Safari 4 X 4 Engineering Pty Ltd v Doncaster Motors Pty Ltd

[2006] VSC 460

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 8249 of 2001

BETWEEN

SAFARI 4 X 4 ENGINEERING PTY LTD (ACN 081 086 660)	Plaintiff
and
DONCASTER MOTORS PTY LTD (ACN 094 027 960)	First Defendant
and
SAMUEL MAXWELL KETTYLE	Second Defendant

AND

No. 5580 of 2006

BETWEEN

SAMUEL MAXWELL KETTYLE	Plaintiff
and
ROADS CORPORATION (TRADING AS VICROADS ) (ABN 61 760 960 480)	Defendant

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JUDGE:	GILLARD J
WHERE HELD:	Melbourne
DATE OF HEARING:	10, 13 - 17 November 2006
DATE OF JUDGMENT:	30 November 2006
CASE MAY BE CITED AS:	Safari 4 x 4 Engineering Pty Ltd v Doncaster Motors Pty Ltd & Anor
MEDIUM NEUTRAL CITATION:	[2006] VSC 460

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Bailment – Thief – Conversion – Theft of motor car from car dealer’s premises – Claim against alleged thief by owner and car dealer – Circumstantial case – Alleged thief purchases car – Alleged thief gives evidence – Not believed – Alternative claim of conversion by purchasing car – Damages include costs of recovery by owner’s insurers – Car dealer as bailee entitled to indemnity from thief.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff (Safari)	Mr D. Clarke	Jones King Lawyers
For the First Defendant	Mr T Messer	Hall & Wilcox
For the Second Defendant and Plaintiff in second proceeding	Mr M.L. Grinberg	Tony Hargreaves & Partners
For the Defendant Roads Corporation	Mr G. McArthur SC (10.11.06) and Mr R. Taylor	Phillips Fox

TABLE OF CONTENTS

Parties................................................................................................................................................... 1

The two proceedings combined...................................................................................................... 2

Dispute................................................................................................................................................. 2

Second proceeding compromised................................................................................................... 4

First proceeding part compromised................................................................................................ 5

Facts...................................................................................................................................................... 5

Claim by Safari against Doncaster Motors................................................................................. 27

Claim by Safari against Mr Kettyle.............................................................................................. 27

Claim by Doncaster Motors against Mr Kettyle........................................................................ 34

Alternative Claims by Safari and Doncaster Motors................................................................ 35

Damages............................................................................................................................................. 38

Conclusion......................................................................................................................................... 40

HIS HONOUR:

1. At the commencement of the hearing, there were two proceedings.  I ordered that they be heard together.  In the first proceeding, the plaintiff, an owner of an expensive BMW motor vehicle, sued a company which had serviced and repaired the vehicle, seeking damages for breach of a contract of bailment in that the company failed to re-deliver the vehicle after the service was completed.  In that proceeding, the company joined as a third party a person who it alleged stole the vehicle from its premises.  He was later joined as a second defendant to the proceeding on the application of the owner of the motor vehicle.  In the second proceeding, the person who was alleged to have stolen the vehicle brought a proceeding seeking damages against the body responsible in this State for the registration of motor vehicles, alleging that it negligently registered the vehicle, which led him to believe that it was not a stolen vehicle. 

Parties

1. The plaintiff in the first proceeding, Safari 4 x 4 Engineering Pty Ltd (“Safari”), purchased a BMW M5 motor vehicle in June 2000 from the first defendant, Doncaster Motors Pty Ltd.  The first defendant (“Doncaster Motors”) at all material times was a motor vehicle dealer conducting the business of purchasing and selling motor vehicles, and servicing and repairing them at its premises at 812 Doncaster Road, Doncaster. 

1. The third party, Samuel Maxwell Kettyle (“Mr Kettyle”), was originally joined as a third party in the first proceeding, and on the morning of the commencement of the hearing, leave was granted to Safari to join him as a second defendant.  Mr Kettyle was born on 19 June 1970.  During the year 2000, he conducted a business through a company called Crown Colour FX Pty Ltd (“Crown Colour”) and had operated that business for approximately five years.  He was the only director and shareholder of the company in 2000.  Crown Colour carried on the business of repairing motor vehicles, involving panel beating and spray painting.  The company’s business was the performance of small jobs, and the company was employed by a number of car dealers.  Mr Kettyle travelled from car dealership to car dealership to carry out the works, and on some occasions the vehicle to be repaired was taken to his home, where he performed larger jobs in his garage. 

1. In the second proceeding, Mr Kettyle was the plaintiff and he sued Roads Corporation trading as VicRoads (“VicRoads”).  VicRoads is a statutory corporation pursuant to s.15 of the Transport Accident Act 1983.  It is the body responsible for the registration of motor vehicles in this State.  It issues certificates of registration of motor vehicles registered in this State and, in addition, compiles and keeps records relating to such motor vehicles. 

The two proceedings combined

1. The first proceeding was instituted in 2001.  The plaintiff was Safari and Doncaster Motors was defendant.  The latter joined Mr Kettyle as a third party to the proceeding, and on the first day of trial he was joined as second defendant by the plaintiff.  Because Doncaster Motors had a third party claim against Mr Kettyle, it was ordered that its third party notice be treated as a claim for indemnity and/or contribution between defendants.  The second proceeding was instituted in 2006.  It was ordered that the proceedings be heard together and that the findings of fact made by the Court would bind all parties to the combined proceeding. 

Dispute

1. The circumstances which brought the parties to Court can be briefly stated.  On 29 June 2000, Safari purchased from Doncaster Motors a 2000 model BMW M5 motor vehicle (“BMW”) for $158,667.  Its registration number was QCZ 577.  Safari purchased the vehicle tax free and its replacement value was in the order of $212,000.  It was a V8 sports sedan and a very expensive motor vehicle.  By 4 November 2000, the BMW had travelled 1,423 kilometres and on that day, Safari’s managing director, Mr Peter Luxon, delivered the vehicle to Doncaster Motors at its premises.  He requested that the vehicle be serviced and that the interior trim of the vehicle be changed.  He also asked Doncaster Motors to address a number of complaints he had concerning the vehicle.  By Monday 13 November 2000, the works had been carried out and an employee of Doncaster Motors, Mr Donaldson, took the vehicle for a test drive between 11.47 and 11.54 am.  The vehicle was then parked in an area described as the “holding car area” at the premises of Doncaster Motors.  The car’s key was then placed on a key board in an internal office in Doncaster Motors.  Mr Luxon was informed that he could collect his vehicle, and he indicated that he would collect it either on Tuesday or the following day.  The only way that one could drive the vehicle was to use the vehicle’s key.  There was no other way of starting the vehicle. 

1. Some time during the night of Tuesday-Wednesday, 14-15 November 2000 the BMW was stolen from the premises.  Safari made a demand upon Doncaster Motors to redeliver the vehicle to it but Doncaster Motors failed to do so.

1. Mr Kettyle, in the course of Crown Colour’s business, was present at the premises of Doncaster Motors on Tuesday 14 November 2000 performing work on another BMW motor vehicle.  It was a relatively small job and his company charged $120 for the work.  By November 2000, Mr Kettyle had been performing jobs for Doncaster Motors over a period of approximately three to four years, and would have been present at the premises about two to three times per month over that period.  The evidence revealed that he was a trusted contractor and that he was free to move throughout the premises.

1. Mr Kettyle gave evidence that he met a person called Robert Costa in or about February-March 2002.  He stated that the latter was involved in buying and selling motor vehicles and that Mr Costa requested him to perform work on a BMW M5 motor vehicle.  This he did, and after discussions, he agreed to purchase the motor vehicle from Mr Costa. 

1. On 30 April 2002, Mr Kettyle became the registered owner of a 2000 BMW M5 sedan, which he said he purchased from Mr Costa for $115,000.  Its registration number was ROA 439.  Its colour was silver, which was the same colour as Safari’s BMW. 

1. On 29 September 2003, Mr Kettyle left his BMW motor vehicle with an automotive repairer who carried on business in a service Station in Doncaster Road, Doncaster, to perform an investigation into an engine problem.  As a result of a number of enquiries made, it was ascertained later that day that the said vehicle was in fact the vehicle which had been stolen in November 2000 from Doncaster Motors.  The police were informed and the vehicle was seized.  Subsequently, there was an interpleader summons issued in the Magistrates’ Court and on 12 April 2005, the Magistrates’ Court at Melbourne ordered that the police deliver the BMW to AMP General Insurance Limited or its nominee.  Mr Kettyle was represented by lawyers in the interpleader proceeding, but in the end did not contest the proceeding.  He was ordered to pay costs of $1,250 as the losing party.  On 20 April 2006, the BMW was sold for $40,000.

