PAG (WA) PTY LTD and COMMISSIONER FOR CONSUMER PROTECTION
[2018] WASAT 57
•28 JUNE 2018
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: MOTOR VEHICLE DEALERS ACT 1973 (WA)
CITATION: PAG (WA) PTY LTD and COMMISSIONER FOR CONSUMER PROTECTION [2018] WASAT 57
MEMBER: PRESIDENT, JUSTICE J C CURTHOYS
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 28 JUNE 2018
FILE NO/S: VR 21 of 2018
BETWEEN: PAG (WA) PTY LTD
Applicant
AND
COMMISSIONER FOR CONSUMER PROTECTION
Respondent
Catchwords:
Motor vehicle dealer's licence - Hearing de novo - Restrictive licence condition upon licence renewal application - Commencement of criminal proceedings - Application for interim orders for stay of proceedings and stay of operation of licence condition - Interest of any person who may be affected by decision - Public interest
Legislation:
Motor Vehicle Dealers Act 1973 (WA), 15(3)
State Administrative Tribunal Act 2004 (WA), s 27(1), 25, s 25(4), s 68
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Applicant | : | Mr A Norwood |
| Respondent | : | Mr S King |
Solicitors:
| Applicant | : | Trinix Lawyers |
| Respondent | : | Department of Mines Industry Regulation and Satety |
Case(s) referred to in decision(s):
Al Edany and Department of Planning and Infrastructure [2005] WASAT 165
D'Ambrosia and Demarte [2014] WASAT 89
Farquharson v Director General, Department of Transport [1999] NSWADT 53
Minniti v Motor Vehicle Industry Board [2011] WASCA 275
REASONS FOR THE DECISION OF THE TRIBUNAL:
Introduction
PAG (WA) Pty Ltd (PAG) holds a motor vehicle dealer's licence under the Motor Vehicle Dealers Act 1973 (WA) (the Act)
The nature of the hearing before the Tribunal
A hearing of a review of the Commissioner's decision is a hearing de novo (s 27(1) of the State Administrative Tribunal Act 2004 (WA)).
The legislative framework
Before turning to an analysis of the facts, it is useful to set out the legislative framework within which the facts are to be considered.
Section 15(3) of the Act provides that a body corporate which applies in the approved form for a vehicle dealer's licence and pays the prescribed fee shall be granted such a licence upon satisfying the decision-maker:
(a)that all of the persons concerned in the management or conduct of the body corporate are persons of good character and repute and are persons fit to be concerned in the management or control of the business of buying or selling vehicles; and
(b)that it has sufficient resources; and
(c)that at least one of the natural persons referred to in paragraph (a) has sufficient knowledge of this Act.
A licence confers a right on a person to pursue a regulated occupation. The considerations relevant to the exercise of a discretion in that context will be affected by the specific terms of statutory powers, the nature of the statutory scheme and its legislative objectives (Farquharson v Director General, Department of Transport [1999] NSWADT 53 at [40]; Al Edany and Department of Planning and Infrastructure [2005] WASAT 165 at [34]).
The nature and objective of the statutory scheme of the Act is to regulate the motor vehicle industry for the protection of the public, particularly consumers who buy or sell vehicles through dealers (Minniti v Motor Vehicle Industry Board [2011] WASCA 275 (Minniti) at [25]).
Dealers and, in the case of corporate dealers, all persons concerned in the management or conduct of the corporate dealer, are required to have honesty and integrity in the conduct of their business and must also be accurate and reliable in the keeping of records and information ((Minniti) at [25]).
PAG's licence renewal application
On 29 September 2017, PAG applied to the Commission for Consumer Protection (the Commissioner) to renew its licence MD22450.
PAG holds a number of licences but the relevant licence is category A which permitted PAG to engage in 'buying, selling and auctioning vehicles other than motor cycles, caravans and camper vans.
The Commissioner responded to the application by letter in December 2017. The letter relevantly stated:
…
While I have decided to approve the renewal of your licence, to allow the investigation to be completed and options for action to be explored, I have, in the interim decided that it is in the public interest for consumers to be protected from the ongoing use by PAG of the above methodology by imposing a restrictive licence condition as follows:
The licence holder is not permitted to engage in consignment selling without prior approval from the Commissioner.
Pursuant to section 18A(4) of the Motor Vehicle Dealers Act 1973, if you would like to make any written submission in relation to the decision to impose this condition, please do so by no later than 4 January 2018[.]
(Commissioner's Book of Documents page 37)
PAG responded by letter dated 16 January 2018:
I refer to the invitation by yourself to make submissions on behalf of PAG (WA) PTY LTD in relation to the proposed condition to be imposed for renewal of the license to PAG - namely a restriction to prohibit consignment sales by PAG.
I submit as follows:
1.My understanding is that such a condition is proposed to be imposed on the basis of ongoing investigations that the Department is conducting in relation to consignment activities.
2.As it stands today, no formal charge or prosecution notice has been issued against PAG.
3.That whilst such investigations may have revealed conduct that may result in a charge, it is important to remember that PAG has yet been charged, and yet to respond to those charges formally and or defend such charges.
4.Accordingly, PAG has not been found guilty of any breaches and as at today, has an unblemished record in relation to its license, having not breaches for over some 8 years
5.It would be extremely unconscionable and unjust to effectively impose such a condition on PAG's license, based on investigations that have yet been concluded, and more importantly, without affording PAG an ability to defend such charges when in fact no charges have been laid as yet.
6.The Department has pre-emptively determined the outcome of such investigations and any prosecution notices that may be issued in this matter,
7.The Department has placed undue weight on weight on such Investigation evidence and insufficient weight on the fact that PAG has yet been charged, PAG has an unblemished record, and that PAG should not be penalised for an act that has yet been determined by the judicial system.
8.At all material times, I always believed that PAG was acting correctly and appropriately and in accordance with all the relevant regulations and rules.
9.If however, the investigations indicate that PAG has not complied with relevant regulations and rules (which I do not admit), I am more than willing to ensure all future compliance strictly and more than willing to work with the Department to put in place all necessary procedures to ensure strict compliance.
10.It is very important to also note that PAG's future consignment activities will also drop significantly in that PAG's business model is changing to that of an online auction.
11.In such respect, all Information is transparent and all auctions and transactions are done directly without any consignment activities as such.
12.My understanding however, is that for auction activities and for this business model that we are implementing for 2018 onwards, the license by PAG must still allow for consignment activities.
13.On this basis, we respectfully request that the condition not be imposed on PAG's license.
14.Any ongoing breaches (If any) or non compliant activities will immediately cease, and all stricter procedures will (In consultation with the Department), be applied to ensure that all issues raised in your Investigations are attended to and will not occur again.
15.The condition proposed to be imposed on PAG's license will have a significant detrimental effect on PAG's business and my financial well being.
