Morrie Muller (NSW) Pty Ltd v Director General, Department of Fair Trading
[2002] NSWADT 163
•09/10/2002
CITATION: Morrie Muller (NSW) Pty Ltd & anor -v- Director General, Department of Fair Trading [2002] NSWADT 163 revised - 12/09/2002 DIVISION: General Division PARTIES: 1. APPLICANT
Morrie Muller (NSW) Pty Ltd t/as Muller Motor Auctions
2. APPLICANT
Morris Martin Muller
RESPONDENT
Director General, Department of Fair TradingFILE NUMBER: 013238 HEARING DATES: 16/11/01, 07/02/02, 08/02/02, 13/03/02 SUBMISSIONS CLOSED: 03/13/2002 DATE OF DECISION:
09/10/2002BEFORE: Higgins S - Judicial Member APPLICATION: Motor Dealer - impose disqualification of licence - Motor Dealers Act - motor dealer - impose disqualification of licence MATTER FOR DECISION: Principal matter LEGISLATION CITED: Administrative Decisions Tribunal Act 1997
Auctioneers and Agents Act 1941
Evidence Act 1995
Motor Dealers Act 1974
Motor Dealers Regulation 1999
Property, Stock and Business Agents Act 1941
Sale of Goods Act 1923CASES CITED: REPRESENTATION: APPLICANTS:
K Earl, barrister on 16 November 2001, 7 February 2002 and 8 February 2002.
M Muller, agent, on 13 March 2002
RESPONDENT
C Ronalds, barristerORDERS: 1. That the decision of the Director-General to disqualify the applicant company from being the holder of a motor dealers licence be set aside. ; 2. That the decision of the Director-General to disqualify Mr Muller from being the holder of a motor dealers licence, or being involved in a company that holds such a licence for 5 years be set aside.
Introduction
1 On 8 October 2001, Mr Muller applied to the Tribunal pursuant to s.20F(c) of the Motor Dealers Act, 1974 (“the Act”) and s.38 of the Administrative Decisions Tribunal Act, 1997 for a review of the decision of the Director General, Department of Fair Trading (“the Director-General”) to disqualify his company, Morrie Muller (NSW) Pty Ltd (“the company”), from being the holder of a motor dealers licence and to disqualify him personally from being the holder of such a licence, or being involved in a company that holds such a licence, for 5 years. The grounds on which the Director General made his decision was Mr Muller’s and the company’s failure to comply with certain record keeping and notice provisions of the Act.
2 At the time of filing the application to the Tribunal, Mr Muller and the company made an application for an urgent stay of the Director General’s decision. That stay was granted on 9 October 2001, subject to conditions, and has been extended each time the matter has been before the Tribunal.
3 In 1971, Mr Muller established the company for the purpose of trading as a licensed motor dealer under the name of Mullers Motor Auctions. Mr Muller had previously been the principal of another corporate entity that was involved in selling second-hand motor vehicles.4 Mr Muller has always been the principal of the company and the company has always had a full dealer’s licence in that it was able to buy, sell or exchange any type of vehicle. However, it was not able to act as a Car Market Operator as defined under the Act. It has always traded from the same premises.
5 On 17 July 2001, Mr Wright, a team leader of the Licensing Investigations Unit of the Department, attended the premises of Mullers Motor Auctions together with some other Departmental officers. Mr Muller was not in attendance at the time, but his secretary/office staff was.
6 Mr Wright conducted an inspection of the vehicles that were at the business premises of Mullers Motor Auctions and found the following:
7 Following the inspection on 17 July 2001, Mr Wright conducted further investigations and found additional breaches committed by the company under the Act.
(a) Two vehicles were displayed for sale on the lawn area in front of the premises, which did not form part of the business premises to which the motor dealer’s licence was attached;
(b) Twenty eight vehicles on the premises did not have attached to them the prescribed notice for vehicles that are offered for sale;
(c) There were twenty omissions in the register prescribed under s.21(3) of the Act; and
(d) There was no consignment register at the premises as required under s.21A of the Act.
8 On 28 August 2001, the Director-General wrote to Mr Muller enclosing a notice to show cause, which stated that the Director-General had reasonable grounds to believe that the company had:
9 On 11 September 2001, the company and Mr Muller, through their lawyers, responded to the Director General’s notice to show cause. That response addressed each of the issues raised. It was acknowledged that the company did not keep a separate consignment register. However, such transactions were recorded in the “police book”, also known as a “Form 2” register. It was their understanding that this was the proper procedure. Failing to have particular notices on vehicles at the time of Mr Wright’s inspection was also acknowledged, but this they stated was for a reason. And that reason was that the vehicles had been prepared and were awaiting delivery to Alliance Motor Auctions at 10.30am that morning for auctioning by Alliance. As Mr Wright arrived at 9.45am, the cars were not taken to the auction on that day. The response further emphasised that Mr Muller had been involved in the industry as a car dealer for over 35 years, during which time he had seen many changes in the regulatory system. It was noted that the company had purchased a new computer package called “Easy Cars” which would be installed and used in the future to ensure that there was future compliance with the Act.
(a) failed to pay trust moneys, into a trust account, contrary to s.29E of the Act. In this regard, the notice gave details of four transactions, in which it was alleged that the vehicle the subject of the transaction was sold on consignment without the use of a trust account;
(b) accepted vehicles on consignment and did not keep a separate register for such vehicles as required by s.21A of the Act;
(c) offered for sale two vehicles at premises which were not the premise to which the licence had been granted, contrary to s.23A(1) of the Act;
(d) displayed for sale, second-hand motor vehicles without attaching, or causing to be attached, to the vehicle in the prescribed manner a notice containing the prescribed particulars in relation to the vehicle as required by s.24(2) of the Act. In this regard the notice gave details of ten vehicles which were offered for sale and which did not have the requisite notices at the time of Mr Wright’s inspection;
(e) failed to provide purchasers with the prescribed form which advises purchasers about their rights in respect of the statutory warranty that is contained in s.27(1) of the Act. In this regard, the notice gave details of one transaction in which the prescribed form had been completed but not signed by the purchaser of the vehicle.
10 On 25 September 2001, the Director General again wrote to Mr Muller advising him that he was satisfied on the balance of probabilities that the grounds stated in the notice to show cause had been substantiated against the company and that he had determined that:
The Legislation
(a) pursuant to s.20E(1)(f) of the Act, that the company’s motor dealer licence be cancelled; and
(b) pursuant to s.20E(1)(d) of the Act, that Mr Muller be disqualified from holding a motor dealer’s licence, or from being concerned in the direction, conduct or management of a business for the carrying on of which a motor dealer’s licence is required for a period of five years.