1. Safari claims the replacement value of the vehicle, namely $212,009.70, less the net proceeds of sale and the amount received from Mr Kettyle for costs, together with the costs incurred, including legal costs, in recovering the BMW, such costs totalling $36,960.45.  These sums are claimed from the defendants Doncaster Motors and Mr Kettyle.  The said defendants deny liability. 

1. In the second proceeding, Mr Kettyle seeks against VicRoads the sum of $115,000, which he alleges he paid for the vehicle when he purchased it on 30 April 2002.  His claim is in common law negligence.

Second proceeding compromised

1. On the fifth day of the combined trial, during the case of Mr Kettyle and after he had been cross-examined for some days by counsel appearing for all parties, the proceeding brought by him against VicRoads was compromised and orders were made that the proceeding be dismissed and that there be no order as to costs.  This left the first proceeding, which involved a claim in bailment by Safari against Doncaster Motors, a claim for conversion against Mr Kettyle by Safari, and a claim brought against Mr Kettyle by Doncaster Motors for indemnity and/or contribution for conversion. 

First proceeding part compromised

1. After the hearing had finished and the Court had reserved its decision, it was informed that the proceeding brought by Safari against Doncaster Motors had been compromised.  The Court has not made any orders in respect to the claim.  The Court has not been told what the terms of the compromise are.  This judgment will deal with the remaining issues in the proceeding, namely the claims by Safari and Doncaster Motors against Mr Kettyle.

Facts

1. Many of the basic facts were not in dispute.  However, there was some argument as to the inferences that one might draw from the basic facts.

1. On or about 29 June 2002, Safari purchased a 2000 BMW M5 motor vehicle for the sum of $158,667.  It was a brand new vehicle.  The purchase was sales tax exempt.  Its replacement value was in the order of $212,000.  It was a special BMW 5 Series motor vehicle.  It had a V8 motor and was a very high powered sporting sedan.  Safari’s managing director, Mr Luxon, purchased it for what he described as “engineering purposes”.  His company was involved in high performance engineering.  The vehicle was silver in colour with a black interior, and was registered QCZ 577.  The vehicle was fitted with all of the M5 features, with additional options of rear blinds and extended heritage leather.  It was a prestige, powerful car.  Few were sold in Australia. 

1. Mr Peter Luxon drove the vehicle on about three occasions after its purchase. 

1. On Saturday 4 November 2000, Mr Luxon delivered the BMW to the premises of Doncaster Motors for a service and to have the interior trim changed.  Mr Luxon agreed to leave the car for a period of about 10 days.  The works were carried out and by Monday 13 November 2000 had been completed.  A senior employee of Doncaster Motors, Mr Donaldson, road tested the vehicle between 11.47-11.54 am on Monday 13 November 2000.  Having completed the road test, Mr Donaldson placed the car key on a peg board in an internal office.  Mr Luxon was informed that day that his vehicle was ready to be collected.  He stated that he would pick up the vehicle either the following day or the day after, being Wednesday 15 November 2000. 

1. When Mr Luxon delivered the vehicle to Doncaster Motors he left the car key with it.  Evidently, he also left a leather pouch containing two other keys in the glove box of the vehicle.  It is impossible to start the car without using the key.  There is no other way of starting the vehicle.

1. The BMW was parked in a fenced area on the side of Doncaster Motors’ premises facing a cyclone fence.  The Doncaster Motors premises are situated on the south side of Doncaster Road.  They comprise a rectangular building, which contains a service area, a display area for motor vehicles, and a spare parts area.  The building faces Doncaster Road and runs east-west.  Located between the front of the building and Doncaster Road is a vehicle display area.  Down the left hand side of the building, namely the eastern side, is a driveway which meets a set of steel gates running from the side of a main building to a cyclone fence.  The steel gates are very solid and slide back during the day and are closed at night.  If one proceeds down the driveway through the steel gate area, one moves into what is called a holding yard, where vehicles are parked parallel, and at right angles to a cyclone fence on the eastern side.  If one proceeds further down, there is an area where vehicles are parked and beyond that is another steel gate.  Behind that is a carport where Mr Kettyle carried out work repairing dents and scratches on motor vehicles.  To the east of the cyclone fence and fronting Doncaster Road was a former McDonald’s restaurant, which, at November 2000, had ceased to operate and had been acquired by Doncaster Motors.  Behind the McDonald’s and to the east of the cyclone fence was a fairly large car parking area, which was enclosed.  At the eastern end of that area was Darcy Street, and across the exit to Darcy Street on the evening of 14-15 November was a single steel boom gate, similar to a farmyard gate, which was chained and padlocked.

1. After the premises were closed at night, the steel gates on the northern end of the holding yard were closed and locked, as was the boom gate leading out into Darcy Street.  The car holding area was floodlit during the night, and situated at intervals along the cyclone fence were alarm sensors.  Located on the eastern end of the main building and directed towards the car holding area was at least one, and perhaps more, cameras which turned.  The security system was operated by an off premises security company.  The evidence in relation to the security was somewhat vague and was given by Mr Peter Kaiser, the service manager.  No person was called from the security company to explain the security system and its operation.  Mr Kaiser’s evidence led to the conclusion that if a sensor was activated, it would send a non-audible signal down to the security company’s premises.  Mr Kaiser thought the cameras would then turn towards the area where the sensor was located.  However, there was a degree of uncertainty about his evidence. 

1. Within the main building was an internal office, which had a door on either side.  On one side of the room were sliding windows facing into the Service Department.  On the other side of the office was the display area for new vehicles.  During the course of the day, people would move in and through the office.  The office was occupied by three employees.  I am satisfied that from time to time during the course of the day none of those persons would have been in the office.  Situated in the office was a key board, approximately two metres high by about a metre wide, attached to the wall.  The key board had 98 pegs on it.  Customers’ cars at the premises, when serviced, were given a number which was recorded on a card, which was then hung from the mirror of the vehicle.  The same number was placed on a card attached to the key and the key was then placed on the key board below the appropriate number.  Any person who was permitted to walk through the office and who did not in any way attract any attention to his or her presence in that office could, at some convenient time during the course of the day, have removed the key without any other person knowing that fact.  It is presumed that Mr Donaldson, when he completed the road test on Monday 13 November 2000, lodged the key on the peg board under number four.  No counsel argued to the contrary.  Hanging from the rear vision mirror of the vehicle was a card with the number 4 noted on it.  Mr Donaldson parked the car at right angles to the cyclone fence on the eastern side of the holding yard, approximately 15 to 20 metres south of the wall and closed steel gate situated between the side of the main building and the cyclone fence.  The area beyond the cyclone fence where the vehicle was, was an open area, comprising a nature strip approximately two to three metres wide and then a bitumen surfaced road. 

1. On Tuesday 14 November 2000, Mr Kettyle, on behalf of his company Crown Colour FX Pty Ltd, was at the premises of Doncaster Motors carrying out some work to a BMW.  The work involved repairs to a front bumper bar on the vehicle.  Mr Kettyle signed an invoice that day for the repairs, for which a charge of $120 was made. 

1. As stated, Safari’s BMW was stored in the holding yard at right angles to the cyclone fence.  It was stored there on the night of Monday 13 November 2000, and the following day and night. 

1. On the evening of 14 November 2000, the alarms at the premises were activated and the gates locked.  The evidence as to whether the flood lights, which are illuminated by a timer switch, were actually operating on that night is questionable.  In some respects, the evidence concerning the security arrangements given by the service manager of Doncaster Motors, Mr Kaiser, was somewhat vague.  His vagueness can be put down to the passage of time.  However, Doncaster Motors was the party that was in the position to call evidence relating to the security measures and the operation of same on the night of 14 November.  Mr Kaiser gave evidence that he called in an electrician the following day because it was suggested the lights were not operating, and that no fault was found.  The evidence also revealed that a person could attend at the box where the switches were and turn off the automatic timer switch without difficulty and quickly. I find that the floodlights were not illuminated on the night of 14-15 November 2000.  No party called evidence of the video that would have been taken on that night, nor did Doncaster Motors call any evidence from any of the owners of the business, who apparently had seen the video.  Accordingly, what the video showed was not placed before the Court.  However, a report tendered in evidence suggested that the video did not record the actual theft.

