Nathan v Capital Finance Australia Ltd - [2007] FMCA 1503

FEDERAL MAGISTRATES COURT OF AUSTRALIA

NATHAN v CAPITAL FINANCE AUSTRALIA LTD

[2007] FMCA 1503

TRADE PRACTICES – Hire purchase agreement – alleged representations made in breach of s.52 of the Trade Practices Act – further assertion of harassment under s.60 of the Act – application dismissed – applicant to pay respondent’s costs of proceeding.

Trade Practices Act 1974 (Cth), ss.52, 60

Applicant:

KAILAI NATHAN

Respondent:

CAPITAL FINANCE AUSTRALIA LTD

File number:

MLG 1427 of 2006

Judgment of:

Burchardt FM

Hearing dates:

18 May 2007 & 29 June 2007

Date of last submission:

29 June 2007

Delivered at:

Melbourne

Delivered on:

10 September 2007

REPRESENTATION

The Applicant:

In person

Counsel for the Respondent:

Ms G.F. Gray

Solicitors for the Respondent:

Bartier Perry

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 1427 of 2006

KAILAI NATHAN

Applicant

And

CAPITAL FINANCE AUSTRALIA LTD

Respondent

REASONS FOR JUDGMENT

This is the latest incident in what has clearly been a long-running legal conflict between the parties. I heard all the extant interlocutory applications on 6 February 2007. In substance, I granted leave to the Applicant, Mr Kailai Nathan, to file an amended Statement of Claim but struck out substantial portions of it.
Much of the hearing on the day was taken up with endeavours by me to understand the case that Mr Nathan wished to put. Based upon the interchanges between us, it became apparent that there were two aspects of Mr Nathan's case that were arguable. The first was a claim that the Respondent had contravened s.52 of the Trade Practices Act 1974 (“the Act”) by representing to Mr Nathan that the payments that he had undertaken to make to the Respondent in respect of a motor vehicle that he was buying on hire purchase included default insurance. The second was a claim to the effect that Mr Nathan had been harassed by the Respondent in contravention of s.60 of the Act.
What was meant by "default insurance" was insurance the effect of which was that, if Mr Nathan was unable to pay the periodic payments required by the hire purchase agreement, the insurer would then pay out all outstanding moneys owing under the hire purchase contract.
I struck out all other aspects of the amended Statement of Claim because they did not, in my view, have any reasonable prospects of success. I indicated that I would split the trial, dealing with questions of liability first and settling issues as to quantification of damages later, in the event that liability was established.
I did this because it was apparent even at that early stage that this proceeding had the capacity to be extremely convoluted and time‑consuming, not least because of the understandable difficulties that Mr Nathan faced as a person not legally qualified in presenting his own case.
It was apparent to me from an early stage of even that interlocutory hearing that the Court would need to be careful to try and confine the issues to the Trade Practices Act claims and not to allow the matter to become a wide‑ranging excursus over what is plainly a long‑running, multi‑faceted controversy between the parties.
I indicated that did not propose to give reasons for my interlocutory decision unless requested to do so but that I would if any such request was made. No such request was made and nor was my interlocutory decision to strike out parts of the amended Statement of Claim the subject of any appeal.
At the interlocutory hearing on 6 March 2007 Mr Nathan described the representation that was at the kernel of his case at P‑35 in these terms:
“There was a loan protection and comprehensive insurance that was supposed to be part of the monthly payment.”
When requested by me to tell me more about that and in response to an inquiry from me in these terms:
“You say that as part of the monthly payment you procured insurance that meant that if you didn't pay the insurance would pay out all of the relevant sums?”

Mr Nathan replied:
“Well, that was why they said, "Because you're on casual employment we can't take the risk. Therefore we have to incorporate in your payment some protection so that if you can't pay then we have to get the money somewhere"..."and that's exactly what happened.”

Mr Nathan went on, on the same page, P‑35 to say, in response to a question as to who said this to him:
“Some car yard, there was somebody from Southbank Finance. There was a car dealer and all this was brought up in the bankruptcy proceeding but none of these people came up to defend those statements.”
It has subsequently emerged that the person alleged to have made the representation in these terms was a Mr McCredie.
I did not order further pleadings, because it was clear to me that it was improbable that Mr Nathan would be able to plead his case in any effective way. Rather, I required him to put his story on affidavit and put in place a regime for the Respondent to reply. I did, however, make it clear that the trial would be restricted to the issues involving alleged contraventions of s.52 and s.60 of the Act.
Mr Nathan filed a further affidavit on 6 February 2007, in accordance with the orders I had made. Under the heading Pre‑contractual Conversation in paragraphs [3] to [16] Mr Nathan deposed as to a visit he had paid to the car yard of James Lane Motors in Coburg on 24 May 2001; he deposed that he was then employed as a casual psychiatric nurse by a nursing agency and that he had spoken to a Mr Gavin Fernandez. It should be noted that nowhere in that conversation did