11 Division 1 of Part 2 of the Act prohibits a person from carrying on or advertising the business of a motor dealer unless the person is the holder of a dealer’s licence. A person who does engage in such an activity is guilty of an offence and subject to prosecution. Section 9 of the Act creates various offences in this regard.
12 The term “dealer” is defined to mean:
13 The term “dealer’s licence” is also defined in s.4 to mean a dealer’s licence granted under s.12 of the Act.
“A person who carries on the business of buying, selling or exchanging motor vehicles, but does not include a financier”.
14 The terms “buy” and “sell” are also defined in s.4 as follows:
15 Division 2 of Part 2 of the Act provides for the application for, and issue of, a dealers licence.
“ Buy means buy as principal or agent.
Sell means to sell as principal or agent”.
16 Division 3 of Part 2 of the Act provides for disciplinary proceedings that may be taken by the Director General against a license holder.
17 Section 20D makes provision for the Director General to issue to the licence holder a notice to show cause. So far as is relevant that section provides as follows:
18 Section 20E of the Act makes provision for the Director General to make a determination as to what disciplinary measures should be taken against the licence holder where a notice to show cause has been issued under s.20D(1). This section, so far as is relevant, provides as follows:
“s.20D(1) where, at any time, the Director General is of the opinion that there are reasonable grounds for believing that:
(2) …” (underlining added)
(a) a licence may have been improperly obtained or, at the time a licence was granted, there may have been grounds for refusing to grant it,
(b) the holder of a licence has been convicted of an offence against this Act or the regulations or any other enactment administered by the Minister,
(c) the holder of a licence may have failed to comply with this Act or the regulations, a condition or restriction to which the licence is subject or an order of the Commercial Tribunal applicable to the holder,
(d) the holder of a licence has, within the period of ten years that last proceeded the grant of the licence, been found guilty of an offence involving fraud or dishonesty punishable on conviction by imprisonment for three months or more,
(e) the business to which a licence relates is being carried on in a dishonest or unfair manner,
(f) if a person were not the holder of a licence the Director General would be required under s.12(2) of s.12(4) to refuse the application by the person for a licence,
(g) in the case of a holder of a dealer’s licence (being a body corporate dealer’s licence), the holder:
or may, for any other reason be unable or is likely to become unable to meet the holder’s liabilities.
(i) is in the course of being wound up,
(ii) is under official management,
(iii) is a body corporate in respect of which a receiver or manager has been appointed, or
(iv) has entered into a compromise or scheme of arrangement with its creditors,
(h) The holder of the licence has, for a period of one month or more, ceased to carry on the business to which the licence relates at the place of business to which the licence relates.
(i) The holder of the licence is contravening another Act or an instrument made under another Act by carrying on the business to which the licence relates at the place of business to which the licence relates, or
(j) The holder of a licence is, for any other reason not a fit or proper person to continue to hold a licence,
the Director General may, by notice in writing served on the holder of the licence, call upon the holder to show cause, within such period, being not less than fourteen days, as is specified in the notice, why the holder should not, for the reasons specified in the notice, be dealt with in accordance with this division.
19 Parts 3, 4 and 4A of the Act contain various record keeping and notice requirements that a licensed motor dealer is required to comply with as part of that persons motor dealing business. The record keeping requirements are intended to ensure that the licence holder retains a contemporaneous record of all motor vehicles that are bought and sold by the business, be it as principal or agent. The notice requirements are intended to ensure that consumers are provided with sufficient information about a vehicle so that they can make an informed choice about the vehicle they purchase. A summary of these record keeping and notice requirements are set out below.
“20E(1) If, after compliance with s.20D, the Director- General is satisfied that any matter referred in s.20D(1) has been established, the Director-General may do any one or more of the following:
(1A) …
(a) reprimand the holder of the licence,
(b) require the holder of the licence to comply within a specified time under a requirement specified by the Director-General,
(c) suspend the licence for a period not exceeding twelve months,
(d) disqualify the holder of the licence or any person concerned in the direction, management or conduct of the business to which the licence relates from holding a licence or from being concerned in the direction, management or conduct of the business for the carrying on of which a licence is required, either permanently or for such period as the Director-General thinks fit,
(e) impose a conditional restriction to which the licence shall be subject,
(f) cancel the licence.
(3) … where the Director-General disqualifies the holder of the licence under sub-section (1)(d), the Director-General shall cancel the licence.
(4) …”.
20 Section 21(3) of the Act requires the holder of a dealer’s licence to retain a register at its place of business and enter into the register the following:
(a) Form 2 Register
21 Clause 19(b) of the Motor Dealers Regulation, 1999 (“the Regulations’) provides that, where the register is kept in writing it is to be in accordance with Form 2 of the Regulations.
“(a) the prescribed particulars of every second-hand motor vehicle and every demonstrator motor vehicle acquired in the course of carrying on that business, and
(b) the prescribed particulars of the disposal of each such vehicle, and
(c) where a vehicle referred to in paragraph (b) is disposed of by sale at an auction – the prescribed particulars of the purchaser of a vehicle”.
(underlining added)
22 Section 21(9) of the Act provides that where the licensee is required to make an entry into the Form 2 register, in respect of a transaction, that entry must be made within one day of the transaction having taken place.
23 A failure to ensure that all the information that is required to be entered into the Form 2 register and that the information is entered within one business day after the transaction has occurred constitutes an offences and is punishable by a fine (s54A of the Act, and cls.15(1), 67 and Schedule 2 of the Regulations).
24 Since 3 October 1990, a licensee who acquires a motor vehicle for sale on consignment, is required under s.21A of the Act to keep a separate register for vehicles acquired by the dealer on this basis. Section 21A(1) expressly states that the licensee must not enter these prescribed particulars into the Form 2 register as required under s.21 of the Act. The prescribed information to be entered in this register and the time of entry of the information is the same as that required on for the Form 2 register.
(b) Consignment Register
25 Where a vehicle is sold on consignment, the licensee is required to deposit the monies received on the sale of the vehicle into a trust account maintained by the business (s.29E of the Act). That deposit is required to be made by the licensee no later than the following day on which the sale on consignment took place. A failure to comply with these requirements constitutes an offence and is punishable by a fine (s.29E(3) of the Act).
26 S29H requires a licensee to account to the consignor within 14 days of selling the consignor’s vehicle. And s29K gives the Director-General a discretion to cancel or suspend a licence where the licensee has failed to comply with the provisions of Part 4A in respect of consigned vehicles or the payment of money into or out of the licensee’s trust account.
27 Again a failure to maintain such consignment register and to account for the money received on the sale of a consigned vehicle as required by the Act constitutes an offence and is punishable by a fine (s54 of the Act).
