Kaufmann v Braddon Automart Pty Ltd & Ors (Civil Dispute)

Case •

[2017] ACAT 29

•

21 April 2017

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

KAUFMANN v BRADDON AUTOMART PTY LTD AND ORS (Civil Dispute) [2017] ACAT 29

XD 181/2016

Catchwords:              CIVIL DISPUTE – bailment contract for reward – breach of contract - Australian Consumer Law – breach of guarantees for goods and services – unconscionable conduct – goods rejected and refund payable – damages for fines paid by consumer

Legislation cited:      ACT Civil and Administrative Act 2008 s 18

Australian Consumer Law ss 2, 3, 20, 21, 22, 52, 224, 227, 236, 244, 259, 261, 263, 267
Competition and Consumer Act 2010 (Cth) sch 1
Fair Trading (Australian Consumer Law) Act 1992 ss 9, 33
National Consumer CreditProtectionAct 2009 (Cth) sch1
National Credit Code ss 5, 88
Sale of Motor Vehicles Act 1977 ss 2, 3, 6, 7, 9, 38, 48, 67, 71

Cases cited:Australian Competition and Consumer Commission v CG Berbatis Holdings and Others (2003) 197 ALR 153

Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682
Blades v Higgs (1861) 10 BC (NS) 713
Briginshaw v Briginshaw (1938) 60 CLR 386
Citizens Co-operative Assurance Company of Australia Ltd (1931) 46 CLR 41
Company of Australia Ltd (1931) 46 CLR 41
Colonial Mutual Life Assurance Society Ltd v Producers and Mutual Life Assurance Society (1931) 46 CLR 41
Downes v Smith [2014] QCATA 350
Kovac v The Australian Croatian Club Ltd [2014] ACAT 41
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623
Marks v GIO Australia Holdings Ltd (1998) 196 CLR 949
Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101
Ltd

List of Papers/

Texts Cited:McEniery, Contracts - Bailment, The Laws of Australia, TLA

Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed)

Tribunal:  Senior Member L Beacroft                  

Date of Orders:  21 April 2017

Date of Reasons for Decision:         21 April 2017

ACT CIVIL & ADMINISTRATIVE TRIBUNAL            XD 181/2016

BETWEEN:

CRAIG MICHAEL KAUFMANN

Applicant

AND:

BRADDON AUTOMART PTY LTD

First Respondent

CHRISTOPHER A CLEARIHAN T/A

BRADDON AUTO MART

Second Respondent

SOLAR SOLUTIONS INTERNATIONAL PTY LTD

Third Respondent

TRIBUNAL:              Senior Member L Beacroft

DATE:                      21 April 2017

ORDER

The Tribunal orders that:

  1. The third respondent holds title to the car and is at liberty to dispose of it in any way they see fit.

  2. The respondents are to pay the applicant damages of $1422.00.

  3. The respondents are to refund the applicant $2882.00.

  4. The respondents are to pay the applicant’s filing fee of $140.00 and search fee of $9.00.

  5. The respondents will comply with Orders 2, 3 and 4 by close of business 26 May 2017 by transferring the total sum of $4453.00 to a bank account which the applicant advises them of. 

    ………………………………..

    Senior Member L Beacroft

REASONS FOR DECISION

Background

  1. On 13 February 2014 the applicant, Craig Kaufmann, entered into an arrangement for a car. The arrangement was made with a business named on the Tax Sales Invoice as Braddon Auto Mart Pty Ltd (ABN 22 138 849 788)[1] (the first respondent), which trades at 37 Mort St Braddon ACT (the business premises). The second respondent is Mr Christopher A Clearihan the sole director of the first respondent,[2] and he is also registered as an individual/sole trader (ABN 98 652 001 552) trading as Braddon Auto Mart.[3] The third respondent, Solar Solutions International Pty Ltd (ABN 72 098 024 296), was added by consent of the parties as a respondent during the proceedings and was the owner of the car at the time the applicant signed the contract.[4] The third respondent trades as Braddon Auto Mart and Braddon Car Mart[5] at the same business premises as the first respondent, and has as its sole director Ms Cheryl Love, who was authorised to represent all the respondents in these proceedings. The third respondent holds Motor Vehicle Dealer License Number 17000568.[6] An issue in the matter was what liability each respondent had, if any. This issue is considered later below (see paragraphs 19 to 20, 52 to 55), but until then these reasons simply refer to ‘the respondents’.

Chronology of key events

[1] Tax sales invoice 5826, dated 13 February 2014, attachment B, response – civil dispute, received 16 May 2016; ASIC Company Search extracted 16 February 2016

[2] Current company extract, ASIC, extracted 16 February 2016, attachment to applicant’s civil dispute application dated 16 February 2016

[3] ABN lookup, Australian Business Register, extracted 16 February 2016, attachment to applicant’s civil dispute application dated 16 February 2016

[4] Statement of vehicle registration history, printed 2 May 2016, attachment E, response – civil dispute, received 16 May 2016

[5] Current organisation extract, ASIC, extracted 20 December 2016, attachment to respondents submission dated 20 December 2016

[6] Public register business and industry licensing, ACT office of regulatory services, search result, accessed 31 January 2016, at  Sale of Motor Vehicles Act1977, section 6

  1. The arrangement was put in place on 13 February 2014. The applicant with his partner, Ms Sarah Lynch, attended the business premises, where the second respondent, Mr Clearihan, assisted the applicant to choose the car, and Ms Love prepared the paperwork. The applicant took possession of the car that day. The arrangement involved the applicant using the car, a RAV 4, and paying it off over time. On 7 May 2015 the applicant was stopped by a police officer and fined for using an unregistered and uninsured vehicle, and he paid $699.00 for each fine.

  2. On 16 February 2016, the applicant applied to the ACT Civil and Administrative Tribunal (the Tribunal) for re-imbursement for out-of-pocket expenses for his application, re-imbursement for the total sum he paid for two traffic infringement fines ($1398.00), and other orders concerning final repayments for the vehicle and transfer of the ownership to the applicant by the respondents. A preliminary conference was conducted by ACAT on 4 April 2016 between the parties to consider whether the dispute would settle and, if not, to issue directions for hearing. The matter did not settle.

