^th July 2000.
The fifth vehicle was purchased by the appellant from Fowles Auction Group for $10,100 on 29^th July 1999. He placed six advertisements for the sale of the vehicle in The Advertiser newspaper and one in the Trading Post. The person who eventually purchased the vehicle responded to the advertisement in the Trading Post and went to the appellant’s home on 9^th November 2000. He was shown the vehicle by a 16 year old youth who is apparently the brother of the appellant. He told him that his brother was out and he could not take the vehicle for a test drive. The purchaser returned to the address the next day with his father and saw the appellant. He showed them the vehicle and said that it belonged to his father who only drove it to “poker games”. The purchaser test drove the vehicle. In answer to a question the appellant said that the vehicle had not been involved in an accident. A purchase price of $22,800 was agreed subject to finance and inspection. A deposit of $500 was paid on this occasion. On 14^th November 2000 an RAA inspection was completed, the consequence of which the purchase price was reduced by $200 due to some holes in the exhaust system. The purchase of the vehicle was completed on 17^th November 2000 when the purchaser again attended at the appellant’s home and paid the balance of the purchase price of $22,100 by cheque.
It may be seen that no gross profit was revealed with respect to the first and fourth mentioned vehicles. With respect to the second mentioned vehicle the gross profit is alleged to be $8,450. On the third vehicle the gross profit is alleged to be $7,650 and on the last mentioned vehicle the gross profit is alleged to be $12,700 making a total of $28,800.
The complainant alleged that with respect to the third vehicle the appellant had made a serious misrepresentation to the purchaser. As has been mentioned, he told the purchaser that the vehicle had been involved in a minor accident and that $250 had been spent on repairing the front bumper bar. The previous owners of the vehicle had been involved in a road accident in March 1998 in the Northern Territory when the vehicle collided with a Brahman bull. The vehicle was written off by their insurer which took possession of the wreck. One of the owners stated that the vehicle had sustained extensive front‑end damage particularly to the driver’s side of the vehicle. The bonnet and top of the motor were torn off and the roof of the vehicle was pushed back to the centre pillars.
Section 7(1) of the Second-hand Vehicle Dealers Act provides that a person must not carry on business or hold himself or herself out as a dealer unless licensed under the Act. The appellant did not at any time hold a licence. Pursuant to s 3 of the Act “dealer” means a person who carries on the business of selling second‑hand vehicles and “sell” includes to sell on behalf of another person. S 50 of the Act provides, inter alia, that a person who has sold four or more second-hand vehicles during a period of twelve months will, in the absence of proof to the contrary, be presumed to have been a dealer during that period.
As has been mentioned, the appellant pleaded guilty to the charge. The matter came on for hearing at the Magistrates Court at Christies Beach on 10^th September 2001 and was adjourned without a plea being entered. A pre‑trial conference was held on 6^th November 2001 and 5^th December 2001 even though no plea was entered. The matter again came on for hearing on 16^th January 2002 and was adjourned to enable negotiations between the appellant and the respondent to be undertaken. When the complaint came on for hearing on 14^th February 2002 the appellant pleaded guilty and the fine was imposed together with court fees, a levy and the costs of the prosecution which was an additional total amount of $312.50. It appears from the endorsements on the complaint that the appellant did not deny the charge at any stage, but an issue was raised as to whether he was carrying on business. He did not plead guilty at the first opportunity.
The appellant was represented at the hearing before the learned Magistrate and his counsel made submissions on his behalf. The learned Magistrate was informed that the appellant was aged 21 years, was a university student who lived with his parents and had no previous convictions. His parents are an immigrant Lebanese family. His mother speaks little English and his father speaks English and works as a taxi driver. The appellant is their older son and is the most articulate member of the family, presumably in speaking English. The learned Magistrate was informed that the mother and the father each owned two of the vehicles and the appellant owned the remaining vehicle. He was informed that all of the vehicles were purchased for the personal use of the particular owners and the appellant derived no profit from the sale of any of the vehicles except for $1,000 which he made upon the sale of his own vehicle. It was submitted that the appellant had assisted his parents to purchase and sell the respective motor vehicles. It was expected of him by reason of his age and command of English that he negotiate and deal with the public in commercial matters, including the buying and selling of motor vehicles.
