Palgo Holding Pty. Ltd. v Gowans - [2003] NSWCA 204

CITATION: Palgo Holding Pty. Ltd. v. Gowans [2003] NSWCA 204 revised - 24/09/2003

HEARING DATE(S): 11 June 2003

JUDGMENT DATE:
25 July 2003

JUDGMENT OF: Handley JA at 1; Beazley JA at 9; Hodgson JA at 10

DECISION: 1. Leave to appeal granted, and order that a Notice of Appeal be filed within 14 days. 2. Appeal dismissed. 3. Appellant to pay respondent's costs of the application and the appeal.

CATCHWORDS: BAILMENTS -Pledges - Whether pledge inconsistent with mortgage - MORTGAGES - Chattel securities - Whether mortgage inconsistent with pledge - CRIMINAL LAW - Further appeal from conviction of lending money on the security of pawned goods without a licence - Whether documentation of transactions as mortgages inconsistent with goods being "pawned goods".

LEGISLATION CITED: Pawnbrokers and Second-hand Dealers Act 1996 s.6

CASES CITED: Cosslett (Contractors) Ltd., In Re [1998] Ch 495
Dalco v. FCT (1988) 82 ALR 669
Esanda Ltd. v. Burgess [1984] 2 NSWLR 128
Hubbard, Ex Parte. In Re Hardwick (1886) 17 QBD 690
Official Receiver, Ex Parte. In Re Morritt (1886) 18 QBD 222
Paintin & Nottingham Ltd. v. Miller Gale & Winter [1971] NZLR 164

PARTIES :
Palgo Holding Pty. Limited t/as Cash Counters Byron - appellant
Kelvin Gowans as a public officer on behalf of the Director General of Department of Fair Trading - respondent

FILE NUMBER(S): CA 40962/02

COUNSEL: Mr. L.J. Aitken for appellant
Mr R. Greenaway for respondent

SOLICITORS: Hewlett & Company, Brisbane for appellant
D.I. Catt for respondent

LOWER COURTJURISDICTION: Supreme Court - Common Law Division

LOWER COURT FILE NUMBER(S): SC 11134/02

LOWER COURT
JUDICIAL OFFICER : Sperling J

CA 40962/02
SC 11134/02

HANDLEY JA
BEAZLEY JA
HODGSON JA
Friday 25 July 2003

PALGO HOLDING PTY. LIMITED V. GOWANS

Judgment

1 HANDLEY JA: In this application for leave to appeal I have had the benefit of reading the reasons for judgment of Hodgson JA in draft form. His Honour comprehensively sets out the evidence, the findings of the magistrate, the history of the proceedings, and the legislative provisions, and I have no need to repeat this material.

2 The question in this case, as Sperling J recognised, was not whether the transactions between the appellant and its customers could be characterised as mortgages. As his Honour said, plainly they were. The question was whether the transactions were pledges and could also be characterised as such.

3 The transactions exhibited all the essential elements of a pledge at common law because there was a bailment of goods by their owner to the appellant as security for a debt, and the appellant had possession of the goods pursuant to that bailment. The appellant possessed additional rights under its mortgages, but in my judgment these additional rights were not inconsistent with a common law pledge of the goods. Those additional rights did not deny or exclude any of the essential features of a valid pledge but merely conferred additional rights on the pledgee.

4 This is clear in principle and is not denied by…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2003] NSWCA 204
Decision Date: 25 July 2003

CaseChat Overview and Summary

Palgo Holding Pty. Ltd. (the appellant) appealed to the New South Wales Court of Appeal against its conviction for lending money on the security of pawned goods without a licence, contrary to the *Pawnbrokers Act 1984* (NSW). The dispute arose from transactions where the appellant took possession of goods as security for loans, documenting these arrangements as mortgages rather than pawnbroker agreements. The respondent was the Crown.

The central legal issues before the Court of Appeal were whether the appellant's documentation of the transactions as mortgages was inconsistent with the goods being "pawned goods" as defined by the *Pawnbrokers Act*, and whether the nature of the appellant's security interests was fundamentally inconsistent with the concept of a pledge.

The Court of Appeal, comprising Handley, Beazley and Hodgson JJA, reasoned that the *Pawnbrokers Act* was intended to regulate the business of lending money on the security of goods, regardless of how the transaction was formally labelled. The Court found that the appellant's business model, involving the taking of possession of goods as security for loans, fell within the scope of the Act's definition of pawnbroking. The documentation of these transactions as mortgages was considered a deliberate attempt to circumvent the licensing requirements of the Act. The Court applied the principle that the substance of a transaction, rather than its form, determines its legal characterisation for regulatory purposes.

Leave to appeal was granted, but the appeal was ultimately dismissed. The appellant was ordered to pay the respondent's costs of the application and the appeal.

Orders

Orders of the court

1. Leave to appeal granted, and order that a Notice of Appeal be filed within 14 days. 2. Appeal dismissed. 3. Appellant to pay respondent's costs of the application and the appeal.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Palgo Holding Pty. Ltd. v. Gowans [2003] NSWCA 204 revised - 24/09/2003
HEARING DATE(S):	11 June 2003
JUDGMENT DATE:	25 July 2003
JUDGMENT OF:	Handley JA at 1; Beazley JA at 9; Hodgson JA at 10
DECISION:	1. Leave to appeal granted, and order that a Notice of Appeal be filed within 14 days. 2. Appeal dismissed. 3. Appellant to pay respondent's costs of the application and the appeal.
CATCHWORDS:	BAILMENTS -Pledges - Whether pledge inconsistent with mortgage - MORTGAGES - Chattel securities - Whether mortgage inconsistent with pledge - CRIMINAL LAW - Further appeal from conviction of lending money on the security of pawned goods without a licence - Whether documentation of transactions as mortgages inconsistent with goods being "pawned goods".
LEGISLATION CITED:	Pawnbrokers and Second-hand Dealers Act 1996 s.6
CASES CITED:	Cosslett (Contractors) Ltd., In Re [1998] Ch 495 Dalco v. FCT (1988) 82 ALR 669 Esanda Ltd. v. Burgess [1984] 2 NSWLR 128 Hubbard, Ex Parte. In Re Hardwick (1886) 17 QBD 690 Official Receiver, Ex Parte. In Re Morritt (1886) 18 QBD 222 Paintin & Nottingham Ltd. v. Miller Gale & Winter [1971] NZLR 164
PARTIES :	Palgo Holding Pty. Limited t/as Cash Counters Byron - appellant Kelvin Gowans as a public officer on behalf of the Director General of Department of Fair Trading - respondent
FILE NUMBER(S):	CA 40962/02
COUNSEL:	Mr. L.J. Aitken for appellant Mr R. Greenaway for respondent
SOLICITORS:	Hewlett & Company, Brisbane for appellant D.I. Catt for respondent

LOWER COURTJURISDICTION:	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S):	SC 11134/02
LOWER COURT JUDICIAL OFFICER :	Sperling J