  3. On 7 April 2016 the car was repossessed by the respondents. As a result, in an amended application received 27 April 2016 by ACAT the applicant amended the orders he sought. He sought re-imbursement of the cost of the fines, a refund of the money he had paid for the car, and other compensation taking into account the vehicle had been recovered by the respondents and for alleged breaches of various legal requirements by the respondents. The applicant claimed compensation of $4553.00, plus out-of-pocket expenses and interest, and he also raised that the respondents were liable for unconscionable conduct due to the repossession of the car.

  4. A response was filed dated 29 February 2016, denying the applicant’s claim and cross claiming for a sum of money. A further response was filed on 16 May 2016 cross-claiming to the maximum allowed then under section 18 of the ACT Civil and Administrative Act 2008 (the ACAT Act), in the sum of $10,280, which was mostly made up of a claim for “loss of profit from car sales from November 2014” due to the applicant’s alleged default in payments against the repayment schedule.[7] This cross-claim was later amended by the respondents to damages for the remaining debt owed by the applicant for the car and the costs to repair and to prepare the car for re-sale in the sum of $5587.44[8] plus out-of-pocket expenses. The respondents sought an order for the third respondent to be declared the owner of the car and to be able to sell the car and have its sale price credited against the latter damages claimed by the respondents.

Conduct of the hearing

[7] Counter-claim attached to response, dated 16 May 2016

[8] Respondent submissions, received 20 December 2016, page 5

  1. A hearing was held on 26 October 2016. The applicant was self-represented and accompanied by his partner who also gave evidence. Ms Love, the sole director of the third respondent, had authority to act for all respondents and gave evidence. All the respondents were legally represented by Mr Harry Nyman, Milford Haseldine and Williams, Solicitors and Accountants.

  2. Prior to the hearing the parties attached various evidence to their applications and responses filed with the Tribunal. These documents and attached evidence were provided to the other parties. After the hearing the respondents provided a final submission dated 20 December 2016.

  3. During the proceedings the third respondent was joined by consent. As explained above, Solar Solutions International Pty Ltd was the owner of the car at the time the applicant signed the contract,[9] trades as Braddon Auto Mart at the business premises, and holds Motor Vehicle Dealer Licence Number 17000568.

Uncontested and contested issues

[9] Statement of vehicle registration history, printed 2 May 2016, attachment E, response – civil dispute, received 16 May 2016

  1. The uncontested facts were as follows:

    (a)The two documents setting out the arrangement between the parties are a ‘Tax Sales Invoice 5826’ with a heading ‘Braddon Auto Mart Pty Ltd’ which is signed by both parties on 13 February 2014,[10] and a ‘Repayment Form’ dated 13 February 2014 signed by the applicant which records a first payment of $200 and then subsequent repayments.[11]

    (b)The vehicle was unregistered and uninsured for various periods of time while the applicant had it in his possession, and on 7 May 2015 the applicant received two infringement notices from the Australian Federal Police in the total sum of $1398.00, which he paid.[12]

    (c)The vehicle was repossessed from the applicant on 7 April 2016 and there is a police incident report about this repossession.[13]

    (d)The amount owed by the applicant, taking into account repayments he made for the price of the car and registration, varied between documents provided by the parties. The applicant’s submissions suggested that $1149.00[14] was owed for the car, although reconciliation by the applicant was difficult. The respondents’ submissions varied about the amount owed, from $1117.00 to $1653.00.[15]

    [10] Document B, attached to the response dated 16 May 2016

    [11] Document C, attached to the response dated 16 May 2016

    [12] Document H, amended civil dispute application, dated 16 February 2016

    [13] Australian Federal Police, case 5944564, document G attached to the applicant’s amended application, received 27 April 2016

    [14] Applicant’s amended civil dispute application, dated 16 February 2016

    [15] Respondents’ claim for unpaid debt for car ranged from $1117.00 to $1653.00 - compare letter from the third respondent to the applicant, dated 19 October 2015, attachment C to applicant’s amended civil dispute application, dated 27 April 2016 with schedule of repayments, attachment D, attached to respondent’s response dated 16 May 2016 and respondents’ submission dated 20 December 2016

  2. The contested issues are set out below:

    (a)What was the nature and terms of the arrangement between the parties?

    (b)What if any remedies including compensation are appropriate for the applicant, and against which respondents?

    (c)What if any remedies including compensation are appropriate for each of the respondents against the applicant?

Legislation

  1. The respondents contended that the arrangement with the applicant was a bailment contract for reward (the contract). The applicant contended that the Australian Consumer Law (ACL) applied to the contract and that the respondents had breached this law. This section summarises relevant law on bailment and on the ACL.

  2. In summary, there is a well-developed common law on bailment which is covered in most textbooks on contracts. The essence of a bailment is that possession of the thing, in this case the car, is transferred by consent from the bailor (in this case the respondent/s) to the bailee (the applicant in this case), and ownership of the thing remains with bailor.[16] Bailments can arise as a result of contract for sale.[17] Bailments for reward, in this case the payment of the price for the car, have more onerous standards of care by the parties than those not for reward for example when a thing is lent for no cost.[18] Contractual bailments are “governed not only by the law of bailment …but also by the …parties’ own contract.”[19] A bailor’s duty is to ensure that the thing is “fit for normal purpose.”[20] While it is not necessarily a bailee’s duty to insure the thing, the bailee’s possession constitutes an insurable interest.[21]

    [16] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 20.1, page 654

    [17] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 20.1, page 655

    [18] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 20.4, page 658

    [19] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 20.4, page 658

    [20] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 20.14, page 665

    [21] Respondents’ Submission, 20 December 2016, citing Ben McEniery, Contracts - Bailment, The Laws of Australia, TLA [8.5.530]

