Ladner v All Boats Business - [2010] WADC 162

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: LADNER -v- ALL BOATS BUSINESS [2010] WADC 162

CORAM: REGISTRAR KINGSLEY

HEARD: 27 JULY 2010

DELIVERED : 4 NOVEMBER 2010

FILE NO/S: CIV 885 of 2010

BETWEEN: MURRAY JOHN LADNER
Plaintiff
AND
ALL BOATS BUSINESS
Defendant
TORELLA PTY LTD
Third Party

Catchwords:

Practice - Rules of the Supreme Court 1971 O 14 - Sale of Goods Act 1895 - Sale of stolen boat - Market overt

Legislation:

Sale of Goods Act 1895

Result:

Judgment for the plaintiff

Representation:

Counsel:

Plaintiff:     Mr A Musikanth
Defendant:     Mr B Ashdown
Third Party  :     No appearance

Solicitors:

Plaintiff:     Holborn Lenhoff Massey
Defendant:     D'Angelo Legal
Third Party  :     Avon Legal

Case(s) referred to in judgment(s):

Bishopsgate Motor Finance Corp Ltd v Transport Brakes Ltd [1949] 1 All ER 37
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Lee v Bayes (1856) 18 CB 599
Leonard v Ielasi (1987) 46 SASR 495
Lyons v De Pass (1840) 11 Ad & E 326
Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890
Morgan v Pallister [2004] WASC 188
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109

REGISTRAR KINGSLEY:

The pleadings

The plaintiff pleads that the defendant carries on business as a boat dealership. In January 2009 the defendant agreed to sell to the plaintiff a Whitleys Cruise Master 700 boat (the boat) for the sum of $90,000. The plaintiff pleads that the agreement was in writing and that there were implied conditions that the defendant had the right to sell the boat and the plaintiff would enjoy quiet possession of the boat.
The plaintiff paid $90,000 to the defendant and took possession of the boat. All this is admitted by the defendant. However, it appears the boat had been stolen and in January 2010 the boat was seized from the plaintiff by Queensland police. The plaintiff pleads the defendant is liable to repay the sum of $90,000 to the plaintiff.
The defendant pleads that it purchased the boat from Torella Pty Ltd (Torella) in April 2008 for the sum of $85,000. At the time of that purchase, the defendant became possessed of the boat, trailer, registration documents for the boat including a registered hull identification number (HIN), a duly executed transfer of the boat, the registration documents for the trailer and a duly executed transfer of the trailer and its registration. In August 2008 the defendant sold the boat to a third party and in January 2009 the defendant purchased the boat back from that third party.
The defendant pleads that at all material times, prior to 8 January 2010 the defendant did not know, and was otherwise unaware, that the boat and/or its trailer was stolen.
The defendant goes on to plead that pursuant to s 22 of the Sale of Goods Act 1895 (WA) (SGA), or at law, the defendant obtained good title to the boat and trailer and, again pursuant to s 22 of SGA, or alternatively at law, the plaintiff obtained good title to the boat and the trailer.
The defendant has issued a third party notice directed to Torella Pty Ltd.

