Hadeler v Antoniou and Antoniou
[2009] SADC 113
•20 October 2009
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Minor Civil Review)
HADELER v ANTONIOU AND ANTONIOU
[2009] SADC 113
Judgment of His Honour Judge Tilmouth
20 October 2009
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - RIGHT OF APPEAL - NATURE OF RIGHT - SCOPE AND EFFECT OF APPEAL
Nature and scope of a "review" pursuant to s 38(7) of the Magistrates Court Act considered.
Magistrates Court Act 1991 (SA) ss 38, 38(4), 38(5),38(6), 38(7)(d)(iii)(B); District Court Act 1991 (SA) Part 6 Division 2; State Railway Authority (NSW) v Earthline Constructions Pty Ltd (in liq) (1993) 73 ALJR 306; Wentworth v Graham (2002) 55 NSWLR 638, referred to.
Smith v St John Ambulance Australia (1991) 162 LSJS 404; Santos Ltd v Saunders (1988) 49 SASR 556; Avon v Administrative Appeals Court (1997) 69 SASR 7; Pulteney Grammar School v Equal Opportunity Tribunal (2007) 250 LSJS 309; [2007] SASC 308, discussed.
STATUTES - ACTS OF PARLIAMENT - INTERPRETATION - CONSTRUCTION, PARTICULAR CLASSES OF STATUTE
Acts done in breach of a condition regulating statutory power - whether invalid - Mandatory and discretionary provisions - purpose-based test.
An application for the registration of a security interest in a motor vehicle held to be invalid because of the failure to provide "such details ... as are necessary" to identify the vehicle or because of inaccurate entry.
Goods Securities Act 1986 ss 4 and 5, referred to.
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, applied.
SALE OF GOODS - RIGHTS OF UNPAID SELLER AGAINST GOODS
Rights of unpaid seller of goods held to be protected under the Goods Securities Act against bona fide purchaser for value without notice.
The Goods Securities Act 1986 (SA) ss 3(3), 11(1)&(2), 11(4), 13(1); Hollins v Fowler (1875) LR 7 757; Bryant v Herbert (1878) 3 CPD 389; Kitano v The Commonwealth of Australia (1974) 129 CLR 151; Schemmell v Pomeroy (1989) 50 SASR 450; Fine Art Society v Union Bank (1886) 17 QBD 705; Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204; Sale of Goods Act 1895 (SA) ss 25(1),(2),(3)&(4), referred to.
Australian Central Credit Union v Commonwealth Bank of Australia (1991) 4 ACSR 145, considered.
HADELER v ANTONIOU AND ANTONIOU
[2009] SADC 113The underlying proceedings
Wilfred Hadeler issued proceedings out of the minor civil or “small claims” jurisdiction of the Holden Hill Magistrates Court against the respondents on the 26th of May 2009. He claimed $4,900, said to represent the value of his interest in a motor vehicle sold to them by a third party.
The action was heard by a Magistrate on 2 June 2009. In an extemporary judgment delivered that day, the Magistrate dismissed the claim. Mr Hadeler now brings an application to review the decision into this court, on a number of grounds. Firstly, he points to erroneous fact finding, and secondly to what is claimed to be legal error in terms of the application of the Goods Securities Act 1986 (SA) to the case.
The underlying facts
The original particulars of claim alleged that on 21 June 2006, a Mr Kevin Bednarz borrowed $2,750 from Mr Hadeler “at a rate of 10% simple interest per month as security for the loan”, in order to purchase a 1995 Ford Fairlane sedan, registered number WNO-102. On 23 June 2006 Mr Hadeler registered his interest in the vehicle by way of security for the loan. The defendants purchased the subject vehicle from Bednarz when it was so encumbered, in July 2006. The basis of the claim for $4,900, or how it was calculated, is not evident.
In a later affidavit filed in the Summary Court on 5 May 2009, Mr Hadeler then claimed that he:
“… did not lend Kevin Bednarz any money on the motor vehicle … and that I bought the vehicle in question which I have a receipt, he had the option to purchase it from me … he had no right to sell it”.
Amended particulars were filed to reflect this change of position and to further add that the “wrongful sale of the vehicle was reported to the police on 4 May 2009”. Once again the amended proceedings did not articulate how the $4,900 was calculated, or what the precise cause of action was.