With respect to the first vehicle, the learned Magistrate was informed that it was purchased at auction in February 1997 and sold in July 1999 after being driven for about 49,000 kilometres. The appellant’s mother had decided to replace the vehicle with a more modern vehicle which was the third vehicle. That submission was contrary to the submission made by the prosecutor. As has been seen, she told the learned Magistrate that the vehicle was involved in an accident when owned by the previous owners in March 1998. The appellant’s counsel informed the learned Magistrate that after purchase this vehicle was repaired by a panel beater and was used by his mother until June 2000.
The learned Magistrate was informed that the fourth vehicle was the first vehicle purchased by the appellant’s father. It was purchased in July 1999 and sold in July 2000. It had been used substantially by his younger brother. He was informed that the fifth vehicle was purchased by the appellant’s father. It was in a damaged condition, was repaired and used by the father until it was sold because he needed the money.
It was submitted that the offending was inadvertent and unintentional and that the buying and selling of the vehicles was not part of a business dealing for profit. I expect what was meant by that submission was that the appellant did not know that he was committing an offence in buying and selling the vehicles and assisting in their renovation as alleged.
It was submitted by the prosecutor that the complainant queried whether the explanations given by the appellant as to the reasons for his parents wanting to sell the motor cars said to be owned by them were true and correct. In the course of sentencing the appellant the learned Magistrate said:
“The particulars on the complaint indicate that between those dates that I have mentioned you were responsible for the sale of five separate motor vehicles to unsuspecting members of the public. I do not propose to go into the specific facts other than to say that you were purchasing motor vehicles at auctions for yourself, for your mother and for your father and during the period that I have mentioned you were responsible for the sale of each of those motor vehicles.
While I am not provided with the details in relation to each of the sales it seems patently obvious that this was being carried on by you and possibly by your mother and father, although I have some reservations about that, for profit and indeed over the period of that 12 months you and possibly your mother and father did make a handsome profit from dealing in motor vehicles. I query when you had time to attend to your university studies given that you were attending motor vehicle auctions, attending to repairs to motor vehicles and attending to the sale of those motor vehicles either in their state as when purchased or after their repair.”
It is not clear from these remarks whether the learned Magistrate accepted that the appellant was acting on behalf of his parents with respect to four of the vehicles. Having said that the appellant did purchase vehicles for himself and his parents, he went on to say that each of the sales was carried out by him and “possibly” by his parents and that he had reservations about that matter. Also, it may be seen that he accepted that a handsome profit had been made from dealing in motor vehicles. It is not clear to me what the learned Magistrate had in mind when he made the reference to the appellant’s university studies.
The learned Magistrate went on to say:
“The prosecution quite rightly request that I have regard to the deterrent element of sentencing. There are statutory obligations which are placed upon motor vehicle dealers who do have the appropriate licence to ensure the protection of the members of the public. You certainly were not licensed. You had no regard whatever to the provisions of the Second-hand Vehicle Dealers Act so far as the statutory obligations on dealers are concerned. The unsuspecting members of the public who purchased these five vehicles have no recourse under the legislation to have warranty repairs carried out or even to recover their money from either you or possibly your mother or father.
Given that this is an offence which goes to the heart of the consumer legislation which applies in this State I think there is a need for a fairly severe penalty to be imposed upon you, not only to bring home to you that this sort of behaviour is simply not tolerated but also to act as a deterrent to others who are presently engaged in this sort of activity and those who might consider becoming engaged in this sort of activity. In the normal course I would think that a penalty in the order of $8,000 would be appropriate given that the offence carries a maximum penalty of $20,000.”
However, having regard to the plea of guilty, the appellant’s age and prior good record, he reduced the fine to $5,000.
The appellant contends that the fine is manifestly excessive having regard to the following matters:
h his prior good record;
hthe fact that the business was not a principal business or even a profit making activity for him;
hhis plea of guilty;
hthe fact that the business was small scale and haphazard and was not a planned attempt to subvert the provisions of the Act;
hthe financial position of the appellant.
The first matter raised on the hearing of the appeal is that the learned Magistrate erred in making a finding adverse to the appellant that he had made a substantial profit from the sale of the motor vehicles despite his submission to the contrary. It is contended that the learned Magistrate should have warned the appellant of his intention to make such an adverse finding so that the appellant could have considered the calling of evidence. Reliance was placed upon Law v Deed [1970] SASR 374 where Bray CJ said at 377:
“This case raises in a novel form the question which is increasingly troubling appellate courts, namely, what version of the facts should the trial court accept for the purpose of imposing sentence after a plea of guilty? It is clear that that plea admits no more than the essential ingredients of the offence and as I have said mens rea is not an essential ingredient of this offence. The plea does not in itself admit any circumstances of aggravation which may be alleged by the prosecution; nor conversely does it in itself negative any circumstances of mitigation not amounting to exculpation which may be within the knowledge of the defendant alone.”
