Purnell Motors Pty Limited v Commissioner for Fair Trading

[2007] NSWSC 19

CITATION:	Purnell Motors Pty Limited v Commissioner for Fair Trading and Anor [2007] NSWSC 19
HEARING DATE(S):	9 August 2006
JUDGMENT DATE :	29 January 2007
JUDGMENT OF:	Johnson J at 1
DECISION:	1. The findings of the Second Defendant under the heading “Insurance Quotations” contained in paragraph 5.5 of the Determination are quashed; 2. The Summons is otherwise dismissed.
CATCHWORDS:	ADMINISTRATIVE LAW - claim for prerogative relief in the nature of certiorari - disciplinary action against motor dealer under Motor Dealers Act 1974 - sale of repaired hail-damaged new and demonstrator vehicles to purchasers without notice being given of hail damage and repair - whether such notice required under s.24(7) Motor Dealers Act 1974 and clauses 32 and 51 Motor Dealers Regulation 2004 - findings that motor dealer carried on business in dishonest or unfair manner - whether error of law on face of record, jurisdictional error or denial of procedural fairness in such findings
LEGISLATION CITED:	Motor Dealers Act 1974 Supreme Court Act 1970 Evidence Act 1995 Fair Trading Act 1987 Crimes Act 1900
CASES CITED:	Roos v Director of Public Prosecutions (1994) 34 NSWLR 254 Wyong Shire Council v MCC Energy Pty Limited [2005] NSWCA 86 Attorney-General for New South Wales v Quin (1989-1990) 170 CLR 1 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 Abebe v Commonwealth of Australia (1999) 197 CLR 510 Corporation of the City of Enfield v Development Assessment Commission (1999) 199 CLR 135 Craig v South Australia (1994-1995) 184 CLR 163 Minister for Aboriginal Affairs v Peko-Wallsend Limited (1985-1986) 162 CLR 24 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 Saville v Health Care Complaints Commission [2006] NSWCA 298 Hanna v Department of Immigration Multicultural and Indigenous Affairs [2004] NSWCA 275 Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Absolon v New South Wales TAFE [1999] NSWCA 311 YG v Minister for Community Services [2002] NSWCA 247 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] 214 CLR 1 Hall v University of New South Wales [2003] NSWSC 669 Greyhound Racing NSW v Cessnock & District Agricultural Association [2006] NSWCA 333 3WJ Pty Limited v Director General, Fair Trading [2003] NSWSC 331 Briginshaw v Briginshaw (1938) 60 CLR 336 Greyhound Racing Authority (NSW) v Bragg [2003] NSWCA 388 Coal & Allied Operations Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113 Project Blue Sky Inc v Australian Broadcasting Authority [1998] 194 CLR 355 Chugg v Pacific Dunlop Limited (1990) 170 CLR 249 Director of Public Prosecutions v Belani (2005) 64 NSWLR 319 Sirway Asia Pacific Pty Limited v Commonwealth of Australia [2002] FCA 1152 Derry v Peek (1889) 14 App Cas 337 Banditt v The Queen (2005) 224 CLR 262 McCann v Switzerland Insurance Australia Ltd [2000] 203 CLR 579
PARTIES:	Purnell Motors Pty Limited (Plaintiff) Commissioner for Fair Trading (First Defendant) Malcolm Finger (Second Defendant)
FILE NUMBER(S):	SC 30021/2006
COUNSEL:	Mr A Robertson SC; Mr A Gruzman (Plaintiff) Ms R Henderson (Defendants)
SOLICITORS:	Bamford Associates (Plaintiff) David Catt, Office of Fair Trading (Defendants)
LOWER COURT DATE OF DECISION:	---
LOWER COURT MEDIUM NEUTRAL CITATION:	---

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
ADMINISTRATIVE LAW LIST

Johnson J

29 January 2007

30021/2006 Purnell Motors Pty Limited v Commissioner for Fair Trading and Anor

JUDGMENT

1 JOHNSON J: On 13 December 2004, a hail storm hit the Sydney metropolitan area. A number of new and demonstrator vehicles at the premises of the Plaintiff, Purnell Motors Pty Limited, were damaged in the hail storm. The Plaintiff caused a number of vehicles to be repaired and subsequently sold these vehicles. Purchasers were not informed that the vehicles had been hail damaged. The present proceedings arise from disciplinary action taken against the Plaintiff under the Motor Dealers Act 1974 (“MD Act”) with respect to the sale of these vehicles.

2 The Plaintiff is the holder of a Motor Dealer’s Licence issued under s.12 MD Act in respect of premises at 139 Princes Highway, Arncliffe. By letter dated 10 February 2006, the Second Defendant, Malcolm John Finger, a delegate of the First Defendant, the Commissioner for Fair Trading, made an adverse determination (“the Determination”) as part of disciplinary proceedings against the Plaintiff, and imposed disciplinary measures including a reprimand and certain requirements to be undertaken by the Plaintiff. The present proceedings challenge the validity of that determination and those measures.

The Present Proceedings

3 By Summons filed on 28 February 2006, the Plaintiff sought a variety of declarations and orders. At the hearing, Mr Alan Robertson SC, for the Plaintiff, indicated that the relief sought was contained in paragraphs 1 and 3 of the Summons, as amended, to the following effect:

“1. An order that the determination of Malcolm Finger as delegate for the Commissioner for Fair Trading made 10 February 2006 (“the Determination”) relating to the plaintiff’s motor dealer’s licence No. MD520 (“the Licence”) be set aside.
…
3. A declaration that the Determination is:

(a) null and void;

…

(c) ultra vires;
…”.

4 Mr Robertson SC confirmed that the Plaintiff sought prerogative relief in the nature of certiorari under s.69 Supreme Court Act 1970 (T1.52, 12.46, 9 August 2006).

5 A number of grounds were advanced by the Plaintiff in support of this claim for relief, some of which were reflected in other declarations originally sought in the Summons. I will turn to these grounds shortly. For present purposes, it is sufficient to note that the other declarations and orders contained in the Summons are not pressed as separate and substantive claims for relief. The bases for relief relied upon by the Plaintiff were crystallised in written submissions handed up during the course of the hearing.

6 On 8 March 2006, orders were made by consent staying the Determination pending resolution of the proceedings by this Court upon the basis that, in the event that the Determination is not set aside, the times prescribed in that Determination for compliance with its requirements will commence to run from the date on which the Court gives judgment.

Relief under s.69 Supreme Court Act 1970

7 The present proceedings claim relief in the nature of certiorari under s.69 Supreme Court Act 1970. It is claimed, in substance, that there was error of law on the face of the record, jurisdictional error, findings of fact made with no evidence to support those findings and a denial of procedural fairness which was said to flow from a refusal by the Second Defendant to provide further and better particulars of certain matters contained in the Notice.

8 The Plaintiff bears the onus of proving the facts grounding an entitlement to such relief: Roos v Director of Public Prosecutions (1994) 34 NSWLR 254 at 259.

9 The present proceedings invoke the exercise of the supervisory jurisdiction of this Court. I am not undertaking a merits review of the decision of the Second Defendant: Wyong Shire Council v MCC Energy Pty Limited [2005] NSWCA 86 at [79]. There is no statutory appeal from the determination of the Second Defendant to this Court. I was informed at the hearing that the statutory appeal to the Administrative Decisions Tribunal under s.20F MD Act was not available in the circumstances of this case (T11.51-12.5, 9 August 2006).

10 The present hearing involves judicial review of administrative action by way of a claim for prerogative relief. In Attorney-General for New South Wales v Quin (1989-1990) 170 CLR 1 at 35-36, Brennan J described the duty and jurisdiction of the Court on such an application in the following way:

“The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone.”

11 This statement has been applied in subsequent High Court decisions where the confines of judicial review have been emphasised: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272; Abebe v Commonwealth of Australia (1999) 197 CLR 510 at 579-580 [195]; Corporation of the City of Enfield v Development Assessment Commission (1999) 199 CLR 135 at 152-154 [43]-[44].

12 Relief in the nature of certiorari is not an appellate procedure enabling either a general review of the order or decision or substitution of the order or decision which the Supreme Court thinks should have been made. Relief enables the quashing of the impugned order or decision upon one or more of a number of distinct established grounds - jurisdictional error, denial of procedural fairness, fraud and error of law on the face of the record: Craig v South Australia (1994-1995) 184 CLR 163 at 175-176.

13 The limited role of a court reviewing the exercise of an administrative decision must constantly be borne in mind. It is not the function of the court to substitute its own decision for that of the administrative tribunal exercising power which the legislature has vested in that body: Minister for Aboriginal Affairs v Peko-Wallsend Limited (1985-1986) 162 CLR 24 at 40-41.

14 In Craig v South Australia, Brennan, Deane, Toohey, Gaudron and McHugh JJ at 179 identified the scope for intervention by way of relief in the nature of certiorari with regard to administrative tribunals:

“If such an administrative tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal’s exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it.”

15 In Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323, McHugh, Gummow and Hayne JJ referred to the non-exhaustive list of kinds of error in Craig v South Australia and continued at 351 [82]:

“Those different kinds of error may well overlap. The circumstances of a particular case may permit more than one characterisation of the error identified, for example, as the decision-maker both asking the wrong question and ignoring relevant material. What is important, however, is that identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law. Further, doing so results in the decision-maker exceeding the authority or powers given by the relevant statute. In other words, if an error of those types is made, the decision-maker did not have authority to make the decision that was made; he or she did not have jurisdiction to make it.”

16 To invoke error of law based upon a failure to take account of relevant considerations, it is necessary to identify matters the consideration of which is mandated by law: Saville v Health Care Complaints Commission [2006] NSWCA 298 at [55]. Where error is alleged by way of taking into account irrelevant considerations, legal error is demonstrated only where a matter is taken into account which the law prohibits: Saville v Health Care Complaints Commission at [57].

17 Relief may be granted in the case of error of law on the face of the record: Hanna v Department of Immigration Multicultural and Indigenous Affairs [2004] NSWCA 275 at [28]. The face of the record includes the reasons expressed by the tribunal for its ultimate determination: s.69(4) Supreme Act 1970.

18 A finding of fact may reveal error of law where it appears that the decision maker has misdirected himself or where there is no evidence to support a finding in relation to an essential element: Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 at 155-6; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355-357.

19 The reasons for an administrative decision are not to be minutely and finely construed with an eye keenly attuned to the perception of error. The reasons of an administrative decision maker are meant to inform, and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed: Minister for Immigration and Ethnic Affairs v Wu Shan Liang at 271-2.

20 A failure on the part of an administrative tribunal to give any or any adequate reasons does not, without more, establish that the decision involved some error, although there may be cases that warrant the inference that the relevant tribunal has failed in some respect to exercise its powers or jurisdiction according to law: Absolon v New South Wales TAFE [1999] NSWCA 311 at [67]; YG v Minister for Community Services [2002] NSWCA 247 at [37].

21 An argument that the Second Defendant failed to take into account certain evidence or erred in having regard to other evidence is an argument which contends that the decision was against the evidence or the weight of the evidence; such a matter involves a question of fact and not law: Azzopardi at 155-156.

22 In the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision maker and not the court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power: Peko-Wallsend at 41.

