Grewal v Platinum Chauffeur Drive Pty Ltd - [2010] FMCA 991

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GREWAL v PLATINUM CHAUFFEUR DRIVE PTY LTD

[2010] FMCA 991

TRADE PRACTICES – Whether breach of implied term to obtain assignment of taxi licence – whether misrepresentation of ability to ensure assignment of taxi licence.

Transport (Compliance and Miscellaneous) Act 1983 (Vic), ss.139, 143, 150
Transport (Taxi-Cab Licences-Market and Trading) Regulations 2005 (Vic)
Trade Practices Act 1975 (Cth), s.52

Alexander v. Rayson (1936) 1 K.B. 169
Brownbill v Kenworth Truck Sales [1982] FCA 11; (1982) 59 FLR 56

Applicant:

TARINDER SINGH GREWAL

Respondent:

PLATINUM CHAUFFEUR DRIVE PTY LTD

File Number:

MLG 610 of 2009

Judgment of:

Phipps FM

Hearing dates:

16 & 17 November 2009 & 23 June 2010

Date of Last Submission:

23 June 2010

Delivered at:

Melbourne

Delivered on:

16 December 2010

REPRESENTATION

Counsel for the Applicant:

Mr Ferrari

Solicitors for the Applicant:

O’Donnell Salzano Lawyers

Counsel for the Respondent:

Ms Bennett

Solicitors for the Respondent:

Law 554

ORDERS

The application is dismissed.
There be liberty to apply on the question of costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG 610 of 2009