16.Such a proposed condition will effectively wipe out my business and prohibit me from doing online auction sales.
17.This will have a severe impact on my well-being and cause significant detriment to me.
18.We respectfully ask that the Department place due weight on the detrimental impact on PAG's business and my financial position, versus our willingness to address any issues raised and put in place any tighter systems to ensure ongoing full compliance.
19.1 respect also ask that due weight be placed on the fact that PAG has never, in its history, been found guilty of any breach and as such, has been a model licensee for over [20 years] CHECK.
20.Accordingly, any issues raised from the investigation if resulting in a prosecution notice, will be a first charge and to which PAG has yet to even defend such charge.
On this basis, I would submit that it is extremely prejudicial that a condition is being imposed restricting PAG's license, based on investigations that have not been concluded, and have not yet resulting in any prosecution notice being issued, and have yet been determined by the judicial system. I simply wish to conduct PAG's business correctly and appropriately, and wish to move on from our current business model and go into online auctions. This will, as stated above, in any event remove all future consignment activities. Having said this, we require the proposed condition not be imposed on PAG's license to allow PAG to conduct this new business model.
(Commissioner's Book of Documents pages 39-40)
The Commissioner responded by letter dated 31 January 2018. The letter relevantly stated:
As you have elected not to attend a recorded interview and your letter does not address the concerns referenced in my letter dated 13 December 2017, I remain of the view that it is in the public interest that the condition be imposed under section 18A(2) of the Act. Therefore, in accordance with section 18A(3) of the Act, I determine that the condition will take effect from 12 February 2018 and to avoid confusion as to its application, I have simplified the condition to remove the words 'without prior approval of the Commissioner'. As a result the licence condition will now read as:
'The licence holder is not permitted to engage in consignment selling'.
As such, you are required to terminate any consignment agreements that you currently have in place and return the vehicles to their respective owners by 12 February 2018. Please note that Compliance Officers will monitor this situation and work with you to ensure compliance is achieved.
To ensure continuity of the licence period, the enclosed licence has been backdated to 27 October 2017, in accordance with section 19(3a) of the Act. In relation to PAG's new premises, I have been advised that you are yet to sign and formally submit an application to change authorised premises, which you will now need to do.
In making this decision, I have given weight to the fact that motor vehicle dealers are required to be licensed because the parliament has recognised the need for protection of the public, particularly those who buy and sell motor vehicles through dealers. One of the essential features of the statutory regime is the requirement for dealers to behave honestly and with integrity in the conduct of their businesses. In relation to the consignment agreements which PAG has entered into, I remain unconvinced that its directors and employees have behaved honestly and with integrity. One mechanism which the Act provides for preventing non-compliance with the obligations which apply to consignment sales is to limit the company's ability to engage in such activities by imposing a restrictive condition.
I have also made this decision in the knowledge that it is a reviewable decision within the meaning of section 22 of the Act such that PAG may apply to the State Administrative Tribunal for a review of the decision[.]
(Commissioner's Book of Documents pages 41-42)
PAG's application
On 8 February 2018, PAG filed an application with the Tribunal seeking the following orders:
1.Pursuant to section 25(2) of the State Administrative Tribunal Act 2004, the operation of the decision by the Respondent to impose the restrictive licence condition 'The licence holder is not permitted to engage in consignment selling' on the Applicant's Motor Vehicle Lealer's Licence MD 22450 pursuant to section 18A(2) of the Motor Vehicle Dealers Act 1973 be immediately stayed.
2.The restrictive licence condition 'The licence holder is not permitted to engage in consignment selling' imposed on the Applicant's Motor Vehicle Dealer's Licence MD 22450 by the Respondent pursuant to section 18A(2) of the Motor Vehicle Dealer's Act 1973 be removed.
3.The Respondent pay the costs of this application.
On 7 March 2018, the Commissioner filed reasons for decision pursuant to an order of the Tribunal dated 14 February 2018. The reasons stated:
STATUTORY REGIME
1.The Motor Vehicle Dealers Act 1973 (MVDA) governs the licensing regime for motor vehicle dealers in Western Australia. The purpose of the MVDA is 'to regulate dealing in motor vehicles and for related purposes'.
2.Section 18A(2) of the MVDA provides that the Commissioner may decide to impose conditions or restrictions on a motor vehicle dealers licence (Licence) at any time, subject to providing the licensee a reasonable opportunity to make submissions regarding the proposed condition.
3.The nature of the conditions or restrictions that may be imposed is not limited, and the grounds on which the Commissioner may decide to impose a condition or restriction are not stipulated in the provision.
BACKGROUND
4.The Applicant is a proprietary company, and trades under the registered business name Xoticar. The Applicant was first granted its Licence in 2011.
5.On 29 September 2017, the Applicant applied for renewal of its Licence.
6.In response to proactive compliance investigations, at the time of renewal, the Commissioner had already commenced an investigation into the Applicant's conduct in the sale of motor vehicles under consignment.
7.A consignment sale is one in which a dealer enters into a written agreement to sell a vehicle on behalf of the consignor for no less than the agreed minimum sale price stipulated in the consignment agreement (WISP). The dealer may sell the vehicle for more than the MSP, and retains the amount in excess of the MSP as its commission. The consignor can therefore expect to receive the full MSP following sale of the vehicle.
8.The Applicant has held a consignment trust account (CTA) since November 2011 but has never deposited any funds into the CTA. The CTA has never been audited, as the Applicant has lodged statutory declarations with the Commissioner in each audit period ending 2012-2016 to the effect that there were no funds held in the CTA in the relevant years.
9.The evidence collected in the course of the investigation indicates that numerous technical breaches have been committed, including:
9.1.Accepting vehicles on consignment without a written agreement contrary to s. 32B MVDA;
9.2.Failure to deposit consignment funds into the CTA contrary to s. 32D MVDA; and
9.3.Failure to pay consignment sale proceeds to the consignor within 2 business days contrary to s. 32G MVDA.
10.Moreover, the evidence indicates that the Applicant has engaged in a modus operandii that involves the making of false or misleading representations to consignors regarding the price paid, or payable, for the sale of their vehicle, contrary to s. 151(1)(i) of the Australian Consumer Law (ACL), and which constitutes an undesirable practice contrary to s. 41 MVDA (Modus Operandii).
11.The Modus Operandii is outlined briefly as follows:
11.1.The Applicant enters into a consignment agreement with a consignor for a stipulated MSP.
11.2.The Applicant subsequently contacts the consignor and represents that the MSP cannot be achieved, or that an offer has been made for a lower price (Representation).
11.3.The Applicant neither terminates nor properly completes the consignment - in each case, having the consignor sign a Form 807 Notice of Sale (Form 7), a form of ambiguous effect that indicates the consignor will receive a price lower than the agreed MSP.