23 There was no issue before me that the Plaintiff was entitled to be accorded procedural fairness in the disciplinary process undertaken by the Second Defendant under ss.20D and 20E MD Act. The MD Act makes express provision for steps to be taken to accord procedural fairness to a licensee under ss.20D and 20E. As will be seen, the Plaintiff’s principal basis for claiming that there was a denial of procedural fairness springs from the refusal of the Second Defendant to provide particulars requested by the Plaintiff’s solicitor.

24 In effect, the Plaintiff claims that it was denied procedural fairness in that the Second Defendant breached that part of the hearing rule which involves a right to be heard. The Plaintiff complains that it was not given, by way of particulars, notice of various matters including the case to be answered and disclosure of material to be relied upon by the decision maker: Hall v University of New South Wales [2003] NSWSC 669 at [68].

25 It is appropriate to keep in mind, in relation to the content of procedural fairness, the following observation of Gleeson CJ in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] 214 CLR 1 at 14 [37]:

“Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.”


As Basten JA (Beazley and Hodgson JJA agreeing) put it in Greyhound Racing NSW v Cessnock & District Agricultural Association [2006] NSWCA 333 at [75], “the obligations of procedural fairness must be assessed against the practical realities, in particular circumstances” .

Evidence in the Proceedings

26 The Plaintiff tendered, without objection, the following documents:

(a) a bundle of documents comprising the Determination together with a Show Cause Notice issued to the Plaintiff on 4 August 2005 (“the Notice”), the response from the Plaintiff’s solicitor dated 24 August 2005 (“the Response”) together with a further letter from the Plaintiff’s solicitor to the Second Defendant dated 6 September 2005 and a letter from the Second Defendant to the Plaintiff’s solicitor dated 12 September 2005 (Exhibit A);

(b) a Notice to Produce dated 21 July 2006 issued by the Plaintiff’s solicitor and directed to the Defendants requiring production of documents or other material that were before the Second Defendant at the time of the issue of the Notice and at the time of the Determination (Exhibit B);

(c) a folder of documents produced by the Defendants in response to the Notice to Produce dated 21 July 2006 (Exhibit C);

(d) three pages of notes dated 18 July 2005 from the records of the First Defendant which are said to relate to discussions between officers of the First Defendant and of Allianz Australia Insurance Limited (“Allianz”) (Exhibit D).

Affidavits Rejected at the Hearing

27 At the hearing, the Plaintiff sought to read affidavits of Sylvain Phillippe Bougreau, Brent Fraser and Paul McKay, each of which were sworn on 16 March 2006. Objection was taken by Ms Henderson, counsel for the Defendants, to the totality of these affidavits. Following submissions, I rejected each of the affidavits and indicated that I would give reasons for this course in my judgment (T15.26, 9 August 2006).

28 The three affidavits upon which the Plaintiff sought to rely were not before the Second Defendant at the time of the Determination which is presently under challenge. Mr Robertson SC submitted that the three affidavits were relevant to one part of the Plaintiff’s claim in relation to which it was alleged that a finding of fact was made by the Second Defendant in the absence of any evidence which was capable of supporting it (Ground 2.5 relating to insurance quotations).

29 Insofar as the Plaintiff claims that there is error of law on the face of the record, the relevant record in the extended sense permitted by s.69(4) Supreme Court Act 1970, is in evidence as part of Exhibit A. Insofar as the Plaintiff contends that there was no evidence to support a particular finding, the material which was before the Second Defendant at the time when the Determination was made is in evidence in Exhibits A and C and, presumably, Exhibit D.

30 As observed earlier, the present proceedings do not involve a type of de novo hearing with respect to the subject matter of the Notice issued by the Second Defendant and his subsequent Determination. The Plaintiff’s argument that there was no evidence before the Second Defendant to support a particular finding falls to be determined by reference to the material which was before the decision maker: Australian Broadcasting Tribunal v Bond at 355-357; Craig v South Australia at 176. In the event that the Court granted relief and the decision maker came to consider once again Ground 2.5, it would, of course, be open to the Plaintiff to seek to place before the decision maker such relevant material as the Plaintiff wished to rely upon at that time.

31 I was not satisfied that the three affidavits ought be admitted in the present proceedings and, accordingly, I rejected them. They were not relevant to the issues which I have to determine in these proceedings: s.55 Evidence Act 1995.

Relevant Statutory Provisions

32 According to its long title, the MD Act, inter alia, provides for the granting of licences to persons carrying on the business of a motor dealer, requires those persons to keep certain records and imposes certain obligations on a motor dealer in relation to motor vehicles offered or displayed for sale or sold by the motor dealer. It is apparent that the legislation is intended to regulate the motor dealer industry and to provide a measure of protection to consumers in their dealings with that industry. The MD Act is one of a number of statutes in relation to which the Commissioner for Fair Trading exercises particular functions: s.8 Fair Trading Act 1987.

33 Part 2 of the MD Act relates to the licensing of motor dealers. Division 3 of Part 2 (ss.20D-20F) provides disciplinary proceedings with respect to a licensed motor dealer.

34 Section 20D MD Act is in the following terms (emphasis added):

“20D Notices to show cause

(1) Where, at any time, the Director-General is of the opinion that there are reasonable grounds for believing that :


(a) a licence may have been improperly obtained or, at the time a licence was granted, there may have been grounds for refusing to grant it,

(b) the holder of a licence has been convicted of an offence against this Act or the regulations or any other enactment administered by the Minister,

(b1) the holder of a licence has been convicted of an offence under section 22 (2) or (4) of the Road Transport (Vehicle Registration) Act 1997 (Affixing of interstate number-plates on registrable vehicles in New South Wales),

(c) the holder of a licence may have failed to comply with this Act or the regulations, a condition or restriction to which the licence is subject or an order of the Tribunal applicable to the holder ,

(d) the holder of a licence has, within the period of 10 years that last preceded the grant of the licence, been found guilty of an offence involving fraud or dishonesty punishable on conviction by imprisonment for 3 months or more,

(d1) the holder of a licence has (as an adult), within the preceding 10 years or the period of 10 years that last preceded the grant of the licence, been found guilty of:

(i) an offence involving, or relating to, stealing a motor vehicle (within the meaning of section 154AA of the Crimes Act 1900), or

(ii) receiving, or being in unlawful possession of, a motor vehicle (within the meaning of section 154AA of the Crimes Act 1900) or a motor vehicle part,

(d2) in the light of evidence acceptable to the Director-General, the holder of the licence is probably receiving or dealing in stolen goods,

(e) the business to which a licence relates is being carried on in a dishonest or unfair manner ,

(f) if a person were not the holder of a licence, the Director-General would be required by section 12 (2) or (4) to refuse an application by the person for a licence,

(g) in the case of a holder of a dealer’s licence (being a body corporate), the holder:

(i) is in the course of being wound up,

(ii) is under official management,

(iii) is a body corporate in respect of which a receiver or manager has been appointed, or

(iv) has entered into a compromise or scheme of arrangement with its creditors, or may, for any other reason, be unable, or is likely to become unable, to meet the holder’s liabilities,

(h) the holder of the licence has, for a period of 1 month or more, ceased to carry on the business to which the licence relates at a place of business to which the licence relates,

(i) the holder of the licence is contravening another Act or an instrument made under another Act by carrying on the business to which the licence relates at a place of business to which the licence relates, or

(j) the holder of a licence is, for any other reason, not a fit and proper person to continue to hold a licence,
the Director-General may, by notice in writing served on the holder of the licence, call upon the holder to show cause, within such period, being not less than 14 days, as is specified in the notice, why the holder should not, for the reasons specified in the notice, be dealt with in accordance with this Division .


(1A) By way of example of the operation of subsection (1) (d2), the Director-General may consider that the holder of a licence in whose custody stolen goods are found is probably receiving or dealing in stolen goods.

(2) The holder of a licence on whom a notice to show cause has been served, a person with whom, pursuant to section 19 (2), the holder of the licence carries on, in partnership, the business to which the licence relates or, where the holder is a body corporate, a director or officer of the body corporate may, within the period specified in the notice, make submissions, orally or in writing, and adduce evidence with respect to the matters to which the notice relates .

(2A) The holder of a licence on whom notice to show cause has been served under this section may not surrender the licence unless the Director-General has made a determination under section 20E in relation to each matter to which the notice relates.

(3) The Director-General may conduct such inquiry or make such investigation in relation to the matters to which the notice relates and the submissions made, if any, and the evidence adduced, if any, by or on behalf of the holder of the licence in relation to those matters as the Director-General thinks fit .”

35 Section 20E provides as follows (emphasis added):

“20E Determination of disciplinary measures by the Director-General

(1) If, after compliance with section 20D, the Director-General is satisfied that any matter referred to in section 20D (1) has been established, the Director-General may do any one or more of the following :


(a) reprimand the holder of the licence ,

(b) require the holder of the licence to comply within a specified time with a requirement specified by the Director-General ,

(c) suspend the licence for a period not exceeding 12 months,

(d) disqualify the holder of the licence or any person concerned in the direction, management or conduct of the business to which the licence relates from holding a licence or from being concerned in the direction, management or conduct of a business for the carrying on of which a licence is required, either permanently or for such period as the Director-General thinks fit,

(e) impose a condition or restriction to which the licence shall be subject ,

(f) cancel the licence.

(1A) Without limiting the powers conferred by subsection (1), among the requirements that the Director-General may specify under subsection (1) (b) is a requirement that the holder of the licence concerned:


(a) make an additional contribution to the Fund of such amount as the Director-General specifies, or

(b) indemnify the Fund to such extent as the Director-General specifies in the event of a particular contingency arising concerning the activities of the holder of the licence.

(1B) Despite subsection (1), the Director-General must cancel the licence concerned if satisfied that:


(a) a matter referred to in section 20D (1) (d1) has been established, or

(b) in the case of a licence holder that is a body corporate, if the body corporate were not the holder of a licence, the Director-General would be required by section 12 (4) (k) to refuse an application by the body corporate for a licence.


(2) Where, under subsection (1), the Director-General requires the holder of a licence to comply with a requirement specified by the Director-General, the holder of the licence shall comply with the requirement within the time specified by the Director-General under that subsection .

(3) Where the Director-General disqualifies the holder of a licence under subsection (1) (d), the Director-General shall cancel the licence.

(4) Where the Director-General suspends or cancels a licence under this section, the suspension or cancellation shall take effect on and from such day as is determined by the Director-General and notified, by notice in writing, to the holder of the licence.

(5) Where the Director-General:


(a) suspends a licence—the holder of the licence, or

(b) cancels a licence—the former holder of the licence, shall return the licence to the Director-General within a period specified by the Director-General when suspending or cancelling the licence.

(6) A person disqualified under subsection (1) (d) shall not, while disqualified:


(a) hold a licence, or

(b) be concerned in the direction, management or conduct of a business for which this Act requires a licence to be held.”

36 Section 24 lies within Part 4 of the MD Act which concerns dealings in motor vehicles. Section 24 provides for the attachment of dealers’ notices in respect of sale of second-hand motor vehicles, second-hand motor cycles, demonstrators and damaged new motor vehicles. Section 24(7)-(12) provides as follows (emphasis added):

“(7) Where any prescribed damage is done to a motor vehicle (not being a second-hand motor vehicle) and a dealer is aware, or on a reasonable inspection of the vehicle would have been aware, of the damage, the dealer shall not sell the vehicle, whether or not the damage has been repaired, unless, at or before the time of sale, the dealer and the purchaser sign a notice, in the prescribed form, containing the prescribed particulars in relation to the damage to the vehicle and the dealer delivers the notice to the purchaser for retention by the purchaser .

