Hoolahan v I.J.V Wholesale Pty Ltd
[2013] QCAT 298
| CITATION: | Hoolahan v I.J.V. Wholesale Pty Ltd [2013] QCAT 298 |
| PARTIES: | Ms Amanda Hoolahan (Applicant) |
| v | |
| I.J.V. Wholesale Pty Ltd Mr Ian Vacchini |
| APPLICATION NUMBER: | OCL085-12 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Mr David Paratz, Member |
| DELIVERED ON: | 25 June 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Pursuant to s 488 of the Property Agents and Motor Dealers Act 2000, the claim is allowed in the sum of $41,100. 2. Pursuant to s 489 of the Property Agents and Motor Dealers Act 2000, at the expiration of the appeal period, the Chief Executive must pay to Amanda Hoolahan the sum of $41,100 from the Claim Fund, and, if there is an appeal, payment must not be made until after the appeal is finally decided. 3. Pursuant to s 488(3)(c) of the Property Agents and Motor Dealers Act 2000, Ian Vacchini is named as the person responsible for the financial loss of Amanda Hoolahan. 4. Upon payment from the Claim Fund and pursuant to sections 490 and 530 of the Property Agents and Motor Dealers Act 2000, Ian Vacchini is liable to reimburse the Claim Fund by paying the sum of $41,100 to the Chief Executive, Department of Justice and Attorney-General. |
| CATCHWORDS: | Motor dealer not giving clear title –– vehicle in possession of claimant – mitigation of loss – whether financial loss – limitation period expired for new claim Property Agents and Motor Dealers Act 2000 s470(1)(c), 472(2). Pattino v Cottam [2012] QCAT 309 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
REASONS FOR DECISION
Ms Hoolahan bought a Mercedes Benz C200 Sport motor vehicle from “Ian Vacchini T/A IJV Wholesale” on 2 September 2009.
Mr Vacchini was a licenced motor dealer. He was a Director of I.J.V.Wholesale Pty Ltd at all relevant times.
It was Ms Hoolahan’s expectation that she would gain clear title to the Mercedes.
In fact, the vehicle was encumbered by a security interest in favour of Mercedes-Benz Financial Services Australia Pty Ltd. (the finance company). Ms Hoolahan was only advised of the encumbrance on or about 20 May 2011.
The vehicle is still in Ms Hoolahan’s possession. Her Solicitors have been in discussions with the Solicitors for the finance company. In a letter dated 23 January 2013 the Solicitors for the finance company advise that their client is prepared to sell the vehicle to Ms Hoolahan for the amount of $45,258.60.
I gave directions in the course of this matter requesting full details of the arrangement between Ms Hoolahan and the finance company. Her solicitors advised in response in a letter dated 26 April 2013 that the arrangement made with the financier is that Ms Hoolahan has been able to retain possession of the motor vehicle on the basis that (a) she keep the motor vehicle insured; and (b) she pursue this claim.
There is no privity of contract or legal relationship between the finance company and Ms Hoolahan. The finance company has the right to repossess the vehicle and sell it, and claim any loss they have suffered against their customer.
The arrangement that the finance company has proposed is unusual in that it is not claiming ongoing interest, and has allowed Ms Hoolahan to retain possession of the vehicle for the time being, and has nominated a specific value which they would accept and pass clear title to her.
Ms Hoolahan has claimed on the Fund established under the Property Agents and Motor Dealers Act 2000 (the Act) for financial loss of $61,821.05. That amount is made up of the initial purchase value of the car of $60,000 plus legal costs of $1,821.05.
Section 470(1)(c) of the Act provides that:
(1) A person may make a claim against the Fund if the person suffers financial loss because of the happening of any of these following events-
(c) a failure of a motor dealer to ensure a person who has bought a motor vehicle sold by or for the dealer gains clear title to the vehicle at the time property in the vehicle passes to the buyer, whether or not the motor dealer contravenes section 233 or 295;
The Chief Executive has submitted that in order to have a valid claim against the Fund, Ms Hoolahan must demonstrate that financial loss arising from a breach of the Act has occurred. It submits that she has not yet sufficiently quantified or demonstrated that she has suffered financial loss.
The Chief Executive submits that Ms Hoolahan has merely demonstrated that she has the potential to suffer financial loss at a future time by either paying out the encumbrance or having the vehicle repossessed, and have referred to Pattino v Cottam [2012] QCAT 309 (Pattino).
The case of Pattino is similar, but not the same as this matter. It is distinguishable.
In Pattino a consumer bought a car from a licensed motor dealer. The car was encumbered to a finance company, which the consumer did not discover until several months later. The finance company allowed him to retain possession of the car. The consumer claimed against the Fund for the full purchase value. Negotiations were underway as to a figure which the consumer could buy the car from the financier for, but at the time of the Application, no figure had been determined, and the consumer had not been asked to clear the debt by the financier.
In that case, the learned member held that the Act does not allow for the payment of compensation “in case” a claim is made in the future, and said she must be satisfied that the consumer had in fact suffered a financial loss.
Reference was also made to the relevant limitation period. In that case, the applicant still had about a year and a half in which to make a claim. The learned member found that the claim was premature, and the application was dismissed.
