Re RACQ & Car Search Brokers P/L

[1996] QSC 189

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  No.7518  of 1996

Before the Hon. Mr Justice Mackenzie

[Re RACQ & Car Search Brokers P/L]

IN THE MATTER OF the
  AUCTIONEERS AND AGENTS
  ACT 1971 (QLD)

-and-

IN THE MATTER OF the
  Applicant, R.A.C.Q. (ROYAL
  AUTOMOBILE CLUB OF
  QUEENSLAND LIMITED
  ACN 009 660 575), an incorporated
  company in the State of Queensland,
seeking an order pursuant to Order 64 Rule 1 B

No.7552 of 1996

IN THE MATTER OF the
  AUCTIONEERS AND AGENTS
  ACT 1971 (QLD)

-and-

IN THE MATTER OF the Applicant
  CAR SEARCH BROKERS PTY LTD
  ACN 050 404 129  an incorporated
  Company in the State of Queensland
seeking an order pursuant to Order 64 Rule 1B

JUDGMENT - MACKENZIE J.

Judgment Delivered 16/10/1996

CATCHWORDS: AUCTIONEERS AND AGENTS ACT 1971 - applicants have an agreement to operate an "Auto Find" service to facilitate the sale of vehicles by licenced dealers to RACQ members - declarations sought that the service can be operated without a motor dealer's licence under the Auctioneers and Agents Act 1971 - whether such declarations should be made under Order 64 Rule 1B / 1BB.

Counsel:R.J. Hanger Q.C. for RACQ.

J. McKenna for Car Search Brokers Pty Ltd.

Solicitors:  Hunt and Hunt for RACQ.
  Hill & Taylor for Car Search Brokers Pty Ltd.

Date of Hearing:                26 September, 1996

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  No.7518  of 1996

Before the Hon. Mr Justice Mackenzie

[RACQ & Car Search Brokers P/L]

IN THE MATTER OF the
  AUCTIONEERS AND AGENTS
  ACT 1971 (QLD)

-and-

IN THE MATTER OF the
  Applicant, R.A.C.Q. (ROYAL
  AUTOMOBILE CLUB OF
  QUEENSLAND LIMITED
  ACN 009 660 575), an incorporated
  company in the State of Queensland,
seeking an order pursuant to Order 64 Rule 1 B

No.7552 of 1996

IN THE MATTER OF the
  AUCTIONEERS AND AGENTS
  ACT 1971 (QLD)

-and-

IN THE MATTER OF the Applicant
  CAR SEARCH BROKERS PTY LTD
  ACN 050 404 129  an incorporated
  Company in the State of Queensland
seeking an order pursuant to Order 64 Rule 1B

JUDGMENT - MACKENZIE J.

Judgment Delivered 16 October 1996

These are applications by the Royal Automobile Club of Queensland Limited (RACQ) and Car Search Brokers Pty Ltd (CSB) for declarations.  CSB has for several years carried on business as a motor vehicle broker.  RACQ and CSB entered into an agreement in connection with a scheme called RACQ Auto Find, the purpose of which was to provide a service under which CSB located motor vehicles having the specifications and price requested by RACQ members and others with a view to a sale of the motor vehicle being concluded between the member or other person and a motor dealer.  CSB would receive a fee from the dealer and RACQ would receive a set fee from CSB in respect of each customer referred to CSB. 
          In the case of RACQ the declaration sought is that RACQ can undertake the business of RACQ Auto Find without a motor dealer's licence under the Auctioneers and Agents Act 1971. In the case of CSB the terms of the declaration sought is that the agreement between RACQ and CSB does not "by clause 3(c)" require CSB to undertake the business of a motor dealer as that term is defined in the Auctioneers and Agents Act 1971.
Clause 3(c) of the agreement requires CSB to observe and carry out the Instructions to Operator set out in the RACQ Auto Find manual. Relevantly clause 2.3, in the section "Instructions to Operator" makes it clear that the member has freedom of choice to select the vendor and is not to be compelled by CSB to use a particular vendor. It also provides that where a member nominates a particular vendor as the source of his or her requirement CSB must respect his or her freedom of choice and not compel the member to use another source. Clause 3.1 provides that in providing the broking service under the RACQ Auto Find programme CSB must not sell a motor vehicle to a member or buy a motor vehicle from a member. Clauses 3.2 and 3.3 set out procedures to be followed by CSB including identifying the best transaction available from negotiations it has carried out and notifying the member of the availability of a vehicle. If the member is interested CSB is to arrange for the member to see the vehicle and if he or she wishes to purchase it he or she signs the necessary documentation and pays the dealer. Clause 3.4 is concerned with trade-ins. Once again the transfer is effected between the member and the acquiring dealer. The only exception is in a case where a dealer (other than the dealer selling the vehicle to the member) who is interested in acquiring the trade-in vehicle will prefer not to have the vehicle transferred direct from the member to it because of concerns as to clear title. In those circumstances, to assist the member CSB is authorised to use the services of a licenced motor vehicle dealer related to CSB. The procedure in the agreement is that the transfer of the trade-in vehicle will be effected from the member to the related licenced dealer which will then transfer the vehicle to the purchasing dealer. The purchasing dealer pays the value of the trade-in to the related dealer which pays CSB the cheque which is then contributed towards the purchase price of the vehicle being purchased by the member. Elsewhere in the Auto Find Manual (in the Code of Practice) it is made clear that it is the right of a member to reject any vehicle presented to him or her for approval.
Section 2 of the Auctioneers and Agents Act defines the term "motor dealer".   Rather than reproduce the definition it is more convenient to break it down into its elements.  Where a person acts on his or her own behalf the definition fixes on the business of:

(a) acquiring used motor vehicles for sale;

(b) acquiring and breaking up used motor vehicles for sale piecemeal; and

(c) selling used motor vehicles whether as integral units or piecemeal. 

Where a person acts as agent for others, the business contemplated by the definition is the business of buying and selling used motor vehicles.  A person is a "motor dealer" if he or she:

(i) exercises or carries on one of those businesses;

(ii) advertises, notifies or states that he or she carries on one of those businesses;

(iii)advertises or notifies or states that he or she is willing to exercise or carry on one of those businesses; or

(iv) in any way holds himself or herself out as ready to undertake one of those businesses.

If a person does an act fitting the description of exercising or carrying on a business, advertising, notifying or stating that the person exercises or carries on, or is willing to exercise or carry on a business or in any way holds out that he or she is ready to undertake a business the critical question is whether that business is (in the context of the present application) one of

(a) acquiring for sale or selling used motor vehicles (in the case where a person is acting on his or her own behalf); or

(b) buying or selling used motor vehicles (in the case where a person is agent for others).

The use in the definition of the concepts of acquiring for sale, acquiring and breaking up, buying and selling is suggestive of a situation where the person acting on his or her own behalf or as agent for others is the legal personality by whom title is acquired or divested.   The exclusion of servants and agents from the part of the definition of "motor dealer" relating to persons acting as agent for others and the requirements of Part 4 of the Act relating to registration of salespersons generally are consistent with this.
           Section 19(2) provides that a corporation shall not:

(a) act as or advertise, notify or state that it acts as or is willing to act as a motor dealer or

(b) carry on or advertise, notify or state that it carries on or is willing to carry on a business of a motor dealer;

unless it is the holder of a corporation licence under the Act.
Section 170(1) makes it an offence to contravene any provision of the Act. Such offences are to be prosecuted upon the complaint of the Registrar or a person authorised by the Minister. It is also convenient to mention the definition of "real estate agent" in s.2 at this point as some reliance was placed on its terms by the applicants. The significance is said to lie in the fact that, in addition to buying and selling, other activities including negotiating for buying and selling are included in the definition. It was submitted that the role of CSB was of that character, and that because that activity was not included in the definition of "motor dealer" it was outside the definition and CSB did not need to be licenced.
          The applications for declarations have been made in response to a view expressed in correspondence between the applicants' solicitors and solicitors representing the Motor Trades Association of Queensland (MTA).  On 21 May 1996 MTA's solicitors claimed that, subject to a satisfactory explanation to the contrary, RACQ was carrying on the business of a motor dealer as defined in the Auctioneers and Agents Act and that CSB was acting as agent for RACQ members in the buying and selling of motor vehicles.  On 19 June 1996 RACQ's solicitors refuted that view.  There was some concentration in the letter on the difference between the definition of a motor dealer and a real estate agent to which reference has been made above.  The letter concluded:

"In the absence of any decided authority, it is difficult to entertain certainty on this point.  However we trust that the above explanation will assist you to better understand our view that both our client's business and CSB's business as a motor broker, as outlined above and as contemplated by the RACQ Auto Find proposal, are distinct from that of a motor dealer and that accordingly neither our client nor CSB require a motor dealer's licence in connection with the performance of their separate functions under the RACQ Auto Find proposal."