TARINDER SINGH GREWAL

Applicant

And

PLATINUM CHAUFFEUR DRIVE PTY LTD

Respondent

REASONS FOR JUDGMENT

In August 2007 the applicant, Mr Grewal purchased a taxicab from the first respondent, Plantinum Chauffeur Drive Pty Ltd. I will refer to it as Platinum. The third respondent, Mr Kutlu, is a director of Plantinum. Mr Kutlu is a director of the second respondent, Astins Worldwide Pty Ltd. I will refer to it as Astins. Astins accounting system was used for payments made by Mr Grewal to Platinum so that Mr Grewal received invoices and receipts in the name of Astins.
A taxicab used in Victoria must have a taxicab licence attached to it. The taxicab licence is a separate requirement to the registration of the vehicle. A taxi licence is owned separately from the taxi and so a taxi owner who does not own a licence, such as Plantinum or Mr Grewal, must obtain assignment of a taxi licence from its owner. At the time of the sale the taxi had a licence assigned to it, the assignee being Plantinum. Mr Grewal alleges that Plantinum should have arranged for the assignment of the licence attached to the taxicab at the time of purchase to be transferred to him. Platinum and Mr Kutlu acknowledge that Mr Grewal should have obtained an assignment of a licence, but it had to done between Mr Grewal and the licence owner and that before that could happen Mr Grewal had to become accredited to operate a taxi and he did not.
The assignment of the licence attached to the taxi was cancelled in June 2008. The licence was a different one to the one attached at the time of sale, the change having been arranged by Plantinum and Mr Kutlu. Mr Grewal, unaware that the assignment had been cancelled, continued operating the taxi. In November 2008 officers of the Victorian Taxi Directorate removed the taxi from service. Mr Grewal claims damages for the loss of value of the taxi.
Mr Grewal purchased the taxicab by a Contract of Sale in writing dated 27 August 2007. The contract preambles are:
Where as:
i)The vendor is the registered owner of vehicle registered M7496 (hereinafter called “the assets”) Vehicle make: Ford Model: Fairlaine/Nov03 Vil No:6FPAAAAJGLW3M46434
ii)The Vendor has agreed to sell to the purchaser the vehicle and all of its chattels (taxi meter, domelight and LPG gas conversion) for the sum of $57,000 (no GST applicable as is of ongoing concern).
iii)The total sum for this transfer is $57,000 excluding GST.
iv)The vendor and the purchaser wish to formalise the arrangement entered into by them for the sale and transfer of the aforesaid vehicle.
The principal issue is whether the contract contained a term that Platinum would effect the transfer of its assignment of the taxi licence to Mr Grewal or whether it represented that it could or would. Plantinum and Mr Kutlu argue that transfer of the assignment was prohibited and that the only way Mr Grewal could obtain an assignment of a licence was by dealing directly with a licence owner. They acknowledge they had an obligation to introduce Mr Grewal to licence holders but no more.
Section 139 of the Transport (Compliance and Miscellaneous) Act 1983 (Vic) provides that a commercial vehicle must not operate on a highway in the State of Victoria unless licensed. Section 143 provides for the issue of taxicab licenses. Section 150 provides for assignments. Relevant to this proceeding it says:
(1) A holder of a licence to operate a taxi-cab (hereafter in this section referred to as the assignor) may apply to the licensing authority for authority to assign to a person specified in the application (hereafter In this section referred to as the assignee) his right to operate a vehicle under the licence.
(4A) An assignment or purported assignment under this section is of no effect if;
(a) it is not authorised by the licensing authority under this section; or
(b) it is not made in writing; or
(c) subject to subsection (4B), it is not for a fixed period of 3 years or less.
(4B) An assignment under this section may provide for the termination of the assignment in specified circumstances before the expiry of the period of the assignment.
(4C) An assignment under this section cannot be renewed and cannot be varied so as to extend the period of the assignment.
(4D) Nothing in subsection (4C) prevents a fresh application being made under subsection (1) for authority to assign the right to operate a vehicle under a licence to operate a taxi-cab to an assignee or former assignee of that right.
(5) The assignee of a licence under this section shall not assign or attempt to assign his rights under the assignment.
On 1 January 2008 s.150(2AA) commenced operation. It requires the assignee of a taxicab licence to be accredited under Division 4 as a taxicab operator.
Mr Foster, accreditation and licensing operator with the Victorian Taxi Directorate gave evidence of the process for authorising an assignment. The documents had to be provided by an authorised person or broker, since the trade of the assignment had to be conducted by such a person[1] on the Bendigo Stock Exchange Taxi market[2].
[1] Regulation 6(a) Transport (Taxi-Cab Licences-Market and Trading) Regulations 2005 (Vic)
[2] Specified under regulation 7 Transport (Taxi-Cab Licences-Market and Trading) Regulations 2005 (Vic)
Prior to 1 January 2008 the documents required were an application for Authorisation and approval to assign a Taxicab Licence signed by both assignee and assignor, an Assignment of Taxi Licence Agreement, national police certificate for the assignee, a depot acceptance letter from an affiliated taxi network operator and evidence that the assignee had completed a taxi training course if the assignee had not held been a licensed taxi operator for 12 months in the previous 5 years. After 1 January 2010 the assignee had to be accredited under Division 4 of the Act. Mr Foster said that often the application for accreditation was submitted with the application for authorisation. The requirements for accreditation are more onerous than the previous requirement of a taxi training course.
The evidence needs to be considered in the context of these statutory requirements.
Mr Kutlu said he had been in the taxi industry for about 15 years. He had been a director of Plantinum for eight years. Plantinum operated a fleet of taxis. It owned the taxicabs and had an assignment of a taxicab licence for each. Plantinum was leaving the taxi business and so selling its taxi cabs. Mr Kutlu said it sold about 42.
In about August 2007 Mr Grewal saw an advertisement in the taxi depot area at Melbourne Airport. He says that it advertised the sale of a car with lease attached with a contact number. Neither party now has the advertisement.
Mr Grewal telephoned the number, spoke to Mr Kutlu and met him that evening and again the next day. There was a third meeting on 27 August 2007 when the contract was signed and $3,000 was paid which Mr Grewal described as a bond. The contract describes it as a non refundable deposit. He was accompanied by a friend, Mr Singh. Mr Singh did not give evidence.