  3. Bailments can be terminated by virtue of a term of the contract for example the period of the bailment expires, or by agreement. The bailee under a contract for reward for a fixed term has a right to “quiet possession” of the thing bailed, unless that possession is “lawfully disturbed by the bailor (such as might occur if the bailee defaults)…”[22] The bailment can be terminated due to a bailee’s wrongful act, for example misusing or damaging the goods. However in such situations the bailment is not automatically terminated. The case of Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101 sets out that “the bailor merely gets the right to terminate it and then the right to retake possession of the goods, provided that can occur without a breach of the peace.”[23] A right to repossession can be exercised provided that it “does not involve a trespass on private property.”[24] If the bailor unlawfully disturbs the bailee’s possession under a contract for reward for a fixed term, the bailor may be liable for damages in “trespass, conversion and/or breach of contract.”[25]

    [22] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 20.12, page 664

    [23] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 20.21, page 669, citing Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101

    [24] Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101, per Sheller JA, Meagher JA concurring (a majority), paragraph 9, citing Blades v Higgs (1861) 10 BC (NS) 713 and a line of supportive authority

    [25] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 20.12, page 664

  4. Bailments under contract for reward may be subject to the ACL. The ACL is contained in schedule 2 of the Competition and Consumer Act2010 (Cth) and related regulations. The ACL applies in the ACT pursuant to section 7 of the Fair Trading (Australian Consumer Law) Act 1992. The Commissioner for Fair Trading (ACT) performs various functions under this Act including receiving complaints and investigating compliance.[26] Under this Act a reference to a court includes the ACAT.[27] The ACL applies to contracts for goods or services supplied by a supplier to a consumer, which is the case here.[28]

    [26] Fair Trading (Australian Consumer Law) Act 1992, section 33

    [27] Fair Trading (Australian Consumer Law) Act 1992, section 9

    [28] ACL, sections 2(1), 3

  5. ‘Unconscionable conduct’ by a supplier is prohibited,[29] and contraventions in this regard may attract pecuniary penalties[30] and/or damages payable to the consumer.[31] Unconscionable conduct by a supplier is indicated by a non-exhaustive list of matters set out in section 22 of the ACL, and includes “consideration of the manner in which …the contract is carried out…and is not limited to consideration of the circumstances relating to formation of the contract.”[32] Recent authorities note that unconscionable conduct is not conduct that is just “unfair or unreasonable, or what merely amounts to a hard bargain.”[33] Rather it “involves notions of serious misconduct…something which is clearly unfair or unreasonable, and requires that the deliberate actions of the wrongdoer show no regard for conscience…some moral fault …would be involved.”[34] Even if the consumer obtains less than full title, the ACL imposes a range of guarantees that cannot be excluded by contract, for example the supplier (even if for hire or lease only) “will not disturb the consumer’s possession” of the goods,[35] and for services a supplier will render “due care and skill”, and supply services that are “fit for purpose” and that are “supplied within a reasonable time.”[36]

    [29] ACL, sections 20-22

    [30] ACL, section 224

    [31] ACL, sections 227, 236, 244

    [32] ACL, section 21(4)(c)(ii)

    [33] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 6:43, page 182; Australian Competition and Consumer Commission v CG Berbatis Holdings and Others (2003) 197 ALR 153

    [34] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 6:43, page 184, citing Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682, per Gordan J at [113-115]

    [35] ACL, section 52(3) and (4)

    [36] ACL, sections 61-62

  6. The ACL provides for various consumer remedies against non-compliant suppliers, including damages for contraventions by the supplier[37] and non-pecuniary remedies such as a supplier publishing an advertisement.[38] The ACL includes offences for various contraventions.

    [37] ACL, part 5-2

    [38] ACL, section 246

  7. One of the respondents to the proceedings is a licensed motor vehicle dealer, namely, Solar Solutions International Pty Ltd, and holds Motor Vehicle Dealer Licence Number 17000568 trading as Braddon Auto Mart.[39] As such they are subject to the requirements that apply to a licensed dealer under the Sale of Motor Vehicles Act1977 (SMV Act). A contract, if it is a “hire purchase agreement” under the SMA Act,[40] is deemed to be a sale under the SMA Act (section 3). A requirement under the SMV is that a person shall not present as a dealer unless they are licensed and operating at the licensed premises.[41]

    [39] Public Register Business and Industry Licensing, ACT Office of Regulatory Services, search result, accessed 31 January 2016, at  Sale of Motor Vehicles Act 1977, section 6

    [40] Sale of Motor Vehicles Act1977, section 2 (Dictionary), section 3

    [41] Sale of Motor Vehicles Act1977, section 7

  8. The Commissioner for Fair Trading regulates licenses under the SMV Act. A corporation is eligible to hold a license if the executive officer, in this case the sole director, Ms Love, is a suitable person.[42] If the executive officer of a corporate licensee is not a suitable person this is grounds for occupational discipline.[43] Certain contraventions of the law by a licensed dealer are relevant to their suitability as a license holder.[44]

    [42] Sale of Motor Vehicles Act1977, section 9

    [43] Sale of Motor Vehicles Act1977, section 48

    [44] Sale of Motor Vehicles Act1977, section 2 (Dictionary), section 71, particularly section 71(7)(c)

  9. Where there are multiple parties allegedly liable for an alleged contravention of law, as was the case here, the issue of vicarious liability arises. In the case of Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101 there were four defendants in a case of an alleged assault on the consumer’s wife. It allegedly occurred when one of the defendants, who was the agent of Toyota, subcontracted another party to take possession of the car due to a breach of a hire purchase agreement. An individual who controlled the sub-contractor then attempted to repossess the car, and the wife of the consumer alleged she was assaulted by him. An issue in the case was whether any of the defendants were vicariously liable for any assault committed by the individual who controlled the sub-contractor.