1. Mr Kaiser arrived at work at about 7.00 am the following morning, being Wednesday 15 November 2000.  It was reported to him at around 7.30 am that morning that somebody had cut through the cyclone fence opposite to where the BMW car was parked.  The car was apparently driven out into the adjoining area and through the boom gate area, after the padlock and chain had been removed and the gate lifted.  The time taken to remove the vehicle would have been a matter of a few minutes.  Gaining access to the area adjoining the holding car area beyond the cyclone fence involved cutting the chain holding the boom gate.  This could have been achieved in a matter of seconds, and would have opened the escape route.  The next step was to cut the cyclone fence using bolt cutters.  This would have taken no more than one minute.  The activity could have been carried out without activating the sensors located inside the cyclone fence.  I find that the person who effected the theft had the key to the car.  That person could have opened the car doors before crossing through the cyclone fence, and it would have taken no more than 30 seconds to enter the car, start it and commence to move through the hole in the fence.  Once through the fence, it would have taken less than 30 seconds to drive out of the premises through the boom gate.

1. Mr Kaiser informed the Court that if a sensor was activated, a signal went back to the security office, which was some kilometres away, and it was expected that an employee of the security company would attend the premises.  However, that person could not enter any part of the Doncaster Motors premises if he or she did attend.  There is some evidence that the sensors were activated on four occasions between 11.10 pm and 12.52 am.  Whether or not any security person did in fact attend the premises is unknown.  There was no evidence as to when the theft took place.  On the morning of 15 November 2000, sunrise would have occurred at around 6.00 am.  I find that some time between the closing of the premises at or around 7.00 pm on Tuesday 14 November and 7.00 am on 15 November, the car was stolen from Doncaster Motors’ premises.  I find that the main building had not been broken into that night and I further find that there was no intruder in the building on that night who removed the key.  I find that the key was taken by somebody between about 12.00 noon on 13 November and 7.00 pm on the evening of 14 November.  Mr Kettyle, who was present during the day on 14 November, would have had an opportunity to take the key.  I do not accept his evidence that he never went into the internal office between the Service Department and the display room.  It was open, and if he had ventured into that office, he would not in any way have attracted any attention or suspicion.  I am satisfied that the person responsible for the theft took the key during business hours and it is most likely that that occurred on 14 November 2000.  There was no dispute that the only way the vehicle could have been moved was by somebody using the key to the vehicle. 

1. Doncaster Motors did not have any system of checking whether all the keys were placed on the pegs each night.  The evidence revealed that from to time, keys did go missing because an employee inadvertently left a key somewhere, locked a key in a box of tools or took a key home.  Doncaster Motors proceeded on the basis that this would occur from time to time, but did not have in place any system to track down keys each night.  It would not have been difficult to establish a system to ensure that at the end of each working day, the keys to all vehicles were in the custody of the business in the room where the key board was located.  It would not have been difficult to have established a system whereby the keys were locked up overnight to ensure that no person removed any of them.  A key audit procedure could have been implemented without any difficulty and would have ensured the safety of the keys each night. 

1. On 30 April 2002, VicRoads issued a Certificate of Registration of a motor vehicle described as a “2000 BMW sedan”.  It was given the registration number ROA 439.  Later evidence established that this was Safari’s BMW, which had been stolen from the premises of Doncaster Motors.  It was registered in the name of Mr Kettyle.  According to the Certificate of Registration, the engine number was 60248630 and the vehicle’s information number (VIN) was 6T9REPV97R201X025.  Evidence revealed that the car had been given a new VIN.  Mr Kettyle stated on oath that he did not steal the car and was not involved in the theft.  He stated that he purchased the car in April 2002, that the transaction was a bona fide one, and that he did not know at the time of purchase, or indeed later, that it had been stolen.  He drove the car from 30 April 2002 until it was seized by the police on 29 September 2003.  There is no direct evidence that Mr Kettyle stole the vehicle or was implicated in its theft.  However, there are pieces of evidence which provide a circumstantial case implicating him in the theft.

1. Mr Kettyle gave evidence of how he acquired the vehicle.  His credibility looms large in the case brought against him that he was involved in the theft.  He was cross-examined in excess of two days, and I formed the opinion that he was an unsatisfactory witness whose evidence should not be accepted unless it was corroborated by other evidence or was admitted.  He was evasive, and sought during the early parts of his evidence to portray a person who was inexperienced in the area of purchasing and selling motor vehicles, and who did not have a good understanding of buying and selling motor vehicles.  He stated that he was ignorant of the Australian regulations concerning importing vehicles from overseas.  His version of events did not stand up to scrutiny.  Some of it beggared belief.  He made a statement to the police on 1 October 2003, and it contains a number of prior inconsistent statements which reflect upon his credibility.  It is difficult to be certain about many of the facts which were the subject of evidence given by Mr Kettyle.  This was because, first, the alleged vendor Robert Costa was not called as a witness and there were some doubts as to whether in fact he existed.  Secondly, documents which purported to have come from Mr Costa raised real questions as to their authenticity and when they were made.  Thirdly, some of the documents were inconsistent.  Fourthly, the circumstances surrounding the registration of the vehicle do not stand up to scrutiny.

1. The BMW was registered on 30 April 2002 and a request was made for a replacement VIN for the vehicle.  A new VIN was provided.  The written application in respect to the replacement VIN was tendered in evidence by counsel for Mr Kettyle.  An engine number which was noted on the vehicle was contrary to the actual engine number.  Later evidence showed that the engine number on the car had not been changed, although the original VIN had been altered.  The application was processed by a Ms E. Sofranko, who was a corrupt employee of VicRoads and who has been charged with a number of serious offences involving deception.  The evidence led to the conclusion that the actual registration was performed by a corrupt person, who was requested to provide a new VIN without carrying out any of the procedures laid down for when a vehicle which had been rebuilt was presented for registration.  According to the application form, the vehicle had a previous registration number in New South Wales and an engine number which was demonstrably false.  Any inspection would have revealed the falsity, and it was asserted that the vehicle had a previous VIN which also was false.  If anyone had looked at the vehicle at that time, it would have revealed a different VIN, which later evidence established was also false.  Mr Kettyle said that Mr Costa arranged the registration.  Finally, the service booklet had a number of important pages missing and contained notations of two services allegedly carried out by BMW Melbourne.  Again, on further examination, this raises real doubts about the authenticity of the notations in the book. 

1. I will later state the reasons why I do not believe Mr Kettyle.  For present purposes, I will set out what Mr Kettyle informed the Court as to the circumstances of him acquiring the motor vehicle. 

1. Mr Kettyle is now aged 36 years and resides in Donvale.  He is married with two children.  His first child was born in April 2002, which is the month in which he alleges he purchased the BMW.  He conducted his business through Crown Colour until some time around late 2002, and then went into partnership with a man called Michael Daoud.  They continued the business for some years.  Eventually the partnership was dissolved.  Mr Kettyle is now a proprietor of a Charcoal Chicken shop in Forest Hill. 

1. Early in his evidence, Mr Kettyle prevaricated about his involvement in buying and selling cars and purchasing prestige vehicles.  However, it emerged after some questioning that he had been involved in buying and selling cars over at least three or four years, and that he had purchased about 10 cars each year.  Some of them were prestige cars.  He also admitted that he had purchased imported vehicles.  Despite this, he stated that he was unaware of the Australian regulations concerning imported cars and the requirement that they comply with the Australian Design Rules.  Imported cars must have a compliance plate affixed to show that they comply with such rules.  Despite being asked a number of times, Mr Kettyle professed ignorance of such matters.  I do not believe him.  Evidence given by a person experienced in the trade, Mr Mark Grulke, who is now employed as a forensic vehicle examiner at the Victorian Police Forensic Centre, was that it was common knowledge going back many years, that to purchase an imported vehicle required vigilance as to its compliance with the Australian Design Rules.  It was a matter discussed from time to time in the media, and was well known amongst those in the motor trade.