Mr Grewal said that on the first occasion Mr Kutlu told them about his taxi business and that he was leaving the taxi business and selling his taxis. Mr Grewal said Mr Kutlu told him a number of things. On which day each was said is not clear. The price of the taxi for sale was $57,000. Mr Grewal said that “we” were concerned that the price was high but that Mr Kutlu told them he had been operating that particular car for eight or nine years and he didn’t have any problem operating the car as long as you are operating the car and things are clear that he could get a three plus three lease on the licence. The first term would be three years with an extension of another three years. Mr Grewal said he was alright with that because he could easily recover the price of $57.000 over six years. Mr Grewal said that Mr Kutlu said he would arrange the transfer of the lease.
He signed the contract on 27 August 2007 and paid what he described as a bond of $3,000 that day. He took possession of the taxi on 9 October 2007. It needed a number of repairs. Mr Grewal said that for four or five days he continually went to Mr Kutlu’s office to ask to have these things repaired. Mr Grewal said he asked Mr Kutlu about the lease and he said he was getting the documents ready.
Mr Grewal said in November Mr Kutlu told him that he must do a taxi operators course, which he did. His certificate is dated 19 December 2007. Mr Grewal said after that he continually asked Mr Kutlu about the assignment of the lease of the taxi licence and that Mr Kutlu gave a number of explanations for the delay, one that he had some family matters to attend to, and on other occasions that he was busy with selling all his taxis.
When on 9 October 2007 Mr Grewal paid the balance of $57,000 and took delivery of the taxi, he paid a further amount of $4,700. He received two invoices from Astins, for $57,000 with the description “SALE OF TAXI M7496” and the other for $4,700 with description “2 MONTHS BOND FOR TAXI LEASE”. Mr Grewal said that was the normal amount when assigned a lease, a payment in advance of two months in case the lease is broken.
Mr Grewal tendered further invoices from Astins for taxi lease for M7406 dated 9 November 2007, described as being for October and November 2007, then 9 December 2007, 9 January 2008, 9 February 2008, 9 July 2008, 9 August 2008 and 9 September 2008. He received an invoice dated 12 December 2007 for $1,001 for depot fees from 9 November to 30 December 2007. He received an invoice dated 9 September 2008 for $3,773 which described depot fees in four week periods from 29 April 2008 to 17 November 2008 at $539 for each period. He paid all these amounts.
Mr Kutlu says that he “clearly indicated” to Mr Grewal that he, Mr Kutlu, would introduce him to numerous assignment owners that he had a relationship with in the past and it would be between him and the assignment owner to negotiate terms.
Mr Kutlu denied saying he would arrange the transfer of the lease of the licence and denied saying that Mr Grewal could obtain a three plus three lease of a licence. He said that was not possible. He said he told Mr Grewal he would introduce him to licence owners and he would need to make his own arrangements with the licence. He described the three by three that Mr Grewal had referred to as ludicrous because the Victorian Taxi Directorate did not allow such an option on leases.
Mr Kutlu said he handed over possession of the taxi with a roadworthy certificate. He kept the assignment of the taxi licence registered in the name of Platinum and received the payments for the taxi licence and depot fees and sent them on to the owner of the licence to allow time for Mr Grewal to get organised and complete the requisites he needed to complete before he became an accredited operator.
Mr Kutlu said that Mr Grewal would come into the office from time to time and made the payments. Mr Kutlu said that at one stage Mr Grewal was behind, but he caught up and said he needed more time to catch up because of other financial commitments. Mr Kutlu said he told Mr Grewal he needed to become accredited. He said he told him if he had not owned a taxi before he needed to have completed the owner’s/operator’s qualification.
At the time of the sale taxi license MT4748 was attached to the taxi. The assignment dated 24 November 2006 was by the owner of the licence, Georsios Agouras, to Platinum. That assignment was terminated on 20 January 2008. Mr Grewal said he thought that the owner wanted to use the license himself. The licence was replaced by MT5253. That assignment was terminated in June 2008. A letter dated 12 June 2008 from the Victorian Taxi Directorate to Platinum says that the Directorate had received advice that taxicab registration M7496 was operating on taxi licence MT5253 under an authorised assignment and that Platinum had breached its obligations under the assignment. The letter says that the owner has terminated the assignment and as a result taxicab M7496 was not authorised to operate.
Mr Kutlu says that Mr Grewal had not been paying the lease payment and although it is not entirely clear, Platinum or Astins ceased paying lease payments to the owner of the licence. The owner then terminated the assignment.
Mr Kutlu, using Astins invoices, continued to invoice Mr Grewal for some months. Mr Grewal said this was because Mr Kutlu was behind in his payments to the licence owner.
The statement of claim contains two causes of action. The claim in contract alleges oral terms of the contract that Platinum would assign the lease of the taxi licence to Mr Grewal and that the lease of the licence would be for a term of three years with an option for a further three years
The misleading and deceptive conduct claim under s.52 of the Trade Practices Act 1975 (Cth) is that the applicant represented:
a)that the purchase price included sums for goodwill and the assignment of the lease;
b)that following sale Platinum or Astins would immediately affect the assignment of the lease;
c)that the assigned lease would be for a term of three years with an option to renew for a further three years; and