  1. In the absence of any employment relationship between the defendants, the court in Toyota Finance Australia Ltd v Dennis considered the nature of the relationships between the defendants, particularly the level of control they had over the individual who allegedly committed the assault. In that case the Court unanimously found that, while Toyota had “delegated the task of …repossession”, it had not authorised any of the other defendants “to engage on its behalf in tortious conduct.”[45] (such as assaulting the consumer’s wife). In his judgment, Sheller JA cited as precedent the case of Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Company of Australia Ltd (1931) 46 CLR 41. Sheller JA distinguished the facts in Toyota Finance Australia Ltd v Dennis from those in Colonial Mutual Life Assurance Society Ltd where Dixon J did find vicarious liability as follows:

    …the liability of a master for the torts committed by its servant …is not imposed upon the appellant by the agency agreement [alone]…

    …

    In most cases in which a tort is committed in the course of the performance of work for the benefit of another person, he cannot be vicariously liable if the actual tortfeasor is not his servant and he has not directly authorized the doing of the act which amounts to a tort … The independent contractor carries out his work, not as a representative but as a principal. [However in this case] [a] difficulty arises when the function entrusted is that of representing the person who requests its performance in a transaction with others, so that the very service to be performed consists in standing in his place and assuming to act in his right and not in an independent capacity…[46]

Applicants’ contentions  

[45] Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101, Sheller JA, at [116]

[46] Colonial Mutual Life Assurance Society Ltd Dixon J,  pp48-49, cited in Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101, Sheller JA at [117]

  1. The applicant has the burden of proving his case on the balance of probabilities. His contentions on the three contested issues in paragraph 10 above are summarised below. Due to the nature of his allegations, particularly his claim that the respondents engaged in unconscionable conduct, the Tribunal has taken the view that the principle in Briginshaw v Briginshaw (1938) 60 CLR 386 applies. Professor Spender has explained that “Briginshaw is authority for the proposition that the more serious the allegation, the more weighty the evidence must be for the Tribunal to be satisfied that it is proven.”[47] The Tribunal has sought corroboration in the form of documentation or other evidence to support any oral evidence given by the applicant.

    [47] Kovac v The Australian Croatian Club Ltd [2014] ACAT 41 at [94]

  2. The applicant’s initial contentions in the proceedings were summarised in a letter from Youth Law Centre ACT to the respondents.[48] In the letter the legal basis for the arrangement was contested, whereby the registration of the car was not to be transferred to the applicant’s name until the debt had been repaid. In short, ownership of the vehicle was contested. Also the letter raised that the respondents had breached various guarantees under ACL and that the applicant may seek damages. At that stage, prior to repossession of the car, the letter proposed that firstly the applicant pay the balance of the debt owed for the car less the amount of the fines, and secondly that the car’s ownership be transferred to the applicant.[49]

    [48] Letter from Youth Law Centre to Braddon Auto Mart, dated 19 November 2015, attachment document D, amended civil dispute application, dated 16 February 2016

    [49] Letter from Youth Law Centre to Braddon Auto Mart, dated 19 November 2015, attachment document D, amended civil dispute application, dated 16 February 2016

  3. Since the car was not in the name of the applicant, the applicant argued that the respondents were liable for the fines. The applicant contended that the respondents’ continuing ownership of the car even after the applicant took possession of it meant that the respondents received all communications about registration for the car from the regulator. The applicant also contended that there was an agreement that the respondents would provide a service to maintain the registration of the car. The applicant and his partner, Ms Lynch, in their oral evidence denied ever receiving a document provided during the proceedings by the respondents titled ‘Terms and Conditions’, which states among other terms that “Registration is your responsibility.”[50] The document is not signed by either party, even though it has a format to allow for this.

    [50] Attachment to response – civil dispute dated 3 March 2016

  4. The applicant pointed out that whether he was in arrears or not, the respondents had paid for three renewals in 2014, in May, September and December 2014.[51] But the respondents failed to do so in a timely manner for the renewal due on 7 March 2015.[52] The applicant paid the registration fee to the respondents on 4 March 2015,[53] and this was received in the bank account of the first respondent on 5 March 2016, with the correct tax sales invoice number as the identifier, that is 5826.[54] However the respondents only paid the registration on 11 May 2015.[55] The applicant gave oral evidence that he rang the office of the respondents to advise them he had made the payment for registration, and although he did not speak to Ms Love he said he didn’t know he had to speak to Ms Love.

    [51] Repayment form, document C, attached to the response dated 16 May 2016

    [52] Statement of vehicle registration history, dated 2 May 2016, attachment E, response – civil dispute, dated 16 May 2016

    [53] NAB payment receipt, $280.00, dated 4 March 2015, attachment to applicant’s amended civil dispute application, dated 16 February 2016

    [54] NAB account balance summary, attachment G, response – civil dispute, dated 16 May 2016

    [55] Statement of vehicle registration history, dated 2 May 2016, attachment E, response – civil dispute, dated 16 May 2016

  5. After the applicant had begun these proceedings and days after a conference between the parties conducted by ACAT, the car was repossessed by the respondents (see paragraph 9 above). The letter from the respondents to the applicant dated 4 December 2015, in reply to their letter from Youth Law Centre, said “Could you please ask Craig to contact us immediately, return the car to Braddon Auto Mart….”[56] But the applicant contended that this was not a notice to repossess, and he did not know that the respondents intended to do so. The police incident report for the repossession event[57] described an incident lasting from 10:05am to 11am, “in the driveway of the premises”, that the applicant “refused” to hand over the keys so the car was removed by “dragging” it onto the tow truck and that “on one occasion the vehicle was moving when Ms Lynch [the applicant’s partner] was half inside removing property.”[58] The police described the incident as a “disturbance” involving a “verbal fight over the ownership of the car.”[59] The applicant and Ms Lynch gave oral evidence that they didn’t refuse to give over the keys, but in the stress of the repossession couldn’t locate them in a hurry. The police incident report says “keys to be dropped off at a later date”[60], and at a later date the applicant handed the keys over to the respondents.