1. I am satisfied on the evidence that Mr Kettyle was not an innocent abroad when he was registered as the owner of the motor vehicle on 30 April 2002.  He had been working at various car dealerships for a period of approximately eight years, had been involved in a business repairing motor vehicles, had been engaged in buying and selling vehicles for at least three or four years, and had purchased about 10 vehicles each year.  He had purchased imported cars prior to April 2002.  In my opinion, he would have been very familiar with all that was involved in buying and selling a motor vehicle.  In particular, he would have been on guard against any defects of title or mechanical problems.  He did, early in his evidence, seek to paint a picture of a man who really was somewhat naïve.  I do not accept that he was.  Further, the financial evidence revealed that his company was making modest profits during the years 1999 through to 2002.  Yet he had considerable cash in the year 2002, when he paid $115,000 in cash for the BMW.  When questioned, Mr Kettyle stated that the reason why he had such an amount of cash was because he had been successful in buying and selling motor vehicles.  In my opinion, he was an experienced trader in used cars as at April 2002.  He also had a very good knowledge of the workings of a car dealership and the servicing of motor vehicles by the year 2000.  He knew the premises at Doncaster Motors and its operations.

1. Mr Kettyle stated that he first saw the silver BMW M5 some time around March 2002 when he met a person called Robert Costa.  He informed the Court that the latter was a used car dealer carrying on business under the name of Flash Motor Company at premises situated at Factory 2, 32 Roberna Street, Moorabbin.  He stated that he met Mr Costa at Pickles Auctions in Tullamarine in or about March 2002, and that they conversed and Mr Kettyle gave him his business card.  According to Mr Kettyle, Mr Costa rang some weeks later and requested him to do some work.  He stated that, from memory, he worked on two vehicles, one of which was the BMW.  Apparently, the work on that car had to be done at Mr Kettyle’s home in Donvale because it involved spray painting the bonnet and the front of the vehicle.  He said that Mr Costa delivered the car to his home.  Mr Kettyle said he charged the sum of $2,000 for that work.  However, there was no documentary evidence relating to this transaction.  Mr Kettyle accepted that he was obliged to retain business documents for a period of at least five years for taxation purposes. 

1. Mr Kettyle gave evidence that Mr Costa told him the vehicle had been imported from overseas and that it had come from Japan.  The car was manufactured in Germany and Mr Costa said it had been used in Japan.  Mr Kettyle stated that he took it for a test drive and noted that certain electronic equipment had to be attended to, namely the satellite navigation system, the telephone and the television.  Mr Kettyle said that he had expressed some interest in purchasing the vehicle and the parties commenced to negotiate.  He stated that they eventually agreed on a price of $115,000 but that before the contract was entered into, it was necessary for Mr Costa to have repaired the various items that Mr Kettyle had noted and, secondly, that Mr Kettyle wished to make enquiries of VicRoads to determine title and whether there were any encumbrances noted on the vehicle.  He stated that because it was an imported car, he “was hesitant about the asking price”.  Mr Kettyle stated that he paid an initial deposit of $5,000 in cash and agreed that he would pay a further sum of $15,000 in cash by way of deposit, when the works had been carried out and he had satisfied himself that there were no problems with the title and no financial encumbrances on the vehicle.  These discussions took place, according to him, around about the end of April.  He stated that after he paid the $5,000, he made contact with VicRoads.  He said he was told that the car was not reported as a stolen vehicle, and that there was no financial encumbrance noted on it. 

1. Mr Kettyle was asked what information he gave to VicRoads to enable the search to have any meaningful effect.  He was vague about what he had told VicRoads, and made reference to a VIN or an engine number.  He was extremely vague about what he told VicRoads to enable it to respond.  When the vehicle was examined by the police after 29 September 2003, it was observed that the original engine number was still intact on the vehicle’s engine.  Nobody could have given that engine number to VicRoads as this would have revealed that it was stolen.  Mr Grulke, the forensic vehicle examiner, inspected the vehicle after 29 September 2003 and the inspection revealed that the original engine number was intact, but very difficult to see without moving some portions of the covering of the engine.  The original VIN, which was impressed on to the tower on the offside of the vehicle, had been ground down and a substitute plate was affixed, covering the area where it had been.  The tower was then repainted and to the naked eye, the substituted VIN appeared to have been the original number imprinted in the metal of the tower.  However, Mr Grulke said that to the trained eye it was obvious that it was not the original VIN.  He  proceeded to remove the surrounding paintwork, and this revealed a substitute plate affixed to the tower.  The original had been imprinted into the surface of the tower.  The Certificate of Registration issued on 30 April 2002 revealed a new, substituted VIN.

1. The procedure to obtain a new VIN was by written application made to VicRoads, and if an employee of VicRoads was satisfied of all matters, authority was given to prepare and affix a new VIN.  This was apparently done in relation to the BMW on or around 30 April 2002.  The new VIN plate was affixed to the tower on the near side of the vehicle.

1. The evidence leads me to the conclusion that Mr Kettyle could not possibly have made any meaningful enquiry of VicRoads because the information that VicRoads had on 30 April 2002 bore no resemblance to anything that was on the vehicle when Mr Kettyle allegedly made his enquiry.  If he had used the engine number, he would have either been told that it was the engine number of a stolen vehicle or the enquiry would not have revealed anything.  If he had sought to use the VIN that was then on the vehicle on the offside tower of the motor, it would also have revealed nothing.  I do not believe that Mr Kettyle made any such enquiry of VicRoads.  Further, Mr Kettyle gave vague evidence, despite being questioned on a number of occasions as to the odometer reading of the vehicle when he purchased it.  He was vague and evasive, and prevaricated, but was not prepared to accept any particular odometer reading, save that he thought it was fairly low.  He stated in cross-examination that the first entry in the service booklet may have been correct, but later said that perhaps the reading noted on the contract of purchase may have been correct.  The difference in the readings was of the order of 5000 kms.  He drove this expensive prestige car for a period of 17 months.  He purchased it for $115,000 cash.  It is unbelievable that he would not have noted the odometer reading at the time of purchase.  That would be one matter that he would have considered when making a decision to purchase.  If it was a low odometer reading, the query would be, was it genuine?  If so, then to purchase a $200,000 plus car for $115,000 was a bargain.  I do not accept that he was not aware of the odometer reading at the time of registration.    

1. He stated that after he had made enquiries of VicRoads, he informed Mr Costa that he would proceed with the purchase and paid him an additional $15,000.  He then produced in evidence the first of a number of very dubious documents.  He stated that Mr Costa provided the first document on or around 30 April 2002.  The document comprised a photostat copy of a driver’s licence in the name of Robert P Costa, who was said to reside at 19 Spring Street, Doveton in this State, and a handwritten receipt.  There is no 19 Spring Street, Doveton.  The evidence revealed that the last numbered house in that street is number 13.  The licence number was noted, but this did not exist.  Further, the licence bore the date 10 March 2002 as its expiry date, which meant it had expired by the alleged date of the document.  Mr Kettyle said Mr Costa had volunteered the receipt.  The handwritten part reads –

“This is to certify that I Robert Costa have received $20,000 deposit being for a 2000 BMW M5.  6T9REPV97R20IX025 dated 30 April 2002 from Mr Samual Kettyle.”

1. The VIN in fact was the new VIN which had been authorised by VicRoads on or about 30 April 2002.  It was not the VIN which appeared to have been imprinted on the off-side tower.

1. Mr Kettyle said that Mr Costa arranged for the vehicle to be registered. According to a document produced in his case, a request was made for a replacement VIN for a rebuilt motor vehicle.  The document reveals that somebody attended at the Greensborough office of VicRoads and the application was prepared.  It is uncertain when the application was prepared, except it was noted that it was issued at VicRoads’ Watsonia office and forwarded to the Greensborough office at 10.30 am on 30 April.  It notes the client details as being Mr Kettyle and his licence number.  It has vehicle details on it.  A previous registration is noted, as are an engine number and a previous VIN.  The engine number, the previous registration and the previous VIN were all false.  It is noted that Ms E Sofranko processed the request and that across the bottom of the document is written the new VIN.  The date and circumstances of the preparation of this document are unknown.  All that one can say is that it would appear that the document was processed at VicRoads Watsonia on the morning of 30 April 2002 and at that stage the VIN was issued. 

1. To add to the doubts about the transaction, Mr Kettyle produced a tax invoice allegedly issued by Flash Motor Company dated 30 April 2002, which states that the total purchase price for the vehicle was $115,000 and that payment was to be made by cash.  It is not a receipt.  It is a document that is incomplete.  There is no ABN number noted for Flash Motor Company.  Mr Kettyle was extremely vague as to when he received that document.  He said he was uncertain as to when he got it, but admitted that the document must have been back-dated. 