28 Section 23A(1) of the Act provides that a licensee is prohibited from offering or displaying a motor vehicle for sale except at the place in respect of which the licence is granted. A contravention of this subsection constitutes an offence, unless the licensee has offered or displayed a motor vehicle for sale in the circumstances set out in sub-section 23A(2). In this regard, sub-section 23A(4) expressly provides that the carriageway or footpath, which is in the immediate vicinity of the licensee’s place of business, does not come within the exceptions as provided in sub-section 23A(2).
(c) Premises at which the holder of the licence may lawfully offer or display motor vehicles for sale
29 S23B(1) of the Act provides that where a licensee offers or displays for sale, or sells a motor vehicle to which a number plate is attached, by auction, the licensee must attach or cause to be attached to the vehicle a roadworthy inspection report that is no more than one month old. There are exceptions to this requirement and one of these is that contained in s. 23B(3)(b) and (c) of the Act. This relates to those circumstances where the dealer offers or sells a vehicle to a trade owner for sale at an auction or a proposed auction.
(d) Sale by auction – notice requirement
30 S23C relates to sales by auction of a vehicle which has no number plates attached. In these circumstances the vehicle is required to have attached a certificate or receipt as to the surrender of the number plates by the relevant motor authority or a declaration from the owner to that effect. Again such a certificate or declaration is not required where the dealer offers or sells a vehicle to a trade owner for sale at an auction or a proposed auction.
31 S24(2) of the Act provides that where a licensee offers or displays for sale a second-hand motor vehicle, the licensee is to attach, or cause to be attached, to the vehicle in the prescribed manner, a notice, in the prescribed form containing prescribed particulars in relation to the vehicle.
(e) Sale, other than by auction – notice requirements
32 S24(2) of the Act provides that s24(1) does not apply to or in relation to the offering or displaying for sale, or sale of a motor vehicle “by bona fide auction”, “to a trade person” and in other specified circumstances.
33 A failure to comply with the s24(1) notice requirements constitutes an offence (s54A of the Act) and punishable by a fine. In prosecuting a licensed dealer for an offence under this section, s24(4) that any second-hand vehicle found on the dealer’s premises is for sale unless that vehicle has attached to it a notice, in the prescribed form, which states that the vehicle is not for sale and that there is no other notice on the vehicle that purports to be the price of the vehicle or otherwise suggests that the vehicle is for sale.
34 Clause 29 of the Regulations prescribes the following in respect of s.24(2) of the Act:
35 Section 27 of the Act sets out the statutory warranty, which a licensee is required to provides when selling a second-hand vehicle. This statutory warranty applies to all second-hand motor vehicles which are less than 10 years old and which have travelled less then 160,000km and requires the licensee to repair defects in the vehicle which occur within three months after the sale of the vehicle or after the vehicle has driven 5,000 kilometres after the sale. Section 28 sets out some exceptions in respect of what defects are covered under the warranty and also makes provision for certain second-hand motor vehicles not coming within the section.
“(a) where the motor vehicle is sold with a statutory warranty , but without a defective notice the prescribed form is Form 4;
(b) where the motor vehicle is sold with a statutory warranty and a defective notice – the prescribed form is a Form 6; and
(c) where the sale of the motor vehicle does not attract the statutory warranty – the prescribed form is Form 8”. (underlining added).
36 S53E of the Act enables an “authorised officer” (defined in s4 of the Act to include the Director-General and a person authorised by him under s6(1) of the Act) to issue a penalty notice where it appears to that officer that a person has committed a prescribed offence under the Act. The prescribed offences are those contained in Schedule 2 of the Regulations and includes breaches of ss21 and 24(2) of the Act. The maximum penalty for a breach is prescribed to be $330 for each offence. However, the issue of such a notice and the payment of the penalty does not amount to an admission of liability ( s53E(6) of the Act ) . Where there has been a payment of such a penalty the Director-General is prohibited from bringing any further criminal proceedings against the person ( s53E(5) of the Act ) .
(e) Penalty Notices
Issues
37 There appears to be no question that Mr Muller and his company failed to fully comply with the register and notice requirements under the Act and the Regulations. In some instances, Mr Muller gave an explanation of why there had been a failure, in others, he contested the conclusions reached by the Department’s investigators.
38 There are two issues in relation to the basis on which the company sold motor vehicles. These relate to sales by auction and sales on consignment. Mr Muller contended that certain sales were by way of auction and that vehicles received by the company on the basis of payment within 7 days were vehicles that had been purchased by the company and not vehicles received on consignment. The Director-General on the other hand contends that no auction took place and that certain vehicles were received by way of consignment.
39 While the abovementioned are issues of importance, in my opinion, the main issue in this case is whether the failures to comply with the provisions of the Act and the Regulations were such to warrant the disqualification of the company’s licence and the disqualification of Mr Muller from holding such a licence or being involved in a company that was the holder of such a licence.
Evidence
40 The application was heard over three days, on 7 and 8 February 2002 and then again on 13 March 2002.
41 Ms Ronalds tendered several documents into evidence, including copies of the company’s Form 2 register and its Form 4 and Form 8 notice books. Ms Ronalds also called Mr Wright, the Department’s investigating officer, to give evidence together with two other witnesses who had responded to advertisements that had been placed by the company for the sale of its vehicles.
42 Mr Muller gave evidence and on 13 March 2002 he called Ms B Eather and Mr G Gamer to give evidence on his behalf.
43 As most of the documentary evidence was not in dispute, it is convenient to deal with the evidence in so far as it related to the various grounds on which the Director-General made his decision to disqualify the company and Mr Muller.
44 Mr Espiritu was called to give evidence, on behalf of the Director-General, in respect of his purchase of a Toyota Supra Coupe from the company on 4 May 2001. Mr Espiritu gave evidence pursuant to a certificate under s.128 of the Evidence Act. His evidence was that on 4 May 2001 he responded to an advertisement, by the company, in the Trading Post on 3 May 2001. The advertisement advertised for sale a “Toyota Supra Twin Turbo 6 Speed”. Mr Espiritu stated that he got a friend to call on his behalf and following that call he went to the premises of the company where he spoke to a man who called himself Garth. He was shown the car and took it for a test drive. He decided to buy the car and he and Garth reached an agreement on a price for the car, which was paid by Mr Espiritu that day.
(a) Auction
45 Mr Espiritu was given and signed a tax invoice and receipt for the car. The tax invoice stated that the car was unregistered and that it was “SOLD AT AUCTIONS AS IS”. The company’s Form 2 register also records this transaction to have been an auction.
46 Mr Espiritu was also given a 3 year warranty by the National Warranty Company.
47 Mr Espiritu stated that he was very happy with the vehicle, it was a car he had always wanted, he got it for a good price and he was happy with the warranty.