    [56] Document E, applicant’s amended civil dispute application, dated 16 February 2016

    [57] Australian Federal Police, case 5944564, document G attached to the applicant’s amended application, received 27 April 2016

    [58] Australian Federal Police, case 5944564, document G attached to the applicant’s amended application, received 27 April 2016

    [59] Australian Federal Police, case 5944564, document G attached to the applicant’s amended application, received 27 April 2016

    [60] Australian Federal Police, case 5944564, document G attached to the applicant’s amended application, received 27 April 2016

  6. The applicant and his partner gave oral evidence that the repossession took place unexpectedly, on a work and school-day morning, lasted about an hour and caused the neighbours to observe the situation, indeed some neighbour’s cars were blocked from exiting the complex. They gave evidence that the event was embarrassing and very stressful to them.[61] They were inconvenienced in that they couldn’t pick up their child from school. They had to quickly purchase another vehicle, and they paid $1200.00 for this replacement vehicle. The applicant claimed that the respondents breached legal requirements for repossession and also trespassed on their private land. Ms Lynch gave evidence that she entered the car to retrieve their child’s personal items however the respondents were moving the car while she did this. After the car was repossessed, as mentioned above (paragraph 9) the applicant amended his application to include a claim arising from the repossession, being a claim for damages due to breaching the contract, breaching the ACL and unconscionable conduct.[62]

Respondent’s contentions

[61] Oral evidence of applicant and Ms Sarah Lynch, hearing 26 October 2016

[62] Amended civil dispute application, dated 16 February 2016

  1. The respondents’ contentions against the three issues listed in paragraph 10 above are summarised below.

  2. In the respondents’ initial response[63] they contended that the applicant signed a financial agreement for the vehicle, and made irregular payments. The respondents contended that they were not responsible for the payment of registration. They contended that they had a right to repossess the car and that it was an appropriate action given the applicant’s poor payment history.

    [63] Response – civil dispute, received 16 May 2016, attachment A

  3. After seeking legal assistance, the respondents filed an amended response. They contended that the only respondent relevant to the applicant’s claims is the third respondent, since that entity owned the vehicle at the time the applicant entered into a contract. In regard to issue (a), they contended that the arrangement between the parties was a “favour” and a “poor business deal”, and legally was a bailment “for reward and multiple advantage”[64]: “the signed document [tax invoice no 5826] recorded the negotiated agreement that the vehicle would be released to the applicant on the condition that the ownership of the vehicle would not transfer to the applicant until such time as the vehicle was paid in full.”[65] At the bottom of the tax sales invoice 5826 a paragraph titled ‘Acceptance of Contract’, was the sentence “Title is not transferable until all monies are paid in full” and the applicant had signed this section.[66] Ms Love gave evidence that she personally wrote up the tax sales invoice and the repayment form when the invoice was issued by Christopher Clearihan. Ms Love also gave oral evidence that she would have given the applicant the document titled ‘Terms and Conditions’[67] and explained these terms to him, even though she did not have a copy signed by the parties in her records. She gave oral evidence that she did not discuss the consequences of defaulting on payments with the applicant.

    [64] Respondents’ submissions, received 20 December 2016, page 4

    [65] Respondents’ submissions, received 20 December 2016, page 1

    [66] Tax sales invoice 5826, dated 13 February 2014, attachment B, response – civil dispute, received 16 May 2016

    [67] Attachment to response – civil dispute dated 3 March 2016

  4. The respondents contended that, at the request of the applicant’s partner, three payments to maintain registration were made by the respondents. Any unpaid contributions for registration were added to the debt owed by the applicant for the vehicle – two quarterly registration fees were unpaid by the applicant but paid by the respondents, and a third registration due 21 August 2014 was paid by the respondents on 8 September 2014 with the applicant re-paying the respondents for this registration fee on 16 September 2014.[68] The respondents contended that they were not responsible for payments for registration , and that this is consistent with the bailment contract terms and law on bailment. They also contended that the applicant did not communicate with the respondents about having forwarded money for payment of the registration in March 2015, and in any case even if he had his communication was too late to ensure it was registered.[69] On these bases the respondents contended that they have no liability for the fines due to the vehicle being unregistered and uninsured.

    [68] Statement of vehicle registration history, printed 2 May 2016, attachment E, response – civil dispute, received 16 May 2016

    [69] Respondents’ submissions, received 20 December 2016, page 2

  5. The respondents contended that the letter they received from the Youth Law Centre on behalf of the applicant, dated 19 October 2015, “amounted to a complete repudiation of the contract… [and that the contract was repudiated with] the complete failure to meet agreed payments and [the receipt by the respondents of the latter letter] …stating that no further funds were owed and the vehicle should be immediately transferred to the applicant.”[70] On this basis they contended that they had a right to repossession of the vehicle. Both Ms Love and Mr Clearihan attended the repossession, and Ms Love confirmed with attending police that the third respondent owned the vehicle.

    [70] Respondents’ submissions, received 20 December 2016, page 4

  6. In regard to issue (c), what remedies should be available to the respondents, they cross-claimed on the basis that the applicant breached the duties of the bailee. They contended that he did not return the vehicle in the same condition as it was delivered to him “ie cleaned and unmarked paintwork, working keys and registered.”[71] Their counter claim was in the sum of $5,587.44 damages plus out-of-pocket expenses, less the sale price of the vehicle once known.

Findings

Issue (a): What was the nature and terms of the arrangement between the parties?

[71] Respondents’ submissions, received 20 December 2016, page 4

  1. The Tribunal accepts the evidence of the respondents that the arrangement was a bailment contract for reward (refer to paragraphs 11 to 14 above). The Tribunal notes that the contract was signed by the applicant but not by another person, the applicant’s mother-in-law ‘Jo’, who is noted on the tax sales invoice as paying $125/week towards the repayments.[72] Neither party called Jo to give evidence. During the hearing all parties approached the matter as if the contract was valid. On this basis the Tribunal accepts that the bailment contract was valid, and repayment by the applicant was a total of $225/week (with the tax sales invoice noting that the applicant may be assisted in his repayments by his mother-in-law, Jo). While the agreement did not include explicit terms about what would happen if the applicant defaulted in his payments, and what the repossession procedure would be, this did not make the contract invalid.[73]

    [72] Tax sales invoice 5826, dated 13 February 2014, attachment B, response – civil dispute, received 16 May 2016

    [73] Downes v Smith [2014] QCATA 350

  2. While the respondents made no submissions disputing that the ACL applies here, in the interests of clarity the Tribunal finds that the ACL applies to the contract between the parties.