1. Mr Kettyle stated that he paid the balance of $95,000 some time after 3 May 2002.  In support of his evidence, he produced the Bank of Melbourne statements for Crown Colour for the calendar year 2002.  He stated that he had other personal bank accounts, but he did not produce them.  He used the bank accounts produced to support his version.  He relied first of all upon an entry dated 29 March 2002, which shows a withdrawal of cash over the counter of $20,000.  He says that that money was used towards the payment of the deposit.  This was at least three weeks prior to paying any deposit, and perusal of the bank statements prior to that date reveal that he withdrew cash over the counter about every month.  Indeed, Mr Kettyle frankly admitted that he was paying his staff in cash.  There are grave doubts about this withdrawal having anything to do with any deposit.  Mr Kettyle’s version was that he paid an initial $5,000 for the deposit about a week before 30 April, and the last $15,000 on 30 April.  In the meantime, there was another withdrawal on 23 April of $45,000.  He stated that this was also used to pay for the purchase.  However, on his version of events, he was uncertain at that time as to whether he would proceed with the purchase.  As he said, not only was he concerned about the state of the electronics and the question of title, he was also concerned that it was an imported vehicle.  He could not explain how it was that he withdrew $45,000 in cash some days before he made a decision to purchase.  The next entry relied upon is on 3 May 2002, when Mr Kettyle withdrew cash of $50,000.  Again, he was somewhat vague about when he paid the balance of the purchase price.  He thought it may have been some time after 3 May.  However, he was unable to say when it was. 

1. To add to the doubts, he produced another document, being a contract for sale of second hand motor vehicle and transfer application.  This document notes that the salesperson was Robert Costa, that the motor car trader was Flash Motor Company, and that the purchaser was Mr Kettyle.  The vehicle is described, and has in its description the registration number which had been given on 30 April 2002, and the new VIN.  The document repeats the false engine number which appeared on the application for the replacement VIN, and also appeared in the Certificate of Registration issued on 30 April 2002.  The document notes that Mr Kettyle had already paid $20,000, and that $95,000 was due as the balance.  The document has been signed by Mr Kettyle and purports to have been signed twice by Mr Costa.  The document is dated 30 August 2002.  Mr Kettyle initially suggested that it must have been 30 April 2002, but it was later pointed out there were a few features about the document which suggested that it was in fact correctly dated.  First, it is most unlikely, based upon one’s experience of life, that anybody could make such an error in dating a document.  Human experience tells us that sometimes with the turnover of the year, errors are made as to the year, and sometimes errors occur on the change of one month to another.  But here, there is a four month difference and it is hard to accept that any person could make that error.  Secondly, the document records the odometer reading at the time of signing the contract as being 6,549 kilometres.

1. A scenario was put to Mr Kettyle which would tend to support the view that the document did bear the correct date.  When the BMW was stolen, the odometer reading was 1,423 kilometres.  After the theft, it is most likely that the vehicle was warehoused.  It is clear that some works were done on the towers of the vehicle, and particularly the offside tower, to record a new and false VIN.  Mr Kettyle gave evidence that he received a service booklet.  The booklet was tendered in evidence.  It is missing a number of pages.  However, on one page there are two service entries.  The first notes an odometer reading of 1,516 kms and the other, a reading of 16,147 kilometres.  A BMW Melbourne stamp is affixed underneath each service entry and a person has initialled each stamp, although there is no date.  According to Mr Kettyle, Mr Costa arranged for the vehicle to be serviced twice.  If, in fact, the vehicle had been warehoused, and if Mr Costa did arrange a service at BMW when the reading was 1,516 kms, then this would tend to support a conclusion that as at 30 April 2002, when the vehicle was registered, then that was the correct reading.  However, the position is further muddied by the fact that a witness from BMW Melbourne, who had inspected the records of that dealer, gave evidence that there was no record that the vehicle had in fact been serviced at BMW Melbourne.  Be that as it may, a reading of 6,549 kms as at 30 August 2002 would be consistent with the vehicle having been driven over the four months following 30 April 2002.  The second reading of 16,147 kms is, to some extent, consistent with the evidence of Mr Kettyle when he said that the second service arranged by Mr Costa took place in late 2002.  I do not accept the evidence of Mr Kettyle as to the contract or the contract date being incorrect.  It is one of the many features of this case which raise a doubt about Mr Kettyle’s version of events.  I am satisfied that the Court cannot rely on the genuineness of the documents produced by Mr Kettyle, being the original receipt, the service books, the tax invoice and the contract of sale.

1. Mr Kettyle said that he took possession of the vehicle on or about 3 May, when he paid the balance of $95,000 in cash.  He was given two single keys.  He said that he only drove the vehicle for private use, and that his wife did not drive it.  He stated that Mr Costa arranged for it to be serviced through BMW, but he was vague about when this occurred and the dates of service. He said he thought that the vehicle had been serviced on two occasions.  He stated that he last saw Mr Costa during November/December 2002, when the latter stated that he was going overseas, and that he has not seen him since.  He did not produce any document which showed a receipt of $95,000.  This was extremely strange, in light of his evidence about how the first receipt came into existence.  He said it was not unusual to obtain a photostat copy of the vendor’s licence on a receipt.  The tax invoice was originally put forward as some form of receipt, but cross-examination showed that there is nothing on the document to suggest that it was a receipt.

1. Mr Kettyle said that he saw the service booklet and other BMW books before he purchased the vehicle.  He stated that he had been told by Mr Costa that it was an imported vehicle.  He said that this was a matter of some concern and that he had to be satisfied as to the vehicle’s title.  The books, instead of providing any comfort, were contrary to the suggestion that the vehicle had come from Japan.  First of all, none of the books were in Japanese.  Secondly, the BMW roadside assistance booklet was clearly referring to Australia and had an Australian telephone number in it.  Thirdly, during Mr Kettyle’s case, his counsel produced a page from the service booklet which noted the two alleged services by BMW Melbourne.  Later, the full service book was produced.  This booklet would have raised doubts in the mind of any person, especially one experienced in buying and selling motor vehicles, as to the history of the vehicle.  First of all, the first four pages had been removed.  One might think that the first four pages would have contained information about prior ownership and any early servicing.  Pages 11-14 were also missing.  The entries of the two services on page 15 are so neatly filled in that one might think that they were filled in on the same day.  As already noted, one shows an odometer reading of 1,516 kms and the other, 16,147 kms.  There is no date noted, although the booklet specifies that the date be recorded.  Instead of reassuring a person about the vehicle’s title and genuineness, this document should have alerted any prospective purchaser to real doubts about many aspects of the vehicle.  Mr Kettyle adopted an approach, when cross-examined, of being vague and falling back on a defective memory.  His explanations as to studying these booklets, and in particular the service booklet, were evasive, prevaricating and unbelievable.

1. Mr Kettyle gave evidence that he took the vehicle down to Doncaster Motors in December 2002 in order to purchase a luggage net.  He stated that the salesperson walked from the sales department to have a look at the vehicle and confirm the type of luggage net.  However, evidence given by another witness was to the effect that the luggage net for all 5 Series BMWs was the same, and this included an M5.  There would have been no necessity at all for any salesperson to have a look at the vehicle.  I do not believe Mr Kettyle.  He produced the tax invoice for the luggage net.  Whether or not it was a luggage net for his vehicle is not apparent from the document.  Indeed, the name of the purchaser is not noted.

1. In August 2003, Mr Kettyle approached Collins Motors as he was interested, so he said, in selling the vehicle and acquiring a four wheel drive vehicle.  Collins Motors sold four wheel drive vehicles.  Mr Kettyle, through his counsel, produced what was described as a “combined summary result”, which showed information recorded at VicRoads.  The face of the summary result recorded the new, correct VIN but the engine number was again the false number that had been used throughout.  Any person wishing to purchase the vehicle and who took steps to ascertain the correct engine number, which was still on the vehicle, would have been informed on checking with VicRoads that the vehicle was stolen.  Of course, the query would have revealed that the recorded engine number was false.  This would have made it very difficult to sell the vehicle.  A person aware that the vehicle was stolen would be interested in knowing what was recorded at VicRoads.  Mr Kettyle’s actions support the case against him.  The strength of the case is increased when it is observed that the value of the car would have been greater than any Mitsubishi four wheel drive. 

1. Apparently, at the end of September 2003, Mr Kettyle was experiencing some problems with the vehicle.  However, he did not take it back to a BMW dealer.  In particular he did not take it to BMW Melbourne, where, according to the service book, services had earlier been performed on it.  Nor did he take it to Doncaster Motors.  Mr Kettyle was described by a senior employee of Doncaster Motors as a trusted contractor, and by 2003 had been working for that company for at least four or five years.  If there were any problems with the vehicle, one might think that Mr Kettyle’s first port of call would be to go to Doncaster Motors to ascertain what the problem might be, before subjecting himself to a potentially substantial repair bill.  However, he went instead to an automotive engineer, Mr Warren Taylor, who carried on business next to a Caltex service station on Doncaster Road, approximately 150 metres from where Mr Kettyle resided.