Mr Hadeler handed a receipt to this court issued by Jarvis Ford, showing he gave them $2,750 for the vehicle. Documents dated 21 June 2006 produced by Jarvis Ford on subpoena, indicate the vehicle was purchased by “DGR Wholesalers” through Mr Bednarz. The engine and VIN numbers appearing on the “dealer sale form” for the transaction do not correspond with those on the certificate of registered interest as recorded in the search done by Mr Hadeler on 23 June 2006, and yet they did by the time of his search of 29 July 2008. How this state of affairs came about was not clarified in the evidence. In a bill of sale granted by Mr Bednarz to Mr Hadeler, the subject vehicle is described as “Ford Sedan Rego no. WNO-102, built 1997, colour white, engine no. JGLWSM76365 Vin no. 6FPAAAJGLWSM76365”. The numbers appearing on the Jarvis Ford document are the same: Engine no. JGLWSM76365, Vin no. 6FPAAAJGLWSM76365. In certificate of 23 June 2006, they were: Engine no. JGLWSM76350, Vin no. 6FPAAAJGLWSM76350, whereas for the certificate of 29 July 2008 they were: Engine no. JGWSM76365, Vin no. 6FPAAAJGLWSM76365.
Evidence in the court below
Mr Hadeler gave evidence before the Magistrate. He described operating two businesses, “Easy Cash” and “Cash on Wheels”. Through the agency of these he provided short term loans, especially for the purchase of cars, boats and caravans, “or something they use as security”.[1] He told the Magistrate Bednarz approached him, wanting to purchase a car, but lacked the necessary funds. Mr Hadeler claimed to have purchased the vehicle in question for $2,750 from Jarvis Ford, for which Bednarz promised to pay him $3,000, within approximately a month. The difference between the two sums reflects roughly 10% interest on the loan over that period of time. He said he did so, in his capacity as a licensed pawnbroker and moneylender.
[1] T2.16 – 2 June 2009
Mr Hadeler’s evidence was that “it wasn’t a loan it was my vehicle until he purchased it, and because he was a friend and I just assumed that it wasn’t a loan it was my vehicle …”.[2] He released the vehicle to Bednarz once a bill of sale was executed. The vehicle was registered in Bednarz’s name. The relevant registered interest of Mr Hadeler was recorded with the Department for Transport, Energy and Infrastructure at 3.50pm on 23 June 2006. It appears that Bednarz may have made several payments before selling it to the Antonious in July 2006, but exactly what payments was not initially disclosed.[3]
[2] T4.31-.33
[3] T4.38
Mr Antoniou, who dealt with Mr Bednarz, also gave evidence. He described purchasing the Ford on 22 July 2006 after seeing an advertisement in the Advertiser on a Saturday. It transpires the vehicle was advertised as bearing registration no. WNO-012, rather than WNO-102, as it should have been. The seller gave his name as Kevin Walker and said the vehicle was registered in his father-in-law’s name. Mr Antoniou gave this evidence:[4]
I did do a vehicle security check on it to find out if there was any finance owing … they told us that there was no finance but somebody else owned the car … and then the vehicle security register … the operator said the engine number and the VIN number don’t correspond to the one I was giving her over the phone … so I went to the car and wrote it down that was on the registration sticker and it still matched the same numbers as I had given from the registration paper.”
He went on to say the operator told him “the numbers were wrong she wouldn’t give out the information”.[5] The vehicle was purchased after they paid $6,000 for it and registered in joint names with Mrs Antoniou.
[4] T10.37-T11.10
[5] T11.37-.38
Mr Antoniou said that in January 2007 Mr Hadeler came to his house fully intending to repossess the car. When police were called, Hadeler was unable to produce documents of ownership. Following the judgment in their favour in the summary court, the Antonious sold the vehicle because of the unpleasant association it had for them, because of the litigation and no doubt because of the inflated price they paid for it.
The reasons of the Magistrate
In his reasons the Magistrate considered the parties to be “witnesses of truth”, and “subject in different ways to dishonest dealings at the hand of Mr Bednarz”. His Honour made a finding that Hadeler attended Jarvis Ford “and assisted Mr Bednarz by purchasing a Ford motor vehicle from him and allowing it to be registered in Mr Bednarz’s name”. He also accepted that Mr Antoniou “made an enquiry in 2006 … the particulars that he was provided with did not correspond with the particulars that Mr Hadeler had recorded with the Vehicles Securities Register”. He was therefore satisfied Mr Antoniou “acted bona fide”, paid “full value” for the vehicle which he purchased in “good faith”, and that he “made an enquiry and was advised that the vehicle … was not encumbered”. His Honour concluded “I cannot find that [the] case has been established and I dismiss his claim”.
The application for review
The argument pressed by Mr Hadeler was initially that the Magistrate erred on accepting Mr Antoniou made the enquiry of the Vehicle Security Register. For that purpose he filed two affidavits, the first on 2 July 2009, referring to the fact that since judgment, he contacted the Department and ascertained the only enquiry with respect to the subject vehicle was made on 23 June 2006, by him. The second affidavit of 24 August 2009, attaches a copy of the “Regulatory Policy and Systems” booklet produced by the Department for Transport Energy and Infrastructure, with respect to the vehicles security register. In effect this policy requires all caller enquiries, to disclose the number plate, the engine number, and the VIN/Chassis number of the vehicle for which an enquiry is made. The person making the enquiry will then be advised if the vehicle is encumbered or not, by providing a ‘yes’ or ‘no’ answer. Thereafter the person can purchase a certificate of registered interest for an extremely modest sum of $9: Schedule 1, Goods Securities Regulations 1999. This material is produced to support the argument that Mr Antoniou did not make the requisite enquiry as he claimed to have done in his evidence before the Magistrate.