48 In giving his evidence, Mr Muller stated that he offered prospective purchasers a choice of buying by auction or retail. He explained that most purchasers chose to buy by auction because it was cheaper. Mr Muller was not involved in the sale to Mr Espiritu and no questions were asked of Mr Espiritu in respect of what notice, if any, was attached to the vehicle at the time he inspected it. Mr Muller stated that it was his understanding that an unregistered vehicle did not attract the statutory warranty.
49 Mr Summergreene, a car dealer, called on behalf of the Director-General to give evidence, agreed with the following questions asked of him in cross-examination by Mr Earl:
50 However, Mr Summergreene went on to state that he was under the impression that the company was selling its vehicles by retail.
“Wouldn’t you accept if someone said, look – you had turned up and the person said you can see that sign there, it’s a condition, it’s auction, I’m not prepared to sell it to you but I will knock it down to you for that price under auction conditions, you either accept that or you don’t.”
51 The Director-General tendered into evidence 4 pro-forma statutory declarations, which related to an agreed price for the vehicle specified in the declaration. The agreement is stated to be between the owner of the vehicle and the company. So far as is relevant each statutory declaration stated:
(b) Consignment
52 Each declaration appears to be signed by the owner and a sum is entered in respect of the agreed price.
“TO: MORRIE MULLER (NSW) PTY LTD
…
In consideration of you as sole agents accepting the following vehicle:
…
1. I/WE so authorise and request you as sole agents to sell the vehicle for the net price of $……(“the Agreed Price”). No lower sum is to be accepted unless either you pay the Agreed Price, or you have obtained my prior written consent”.53 Each of the vehicles referred to in the declarations are recorded in the Form 2 register as follows:
Entry No. Date of Acquisition How Acquired Date of Disposal No. of Disposal 9677 20.04.01 P 20.04.01 Form 7 9682 30.04.01 C 06.05.01 Sold at auction 9681 30.04.01 C 19.05.01 Sold at auction 9704 05.06.01 C 15.06.01 No form required 54 Mr Muller does not dispute that “P” stands for purchase and “C” stands for consignment.
55 It was the evidence of Mr Wright that each of the abovementioned vehicles were received on consignment and should have been entered into a separate consignment register as required by s.21A of the Act.
56 Mr Wright’s evidence was also to the effect that payments received from the purchaser of the abovementioned vehicles was required to be paid into a trust account and then remitted to the owner from that account.
57 In a record of interview conducted by Mr Wright on 2 August 2001, Mr Muller stated:
58 In response to the Director-General’s “show cause” notice, Mr Muller provided the Director-General with a letter from the owners, or their representative, of three of the vehicles concerned. The first letter was from Mrs Taylor, the mother of the owner of one of the vehicles. In her letter she states that her son’s vehicle was left with Mr Garth Muller not on consignment but on the basis of a sale, where her son would be paid within seven days. She goes on to state that he was paid the amount agreed. The second letter was from a director of a leasing company that owned two of the remaining three vehicles. In that letter the director states that while the vehicles were originally given to the company on consignment, when they were not sold within a month it was agreed that the company would purchase the vehicles. The director further states that he has had many dealings with Mr Muller and that he has always been happy with the services, which has been provided to him.
(a) the company occasionally received vehicles on consignment;
(b) the company had a pro-forma declaration prepared in respect of an agreed price and that this pro-forma declaration was used for consigned vehicles and those purchased by the company;
(c) the company had a trust account but it had not been used for some time. It had been used when the company had regular large scale auctions (“10-15 cars”);
(d) the money received from the purchaser of the abovementioned vehicles was not deposited into a trust account;
(e) in each of the abovementioned transactions, the company paid the consignor/seller seven days after it received payment for the vehicle from the purchaser of the vehicle;
(f) in respect of the first transaction mentioned above, this was a purchase and not a consignment. It was and had always been the company’s policy that were the company acquired a vehicle it would pay the seller of the vehicle within 7 days of acquiring the vehicle;
(g) he was unaware of the requirement to have a separate consignment register or the need to pay the consignor the agreed price of the vehicle consigned, within one day of receipt of the purchase price, where the purchase price is not deposited into a trust account.
59 In relation to the remaining vehicle, Mr Muller in his response to the show cause notice stated that this vehicle was also changed from a consigned vehicle to a purchased vehicle after the vehicle was not sold within a week or two. However, in this case Mr Muller was not able to obtain a statement from the owner as he was overseas.
60 Mr Muller tendered into evidence documents relating to a complaint made by Barry McBride of McBride Wholesale Truck Parts on 5 July 2001 to the Department. Mr McBride complained about the failure to receive payment from Mr Muller following the sale, by the company, of a vehicle that had been consigned to the company by his company. The documents indicate that the cheque received from the purchaser of the vehicle was dishonoured. The complaint was subsequently resolved and on 16 November 2001, Mr McBride wrote a letter stating that he “never had any reason to doubt Mr Muller’s honesty and integrity” and that he was pursuing it for insurance purposes.
61 Mr Wright gave evidence that a pro-forma Form 4 notices book contained numerous notices, each of which is consecutively numbered. These forms have printed on them, in bold type, at the top of the page the following:
(c) Form 4 Notice
62 The bottom third of the notice sets out in detail the terms of the statutory warranty as contained in s.27 of the Act.
“WARRANTY
WARRANTY UNDER THE MOTOR DEALERS ACT APPLIES TO THIS VEHICLE”.
63 In respect of these forms Mr Wright explained that each notice is made up of a white original and a pink, green and yellow copy. The white copy is the copy that it attached to the vehicle. Part 2 of the pink copy is completed by the licensee when the car is sold and this copy plus the white copy is given to the purchaser of the vehicle.
64 The green copy is also given to the purchaser as this is the record of the sale, which the purchaser gives to the Road Transport Authority for the purpose of registering or transferring the registration of the vehicle. The copy is clearly marked as “RTA copy – Notice of Sale”. The final copy, the yellow copy, is then retained in the book as the licensee’s record of the sale.
65 Following Mr Wright’s inspection of the premises on 17 July 2001 he conducted a thorough examination of the company’s Form 4 notice booklet. He found numerous irregularities. These included:
66 As mentioned above, Mr Summergreene, a principal of a licensed motor dealer business was called to give evidence for the Director-General. He gave evidence that in response to an advertisement in the Trading Post of 31 May 2001, he had telephoned the company. The advertisement offered for sale a “Nissan Skyline GTST 1994 liquidation matter”. During his telephone conversation he spoke to a woman and five days later he went to the premises to look at the cars that were on display. He stated that a Mr Garth Muller introduced himself when he was looking at a second-hand imported Toyota Soarer which was on display. Mr Summergreene noticed that the vehicle did not have a Form 4 attached to it and he asked Mr Garth Muller “Do I get a warranty for this vehicle?” to which Mr Garth Muller replied “No – we supply a warranty from Victoria”. Mr Summergreene went on to ask “Do I get a dealer’s warranty statutory warranty?” to which Mr Garth Muller responded “No…..because its an imported vehicle”.