11.4.In each case, the vehicle is sold shortly thereafter for more than the MSP, and either:
11.4.1.the Applicant had already a buyer interested in the consigned vehicle before making the Representation; or
11.4.2.had already received an offer above the MSP before making the Representation; or
11.4.3.had already received full payment in excess of the MSP before making the Representation.
11.5.In each case, the consignor believes that the purchase is occurring in accordance with the consignment agreement.
11.6.The price received by the consignor is less than the MSP, and the Applicant receives a significantly higher price.
12.In this way, the Applicant:
12.1.Increases its profit margins at the consignor's expense;
12.2.Allows consignors to believe that the vehicle is still under consignment, allowing the Applicant to delay payment to the consignor until after the buyer has paid the purchase price; and
12.3.Purports to have terminated the consignment with the Form 7, ostensibly avoiding the requirement to deposit funds into its CTA, to pay consignors within 2 days of receipt, and avoiding audits of its CTA.
13.Whilst considering the application for renewal, the Commissioner considered whether it was appropriate to impose a restriction on the Applicant's licence. Given that all the alleged contraventions related to consignments, the Commissioner elected to impose a restriction on the Applicant engaging in consignment sales rather than refusing to renew the Applicant's Licence.
14.On 13 December 2017, the Applicant was informed by letter that the Commissioner intended to renew its Licence, but had made a preliminary decision to impose a licence restriction prohibiting the Applicant from engaging in consignment sales (Restriction).
15.On 16 January 2018, the Applicant sent a letter to the department raising objections to the imposition of the Restriction.
16.On 31 January 2018, the Commissioner wrote to the Applicant confirming his decision to impose the Restriction.
17.The Applicant lodged an application for review of the Respondent's decision on 9 February 2018.
REASONS FOR DECISION
Grant of licences and imposition of conditions
18.Section 15(3) MVDA governs the grant of a Licence to a body corporate. It provides that the Commissioner shall grant the category of licence sought upon being satisfied that the applicant meets the prescribed criteria.
19.Schedule 4 of the Motor Vehicle Dealers (Licensing) Regulations 1974 (Licensing Regulations) sets out the licence categories.
20.The obligation to grant licences to qualified applicants pursuant to s. 15 is subject to the Commissioner's power to impose conditions and restrictions on licences pursuant to s. 18A MVDA.
21.In particular, s. 18A(2) provides that the Commissioner may decide to impose a condition or restriction at any time, subject to giving the applicant reasonable notice.
The evidence and the Commissioner's concerns
22.The Commissioner's principal concerns regarding the conduct of the Applicant fall into three categories:
22.1.Technical contraventions' in the operation of consignment sales and its consignment trust account;
22.2.The Applicant making false or misleading representations to consignors contrary to the Australian Consumer Law (ACL); and
22.3.The Applicant's engagement in an undesirable practice contrary to the MVDA and the Motor Vehicle Dealers (Sales) Regulations 1974 (Sales Regulations).
Undesirable practice
23.The Commissioner formed the view that the Modus Operandii outlined above constitutes an undesirable practice contrary to s. 41 MVDA.
(1)A person shall not, in relation to the business of buying or selling vehicles, carry out or give effect to any undesirable practice.
Penalty: $2 000.
(2)In this section an undesirable practice means a practice prescribed to be an undesirable practice by regulation under this Act.
25.Schedule 2 to the Motor Vehicle Dealers (Sales) Regulations 1974 (Sales Regulations) outlines undesirable practices for the purposes of s. 41 MVDA.
26.item 5 of Schedule 2 provides:
5.The giving, by a dealer, yard manager or salesman, of misleading advice to a person (in this item called the representee) concerning
(a)the nature of a written offer to purchase a motor vehicle, which offer has been prepared by a person other than the representee; and
(b)the effect of the offer referred to in paragraph (a) if signed by the representee or any other person.
27.The Commissioner formed the view that the manner in which the Applicant represents the Form 7 to consignors contravenes the above provision.
28.The Form 7 constitutes a written offer to purchase the vehicle from the consignor, and the Applicant misled the consignors as to the nature and effect of the offer. The above consignors all believed that the Form 7 was necessary to conclude the consignment, that the offer came from a purchaser, and that it constituted the best price achievable for the vehicle.
29.Further, the Form 7 does not constitute termination of the consignment agreement, and the Applicant is still required to comply with the consignment requirement. Moreover, after the consignor executes the Form 7, the Applicant continues to treat the sale as a consignment - in particular, the Applicant does not immediately pay the consignor, but delays payment until they have received purchase funds from the buyer (or later).
30.The intended purpose of the Form 7 is ambiguous. It is not expressly a purchase contract, nor does it clearly terminate the existing consignment contract.
31.If the Form 7 were arguably a sales contract, it expressly states that title does not pass until all monies are received. The Applicant never paid any consignor for their vehicle until after it had been on-sold to a purchaser in the manner of a consignment.
32.If the Applicant intended the Form 7 to constitute a private purchase between consignor and dealer, then they have not concluded that purchase, and have subsequently on-sold the vehicle without the right to do so. Irrespective of the Form 7, the only legal basis on which the Applicant could sell the relevant vehicles was subject to the original consignment agreements.
Example 1 - Melissa Rossouw
33.Melissa Rossouw consigned her vehicle to the Applicant for $29,000,00 on 9 June 2016. As Ms Rossouw was ill, her sister, Anja Rossouw, delivered the vehicle to the Applicant, and signed the consignment agreement.
34.The Applicant received a signed purchase contract from Leslie Smeda $33,500.00 for Ms Rossouw's vehicle on 30 July 2016 and did not inform Ms Rossouw.
35.On 1 August 2016 the Applicant, via Fred Seinor, advised Anja Rossouw words to the effect that he 'could not get any .more than $29,000 for the vehicle' and, as the Applicant 'needed to make $4,000 profit', Ms Rossouw would only get $25,000 from the sale.
36.The Applicant received payment of $33,366.45 from Mr Smeda on 2 August 2016 and did not inform Ms Rossouw.
37.Ms Rossouw subsequently signed a Form 7 stipulating the price of $25,000.00 on around 5 August 2016. The Applicant did not date the Form 7.
38.Ms Rossouw believed the Form 7 was necessary, to conclude to consignment, and was not told that the Applicant had any intention to terminate the consignment agreement.
39.Pursuant to the consignment agreement, Ms Rossouw was entitled to receive $29,000, but only received $25,000 on 19 August 2016. The Applicant increased its profit margin by $4,000.
40.The Applicant had already received the full purchase price into its account several days before Ms Rossouw was asked to sign the Form 7.
41.The Applicant:
41.1.Misled Ms Rossouw as to the price a purchaser was willing to pay for the vehicle; and
41.2.Had Ms Rossouw sign a Form 7 for $25,000, where it had already received an offer, and payment, for a higher purchase price.