On 28 June 1996 the solicitors for MTA addressed a number of propositions including some which, if put into practice, would be outside and contrary to the terms of the Auto Find agreement.  The letter concluded with the expression of an opinion that both CSB and RACQ required motor dealers licences and a statement that if the scheme proceeded without appropriate licences MTA believed that they "may have no alternative but to take whatever action they may be advised through the courts to have the matter resolved".  A request for advice whether or not RACQ proposed to proceed with RACQ Auto Find without seeking appropriate licencing was made.  The material before me does not indicate that a reply was made to this request, nor addressing the apparent misconceptions as to the operation of the scheme.
          The next development was that on 10 and 11 September 1996 the originating summonses were filed on behalf of RACQ and CSB respectively.  The RACQ summons was expressed as being intended to be served on Australian Automobile Dealers Association (Qld), a division of the Motor Trades Association of Queensland Union of Employers.  A letter of 10 September 1996 accompanying the originating summons and affidavit asked whether in light of the documents exhibited to the affidavit it would be conceded that RACQ did not require to be licenced as a motor dealer.  The reply on 17 September 1996 was to the effect that MTA would neither consent to or oppose the RACQ application.  It also stated that if RACQ saw service as necessary they had instructions to accept service but their client saw no need to appear at the hearing.  On 18 September 1996 RACQ's solicitors noted that letter and asked for confirmation that MTA resiled from the threat in the letter of 28 June that it would take action through the courts to have the question of the need for a licence to be resolved, and that MTA no longer contended that RACQ was required to hold a licence in order to lawfully perform its obligations and receive the benefits of the Auto Find arrangement.  On 23 September 1996 MTA's solicitors replied, with reference to the letter of 28 June 1996 that without prejudice to MTA's rights it did not propose to take action at this point.  It further stated that insofar as the Auto Find agreement was concerned MTA made "no contention at this point" as to whether or not RACQ or CSB was required to hold a motor dealer's licence.  The letter continued:

"Our client's concern remains with the proposed operation of RACQ Auto Find.  Simply put, our clients are concerned that the interests of their Licenced Motor Dealers may be eroded by the promotion of the concept of motor vehicle broking which is contended by your client as not being subject to licensing under the Act."

It confirmed that they would not be appearing on the application. 
          A letter dated 12 September 1996 accompanying the documents in the CSB application attracted a response on 17 September 1996 stating that the application would be neither consented to nor opposed, that the solicitors had instructions to accept service and did not see it as necessary to appear at the hearing of the application.  Then after further correspondence directed towards the identity of the entity named in the summons as the party to be served, service was affected on Australian Automobile Dealers Association (Queensland), a different entity and a division of MTA.  It was confirmed on 24 September 1996 that there would be neither consent nor opposition to the application and that the solicitors could not see the necessity to appear on the hearing.  Later the same day the solicitors for CSB wrote to the solicitors for MTA stating the following:

"As to the substantive matter of the application we refer to your letter of 17 September, 1996.  Needless to say, our client is surprised and concerned at the approach being adopted by your client.  Your client vigorously objected to the proposed agreement between our client and RACQ.  It engaged solicitors to voice objections and it interfered in the commercial relations between RACQ and our client."

The summonses and affidavits had also been brought to the attention of the Office of Consumer Affairs.  The Commissioner replied after consideration that his office would not seek to intervene in the proceedings.    The Commissioner for Corporate Affairs also indicated, through the Crown Solicitor, that he would not be seeking to intervene in the proceedings.
It was submitted on behalf of the applicants that the source of jurisdiction to grant the declarations sought lay in either Order 64 Rule 1 B or Order 64 Rule 1 BB. These provide that a person claiming a legal or equitable right in a case where determination of the question whether the person is entitled to the right depends, respectively, on a question of construction of a statute, or, if there is unlikely to be a substantial dispute of fact, on a question of law, may apply for determination of the question of construction or the question of law and for a declaration as to the right claimed. It was submitted that the three pre-requisites for obtaining a declaration were:

(a)that there is a real and not a theoretical or hypothetical question involved;

(b)that the applicant has a real interest in obtaining a declaration; and

(c)that there is a proper contradictor.

The principal authorities relied on by the applicants in support of these propositions were Oil Basins Limited v. Commonwealth of Australia & Others (1993) 178 CLR 643; The Queen v. British Coal Corporation ex parte Price & Others (No. 3) 1993 TLR 298 and Rosenthal v. The Sir Moses Montefiore Jewish Home (unreported Supreme Court of New South Wales, Young J. 26 July 1995).
          It is noted in passing that if either of the applicants were to require a licence to carry out its part in the Auto Find agreement possible legal consequences might be prosecution under the Auctioneers and Agents Act by the Registrar or a person authorised by the Minister or injunctive relief at the suit of a party with sufficient interest to bring the proceedings.  The only relief sought is against the entity served, presumably in the expectation that if action hinted at in the correspondence was of an injunctive nature such action would be pre-empted by the declaration.  Nothing decided in the present proceedings would prevent prosecution if the authorities were to take the view that licences were required. 
          The Queen v. British Coal Corporation, to the extent that the report reveals, is no more than a restatement of the well established principle that the court will not decide academic or hypothetical questions.  The court found that on the facts of the case the question whether the Corporation had complied with the terms of a previous court order as to the kind of consideration it must give before deciding to close pits was specific and practical.  
          Recent High Court authority, Ainsworth v. Criminal Justice Commission (1992) 175 CLR 564, 581-2 states the principle relating to granting declaratory relief as follows:

"It is now accepted that superior courts have inherent power to grant declaratory relief.  It is a discretionary power which '[1]t is neither possible nor desirable to fetter by laying down rules as to the manner of its exercise.'  However, it is confined by the considerations which mark out the boundaries of judicial power.  Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions.  The person seeking relief must have 'a real interest' and relief will not be granted if the question 'is purely hypothetical', if relief is 'claimed in relation to circumstances that [have] not occurred and might never happen' or if  'the Court's declaration will produce no foreseeable consequences for the parties'."

(see also re Bowman (1994) 1 QdR 251, 257)

The question whether it is appropriate to make declarations sought, on the assumption that the underlying proposition that licencing is not necessary is correct, will therefore be influenced by the extent to which the question is "purely hypothetical", "claimed in relation to circumstances that have not occurred and might never happen" and if "the court's declaration will produce no forseeable consequences for the parties".
          In Rosenthal the first and second defendants had brought proceedings in the Guardianship
Board to test the plaintiff's capacity to execute a new Power of Attorney and revoke the former one.  They did not resile from this course of action.  Young J. held that in the circumstances they must be taken to be persons who continued to press as a serious matter the question of the plaintiff's status.  He held that they were proper contradictors and that the plaintiff was on the evidence entitled to a declaration that she had the necessary capacity to revoke and execute the Powers of Attorney.  There was an ongoing issue between the parties in the Guardianship Board at the time the declaration was made. 
          Oil Basins Limited v. The Commonwealth is, in terms of its facts and the complex statutory framework in which it arose a somewhat different case from the present one.  While the Commissioner of Taxation claimed that because he had not determined the question of liability for tax involved in the case Dawson J. held that the objection procedure was not the exclusive means of relief, that other consequences might ensue for the plaintiff if the question of liability was not resolved and that plaintiff had a real interest in obtaining a declaration that it was not liable to the tax.  It is also noted in passing that Dawson J. did not find it necessary to find whether the Commissioner of Taxation was a proper contradictor because one of the other parties certainly was.  However he raised the issue whether, if a person were otherwise a proper contradictor, adoption by choice of a stance of neutrality might perhaps amount to no more than performance of the role as a contradictor in a particular manner.

          The cases upon which reliance is placed were ones where proceedings had been bona fide commenced between parties who had an interest in the resolution of the question in respect of which a declaration was sought.  The present case is different in that the application is based on the terms of correspondence in which a view of the law adverse to the interests of the applicants was expressed by MTA.  In later correspondence, summarised above, the view expressed in the initial correspondence has not been resiled from despite invitations to do so but on one view of the correspondence the stance has been modified to a degree.  For example the letter dated 23 September 1996 to the RACQ's solicitors appears to represent a retreat from the positive assertion that the scheme is unlawful.  It is not possible to discern from the correspondence whether it is a retreat based on a recognition that the original stance was overstated or whether it is a tactical retreat.  In some respects the language used is reminiscent of that In re Clay; Clay v. Booth (1919) 1 Ch. 66, 78. As Ainsworth v. Criminal Justice Commission  points out relief will not be granted if relief is claimed in relation to circumstances that have not occurred and might never happen.  The question is whether this is a case in which a declaration ought to be made.  That  there are limitations on the court's power in cases of this kind is apparent from the passage quoted above from Ainsworth v. Criminal Justice Commission. The words of Order 64 Rules 1B and 1BB themselves are consistent with that kind of limitation. Each rule refers to the claim of a right in a case where the determination of the question will have the consequences mentioned in the Rules. It is not necessary to attempt to define the scope of the words precisely in this case.
          At the time of the hearing there was no imminent or immediate threat that proceedings would be commenced and, for whatever reason, the position taken by MTA was expressed in rather less positive terms in the latest correspondence than in the earlier exchanges.  It is true that the concession demanded that MTA resile from its view that licences were needed had not been complied with.  A judgment must be made as to which side of the dividing line the matter falls on.  While the desire of the applicants to remove any doubt about their respective positions is understandable I am not satisfied that the case is one where a declaration can be made.  The applications are therefore refused.