(a) Forms had been completed but the white copy of the form remained in the book indicating that the form was never attached to the vehicle to which it related and as required under s.24(2) of the Act and clause 29(1) of the Regulations. If this was the case the consumer was not informed about the statutory warranty applying to that vehicle.
(b) The pink copy of the form remained in the book indicating that the purchaser had not been provided with a copy, which meant that the purchaser had no record of the warranty and possibly no knowledge of it either.
(c) In some cases the pink copy, which remained in the book had not been signed by the purchaser, also indicating that the purchaser had not been advised about the statutory warranty applying to that vehicle.
(d) In some cases the green copy had been retained in the book indicating that the vehicle had not been sold, but the form had not been crossed out as being cancelled.
(e) In some cases Part 2 of the notice had not been completed. This part required details of the purchaser to be inserted and to be signed by the purchaser. Again, a failure to complete these details was an indication that the purchaser had not been informed about the statutory warranty.
67 On receiving this response Mr Summergreene left the premises and contacted the Department to see whether he could also offer imported second-hand vehicles for sale without providing a statutory warranty.
68 In cross examination Mr Summergreene agreed that the vehicle was offered at a price which was much less than that which he would sell it for. He also stated that the person he spoke to on the day he went to the premises of the company’s business was not Mr Muller and that it was never suggested that the vehicle was for sale by auction.
69 Mr Wright gave evidence that the pro-forma Form 8 notices book was in a similar format to the Form 4 notices book. That is, each form was numbered consecutively and each notice had an original white copy, and then a pink, green and yellow copy. In this case, the Form 8 notices had the following words printed on them, in bold type, at the top of the page:
(d) Form 8 Notice
70 Again, the white copy of the notice was to be attached to the vehicle to which it related. The pink copy was for the purchaser of the vehicle, the green copy was for the purchaser for registration purposes and the yellow copy was for retention by the licensee.
“NO WARRANTY
NO WARRANTY UNDER THE MOTOR DEALERS ACT FOR THIS VEHICLE”
71 Following Mr Wright’s inspection of the premises on 17 July 2001 he also conducted a thorough examination of the company’s Form 8 notice booklet and found numerous irregularities similar to those which were found in the Form 4 notice booklet and which are referred to above. In five cases Mr Wright formed the view that the vehicle the subject of the Form 8 should have been given a warranty because the vehicle was less than 10 years old and had travelled less than 160,000km.
72 During his inspection of the premises on 17 July 2001, Mr Wright also obtained a copy of the company’s Form 2 register. On an examination of this register for the period 26 June 2001 to 16 July 2001, Mr Wright found numerous details, which had not been entered into the register and which were required to be entered. This included failure to enter details of date of manufacture, engine number, VIN number, odometer reading and how the vehicle was disposed of. However, in some cases the vehicles were still on the premises and had not been sold.
(e) Form 2 Register
73 There is no dispute that the company’s business is conducted from premises, which are located away from the main traffic area and it is a relatively small business, which deals with the sale of second-hand cars, which Mr Summergreene described as “low volume imported” vehicles.
74 In respect of record keeping and notices generally Mr Muller conceded that his company had failed to meet the requirements of the Act and its Regulations. He explained that in 1988 and 1989 he had become seriously ill with polyneuropathy, a condition which affected his central nervous system and which rendered him a quadriplegic for that time. During this time he had relied on others to run the business and on his return he found that they had run the business down and taken substantial funds from it.
75 In order to put the business back on track Mr Muller re-engaged a former employee of the business to update and maintain the records, which were required under the legislation. Mr Muller stated that he had difficulty in dealing with these requirements and needed help. He re-hired a former long time employee who had retired and was in her 70’s and he believed that she was doing what was required. At this time, Mr Muller states he was being monitored by the Department, who had made no complaint about the record keeping system he used.
76 Mr Muller also stated that he had other business interests to deal with at that time and that his son, Garth, was working in the business to assist. In the meantime his son had left the business.
77 After Mr Wright explained the inadequacies of the company’s records and notices to Mr Muller in August 2001 and Mr Muller in his response to the show cause notice stated that he would take steps to fully computerise his registers so that they were updated correctly and that the requisite notices were correct in future.
78 On 13 March 2002 when the matter was before the Tribunal, Ms Ronalds for the Director-General tendered additional evidence. This additional evidence was a copy of the company’s manual Form 2 register as updated by the company since July 2001 and a print out of the company’s computerised Form 2 register, as at 5 March 2002 and 12 March 2002.
79 Ms Ronalds also tendered into evidence a further statement of Mr Wright and two further schedules. One schedule related to omissions Mr Wright found in the updated Form 2 register and the other schedule contained details comparing the information contained on the manual Form 2 register with those on the computerised Form 2 register.
80 The essence of the further omission schedule was to highlight that omission on the manual Form 2 register, which had previously been identified by Mr Wright, had, contrary to statement made by Mr Muller during the hearing, not been rectified. That is, of the 16 omissions previously identified, only 4 had been rectified.
81 The essence of the schedule, which compared the details between the Form 2 written register and the computer register, was that details which should have been the same in each register were in fact different. For example, the date of the disposal of a particular vehicle differed in one record to that which was recorded in the other record. Other differences related to the details about the price for which the vehicle was sold, the disposal form that was used and the date the vehicle was built.
82 On the last day of the hearing, Mr Muller called two witnesses. The first witness was Graham Gamer who had been a licensed motor dealer since 1964 and who primarily sells motor vehicles by auction. His evidence was that:
(a) his business will purchase a vehicle from an owner and pay the owner the agreed price (as per a signed declaration) within 7 days of purchase – that is, the price is not paid at the time of purchase;
83 The other witness called by Mr Muller was Belinda Eather who was a qualified chartered accountant and book keeper who had commenced working for the company on 8 March 2002. Ms Eather stated that she had been employed to work 20 hours a week but had agreed to put in additional hours to update the company’s records, which were to be fully computerised onto the computer system. She agreed that she had “walked into a hornet’s nest” but felt confident that she could undertake the tasks required of her if she was able to get access to the original records, which were primarily under the control of the ex-retired employee recruited by Mr Muller.
(b) his business does not advertise vehicles but conducts auctions on specified days each week. If, at the conclusion of the auction, a person remains interested in purchasing a vehicle his business will sell the vehicle to that person under the terms of an auction;
(c) where a person purchases a vehicle by auction they are required to pay a deposit on the day of the auction and they are given 7 days in which to make full payment. That person is not given the vehicle until full payment is made, except where that person is a car dealer. A car dealer will take the vehicle following the auction.