Example 2 - Russell O'Neill
42.Russell O'Neill consigned his vehicle for sale for $12,000.00 on 10 July 2014.
43.The minimum sale price was later reduced to $9,000.00 by amendment of the consignment agreement, which was undated and unsigned.
44.Mr O'Neill signed a Form 7 on 9 February 2015 for the further reduced price of $7,200.00.
45.The Applicant sold Mr O'Neill's vehicle for $13,888.00 11 February 2015. Mr O'Neill received $7,200 on 13 February 2015.
46.The Applicant:
46.1.Misled Mr O'Neill as to the price achievable for the vehicle; and
46.2.Had Mr O'Neill sign a Form 7 for $7,200, and had a signed purchase contract for over the original MSP within 2 days.
Example 3 - Dominic Lee
47.Dominic Lee consigned his vehicle for sale for $83,000.00 on 13 August 2016, and authorised his father, Ben Lee, to deal with the Applicant on his behalf.
48.The Applicant, via Fred Seinor, advised Ben Lee that they had a buyer for $71,000, which was the best price they could obtain for the vehicle23, and requested that Dominic Lee sign a Form 7.
49.Dominic Lee signed a Form 7 on 26 August 2016.
50.Payment was not received, and Ben Lee contacted the Applicant on 31 August to enquire when they would receive payment. Mr Seinor responded via email on 13 September 2016 that 'settlement' would be finalised on 16 September and they would receive the funds on 20 September.
51.In fact, the Applicant received full payment of $78,500.00 in its account on 13 September 2016, from Westside Auto Wholesale. Dominic Lee did not receive the $71,000 until 21 September 2016.
52.The Applicant:
52.1.Misled Mr Lee as to the price a purchaser was willing to pay for the vehicle; and
52.2.Had Mr Lee sign a Form 7 for $71,000, on the basis that was the highest offer achievable; where the offer (from a vehicle wholesaler) was for a higher purchase price.
Example 4 - Jeremy Gledhill
53.Jeremy Gledhill consigned his vehicle for sale for $55,000 on around 5 March 2016.
54.On 7 April 2016, the Applicant via Fred Seinor, advised Mr Gledhill that an offer had been received for $42,000, which was the 'absolute best price that you could get for the vehicle'.
55.On 8 April 2016, at 11:11 am the purchaser, Albert Letto, paid a deposit of $2,000 to purchase Mr Gledhill's vehicle, and paid the remainder on 20 April 2016, to a total amount of $48,350.
56.Also on 8 April 2016, the Applicant via Fred Seinor, requested that Mr Gledhill sign a Form 7 with the price of $42,000, and stated it was necessary to complete the consignment. Mr Gledhill signed the Form 7 and returned it via email at 1:30pm on 8 April.
57.On 26 April, following a query from Mr Gledhill about payment, the Applicant via Fred Seinor, sent an email stating that 'finance will be settled tomorrow and the balance will be in your account by Friday 29th'. Full payment had already been received on 20 April.
58.Mr Gledhill received the full $42,000 by 27 April, in two payments from the Applicant's general bank account on 26 and 27 April.
59.The Applicant:
59.1.Misled Mr Gledhill as to the price a purchaser was willing to pay for the vehicle; and
59.2.Had Mr Gledhill sign a Form 7 for $42,000, where it had already received an offer, and deposit, for a higher purchase price.
Other supporting evidence
60.The Commissioner has received complaints, and statements, from several additional consignors outlining their interactions with the Applicant in similar terms. Evidence relating to the Kambembo, Kemp, Salik, Wahhab, Marion, Takla, and Shillington Consignments is presented in the Respondent's SIFC.
61.In addition, two former employees of the Applicant, Mr Shane Schleper and Mr Dominic Brighton, have provided statements indicating that they received instructions from Mr Zeljko 'Zak' Grujin, on behalf of the Applicant, to act in accordance with the Modus Operandii and, in particular:
61.1.To bring in consignors 'at any price', with a view to pushing the MSP lower;
61.2.To execute a Form 7 on every sale; and
61.3.That the majority of sales conducted are commenced by way of consignment contract, notwithstanding that they are never properly concluded.
False or misleading representations
62.Section 151 (1)(i) of the Australian Consumer Law (ACL) provides:
(1)A person commits an offence if the person, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
(i)makes a false or misleading representation with respect to the price of goods or services[.]
63.Based on the evidence outlined above, the Commissioner formed the view that the Applicant made false or misleading representations:
63.1.to Lee and Rossouw regarding the actual price offered by a purchaser for their vehicles; and
63.2.to Rossouw, O'Neill and Gledhill regarding the sale price achievable for their vehicles.
Technical contraventions
64.The Applicant enters into consignment agreements with consignors. The MVDA provides that consignment agreements must be in writing and contain the prescribed particulars, terms and conditions: s. 32B MVDA.
65.The prescribed requirements are contained in Schedule 4 of the Sales Regulations which prescribe that a consignment agreement must be terminated by a party giving written notice: clause 11 of Schedule 4.
66.The ongoing nature of the agreements, and the requirement for termination in writing, is reflected on the consignment agreements themselves.
67.The Applicant does not terminate consignment agreements, nor does it conclude them, but requires consignors to sign a Form 7.
68.The Form 7 does not constitute written termination of the consignment agreement and consignors continued to believe their vehicle was being consigned to a purchaser for the price stipulated in the Form 7.
69.The Applicant remains bound by the MVDA requirements in respect of consignment sales and, accordingly:
69.1.Must deposit purchase payments received from buyers into the CTA pursuant to s. 32D MVDA, but failed to do so in respect of each of the Rossouw, O'Neill, Lee and Gledhill consignments; and
69.2.Must pay consignors within 2 business days of receiving payment of the purchase price pursuant to s. 32G MVDA and clause 3.1 of Schedule 4 of the Regulations, but failed to do so in respect of each of the Rossouw, Lee and Gledhill consignments.
The Commissioner's preliminary decision
70.The Commissioner considered the evidence in accordance with the principles of administrative decision making. On those principles, the Commissioner:
70.1.may consider any matters he deems relevant by reference to the subject matter, scope and purpose of the MVDA, and ascribe to each such weight as he deems appropriate;
70.2.must consider the public interest;
70.3.must not come to a finding of fact that it irrational or illogical; and
70.4.must not make a decision that is so perverse that no reasonable decision-maker could have arrived at it.
Relevant considerations
71.The Commissioner is not expressly bound by s. 18A to consider any particular factors - nor prohibited from considering any factor - in exercising his discretion to impose licence restrictions.
72.By implication, the subject matter, scope and purpose of the MVDA restricts permissible considerations to those with sufficient nexus to the regulation of motor vehicle dealing.