The application for summary judgment

The plaintiff has brought an application pursuant to O 14 Rules of the Supreme Court 1971. That application is supported by the plaintiff's affidavit sworn 13 May 2010. The plaintiff deposed he never inspected the engine number or identification of the vessel, believing he had brought the boat from a reputable dealer. The boat was registered in WA with the HIN AU-TwA043927AM8.
The plaintiff deposed that he had been informed by the defendant's staff that checks had been completed to ensure that no monies were owing on the boat and that it was not stolen.
In January 2010, the plaintiff received a phone call from a detective sergeant from the Perth Motor Squad regarding an anomaly with the boat's HIN and the plaintiff agreed to allow the detective sergeant to inspect the boat. Approximately two weeks later the detective sergeant told the plaintiff he had a search warrant for the search and seizure of the boat. Subsequently, the police advised the plaintiff that the police had located the hidden HIN of the boat which confirmed that the boat was stolen. It appears that at the date of manufacture the boat's HIN is stamped within the boat in an unknown, at least to the general public, location.
The defendant opposes the application and through Yilmaz Yahiya (Yahiya) has filed an affidavit sworn 21 June 2010. Yahiya deposes that the business premises from which the boat was sold consists of an external yard and parking area in which boats for sale and their trailers are displayed and are visible both inside and outside of the defendant's premises. Yahiya deposes that the standard trading hours are Monday to Friday 8.30 am to 5.30 pm and Saturday 8.30 am to 4 pm and Sunday 10 am to 4 pm.
Yahiya goes on to depose that he purchased the boat and trailer from Torella Pty Ltd. On the day of purchase, he instructed his receptionist to phone the Department of Consumer and Employment Protection's Register of Encumbered Vehicles Search (REVS) to check the HIN revealed on the WA registration documents. That search showed the boat was not recorded as being encumbered or stolen. Yahiya deposes that the defendant sold the boat and trailer to a third party and that sale occurred during the normal hours for trade for the defendant's business and at a time when it was daylight. Yahiya deposes that about five months later the third party brought the boat and trailer back to the defendant's premises and the defendant purchased the boat and trailer, that purchase occurring at the defendant's premises during the normal hours of trade and when it was daylight.
Yahiya deposes that the defendant sold the boat and trailer to the plaintiff for the sum of $90,000, such sale occurring during the normal hours of trade for the defendant's business and at a time when it was daylight. Until the boat and trailer were seized on 8 January 2010, Yahiya deposes that he was unaware that the boat and trailer had been, or were alleged to have been, stolen.
Yahiya is informed by Detective Sergeant Ziser of the Queensland police that Jonathon Grant Constance (Constance) had been charged with stealing the boat and trailer but to date there has been no trial or conviction of that person in respect of the charge.
Yahiya deposes that the Boating Industry Association of Australia maintains a register of stolen boats and that the defendant is a member of that industry association. From time to time the association sends notices to its members alerting them that a boat has been stolen. Yahiya deposes that the defendant has not received any notification from the industry association advising that the boat was stolen. On 1 February 2010, Yahiya conducted a further search of the WA REVS database with respect to the boat and that search did not indicate that the boat was stolen.
In an affidavit sworn 19 July 2010, Benjamin Ashley Jackson, the solicitor for the plaintiff, deposed to and attaches email correspondence from the organised crime investigation unit of the Queensland police. That email correspondence from Detective Sergeant Ziser dated 12 July 2010 discloses that Constance had been charged with respect to the theft of the boat. Ziser, in his email, also states that the original HIN is pressed into the transom of the boat. The original HIN was AU-CRU3303D606. The allegation is that the boat was 'rebirthed' with a new HIN of AU‑CRUS8300D606.
All the evidence points to the fact the boat was 're-birthed'. The evidence is the original HIN was AU‑CRUS3303D606 (the original HIN). The contention is that the boat was re-birthed in Queensland with a HIN of AU‑CRUS8300D606 (the re-birthed HIN). It was only until the police ascertained the original HIN, which is hidden in the transom of the boat and unknown to the plaintiff and defendant, that the police ascertained that the boat was in fact stolen.
Subsequent to the hearing of the summary judgment application the defendant sought to admit into evidence the affidavit of Lucas di Placido sworn 29 July 2010. The plaintiff's solicitors consented to di Placido's affidavit being admitted into evidence. I gave counsel for both parties time to file and serve supplementary submissions.
Di Placido, in his affidavit, deposes he is a director of Torella. Torella is a retailer of motor vehicles. In December 2007 Torella had a Holden Monaro for sale. Di Placido deposes he received an enquiry from Constance that he wanted to trade the boat and trailer for the Monaro.
In January 2008 an agent for Torella and Constance went to the Queensland Transport Office and the formal documentation to transfer the boat to Torella was completed. Attached to di Placido's affidavit is the Queensland transport particulars of registration. I am not informed as to the details of the request but the particulars of registration dated 7 January 2008 show a HIN of AU‑CRUS830D606 – suggestive of the re‑birthed HIN but with a missing digit. As a consequence Torella acquired the boat and released the Monaro, and a sum of money, to Constance.
It is fair to say this action is one of those unfortunate situations in which an innocent party will be out of pocket.

