RAJPUT v AKOMA & ANOR (Civil Dispute) - [2021] ACAT 11

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

RAJPUT v AKOMA & ANOR (Civil Dispute) [2021] ACAT 11

XD 1739/2019
Catchwords: CIVIL DISPUTE – selling a damaged second-hand car – misleading and deceptive conduct – right to a refund – duty to mitigate losses

Legislation cited: Australian Consumer Law ss 18, 29

Tribunal: Senior Member A Anforth

Date of Orders:  15 February 2021
Date of Reasons for Decision:         15 February 2021
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          XD 1739/2019

BETWEEN:
IMRAN RAJPUT
Applicant

AND:
BLESSING AKOMA
First Respondent
UC EVANS ALSO KNOWN AS EVERESTUS UGWUMBA
Second Respondent

TRIBUNAL: Senior Member A Anforth

DATE:15 February 2021

ORDER

The Tribunal orders that:
1.The second respondent is to pay to the applicant the sum of $5,959.70 on or before 12 March 2021.
2.Upon compliance with order 1, the applicant is to give the second respondent access to the vehicle for the respondent to tow away at his own cost.
3.If the second respondent does not comply with order 1, then the applicant may dispose of the vehicle to a second-hand dealer or wrecker at a reasonable cost, and may retain the proceeds of the sale as part payment of the judgment debt.
………………………………..
Senior Member A Anforth

REASONS FOR DECISION

Overview

The applicant purchased a second-hand 2011 Honda Civic car from the first respondent for $5,500 on 5 October 2019 and the registration was transferred to the applicant’s name. The sale was negotiated on behalf of the first respondent by the second respondent. The respondents are friends. Within a short time the car had broken down and the applicant discovered that the car had been labelled a ‘repairable write off’ on 3 July 2019[1] from a prior accident. The applicant seeks a refund of the purchase price and costs. The second respondent resists this claim.

History of the car

[1] Exhibit A7 page 5

The records of Access Canberra, obtained via subpoena, disclosed the following:
(a)The car was registered in the ACT to an unrelated third party until it was involved in a crash on 10 June 2019.
(b)The car suffered extensive panel and other damage, shown in photographs held by Access Canberra.
(c)The third party made an insurance claim with Allianz Australia who, on 3 July 2019, declared the car a write off and paid the third party.
(d)The ACT registration was cancelled by the third party on 30 July 2019.
(e)Allianz then sent the damaged car to auction at Pickles Auction in Canberra.
(f)The second respondent or his wife, Canice, purchased the damaged car at auction on 8 August 2019 for the sum of $1,100, plus some costs.
(g)The Pickles Auction invoice, addressed to the second respondent’s wife, explicitly referred to the car as a ‘repairable write off’.
(h)The car remained unregistered until it was registered in the name of the first respondent on 4 October 2019.
By way of contrast, the second respondent told the Tribunal the following:
(a)He had purchased the car from an unidentified source, and on an unidentified date, in NSW.
(b)He paid $6,000 for the car.
(c)He used the car for journeys between Canberra and Newcastle for an unidentified period.
(d)On 4 October 2019, one day before the sale to the applicant, the car had been in an unidentified auto garage in Canberra for unidentified repairs.
(e)On 4 October 2019 the second respondent enlisted the support of the first respondent to move the car to the second respondent’s home.
(f)The respondents then agreed for the second respondent to sell the vehicle to the first respondent for the notional sum of $1,100 to minimise the transfer tax, and for the first respondent to register the car in his name.
(g)The sale occurred on 4 October 2019 and new ACT plates were issued.
(h)The plan was for the second respondent to advertise and sell the car and keep the money for himself. This plan was intended to hide the existence of the car and the proceeds of its sale from the second respondent’s ex-wife.
The second respondent advertised the car on Facebook with its new ACT plates, saying it was “in very good condition…”[2]. There was no reference to the car’s history or having been a repairable write off. The applicant responded to the advertisement and attended the second respondent’s home to view the car. At this point, the history given by the parties is conflicting. The second respondent says that the applicant attended with a mechanic who inspected, and test drove the car. The applicant says he attended only with his wife. The parties disagree over what was said on that occasion. The applicant says that he explicitly inquired about the car’s history and any accidents. He says that the respondent assured him the car was “100% fit” and in “A1 condition” The second respondent denied any such dialogue. The second respondent said that he did not have a roadworthy certificate because he had sent it to the ACT Motor Registry (Access Canberra).
[2] Exhibit A1
The applicant purchased the car for $5,500 and changed the registration into his name. His wife had only driven the car for a week or so when it developed noises and vibrations. The car has not been driven since and remains parked at the applicant’s home.
On 12 December 2019 the applicant had the car serviced and found that there was an oil problem. He had the car inspected by NRMA, who disclosed that the car had been declared a repairable write off on 3 July 2019 following an accident, had been badly damaged, and had a transmission failure.
On 10 October 2019 the applicant contacted the second respondent about the defects. The second respondent offered to refund the purchase price if the applicant returned the car. The applicant did not take up this offer and did not contact the second respondent again until he lodged a complaint with Fair Trading. That complaint did not lead to a solution and the applicant lodged an application with the tribunal on 23 December 2019.