This approach has been adopted in many cases involving sentencing in the Magistrates Court: examples are O’Malley v French (1971) 2 SASR 110, Jackson v Police [1999] SASC 345 and Watson v Police (2001) 118 ACrimR 114. A different view as to the obligation of the sentencer in the criminal courts was taken by King CJ in The Queen v Perre (1986) 41 SASR 105. In the criminal courts the sentencing judge has evidence as to the circumstances of the crime verified by witnesses on oath or in statements. He held that the judge is not required to inform the defendant of any view of the facts adverse to him before imposing sentence. In R v Olbrich (1999) 199 CLR 270 Gleeson CJ, Gaudron, Hayne and Callinan JJ said at 280-281:
“For present purposes, it is enough to say that we reject the contention that a judge who is not satisfied of some matter urged in a plea on behalf of an offender must, nevertheless, sentence the offender on a basis that accepts the accuracy of that contention unless the prosecution proves the contrary beyond reasonable doubt. The incongruities that would result if this submission were accepted are well illustrated by the present case. The respondent swore that he was a courier but the judge disbelieved him. To require the judge to sentence the respondent on the basis that he was a courier is incongruous.
Much of the discussion of fact finding for the purposes of sentencing addresses questions of onus and standard of proof (Fox and Freiberg, Sentencing: State and Federal Law in Victoria, 2^nd ed (1999) pp100-107). References to onus of proof in the context of sentencing would mislead if they were understood as suggesting that some general issue is joined between prosecution and offender in sentencing proceedings; there is no such joinder of issue. Nonetheless, it may be accepted that if the prosecution seeks to have the sentencing judge take a matter into account in passing sentence it will be for the prosecution to bring that matter to the attention of the judge and, if necessary, call evidence about it. Similarly, it will be for the offender who seeks to bring a matter to the attention of the judge to do so and, again, if necessary, call evidence about it. (We say ‘if necessary’ because the calling of evidence would be required only if the asserted fact was controverted or if the judge was not prepared to act on the assertion.)”
This matter was also considered by the Full Court in R v Lobban (2001) 80 SASR 550. Martin J, with whom the other members of the Court agreed, after referring to Perre, said at 554-555:
“Different considerations may apply if specific issue has not been joined between the prosecution and an offender. As the majority of the High Court pointed out in a joint judgment in R v Olbrich (1999) 199 CLR 270, there is no general issue joined between the prosecution and an offender in sentencing proceedings (at 281). In my view, in the absence of specific joinder, the potential for unfairness exists.
............
If a version of the criminal conduct put forward in submissions by an offender is inherently implausible or obviously contradicted by inferences plainly arising from the sworn statements, the remarks of King CJ in Perre are readily applicable. However, in other less obvious circumstances, in the absence of the prosecution taking issue with a version put forward in mitigation, an offender may be placed at an unfair disadvantage. Short of asking the judge whether the version put forward in submissions is accepted by the judge, an offender may not be in a position to decide whether it is necessary to call evidence. It is also appropriate to bear in mind that the Crown now takes a far more active role in sentencing proceedings than was the practice in 1986 when Perre was decided. In addition, in the following passage in Olbrich the High Court contemplated that it may be necessary to put an offender on notice of the need to call evidence (at 281):
‘Similarly, it will be for the offender who seeks to bring a matter to the attention of the judge to do so and, again, if necessary, call evidence about it. (We say “if necessary” because the calling of evidence would be required only if the asserted fact was controverted or if the judge was not prepared to act on the assertion.)’
There can be no inflexible rule. Each case must be determined according to its particular circumstances. The critical question is whether an offender, by some means, is on notice that a submission advanced in mitigation might not be accepted by the sentencing judge.”
Of course, in the Magistrates Court, the magistrate usually only has the oral submissions of the prosecutor and of, or for, the defendant and not statements of witnesses which have been verified. In circumstances such as the present, the approach in Law v Deed is not inconsistent with the approach in Olbrich and Lobban. The learned Magistrate was informed by the appellant’s counsel that the appellant did not make a profit on any of the transactions except on the sale of his own vehicle. He did not receive any fee or commission. The submissions made on behalf of the respondent were not to the contrary. All that could be inferred from them was that there were substantial gross profits made by someone, namely the parents.