(8) A notice shall not be treated for the purposes of subsection (2), (5), (6), or (7) as containing the prescribed particulars if any of the prescribed particulars contained in the notice is false or misleading in a material particular.

(9) Where the sale of a motor vehicle is effected by a person acting as the agent or employee of a dealer, compliance by that agent or employee with the requirements imposed on the dealer by subsection (3), (5), (6) or (7), as the case may require, shall be treated as compliance by the dealer with those requirements.

(10) Where the holder of a dealer’s licence offers or displays for sale, or sells, a motor vehicle on behalf of another dealer, this section does not apply to the other dealer.

(11) Where :


(a) a person carrying on (whether in partnership or otherwise) the business of a dealer does not comply with any requirement imposed on the person by subsection (2), (3), (5), (6) or (7), the person is guilty of an offence , or

(b) a person carrying on in partnership (whether under a joint licence or otherwise) the business of a dealer does not comply with any requirement imposed on the person by subsection (2), (3), (5), (6) or (7), each of the person’s partners is guilty of an offence.

(12) In proceedings for an offence under subsection (11), it is a defence if the accused person proves that the motor vehicle concerned was offered or displayed for sale, or sold, as the case may be, to an auto-dismantler or motor vehicle parts reconstructor for the purpose of being demolished or dismantled .”

37 Several provisions in the Motor Dealers Regulation 2004 (“MD Regulation”) are relevant to these proceedings. Clause 32 MD Regulation prescribes forms of damage for the purposes of s.24(7) of the Act (emphasis added):

“32 Sale notice for damaged motor vehicle: section 24 (7)

(1) For the purposes of section 24 (7) of the Act, the following damage is prescribed :


(a) damage (not being superficial damage) occasioned to a motor vehicle by reason of it being exposed to water,

(b) damage (not being superficial damage) occasioned to the body or frame of a motor vehicle and that required or requires :

(i) replacement or repair of the whole or part of any panel, structural member or component of the vehicle by cutting and welding, by application of heat or by any other means , or

(ii) replacement of not less than 4 major external panels (fittings excepted) fitted to the vehicle by means of bolts, screws or other mechanical fastening devices,
to restore the vehicle to a reasonable condition, having regard to its age .


(2) For the purposes of section 24 (7) of the Act, Form 13 is the prescribed form .

(3) For the purposes of section 24 (7) of the Act, the prescribed particulars are the particulars required to be inserted to complete the relevant form.

(4) If particulars for a motor vehicle are not available until the vehicle is sold, those particulars must be inserted at the time of sale.”

38 Clause 32(2) MD Regulation provides that Form 13 is the prescribed form for the purposes of s.24(7) MD Act. Form 13 is in the following terms:

Form 13 Notice of damage—new and demonstrator motor vehicles
(Clause 32 (2))
Motor Dealers Act 1974 : section 24 (7)
Register Details

Book No

Entry No

Part 1 (To be completed and delivered to the purchaser at or before the time of sale)

Dealer	Licence No
Full Business Address of Dealer Where Vehicle Sold
(No)(Street)(Suburb/Town/City)
Make of Vehicle	Engine No
Model Designation	VIN or Chassis No
Body Type	Date of Manufacture
Registration No	Date of Sale

Part 2
THE FOLLOWING DAMAGE HAS BEEN CAUSED TO THE VEHICLE DESCRIBED IN THIS NOTICE
NATURE AND EXTENT OF DAMAGE
NOTE

The Motor Dealers Act 1974 provides that the dealer must disclose:

(a) damage caused by exposure to water (eg immersion in floodwater or exposure to salt water) that has caused damage by initiating corrosion or otherwise reducing the quality of the vehicle, or

(b) accidental damage to the body or frame of the vehicle which has required:

(i) the replacement or repair of any of the panels, structural members or components of the vehicle by cutting and welding, by the application of heat or by any other means, or

(ii) repairs that are wholly effected by the replacement of not fewer than 4 major external panels fixed to the vehicle by means of bolts, screws or other fastening devices and the replacement or repair of fittings.

Purchaser’s Full Name

Purchaser’s Address

Name (print) and Signature of Dealer,
Agent or Employee Effecting Sale

39 Clause 51 MD Regulation is in the following terms (emphasis added):

“51 Advertising sale of motor vehicle that is damaged or defective: section 24 (7)

(1) A dealer who advertises for sale a motor vehicle the subject of prescribed damage referred to in section 24 (7) of the Act (not being a second-hand motor vehicle) must include in the advertisement :


(a) a statement to the effect that the vehicle has been damaged, and

(b) a further statement specifying whether or not the damage has been repaired .


Maximum penalty: 20 penalty units .

(2) A dealer who advertises for sale a motor vehicle the subject of a defect notice must include in the advertisement the words and figures “DEFECTIVE VEHICLE—REPAIR COST $…” where the repair cost must be completed to accord with the total estimated cost specified in the defect notice in relation to the repairing or making good of the defects so specified.

Maximum penalty: 20 penalty units.

(3) A dealer must not publish an advertisement offering for sale a motor vehicle the subject of a statutory warranty if the vehicle has defects:


(a) of a kind that the dealer is required to repair or make good under the warranty, and

(b) of which the dealer knew, or ought to have known, at the time the dealer published the advertisement, unless the advertisement includes a statement drawing attention to the existence of defects in the vehicle.


Maximum penalty: 20 penalty units.

(4) The matter required by this clause to appear in an advertisement in relation to a motor vehicle must appear in writing of a size and prominence not less than that used for the price of the vehicle or (if the price does not appear) for any other matter relating to the vehicle .”

40 Clause 55 MD Regulation provides:

“55 Certain advertisements to include registration numbers

A dealer must not publish an advertisement that refers to:

(a) a specified motor vehicle, or

(b) any specified price at which a second-hand motor vehicle may be purchased,
unless the advertisement specifies the registration number of the vehicle.


Maximum penalty: 20 penalty units.”

Some Undisputed Facts

41 A number of factual matters raised in the Notice were admitted by the Plaintiff in its Response (Exhibit A, pages 13, 33). What follows is drawn from those documents.

42 On 13 December 2004, a hail storm hit the Sydney Metropolitan area. Vehicles at the premises of the Plaintiff were damaged in the hail storm. This damage consisted of dents of various sizes to the surfaces of vehicles. A number of the vehicles were new and demonstrator vehicles.

43 Following an assessment of the vehicles, an insurance claim was submitted by the Plaintiff to Allianz.

44 The majority of the vehicles were repaired by S&P Bougreau Pty Limited trading as Dent Erasers. The repairs were conducted using a paintless dent repair technology.

45 On 16 March 2005, investigators from the Office of Fair Trading (“OFT”) met with Mr Rodney Dale, a director of the Plaintiff company, and discussed the sale of hail-damaged vehicles by the Plaintiff. The enquiries established that the Plaintiff had sold hail-damaged vehicles to customers without providing a prescribed form (Form 13). Mr Dale advised investigators that he was not aware that he had to declare the damage as the repairs had been carried by the paintless dent repair method and did not involve any painting of the vehicle.

46 Mr Dale was issued with a Notice to Produce documents pursuant to s.53B MD Act in relation to the sale of hail-damaged vehicles. The documents were provided to investigators on 21 March 2005. The documents provided to investigators showed that, in total, 52 new and demonstrator vehicles at the Plaintiff’s premises were damaged in the hail storm, 22 of which had been sold prior to 16 March 2005. Of these 22 vehicles, eight were exempt from the provisions of s.24(7) MD Act as the cash price exceeded the prescribed amount (the luxury vehicle limit) of $57,009.00 (clause 5, Motor Dealers Exemption Order 1986). The Plaintiff provided investigators with a schedule listing the vehicles. Of the 22 damaged vehicles which had been sold, there were eight demonstrator Land Rovers, seven new Land Rovers, five demonstrator Volvos and two new Volvos (Exhibit A, page 20).

The Notice

47 The investigation of the Plaintiff’s activities with respect to hail-damaged vehicles culminated in the issue on 4 August 2005 by the Second Defendant, the Manager of Fair Trading Investigations, under delegation from the First Defendant of a Notice under s.20D MD Act (Exhibit A, page 11). No issue arose before me concerning the delegation held by the Second Defendant to perform relevant statutory functions under the MD Act.

48 The Notice included the following (Exhibit A, page 11):

“Acting under delegation from the Commissioner for Fair Trading and in accordance with section 20D of the Act, I am of the opinion that there are reasonable grounds for believing that:

1. the holder of a licence may have failed to comply with this Act or the regulations (section 20D(1)(c));

2. the business to which a licence relates is being carried on in a dishonest or unfair manner (section 20D(1)(e)); and

The details of my grounds of belief are particularised at Schedule A of this Notice.

Therefore I call upon the licensee to show cause within 21 days of service of this Notice why it should not be dealt with in accordance with section 20E of the Act.

I draw your attention to section 20D(2) of the Act which provides that the holder of a licence on whom a Notice has been served may, within the period specified in the Notice, make submissions, orally or in writing, and adduce evidence with respect to the matters to which the Notice relates.

Whether or not I receive a reply I will, after 21 days, proceed to determine the matter pursuant to section 20E of the Act.”

49 I note that the Plaintiff does not challenge the validity of the Notice which required, as a foundation, the holding of an opinion that there were reasonable grounds for believing the matters contained in the Notice. It is the Determination which is challenged in these proceedings.

50 After reciting the matters set out in paragraphs 42 to 46 of this judgment, the Notice moved to a number of specific areas.

The “Prescribed Damage” Issue - s.20D(1)(c) MD Act

51 It was alleged that enquiries by OFT investigators with purchasers of the hail-damaged vehicles confirmed that the Plaintiff did not advise them of the damage or provide the prescribed form (Form 13) which the Second Defendant maintains was required in the circumstances (Exhibit A, page 13, paragraph 1.1.7). It was alleged that seven of the vehicles damaged in the hail storm had been advertised in 29 separate advertisements in newspapers, none of which stated that the vehicle had been damaged. It was alleged that the vehicles were the subject of “prescribed damage” so that the provisions contained in clause 51(1) MD Regulation applied to these advertised vehicles (Exhibit A, page 14).

52 Accordingly, the first category of conduct contained in the Notice asserted that the Plaintiff had failed to comply with the MD Act or MD Regulation for the purposes of s.20D(1)(c) MD Act. It was alleged that the Plaintiff had failed to comply with the provisions of s.24(7) MD Act and clauses 32 and 51(1) MD Regulation. These alleged breaches all flowed from the assertion that the hail damage sustained by the vehicles was “prescribed damage” for the purposes of the MD Act and the MD Regulation (Exhibit A, pages 12-14).

Carrying on Business in a Dishonest or Unfair Manner - s.20D(1(e) MD Act

53 The second category of conduct relied upon by the Second Defendant flowed from the opinion that there were reasonable grounds for believing that the Plaintiff’s business was being carried on in a dishonest or unfair manner for the purposes of s.20D(1)(e) MD Act (Exhibit A, pages 15-19).