The policy document certainly confirms that such enquiries can be made by telephone. Mr Hadeler particularly drew the court’s attention to the following extract:[6]
[6] At p 37
Why is a Certificate Necessary?
(20)
In order to gain legal protection, a bona fide purchaser must obtain a certificate stating “No Interests Registered” before a purchase is made and complete the vehicle purchase by midnight on the day following the date of the certificate. A clear certificate is one that indicates there is no financial security interest over a vehicle. If no interest is registered, the certificate could be vital. It will protect the purchaser against repossession in the event of a credit provider having failed to advise the Register of a financial interest.
The premise behind the appellant’s second submission is that if a certificate of a registered security interest is not obtained under either s 11(1) or (2) of the Goods Securities Act 1986 (SA), then the person purchasing the goods subject to a registered interest, does not acquire good title in them. Translated to the facts of this case, having failed to obtain such a certificate, the Antonious were not protected from the rights of the plaintiff in the vehicle, so that Mr Hadeler is entitled to maintain the action accordingly.
The nature and content of the review process
Before considering the merits of these contentions, it is first necessary to understand the nature and scope of the jurisdiction conferred on this Court to determine minor civil appeals, under s 38 of the Magistrates Court Act 1991 (SA). The section establishes a streamlined procedure for the hearing of “minor civil actions” by Magistrates. Such actions are defined as including neighbourhood disputes, “minor statutory proceedings” that is actions under specified Acts, and of relevance to this case, “small claims”, presently defined as “ a monetary claim for $6,000 or less”.
Sections 38(6) and (7) vest the jurisdiction and the powers of review, respectively:
(6)The District Court (constituted of a single Judge) may, on the application of a party dissatisfied with a judgment given in a minor civil action, review the matter.
(7) The following provisions apply to such a review by the District Court:
(a) the right of a party to be represented by a legal practitioner at the review will be determined in accordance with subsection (4);
(b) the Court may inform itself as it thinks fit and, in doing so, is not bound by the rules of evidence;
(c) the Court may, if it thinks fit, re-hear evidence taken before the Magistrates Court;
(d) in determining the matter, the Court may –
(i) affirm the judgment; or
(ii)rescind the judgment and substitute a judgment that the Court considers appropriate; or
(iii)if the review arises from a default judgment or summary judgment, rescind the judgment and –
(A) substitute a judgment that the Court considers appropriate; or
(B)remit the matter to the Magistrates Court for hearing or further hearing;
(e) in hearing and determining the review, the Court must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.
(8) A decision of the District Court on a review is final and not subject to appeal.
It is noticeable that there is no general power of remission; that option exists only in the limited circumstances of the review of a default or summary judgment: s 38(7)(d)(iii)(B) Magistrates Court Act.
The outstanding attribute of s 38 so far as hearings in the Magistrates Court is concerned, is the expressly inquisitional nature of the inquiry. Hence Magistrates are directed to make an “inquiry … into the matters in dispute” (s 38(1)(a)), enabled to call and examine witnesses (s 38(1)(b) & (c)), are not bound by the rules of evidence (s 38(1)(e) & (f)), rights of legal representation are heavily curtailed (s 38(4)), and awards for costs can only be made in limited “special circumstances” (s 38(5). The jurisdiction and power of this Court are erected on this base. It is in this context that the jurisdiction “to review the matter” stands to be considered. The bases of review provide a relatively informal procedure, but now in an adversarial context. Legal representation is similarly restricted as provided for by s 38(4), however it appears costs may be awarded on a wider basis.
The legal expression “review”, like its cousins “rehearing” and “appeal”, are of flexible meaning to be gathered from specific legislative context: State Railway Authority (NSW) v Earthline Constructions Pty Ltd (in liq).[7]The review process contemplated by s 38 of the Magistrates Court Act is clearly meant to be governed by different procedures to administrative appeals entertained in the Administrative and Disciplinary Division of the Court, under Part 6 Division 2 of the District Court Act 1991 (SA).
[7] (1999) 73 ALJR 306 at 322 [72]–[80]
When considering the nature of an appeal conducted “as a review of the decision” of the Tribunal under 98(4) of the Equal Opportunity Act 1984 (SA) in Smith v St John Ambulance Australia SA Inc, Matheson J said:[8]
I do not consider it necessary here to define exhaustively the nature of the appeal under s 98, but at least I have reached the conclusion that such an appeal is not a rehearing, and that the appeal is not confined to questions of law. Like “judicial review” under Rule 98, the appeal affords an opportunity to look over the decision of the Tribunal and to identify and correct any error, regard always being had to the fact that the appeal is an appeal from a specialist tribunal, and that in consequence the Court will not lightly overturn the opinion of the Tribunal on technical issues of discrimination.