Mr Grant, who appeared for the respondent, submitted that there was a lack of information before the learned Magistrate about the extent of the profit upon the sale of the motor vehicles and as to who received it, but that was a problem created by the appellant. The prosecution did not have the information which was within the knowledge of the appellant. The appellant should have placed the necessary information before the learned Magistrate and consequently it was submitted that the learned Magistrate was not in error.
Whilst there is some force in those submissions, in my view, the learned Magistrate erred in proceeding to sentence the appellant on the basis that substantial net profits were received by him without informing the appellant that he proposed to do so and affording him the opportunity of proving to the contrary by appropriate evidence. Consequently, the appellant was not on notice that the submission as to the extent of profit to him might not be accepted by the learned Magistrate. Because the learned Magistrate proceeded on the basis that substantial profits had been made, there has been a miscarriage of justice and the sentence should be set aside.
Upon consideration of these matters, I concluded that the appellant should be given the opportunity to place before me the information which he could, and should, have placed before the learned Magistrate so that a just sentence could be determined and I adjourned the hearing of the appeal for that purpose.
Upon the resumption of the hearing I was informed that it had been accepted by the respondent that a considerable amount of work had to be undertaken on the vehicles before sale and that the total profit made from the sale of all of the vehicles was no more than $1,000.
It may be seen that the learned Magistrate sentenced the appellant upon an incorrect factual basis. The appeal must be allowed and I must exercise the sentencing discretion afresh.
The appellant is now aged 22 years. He has continued to live with his parents who migrated to Australia from Lebanon. He is the oldest of four children. He has had outstanding success in his education. He excelled in a law degree and has recently finished the necessary practical legal training to enable him to be admitted as a practitioner of this Court early next year.
His parents have been very industrious. Their two youngest children are being educated at a private school and the second child has undertaken a course at the University of South Australia. They are understandably proud of the achievements of their children.
Two written testimonials were received by me with the consent of the respondent, one from a relative and the other from a law clerk in a firm of solicitors. The authors of these documents speak highly of the appellant and I accept that he is of good character and is honest, reliable and well respected by those who know him. His qualifying for admission to the Bar demonstrates that he is an able and hard working young man. Apart from the matters which are the subject of this appeal, he has not committed any offences.
I accept the submissions made on behalf of the appellant as to the circumstances of the sale of the motor vehicles. His mother owned two of them. She sold products as an agent which required the use of a station wagon. The first of the vehicles owned by her was a station wagon and was sold to enable a better station wagon to be acquired to be used in her business. That vehicle was sold to enable her to acquire a sedan.
Another of the vehicles was owned by the appellant. He had borrowed money from his father to purchase the vehicle and he sold it because his father needed the loan to be repaid.
The other two vehicles were owned by the appellant’s father. The appellant’s younger brother used one of those vehicles. He was involved in an accident and the father required the vehicle to be sold. The father sold the other vehicle because he required money to acquire an asset.
The net profit of $1,000 was made upon the sale of the appellant’s vehicle. No net profits were made on the other vehicles because repairs were effected before sale.
The appellant has been maintained by Austudy and has no savings. The imposition of a fine will involve some financial hardship for him.
It was submitted on behalf of the appellant that I should exercise the discretion under s 16 of the Criminal Law (Sentencing) Act 1988 and impose a penalty without proceeding to a conviction. S 16 provides:
“16Where a court finds a person guilty of an offence for which it proposes to impose a fine, a sentence of community service, or both and the court is of the opinion—
(a)    that the defendant is unlikely to commit such an offence again; and
(b)    that, having regard to—
(i)the character, antecedents, age or physical or mental condition of the defendant; or
(ii)    the fact that the offence was trifling; or
(iii)   any other extenuating circumstances,
good reason exists for not recording a conviction;
the court may impose the penalty without recording a conviction.”
I accept that the appellant is unlikely to commit the offence again. He was not aware that his conduct in selling the motor vehicles constituted an offence against the law. He did not in fact carry on business as a second hand car dealer in the usual sense. This offence is established by the presumption in s 50 of the Second-hand Vehicle Dealers Act which provides that in having sold, offered for sale or exposed for sale four or more second-hand vehicles during a period of twelve months, he is presumed, in the absence of proof to the contrary, to have been a dealer in that period. He did not offer proof to the contrary and pleaded guilty.