73.The evidence relating to the Applicant's engagement in the Modus Operandii which potentially constitutes criminal breaches of both the ACL and MVDA, is a relevant consideration by reference to the subject matter, scope and purpose of the MVDA, and the Commissioner was permitted, if not bound, to consider it.
74.On the basis of the evidence outlined above, the Commissioner made findings of fact, and drew inferences, to the effect that:
74.1.The Applicant has engaged in the Modus Operandii, which is an undesirable practice contrary to s. 41 MVDA and Schedule 2 of the Sales Regulations;
74.2.The Applicant has made false or misleading representations in respect of the price of goods in contravention of s. 151(1)(i) ACL;
74.3.The Applicant has committed technical breaches of the MVDA, particularly ss. 32D and 32G, in failing to deposit consignment proceeds in its CTA, and failing to pay those proceeds to consignors within 2 business days;
74.4.The Applicant's engagement in these practices allow it to:
(a)secure consignors, and then falsely reduce the MSP in order to secure a larger profit margin at the consignor's expense; and
(b)avoid the controls and scrutiny created by the provisions of the MVDA governing the consignment process, use of a consignment trust accounts and auditing of those accounts; and
74.5.These practices have the potential to cause detriment to consumers, and undermine the licensing regime.
75.These inferences and findings of fact are not unreasonable or illogical in light of the evidence provided.
Public interest
76.The Modus Operandii misleading representations, and technical breaches also have significant potential to negatively impact consumers and undermine the licensing regime. This is a relevant consideration by reference to the public interest.
77.The Commissioner considered the potential negative impact to the Applicant of curtailing its engagement in consignment sales. However, as the Applicant has never concluded a single consignment sale in the manner prescribed by the MVDA, the Commissioner formed the view that their operations would not be negatively impacted, save to the extent that they are prevented from engaging in a misleading and undesirable practice.
78.By contrast, the potential for the protection of consumers from what seem, prima facie, to be misleading and undesirable practices, is significant.
79.In balancing these factors, the Commissioner decided that the imposition of the restrictive licence condition was the correct and preferable decision.
Applicant's objections
80.The Applicant's written submission and application contain a number of objections particularly relating to procedural fairness, impact on the Applicant, or the taking into account of irrelevant considerations:
(1)Imposition is unfair as the Applicant has not been prosecuted or convicted;
(2)Denial of procedural fairness;
(3)Change of business model to online auctions, which will reduce or eliminate consignment sales;
(4)That the Applicant believes it requires a 'consignment licence' in order to conduct online auctions;
(5)Detrimental impact of the Applicant's business, and its director's personal and financial wellbeing;
(6)That the Commissioner gave weight to the Applicant's decision not to attend an interview; and
(7)The Applicant's willingness to ensure compliance.
Objection 1
81.The Commissioner's discretion as outlined in s. 18A MVDA does not require any previous determination or conviction. In the circumstances, a previous conviction is not the only evidence capable of satisfying the Commissioner that the imposition of a condition or restriction is warranted.
82.Neither does the provision require the Commissioner to be satisfied to a particular standard so as to imply that a conviction or other judicial determination is required.
83.The Commissioner was satisfied that the imposition of the restriction was the correct and preferable decision, based on the evidence available.
Objection 2
84.Procedural fairness in this context requires that the licensee is given a reasonable opportunity to provide submissions in relation to the proposed condition or restriction, pursuant to s. 18A(4)(b) MVDA.
85.The Applicant was invited to provide a response to the Commissioner's preliminary decision, and did so. In addition, the Applicant was advised, via email dated 20 December 2017, that the offer to attend a voluntary interview remained open.
86.The Applicant was accorded procedural fairness, but did not address the matters of concern to the Commissioner.
Objections 3 & 4
87.If the Applicant's intention is to engage in consignment sales via an online auction system, then the Commissioner remains of the view that the Applicant ought to be restricted from doing so.
88.If the Applicant intends to reduce or eliminate consignment sales, then the impact upon its business should be minimal.
89.Given that the Applicant has not completed a consignment in the past 5 years, the Commissioner remains of the view that the Applicant intends to continue engaging in the Modus Operandii.
90.The Commissioner is not of the view that the online auction of motor vehicles requires the Applicant to engage in consignments. There is a distinction between conducting sales as an agent (Category E licence), and conducting consignment sales (which is conducted under a Category A licence).
Objection 5
91.The Commissioner further considered that, even if the licence Restriction did prevent the Applicant from engaging in its proposed online auctions, the negative impact on its business would be outweighed by the public interest in the imposition of the Restriction.
92.The Commissioner is of the view that the Applicant's conduct needed to be stopped, and that the imposition of a licence restriction would have less impact on the Applicant than the outright refusal to renew its Licence.
Objection 6
93.The Commissioner did not rely upon the Applicant's decision not to attend a voluntary record of interview in coming to his decision.
94.Attendance at an interview would have provided the Applicant an opportunity to address concerns underlying the Commissioner's decision. The Applicant did not take that opportunity and, accordingly, the Commissioner's decision remained unchanged. This was noted in the Commissioner's letter of 31 January 2018.
95.Similarly, the Applicant's written submission did not address the Commissioner's concerns.
Objection 7
96.The Applicant has been aware of the Commissioner's concerns regarding its practices since October 2017, and has been offered multiple opportunities to engage with the Department.
97.In its submission, the Applicant simultaneously denied any wrongdoing and indicated a willingness to alter its practices to ensure compliance. The Applicant is entitled to remain silent in respect of criminal allegations raised regarding its conduct, however its ability to become compliant is hindered by a refusal to acknowledge any wrongdoing.
98.The Commissioner was not satisfied by the Applicant's general assurances and, on balance, decided that imposition of the Restriction remained the correct and preferable decision.
CONCLUSIONS
99.On the above principles, the Commissioner:
99.1.considered matters he deemed relevant by reference to the subject matter, scope and purpose of the MVDA;
99.2.considered the public interest, and balanced it against the potential impact to the Applicant;
99.3.considered the submissions made by the Applicant;
99.4.drew inferences and made findings of fact that were rational and logical based on the available evidence; and
99.5.made a decision, within his discretion, that was reasonable in all the circumstances.
100.Having considered the relevant principles in coming to his preliminary decision, with particular focus on the public interest considerations and, subsequently, with particular reference to the objections raised by the Applicant, the Respondent came to the final decision that the maintenance of the statutory regime, and the protection of the public interest, required the imposition of the restrictive condition.
(Commissioner's Book of Documents; Reasons pages 0-16)
The Tribunal notes that the Commissioner's reasons were supported by extensive references to relevant documents.