A claim against the Fund must be brought within the earlier of one year after the person became aware that they had suffered financial loss because of the happening of an event mentioned in s 470(1); or three years from the happening of the event that caused the person’s financial loss - s 472(2).
In this case, the financier has set a specific amount that it requires to pass clear title, which is different to Pattino. Further, Ms Hoolahan’s claim if brought now, or on a new application, would be out of time, as both time periods have expired.
Ms Hoolahan bought the car in good faith, and paid $60,000 for it. She has had the use of the vehicle since 2 September 2009. The value of the vehicle will have reduced in that time due to the increasing age of the vehicle, and the kilometres that it has travelled.
A Valuation Certificate as at 26 September 2012 has been submitted by Ms Hoolahan. It shows the value of a 2009 Mercedes-Benz C200 Kompressor in “as new” condition which has travelled 25,000 kilometres, as $41,100.00.
Her solicitors have argued that the current value as at 26 September 2012 was $41,100 on the basis of the valuation. It is implicit that they are submitting that the vehicle is in “as new” condition.
The Chief Executive submits that if the Tribunal is satisfied that financial loss has been suffered, that it would be appropriate to calculate the financial loss as the lesser of either the payout figure for the encumbrance or the vehicle purchase price as at the Applicant’s date of awareness. No material has been provided to establish either the payout figure, or the vehicle purchase price, as at 20 May 2011, which was when Ms Hoolahan became aware of the encumbrance.
The Chief Executive further submits that if the Tribunal is satisfied that the payout for the encumbrance is established as the Applicant’s financial loss, that pursuant to s488(3) of the Act, the Tribunal must take into account any amount the Applicant might have reasonably received or recovered had she mitigated her financial loss on first discovering the vehicle was encumbered.
What steps it is suggested that Ms Hoolahan should have taken to mitigate her loss are not expanded upon. Presumably this may have included handing over the vehicle at that time to the financier.
The Chief Executive alternatively submits that if the vehicle purchase price is established as the Applicant’s financial loss, the Tribunal would need to take into consideration the benefit the Applicant has derived from having use of the vehicle for the period since it was purchased. The Chief Executive submits that the current market value for the vehicle and the market value as at the date of purchase would need to be provided by the Applicant, and the difference between the values would determine the benefit derived by the Applicant. The result of this calculation would seem to come back to being the current market value of the vehicle at the date of assessment of the loss.
There is no doubt that Ms Hoolahan has suffered loss of some sort as a result of her dealings with a licensed motor dealer. She did not gain clear title when she bought the vehicle, and has no unencumbered asset in return for her payment. The difficult question in this matter is as to the quantum of that loss. The matter is complicated by the unusual circumstances of the finance company allowing her to retain possession of the vehicle at all, and without any apparent accrual of interest.
The payout figure that the finance company is prepared to accept this year is different to and higher than, the market value of the vehicle late last year. There is a difference of $4,158.60.
The payout figure is a figure that is determined by the original arrangements made between the finance company and its customer. It would be affected by any deposit or initial payment, the rate of interest that was set, and the presence of any balloon or residual payment. Those are matters that are unrelated to the current market value, or to any action of Ms Hoolahan.
The question is one of assessment and mitigation of loss. If the time for assessment of the financial loss was the time she became aware of the encumbrance, and there was a definite payout figure at the time of discovery of the encumbrance, but that was greater or less than the market value of the vehicle at that same time, which figure was to apply?
If Ms Hoolahan elected not to pay the payout figure, as it was higher than the market value of the vehicle at the time, the financier would repossess the vehicle, and Ms Hoolahan’s loss would then be the market value of the vehicle at the time of repossession. The finance company would suffer loss being the difference between the market value of the vehicle and the payout figure, but that has nothing to do with Ms Hoolahan.
If Ms Hoolahan elected to pay the payout figure, as it was less than the market value of the vehicle at the time, then Ms Hoolahan would obtain clear title, and the payout figure would represent her financial loss.
Ms Hoolahan appears to have wanted to retain the vehicle, but may not have had the ability to pay the finance company the payout figure when she became aware of the encumbrance.
The ultimate difficulty in this matter, and of the course of conduct that Ms Hoolahan has followed, is that she has not crystallised her loss at any point, but that in the interim, a limitation period has been ticking, and has now expired.
Ms Hoolahan frankly would seem to have been better advised to have simply handed over the vehicle to the finance company when she became aware of the encumbrance on 20 May 2011, if she could not afford to, or did not want to, pay the payout figure. She could then have claimed the market value of the vehicle at that time against the Fund. That would have been a straight-forward claim, and the matter may well have been resolved some years ago.
As a matter of justice, it would not be appropriate to dismiss the application now on the basis that Ms Hoolahan has not crystallised her loss, as she then would be blocked out by the limitation period, and be unable to claim anything from the Fund when she finally either pays out the finance company or hands the vehicle back to them. She would then have no recompense for the loss she has suffered. That is an important distinguishing consideration to Pattino.