1. Mr Taylor conducted an automotive business known as Dontex at the service station premises, although he did not operate the service station business.  According to Mr Kettyle, he approached Mr Taylor in order to obtain what he described as a second opinion.  Again, his evidence in relation to this aspect was vague also.  His evidence was that he was concerned that he would be charged a lot of money by a registered dealer.  He also stated that he did not want Mr Taylor to do any work, but wanted Mr Taylor to advise him on what the problem was.  There was no evidence Mr Kettyle had obtained an initial opinion from any repairer. 

1. Mr Kettyle stated that he did not ask Mr Taylor to carry out any service work, but I do not believe him.  Mr Warren Taylor gave evidence.  He stated that Mr Kettyle was concerned about engine noise from misfiring and had asked him, Mr Taylor, to attend to the problem.  Mr Taylor stated that he had never serviced such a vehicle before and advised Mr Kettyle that he should take it to a BMW dealer.  He expressed the view that the vehicle may be under warranty. He stated that Mr Kettyle said that it was not under warranty and he asked Mr Taylor to look into the problems.

1. Mr Taylor contacted Doncaster Motors in order to purchase some spark plugs, this being the first step in seeking to overcome the misfiring problem.  When Mr Taylor made contact with Doncaster Motors, an employee sought further information about the vehicle.  Eventually, two senior employees of Doncaster Motors visited Mr Taylor, looked at the vehicle and suspected that it was, in fact, a stolen vehicle.  They obtained the key from Mr Taylor, returned to Doncaster Motors and had it examined with the key data equipment.  The key held considerable information.  It revealed the vehicle identification number and this, of course, immediately established that the vehicle was the same one stolen from Doncaster Motors.  By this time, the vehicle had travelled 44,470 kms.  The police were informed and seized the vehicle.  The theft was investigated, but no charges were laid.

1. Mr Kettyle made a statement to the police on 1 October 2003, in which he acknowledged that it was true and correct, and made on the understanding that a person who makes a false statement may be liable to penalties for perjury.  In his statement, he said that after doing initial business with Mr Costa, Mr Costa indicated that he was prepared to sell the vehicle.  Mr Kettyle further said “However because it was an import there were a few things that needed to be fixed to the car (sic) I was hesitant about his asking price.”  He then observed that he took it for a test drive.

1. In the statement, Mr Kettyle said that he took the VIN down before he rang VicRoads and that he had got it from the tower under the bonnet.  However, this VIN would have made no sense to VicRoads.  It was a false number.  He then stated that he rang VicRoads and said –

“The VIN number was the only one number I can be sure about, because it was the only number I could read on the car myself.  I was informed during this phone conversation that the BMW was all clear.”

I do not accept that evidence.  Mr Kettyle further stated –

“I do do a lot of buying and selling of cars as well, which creates cash flow to the business.  These cars are purchased under my name and not the business.  I would buy and sell approximately 10 vehicles a year.”

He then went on to observe that at the time when he gave Mr Costa $95,000 cash when the vehicle was brought around to his home, Mr Costa completed the contract in his presence.  This, according to his oral evidence, must have been on or shortly after 3 May 2002.  In his statement, however, he went on to say –

“This form was dated on the 30^th of August 2002.  I am unsure of the odometer reading at the time of purchase, I know it was very low kilometres.”

He did not say in his statement that the date was incorrect.  He made reference to the two services, the latter being in December 2002, and stated that Mr Costa took the vehicle to BMW for both services.  He also thought that there was another occasion when Mr Costa took the vehicle to a BMW dealership.

1. Contrary to his unsatisfactory oral evidence about why he took the vehicle to Mr Taylor and what he asked him to do, Mr Kettyle stated the following two days after the event –

“The BMW was running rough at this time and if Warren could not find the reason I was going to book it in at the Doncaster BMW dealership for a service.”

1. This statement has to be contrasted with his attempt while giving evidence to suggest a variety of reasons as to why he approached Warren Taylor, although none of his oral evidence suggested that he asked Mr Taylor to do any work.

1. As I have already stated, I accept Mr Taylor’s evidence.  Mr Taylor’s conduct is also consistent with being asked to see whether he could fix the problem.  Mr Kettyle’s evidence to the contrary is not accepted.

1. Mr Kettyle engaged a firm of solicitors to act for him and it is apparent that over the next 18 months there was much dispute as to who owned the vehicle.  An interpleader application was heard in the Magistrates’ Court at Melbourne and on 12 April 2005, the Magistrates’ Court ordered that the vehicle be delivered to AMP General Insurance Ltd or its nominee.  Mr Kettyle was ordered to pay the costs of AMP General Insurance Ltd fixed at $1,250.  He has paid the money.  Although his solicitors, on his behalf, pursued the course of making a claim to the vehicle, they informed the solicitors acting for the insurance company shortly prior to the hearing that Mr Kettyle would not contest the insurance company’s title to the BMW.

1. The plaintiff was insured with a policy of insurance by AMP General Insurance Ltd during the relevant period.  The insurance company paid the plaintiff a sum of $169,500, being $170,000 less the amount of excess of $500.  On 5 July 2001, a demand was made on behalf of the plaintiff on the defendant for payment of the sum of $212,009.70, which was the replacement cost of the vehicle.  Doncaster Motors refused to pay the sum.

1. On 20 April 2006, the vehicle was sold for $40,000 by Fowles Auction Group on behalf of the insurance company, and the net amount received by the insurance company was $39,694.20.

1. AMP General Insurance Ltd retained solicitors to obtain possession of, and ultimately title to, the BMW vehicle.  The solicitors charged $37,960.45 in costs effecting recovery of the BMW, but there is a dispute as to whether all of the costs are recoverable.  The evidence comprised the tender of a series of bills, which were prepared by the said solicitors and sent to the insurance company.  The other parties did not object to the tender.  However, there was no further evidence explaining the bills.  Accordingly, the only evidence the Court has is the documents.  It is fairly apparent on the face of the documents that some of the items are costs in the present proceeding, and not costs associated with effecting recovery of the motor vehicle.  It will be necessary later to consider the claim.

1. Early in his evidence, Mr Kettyle was somewhat vague about whether or not he was at Doncaster Motors’ premises on 14 November 2000.  This was despite the fact that he had many years to consider the events leading up to the trial.  In the course of Safari’s case, an invoice from Crown Colour dated 14 November 2000 was tendered in evidence.  It was signed by Mr Kettyle.  However, initially he was somewhat vague and said he could not remember, although in the end he conceded in cross-examination by plaintiff’s counsel that he must have been at the premises on that date.  Initially he suggested that he had not attended Doncaster Motors very often over the years.  However, the evidence from Mr Belton, the assistant service manager, which I accept, was that it was around 1996-1997 that Mr Kettyle’s company was engaged by Doncaster Motors on the recommendation of a Volvo dealer.  Thereafter Crown Colour regularly did work for Doncaster Motors.  The documentary evidence revealed that between 12 September and 22 September 2000, six vehicles were repaired by Crown Colour.  Mr Kettyle worked on vehicles on two occasions during that month, and in the month of November 2000, the company carried out three separate jobs.  Mr Kettyle performed two of them.  I accept the evidence of the assistant service manager, Mr Belton, that Mr Kettyle was a valued and trusted contractor and, further, that on occasions, he was permitted to drive a vehicle within the premises and for that purpose was provided with a key.  I do not accept Mr Kettyle’s evidence that he never drove a vehicle at Doncaster premises.  Further, I accept the evidence of Mr Belton that from time to time, Mr Kettyle would be in the internal office where the key board was situated, and that he was permitted to remove a key and return it to the board.

1. As noted earlier, when a job was done on a motor vehicle at Doncaster Motors, the vehicle was allocated a number and a card was suspended from the rear view mirror of the vehicle with the number on it.  The number coincided with an attachment to the key, which also had the number on it.  The key, when not in use, was placed on the key board under that number. When Safari’s BMW was at the premises in November 2000 its mirror hang card number was number 4.  Any person walking past the vehicle could, by looking into the vehicle, see the number on the mirror hang card.  Having determined that number, it would be very easy to go to the internal office and quickly identify the key to that car.