Commencement of criminal proceedings
On 4 April 2018, the Commissioner commenced criminal proceedings against PAG (Affidavit of Myhung Nguyen 25 May 2018 pages 52-80). The facts alleged in the criminal proceedings are substantially the same as those stated in the reasons for decision of the Commissioner set out above (Nguyen affidavit above).
The issue
PAG seeks two interim orders:
1)a stay of the proceedings pending the outcome of the criminal charges; and
2)a stay of the operation of the condition imposed on the licence.
The Commissioner does not oppose the first order sought by PAG. Given that criminal proceedings have been commenced it is appropriate that the proceedings be stayed. The contentious order is order 2.
The Tribunal's jurisdiction to stay the operation of the decision
The Tribunal has the power to stay the operation of a decision under review under s 25 of the SAT Act which relevantly provides:
Effect of review proceedings on decision being reviewed
(1)The commencement of a proceeding for the review of a decision does not affect the operation of the decision or prevent the taking of action to implement the decision unless
(a)the enabling Act states otherwise; or
(b)the Tribunal makes an order under subsection (2).
(2)The Tribunal, on the application of a party or on its own initiative, may make an order staying the operation of a decision that is the subject of a proceeding for review.
…
(4)The Tribunal may make an order under subsection (2) only if it considers that it is desirable to do so after taking into account
(a)the interests of any persons whose interests may be affected by the order; and
(b)any submission made by or on behalf of the decision‑maker; and
(c)the public interest[.]
The Tribunal does not accept that an onus rests on either party. The Tribunal is to review the evidence before it and to make a decision as to whether the stay is appropriate.
PAG submitted that the Tribunal may take into account factors beyond those set out in s 25(4) of the SAT Act.
The 'may' is not a discretion as to which factors should be taken into account but rather whether, having considered the factors set out in s 25(4)(a) to (c), the Tribunal will order a stay. However, given that the Tribunal may take into account 'any submission made by or on behalf of the decisionmaker', the factors which may be considered are wide.
PAG further submitted:
In Phoenix Timber Products trading as Vintage Hardwoods and Skinner ([2005] WASAT 315 at [10] to [14]) the Tribunal held that some general principles relating to an application for a stay of execution of a judgment pending an appeal should apply to an application for a stay of a reviewable decision under section 25 of the Act, subject to section 25(4) of the Act. In D'Ambrosia and Demarte [[2014] WASAT 89] the Tribunal summarised those principles as:
1the starting point is that a successful party should be entitled to the fruits of his or her judgment; so there is an onus on the applicant for a stay of a decision to demonstrate a proper basis for a stay;
2the discretion to stay execution of a decision pending an appeal is unfettered. The Tribunal needs to be satisfied that there is an arguable case for an appeal to ensure that the appeal has not been lodged simply to delay execution: Croney v Nand; ([1999] 2 Qd R 342 at 348 and 349).
3appropriate circumstances may exist if it is shown that if a stay of execution is not granted, the appeal may be nugatory: Wilson v Church (No 2) (1879) 12 ChD 454 at 458, or that serious injury will result to the applicant unless a stay is granted. Appropriate circumstances are not limited to that situation and will exist whenever there is a real risk that it will not be possible for a successful applicant to be restored substantially to his or her former position: Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) ((1986) 160 CLR 220 at 223).
The Commissioner submitted:
14.In D'Ambrosia [D'Ambrosia and Demarte [2014] WASAT 89 at [13]], the Tribunal stated that the onus is on the applicant for a stay to demonstrate a proper basis for it.
15.The Tribunal has previously held that some general principles relating to appeals should apply to stays of reviewable decisions [Phoenix Timber Products trading as Vintage Hardwoods and Skinner [2005] WASAT 315 at [10]-[14]], which were outlined in D'Ambrosia as follows.
16.Firstly, the discretion to stay execution of a decision pending an appeal is unfettered. The Tribunal needs to be satisfied that there is an arguable case for the review to ensure that it has not been lodged simply to delay execution [Croney v Nand [1999] 2 Qd R 342 at 348 and 349].
17.Secondly, it may be appropriate to grant a stay if it is shown that the review will be made nugatory, or serious injury will result to the Applicant [Wilson v Church (No 2) (1879) 12 ChD 454 at 458].
18.Thirdly, delay in bringing the application for stay is a relevant consideration [D'Ambrosia at[26]].
Despite what the Tribunal stated in D'Ambrosia and Demarte [2014] WASAT 89, the analogy of a stay pending an appeal is not helpful. An appeal is premised on a decision made after a hearing. The Commissioner is not the 'successful party' in any sense compared to a party who is successful after contested proceedings.
Each of the factors identified, such as an arguable case, delay etc., fall to be considered under s 25(4)(a) to (c) of the SAT Act rather than by reference to appeals.
What is the strength of the Commissioner's case?
Logically, the first matter to be considered is whether there is an arguable case this is relevant both to s 25(4)(a) and (c) of the SAT Act. The Tribunal has read the Commissioner's reasons for decision which are supported by extensive references to documents which support the Commissioner's case. It is evident from the Commissioner's reasons and the supporting documentation that there is prima facie case that PAG has engaged in the conduct complained of by the Commissioner. The Commissioner's reasons are not rebutted by PAG.
In particular, the Tribunal notes the Commissioner's submissions at paras 24-28:
24.Principal among these obligations is the maintenance (and use) of a consignment trust account (CTA), and the regular auditing of that account.
25.A dealer who sells vehicles on consignment receives money, and is required to hold that money, on trust for the consignor of the vehicle. This is a significant responsibility for a dealer, and distinguishes the sale of consignment vehicles from the sale of a dealer's own stock in the usual course of business.
26.The evidence paints a clear picture of the Applicant engaging in conduct that constitutes:
26.1.failure to comply with the basic technical requirements of consignment sales, most particularly a failure ever to deposit funds in a CTA; and
26.2.a misuse of the systems that should be in place in consignment sales, which are intended to protect consumers, in particular the requirement to terminate consignment agreements in writing.
27.Further, the Applicant's avoidance of proper protocols in its engagement in consignment sales allows it to engage with consumers in a misleading manner, which has resulted in a number of consumers suffering detriment in the sale of their vehicles on consignment.
28.The Applicant cannot argue that it has been properly engaging in consignment sales as, despite entering numerous consignment agreements, the Applicant has never deposited any funds into its CTA in the almost 7 years since it was opened (RBOD Document 4).