84 Finally, following Mr Wright’s inspection of the company’s premises and its register, Penalty Notices were issued against the company in respect of eight vehicles that had been displayed for sale without a Form 4 of Form 8 notice being attached to it. The Tribunal was informed that the penalty amount was $50 for each alleged infringement and that these had been paid.
85 Also tendered into evidence, as part of the company’s and Mr Muller’s response to the Director-General’s “show cause” notice were two invoices dated 16 July 2001 giving details of 15 vehicles that were on the premises on 17 July 2001 and which, according to Mr Muller were to be sent to Alliance Motor Auctions on that day. Mr Muller also tendered into evidence a letter dated 12 November 2001 from Mr Giovannangelo of Alliance Motor Auctions Pty Ltd stating that Muller Motor Auctions regularly consigned vehicles for auction to Alliance Motor Auctions and that, on 16 July 2001, they had been advised that 15 vehicles were to be consigned for auction the following day. However, the vehicles did not arrive by 11 o’clock and were therefore not included in the sale.
86 Written submissions were provided by Ms Ronalds and Mr Muller, which they both elaborated on orally.87 Ms Ronalds, for the Director-General, submitted that Mr Muller and his company had over a lengthy period of time consistently and persistently failed to meet the record keeping and notice requirements of the Act. These requirements had been inserted by Parliament because Parliament considered them to be the minimum best practice for the protection of consumers. In particular, she submitted that while Mr Muller alleged that vehicles were sold at auction, the evidence was that they had not been sold at a “bona fide” auction. The inference to be drawn from this was that the company and Mr Muller used the “auction” sale so that purchasers were deprived of the statutory warranty.
88 Accordingly, Ms Ronalds submitted that the breaches of the Act and the Regulations, including the failure to properly record vehicles sold on consignment in a consignment register and the failure to deposit proceeds from the sale of such a vehicle into the company’s trust account, were serious breaches, which made the Director-General’s decision the correct and preferred decision.
89 Ms Ronalds also submitted that the proper test to be applied in this case was not whether there was evidence of a consumer complaint or of a consumer having suffered loss or damage as a result of the company’s and Mr Muller’s failure to comply with the requirement of the Act and the Regulations. The fact that no consumer had complained must be looked at in the context of Mr Muller’s conduct in that the evidence was such that he deprived prospective purchasers of their right to particular information about the vehicles he offered for sale, which they were entitled to have. Furthermore, the failure to operate a trust account meant that persons who had given Mr Muller’s business their vehicle to sell on consignment were not given the protection that Parliament intended to be given to those persons and the proceeds which the licensed dealer received from the sale of the vehicle.
90 Mr Muller on the other hand, submitted that consideration needed to be given to the fact that he had been operating his business for 35 years, during which time he had been monitored by the Department regularly and where no complaints had been made against him. He fully acknowledged that his record keeping was inadequate in some respects. However, prior to Mr Wright’s visit he thought he was operating in compliance with the Act and the Regulations. Since Mr Wright’s inspection he had been trying to get his record keeping in order and he acknowledged that this had taken some time. The difficulty in dismissing a loyal employee, who was in her seventies, he stressed should not be underestimated.
91 In respect of the Form 4 and Form 8 notices he submitted that because vehicles were constantly moving from the company’s premises to a dealer who conducted auctions, these notices were sometimes not taken out of the book as they should have been.
92 He pointed out that the company had been trading continuously since 1971 and that 90% of its business was sales to other dealers or consignments to other dealers for auctions and he addressed each of the complaints that he been made against him.
93 Mr Muller stressed that there was no evidence of him acting dishonestly, nor was there any evidence of any complaints from consumers. The evidence was that he ran a small second-hand car dealership, which included selling imported second-hand specialty cars.
94 As mentioned above the following matters of fact were not disputed:95 It was also conceded by Mr Muller that the Form 4 and Form 8 notices were not always completed correctly and may not have been attached to the vehicle because of the nature of the company’s business, which was continually moving vehicles from its premises to another dealer for a proposed auction.
(a) The company failed to maintain a separate consignment register;
(b) The company failed to deposit money it received on the sale of a consigned vehicle into its trust account;
(c) The company’s Form 2 register failed to contain details of all the information that was required and on some occasions incorrect details had been entered; and
(d) On 17 July 2001, the company had on display, on the footpath, a number of vehicles for sale.
96 The remaining issues of whether vehicles were received on consignment and whether vehicles were sold at auction primarily involve legal issues and to the extent they involve findings of fact, these are addressed below in my reasons.
97 I found Mr Wright to be a truthful witness, who had undertaken his duties in respect of his investigations with care and precision. Mr Wright’s oral evidence was also of great assistance in understanding the various requirements placed on the licensed dealers under the Act and the Regulations.
98 On the whole I also found Mr Muller to be a truthful witness, who readily acknowledged inadequacies in the company’s record keeping and sought to explain with frankness the various business practices of the company.
Reasons
99 Following the issue of a show cause notice under s.20D of the Act, s.20E of the Act gives the Director-General a wide discretion to take one or more of the prescribed disciplinary measures that are set out in s.20E(1), where he is satisfied that the basis on which he issued his notice has been established. The prescribed disciplinary measures range from a reprimand to a cancellation of the licence. That is, Parliament has prescribed a range of disciplinary measures so that the Director-General is able to make the most appropriate decision having regard to all the circumstances of a particular case.
100 In this case, the Director-General’s show cause notice stated that he had reason to believe that the company had failed to comply with certain specific provisions of the Act and the Regulations. Mr Muller responded to that notice and acknowledged some of the breaches which had been identified by the Director-General in his notice. Accordingly, even on Mr Muller’s own admissions the Director-General was in a position to be satisfied that these matters had been established. The next question was what disciplinary measure was appropriate in the circumstances having regard to those matters, which had been admitted and those which he was otherwise satisfied had been breached.
101 In my opinion, in this case, the relevant factors to be taken into account in deciding the most appropriate disciplinary measure, including disqualification, are as follows:
102 While I agree with Ms Ronalds that the test for the Director-General’s exercise of discretion under s.20E(1)(d) of the Act is not limited to having evidence of consumer complaints or evidence of consumers having suffered loss and damage as a result of the motor dealer’s contravening conduct, I do not accept that this is a factor which should be ignored in the exercise of that discretion.
(a) the nature of the alleged breaches of the Act and the Regulations. This will involve consideration of:
(b) the period over which the breaches occurred;
(i) whether the breach is a breach of a fundamental provision of the legislative scheme;
(ii) whether the breach is technical in nature or whether it was a deliberate breach to avoid complying with the Act or Regulations; and
(iii) the consequences which can and did flow from the breach;
(c) Mr Muller’s explanation of how the breaches arose and what action he has taken since that time to ensure compliance with the Act and the Regulations; and
(d) any other matters which may be relevant to the particular breaches and the circumstances in which they occurred.