54 The Notice alleged that there were reasonable grounds for believing that the Plaintiff’s business had been conducted in a dishonest or unfair manner upon five bases.

55 Firstly (Ground 2.1), it was said that the Plaintiff had not dealt honestly and fairly with all of its customers in that purchasers of new and demonstrator vehicles had not been advised of the hail damage to the vehicles and that this information was relevant to the decision to purchase a vehicle (Exhibit A, page 15, paragraphs 2.1.1-2.1.8). Paragraph 2.1.7 was in the following terms:

“Fair Trading has spoken with customers of the licensee who purchased hail damaged vehicles. All advised that they would not have purchased the vehicle concerned had they known of the hail damage.”

The Second Defendant expressed the belief that these consumers had been dealt with unfairly within the meaning of s.20D(1)(e) MD Act.

56 Secondly (Ground 2.2), the Notice alleged that the Plaintiff had advertised a number of vehicles after the vehicles had in fact been sold. Particulars were provided of six hail-damaged vehicles advertised in various publications after the vehicles had been sold. The Second Defendant expressed the belief that this conduct was dishonest or unfair within the meaning of s.20D(1)(e) MD Act (Exhibit A, page 16, paragraphs 2.2.1-2.2.3).

57 Thirdly (Ground 2.3), the Notice alleged that three hail-damaged vehicles had been sold at a price higher than the advertised price, in one instance for a sum $11,000.00 greater than the advertised price. The Second Defendant expressed the belief that this conduct was dishonest or unfair (Exhibit A, pages 16-17, paragraphs 2.3.1-2.3.3).

58 Fourthly (Ground 2.4), the Notice alleged that two purchasers of hail-damaged vehicles informed OFT investigators that they were advised by the Plaintiff’s sales persons that they would get more for their trade-in vehicles if they had their log books stamped with details of servicing. In one case, a Mr Stockley was allegedly informed that if he had his log book stamped, he would get an additional $2,000.00 for his trade-in vehicle. It was alleged that the Plaintiff’s sales person was aware at that time that Mr Stockley had completed all the servicing of his Volkswagen vehicle himself, but nevertheless, encouraged him to have the log book stamped by a Volkswagen dealer. When Mr Stockley advised that he was unable to comply with this request and asked to cancel the purchase contract, the licensee was said to have refused to do so with the matter being finalised by Mr Stockley paying an additional $1,000.00 to purchase the vehicle. It was alleged that the conduct of providing log books with a false history of servicing of the vehicle was dishonest because it would mislead future purchasers of the vehicle. The Notice alleged that a second purchaser, a Mr Townsend, was advised by the Plaintiff’s sales person that he would receive an extra $1,000.00 for his trade-in vehicle if the log book was stamped. As Mr Townsend had always had his vehicle serviced by a licensed repairer, he had the log book stamped. However, when he went to complete the deal and asked for the extra $1,000.00 on the trade-in, it was alleged that the sales person denied that he had asked for the log book to be stamped and refused to pay the additional $1,000.00. Mr Townsend completed the deal at the lower price for the trade-in vehicle. The Second Defendant expressed the belief that this conduct was dishonest and unfair under s.20D(1)(e) MD Act (Exhibit A, pages 17-18, paragraphs 2.4.1-2.4.5).

59 Fifthly (Ground 2.5), the Notice alleged that the Plaintiff facilitated the submission of false quotations on Dent Eraser’s letterhead. It was alleged that during the insurance claim process, written quotations were received to assess the level of damage caused to vehicles. Initially, Dent Eraser provided verbal quotations for repairs. However, OFT investigations revealed that an employee of the Plaintiff, Mr Paul McKay, obtained from Dent Eraser a sample quotation form. These forms were then copied and used to record quotations for repairs. The Notice alleged that the OFT was aware that an insurance assessor from Allianz was involved in completing a document which may contain false information and without the permission of the owner. It was alleged that employees of the Plaintiff were aware that this was occurring and acquiesced in the deception (Exhibit A, pages 18-19, paragraphs 2.5.1-2.5.5).

60 Annexed to the Notice was a summary of 52 damaged vehicles comprising 22 sold damaged vehicles and 30 unsold damaged vehicles. The summary provided particulars of individual vehicles including names of purchasers (for sold vehicles) and the Plaintiff’s stock numbers for both sold and unsold vehicles (Exhibit A, pages 20-24). A copy of a Dent Eraser quotation accompanied the Notice (Exhibit A, page 25).

The Response

61 On 24 August 2005, a written response to the Notice was provided under the hand of the Plaintiff’s solicitor (Exhibit A, pages 30-42). A number of issues were raised in the Response which are not presently relevant. At various points, the Response sought particulars including the following request (Exhibit A, pages 31-32):

“Contrary to section 20D(1), no reasons are specified in the notice. It is therefore defective in relation to the allegations concerning hail damage.
The allegation is insufficiently particularized. We require answers to the following:

1. Is it the contention of the Commissioner that damage to the 52 vehicles, caused by hail, which are not exempted (the Non Exempt Vehicles ) was in each case not superficial?

2. If the answer to 1 is in the affirmative please provide particulars and the reasons for your opinion?

3. Is it the contention of the Commissioner that non superficial damage repaired by any means constitutes prescribed damage for the purposes of section 32 of the Motor Dealers Regulation 2004?

4. If the answer to 3 is in the affirmative please provide the reasons for your opinion?”

The “Prescribed Damage” Issue - s.20D(1)(c) MD Act

62 With respect to those parts of the Notice concerning hail damage to vehicles, the Plaintiff submitted that a threshold requirement under clause 32(1) MD Regulation was that the damage not be “superficial”. In this respect, the Plaintiff submitted that “superficial” meant “being at, on, or near the surface” and that normally hail damage is at, on or near the surface and is therefore superficial and “not prescribed damage” for the purpose of the MD Act and MD Regulation. Further arguments were advanced involving the interpretation of the MD Regulation to which reference will be made later in this judgment. Put shortly, the Plaintiff submitted that any damage to the vehicles in question was not “prescribed damage” within clause 32(1) MS Regulation (Exhibit A, pages 32-33).

63 The Plaintiff agreed that 52 hail-damaged vehicles had been subjected to paintless dent repair by Dent Eraser which, the Plaintiff contended, was not repair by “cutting and welding”, “by heat” or “by any other means”. Once again, the Plaintiff contended that this form of damage was not “prescribed damage” (Exhibit A, pages 33).

64 The Plaintiff submitted that, as hail damage is normally superficial, it is not “prescribed damage” and does not require a Form 13 to be provided to the purchaser. Alternatively, the Plaintiff submitted that as there was no particularity of the damage to each vehicle, it was impossible to make an assessment on a vehicle-by-vehicle basis that would otherwise be necessary. The Plaintiff submitted that, in the absence of any particularisation of the damage or extent of damage to individual vehicles, a conclusion could not be reached that “prescribed damage” had been sustained by each vehicle. It was submitted that the Notice appeared to approach the issue of hail damage “as one of general principle without the need for justification or reasons” and that no cogent reason had been enunciated as to why hail damage was not superficial (Exhibit A, pages 33-34).

Carrying on Business in a Dishonest or Unfair Manner - s.20D(1)(e) MD Act

65 With respect to the allegation that the Plaintiff’s business was being carried on in a dishonest or unfair manner for the purpose of s.20D(1)(e) MD Act, the Plaintiff’s reply raised a number of issues.

66 With respect to Ground 2.1 of the Notice which asserted that consumers had been dealt with unfairly because purchasers were not advised of hail damage, the Plaintiff joined issue with the claim that repaired hail damage would invariably affect the value of the vehicle or its ability to be insured or its manufacturer’s paint warranty (Exhibit A, page 34). Reliance was placed upon the decision of Austin J in 3WJ Pty Limited v Director General, Fair Trading [2003] NSWSC 331, to which reference will be made later in this judgment. The Plaintiff contended that allegations of dishonesty or unfairness were serious in nature and required particularity and satisfaction in accordance with the principles in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 before an adverse finding could be made (Exhibit A, page 36).

67 With respect to paragraph 2.1.7 of the Notice (reproduced at paragraph 55 above), the Response stated (Exhibit A, page 37):

“2.1.7 This allegation is not particularised with dates of conversations and by whom so that it can be tested. The licensee has equally had conversations with each and every customer and did not get the response, which the Commissioner refers to. Please provide particulars of conversations between officers or employees of the OFT and customers which the Commissioner contends establish that the actions of the licensee were unfair or dishonest. How many customers have been spoken to? What was the substance of what was said to them and what they said?”

68 With respect to Ground 2.2 of alleged dishonest or unfair conduct, the Plaintiff contended that this ground could not be established relying upon advertisements for vehicles which had already been sold without more (Exhibit A, pages 37-38).

69 With respect to Ground 2.3 concerning the sale of vehicles for more than the advertised price, the Plaintiff proffered explanations for the examples particularised in the Notice and denied that the conduct alleged was capable of constituting dishonest or unfair conduct (Exhibit A, pages 38-40).

70 With respect to Ground 2.4 concerning log books, the Plaintiff joined issue with aspects of the Notice concerning Mr Stockley and Mr Townsend and denied that the matters raised could constitute dishonest or unfair conduct (Exhibit A, page 40).

71 With respect to Ground 2.5 concerning insurance quotations, the Plaintiff joined issue with the allegation and contended that the Dent Eraser forms were not used as quotations or as representing any matter on behalf of Dent Eraser. With respect to the matter concerning an Allianz insurance assessor (paragraph 2.5.5 of the Notice), the Plaintiff sought further particulars of the complaint made (Exhibit A, page 41).

72 The Response concluded in the following way (Exhibit A, page 42):

“Our client seeks to be provided with the requested particulars as soon as possible. Our client reserves the right to an oral hearing of this matter and to make oral submissions at the hearing.”

Second Defendant’s Letter of 12 September 2005

73 By letter dated 12 September 2005, the Second Defendant responded to the Plaintiff’s solicitor. The letter addressed a number of issues raised by the Plaintiff’s solicitor, of which the following part is presently relevant (Exhibit A, page 43):

“The particulars you seek will not be provided.
Any further written submissions in response to the Notice to Show Cause should be received by me on or before Friday 14 October 2005. Should your client wish to make any oral submissions, arrangements should be made before 30 September 2005. In this regard I can be contacted on 98950416.”

74 No further written submission was made by or on behalf of the Plaintiff, nor was a request made by the Plaintiff for oral submissions to be made as invited in the Second Defendant’s letter. No further correspondence passed between the Plaintiff and the Defendants until the Second Defendant’s Determination.

The Determination

75 Referring to the process undertaken, the Second Defendant summarised the Response in the following way in the Determination (Exhibit A, page 2):

“The response received from the licensee denied the conduct forming the grounds of belief, claimed the allegations contained in the notice were insufficiently particularised and suggested an alternative interpretation of ‘superficial damage' most favourable to the licensee.

The response sought, inter alia, further particulars of the allegations forming the basis of the grounds of belief in the Notice and further sought evidence that the functions associated with sections 20D and 20E of the Act had been delegated by the Commissioner.