d)that it was sufficient for the written contract to refer to licence number M7496 to evidence the agreement to assign the lease for the licence.
The allegation is that these representations were false, or, if representations about future matters, they were made without reasonable grounds for doing so.
The terms relied on by Mr Grewal, are expressly prohibited by statute. Section 150(5) of the Transport (Compliance and Miscellaneous) Act 1983 (Vic) prohibits assignment of an assignment of a taxi licence and s.150(4C) prohibits renewal or a variation to extend the period. If there were these terms they are illegal and cannot be enforced.[3] They cannot be implied because they are prohibited.
[3] Alexander v. Rayson (1936) 1 K.B. 169, Brownbill v Kenworth Truck Sales [1982] FCA 11; (1982) 59 FLR 56.
The existence of the terms in oral form and the existence of the alleged representations depends upon a finding about the conversations between Mr Grewal and Mr Kutlu. Neither puts the significant parts of the conversation in direct speech. Relevant in the context is the statutory requirements. Mr Kutlu understood what they were because he had been working for a number of years with his taxi business which required him to understand the statutory scheme. On the other hand he was wanting to sell his taxi. The terms of the contract, apart from anything else, show that the taxi was being sold with licence attached because it was being sold as a going concern. That is in the written contract.
The contract case resolves by applying two basic principles. The first is that a term will be implied if it is necessary to give business efficacy to the contract. The second is that a party to a contract must do whatever is required by that party to put the contract into effect.
The taxicab was sold as a going concern business. The express term of the contract says so. For Mr Grewal to be able to operate the taxi as a going concern the taxi had to have a taxi licence assigned to it. In order for the contract between Mr Grewal and Platinum to have business efficacy there must be a term that Platinum would ensure that Mr Grewal would obtain an assignment of a taxi licence for the taxicab he purchased. It is not sufficient for business efficacy to say that the implied term is that Platinum would introduce Mr Grewal to licence owners with whom Mr Grewal could negotiate. That would not be a sale of a going concern taxicab business.
Mr Hardeman, Fleet Manager for Black Cabs and a Bendigo Stock Exchange broker gave evidence. Bendigo Stock Exchange has the sole responsibility for brokering the transfer and assignment of licences. Mr Hardeman’s evidence is that the normal process for assignment is for a potential assignee to be introduced to the licence owner by the current assignee. In 2007 and 2008 there was little chance of a prospective licensee obtaining an assignment without an introduction by a current licensee. His evidence shows that for the sale of the taxicab to be a sale of a going concern Platinum had to ensure that Mr Grewal received an assignment.
It may be that Mr Kutlu said words which Mr Grewal interpreted as meaning that he could obtain a three year assignment with a further three years after that because Mr Kutlu may well have said words to the effect that that if the first three years goes well there will be a renewal. Logically if a licence holder wishes to continue the assignment of a licence after a three year term the licence holder will again assign the licence to the current assignee if that assignee has kept the terms of the assignment.
Probably neither Mr Grewal nor Mr Kutlu were using the language of the statute. Use of the expression lease of a licence rather than the statutory term assignment appears common. Given that Mr Kutlu understood the statutory requirements he is unlikely to have said words to the effect that Platinum would assign the lease or assignment. He probably said words to the effect that Platinum could arrange an assignment. Whether it could or could not was not ultimately tested. Platinum was able to maintain an assignment of a licence in relation to the taxi until the middle of the year. Mr Kutlu says that he stopped paying and so allowed the assignment to be terminated because Mr Grewal stopped paying the lease payments. Mr Kutlu says that he continued sending invoices to recover the payments Mr Grewal had not made. The invoices tendered by Mr Grewal have a gap for March, April, May and June 2008. Mr Grewal tendered them to prove payment of the lease payments as part of his proof of damages. The gap in the dates leads to the inference that Mr Grewal did not make payments for those dates which supports Mr Kutlu’s evidence.
Platinum could only comply with the term that it ensure that Mr Grewal was able to obtain an assignment of a taxi licence for the taxi cab if Mr Grewal was qualified to hold an assignment. Platinum did not have an obligation to either ensure that Mr Grewal was qualified or to advise him that he needed to be or to tell him what he must do. Any term to that effect is not necessary to give business efficacy to the contract. The obligation to be qualified to hold an assignment was on Mr Grewal.
Mr Grewal said that he was waiting for Mr Kutlu to prepare the paperwork. That was not Platinum’s obligation. The assignment had to be done through a taxi broker. Platinum’s contractual obligation was to ensure that there was a licence holder who was willing to assign a licence to Mr Grewal. The inference from the evidence that there was a taxi licence attached to the taxicab until June 2008 and only effectively surrendered by Platinum on that date because Mr Grewal was not making payments is that Platinum could have ensured that a licence was available for assignment to Mr Grewal. The licence holder’s interest is in receiving the monthly payment. The probability is that a licence holder would be prepared to maintain an assignment by way of a fresh assignment for the same taxicab upon the taxi being sold. The inference is that Platinum could have fulfilled its contractual obligation to ensure an assignment of a licence if Mr Kutlu had been qualified.