  3. The Tribunal accepts the evidence of the applicant that there was an orally agreed term to the contract that the respondents pay the registration. The ‘Terms and Conditions’ document was not signed by either party and therefore offers no guidance about the agreed terms of the bailment. The respondents’ behaviour in 2014 provides evidence in support of the applicant’s contention that the respondents agreed to be responsible for registration of the vehicle: the respondents made three payments for registration even though the applicant was in arrears and only paid the respondent for one of these registration fees. The applicant relied on this agreement for the registration payment due in March 2015, which he pre-paid using the correct identifier for his sales tax invoice. However, the March 2015 registration payment was not paid by the respondents until May 2015, a delay of two months, which the respondents should have known left the car unregistered and uninsured since they received the registration communications from the regulator.

  4. The Tribunal finds that it is irrelevant whether the applicant or his partner spoke to Ms Love to arrange this March 2015 payment – the respondents received the registration notices and knew when it was due or overdue, and there was an existing pattern of behaviour established in 2014 that the applicant relied on to confirm his view that it was a term of the contract that the respondents maintain the registration. It is irrelevant that the applicant could have made other arrangements for registration to be paid, a point that the respondents made. The fact is he did not, and the respondents knew that he had not. The applicant relied on the contractual agreement that the respondents would keep the vehicle registered.

  5. The arrangement between the parties was unusual in that there was no fees charged, no interest payable by the applicant, no express terms about the consequences of any default in payment by the applicant and no express end date to the contract. The Tribunal accepts the evidence of the respondents that they entered into the arrangement to be helpful to the applicant as a favour to the applicants mother-in-law Jo. However, this does not mean that the contract is beyond the law.

    Issue (b): What if any remedies including compensation are appropriate for the applicant, and against which respondents?

  6. The Tribunal set out a finding above that it was a term of the contract that the respondents were responsible for the registration. In not maintaining the registration of the car, the respondents breached various guarantees for service under the ACL, including lack of due care and skill, services and product not fit for purpose, and services not “supplied within a reasonable time.”[74] As a consequence of these breaches by the respondents, the applicant incurred fines due to the unregistered state of the car in May 2015 ($1398.00), and also the applicant and his partner paid for temporary registration for the car on 11 August 2015 in the sum of $24.00.[75]

    [74] ACL, part 3-2, sections 60-62

    [75] Statement of vehicle registration history, printed 2 May 2016, attachment E, response – civil dispute, received 16 May 2016

  7. For the breach of service guarantees under the ACL in regard to the term of the contract to maintain the registration of the car, the Tribunal awards the applicant damages in the sum of $1422.00 for his financial loss, being the sum of the fines that the applicant paid, plus the cost of re-registering the car to move it. More substantial damages due to these breaches of service guarantees might have been appropriate here. For example, it appears from the evidence that the applicant was unaware that the respondents’ payments for registration during 2014 were untimely, leaving the car also unregistered and uninsured at various times in 2014.[76] But the Tribunal takes into account that the arrangement was unusual and meant to be helpful to the applicant.

    [76] Statement of vehicle registration history, printed 2 May 2016, attachment E, response – civil dispute, received 16 May 2016

  8. If the respondents had not repossessed the vehicle in the manner employed (see paragraphs 25 to 26 above), it might have been that this would have been the end of the findings and orders in these proceedings. However, the respondents made a very serious error of judgement when they repossessed the vehicle in the circumstances of this case.

  9. Considering the law that applies to this repossession, the Tribunal finds that the National Credit Code and law does not apply to the arrangement between the parties because the respondents did not charge for providing the credit.[77] On this basis the Code’s requirements for repossession, asserted by the applicant, do not apply here.[78]

    [77] National Credit Code, section 5, schedule 1 National Consumer CreditProtectionAct 2009

    [78] National Credit Code, section 88(1)

  1. In regard to the repossession, the Tribunal finds that the respondents in repossessing the car breached further consumer guarantees under the ACL, breached the bailment contract and engaged in unconscionable conduct.

  2. The ACL provides for a consumer guarantee (even if for hire or lease only) that the supplier “will not disturb the consumer’s possession of the goods.”[79] The Tribunal finds that this guarantee was breached by the respondents. Even if the ACL did not apply here, under the law of bailment if the respondents had a right to repossess the car they were required to do so without trespassing and without causing a breach of the peace (see above paragraph 13). In this case the Tribunal finds that the respondents had no right of repossession. The bailment contract did not specify under what circumstances, if any, repossession might occur, and Ms Love’s oral evidence was that the consequences of a default were not discussed with the applicant when the contract was made. Despite this, the respondents entered the applicant’s driveway in order to repossess the car, they caused a disruption to the neighbourhood and they demonstrated risky behaviour by moving the car while the applicant’s partner was in it, according to the police incident report (see paragraphs 25 to 26 above).

    [79] ACL, sections 52(3) and (4)

  3. The Tribunal accepts the evidence of the applicant that no notice was given by the respondents to the applicant about the repossession. The Tribunal rejects the respondents’ contentions that they had given notice – the evidence shows that they merely requested that the applicant return the car. Also, the Tribunal rejects the contention by the respondents that the applicant repudiated the contract in the letter from the Youth Law Centre. Repudiation refers to an intention by a party (in this case the applicant) to “abandon altogether, or refuse performance of, the contract.”[80] On the contrary, the relevant letter from the applicant’s representative confirmed that there was a debt owed under the contract and it proposed an off-set in the sum of the fines paid by the applicant. The Tribunal finds that the respondents breached the bailment contract due to the repossession of the car.