By letter and fax dated 12 September 2005, the request to provide further particulars was declined and a copy of the Delegation dated 15 January 2002 provided to the licensee. The licensee was also granted an extension to provide any further written submissions by 14 October 2005. A copy of that letter is attached at Annexure ‘C’.”

76 The Second Defendant stated that he had considered the evidence and the Plaintiff’s response and was satisfied that ss.20D(1)(c) and 20D(1)(e) MD Act had been established. His reasons for these conclusions extended over eight pages (Exhibit A, pages 2-9). Given the issues raised by the Plaintiff’s submissions, it is appropriate to set out the reasons of the Second Defendant concerning each finding.

The “Superficial Damage” Issue - s.20D(1)(c) MD Act

77 With respect to the “superficial damage” issue, the Second Defendant expressed the following reasons and conclusions (Exhibit A, pages 3-4):

“I have considered the licensee's suggestion that hail damage occasioned to the 52 vehicles on 13 December 2004 was 'superficial damage' within the meaning of clause 32 of the regulation and that there was therefore no requirement under the Act or regulation to use a Form 13 for the sale of those vehicles.

The licensee relied on one of six definitions of 'superficial' contained in the Macquarie Dictionary, namely ‘being at on or near the surface’. One further definition appearing in the same dictionary is ‘apparent rather than real’ while the Collins Concise dictionary defines superficial as ‘of little substance or significance’.

Both generally and in the circumstances of this case, hail damage occasioned to the panel of a motor vehicle is not confined to the surface of the panel but involves indentation to the panel extending beyond the surface.

Quotations for repairs to the vehicles indicate that that the damage occasioned occurred on multiple panels on the upper and side surfaces of the vehicles. The damage required repair either by a process known as Paintless Dent Repair (PDR) and/or conventional means. In some instances, exterior trims damaged by the hail required replacing.

The impact of the hail was such that, on some occasions at least, panels had to be repaired from the underside by ‘massaging’ (PDR terminology) the panel and forcing the metal back into its original position. To facilitate this method of repair it was sometimes necessary to remove the interior trims and other parts of the vehicle to get to the underside of the damaged panel.

Quotations provided to the insurance company for repairs to the vehicles range from $3,327.50 to $7,313.79. These amounts further suggest the damage was not superficial.

I am further satisfied that, having regard to the interest of consumers, a reasonable person would not consider hail damage, particularly of the type occasioned to the vehicles in this case, to be superficial and I am satisfied that knowledge of such damage would have had a significant effect on a consumer's decision to purchase a vehicle that has sustained damage of that type.

Having regard to the licensee's submission claiming that ‘prescribed damage' is limited to damage requiring repair by ‘cutting or welding’, I am not satisfied that this interpretation represents the intention of the legislature as it would allow, for example, major damage to be repaired by conventional means such as filling, sanding and painting without having to disclose the damage to a consumer.

The intention of section 24(7) of the Act is to ensure that prospective purchasers of damaged new or demonstrator vehicles are made aware of any damage, and advised whether it has been repaired or not, thus providing them with the opportunity to make an informed choice before purchasing the vehicle.

I am satisfied that the licensee was, in relation to the 14 vehicles described, required to complete and deliver a prescribed form (Form 13) as required by section 24(7) of the Act and clause 32(2) of the Regulation and failed to do so in accordance with those provisions.”

78 With respect to the alleged failure by the Plaintiff to include in advertising of damaged vehicles, details of the damage, the Second Defendant concluded (Exhibit A, page 4):

“Included in the Notice served on the licensee were particulars of 29 advertisements relating to various hail damaged vehicles. The licensee failed to include in those advertisements a statement pursuant to section 24(7) of the Act and clause 51(1) of the regulations advising that the vehicle had been damaged along with a further statement advising whether or not the damage had been repaired.

The licensee relies on submissions contained in its response claiming that the hail damage occasioned was superficial and therefore no obligation arose to include the prescribed information in advertisements required by the Act and regulations.

For the reasons stated above I am satisfied that the hail damage occasioned to the vehicles was 'prescribed damage' and I am accordingly satisfied that the licensee was required to include in the advertisements the prescribed information and failed to do so in accordance with the Act and regulations.”


Carrying on Business in a Dishonest or Unfair Manner - s.20D(1)((e) MD Act

79 The Second Defendant reached the following conclusions with respect to Ground 2.1 alleging dishonest or unfair trading arising from the Plaintiff’s failure to inform purchasers of vehicles of hail damage (Exhibit A, page 5):

“In addition to any statutory requirement of disclosure contained in the Act or regulations, there is an expectation that a licensee will act fairly and honestly towards its customers and will not mislead consumers. Inherent in the expectation is that the licensee will not withhold information which would be reasonably expected to influence a consumer's decision to purchase a motor vehicle. It is reasonable to expect that a vehicle which has been damaged and repaired will suffer a drop in valuation compared to an equivalent vehicle which has never been damaged and that consumers offered a choice between the two would invariably choose the vehicle that has not suffered any damage. This would be true regardless of any valuation for insurance purposes or otherwise.

An illustration of the importance which the motor trade places on previously damaged vehicles can be found in the sale contracts issued by the Motor Traders' Association (and used by the licensee) requiring consumers to declare whether the vehicle they are trading in has been previously hail damaged.

It is also reasonable to expect that as a consequence of the damage and subsequent repair to the vehicles, even though the repairs appear to have been carried out in a workmanship like manner, that the consumer may suffer a loss at the time the vehicle is disposed of should an experienced person be able to detect that repairs had been affected.

The course of conduct engaged in by the licensee has removed the right of the consumer to make an informed choice as to whether they should purchase the damaged and repaired vehicle or an equivalent vehicle that has not sustained any damage.

I am satisfied that information as to the history of a motor vehicle is important to both consumers and licensees when buying and selling motor vehicles and I am further satisfied that the failure to disclose information such as in the present case was misleading to consumers and constitutes dishonest or unfair trading.”

80 With respect to Ground 2.2 of alleged dishonest or unfair trading arising from the advertising of vehicles after they had been sold, the Second Defendant concluded (Exhibit A, page 5):

“The conduct outlined in the Notice of advertising vehicles that are not available for sale is unfair to prospective purchasers looking to purchase a vehicle with the particular characteristics of that advertised (such as colour, style, model or features) and it is reasonable to expect that a dealer would attempt to steer those consumers responding to such an advertisement toward the purchase of another vehicle which may or may not meet the consumers expectations. This type of marketing could be considered unlawful by virtue of the bait advertising provisions contained in section 51 of the Fair Trading Act 1987. In some instances the vehicles (as referred to in the Notice) were advertised in several successive editions after the vehicles had been sold.

I note the licensee did not provide in its response any evidence of contacting the publishers to withdraw advertisements after they were placed.

It is also a requirement under section 55 of the Act that a dealer must disclose in any advertisement for a specific vehicle, the registration number so that the vehicle can be identified. In this instance the inclusion of registration numbers by the licensee for vehicles that had been sold would constitute a false representation.

I am satisfied that the placing of the advertisements referring to vehicles that had been sold constitutes trading in a dishonest or unfair manner.”

81 With respect to Ground 2.3 of dishonest or unfair trading concerning the sale of vehicles for more than their advertised price, the Second Defendant concluded (Exhibit A, page 6):

“The Notice provided details of three vehicles that were sold for a price higher than that advertised. In one instance, vehicle AMA-34X was sold at a price $11,000 greater than the advertised price.

The conduct was further identified by the statement from Mrs Romiti who, after responding to an advertisement offering for sale a Volvo (registration number NXG10L) for $59,995 was advised that the sale price was $70,000. Only after Mrs Romiti brought the advertised price to the attention of the licensee was she able to negotiate a sale at the advertised price.

The licensee concedes that the vehicles were sold at higher than the advertised price and in the case of vehicles AMA-34X and AMA-34U claims the sale price was only inflated at the request of the consumer for the purpose of increasing their trade-in valuation. This conduct is colloquially referred to in the motor trade industry as a ‘Jack Deal’ and is generally frowned upon because this type of deal can be used to create artificial figures which are then relied upon for obtaining or paying out existing credit contracts with third party financiers. Accordingly I am satisfied that conducting the business in that way was dishonest or unfair.

I note the licensee's response which advises that the purchaser of vehicle AQY-21L resided outside the dealer's 'Prime Market Area' and as such the dealer was entitled to charge that particular consumer a price higher than that advertised. I do not accept that the residential address of a consumer is capable of justifying the sale of a vehicle at higher than the advertised price and I am satisfied that the conduct constitutes trading in a dishonest or unfair manner.”

82 With respect to Ground 2.4 of unfair or dishonest trading concerning log books, the Second Defendant concluded (Exhibit A, page 6):

“The Notice provided two examples of consumers who were advised by the licensee that their trade-in valuation could be increased if the log books belonging to the vehicles could be completed by a licensed repairer or service centre. In the case of Mr Stockley, the licensee's representative suggested that he should attempt to have the log books endorsed by the service centre even though he had himself serviced the vehicle and any endorsement would be unjustified.

It is conceded that a used vehicle with properly completed log books will command a higher resale price than an equivalent vehicle with an unreliable service history. Had Mr Stockley acceded to the licensee's request, the log book would have been falsified and could have been used to extract a higher resale price thereby misleading future purchasers as to the particular history of the vehicle.

I am satisfied that this conduct constitutes trading in a dishonest or unfair manner.”

83 The Second Defendant reached the following conclusion concerning Ground 2.5 of unfair or dishonest trading concerning insurance quotations (Exhibit A, pages 6-7):

“The Notice advised that subsequent to the vehicles being hail damaged S & P Bougreau trading as Dent Eraser provided a number of verbal quotations for repairs to affected vehicles. A representative of the licensee later obtained a blank copy of a Dent Eraser quotation form which was used to draw up quotations for use in insurance claims. The owner of the document, Mr Bougreau, advised Fair Trading that he had no knowledge of the use to which the form had been put and did not provide permission for the form to be used in that way.

I note in the licensee's response the explanation provided was that the quotation form was used as working papers by the insurance assessor. I do not accept that explanation and I am satisfied that the creation of fraudulent quotation forms constitutes trading in a dishonest or unfair manner.”

Disciplinary Measures

84 Having made a number of adverse findings against the Plaintiff, the Second Defendant turned to consider appropriate disciplinary action (Exhibit A, page 7):

“As delegate I have considered the various options provided by section 20 of the Act.

I have elected to reprimand the licensee rather than disqualify or suspend the licence. The following has been taken into consideration.

· The dealer has been the holder of a motor dealer licence since 17 July 1975. During this time the Office of Fair Trading has received a low level of complaints against the licensee.

· There has been no previous enforcement or disciplinary action taken against the licensee by the Office of Fair Trading.

· The licensee operates a large dealership with sales, service and parts divisions. Disqualification or suspension of the licence would have a major impact on the licensee's employees and cause considerable disruption to the operation of the business and its customers.

· However, the conduct of the licensee in this matter shows the business has been conducted in a dishonest and unfair manner and disciplinary action is appropriate.”

85 The Second Defendant made the following determination (Exhibit A, pages 7-9):

“I am satisfied that contraventions of sections 20D(1)(c) and 20D(1)(e) of the Act have been established in relation to 14 and 20 of the identified vehicles respectively, and pursuant to section 20E of the Act I have determined to:

1. Reprimand - section 20E(1)(a)

Reprimand Purnell Motors Pty Ltd, the holder of motor dealer licence MD 520 for:

· Failure to provide prescribed notices (Form 13) to purchasers of hail damaged new and demonstrator vehicles.