Mr Fernandez make any remarks to the effect of the representation upon which Mr Nathan bases his case.
Mr Nathan went on to depose that he was telephoned by

Mr Cameron McCredie on 28 May 2001 and that he saw Mr McCredie at about 5.00 pm that day at the James Lane Motors car yard.
The only reference to any representation of the sort upon which Mr Nathan relies to establish contravention of s.52 of the Act is at paragraph [36], which reads as follows:
“I then asked about insurance. Mr McCredie said the loan includes comprehensive insurance and loan protection cover in the monthly repayments and Mr Fernandez added everything is taken care of.”
It should be noted that, although I had made it clear to Mr Nathan that he must tell his story in as much detail as he was able in his affidavit at the hearing on 6 February 2007, Mr Nathan did not include in his affidavit the remarks that he had attributed to the Respondent or its agents at the hearing on 6 February 2007, referred to in paragraph [8] above.
In the affidavit at paragraphs [65] and following Mr Nathan set out a relatively extensive series of assertions designed to show that the Respondent or its agents had harassed him. He named in particular a Mr Andrew Taranto, a Mr Edward Weimer and a Mr Ben Shingles as being persons who had conducted such harassment.
The Respondent filed an affidavit on 5 April 2007 of Dominic Cabassi.
The events that have given rise to this proceeding, at least insofar as the s.52 alleged breach is concerned, took place in May 2001. It is not surprising therefore that the affidavit of Mr Cabassi did little more than exhibit various business records relevant to the transaction.
Insofar as the alleged harassment was concerned, the affidavit of

Mr Cabassi merely denied undue harassment and set out, by the exhibition of various documents to the affidavit, the history of the interrelationship between the parties.
Exhibit A to Mr Cabassi's affidavit purports to be a true copy of the application for a loan to buy the Mercedes Benz vehicle that

Mr Nathan wished to purchase. It is a document signed on its second page, albeit dated 28 November 2001, in what purports to be

Mr Nathan’s signature. The reference to November is clearly an error by Mr Nathan.
Exhibit B is a privacy consent form signed by Mr Nathan ostensibly on 28 May 2001 together with certain other documents, being a direct debit request, a delivery docket for the car and a motor business declaration consumer credit code, also signed on 28 May 2001. The document has indications that suggest that the vehicle was to be used wholly or predominantly for business or investment purposes.
Exhibit C to Mr Cabassi's affidavit is a copy of the approval advice asserted to be made on or about 28 May 2001. Exhibit D, according to Mr Cabassi's affidavit, was a copy of Capital Finance’s settlement processing sheet which noted the details of the comprehensive motor vehicle insurance. It will be noted that Mr Cabassi's affidavit asserted that it is Capital Finance’s policy not to enter into finance agreements unless details of comprehensive motor vehicle insurance are provided.
Mr Cabassi went on to depose that it was possible (paragraphs [13] and following of his affidavit) that Mr Nathan might have been confused about the question of loan protection insurance because he had taken out a personal loan with the Respondent in September 2001, which loan contract was annexed as Exhibit E. The personal loan contract included an accident/sickness, accidental injury or involuntary unemployment insurance policy, which was apparently provided as a corollary to the loan itself.
It should be noted that that loan protection insurance is restricted only to the items I have described. It is not an insurance policy that provides that the insurer will make good all outstanding debts on the part of the insured in the event that the insured does not pay the relevant premiums.
Mr Nathan filed a further affidavit on 6 June 2007. That affidavit asserted that he was at work at the Werribee Mercy Psychiatric Hospital from 7.00 am till 3.30 pm on 28 May 2001. It exhibited what purported to be a true copy of a letter verifying that Mr Nathan was at work from 7.00 am to 3.30 pm at the hospital on 28 May 2001.
It should be noted that the Exhibit KN1 does not in fact state what the affidavit says it states. Exhibit KN1, which is of course hearsay in any event, purports to be signed by Noel Molloy, clinical nurse manager, on 14 May 2007 and relevantly says:
“This is to confirm a conversation with Mr Kyle (sic) Nathan that I had at 1450 hours today, the 14th of May 2007, that he, Mr Nathan, according to the 2001 ward diary, employed as an agency nurse, worked from 7 am to 1530 hours on 28 May 2001.”
It is readily apparent that that is not compelling proof that Mr Nathan did indeed work the hours that he claimed on that day.
When the proceeding commenced on 18 May 2007 it emerged that