The procedural history in the tribunal

The applicant lodged an application with the tribunal on 23 December 2019 seeking an order for $6,625.25 composed of the sale price; the tribunal lodgement fee of $159.50; an NRMA report of $270; oil change of $80; registration charges of $216; documents and search fee of $26.20; and interest of $73.55.
The application annexed a copy of:
(a)the Facebook advertisement;
(b)the receipt for the purchase;
(c)the certificate of registration in the applicant’s name;
(d)the certificate of registration in the first respondent’s name;
(e)the application to transfer registration from the second respondent to the first respondent on 4 October 2019 for $1,100;
(f)the roadworthy certificate from Access Canberra dated 19 September 2019 showing no relevant defects;
(g)an NRMA car history report of 11 December 2019 which indicated that the car was declared a repairable write off on 3 July 2019 and had sustained impact to the passenger side front, rear and side panels, and to the roof. The damage was described as “heavy”[3]; and
(h)an NRMA inspection report of 11 December 2019 which shows problems with the transmission and panels that had been “repaired badly”[4].
[3] Exhibit A7, page 5
[4] Exhibit A7, page 9
The first respondent lodged a response on 23 January 2020. He said that on 4 October 2019 the second respondent asked him for assistance to move the car from an auto garage in Fyshwick to his home. The second respondent then asked the first respondent to register the car in his name, which the first respondent did. Beyond this, the first respondent took the view that he was an innocent party and the dispute was between the applicant and the second respondent.
On 31 March 2020 the second respondent lodged a response in which he said:
(a)the applicant attended his home on 5 October 2019 with a mechanic;
(b)the applicant and the mechanic road tested the car;
(c)the applicant was told that the car was a repairable write off;
(d)the car would need to be inspected by Access Canberra before any transfer of registration could occur;
(e)the car had been professionally repaired after the accident; and
(f)the car had no mechanical issues at the time of sale.
On 10 October 2019 the applicant contacted the second respondent about the roadworthy certificate. As a result of that conversation the second respondent offered to return the purchase price if the applicant returned the car. The applicant did not respond to this offer and the second respondent heard nothing more until the applicant made a complaint to Fair Trading. The second respondent said that the applicant was not telling the truth. The second respondent annexed, among other things, an invoice from The Dent Brothers for $660 dated 7 April 2020, and an undated SMS chain between the parties in which the second respondent told the applicant that the write off was due to hail damage.
On 29 April 2020 the applicant lodged a statement by Munazza Rajput, his wife. She wrote that in the second week of October 2019 the car developed a “weird sound and excessive vibration”. Since that time, the car had not been driven and remained parked at the applicant’s apartment.
On 9 June 2020 the second respondent lodged submissions in the form of a comment on the various assertions made by the applicant in his statement. The second respondent affirmed the content of his previous statements and accused the applicant of lying.
On 10 June 2020 the matter was listed for hearing by phone. The applicant and second respondent appeared. The parties both have heavy accents and were highly agitated with each other. The Tribunal found it difficult to control the hearing and to understand everything that was said, which necessitated the use of repetition. This was a feature of each of the hearings in this matter.
The second respondent asserted that he had paid $6,000 for the vehicle and transferred the title into the first respondent’s name for family law reasons. The two respondents agreed on a purchase price of $1,100 to minimise the transfer fee payable to Access Canberra.
The second respondent denied any knowledge of the car having been in a crash. He said the only damage was a small dint to the roof which The Dent Brothers removed for $660. He said that he had been in error when saying that this car had been hail damaged. The hail damage related to another car he had recently sold.
The second respondent said the vehicle had previously been registered in NSW but not to him. He denied any knowledge of any heavy damage to the vehicle in an accident. He denied that the car was defective in any significant way. The matter was adjourned to allow the applicant to issue a subpoena to NSW Motor Registry for the history of its ownership, registration and insurance claims, and to issue a subpoena to any relevant insurer of the car. An order was made permitting the second respondent to have his engineer inspect the car, which was still parked at the applicant’s home. The applicant made this request to the Registrar on 17 July 2020 and the subpoena was issued.
The Tribunal asked the applicant numerous times why he did not respond to the second respondent’s offer to return the car and obtain a refund. The applicant was resolute in his avoidance in answering the question. He said the had been “cheat[ed]”[5] and wanted the Tribunal to deal with it.
[5] Transcript of proceedings 10 June 2020, page 14 line 7
On 7 August 2020 the matter was listed by phone for return of subpoena issued to the NSW Motor Registry The applicant and second respondent appeared. No documents were produced because the subpoena was not served. The second respondent said he wanted to see the results of the subpoena to show that he was not the owner of the car at the date of the write off.
The matter was listed for return of the subpoena on 18 August 2020 by phone. The documents produced by the NSW Motor Registry stated it had no record of the car. The applicant said he did not understand this as the ACT Access Canberra records said the car had been previously registered in NSW. The Tribunal suggested that the applicant issue a subpoena for all the Access Canberra records relating to the car.
The second respondent protested that the process was unfair and that it was for the applicant to prove his case, which he had failed to do. He said that he was not the owner of the car when it was written off and so did not know the history of the prior ownership, and he could not remember when he bought it. He accused the applicant of lying.
The matter was finally listed for hearing on 13 November 2020 by phone. The applicant and second respondent appeared. The parties said that they had not inspected the documents returned by Access Canberra. The Tribunal read the contents to the parties.
The parties repeated their respective arguments. The second respondent repeated that he was using the vehicle to travel from Canberra to Newcastle to see his son. He did not specify the period in which he was making these journeys.
The matter was then reserved for decision.