· Failure to include in advertising of damaged new and demonstrator vehicles the fact that the vehicles have been damaged and whether the damage has been repaired or not.

· Carry on the business in an unfair or dishonest manner.

2. Condition on licence regarding future conduct - section 20E(1)(e)

Impose upon the licence, for a period of three (3) years commencing from the date of this determination, a condition requiring the licensee to provide to the Office of Fair Trading details of any new or demonstrator motor vehicle that sustains prescribed damage (including hail damage). Such reports are to be provided to the Manager, Fair Trading Investigations within one month of the sale of the vehicle.

The information is to include:

a) a description of all vehicles (including registration numbers and vehicle identification numbers);
b) a description of the extent of the damage and the cost of any repairs carried out;
c) evidence of disclosure in advertisements; and
d) evidence of disclosure to purchasers including copies of the relevant prescribed notice (Form 13).

3. A requirement specified by the Commissioner - section 20E (1)(b)

a) Require the licensee, within twenty-eight (28) days from the date of this Determination, to contact in writing each of the purchasers of the 19 identified vehicles in the attached schedule (excluding purchasers of vehicle Registration numbers ART-30R, ARM-85Q and ARM-85H — the first two having acknowledged the hail damage and the latter having already come to a settlement agreement) and notify the purchasers that:

i) the Commissioner has issued a Notice to Show Cause and made a Determination that the licensee has contravened the Motor Dealers Act 1974, and

ii) the licensee has been formally reprimanded for:

· Failure to provide prescribed notices (Form 13) to purchasers of hail damaged new and demonstrator vehicles.

· Failure to include in advertising of damaged new and demonstrator vehicles the fact that the vehicles have been damaged and whether the damage has been repaired or not.

· Carry on the business in an unfair or dishonest manner.
iii) and a condition imposed upon the licensee requiring it to report details of any vehicles that suffer prescribed damage (including hail damage) in the future, and
iv) the Commissioner requires the licensee, within three (3) months from the date of this Determination, to attempt to negotiate a compensatory amount as follows:

i) by offering the purchaser a nominal amount as identified in the attached Schedule, being the amount paid by the insurance company to the licensee including the ‘diminished vehicle allowance’ (DVA); or

ii) by the purchaser and the licensee agreeing on an amount greater than the nominal amount; or

iii) where the licensee and purchaser cannot agree on an amount equal to or greater than the nominal amount, by advising the purchaser of their right to commence proceedings in the Consumer Trader and Tenancy Tribunal.

b) Require the licensee, within twenty-eight (28) days from the date of this Determination to provide to the Manager, Fair Trading Investigations copies of all the letters sent as required by paragraph (a) above.

c) Require the licensee to attempt to negotiate with the purchasers set out in paragraph (a) above a compensatory amount as follows:

i) by offering the purchaser a nominal amount as identified in the attached Schedule, being the amount paid by the insurance company to the licensee including the ‘diminished vehicle allowance’ (DVA); or

ii) by the purchaser and the licensee agreeing on an amount greater than the nominal amount; or

iii) where the licensee and purchaser cannot agree on an amount equal to or greater than the nominal amount, by advising the purchaser of their right to commence proceedings in the Consumer Trader and Tenancy Tribunal.
d) Require the licensee, within four (4) months from the date of this Determination, to notify the Commissioner of the outcome of the above requirements in subsections 3(a), (b) & (c) in respect of the 19 purchasers.”

86 The Schedule referred to in paragraph 3(a) (and elsewhere) of the Determination particularised vehicles which were the subject of findings. It is appropriate to incorporate this Schedule in the judgment (Exhibit A, page 10):

Determination Schedule

Under Luxury Limit - Repaired

#	Stock	Rego	Type	D/N	Purchaser	Sale Date	Sold $	Insurance	DVA	Compens- ation
1	D703	ART30Q	Landrover Freelander	Demo	Gason	20/12/04	$47,000	$3,492.50	$2,000.00	$5,492.50
2	D624	AMA34X	Landrover Discovery	Demo	Gerards	10/01/05	$56,295	$3,327.50	$2,000.00	$5,327.50
3	7447	XYM745	Landrover Discovery	New	Herbert	25/01/05	$56,862	$3,327.50	$2,000.00	$5,327.50
4	20148	ASK98C	Volvo S40	New	Infinity/Ho	20/2/05	$56,388	$4,649.70	$2,000.00	$6,649.70
5	7432	ASK98B	Landrover Discovery	New	Townley	16/02/05	$51,847	$3,327.50	$2,000.00	$5,327.50
6	D622	AMA34U	Landrover Discovery	Demo	Townsend	09/02/05	$44,500	$3,327.50	$2,000.00	$5,327.50
7	D690	AQY21L	Volvo V50	Demo	Wharf Mgt	15/02/05	$54,000	$5,311.90	$2,000.00	$7,311.90
8	D639	ANR84Y	Landrover Discovery	Demo	Jee	15/03/05	$51,233	$3,327.50	$2,000.00	$5,327.50
9	D614	AMA34J	Volvo S40	Demo	Rider	04/03/05	$39,990	$4,649.70	$2,000.00	$6,649.70
10	7431	Ab26NW	Landrover Discovery	New	Wardle	14/03/05	$52,380	$3,327.50	$2,000.00	$5,327.50
11	D616	AMA34M	Volvo S40	Demo	Ansari	23/02/05	$30,000	$4,649.70	$1,500.00	$6,149.70
12	7395/ D722	ARM85W	Landrover Discovery	Demo	Harbridge	07/03/05	$56,868	$3,327.50	$2,000.00	$5,327.50

Under Luxury Limit - Not Repaired

#	Stock	Rego	Type	D/N	Purchaser	Sale Date	Sold $	Insurance	DVA
13	D704	ART30R	Landrover Defender	Demo	Thompson	18/01/05	$50,420	$7,313.79	$2,000.00
14	7442/ D717	ARM85Q	Landrover Defender	Demo	Barber	26/02/05	$39,500	$6,258.12	$1,500.00

Over Luxury Limit - Repaired

#	Stock	Rego	Type	D/N	Purchaser	Sale Date	Sold $	Insurance	DVA	Compens- ation
15	7436	ARM85E	Range Rover	New	Dukest Trading	21/12/04	$120,000	$3,977.32	$3,000.00	$6,977.32
16	7422	ARM85F	Landrover Discovery	New	Fishburn	24/12/04	$60,000	$3,327.50	$2,000.00	$5,327.50
17	20141	ARM85L	Volvo XC90	New	Hogg	31/01/05	$83,065	$4,276.25	$3,000.00	$7,276.25
18	7409	ARM85H	Landrover Discovery	New	Miles* Compens-ation $8,000	20/01/05	$58,739	$3,327.50	$2,000.00
19	D674	NXG10L	Volvo S40	Demo	Romiti	18/02/05	$60,250	$4,649.70	$2,000.00	$6,649.70
20	D684	AQY21C	Volvo XC70	Demo	Auction Plus	3/0/3/05	$71,573	$3,616.25	$3,000.00	$6,616.25
21	D701	ART30E	Range Rover	Demo	JomHill P/L	07/03/05	$120,000	$3,977.32	$3,000.00	$6,977.32
22	7426	ASK98N	Landrover Discovery	New	Stockley	04/03/05	$59,950	$3,327.50	$2,000.00	$5,327.50

The Plaintif f ’s Submissions

87 The Plaintiff made detailed oral and written submissions, the latter comprising written submissions in chief (dated 9 August 2006) and in reply (dated 11 August 2006). I have had regard to all submissions made on behalf of the Plaintiff. What follows is a broad outline of those submissions.

88 Mr Robertson SC made a number of general submissions before moving to specific areas of complaint.

· Firstly, it was submitted that a breach of s.24(7) MD Act is a criminal offence and that this is relevant both to construing the terms of the provision and also to the quality of the material on which the delegate should act under s.20E.

· Secondly, it was submitted that s.24(7) proceeds by reference to “a motor vehicle” and not by reference to generalised conclusions. In this regard, the Plaintiff relies on the judgment of Austin J in 3WJ Pty Limited at [32]-[34].

· Thirdly, Mr Robertson SC submitted that the sanction or penalty that has been purportedly imposed under s.20E is based in an undifferentiated way on the various findings in relation to s.20D(1)(c) and s.20D(1)(e) MD Act. Thus, the Plaintiff submits that if substantial error is established in respect of any of these matters, the entire Determination should be set aside.

· Fourthly, in relation to penalty, the Plaintiff submits that the Determination requires it to offer to each purchaser an amount calculated by reference to the amount paid to the Plaintiff by its insurance company. The Plaintiff submits that no basis is shown that relates that amount, in each case, to the amount of any loss or damage in fact suffered by the purchaser: cf s.68 Fair Trading Act 1987. The Plaintiff submits that the vehicles had been repaired before sale, yet an approximation of the loss to the dealer before repair is to be the minimum amount of compensation to the purchasers. The Plaintiff submits that the Determination should be held invalid for that reason alone.

The “Prescribed Damage” Issue

89 Mr Robertson SC submits that not all damage is required to be the subject of a notice under s.24(7) MD Act - the provision operates only where “prescribed damage” is done to a motor vehicle. Clause 32 MD Regulation does not require “superficial damage” to be the subject of a s.24(7) notice. Nor does clause 32 MD Regulation require damage of any sort to be the subject of a notice unless, relevantly, the damage required or requires repair of the whole or part of any panel by cutting and welding, by application of heat or by any other means to restore the vehicle to a reasonable condition, having regard to its age.

90 The Plaintiff submits that the repairs to the subject vehicles were conducted using paintless dent repair technology. It was submitted that this technology does not involve cutting or welding by the application of heat or by any other means. The outside of the panel is not touched. The method involves a skilled pushing technique so the inside surface of the panel is not affected and the reflection is put back to the way it was at the point of manufacture.

91 It was submitted that the Notice provided no specificity or particularity whatever in relation to individual motor vehicles, but operated upon an assumption that hail damage of any sort is “prescribed damage”. Mr Robertson SC submits that significant and material error is disclosed in the Determination by way of the statement that the intention of s.24(7) MD Act was to “ensure that prospective purchasers of damaged new or demonstrator vehicles are made aware of any damage and advised whether it has been repaired or not”. The Plaintiff submits that the Determination is fundamentally flawed in that it equates “any damage” with “prescribed damage” when the legislative terminology does not permit such a conclusion.

92 Mr Robertson SC submits that the Second Defendant has erred in his construction of the word “superficial”. It is contended that the delegate relied upon a definition in the Collins Concise Dictionary where “superficial” is said to mean “of little substance or significance”. Mr Robertson SC submits that the appropriate meaning to be given to the word “superficial”, viewed in its statutory context, is “being at, on, or near the surface” (Macquarie Dictionary) or “of or pertaining to the surface; that is, lies or is found at or on the surface; constituting the surface, outermost part, or crust” or “appearing on the surface, external, outward” or “that is only on or near the surface; affecting only the surface, not extending much below the surface, not deep” (Oxford English Dictionary).