Mr McCredie had not been served with a subpoena to attend to give evidence but that Mr Taranto, Mr Shingles and Mr Weimer were all present, having been subpoenaed to give evidence and produce documents.
As a courtesy to them, I heard their evidence first. Their evidence all related to the discrete issue of the alleged harassment in contravention of s.60 of the Act.
Mr Weimer gave evidence first. He stated that he was a process server and not a repossession agent. He denied ever having sought to repossess the car and said that he had delivered documents to Mr Nathan's residence, or attempted to do so, but he was not involved in repossession. He said he had been to Mr Nathan's home at

1 Bellbird Avenue, Taylors Lakes on eight to ten occasions. His best recollection was that the documents he was seeking to serve were to do with Capital Finance Australia Ltd (“Capital Finance”).
In response to a question from counsel for the Respondent as to what he recollected, Mr Weimer stated (P‑17):
“Well, the most memorable thing from the whole episode was

Mr Nathan saying to me the phrase, "Anyone else comes here, I will hit them with a hammer", which was pretty clear, precise and unforgettable.”
He did subsequently, in response to an answer from Mr Nathan, concede that on one occasion he had been told by him, "If you want to speak to me, stand out in the street," and that when he did so and complied with that request Mr Nathan went inside and closed the doors.
Mr Taranto was the next witness called. He said that, although he was a repossession agent, he had never come across the car. He denied that he had ever seen the Mercedes Benz the subject of his endeavours, but did eventually remember that he had on one occasion pursued a Mercedes Benz from Bellbird Avenue to the Watergardens Shopping Centre. He said that the car stopped at some traffic lights, that he knocked on the window and that the car drove off.
Mr Taranto confirmed that he served a County Court writ and Statement of Liquidated Claim upon Mr Nathan.
Mr Taranto said that although he could not remember how often he went to Mr Nathan's home, it was "approximately over 20 times" (P‑22); those were attempts to repossess the car or to serve documents. Under cross‑examination by counsel for the Respondent, he said that the only time he was successful in serving documents was the time he served a County Court writ and a Statement of Liquidated Claim.
The next witness called was Mr Shingles. He said he had been to Mr Nathan's home about three times. He confirmed that he had also visited premises in Kyneton when he was looking for the car to repossess it. It appears that on that occasion Mr Shingles had driven from South Australia where he lives in order to endeavour to repossess the car.
Mr Shingles also confirmed that he had been to adjacent premises to Mr Nathan's home to make inquiries to see if the car had been sighted at Mr Nathan's address and if he was driving it. He said that that was what he does on every job.
Mr Nathan then gave evidence himself. He relied upon all of his affidavits filed in the proceeding.
Under cross‑examination Mr Nathan confirmed that Mr McCredie had said something to him about loan protection on 28 May 2001 and said:
“He said to me that the monthly repayments of $1034 includes comprehensive and loan protection.” (P‑30).
Mr Nathan denied that he had himself applied for comprehensive insurance for the Mercedes Benz but confirmed that he had the vehicle in his possession from 28 May 2001. He had made regular payments on the car until January 2003 and a few payments thereafter.
Subject to the calling of Mr McCredie, that was the evidence on the part of Mr Nathan.
The Respondent first called Dominic Cabassi. Mr Cabassi is the manager of loss recoveries of the Respondent and has held that position since mid 2002. Although he has plainly had a lot of dealing with

Mr Nathan over time, much of his affidavit material simply recorded documents from the Respondent's files and formal matters arising from records.
Mr Cabassi gave little evidence from his own direct experience, a matter not surprising in the circumstances, given that the events of primary concern took place in 2001. In response to the assertion of misleading or deceptive conduct, Mr Cabassi's first affidavit filed on

31 January 2007 stated that the Respondent had not unconscionably, knowingly and wilfully induced Mr Nathan to enter into the hire purchase agreement on the false premise that the vehicle was for business purposes (paragraph 38).
Mr Cabassi went on to say in paragraph [39] of the affidavit that:
“Capital would have been wholly reliant on Mr Nathan to inform Capital what he intended to use the vehicle for. As is apparent from the "motor business declaration" dated 28 May 2001,