1. I find that Mr Kettyle was a trusted contractor and that his presence in the internal office and on the premises would not have excited the interest of any employee of Doncaster Motors.  He could move around the area freely without in any way attracting any attention.  It would have been very easy for him to have determined the number on the mirror hang card in Safari’s BMW and to move into the office and obtain the key.  He gave evidence that he was not involved in the theft and was not implicated in any way in it.  He denied looking at the vehicle to determine the mirror hang card number, and he further stated that he did not take the key off the board in the internal office.  I do not believe Mr Kettyle when he says that he was not in any way involved in the theft.

1. It will be necessary to further consider the case against Mr Kettyle when I deal with each cause of action.

Claim by Safari against Doncaster Motors

1. After the Court had reserved its decision, it was informed that the proceeding between the plaintiff Safari and the first defendant Doncaster Motors had been compromised.  Accordingly, it is unnecessary to consider the claims made. 

Claim by Safari against Mr Kettyle

1. Safari claims that Mr Kettyle was implicated in the theft of the BMW vehicle  and thereby converted the vehicle to his own use, causing Safari damage.  In the alternative, it pleaded that even if Mr Kettyle was not implicated in the original theft, by purchasing the vehicle from Mr Costa and having it registered in his own name, Mr Kettyle was guilty of conversion and was liable for the value of the vehicle at the date of the conversion, being 30 April 2002.

1. The first cause of action alleges a criminal offence.  Safari as plaintiff carries the burden of establishing its case of conversion on the standard of the balance of probabilities.  However, because the claim involves the commission of a criminal offence by Mr Kettyle, the standard, although on the balance of probabilities, carries a heavier burden than that which normally rests on a plaintiff in a civil proceeding.  In Briginshaw v Bringinshaw[1], Dixon J considered the question of burden of proof and the standard of proof in civil and criminal cases.  After observing that whilst there was not any standard of persuasion fixed between the criminal standard and the civil standard, he stated that nevertheless the nature of an issue -

“necessarily affects the process by which reasonable satisfaction is obtained.  When, in a civil proceeding, a question arises whether a crime has been committed, the standard of persuasion is, according to the better opinion, the same as upon other civil issues … (authorities referred to) … But, consistently with this opinion, weight is given to the presumption of innocence and exactness of proof is expected.”

(Emphasis added)

This is known as the Briginshaw standard and it applies in the present case insofar as Safari, and also Doncaster Motors, contend that Mr Kettyle was implicated in the theft of the motor vehicle.

[1](1938) 60 CLR 336.

1. There is no direct evidence that Mr Kettyle took the vehicle.  The cases brought by both Safari and Doncaster Motors are circumstantial, and each party relies upon a number of pieces of circumstantial evidence which establish, on the balance of probabilities according to the Briginshaw standard, that Mr Kettyle was involved in the theft.

1. The principles relating to circumstantial evidence and its application in criminal cases were discussed by the High Court in Chamberlain v R (No. 2)[2] and Shepherd v R[3].  The same principles apply in a civil case.  They were discussed in the civil proceeding of Transport Industries Insurance Co Ltd v v Longmuir[4].  Although it is appropriate in the circumstances to consider each piece of circumstantial evidence to determine its value as evidentiary proof, in the end, however, it is necessary to consider the combined weight of all the intermediary facts when considered as a united force.[5]

   [2](1984) 153 CLR 521 at 535 et seq.

   [3](1990) 170 CLR 573 at 580-1 per Dawson J.

   [4][1997] 1 VR 125.

   [5]See ibid, per Winneke P at p.128.

1. In that case, the allegation was that an insured person had committed arson and accordingly, the burden was upon the insurance company consistent with the Briginshaw principles to prove its case, albeit on the balance of probabilities.  At p.129, Winneke P said -

“The task of the learned judge was to consider the weight of the combination of facts proved to his satisfaction and then to determine whether the combined weight of those facts and circumstances supported the inference, as a matter of probability, that the respondent lit the fire.  The onus of proof is only to be applied at the final stage of the reasoning process.  It is erroneous to divide the process into stages and, at each stage, apply some particular standard of proof.  To do so destroys the integrity of the circumstantial evidence.”

1. His Honour went on to observe, in respect to the burden of a standard of proof, the following -

“In cases like the present, where the trial judge is asked to draw an inference that the party to civil proceedings has committed a criminal offence, the civil standard of proof still applies.  However, it is necessary for the court to bear steadily in mind that the seriousness of the allegation will affect the clarity of the proof which is required with regard to the evidentiary facts from which the inference is to be drawn.”

1. In my opinion, there were a number of pieces of circumstantial evidence which pointed to Mr Kettyle being involved in the theft.  The evidence established the following:

(i)That Mr Kettyle, through his company Crown Colour, was a trusted and valued contractor who was permitted to come and go in the Doncaster Motors’ premises in the course of his daily activities, and that his presence would not have excited any interest or suspicion;

(ii)That Mr Kettyle had from time to time access to a key of a BMW and this would have involved him going into the internal office;

(iii)That Mr Kettyle’s presence in the internal office would not have alerted any person to suspect that he was up to no good, or that he should not have been in the office;

(iv)That in order to obtain a purchase order to carry out work, Mr Kettyle would have had to attend at the internal office;

(v)That Mr Kettyle was on the premises on Tuesday 14 November 2000 to perform work;

(vi)That is was open to Mr Kettyle that day to determine the key for Safari’s BMW by looking at the number on the mirror hang card, and that the opportunity was there to go into the internal office and remove the key;

(vii)That Doncaster Motors did not on the evening of 14 November seek to ascertain where the key was;

(viii)That Mr Kettyle’s version of the acquisition of the motor vehicle in April 2002 was fanciful and his evidence was contradictory;

(ix)That Mr Kettyle’s version of how he acquired the motor vehicle demonstrated a lack of care on his part, which, given his experience of buying and selling motor vehicles, was not believable;

(x)That the vendor, Mr Costa, has not been seen and no evidence was called on behalf of Mr Kettyle from any person who had seen him;

(xi)That there are grave doubts that Mr Costa actually existed and no attempt was made in Mr Kettyle’s case to call independent evidence that he did exist;

(xii)That Mr Kettyle did not seek to determine from any source, prior to the alleged purchase, the history of the vehicle he was proposing to purchase, though he had contacts at Doncaster Motors who could have searched BMW’s records to determine the history of the vehicle;

(xiii)That Mr Kettyle did not service the vehicle in the following 14 months through any BMW outlet;

(xiv)That Mr Kettyle in September 2003, some fourteen months after he had acquired the vehicle, according to his version, instead of going to a BMW dealer to carry out works, chose to go to a local automotive engineer to repair the car even though the latter stated that he should go to a dealer.

1. In my opinion, the circumstantial evidence, when considered in combination, points to Mr Kettyle being involved in the theft.  The coincidence of him acquiring the vehicle and him being at Doncaster Motors on the day prior to the vehicle being stolen is just too fortuitous to be believable.  Given the circumstances, Mr Kettyle had to go into the witness box to give evidence to refute the case that was put against him.  He was cross-examined in excess of two days.  In my opinion, he told lies and was not a credible or believable witness.

1. In setting out the facts above relating to Mr Kettyle’s acquisition of the vehicle from Mr Costa and his request of Mr Taylor, I have made a number of observations about Mr Kettyle’s lack of credibility.  I do not propose to go through every example which leads the Court to the conclusion that his evidence was not believable.  However, the following pieces of evidence demonstrate the implausibility of his version and his lack of honesty and credibility.

1. Mr Kettyle was a spray painter by trade.  He had been involved in the business of spray painting for at least six years prior to the night of the theft.  Despite giving  initial evidence to suggest that he was naive and innocent in the area of buying and selling motor vehicles, later evidence clearly demonstrated that he was a person experienced in buying and selling motor vehicles.  On his version of events, the amount of cash that was floating around in his company’s accounts was due to his success in buying and selling motor cars.  Again, despite his early reticence to admit involvement in purchasing prestige cars, or indeed imported cars, it emerged in the course of evidence that he had purchased prestige cars, outlaid large sums of money and purchased imported vehicles.  He pretended to not know anything about the Australian Design Rules concerning the importation of vehicles into this country.  He must have been the only person involved in buying and selling cars in this State who was not aware of them.  Publicity had been given to the Rules and any person who purchased an imported car in this State in the year 2000, and who was familiar with buying and selling motor vehicles, would have been well aware of the Australian Design Rule compliance obligation.