Section 21 Sale of Goods Act

The starting point in s 21 SGA which provides that:
Where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell.
Section 21 SGA encapsulates the nemo dat quod non habet rule that no one can pass a better title than he himself has. Where goods are stolen, property in the goods remains with the owner, notwithstanding any intermediate dealing.
There are some exceptions to the nemo dat rule, the relevant exception in this action being a statutory estoppel. Section 21(a) SGA provides that the owner of the goods may, by their conduct, be precluded from denying the seller's authority to sell. In that case good title passes.
The defendant's counsel submits that the boat was registered in WA under the Navigatable Waters Regulations 1958 and all appropriate Western Australian registration documents were issued. Further the original owner made no notification or lodged any details of the theft with either the Western Australian or Queensland REVS system, notwithstanding the allegation the boat was stolen.
In support defendant's counsel cites Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890 for the proposition that a reasonable man, in the position of acquirer of property would expect the owner, acting honestly and responsibly if he claimed title in the goods, to take steps to make that claim known to and discoverable by the acquirer. This test was criticised by Johnston J in Leonard v Ielasi (1987) 46 SASR 495. In Leonard's case the owners of a motor vehicle permitted a third party to remain in possession of the owner's vehicle notwithstanding the owners knew the third party had dishonestly registered the vehicle in his name.
Thus defendant's counsel submits the original owner had failed to act to bring the alleged theft to notice and is thereby estopped. In Leonard's case the owner of the vehicle was aware that the third party had dishonestly transferred the registration into his name and continued to allow the third party to have possession of the vehicle.
In my opinion the onus is on the defendant to engage the estoppel. It is for the defendant to show that the original owner has not, acting honestly and responsibly, taken steps to make the fact of the theft discoverable by the acquirer. The difficulty here is that the original owner was only aware of the original HIN. There is no evidence that the original owner has taken the step of notifying the Queensland REVS. But even if the original owner had, it would not be discoverable by the acquirer. This is because the boat was registered in Queensland in the re-birthed HIN.
The evidence of the plaintiff in his affidavit sworn 13 May 2010 at par 22 and that of Jackson sworn 19 July 2010 with the email attachments points to the inference that the boat, having been stolen, could not have been owned by the defendant as at 11 January 2009. Further, there was nothing that the original owner could have done to bring to the attention of a subsequent acquirer that the boat had been stolen. This is because the original owner could only circulate the original HIN known to him.

Section 22 Sale of Goods Act

The defendant in its submissions raises s 22 SGA that the sale of the boat was in a market overt. Section 22 provides that:
Where the goods are sold in market overt according to the usage of the market the buyer acquires a good title to the goods provided he buys them in good faith and without notice of any defect or want of title on the part of the seller.
Defendant's counsel submits that at the time of the adoption of the market overt rule in Western Australia, the rule applied to all shops in London. Defendant's counsel submits that the rule applies to all shops in Perth. Defendant's counsel cites Lyons v De Pass (1840) 11 Ad & E 326 for the proposition that a sale within the city of London in an open shop is a sale in a market overt. Lee v Bayes (1856) 18 CB 599 provides that the custom that every shop in London is a market overt only extends to shops situated within the boundaries of the City of London and not, for example, to those shops in The Strand.
Plaintiff's counsel casts doubt upon the proposition that there was any market or other place in Australia which constitutes a market overt. Even if there was a market overt in Western Australia it would be confined, on the defendant's submissions, to shops in Perth. This must be taken to mean shops within the City of Perth. The defendant's premises are located in the suburb of Kingsley.
I have significant doubts that there is a market overt in Western Australia, but if there could be, in my opinion, it would be confined to the City of Perth.
In any event, on the authority of Bishopsgate Motor Finance Corp Ltd v Transport Brakes Ltd [1949] 1 All ER 37 the market must be legally constituted as a general market. There is no evidence to suggest the defendant's premises have been legally constituted as a general market.
Accordingly, I am of the opinion that s 22 SGA affords no defence to the defendant.

Section 24 Sale of Goods Act

Also raised in submissions is s 24 SGA which provides that conviction of the thief re-vests the property in the stolen goods in the original owner. The pre-conditions to re-vesting are that the goods have been stolen and the offender is prosecuted to conviction. The re-vesting will then occur, notwithstanding any intermediate dealing with the goods whether by sale in market overt or otherwise.
While Constance has been arrested and charged in Queensland, he has yet to be prosecuted to conviction.
However in my opinion the defendant did not have authority of the owner to sell the goods and, in my opinion, the owner has not by his conduct raised statutory estoppel.

Authorities on Order 14 Rules of the Supreme Court

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 remains the authority for the prosecution that the power to order summary judgment should be exercised with great care and should never be exercised unless it is clear there is no real question to be tried. The plaintiff carries the burden of persuading the court that the claim is a good one, that there is no defence and therefore judgment should be entered (Morgan v Pallister [2004] WASC 188).
Where the plaintiff has satisfied the requirements of O 14, the burden shifts to the defendant to satisfy the court why judgment should not be entered. The defendant must satisfy the court that there is an issue or question in dispute which ought to be tried (Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109).

Conclusion

In my opinion the defendant has not raised any triable issue and therefore the plaintiff should have judgment for the amount claimed, together with interest, and costs, on the action and on the application.