He has done well in his life. I accept that he is genuinely remorseful and contrite. The chance of his re-offending is virtually nonexistent. His good character, antecedents and age activate the exercise of the discretion under s 16 of the Act.
However, there are other matters to also consider. When the appellant sold the last of the five motor vehicles, he told the purchaser that his mother had owned the vehicle for 12 months and that it had been involved in a minor accident. He said that $250 had been spent on repairing the front bumper bar. The vehicle was mechanically sound at the time of the sale but it had been involved in a major accident in March 1998 and had been written off by the insurer of the vehicle. In Gilmore v Skwarski & Skwarski (unreported, D3767, 27 February 1998), Judge Anderson regarded untrue or deliberately misleading representations made to purchasers as a significant matter when considering penalty for this offence. I agree with that approach. The misrepresentation by the appellant as to the history of the fifth vehicle is a matter of importance but it is not decisive per se.
It appears to be well accepted that the discretion under s 16 of the Sentencing Act is of limited application in cases where the charge relates to the breach of social or regulatory legislation: Liddy v Cobiac [1969] SASR 6 per Bray CJ at 10. Bollen J expressed a similar view in the context of suspending a sentence in Hemming v Neave & Neave (1989) 51 SASR 427. However, as Duggan J pointed out in Piva v Brinkworth (1992) 59 SASR 92, there will be cases when the discretion under s 16 may be exercised by not proceeding to conviction when dealing with regulatory or social legislation. I agree with that view.
In Sims v Police [2000] SASC 102, Bleby J expressed the view at par 7:
“Furthermore, the assumption behind s 16 of the Sentencing Act is that, in most cases, a conviction will be recorded. S 16 is by way of exception to the normal rule. In order to exercise the power conferred by s 16, the court would have to identify what it was that provided good reason for not recording the conviction.”
If His Honour is suggesting that the discretion can only be exercised in circumstances which are exceptional, I would respectfully disagree. The section identifies the circumstances which give rise to the exercise of the discretion and if one or more of them exist, the discretion may be exercised. In doing so, all relevant matters must be considered, including the need for adequate punishment and deterrence, although these matters in many cases may be adequately emphasised in the fine.
It was also submitted that a matter to be considered in exercising the discretion is that the appellant is due to be admitted to the bar. That matter was considered by Cox J in Lanham v Brake (1983) 34 SASR 578. In that case the respondent committed offences against the Quarantine Act 1908 (Cth) and the Customs Act 1901 (Cth). He had been a member of the legal profession and intimated that at some future time he might seek to practice again. He was aged 56 years. It was submitted that it would be out of proportion to the offence to record a conviction against him. Cox J said at 585:
“It will always be a relevant consideration that a man of good character will understandably wish to avoid the stigma of any conviction being recorded against him. That is something that the Special Magistrate was entitled to put into the scales in this case, although the weight to be given to such a consideration will be less in the case of regulatory offences such as these than in the case, say, of a common law crime that contains overtones of considerable moral turpitude.”
Of course, a prospective member of the legal profession is not to be treated more favourably than any other member of the community for that reason alone, however, his intention to be admitted as a lawyer is a relevant matter for consideration. Whether or not there is a conviction is unlikely to affect his prospects of being admitted to the Bar as he will be obliged to disclose his offence to the appropriate authority in either event, but having such a conviction could adversely affect his prospects of employment or progress in legal practice, although probably not in a serious way, if that is what he chooses to do. I have had regard to this matter.
Taking all matters into account, I exercise my discretion under s 16 favourably to the appellant. The circumstances of the offence are unusual. The sale of four of the vehicles occurred for the benefit of the appellant’s parents. I accept that the appellant should not be regarded as a second hand car dealer in the usual sense of that occupation. He pleaded guilty, and has progressed with his life with distinction and considerable success. With these matters, along with the other circumstances already mentioned, I think there is good reason not to record a conviction.
It was submitted that the appellant should be placed on a bond which would be an adequate penalty in the circumstances. The maximum penalty for a breach of s 7 is a fine of $20,000. The aim of the legislation is community protection through, inter alia, an adequate licensing system. The circumstances of the offence and the appellant require a fine to be imposed. His financial position is not strong and any fine will cause some hardship.
I allow the appeal. I set aside the conviction and the fine imposed by the learned Magistrate and impose a fine of $500 without recording a conviction.

[2002] SASC 416

13 December 2002