14.The Respondent's SIFC and the Respondent's Submissions have not produced any evidence that the Applicant's application to review the Decision was anything other than a genuine application to review the Decision, which was motivated by and based on a genuine belief on the part of the Applicant that the Decision was incorrect and not justified in the circumstances. The Respondent has certainly not established that the Applicant's application was lodged simply to delay execution. While these proceedings have taken longer than the Applicant (and presumably the Respondent) would have liked, it was not by design of the Applicant that the Respondent filed the Criminal Proceedings after these proceedings were commenced. Given the Criminal Proceedings and the Applicant's need to obtain external advice (which we note we are not involved with) we would submit the delay incurred, while unfortunate, was not excessive or inexcusable in the circumstances. In particular while the Applicant did apply for a formal stay of the operation of the Decision when initially filing these proceedings, the Applicant did not press that application given an undertaking by the Respondent that the Decision would not be enforced pending the conclusion of these proceedings. The application for a formal stay of the operation of the decision has only been necessitated now by the Respondent now advising the Respondent was not prepared to extend the undertaking if the proceedings are stayed pending the conclusion of the Criminal Proceedings.
PAG has submitted that it is not able to respond to the Commissioner's allegations contained in the reasons for decision because of the criminal proceedings. PAG argues that the Commissioner should bear the onus of establishing the grounds for a stay and the onus should be greater when the Commissioner has commenced criminal proceedings.
PAG did not address the merits of the allegations in the Commissioner's reasons for decision on the basis that it would be unfair for PAG to have to disclose its hand before the criminal proceedings.
If no stay had been granted of the proceedings, any answers given on documents produced by PAG would be protected from incrimination by s 68 of the SAT Act.
PAG submits that the Commissioner:
… is free to throw untested aspersions against [PAG] while [PAG] remains effectively restrained and unable to counter with its legitimate viewpoints, explanations and legal justifications until it ventilates its defence of the Criminal Proceedings.
The Tribunal is not persuaded that the Commissioner's reasons amount to untested aspersions. The allegations are supported by documentation. They may be untested but they are not simply aspersions.
In regards to stay of civil proceedings pending resolution of criminal proceedings, Lexis Nexis, Civil Procedure: Western Australia, vol 1 (at Service 177) [4A.22.0] states:
Allanson J provided the following guidance relating to the stay of civil proceedings pending the resolution of criminal proceedings in Andrew Koh Nominees Pty Ltd As Trustee for KL Unit Trust v Pacific Corp Ltd(No 3) [2010] WASC 248; BC201006663 at [55]:
1.Prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the court.
2,It is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper grounds.
3.The burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff's ordinary rights should be interfered with.
4.Neither an accused nor the Crown is entitled as of right to have a civil proceeding stayed because of a pending or possible criminal proceeding.
5.The court's task is one of 'the balancing of justice between the parties', taking account of all relevant factors.
6.Each case must be judged on its own merits, and it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors.
7.One factor to take into account where there are pending or possible criminal proceedings is what is sometimes referred to as the accused's 'right of silence', and the reasons why that right, under the law as it stands, is a right of a defendant in a criminal proceeding.
8.However the so called 'right of silence' does not extend to give such a defendant as a matter of right the same protection in contemporaneous civil proceedings. The plaintiff in a civil action is not debarred from pursuing action in accordance with normal rules merely having to disclose, in resisting an application for summary judgment in the pleading of his defence, or by way of discovery or otherwise, what his defence is likely to be in the criminal proceedings.
9.The court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings.
10.In this respect factors which may be relevant include:
(i)the possibility of publicity that might reach and influence jurors in the civil proceedings;
(ii)the proximity of the criminal hearing;
(iii)the possibility of miscarriage of justice, for example, by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses;
(iv)the burden on the defendant of preparing for both sets of proceedings concurrently;
(v)whether the defendant has already disclosed his defence to the allegations;
(vi)the conduct of the defendant including his own prior invocation of civil process when it suited him.
11.The effect on the plaintiff must also be considered and weighed against the effect on the defendant in which regard it may be relevant to consider the nature of the defendant's obligation to the plaintiff; and in an appropriate case the proceedings may be allowed to proceed to a certain stage, for example, setting down for trial, and then staying them.
Justice Allanson's decision makes it clear that the commencement of criminal proceedings does not of itself prevent the continuation of civil proceedings.
Civil proceedings are analogous to proceedings for the purposes of considering a stay.
There is no evidence from PAG, other than a generalised assertion, to show that there is a real danger of injustice to it in the criminal proceedings if it responded to the Commissioner's allegations.
The decision whether or not to answer the allegations made by the Commissioner in these proceedings is a forensic decision made by PAG. The evidence of the Commissioner in opposition to a stay is not required to be stronger simply because PAG has made a forensic decision not to respond in these proceedings.
The interests of any person who may be affected by the decision
PAG submitted:
16.… In the Applicant's evidence (paragraphs 16 to 19 of the Nguyen Affidavit) its business and goodwill will be materially damaged if the operation of the Decision is not stayed and the Consignment Restriction is imposed on its Licence, and business goodwill is not something that the Respondent can simply provide to the Applicant as compensation if the Decision is ultimately overturned. Thus a refusal of the stay would render the Applicant's application nugatory, and would cause significant injury to the Applicant as contemplated under the principles in D'Ambrosia and Demarte.
The Commissioner submitted:
29.In the Respondent's submission, it cannot be established that the refusal of the stay will be nugatory, or cause serious injury.
30.In that vein, the Applicant has provided figures for its annual turnover, but without reference to what proportion of turnover relates to consignments.
31.The Applicant has stated, with the Respondent's Decision enforced it will be unable to (ASIFC [8]):
31.1.continue its business as currently operated;
31.2.operate any business at all; or
31.3.operate its new proposed online auctions model.
32.The suggestion that the Applicant could not conduct any business absent consignment sales is absurd. Numerous motor vehicle dealerships do precisely that, and there is nothing to prevent the Applicant buying and selling vehicles in the usual course of business.
33.The Respondent claims that the business as operated is in breach of the Motor Vehicle Dealers Act 1973 (MVDA), as the Applicant engages in consignment sales, but does so improperly to the detriment of consumers.
34.The statement that the business is based on consignments to the extent that without them it will fail only serves to emphasise the breadth of the Applicant's failure to comply with the basic requirement of depositing consignment funds into a CTA. If the Tribunal grants the stay, it will effectively allow the Applicant to continue business practices that contravene the MVDA.
35.The Applicant's conduct, and its statements in the Nguyen Affidavit and ASIFC, makes a mockery of the statutory scheme upon which they purport to be entirely financially reliant.
36.It is accepted that the Applicant would be unable to engage in consignment sales pursuant to the Respondent's Decision, but the Applicant has provided no evidence as to what the real financial detriment will be, if any.
37.Finally, as noted in the Reasons (Reasons [90]), it may be open to the Applicant to engage in its proposed online auctions business by the use of its ability to conduct sales by acting as an agent for the sale, under its Class E licence.
38.This would require the Applicant to comply with strict conditions, all stipulated on its licence (RBOD Document 3), for engagement in agency sales; which are intended to protect consumers selling their vehicles under agency agreements.