If Ms Hoolahan is awarded payment from the Fund, she will recover that amount. There is then a possibility that the wrong-doer will not go free as the Chief Executive is able to seek reimbursement under the Act. The possibility of reimbursement may be remote, as Mr Vacchini was an undischarged bankrupt as at 18 October 2012, but the possibility exists. Further, disciplinary action can then be taken by the Chief Executive.
It might be possible to adjourn further consideration of this claim until such time as Ms Hoolahan does crystallise her loss. I am mindful though of the need to bring these proceedings to finality, and to not have matters left in limbo in the Tribunal for an indeterminate period of time. I therefore consider it is preferable and appropriate to bring this matter to a certain determination.
The expression used in the act of “financial loss” is particular to this Statute. It is defined in Schedule 2 as “financial loss, for chapter 14, see section 469”. Section 469 defines it as follows:-
Financial loss, suffered by a person, if evidenced by a judgment of a court, does not include interest awarded on the judgment
These definitions of “financial loss” in the Act do not assist in the understanding of the meaning of that expression.
A more usual expression may be damages. Damages is described in the Encyclopaedic Australian legal dictionary as:-
Assessment of the amount necessary to compensate a plaintiff for the loss suffered as a result of the defendant’s wrong. In contract, the sum that will put the injured party in the same position as if the contract had been performed: Robinson v Harman (1848) 1 Exch 850; 154 ER 363; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; 104 ALR 1. Damages will be assessed on the basis of both loss of bargain (expectation of loss) and damage suffered, including expenditure incurred, in reliance on the contract (reliance loss): Gates v City Mutual Life Assurance Society (1986) 160 CLR 1; 63 ALR 600.
Damages can be assessed even though a loss has not crystallised. This is frequently done for example in personal injury claims where loss is ongoing. Loss can be similarly ongoing in contract claims, such as breach of intellectual property rights.
The usual expression of courts when faced with a difficult assessment of damages is “doing the best I can” in order to produce a certain and as fair result as possible. A similar consideration arises in this case where the Applicant has an undisputed valid claim, but determination of her loss is difficult. It would be unfair for the Applicant to be denied any remedy because of the difficulty in determining loss.
The objects of the Tribunal are set out in the Queensland Civil and Administrative Tribunal Act 2009. Section 3(b) provides that the objects of the Act are to have the Tribunal deal with matters it is empowered to deal with “..in a way that is .. fair, just..”
The best, and only available appropriate, date in this circumstance to set as determining her loss, may be the end of the last possible limitation period for a claim.
One option is that the limitation period could have run out on 20 May 2012, as that is one year after Ms Hoolahan became aware of the encumbrance. Section 472(2) however refers to one year after the person became aware that they suffered financial loss. There is an argument that she had not suffered financial loss as at that date, and therefore that limitation period should not apply.
The optional limitation period is 3 years from the happening of the event that caused the loss. That would be 3 years from the date of sale, which was on 2 September 2009. That period would then have expired on 2 September 2012.
I consider it is arguable that her loss notionally crystallised at expiry of the limitation period on 2 September 2012, as she could not bring a claim thereafter.
A valuation is in evidence of the market value of the vehicle as at 26 September 2012 for $41,100, which is only a few weeks later. That valuation has not been challenged. I am therefore prepared to accept that loss existed as at the end of the limitation period of $41,100.
That market value is less than the figure at which the finance company has offered this year to sell the vehicle to Ms Hoolahan. Having regard to the need for Ms Hoolahan to mitigate her loss, I do not consider that the greater figure is to be adopted.
This case turns on unusual and particular circumstances, and I do not suggest that it establishes any principle as to the assessment of financial loss that may apply to other cases.
Section 488(2) of the Act provides that the Tribunal may allow the claim only if satisfied, on the balance of probabilities, that an event mentioned in section 470(1) happened, and that the claimant suffered financial loss because of the happening of the event.
In the particular circumstances of this case, and having regard to the justice of the matter, I am satisfied that an event mentioned in s 470(1) happened, that Ms Hoolahan suffered financial loss because of the happening of the event, and that the appropriate assessment of the financial loss suffered by Ms Hoolahan is the market value of the vehicle at the expiry of the limitation period, which I accept as $41,100.
Ms Hoolahan has also claimed for legal costs of $ 1,821.05. No detail has been provided of those costs. Further, as I have indicated, if a different course of conduct had been adopted, then this matter may have been resolved years ago, without the possible incursion of some or much of these costs. I am therefore not satisfied as to what extent these costs are applicable in the usual course of such a claim, and will not allow any costs.
S 488(3) provides that the Tribunal must name the person who is liable for the claimant’s financial loss. The cheque for the purchase was made out to “IJV Wholesale”, and the Vehicle Registration Transfer Application showed the disposer as Ian Vacchini.
No business name search has been provided as to “IJV Wholesale”. There is nothing on the material provided that shows an involvement by the company IJV Wholesale Pty Ltd.
Accordingly, I consider that liability is only shown against Mr. Vacchini personally. I name the respondent, Ian Vacchini, as the liable person.
I allow the claim in the amount of $41,100 and make orders accordingly for payment to Ms Hoolahan, and for reimbursement to the Fund by the liable person.
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