Mr Nathan represented to Capital that the vehicle would be used wholly or predominantly for business or investment purposes. Further, given the findings of VCAT referred to above, Capital denies that it is now open to Mr Nathan to allege that the vehicle was not intended to be used for business purposes.”
The reference to a VCAT proceeding is referred to at paragraphs [26] to [29] of the same affidavit. The decision of the deputy president who heard the matter formed an annexure to the affidavit itself, but the relevant extract from the decision at paragraph [28] of Mr Cabassi's affidavit asserts:
“Mr Nathan argued, and Capital agreed, that the transaction was and always had been a commercial transaction.”
In my view, Mr Nathan is now estopped from asserting to this Court that the motor business declaration does not mean what it says. If he is not estopped, he in any event is open to the most severe criticism for telling VCAT one thing and seeking to tell this Court another.
In his first affidavit, Mr Cabassi also denied any representation to

Mr Nathan that the Respondent held a loan protection insurance policy that would, if Mr Nathan defaulted in his obligation to pay money under the hire purchase agreement, pay out Mr Nathan's debt.

At paragraph [42] of the affidavit Mr Cabassi said:
“No such representation was made to Mr Nathan, and given that it is not possible to obtain such an insurance policy in favour of a debtor, no such representations could have been made to

Mr Nathan.”
In his second affidavit filed on 5 April 2007 Mr Cabassi repeated these denials, but went on to say in paragraph [11] of his second affidavit that, the relevant representation having been made by Mr McCredie, "Mr McCredie is not an employee or agent of Capital".
At trial the point that Mr McCredie was not the Respondent's agent was pressed.
Mr Cabassi was cross‑examined at some length by Mr Nathan. In this cross‑examination much was made of what was alleged to be the unavailability of various documents that ought to have been, on

Mr Nathan's case, in the possession of the Respondent. While

Mr Cabassi was at times slightly combative in his demeanour and answers, I am satisfied that the absence of any documents that are not available is readily explicable by the practices of the company, as set out in the evidence, and the long time that has elapsed since the events with which the trial has been substantially concerned took place.
It should be noted (see P-76) that Mr Nathan was not slow to allege tampering with documents, amounting to fraud by the Respondent in this regard.
I formed a clear impression that Mr Cabassi was an honest witness doing his best to respond to questions which were on occasions hard to follow and which from time to time seemed almost deliberately to misrepresent his answers. By way of illustration only, at P‑8 lines 25 to 30, Mr Nathan in cross‑examination completely misrepresented the answer given by Mr Cabassi.
A further allegation of forgery was made at P-11 when Mr Nathan asserted that a document produced in this proceeding was different to another document apparently produced by the Respondent in a proceeding in another Court or Tribunal.
It is fair to say that all of the documentation annexed to Mr Cabassi's affidavit material strikes me as being clear on its face. It all supports the Respondent's position and there is no reason to think that these are anything other than copies of the original documents, as they purport to be, and that such documents as are not available are not available because of the ordinary processes of a business over many years.
Mr Cabassi was pressed to an extent in cross‑examination about the representation allegedly made by Mr McCredie. As I endeavoured to explain at the time, this was a relatively futile exercise since

Mr Cabassi plainly was not present and did not have any direct experience of the relevant conversation between Mr Nathan and

Mr McCredie.
Mr McCredie was called pursuant to a subpoena on the second day of hearing. Surprisingly, Mr McCredie was never asked in terms by Mr Nathan whether he had made the representation upon which Mr Nathan relies, namely that there was loan protection insurance that would completely indemnify Mr Nathan in the event that he was unable to pay his loan repayments from time to time. While this omission may be simply a matter of a lack of forensic experience on the part of

Mr Nathan, it is surprising that no questions at all on this vital point were put to Mr McCredie.
It should be noted that one answer given by Mr McCredie (P‑23) was to this effect:
“Mr Nathan, I don't actually sell insurance so my clients arrange their insurance themselves, so I would have to assume that you arranged your own insurance as I do not sell insurance ... It can be financed if the client requests it to be financed ... In your case it hasn't been financed ... because it's not in the documents.”

It should also be noted that, while it is only a passing matter of credit, Mr McCredie was able to remember that Mr Nathan informed him that he, the Applicant, was in the movie business.
I should say that I thought Mr McCredie's answers were given clearly and responsibly and he was a witness, I would accept, of truth. Furthermore, and importantly, his evidence, like that of Mr Cabassi, was entirely consistent with the documentation before the Court.
It should also be noted that there is no reference to loan protection insurance in the documentation that relates to the loan that enabled