On appeal to the Full Court, Cox J saw no reason to doubt the correctness of this analysis, but declined to express a concluded view since the point was not argued.[9]
[8] (1991) 162 LSJS 404 at 418, emphasis in the original
[9] (1992) 166 LSJS 231 at 232, White ACJ and Mohr J concurring
Then in Santos Ltd v Saunders[10] the Full Court considered the obligation of a review officer when reviewing a decision pursuant to s 96 of the Worker’s Rehabilitation and Compensation Act 1986, concluding that it was necessary to make a fresh judgment upon the matter, and in so doing was not limited by those principles governing appeals against an exercise of discretion.[11]
[10] (1988) 49 SASR 556 at 559
[11] Per King CJ at 559-560 and per Von Doussa J at 568-569
The structure of provisions not unlike the present were before the Full Court in Avon v Administrative Appeals Court.[12] Under consideration in that case was s 69 of the Guardianship and Administration Act 1993 (SA) which provided for:
“… a review of the decision … on the evidence given in the original proceedings and on such further evidence as may, with leave of the court or pursuant to the request of the court, be presented to it”.
After examining a number of authorities concerning the meaning of “review” at length, Matheson J found it was unnecessary to define precisely the scope of the appeal under the legislation.[13]
[12] (1997) 69 SASR 7
[13] Above at 27
Olsson J considered a “review…in the true sense”, contemplates a process of re-examination, with a view to correction or modification, if appropriate”.[14] His Honour wrote:[15]
In the present case what is an issue is clearly not an appeal stricto sensu. It is a process in which this Court is required to reconsider the decision complained of, in the setting which gave rise to it, on a broad basis, having regard to the nature of the jurisdiction exercised under the Act; and to form its own opinion as to the propriety of what was done. In so doing it will, on the one hand, not be fettered by technical principles related to the conduct of appeals, but will necessarily bear well in mind and give due regard to the fact that the decision appealed against is that of a specialist tribunal, which ought not, lightly, to be overturned. On the other hand, it is clearly the intention of the statute that this Court is to exercise an independent judgment in assessing whether or not the court appealed from fell into error in relation to the merits of the proceedings. It must formulate its own conclusion and should not hesitate to give effect to it, if it believes that there are suasive reasons for dissenting from what was done by the AAC.
In so saying I recognise the force of the point that the AAC has an extremely wide, discretionary charter, by virtue of s 52 of the District Court Act. However, as was indicated by Bray CJ in Re Appeal from Credit Tribunal by John Martin & Co Ltd (1974) 8 SASR 237 at 245, that is not to say that it is not required to discharge its functions on the basis of well settled principle. It is certainly not a charter for an arbitrary, idiosyncratic approach: Ory v Betamore Pty Ltd (In liq) (1993) 60 SASR 393 at 413.
The reference “AAC” therein was to the Administrative Appeals Court, as the District Court was then constituted in its Administrative Appeals Jurisdiction. Williams J expressed no opinion on the question.
[14] Above at 35
[15] Above at 36
There is a long and consistent line of authority to the effect that the power of review is different to an appeal, and is not therefore subject to the necessity to identify error before the power to interfere is enlivened. Many of these are collected in the judgment of Matheson J in Smith, in Ritchie’s Supreme Court Procedure New South Wales at [49.19.5], and see Wentworth v Graham.[16]
[16] (2002) 55 NSWLR 638
However after referring to the decisions in Smith and Avon quoted above, White J concluded in Pulteney Grammar School v Equal Opportunity Tribunal:[17]
[7] Although Olsson J outlined more comprehensively the function of this Court on an appeal of the present kind than did Matheson J in Smith, it is not clear whether he was intending to indicate that a different approach should be adopted. I consider it appropriate to proceed on the basis that there is no relevant distinction in substance between the two approaches. That is the course which the parties were willing for this Court to adopt. In short, this Court should reconsider the decision of the Tribunal and determine whether or not it is affected by error, either of law or as a matter of merit. It is for the appellant to demonstrate the existence of error. If the Court determines that the Tribunal has erred, it may substitute its own conclusion or, alternatively, remit the matter to the Tribunal for reconsideration.
[17] (2007) 250 LSJS 309; [2007] SASC 308 at [7], Nyland and Kelly JJ agreeing
These comments seem to set the review process on a somewhat narrower basis than the cases referred to suggest. In light of this decision, for the moment, I approach this review on the same basis as White J. For reasons to become apparent later, it will prove unnecessary to determine the question.