PAG further submitted:
17.The Respondent has submitted the Applicant's contentions in regard to consignment selling and the impact of the Consignment Restriction are absurd. (Paragraph 32 of the Respondent's Submissions). The Applicant submits that if the Applicant's contentions appear absurd (which is denied) that is only because, for the reasons outlined above, the Applicant is restricted from fully outlining its position. The Applicant submits that its evidence at the very least outlines that the Applicant has interests to protect, (paragraphs 6 and 15 to 19 of the Nguyen Affidavit) and in the Applicant's view are at risk from the operation of the Decision. In the circumstances (and all other things being equal) the Applicant submits it should be given the benefit of any doubt in that regard pending the conclusion of the Criminal Proceedings.
The Tribunal accepts that not staying the operation of the decision will have an impact on the financial position of PAG. It is difficult to assess the extent of that impact. However, the Tribunal does not accept that a refusal of the stay of the decision could render PAG's decision nugatory. In particular, the Tribunal notes there is no evidence as to the percentage of PAG's business which relates to consignment. There is no reason why PAG could not buy and sell vehicles as many, if not most, other dealers do. PAG's submissions in relation to the public interest state that PAG is transitioning to online auction sales. There are clearly other business models open to PAG.
Public interest
The Commissioner submitted:
40.The phrase 'public interest' has been widely considered. The concept of public interest directs attention to that conclusion or determination which best serves the advancement of the interest or welfare of the public or of society (McKinnon v Dept of Treasury (2005) FCAFC 142 per Tamberlin J [8]).
41.In vocational matters, it allows for issues to be taken into account going beyond an applicant's character, and includes concerns relating to public protection, public safety and public confidence in the administration of the relevant licensing system (Constantin v Commissioner of Police NSW Police Force (GD) [2013] NSWADTAP 16 [33]).
42.It requires consideration of the interests of the whole community, as opposed to private interests (Comalco Aluminium (Bell Jay) Ltd v O'Connor (1985) 131 ALR 657 at 681).
43.In the Respondent's case, the public interest has two primary facets: the protection of the public, and ensuring that the statutory regime is upheld and seen to be upheld.
44.The Respondent has received a number of similar complaints from members of the public, as outlined in the RSIFC, each of which evidence both wrongdoing by the Applicant, and detriment to the consumer.
45.Aside from the detrimental financial impact on individual consumers, at the least it is apparent that the Applicant has failed to comply with the statutory requirements surrounding engagement in consignment sales.
46.The Respondent must act to ensure compliance with the statutory scheme, and must be seen to be doing so otherwise a loss of confidence will arise, not only in the Respondent in his administration of the statute, but in the motor vehicle dealing industry as a whole.
47.The efficacy of regulatory schemes relies not only upon enforcement by the regulator, but 'on a pervasive culture of general observance' (Swan Bay Holdings v City of Cockburn [2010] WASC 81 [74], with regard to planning controls which were observed to exist 'for the benefit of the community as a whole') within the industry.
48.The protection of consumers, the interests of the motor vehicle industry, and the community in general militates strongly in favour of the continued enforcement of the Respondent's Decision.
PAG submitted
18.In relation to the issue of public interest, the harm alleged by the Respondent in the Reasons and the Criminal Proceedings (which is denied) is purely regarding physical consignment selling of motor vehicles. As outlined previously by the Applicant to the Respondent, (document 6 in the Respondent's Documents on page 40) and in the Applicant's evidence in these proceedings, in any event the Applicant was intending to exit that business and transition to online auction sales of motor vehicles. Given such online auctions are a transparent and open processes, where willing buyers are matched to willing sellers through a fixed and mechanical process, (Paragraph 17 of the Nguyen Affidavit.) it is submitted there is no room for the harm alleged by the Respondent in the Reasons and the Criminal Proceedings in such a business.
19.The Respondent submits that it 'may be open' for the Applicant to engage in online auction selling of motor vehicles as an agent under its Class E Licence. However the Respondent in both the Respondent's Submissions (at Paragraph 37) (and the Reasons (At paragraphs 87 to 90) before that) is somewhat equivocal on that point. The Respondent submits the requirements for agent selling are strict, (At Paragraph 39 of the Respondent's Submissions) however the Applicant has long indicated its willingness to work with the Respondent and meet any requirements. (Document 6 in the Respondent's Documents on pages 39 to 40)
20.The Applicant submits that being allowed to engage in online auction selling of motor vehicles, as an agent or otherwise, does not involve any of the expressed public interest considerations given the nature of the selling, and therefore the Respondent's objections on that ground (in relation to online auction selling) fall away. However provided that the Applicant is allowed to preserve its business and engage in online auction selling, the legal form and authority (and respective regulatory requirements) of that selling are of no concern to the Applicant.
21.As such, if necessary the Applicant is open to a compromise for a stay to the operation of the Decision that only relates to online auction selling, or alternatively an unequivocal statement from the Respondent that the Applicant is not restricted from engaging in online auction selling under its Licence (even with the imposition of the Consignment Restriction). The Applicant is not seeking to be unreasonable in the circumstances, and has throughout only wanted a fair hearing and an opportunity to protect its business and goodwill. (Paragraphs 10 to 11 of the Nguyen Affidavit).
22.Even now the Respondent is relying on Ms Nguyen and Mr Grujin of the Applicant's refusal to meet with Mr Moodley of the Department of Consumer Protection, (for which refusal Ms Nguyen and Mr Grujin had good reason, (Paragraph 10 of the Nguyen Affidavit) without acknowledging that Ms Nguyen and Mr Grujin were ready and willing and in fact offered to meet with anyone else at the Department (and that offer was rejected by the Department). (Paragraph 11 of the Nguyen Affidavit). If the Respondent had agreed to the Applicant's request to meet in late 2017 then this situation may possibly have been avoided.
As noted above, dealers are required to have honesty and integrity in the course of their business and must also be accurate and reliable in the keeping of records and information (Minniti at [25)).
The statutory scheme of the Act is to protect the public. The conduct of PAG as disclosed in the Commissioner's reasons for decision, which is uncontested, establishes that the conduct of PAG places the public who deal with PAG on consignment at risk.
PAG brought the application for a stay in late May 2018. The criminal proceedings were commenced in early April 2018. The delay in commencing proceedings was under two months. The Tribunal has considered the Commissioner's submissions at paras 51-66. The Tribunal has concluded that the delay was not such as to be a factor in granting a refusal of a stay.
Conclusion
The Tribunal has concluded that the public interest outweighs any adverse effect on the interests of PAG. The Tribunal is not prepared to order a stay of the operation of the decision.
The application for a stay of the operation of the Commissioner's decision is dismissed.
Orders
1.The application for a stay of the operation of the decision of the Commissioner for Consumer Protection is dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
JUSTICE J CURTHOYS, PRESIDENT
28 JUNE 2018
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