Mr Nathan to buy the car. There is loan protection insurance referred to in a personal loan application that Mr Nathan made, which is annexed to Mr Cabassi's second affidavit. The personal loan contract (Exhibit E to the affidavit) and the loan protection insurance policy relating to that contract (Exhibit F to the affidavit) make it plain that the loan insurance issued in respect of that policy was attributable to accident/sickness, accidental injury or involuntary unemployment.
This then brings one to the central allegation in this case. I said on transcript on a number of occasions almost from the inception of the case that Mr Nathan's central proposition, namely that it was represented to him that the hire purchase agreement he signed included loan protection insurance of a sort that effectively meant that he could default almost instantly on his obligations and have all his obligations paid out by the insurer, is a startling one. Mr Cabassi has sworn that no such insurance is available.
Nonetheless, it has always been possible that an agent or a person working in a car yard not the agent of the Respondent might have said words to the effect alleged by Mr Nathan in the course of an overzealous or unscrupulous endeavour to sign up a client, such as

Mr Nathan.
The difficulty with this is that I do not believe for one moment that

Mr McCredie made any such representation. While Mr Nathan had much to say about the circumstances in which the loan documentation was signed, I think it is far more probable than otherwise that Mr Nathan did sign a declaration saying that he wished to use the car only for business purposes, and in doing so misled, and in an active way, the Respondent as to his circumstances. I also accept that he told Mr McCredie he was in the movie business.
Mr Nathan now complains that in effect he should never have been lent the money to buy the car, because he was a part‑time psychiatric nurse.
As I noted earlier, Mr Nathan formulated the representation at P‑35 on the first day of hearing in these terms:
“Because you're on casual employment, we can't take the risk. Therefore we have to incorporate in your payment some protection so that if you can't pay then we have to get the money somewhere.”
That is all very well as far as it goes, but it completely ignores the obvious reality that no insurer would ever guarantee the obligation to a person in those circumstances. It beggars commonsense to think that they would.
The prospect of insurance of the sort described is radically unsound, giving, as it would, to Mr Nathan the option of ceasing payments after, say, one month, or possibly even without making any payments at all, and then having an insurer immediately reimburse and discharge all of his hire purchase obligations in full.
I should also say, as I have thus far refrained from saying, that I found Mr Nathan to be a very unimpressive witness. Much of what he had to say was said in the course of what purported to be submissions; but his evidence, whether in submissions or in the witness box, was uniformly unimpressive. He has leapt with great alacrity to accuse the Respondent of fraud, forgery and tampering with documents and the like, but I have no doubt that he himself has lied to Capital Finance to get the loan that enabled him to buy his car; and I have no doubt that he lied to Mr McCredie when he said that he was in the movie business.
Whether Mr Nathan knew he was lying, is a matter that only he can know, but I find Mr Nathan to be a person to whom truth is whatever he thinks. His deliberate misrepresentations of witnesses' evidence, of which I have given an example earlier, and his endeavours to resile from the position he has manifestly put to VCAT, only go to enforce the impression of untruthfulness that emanated so strongly from every aspect of his demeanour and the presentation of his case.
It follows that I am comfortably satisfied that Mr Nathan has not discharged the burden of proof upon him to establish that the representation for which he contends was made. Indeed I am positively certain that no such representation was made.
It therefore follows that the s.52 claim must fail. Mr Nathan was not induced to take out the loan with the Respondent that he took out on the basis of a representation made by Mr McCredie because no such representation was ever made, by him or by anyone else, for or on behalf of the Respondent.
It was submitted by counsel for the Respondent that in any event

Mr McCredie was not the agent for the Respondent. In my view, there would be considerable force in this proposition, given the way the evidence has emerged. It appears that Mr McCredie worked for a company that may well be unrelated. In the circumstances, however, it is not necessary for me to make any final findings about this matter, and I do not do so.
It only remains now to deal with the issue of harassment asserted by Mr Nathan. The endeavours made by the Respondent to repossess the car and to otherwise pursue legal avenues against Mr Nathan were all, in my view, entirely reasonable and do not begin to approach what might be said to be harassment within the meaning of s.60 of the Act.
I found the three witnesses subpoenaed by Mr Nathan in respect of these issues to be believable witnesses. I accept Mr Weimer’s evidence that Mr Nathan asked Mr Weimer to move back and then closed the door, and the threat that he made that the next person who came to his home would be hit with a hammer.
The application in respect of harassment fails totally.
It is clearly necessary to make orders that the application be dismissed and Mr Nathan will pay the Respondent's costs of the proceeding. I will give the parties an opportunity to consider these reasons for judgment. I will then hear further as to any submissions as to the basis upon which costs should be awarded and as to any ancillary orders that may be appropriate.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of Burchardt FM

Associate: Brooke Evans

Date: 10 September 2007