The grounds of review
The statement of claim did not in lawyer’s terms disclose a cause of action. The appellant was no better able to inform the court during the oral hearing, but later he laid claimed to conversion. The trespassory tort of conversion, like detinue, serves to protect the rights of owners, as well as those entitled to the possession of goods. Hence an action lies in conversion against anyone wrongfully interfering with goods in a manner inconsistent with the owner’s rights: Hollins v Fowler[18] and in detinue at the instance of anyone holding a proprietary interest entitling him to possession: Bryant v Herbert,[19] Kitano v The Commonwealth of Australia,[20] and Schemmell v Pomeroy.[21] So when a person purchases and takes possession of goods which the seller has no right to sell, conversion will lie, even though the purchaser did not know the seller had no right to them: Fine Art Society v Union Bank of London Ltd.[22]
[18] (1875) LR 7 757 at 766 (HL)
[19] (1878) 3 CPD 389
[20] (1974) 129 CLR 151 at 172
[21] (1989) 50 SASR 450
[22] (1886) 17 QBD 705 at 712
On the facts of this case it is impossible to accept the appellant proved ownership of the vehicle on the balance of probabilities. As noted, his pleadings were inconsistent on this, and the documentation points in conflicting directions. The receipt from Jarvis Ford is by no means conclusive and in fact is equally consistent with him or Bednarz becoming the owner. The balance of probabilities are that ownership passed to Bednarz, since the Jarvis Ford documents suggest he became the owner and the fact of registration in his name, although inconclusive, tells heavily against the appellant. More decisively, it is totally inconsistent with the bill of sale: he could hardly be both grantor and grantee under a bill of sale over the same property. Insofar as he seeks to mount any claim based on ownership of the vehicle, it must therefore fail.
But that is not the end of the matter, as an action lies against persons committing trespass not only at the suit of the person in possession, but also at the suit of the person immediately entitled to possession: Penfolds Wines Pty Ltd v Elliott.[23]Whether Mr Hadeler has a sufficient interest to sue in conversion depends on the terms of the arrangement between him and Bednarz. Whilst not much attention was devoted to this question, it is clear that he paid the money to Jarvis Ford and subsequently registered his interest by way of a bill of sale over the vehicle on 23 June 2006, so that it appears he was entitled to claim possession in default of the loan. There was no formal proof of such default, but I proceed on that footing, since the case seems to have been conducted on the assumption that Bednarz was in fact well in arrears.
[23] (1946) 74 CLR 204
At common law no one can pass a better title to goods than they themselves hold: “no one gives who possesses not”, the ancient nemo dat principle. As the vehicle was subject to an undischarged bill of sale, Bednarz had no capacity to pass title to it. This principle found statutory expression in the Sale of Goods Act 1895 (SA):
Division 2—Transfer of title
………
25—Seller or buyer in possession after sale
(1) Where a person having sold goods continues or is in possession of the goods, or of the documents of title to the goods, the delivery or transfer by that person, or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge, or other disposition thereof, to any person receiving the same in good faith and without notice of the previous sale, shall have the same effect as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same.
(2) Where a person having bought or agreed to buy goods obtains, with the consent of the seller, possession of the goods or the documents of title to the goods, the delivery or transfer by that person, or by a mercantile agent acting for him, of the goods or documents of title, under any sale, pledge, or other disposition thereof, to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods, shall have the same effect as if the person making the delivery or transfer were a mercantile agent in possession of the goods or documents of title with the consent of the owner.
(3) In this section the term mercantile agent shall mean a mercantile agent having in the customary course of his business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods.
(4) Subsection (2) does not operate to defeat an interest that is registered under the Goods Securities Act 1986.
Section 25(4) was added by schedule 1 to the Goods Securities Act 1986 (SA), so it was obviously intended to impinge upon the operation of s 25(2), in the case of the buyer in possession in some way, but not upon the operation of s 25(1), when the seller remained in possession. Absent this provision, the position was that the Sale of Goods Act remained unaffected by the passage of the Goods Securities Act, for the reasons explained in Australian Central Credit Union v Commonwealth Bank of Australia:[24]
The appellant did not have actual notice, but the question arises whether registration of a security interest under the Goods Securities Act is notice to all the world of the existence of that security interest so that the appellant must be taken to have had constructive notice of such interest.
The Goods Securities Act itself does not provide that registration of a security interest is notice to the world of the existence of that interest. It is framed in terms of conferring title, free of the security interest, on a third party if the third party falls within the terms of s 11(1) or of conferring priority if the facts fall within s 11(2). There is nothing in the Act which states expressly, or in my opinion by implication, that a third party which does not qualify under s 11 to acquire a title free of the security interest or in priority to it, is precluded from deriving such title under any other statutory provision or rule of law. It is implicit in s11, indeed, that a person who acquires title from a dealer may be treated as without notice of a security interest notwithstanding that the security interest is registered under the Act. Such a person may acquire title free of the security interest as one who has acquired title without notice notwithstanding that the security notice is registered. That provision appears to be inconsistent with any notion of entry on the register being notice to all the world.