Consideration of the issues

The Tribunal was unimpressed with the evidence of the second respondent. It was inconsistent, evasive and, at some points, simply dishonest. The Tribunal does not accept that the second respondent’s assertions that:
(a)he did not recall when and from whom he purchased the vehicle;
(b)he paid $6,000 for the vehicle;
(c)he had no knowledge of the crash and the damage caused;
(d)he used the car for trips to Newcastle;
(e)the car was in “good condition”, as advertised on Facebook;
(f)the applicant attended the purchase with a mechanic who test drove the car; or
(g)he told the applicant that the vehicle had been a repairable write off.
The Tribunal finds that the more likely truth is that the second respondent bought the car at auction on 8 August 2019 in a damaged state. He had minor body repairs carried out by the Dent Brothers for the purpose of hiding the damage. He did not drive the car between Newcastle and Canberra. The car remained unregistered between the write off and registration in the name of the first respondent on 4 October 2019. The second respondent advertised the car as being in good condition and deliberately withheld knowledge of its history from the applicant.
The applicant’s wife only drove the car for a week and for less than 500km when it developed problems. The applicant took the car to the NRMA for inspection on 11 December 2019 which uncovered its history and defects. The car has not been driven since.
If this were the whole of the relevant facts, the Tribunal would have no difficulty in concluding that the second respondent had engaged in “misleading and deceptive conduct” within the meaning of section 18 of the Australian Consumer Law and was “false and misleading” within the meaning of section 29 of the Australian Consumer Law. In fact, the Tribunal finds that the actions of the second respondent were a deliberate attempt to ‘scam’ the applicant.
The complication arises from the communications of 10 October 2019, in which the second respondent offered to refund the money. The applicant did not accept this offer and made no further contact with the second respondent. He kept the car, albeit he did not use it after the first week. The applicant was evasive to the point of refusing to explain this conduct. The Tribunal concluded that the applicant was motivated by a sense of outrage that he had been scammed and was determined to take his complaints to a formal level. All this is fine, but it is not without implications for the second respondent. If the applicant had returned the car and obtained a refund, then the second respondent could have disposed of the car in some other lawful way for some gain. As the lawful owner of the car, the applicant was permitted to retain possession until he received a refund. At a practical level, the actions of the applicant in refusing the offered refund were akin to him ‘impounding’ the respondent’s car in reprisal for the scam.
The applicant was under a contractual duty at common law to mitigate his losses. All he had to do was to accept the offer of refund. He did not do so. He could, but did not, contact the second respondent after 10 October 2019 to see if that offer was still on the table.
The car will have depreciated over the ensuing year or more that it has been informally ‘impounded’ and the applicant has had some use of it.
The principal fault was that of the second respondent, and so the starting point is to allow the applicant a full refund with his associated costs. The applicant’s claim for interest, which was unnecessarily incurred by the applicant’s failure to mitigate his losses, should be deducted from this amount.
The applicant’s award should be further reduced to allow for the depreciation during the unauthorised informal ‘impoundment’. The depreciation rate for a nine year old vehicle at that time could be ascertained from industry sources, but the Tribunal will assume it to be 20%.
Then the issue arises concerning the proper base value upon which to apply the depreciation. The Tribunal does not accept that this car was fairly valued at $5,500, as a poorly repaired ‘repairable write off’. The Tribunal will adopt the value that the second respondent himself put on the car when notifying Access Canberra of the sale to the first respondent, namely $1,460, being the amount paid at auction plus the repair cost paid to The Dent Brothers. Twenty percent of this figure is $292.
The Tribunal orders that the second respondent pay the applicant the sum of $5,959.70, comprising of:
(a)the sale price of $5,500;
(b)the tribunal lodgement fee of $159.50;
(c)an NRMA report of $270;
(d)oil change of $80;
(e)registration charges of $216;
(f)documents and search fee of $26.20;
(g)minus $292 for depreciation.
The second respondent is to pay to the applicant the sum of $5,959.70 on or before 12 March 2021, at which time the applicant is to give the respondent access to the vehicle for the respondent to tow away at his own cost.
If the second respondent does not comply with the order at paragraph 37, then the applicant may dispose of the vehicle to a second-hand dealer or wrecker at a reasonable cost, and may retain the proceeds of the sale as part payment of the judgment debt.
………………………………..
Senior Member A Anforth

Date(s) of hearing:	10 June 2020, 7 August 2020, 18 August 2020, 17 September 2020, 27 October 2020, 13 November 2020
Applicant:	In person
First Respondent:	In person
Second Respondent:	In person