    [80] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 7.34, page 210, citing Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623

  4. The Tribunal finds that the circumstances of the repossession demonstrate unconscionable conduct by the respondents under the ACL.[81] Unconscionable conduct is not defined in the ACL but, as explained above (see paragraph 15), can concern the conduct of the supplier after the arrangement was entered into.[82] It refers to “serious misconduct…something which is clearly unfair or unreasonable, and requires that the deliberate actions of the wrongdoer show no regard for conscience…some moral fault …would be involved.”[83]

    [81] ACL, section 21(1)(a)

    [82] ACL, section 22(1)(j)(iv)

    [83] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 6:43, page 184, citing Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682, per Gordan J [113-115]

  5. The circumstances of the repossession by the respondents in this case did not just involve attempting to gain possession of the keys in a parking lot, as occurred in the Toyota case. The police incident report confirms the applicant’s evidence that the respondents engaged in serious misconduct over an hour in duration, including entering the applicant’s driveway and removing the car from that location, risky behaviour by moving the car while the applicant’s partner was in it, and damaging the car by moving it without the keys. More specifically, the matters that the Tribunal takes into account in finding unconscionable conduct are as follows:

    (a)The consumer was required to comply with a condition, namely the repossession of the car, when it was “not reasonably necessary for the protection of the legitimate interests of the supplier”, given the matter was before ACAT and a relatively small percent of the price was owed on the car.[84]

    (b)The repossession in this case demonstrated a use of ‘unfair tactics’ in that it was a planned event by the respondents, but unexpected for the applicant, and involved the applicant facing an intimidating and publically embarrassing situation for an hour, aggravated by the fact that the respondents entered onto the applicant’s land to execute the repossession.[85]

    (c)The respondents did not disclose to the applicant their intention to repossess the vehicle, and the surprise nature of the repossession was unnecessary in all the circumstances and caused extra stress for the applicant.[86]

    (d)The repossession involved the respondents entering the applicant’s driveway and moving the vehicle while the applicant’s partner was trying to remove personal property from the car, demonstrating a disregard for foreseeable risks to the safety of the applicant and his family.[87]

    [84] ACL, section 22(1)(b)

    [85] ACL, section 22(1)(d)

    [86] ACL, section 22(1)(i)(i)

    [87] ACL, section 22(1)(i)(ii)

  6. There remains the question of the appropriate remedies that apply here, given the Tribunal’s findings above. Firstly, the order about ownership is considered. The Tribunal finds that title to the car never passed to the applicant, so an order to confirm the ownership by the third respondent is technically redundant. If the Tribunal is incorrect about this finding about title to the car, in the alternative the Tribunal accepts that the applicant notified the respondents in his amended application that remedying the failure of the respondents to comply with the consumer guarantees by returning the car was rejected by him, due to the possible damage caused to the car during repossession. On this basis, if title ever was held by the applicant, upon repossession it re-vested with the respondents.[88] In either case, for clarity the Tribunal makes an order that the third respondent holds title to the car and is at liberty to dispose of it in any way they see fit.

    [88] ACL, section 263

  7. Secondly, the applicant seeks damages for his economic loss for the respondents’ breaches of guarantees of service to maintain the registration of the car and for breaches of contract. As the Tribunal set out earlier (see paragraph 39 above), the Tribunal awards damages in the sum of $1422.00.

  8. Thirdly, the applicant seeks a refund of money paid for the car by the applicant.[89] The Tribunal finds that the applicant has validly notified the respondents that he rejects the car under section 259(3) of the ACL because the car has been repossessed and is likely damaged due to the nature of the repossession. The Tribunal finds that the applicant has elected to have a refund of any money he paid for the car under section 263(4) of the ACL. The Tribunal notes the many varied submissions, including by the respondents themselves about the total sum that the applicant had paid for the car before its repossession. The respondent’s submissions vary about how much was paid for registration,[90] and the document relied on by the respondents for their final claim of $1653.00 outstanding does not show the payment of $200.00 on 13 December 2014.[91] It is surprising that the respondents who conduct the business of selling cars have such poor records, indeed one critical record is hand-written. This state of affairs with their records raises a question about the compliance of their systems with requirements under the SMV Act.[92]

    [89] ACL, section 261(d)

    [90] Compare attachment C with document F in the applicant’s amended civil dispute application

    [91] Letter to applicant from the third respondent, dated 19 October 2015, attachment C to applicant’s amended civil dispute application, dated 27 April 2016

    [92] See section 38(2)(b) of the SMV Act

  9. The Tribunal has relied on the hand-written version of the repayment form of the respondents[93] since it reconciles best with all the evidence about repayments. This document shows that the price the applicant paid for the car ($3999.00) and the four registration payments ($1042.00) came to a total of $5041.00. This document also shows that the applicant owed $1117.00, including for any unpaid registration, when he stopped payments due to this dispute and at repossession. So the applicant had paid the respondents a total of $3924.00. In assessing the amount of the refund, the Tribunal finds that the applicant should not be refunded the cost of the registration since he was the user of the car, so the refund is the sum he paid for the car less the registration costs, being $2882. The Tribunal makes an order that the applicant be refunded the sum he paid for the car, being $2882.00 under section 263(4)(a)(i) of the ACL.

    [93] Document G, applicant’s civil dispute application, dated 16 February 2016

  10. The applicant also seeks further damages due to the repossession. The Tribunal set out above that the repossession was a breach of customer guarantees under the ACL, the contract and demonstrated unconscionable conduct by the respondents. While pecuniary penalties can be imposed for unconscionable conduct, preference is to be given to compensating victims of the conduct. The Tribunal prefers to award damages to the applicant.[94] However, the Tribunal finds no basis for further damages beyond those set out above and in the orders. Under the ACL, it is not clear that non-economic loss or exemplary damages can be awarded.[95] Under contract law, damages are intended to “put the innocent party into the position [they] would have been in had the contract been properly performed.”[96] The Tribunal is of the view that under contract law there is no basis for further damages beyond those set out above and in the orders. If the Tribunal was satisfied there was a trespass to the applicant’s land, then this would provide a basis for further damages of a non-economic nature since the tort of trespass is “actionable per se.”[97] While there may have been a trespass, the applicant did not specifically address this issue in proceedings and the Tribunal cannot be satisfied that there was a trespass on the evidence before it.