Resolution of Competing Submissions

127 In approaching the arguments advanced by the parties, I bear in mind the limits upon a court undertaking judicial review of administrative action by way of a claim for prerogative relief (see paragraph 9ff above).

The “Prescribed Damage” Issue

128 The Plaintiff submits that the Second Defendant has erred in law in his construction of s.24(7) MD Act and clause 32(1) MD Regulation. It is necessary to consider the proper construction of these provisions.

129 The contemporary approach to statutory interpretation is literal but not literalistic and requires words to be construed in their total context: Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113 at 141 (paragraph 115). In Project Blue Sky Inc v Australian Broadcasting Authority [1998] 194 CLR 355, McHugh, Gummow, Kirby and Hayne JJ said at 384 [78]:

“However, the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.”

130 Section 24(7) requires a dealer to inform prospective purchasers of new and demonstrator vehicles where “prescribed damage” has been done to the vehicle, whether or not it has been repaired. Clause 32 MD Regulation defines “prescribed damage” for the purpose of s.24(7) MD Act.

131 It has not been submitted by any party that clause 32(1)(a) MD Regulation applies to this case. Accordingly, it is not contended that damage to the subject vehicles by hail was occasioned “by reason of … being exposed to water”. I place that provision to one side.

132 Clause 32(1)(b) relevantly involves two concepts:

(a) that there be “damage (not being superficial damage)” occasioned to the body or frame of motor vehicle;

(b) that such damage required replacement or repair of the whole or any part of any panel, structural member or component of the vehicle by cutting and welding, by application of heat or by any other means to restore the vehicle to a reasonable condition, having regard to its age.

133 Mr Robertson SC submitted that it should be kept in mind that s.24(7) and (11) creates a criminal offence. In any prosecution for such an offence, an issue may arise with respect to the phrased “damage (not being superficial damage)”. Is the phrase “not being superficial damage” an exception, exemption, proviso, excuse or qualification to an offence for the purpose of s.417A Crimes Act 1900 with the consequence that it is for the accused person to prove that he falls within the exception? This involves consideration of substance and not form: Chugg v Pacific Dunlop Limited (1990) 170 CLR 249 at 257-258; Director of Public Prosecutions v Belani (2005) 64 NSWLR 319 at 330-332. An argument in favour of such a construction may arise from the fact that the nature of the damage sustained to the vehicle might be considered (certainly in this case) a matter peculiarly within the knowledge of the dealer: Chugg v Pacific Dunlop Limited at 258. An argument against such a construction may arise from s.24(12) MD Act which provides expressly for a statutory defence if the accused person proves certain matters. These issues were not raised during the hearing and I express no conclusion with respect to the issue for the purpose of the present case.

134 What is clear, however, in the circumstances of this case is that the Plaintiff was well aware of the nature and extent of damage sustained by each of the vehicles on its premises on 13 December 2004. Each vehicle was the subject of inspection, quotation and repair with an associated insurance claim made by the Plaintiff to Allianz. The Plaintiff concedes that each vehicle was hail damaged. It was common ground that the new and demonstrator vehicles which were hail damaged and repaired were not the subject of any notification to actual or prospective purchasers that the vehicles had been damaged in any way or had been subjected to relatively expensive repairs. The Plaintiff maintains that it was not required to disclose these matters to prospective purchasers.

135 The provisions falling for interpretation lie within a statutory scheme which is intended to regulate the conduct of motor dealers and to provide a measure of protection to consumers, including actual and prospective purchasers of motor vehicles. This is a significant starting point in the construction of these provisions.

136 A fair reading of the Second Defendant’s Determination on this point (see paragraph 77 above) does not reveal that he rejected the Plaintiff’s construction of the word “superficial” as “being at, on, or near the surface”. Rather, the Second Defendant acknowledged that the word bore other meanings as well including “apparent rather than real” and “of little substance or significance”.

137 The Second Defendant found that damage to the motor vehicles caused by hail was not confined to the surface of the panel but involved indentation to the panel extending beyond the surface. Reference was made to measures taken to repair the damage, including “massaging” by paintless dent repair methods involving removal of interior trims and parts to obtain access to the underside of the damaged panel. The steps which were required to be taken with respect to each vehicle were revealed in the documents obtained from the Plaintiff which were before the Second Defendant as decision maker (Exhibit C). It was open to the Second Defendant to form the view that the Plaintiff was well aware of these matters which involved steps taken by the Plaintiff following the damage to the vehicles occasioned by the hail storm.

138 In reaching his findings, the Second Defendant applied the meaning which the Plaintiff ascribed to the word “superficial”. In my view, it was open to the Second Defendant to conclude that there was evidence that each of the vehicles had suffered damage (which was conceded by the Plaintiff) and that such damage was not superficial damage (which was not conceded by the Plaintiff). It was open to the Second Defendant to conclude (as he did) that the substantial cost of repair of each of the specified vehicles supported a conclusion that the damage was not superficial.

139 To determine these proceedings, it is not necessary for me to decide whether the sole meaning to be given to the word “superficial” in clause 32(1) MD Regulation is that advanced by the Plaintiff, being at, on, or near the surface. I am satisfied that it was open to the Second Defendant to conclude that the damage occasioned to each of the vehicles was not superficial in this sense. That is sufficient to reject the Plaintiff’s argument on this ground.

140 It seems to me, however, that there are good reasons, both textual and contextual, for not confining the meaning of the word “superficial” in this way. Damage to a motor vehicle may take a multitude of forms. To confine the meaning of the word “superficial” in clause 32(1) MD Regulation to a geographical sense relating to the surface of the vehicle may be an unduly confined construction. There is much to be said for other meanings which are not so confined including those referred to by the Second Defendant, being “apparent rather than real” or “of little substance or significance”. However, as I have said, it is not necessary for me to determine this question in the present proceedings.

141 The second matter of construction arising concerns the meaning of clause 32(1)(b)(i) MD Regulation. The Plaintiff submits that the repairs effected to each of the subject vehicles did not involve cutting and welding or application of heat and therefore the damage to each of the vehicles does not fall within the definition of “prescribed damage”. In my view, the Plaintiff’s submission strains the meaning of clause 32(1)(b)(i) MD Regulation. The Plaintiff’s argument gives no sensible meaning to the words “or by any other means” contained within that provision. I accept the submissions of the Defendants concerning the proper construction of clause 32(1)(b)(i) and (ii) MD Regulation. This construction does not render otiose any part of subclause (b). Even if it was arguable that it did have that effect, it is still necessary to give meaning to the clear and broad words “or by any other means” as contained in subclause (i).

142 In my opinion, it was open to the Second Defendant to conclude, on the evidence before him, that with respect to each of the vehicles, there was repair to the whole or part of any panel, structural member or component of the vehicle by means of paintless dent repair or conventional means as revealed in the quotations and as relied upon in the Determination (Exhibit A, page 3).

143 I do not accept the Plaintiff’s submission that the Second Defendant equated any damage or any hail damage with “prescribed damage”. A fair reading of the Second Defendant’s findings reveals that he was aware of, and addressed, the statutory definition. He started and finished with the correct test: Minister for Immigration and Ethnic Affairs v Wu Shan Liang at 271-272.

144 The Plaintiff has failed to demonstrate any error of law on the face of the record with respect to the Second Defendant’s findings under s.20D(1)(c) and s.20E MD Act. I am satisfied that there was evidence capable of supporting the findings of the Second Defendant in this respect. I am not satisfied that any denial of procedural fairness was occasioned to the Plaintiff with respect to this ground. The Plaintiff was well aware of the nature and extent of damage occasioned to each of the vehicles and the steps taken to repair the vehicles. The Plaintiff was in a position to make such submissions as it saw fit, and to adduce evidence, for the purpose of replying to the Notice. No practical injustice has been occasioned to the Plaintiff.

145 I am not satisfied that the Plaintiff has demonstrated jurisdictional error in the way in which the Second Defendant has approached this aspect of the Determination. The Second Defendant adverted to the quotations for repairs for the subject vehicles and has inferred that the repairs were undertaken in accordance with the quotations. Insurance claims were made by the Plaintiff and paid by Allianz on this basis. I am not satisfied that any error has occurred of the type found in 3WJ Pty Limited, a decision reached with respect to a significantly different statutory scheme.

146 Having regard to my findings with respect to this aspect of the proceedings, it follows that I reject the Plaintiff’s challenge to that part of the complaint based on s.20D(1)(c) arising from the failure of the Plaintiff to comply with clause 51(1) MD Regulation by incorporating in advertisements reference to the fact that the advertised new and demonstrator vehicles had been hail damaged and repaired.

Carrying on the Business in a Dishonest or Unfair Manner

147 Ground 2.1 involves a finding of carrying on business in a dishonest or unfair manner by not revealing to purchasers or prospective purchasers that any of the new or demonstrator vehicles, the subject of the Determination, had been hail damaged. This finding is not dependent upon the statutory provisions contained in s.24(7) MD Act and clauses 32 and 51 MD Regulation. Nevertheless, the existence of such a requirement is a clear basis for distinguishing this case from 3WJ Pty Limited. The finding is based upon an expectation that the Plaintiff, as a motor dealer, will not withhold information which would be reasonably expected to influence a consumer’s decision to purchase a new or demonstrator motor vehicle.

148 There are further bases for distinguishing the decision in 3WJ Pty Limited from the present case. There, Austin J held that there was clear error in importing the concept of misleading or deceptive conduct under s.42 Fair Trading Act 1987 in construing the meaning of the words dishonest or unfair in s.20D(1)(e) MD Act. No such error has been made in this case. Further, it is important to observe that the vehicles in question in 3WJ Pty Limited were second-hand vehicles whilst the vehicles in question in the present case were new and demonstrator vehicles. The approach adopted by the Second Defendant in his findings with respect to Ground 2.1 appear especially applicable to the attitudes of prospective purchasers to the existence of damage and repair in a new or demonstrator vehicle.

149 Insofar as the Plaintiff complains that the Second Defendant has erred in this finding in not considering the individual circumstances of each vehicle and each purchaser to determine the possible impact of the withholding of information from those purchasers, it is pertinent to note the approach adopted by the Plaintiff and its insurer, Allianz, in determining the amount to be paid to the Plaintiff by Allianz with respect to the hail damage to each vehicle. The documents before the Second Defendant (Exhibit C, Tabs 6, 7 and 8) reveal the application of a diminished value allowance concerning each vehicle. In addition to the cost of repair, the Plaintiff recovered from Allianz such a new vehicle diminished value allowance calculated in accordance with clause 17 of its insurance policy (Exhibit C, Tab 8, page 12). This allowance provides for figures of $1,500.00, $2,000.00 or $3,000.00 depending upon the value of the vehicle and the cost of repairs. In my view, the factoring in of such an allowance reflects and supports the finding made by the Second Defendant concerning Ground 2.1. It accords with a commonsense view of the attitude of prospective purchasers of new and demonstrator vehicles if they were aware that a vehicle had been damaged and repaired. In my view, this additional evidentiary feature in this case supports the approach of the Second Defendant and constitutes a further basis for distinguishing 3WJ Pty Limited.

150 The Second Defendant has made findings, at various points, that conduct of the Plaintiff constitutes dishonest or unfair trading. I am not satisfied that the Second Defendant has approached the issue upon the basis that the two terms are synonymous.