103 The effect of taking the disciplinary measure under s.20E(1)(d) of the Act (ie. disqualification) is to cancel a motor dealer’s licence and its business. This is a serious step to take where the motor dealer in question has been operating as a licensed dealer for some considerable time, particularly as Parliament has provided other less serious disciplinary measures in this section. Accordingly, in my opinion, evidence of consumer complaints is a relevant factor to be taken into account by the Director-General when exercising his discretion under s.20E(1) of the Act and deciding which, if any, disciplinary measure, is appropriate in a particular case.
104 I will now deal with each of the alleged contraventions in light of the abovementioned factors and then consider them as a whole.
105 While the company did not retain a consignment register separate from its Form 2 register, all consigned vehicles were recorded on this register and marked as such with the letter “C”. That is, while there has not been compliance with s.21A of the Act, there is no suggestion that Mr Muller or his company acted deceptively in that they sought to conceal such transactions. I also accept Mr Muller’s explanation that he believed that he could record all vehicles received on consignment in the Form 2 register. Prior to October 1990, this appears to have been the case. The pro-forma Form 2 register used by the company did not suggest otherwise in that it contained a column allowing the dealer to identify how the vehicle was acquired – this could include a consignment.
(a) Consignment Register
106 This does not excuse the company or Mr Muller from failing to have a separate register as required.
107 Again the omissions in the Form 2 register are admitted by Mr Muller and while he has taken time to rectify these, in my opinion those delays are not due to his unwillingness to correct the register. In most instances, the omissions relate to transactions he was not involved in. However, he should ensure that he has access to all the relevant documentation so that he can monitor the entries on the register and be satisfied that they are complete and correct.
(b) Omissions in From 2 register
108 While I accept Mr Muller’s evidence of his need to employ someone who is reliable and capable to make the necessary entries in the Form 2 register, be it in manual or computerised form, I am concerned that it took him until February/March 2002 to look for and find someone suitable. If Mr Muller is not able to maintain the registers then it is incumbent on him to find someone who can and at all times supervise that person so that he can be satisfied that the company complies with the Act and the Regulations.
109 Mr Muller acknowledged that the Form 4 and Form 8 Notices contain irregularities which should not have happened. There is no evidence that Mr Muller was involved in the irregularities but responsibility for them clearly rests with him as the owner and principal of the business, which is the holder of the licence.
(c) Form 4 and Form 8 Notices
110 What is of concern are those vehicles which may have been sold without a Form 4 notice being attached to the vehicle or given to the purchaser (eg. unregistered vehicles) and those vehicles sold with a Form 8 notice attached, when they should have had a Form 4 notice attached.
111 The purpose of these notices is to advice respective purchasers about the s.27 statutory warranty that attaches to the vehicle if it is purchased and the contents of such a warranty. While the warranty applies regardless of the Form 4 notice being attached, Parliament’s intention in requiring the notice is clearly to provide consumers with relevant information about the vehicle and to inform them of their rights under the statutory warranty that applies to the vehicle in the event they purchase it.
112 While I accept Mr Muller’s evidence that most of the company’s sales were to other wholesale licenced dealers or licensed dealers who sold by auction, this does not excuse the failure to attach the requisite notices to a vehicle during the time the vehicle was on the premises and on offer for sale to any member of the public.
113 The fact that the Department has not received any complaints from consumers in respect of these irregularities may be explained by the few number of sales that are made to the general members of the public by the company. On the other hand, it may not.
114 I note that the computerised system installed by Mr Muller will automatically generate the relevant notice each time a vehicle is acquired by the business.
115 This breach is also acknowledged and the fact that other licensed dealers do the same is not an excuse.
(d) Vehicles on the pavement to the premises
116 In respect of what is a consigned vehicle and what is not a consigned vehicle, it will depend on the circumstances in which a vehicle is acquired. Section 29D of the Act defines a “consignor” to mean, in relation to a dealer, to be “a person from whom the dealer receives motor vehicles for sale on consignment”.
(e) Consigned vehicle
117 The term “consignment” or “sale on consignment” is not otherwise defined in the Act. The Butterworths Australian Legal Dictionary defines the term to mean:
118 In this case, the four transactions in which the Director-General formed the view that the company had received the vehicle on consignment and not as a purchase, were in my opinion all received on consignment.
“Goods delivered to another “on approval” (with a view to the other purchasing the goods if satisfactory), or on “sale or return” (with a view to the other selling the goods in the course of trade or returning them to the consignor if not sold within a given period”.
119 In each case the statutory declaration completed by the owner of the vehicle expressly stated that the company was acting as the owner’s “sale agent” and that the owner “authorise and request” the company “as sole agents to sell the vehicle” for the agreed price. The declaration also includes an authority for the company to receive the proceeds of any sale of the vehicle and make certain deductions therefrom and retain any amount in excess of the agreed price as commission.
120 In my opinion, the abovementioned express words in the signed declarations created an agreement between the owner of the vehicle and the company to the effect that the company received the vehicle on consignment. In three of the four transactions, this is confirmed by the “C” entry in the company’s Form 2 register. Mr Muller sought to argue that these vehicles were subsequently sold to the company when the company was not able to sell the vehicle for the price the owner had wanted for it, as agreed in the statutory declaration. In support of this argument Mr Muller relied on a letter from a director of a leasing company, which was the owner of two of these vehicles. There are inconsistencies between the contents of this letter and that which is recorded in the Form 2 register. These inconsistencies fail to satisfy me that as a matter of law the owner and the company subsequently entered into a new agreement whereby the company purchases the vehicle. If they were purchased subsequently, this should have been reflected in the Form 2 register, which they were not.
121 In respect of the remaining transaction, in my opinion, this is also a consignment and not a purchase. For the reasons stated above, the declaration signed by the owner was clearly an agreement to consign the vehicle to the company and not to sell it to the company. In this regard, the letter from the owner’s mother, Mrs Taylor, who was not a party to the agreement, can be given no weight.
122 While the company is free to enter into agreements to purchase a vehicle in which the owner agrees to give immediate possession of the vehicle to the company, with payment for the vehicle within seven days, the declarations in this case were not to this effect. Furthermore, in my opinion, such an agreement in the ordinary course of business, if explained properly to a consumer would be unlikely. It may even be unconscionable for a dealer to use such an agreement in order to avoid the consignment and trust account provisions of the Act and the Regulations. There is no such evidence in this case.