[24] (1991) 4 ACSR 145 at 151 per King CJ, Cox J agreeing
As the Antonious bought the vehicle in good faith, without notice of any defect or want of title on the part of Mr Hadeler, they otherwise retained good defences to actions in conversion and detinue, so the remaining question is what effect the Goods Securities Act and the concurrent amendment to the Sale of Goods Act, has upon the facts of the case.
Consideration of the grounds of review
In so far as Mr Hadeler claims the respondents did not contact the relevant Department, that stance only serves to worsen the situation for him, because if they did, it shows they were put on an inquiry as to good title. Section 3(3) of the Goods Securities Act provides:
(3)For the purposes of this Act, a person has notice of a security interest in prescribed goods if—
(a) the person has actual notice of the security interest; or
(b) the person has been put upon inquiry as to the existence of the security interest and has deliberately abstained from inquiry or further inquiry when the person might reasonably have expected the inquiry or further inquiry to reveal the security interest.
Accordingly if there is no evidence of the respondents contacting the Department, there is nothing left to suggest they were put on any relevant inquiry.
However the evidence of Mr Antoniou exhibits dealings with the Department corresponding to their known procedures and practices. As what he was told coincides with the known facts relating to the records relating to this vehicle, there is such a coincidence of esoteric knowledge, that he must have telephoned them. On that finding, he was told the vehicle was not affected by any finance.[25] The explanation for the mix up lies either in the fact that not all the required numbers corresponded exactly, or in the fact that they were incorrectly entered in the register. It is not possible to resolve this conundrum because "it appears that the document was incorrectly filed and as of 12 June 2009 could not be located by the Branch Office that processed the application" for the registration of Mr Hadeler's "interest Lodgement".[26] That being the case, so much of the appeal as relates to impugning the finding that Mr Antoniou did not ring the Department, must be dismissed, counter productive or otherwise.
[25] T11.2, 2nd June 2009
[26] Letter from the Department for Transport, Energy and Infrastructure of 12 June 2009, Exhibit "A" to the affidavit of Mr Hadeler of 2 July 2009.
The premise of the alternative basis urged by the appellant appears to be that the Goods Securities Act provides no defence to a claim, however characterised, unless the relevant certificate is acquired. To understand the argument it is necessary to set out the relevant provisions. Non-exclusive jurisdiction is vested in the Civil (Consumer and Business) Division of the Magistrates Court. By virtue of s 13(1) of the Goods Securities Act, that court has “jurisdiction to determine any questions relating to the application of s 11 or 12 to a security interest in prescribed goods.” Section 12 concerns the order of priority over interests in prescribed goods, so it has no relevance here.
By the same token s 11 is relevant, because it relates to the discharge of security over goods. Section 11(1) pertains to the registration of title. For the reasons mentioned above the appellant has failed to prove any title to the car. Section 11(2) protects a person’s interest in goods:
11 (2) Subject to subsection (4), where –
(a) prescribed goods are subject to a security interest; and
(b) a person (the third party) honestly, for value and without notice of the security interest purports to acquire an interest in the goods from the owner or apparent owner of the goods; and
(c) -
(i)the security interest is unregistered; or
(ii) the owner or apparent owner is a dealer in goods of that kind; or
(iii)after registration of the security interest and before the time of the purported acquisition of the interest, a certificate of registered security interests was obtained under this Act by or on behalf of the third party and the certificate did not disclose the security interest.
For the purposes of this case, s 11(4) has no application to the facts. The expression “apparent owner” of goods is defined by s 11(7) to mean “a person who has possession of the goods with the consent of the owner of the goods in circumstances in which that person appears to be the owner”. Under s 3 the interpretation provision, a “motor vehicle” is defined as a prescribed good and a “security interest” includes a bill of sale. Section 3(1) defines a “dealer” to mean “a person who carries on the business of purchasing and selling prescribed goods or any class of prescribed goods”. That definition does not appear to apply to the appellant. There is no evidence one way or the other as to whether this capacity applied to Mr Bednarz, or DGR Wholesales, whoever they were.
Based on the above facts – and subject to what follows later - the motor vehicle in question was certainly subject to a relevant security interest and the Antonious certainly were honest purchasers for value without notice, so that both s 11(2)(a) and (b) were satisfied. However s 11(2)(c) was not, in as much as none of the three placita were applicable. More particularly, a certificate proving there was no relevant security interest in the vehicle was not obtained by Mr Antoniou. It must follow that they fail to demonstrate any entitlement to the protection the section affords. It must equally flow from this conclusion that they do not hold ”an interest that is valid against” Mr Hadeler.