    [94] ACL, section 236

    [95] Marks v GIO Australia Holdings Ltd (1998) 196 CLR 949

    [96] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 7.47, page 220, citing Robinson v Harman (1848) 1 Ex 850

    [97] Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 22.5, page 733

  11. Finally considering the liability of each of the respondents, the Tribunal notes that the entities that the consumer was contracted to and then transacting with was confusing for the consumer, and not transparent. He was an inexperienced consumer and perceived his dealings as being with two individuals, the second respondent being Christopher Clearihan, and Cheryl Love who is the sole director of the third respondent. Both these individuals were at the premises of Braddon Auto Mart yard when the contract was signed by the applicant, and were present at the repossession of the car.

  12. The Tribunal accepts the evidence of the respondents that the third respondent was and remains the owner of the vehicle. However, the first correspondence in evidence from the third respondent to the applicant in relation to the contract is a letter from Cheryl Love dated 19 October 2015, although a later letter, the reply to letter from Youth law Centre, dated 4 December is simply headed Braddon Auto Mart with the License Motor Vehicle number shown. Importantly, the tax sales invoice showed the party to the bailment to be the first respondent, the second respondent, Christopher Clearihan, is the sole director of the first respondent and is included as a respondent on this basis. The first and second respondents are not licensed motor dealers, and it may be that they have held themselves out to be the dealer and breached section 7 of the SMV Act. In any case, it appears that the third respondent had an arrangement with the first respondent and/or the second respondent, Christopher Clearihan, to sell its vehicles. Both the second and third respondents use the trading name Braddon Auto Mart, and Ms Love described Christopher Clearihan, as her “business and personal partner” in 2014 in her statement dated 10 October 2016. This was not a hands off arrangement as occurred in the Toyota case (see paragraphs 19 to 20 above), since the sole director of the third respondent, Cheryl Love, worked closely with the first and second respondents, and indeed prepared the contract documents at the time the contract was signed. On this basis, the Tribunal finds that the third respondent is vicariously liable for any breaches of legislation or of the general law by the first and second respondents, and vice versa.

  13. While no respondents had a right to repossess the vehicle, the third respondent was its owner and the first respondent was the supplier under the contract. When the repossession took place, the sole directors of the first and third respondents were present and actively guiding the repossession. On this basis, the Tribunal finds all respondents liable for breaches due to the repossession, and if this view is not preferred then each is vicariously liable to the other for breaches of the law.

  14. A sale by a non-licensed entity at the premise of Braddon Auto Mart (refer to paragraph 53 above) is a matter that may be a contravention of the SMV Act and relevant to the suitability of the third respondent, whose sole director prepared the documents, to hold a motor dealers licence.[98] The evidence before the Tribunal raises questions about the compliance of the respondents systems with requirements under the SMV Act, as mentioned above (refer to paragraph 49). The manner of the repossession is a contravention of the ACL as set out above (paragraphs 40 to 46), and may also be an offence under the ACL. Given the latter, this decision and reasons are being referred to the regulator in the ACT for the SMV Act and the ACL, the Fair Trading Commissioner, for their information, investigation and follow-up as necessary under the SMV Act and ACL.

    Issue (c): What, if any, remedies including compensation are appropriate for the respondents?

    [98] Sections 48(1),71(7)a)

  15. Given the findings above, it follows that the Tribunal rejects the respondents’ cross claim. It is the respondents, not the applicant, who breached the contract, as the Tribunal has set out in its findings above.

Summary of findings and orders

  1. The Tribunal finds that:

    (a)there was a bailment contract for reward between the applicant and the respondents, there was no credit contract;

    (b)a term of the contract was that the respondents maintain registration of the vehicle which they did not, and they therefore breached the contract and also guarantees for service under the ACL;

    (c)the respondents repossession of the vehicle was a breach of the contract and also of guarantees under the ACL;

    (d)the respondents had no right to repossession and repossessed the car in circumstances that amount to unconscionable conduct;

    (e)there is insufficient evidence for the Tribunal to be satisfied that the  respondents trespassed on the applicant’s land, and so there is not a basis for awarding damages for non-economic loss without further evidence; and

    (f)the respondents are jointly and severally liable for the paying the applicant a refund of the money he paid for the car, damages for the fines he paid and a related expense he incurred, and re-imbursement for his filing fee and search fee.

  2. The Tribunal orders as follows:

    1.The third respondent holds title to the car and is at liberty to dispose of it in any way they see fit.

    2.The respondents are to pay the applicant damages of $1422.00.

    3.The respondents are to refund the applicant $2882.00.

    4.The respondents are to pay the applicant’s filing fee of $140.00 and search fee of $9.00.

    5.The respondents will comply with orders 2, 3 and 4 by close of business 26 May 2017 by transferring the total sum of $4453.00 to a bank account which the applicant advises them of. 

………………………………..

Senior Member L Beacroft

HEARING DETAILS

FILE NUMBER:

  XD 181/2016

PARTIES, APPLICANTS:

Craig Michael Kauffman

PARTIES, RESPONDENT:

Braddon Automart Pty Ltd (1st resp), Christopher A Clearihan T/A Braddon Auto Mart (2nd resp) and Solar Solutions International Pty Ltd (3rd resp)

COUNSEL APPEARING, APPLICANT

N/A

COUNSEL APPEARING, RESPONDENT

N/A

SOLICITOR FOR APPLICANT

Self-Represented

SOLICITOR FOR RESPONDENTS

Milford Haseldine and Williams, Solicitors and Accountants

TRIBUNAL MEMBER:

Senior Member L Beacroft

DATE OF HEARING:

26 October 2016

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