Mr Kutlu was qualified from 18 December until 31 December. He would only remain qualified if an assignment was made during that period. The obligation was on Mr Kutlu to arrange a licensed broker to do the assignment. The obligation on Platinum to ensure there was an assignment could only be to do it in a reasonable time. There is no evidence of whether it was feasible to make the necessary arrangements between 18 December and 31 December. If for no other reason Mr Grewal fails on this issue for failure to satisfy the onus of proof. Apart from that there is no evidence that Mr Grewal did anything other than receive the qualification document. He took no steps to have an assignment made and dealt with by a broker.
After 31 December 2007 the qualification requirements changed. Mr Grewal did not do whatever was necessary to make himself qualified. He could not have a taxi licence assigned to him. That Platinum maintained an assignment of a licence to the taxicab until June 2008 is evidence of its ability to ensure that a licence was assigned to Mr Grewal. The obligation on Platinum must be limited by a reasonable time consideration. What Platinum did in maintaining a licence even though it had disposed of the taxicab and no longer operated it may have been in breach of the requirements of the legislation, but it does show that it was maintaining its ability to comply with the implied term. It was not required to maintain this indefinitely. By doing so until June 2008 it complied with its obligation under the implied term. The failure of the intention of the contract, that Mr Grewal receive an assignment of a taxi cab licence, is the responsibility of Mr Grewal, not Platinum.
There has been no misleading and deceptive conduct. That Mr Kutlu said that he would assign the lease is improbable because, to Mr Kutlu’s knowledge, he could not. The probability is that he said words to the effect that the taxi would come with an assignment of a lease. This is a statement as to something which will happen in the future and the onus is on Platinum and Mr Kutlu to show that there were reasonable grounds for making the statement. There were reasonable grounds for making the statement because the evidence satisfies me that if Mr Grewal became qualified to hold an assignment Platinum and Mr Kutlu were able to introduce or recommend Mr Grewal to a licence holder so that he would have received an assignment.
Regrettably the conclusion I have come to is that Mr Grewal’s desire to be a successful taxi owner has not succeeded through his own failure. He did not understand what he needed to do so that he had a licence assigned for the taxi cab he purchased. If he had understood and done what was necessary Platinum could have compiled with its obligations under the contract. There has been no breach of contract and no misleading and deceptive conduct.

I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of Phipps FM

Date: 16 December 2010