The purposes of this legislation, as its long title suggests, is to provide for the registration of security interests in prescribed goods. The mechanism affecting that purpose pivots around s 11. This affords a statutory means of protection to bona fide purchasers upon obtaining a certificate which “did not disclose the security interest” under s 11(1)(c)(iii) or 11(2)(c)(iii). This certificate effectively provides an absolute statutory defence, which is conclusive of the issue.
What then of the position when one is not obtained? The Goods Securities Act modifies or overrides the Sale of Goods Act to the extent provided for in s 25(4) of the latter. That is to say, even though a buyer in possession purchases in good faith and without notice of any interest of the original seller, he fails to defeat an interest registered there-under, and so fails to acquire good title. As unfortunate as it may be, this is precisely the position of Mr and Mrs Antoniou in this instance.
It follows that the Magistrate erred in failing to apply the terms of s 25(4) of the Sale of Goods Act to the primary findings of fact. Quite understandably his Honour considered bona fide purchase for value without notice was sufficient to make out a defence. As we have seen the Goods Securities Act erects its own scheme in lieu of the previous position, by replacing that with the statutory defence of proving a non-interest certificate.
The formal requirements of the Goods Securities Act
Despite this conclusion there is another issue remaining to consider. The Goods Securities Act provides for the registration of a security interest in tightly defined circumstances. The register is required to contain such information as is required by the Act itself and such other information as may be prescribed (s 4(2)(a) & (b)). The research of the court proved unable to locate any “such other information” prescribed for the purposes of s 4(2)(b). As to the former, the Acts requirements are those contained in s 5:
5—Application for registration
(1) The holder of a security interest in prescribed goods may make application for registration of that security interest.
(2) On receipt of an application under subsection (1) the Registrar must register the security interest by entering the following particulars (insofar as those particulars are not already entered) in the register:
(a)such details of the goods to which the security interest relates as are necessary to identify them; and
(b) the name and address of the holder of the security interest; and
(c) the type of security interest; and
(e) the date and time of entry in the register.
Putting aside the formal aspects required by s 5(2)(b)-(e) inclusive, the core requirement is to furnish such particulars “as are necessary to identify” the goods in question (s 5(2)(a)). As a matter of administration the Department insists in its “Regulatory Policy and Systems Booklet” that “suitable” compliance is achieved when the documentation contains the following particulars:[27]
·Name and address of the lender;
·Name and address of the borrower;
·A description of the vehicle which should include the make, type, registration number, engine number and VIN/Chassis;
·The amount of money to be repaid. This should include the interest and terms of repayment;
·The signatures of the lender, borrower and witness. The signatures of the borrower and witness will also suffice.
[27] At p 22
Of course these policies are not binding in terms of the proper construction of the statutory obligation to sufficiently identify the motor vehicle in question. It is however a matter of common sense that a registration number alone would always be insufficient, as these can so easily be swapped. In order to sufficiently identify a motor vehicle, it is necessary to furnish accurate VIN/Chassis numbers to ensure bodies are not swapped, and accurate engine numbers, to ensure an engine has not been changed over. Accordingly insofar as Mr Hadeler supplied incorrect engine and chassis numbers, he failed to comply with the core requirements necessary to identify the vehicle. Alternatively if they were erroneously recorded, there was an inaccurate registration of his security interest.
What then is the consequence of this? The effect of acts done in breach of statutory powers, were extensively considered by the High Court in Project Blue Sky Inc v Australian Broadcasting Authority. McHugh, Gummow, Kirby and Hayne JJ wrote in that case:[28]
[91] An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. Unfortunately, a finding of purpose or no purpose in this context often reflects a contestable judgment. The cases show various factors that have proved decisive in various contexts, but they do no more than provide guidance in analogous circumstances. There is no decisive rule that can be applied; there is not even a ranking of relevant factors or categories to give guidance on the issue.
[92] Traditionally, the courts have distinguished between acts done in breach of an essential preliminary to the exercise of a statutory power or authority and acts done in breach of a procedural condition for the exercise of a statutory power or authority. Cases falling within the first category are regarded as going to the jurisdiction of the person or body exercising the power or authority. Compliance with the condition is regarded as mandatory, and failure to comply with the condition will result in the invalidity of an act done in breach of the condition. Cases falling within the second category are traditionally classified as directory rather than mandatory.
…
[93] In our opinion, the Court of Appeal of New South Wales was correct in Tasker v Fullwood in criticising the continued use of the "elusive distinction between directory and mandatory requirements" and the division of directory acts into those which have substantially complied with a statutory command and those which have not. They are classifications that have outlived their usefulness because they deflect attention from the real issue which is whether an act done in breach of the legislative provision is invalid. The classification of a statutory provision as mandatory or directory records a result which has been reached on other grounds. The classification is the end of the inquiry, not the beginning.