123 In relation to the question of whether a vehicle is sold by auction or not, the essence of Mr Muller’s submission was that, since the deregulation of auctions with the repeal of the Auctioneers and Agents Act, 1941 in 1992, he was free to offer a vehicle for sale to an individual purchaser at an auction price or at a retail price. The auction price being less than the retail price, with the inference that the difference in price reflected the cost of the statutory warranty, which is attached to a retail sale and not a sale by auction.
(f) Auctions
124 In my opinion, this cannot be correct and is contrary to the Act. A sale by auction is a particular process of sale and without a legitimate auction process there can be no such thing as an auction price. The Act clearly envisages that a sale of a vehicle at auction is different to a sale in the ordinary course of a retail sale (see ss.23B, 23C and 24 of the Act). The terms “auction” and “auction sale” are not defined in the Act. The repealed Auctioneers and Agents Act, 1941 contained the following definition of an “auction sale” in s.3(1):
125 A similar definition is contained in s.37 of the Property, Stock and Business Agents Act, 1941 which relates to the sale of land by auction.
“Auction sale”, “sale by auction”, “sell by way of auction” and expressions of a similar character mean the selling of any estate, goods, or effects whatsoever by outcry, by what is known as Dutch auction, by knocking-down of hammer, candle, lot, parcel, instrument, machine, or by any other mode whereby the highest, the lowest, or any bidder is the purchaser; or whereby the first person who claims the property submitted for sale at a certain price named by the person acting as auctioneer is the purchaser; or whereby there is a competition for the purchase of any estate, goods or effects whatsoever in any way commonly known and understood to be by way of auction, and shall be deemed to include selling by outcry or in any other manner before mentioned in any public place or in any room, or mart, or place to which the public are admitted or have access, whether or not the sale has been advertised to take place”.
126 Section 60 of the Sale of Goods Act, 1923, which includes the sale of vehicles, also makes reference to a sale by auction. Section 60(3) provides:
127 Accordingly, I agree with the submissions of Ms Ronalds for the Director-General that sales conducted by the company in circumstances such as those in which the Toyota Supra Coupe was sold to Mr Espiritu are not a sale by auction. They are a sale in the ordinary course of the company’s retail business and the sale was subject to the statutory warranty that was contained in s.27 of the Act and which required a Form 4 notice to be attached to the vehicle and then given to Mr Espiritu.
“A sale by auction is complete when the auctioneer announces its completion by the fall of the hammer or in such other customary manner: until such announcement is made any bidder may retract his bid”.
128 In light of the response of Mr Summergreene to the question asked of him by counsel for Mr Muller, I was left with the impression that Mr Muller may not be the only person who had interpreted an auction sale to be a sale for an auction price, without the need to undergo the process of an auction sale.
129 The evidence is that Mr Espiritu was very happy with the vehicle he purchased, the price he paid for it and the warranty he received, even though it was not the statutory warranty. Mr Muller was not involved in this particular sale, however, the practice which was adopted appears to be one he approved of. This practice was incorrect, Mr Espiritu’s purchase was an ordinary retail sale which attracted the statutory warranty.
130 However, I do not believe Mr Muller intended that through this practice Mr Espiritu should be deceived.
131 The evidence is that the breaches of the Act and the Regulations occurred over a considerable period of time, as they reflected the practices of the business. This was particularly so in respect of the consignments and sales by auction. These Mr Muller stated represented a small percentage of the company’s business. He also stated that the Department was aware of the manner in which he retained his records, in particular, his practice of entering vehicles received on consignment in the Form 2 register,
(g) Period over which the breaches occurred
132 On the whole, as I have already mentioned, I accept that Mr Muller was not aware that his practices were breaching the Act until Mr Wright’s inspection and on becoming aware of these he has sought to rectify them. The onus is of course on Mr Muller and not the Department to ensure compliance and, the fact that the Department inspectors did not pick up on the errors previously, is not an excuse.
133 I have already dealt with Mr Muller’s explanation of the circumstances in which the breaches arose and what he has done to rectify this.
(h) Mr Muller’s explanation
134 While I am satisfied that Mr Muller’s intention is to comply with the Act and the Regulations I am concerned about the time it has taken him to do so.
135 I am also concerned that the Department’s resources are not used to endlessly monitor his record keeping and notices and point out to him where they are deficient. It is Mr Muller’s responsibility to ensure that all his record keeping and notices comply with the Act and the Regulations.
136 In light of the matters set out above, in my opinion the evidence before the Tribunal established that the company had committed various breaches of the Act and the Regulations. These breaches included not only those which Mr Muller admitted to but also those which he contested on grounds of legal interpretation. The breaches were breaches of the primary provisions of the Act and the Regulations and to that extent they were serious breaches which occurred over a long period of time. However, there is no evidence that the breaches were committed with a misleading or deceptive intent or that any customer of the company has suffered as a result of these breaches.
137 The evidence indicates that many of the breaches were committed through a misunderstanding of the provisions of the Act and the Regulations and Mr Muller’s lack of supervision of the company’s business. Mr Muller now has a full understanding of the requirements of the Act and the Regulations and his responsibilities in relation thereto. While he had taken time to take the necessary steps to ensure that the company’s record keeping is in compliance with the Act and the Regulations, he has taken these steps. If he wishes to continue to be involved in a licensed motor dealer business he remains responsible for ensuring that there is full compliance.
138 In my opinion, the conduct of the company and Mr Muller warranted disciplinary measures to be taken by the Director-General under s.20E(1) of the Act. However, for the reasons stated above, in my view the conduct when viewed as a whole was not of such a magnitude to warrant disqualification under s.20E(1)(a) of the Act. There was no evidence that Mr Muller had been warned previously about the irregularities or that complaints had been made against him or the company.
139 Accordingly, in my opinion, the Director-General’s decision to disqualify the company from holding a dealer’s licence and to disqualify Mr Muller from being the holder of such a licence or being involved with such a licence holder for five years is not the correct and preferred decision.
140 The next question is whether any other disciplinary measure as set out in s.20E(1) of the Act is appropriate at this time. In my opinion it is not. Mr Muller has been operating his business for over twelve months on conditions that he and his company did not acquire any vehicles on consignment or that they sold vehicles by auction. These conditions have placed a real constraint on his business and given him the opportunity to ensure that the record keeping systems of the business are in order so that he can again become fully operational. If he and the company continue to breach the Act and the Regulations in a substantive way, the powers of the Director-General are not diminished in any way and Mr Muller is fully aware of the consequences.
ORDERS
141 I order that:
1. the decision of the Director-General to disqualify the applicant company from being the holder of a motor dealers licence be set aide.
2. That the decision of the Director-General to disqualify Mr Muller from being the holder of a motor dealers licence, or being involved in a company that holds such a licence for 5 years be set aside.
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