151 It is possible to envisage circumstances where conduct may be unfair, but not dishonest. The meaning of “unfair” includes “not just or equitable” and “unjust” as well as “marked by deceptive dishonest practices” (Macquarie Dictionary). I accept the Plaintiff’s submission concerning the meaning of “dishonest” in s.20D(1)(e) MD Act. It may be that some conduct is capable of being both dishonest and unfair.

152 With respect to Ground 2.1, the Second Defendant gave reasons for his findings (see paragraph 79 above) which emphasised the disadvantaged position of a consumer in making an informed choice with respect to the purchase of a new or demonstrator vehicle when information bearing upon the history of the vehicle is withheld from the consumer. In my view, it was clearly open to the Second Defendant to conclude that conduct of this type constituted unfair trading. It may be that the conduct could extend to dishonest trading as well. It is not necessary to determine this question to finality to resolve the present challenge. It is sufficient to observe that there was evidence to support the finding of unfair trading and no error of law on the face of the record is revealed in this respect.

153 It is important to bear in mind that s.20D(1)(e) refers to the concept of carrying on business in a dishonest or unfair manner. The term “business” is not capable of a precise definition and its meaning is to be derived from the context in which it is to be used: Sirway Asia Pacific Pty Limited v Commonwealth of Australia [2002] FCA 1152 at [51]. The expression “carry on a business”, in its ordinary meaning, signifies a course of conduct involving the performance of a succession of acts and not simply the effecting of one solitary transaction: Sirway at [52]. The finding of the Second Defendant adverted to the course of conduct engaged in by the Plaintiff and the effective advantage extended to the Plaintiff over the consumer as a result of the withholding of information concerning the damage to vehicles being advertised for sale as new and demonstrator vehicles.

154 I am not satisfied that any error has been demonstrated with respect to Ground 2.1.

155 The Plaintiff’s challenge concerning Ground 2.2 asserts that the finding of the Second Defendant involves an abstract and theoretical proposition. The Plaintiff seeks to call in aid the decision in 3WJ Pty Limited.

156 The Second Defendant found that advertising vehicles for sale which had already been sold was unfair to prospective purchasers. He found that such conduct might be seen as a form of bait advertising (cf s.51 Fair Trading Act 1987), but did not purport to make an express finding to that effect. It seems to me that the finding of the Second Defendant is clear enough. To carry on business in a manner involving the advertising for sale of vehicles which have already been sold may serve to attract consumers to the dealership seeking the particular advertised vehicles, when those vehicles have already been sold. It does not seem to me to be an erroneous construction of the term unfair trading to characterise such advertising as unfair.

157 I detect no error with respect to these findings.

158 Ground 2.3 involved findings adverse to the Plaintiff concerning the sale of three vehicles for prices higher than advertised. The Second Defendant was satisfied that conducting business in this way was dishonest or unfair. I detect no error of law in this finding. As observed earlier, it is necessary to bear in mind the statutory context in which these terms are used which serve to focus attention on actions of motor dealers.

159 In my view, there is no error of law in the face of the record with respect to these findings. The vehicles and consumers were readily identified to the Plaintiff which made submissions with respect to the substance of the complaint. It was a matter for the Second Defendant to make findings of fact with respect to the issues raised.

160 I am not satisfied that the Plaintiff has demonstrated any basis in substance or by reference to procedural unfairness which may attract a grant of relief arising from these findings.

161 Ground 2.4 involves an adverse finding against the Plaintiff that its sales person had suggested to Mr Stockley that a log book ought be completed by a licensed repairer with respect to his vehicle, even though Mr Stockley had serviced the vehicle himself at all times. Mr Stockley declined to accede to this suggestion.

162 In my view, it was open to the Second Defendant to conclude that the suggestion by the Plaintiff’s sales person to create a false log book involved the carrying on of business in a dishonest or unfair manner. No error has been demonstrated in this respect which would entitle the Plaintiff to relief.

163 The finding of the Second Defendant with respect to Ground 2.5 (see paragraph 83 above) involves a finding that the creation of fraudulent quotation forms constitutes trading in a dishonest or unfair manner.

164 The factual basis for this ground was dealt with briefly in the Notice. It should be kept in mind that the Notice was required to provide the Plaintiff with reasons for the holding of an opinion that there were reasonable grounds for believing that the business was being carried on in a dishonest or unfair manner in a way relevant to the particular complaint: s.20D(1) MD Act.

165 The reasons in the Notice in this respect are somewhat cryptic (Exhibit A, pages 18-19, paragraphs 2.5.1-2.5.5). The Second Defendant declined to provide the Plaintiff with further particulars with respect to this ground.

166 I accept the Plaintiff’s submission that the finding of the Second Defendant with respect to Ground 2.5 involves one of fraud. There is an express finding that “fraudulent quotation forms” were created.

167 Fraud is proved when it is shown that a false representation has been made knowingly, or without belief in its truth, or recklessly, careless whether it be true or false. A person who makes a statement recklessly, careless whether it be true or false can have no real belief in the truth of the statement: Derry v Peek (1889) 14 App Cas 337 at 374; Banditt v The Queen (2005) 224 CLR 262 at 265 [2].

168 The finding of fraud constituted the foundation for the ultimate finding that the Plaintiff traded in a dishonest or unfair manner.

169 The process whereby the Second Defendant has made this finding is troubling. The question for me, however, is whether there is error of law on the face of the record, whether there is no evidence to support the finding or whether there has been a denial of procedural fairness in reaching the finding.

170 I have considered the documents contained within Exhibit C to which Ms Henderson referred in her submissions (T43-45, 9 August 2006). The documents before the Second Defendant reveal the involvement of representatives of Dent Erasers and Allianz soon after 13 December 2004. A number of documents were created concerning particular damage to individual vehicles and the cost of repair of those vehicles. It appears that representatives of Allianz examined the damaged vehicles and there was material in the OFT file which supports this fact and appears inconsistent with any finding of fraudulent conduct (Exhibit D).

171 As I have observed, there is a close rein on the Court on an application for judicial review interfering with a finding of fact. Nevertheless, having carefully considered the material contained within Exhibits C and D and the matters contained in the Notice, the Response and the Determination (Exhibit A), I am satisfied that there is no evidence to support the finding of fraud made by the Second Defendant. This finding is sufficient to set aside the finding. However, I am also satisfied in this area that a denial of procedural fairness has been demonstrated in the failure of the Second Defendant to provide reasons as required by s.20D(1) MD Act either in the Notice or by means of particulars provided in response to the Plaintiff’s request.

172 I am satisfied that the Plaintiff has demonstrated a basis for setting aside that part of the Determination under paragraph 5.5 and the heading “Insurance Quotations” (Exhibit A, pages 6-7) which is reproduced in its entirety in paragraph 83 above. As the finding of dishonest or unfair trading in Ground 2.5 was entirely dependent upon the finding of fraud, the entire finding ought be set aside.

The Determination and Disciplinary Measures

173 I have rejected the Plaintiff’s challenge to all aspects of the Determination with the exception of that relating to Ground 2.5 concerning the insurance quotations. Mr Robertson SC submits that demonstration of any substantial basis for relief ought see the quashing of the entire Determination given that the Second Defendant did not relate particular disciplinary measures to particular findings made. Ms Henderson, on the other hand, submits that it is appropriate to consider whether the Determination ought be quashed having regard to the unimpeached findings which remain on foot.

174 At the outset, I note that the Second Defendant proceeded by way of reprimand under s.20E(1)(a) and the imposition of requirements and conditions under s.20E(1)(b) and (e) MD Act. Each of the requirements and conditions incorporated in the Determination spring from matters extraneous to the adverse findings in Ground 2.5 concerning the insurance quotations. The foundation for the requirements and conditions relate to findings made by the Second Defendant which remain unimpeached in the present proceedings.

175 I am satisfied that the error revealed with respect to Ground 2.5 ought not have the consequence that the entire Determination be set aside. There was a global reference (in paragraph 6 of the Determination reproduced at paragraph 84 above) to the fact that “the conduct of the licensee in this matter shows the business has been conducted in a dishonest and unfair manner and disciplinary action is appropriate”. I have concluded that it was open to the Second Defendant to make findings, in one or other respect, of dishonest or unfair trading or both. Accordingly, there remains a clear and unimpeached basis for such a finding.

176 The Second Defendant proceeded by way of reprimand, and not suspension or cancellation of the Plaintiff’s licence. This was the least serious course available of these three options. The requirements and conditions imposed relate entirely to parts of the Determination which I have upheld. In these circumstances, subject to any further ground being demonstrated relating to the approach to assessment of compensation, I decline to grant the Plaintiff any relief by way of quashing the entire Determination.

The Compensation Issue

177 Section 20E MD Act does not confine the nature of requirements or conditions which may flow by way of disciplinary measures against the licensee. The statutory context of s.20E leaves open the prospect that a requirement or condition may involve the payment of sums of money to consumers arising from the conduct of the licensee. In circumstances where this arises, the MD Act creates no mechanism for calculation of sums of money by way of compensation as part of a condition or requirement.

178 In this case, the Second Defendant has utilised, as a starting point, the insurance payout made by Allianz to the Plaintiff with respect to each vehicle. This approach utilises the cost of repairs together with a diminished value allowance used for insurance purposes as part of the process of calculation (Exhibit C, Tabs 6, 7 and 8). In circumstances where the MD Act does not require a particular approach such as the calculation of actual loss or damage suffered by a consumer (contrast s.68 Fair Trading Act 1987), it seems to me that it is open to the Second Defendant to utilise the approach adopted in setting the compensation amounts as part of the requirements and conditions.

179 In circumstances where the conduct giving rise to the findings involves the sale of new or demonstrator motor vehicles which had been damaged and repaired without notice to purchasers, I am satisfied that the imposition of such conditions and requirements is not ultra vires. Nor is error of law or jurisdictional error revealed in such an approach. The figure set with respect to each vehicle is referable to the circumstances of that vehicle and reflect figures paid by Allianz to the Plaintiff as a consequence of hail damage occasioned to the vehicles and their subsequent repair. Although there may be other ways to determine compensation in such circumstances, the question for me is whether the manner in which these sums have been calculated in this case gives rise to an entitlement for relief in the nature of certiorari in favour of the Plaintiff. I am not satisfied that the approach adopted by the Second Defendant in this case gives rise to such an entitlement.

Conclusion

180 I have rejected the Plaintiff’s claim for relief on all bases except that concerning Ground 2.5 relating to insurance quotations. I propose to quash the findings contained at paragraph 5.5 of the Determination (Exhibit A, pages 6-7). However, for reasons given in this judgment, I do not propose to set aside in whole or in part the disciplinary measures ordered by the Second Defendant under s.20E MD Act.

181 I will allow the parties an opportunity to consider the question of costs in the light of this judgment. When the matter is next before me, subject to any further application, I propose to lift the stay granted on 8 March 2006.

182 I make the following orders:

(a) I quash the finding of the Second Defendant under the heading “Insurance Quotations” contained in paragraph 5.5 of the Determination;

(b) the Summons is otherwise dismissed;

(c) I stand over the proceedings until 9.30 am on 5 February 2007 for the hearing and determination of any application as to costs.

**********