…
A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. This has been the preferred approach of courts in this country in recent years, particularly in New South Wales. In determining the question of purpose, regard must be had to "the language of the relevant provision and the scope and object of the whole statute".
[28] (1998) 194 CLR 355, footnotes omitted
In determining the act in question was done in breach of a statutory provision but was not invalid, their Honours laid stress on the actual scope and nature of the statutory power, considering these to regulate the exercise of functions already conferred, rather than to imposes essential preliminaries to the exercise of those functions. These considerations they said, “strongly indicates that it was not a purpose of the Act that a breach…was intended to invalidate any act done in breach of that section”.[29] Another factor in their Honours’ mind was:
[97] Courts have always accepted that it is unlikely that it was a purpose of the legislation that an act done in breach of a statutory provision should be invalid if public inconvenience would be a result of the invalidity of the act [Montreal Street Railway Co v Normandin [1917] AC 170 at 175; Clayton v Heffron (1960) 105 CLR 214 at 247; TVW Enterprises Ltd v Duffy [No 3] (1985) 8 FCR 93 at 104-105]. Having regard to the obligations imposed on the ABA by s 160, the likelihood of that body breaching its obligations under s 160 is far from fanciful, and, if acts done in breach of s 160 are invalid, it is likely to result in much inconvenience to those members of the public who have acted in reliance on the conduct of the ABA.
[29] Above at 94
In the instant case, although the validity of statutory power is not in issue if, Mr Hadeler misdescribed the vehicle in his application to register the interest, the consequences of acts done in breach of statute are, so that the principles identified in Project Blue Sky are useful by analogy in resolving the case. As mentioned, the pivotal obligation was to supply so much information as was necessary to identify the vehicle. This on one view of the facts he did not do. The actual content of the statutory power in this instance, clearly imposes essential preliminaries to the exercise of the statutory function to register the relevant interest, such that a fundamental breach of the central purpose of the Act serves to invalidate any act done in breach of the section creating that obligation.
That conclusion is reinforced by reference to later provisions under part 4 of the Goods Securities Act, which render the Department liable to the payment of compensation when it makes an “erroneous entry” in the register or when a security interest “is not registered as required by this Act”: s 14(1). Accordingly if the Department made an erroneous entry in the register, the result is exactly the same. One way or another there has been such a breach of the essential requirements of the Act such as to render Mr Hadeler’s attempt to register his interest invalid.
The difference between holding invalid an act done in breach of s 5, and holding it valid, lies only in the inconvenience to an applicant failing to comply, as against the potential inconvenience to a class of applicants seeking to establish the existence of registered interests, who rely in purchasing goods on the existence of no such interest. When, on the other hand the Department makes an erroneous entry or one otherwise not “as required by this Act”, that renders it liable to pay compensation under part 4 of the Act.
It is not surprising given this construction of the respective statutory obligations, to find in the “Regulatory Policy and Systems Booklet”, it is recorded:[30]
[30] At p 18
Responsibility
Applicant
It is the responsibility of the Financier to make ‘Application to Register an Interest’ as soon as practicable after advancing funds. It is also their responsibility to ensure that the information supplied on the application is accurate and complete.
Inaccurate information can result in the incorrect vehicle being placed on the Register which may cause embarrassment to both the applicant and the Registrar. The applicant will not gain protection under the Act if the details they place on the register are incorrect.
An incomplete application may lead to delays in processing. This could result in a financial loss to the applicant.
And later:[31]
[31] At p 37
Responsibility
Registrar
It is the responsibility of the Registrar to ensure that the details, as supplied by the applicant, are correctly entered onto the Register for checking. Inaccurate data entry could result in an interest going undetected which in turn may lead to the vehicle being repossessed by a Financier. If it was proved that the Registrar made the error then a claim for compensation may be made.
It should be mentioned that had Mr Hadeler succeeded, it would not have been open to order restation of the vehicle in view of the fact that it has been on-sold. As to the potential level of damages, the basis for the original claim of $4,900 was never made good. The best the appellant did was to show an outlay of $2,750, and an expectation of a return of $3,000 within a month. He later advised the court there were two repayments of $400 each on 15 and 20 May 2008 respectively. There being no other evidence from which proof of any other damage can be inferred, the best he could expect would have been a judgment in his favour of $1,950, plus interest as provided for under the rules of court.
In light of these conclusions it must follow that even though the Magistrate erred in failing to apply the facts to the relevant statutory framework, the result must be the same. The appellant did not hold a valid registered interest in the vehicle, either because he failed to make the appropriate application in accordance with the provisions of the Act, or it was erroneously entered. His appeal must therefore fail. As the parties were self-represented, there will be no order as to costs.
4
12
1