1. The BMW vehicle that he said he acquired had had re-birthing work done to the towers on each side of the motor.  A spray painter had been used.  The compliance plate, which is necessary on all imported cars, was not there when the vehicle was eventually seized in September 2003.  It had been removed.  Mr Kettyle said that he approached VicRoads to clarify title and to check that there was no financial encumbrance.  His evidence in relation to this matter was extremely vague and prevaricating.  On any version of the evidence, there is no way that he could have made any meaningful enquiry of VicRoads.  We know that the person involved in registering this vehicle was a corrupt official, who facilitated the registration and the provision of a new VIN.  We know that no attempt was made to eradicate the engine number, and yet the engine number that was given to VicRoads was false, as was the old VIN.

1. Mr Kettyle said that he was concerned because the BMW was an imported car.  Yet he took absolutely no steps to protect his interests.  The service booklet was missing the first four pages and a number of other pages involving servicing.  That should have prompted the average buyer to be extremely wary.  Mr Kettyle, according to his version, was not concerned about the service booklet.  I should add that having observed Mr Kettyle in the witness box, he is no innocent abroad, and is not a naïve fool.  He is clearly an intelligent and cunning individual.  I drew the conclusion after his long cross-examination, that lying came to him naturally.

1. The booklets that were supplied with the vehicle were in English and there is no evidence that the car had ever been in Japan.  The breakdown service telephone number provided was Australian.  The documents that Mr Kettyle produced, which he said came from Mr Costa, raised more questions than providing proof of anything.  It was surprising that, having obtained a receipt for the $20,000, Mr Kettyle never obtained a receipt for the balance of the purchase price.  Indeed, he sought to mislead the Court by producing a tax invoice and suggesting that it was a receipt.  He also attempted to mislead the Court in stating that the date on the alleged contract of purchase was incorrect and should have read 30 April 2002.  On one version of his evidence, the contract was prepared by somebody on 30 August 2002.  Mr Kettyle’s evidence relating to the amount of cash that he had and the reasons for the withdrawals was uncertain, vague and prevaricating.  He was challenged by counsel to produce documents which would explain the cash withdrawals, and why there were so many, but he failed to produce any documents showing his business activities and why he had so much cash.  He initially tried to make out that his business was very successful, but the tax returns revealed a very small profit each year.  The business records do not lead to the conclusion that he had an excess amount of cash from his business.

1. Mr Kettyle’s conduct after 30 April 2002 shows a man who was alert to the fact that he was driving a stolen motor vehicle and taking steps to cover his tracks.  He also sought to ascertain whether it would be safe to sell the vehicle.  First of all, in relation to the question of servicing the vehicle, it is extraordinary that Mr Costa was requested to service the vehicle.  The page from the service record showing servicing at BMW Melbourne in my opinion was forged, and does not represent a service at BMW Melbourne.  Secondly, Mr Kettyle attempted to set up a situation by purchasing the luggage net from Doncaster Motors.  This was an attempt by him to establish a situation which he expected would show that he was an innocent bona fide purchaser.  In my opinion, this was nothing more than an attempt to provide evidence to cover his criminality.  I do not believe him when he says that when he purchased the net, the salesman left the sales department to look at the vehicle to determine whether it was suitable for the vehicle.  The evidence was to the contrary.  It is a standard net for all BMW 5 Series motor vehicles.

1. Thirdly, the fact that Mr Kettyle approached Warren Taylor to service the vehicle and to rectify problems associated with the vehicle, again demonstrates a man who was anxious to avoid taking the vehicle to a BMW dealership.  Indeed, Mr Kettyle’s whole conduct leads to a conclusion that he was very aware that he was running a real risk if he went anywhere near a BMW dealership.  I am satisfied that in August 2003, he approached Collins Motors to ascertain what was on the records so that he could determine whether he could sell the vehicle.  The problem that he faced was that the car still had the original engine number on it.  If any person checked that, it would quickly have been ascertained that it was a stolen vehicle.

1. Further, Mr Kettyle did not call any witness to say that he had ever seen or met Mr Costa.  Whilst the burden of proof rests upon Safari, and also Doncaster Motors, in relation to its claim for indemnity or contribution from Mr Kettyle, in my opinion there was an evidentiary burden that rested upon Mr Kettyle to prove that Mr Costa actually existed.  It would not have been difficult, if he had existed, for Mr Kettyle to call some witness who had seen him with Mr Costa, for example his wife or somebody at Moorabbin.  According to Mr Kettyle, Mr Costa visited his home on at least two occasions.  Mr Kettyle did propose to call his wife as a witness but in the end she did not give evidence, and it was alleged that she was ill.  But even if I am wrong in this regard and he does not carry the evidentiary burden, my conclusion would still be the same on all the evidence.

1. I am satisfied on the balance of probabilities, according to the standard laid down in Briginshaw, that Mr Kettyle was involved in the theft of this vehicle and converted it.  He is liable to the plaintiff Safari for the damages suffered as a result of the conversion.

Claim by Doncaster Motors against Mr Kettyle

1. The third party notice now standing as a claim for indemnity, alleged a conversion by theft and, in the alternative, conversion on or about 30 April 2002.  Mr Grinberg of counsel, who appeared for Mr Kettyle, informed the Court that prior to the hearing, the solicitors acting for Doncaster Motors had said they would not rely upon the alternative claim that Mr Kettyle converted the vehicle on 30 April 2002.  Whilst that was asserted from the Bar table, in my view the third party pleading was wide enough to raise the issue.  However, if it was not, I put to Mr Grinberg that I would give leave to Doncaster Motors to rely upon the alternative claim because the plaintiff Safari had pleaded the alternative claim, and Mr Grinberg was unable to suggest any prejudice that would occur if such an amendment was allowed.

1. Turning to the question of whether Mr Kettyle was involved in the theft, for reasons which I have already stated in relation to the claim brought by Safari, I am satisfied that Doncaster Motors has also proven, to the requisite standard of proof, that Mr Kettyle was involved in the theft of the motor vehicle on the evening of 14-15 November 2000, and is liable to Doncaster Motors.  It is well established law that a bailee is entitled to sue for interference with its possession,  and Doncaster Motors is also entitled in the circumstances to bring a claim in conversion against Mr Kettyle.  There is no doubt that a bailee of goods has standing to bring an action for conversion.[6]  This is because a plaintiff in an action for conversion must either be entitled to actual possession or immediate possession of the goods when they are converted.  It follows that Doncaster Motors at the relevant time was a bailee in possession of the goods when they were converted, and accordingly has a right to bring the proceeding.  In the event that it has to, and does, pay any money to Safari, it is entitled to be indemnified up to the amount it pays Safari.

   [6]See Fleming Law of Torts 9^th Edition at p.71.

Alternative Claims by Safari and Doncaster Motors

1. Safari and Doncaster Motors claim against Mr Kettyle, in the alternative, that if he was not responsible for the theft, and did purchase the vehicle from another, the act of acquiring the vehicle registered in his name constituted conversion.  The date of the conversion would have been 30 April 2002.  These alternative claims by both parties raise the same issues and can be dealt with together.  The claims are to be considered and determined on the basis that Mr Kettyle was not involved in the theft of the BMW on 14-15 November 2000 and purchased the vehicle without knowing it had been stolen.

1. The law is clear and was not subject to any dispute between counsel. 

1. The late Professor Fleming, in the 9^th edition of his work The Law of Torts, defined conversion at page 60 as follows:

“Conversion may be defined as an intentional exercise of the control over a chattel which so seriously interferes with the right of another to control it, that the intermeddler may justly be required to pay its full value.”

1. It was a submission of counsel for Safari and Doncaster Motors that the intentional act of Mr Kettyle in purchasing the vehicle registered in his name and thereafter taking possession of the vehicle amounted to a conversion.  It was submitted that Mr Kettyle was strictly liable and it was no defence for him to establish that he was a bona fide purchaser for value without notice. 

1. Based upon his version that he purchased the motor vehicle from Mr Costa, Mr Kettyle was a party to an agreement for the sale of goods, namely the BMW vehicle.  If he was a bona fide purchaser without notice, one could see the justice of Mr Kettyle’s cause, but equally the deprivation of the interest of the true owner also raises a justice point.  The contest between two just rights was eloquently stated by Denning LJ in Bishopsgate Motor Finance Corporation v Transport Brakes Ltd[7], where his Lordship said:

“In the development of our law, two principles have striven for mastery.  The first is for the protection of property:  no-one can give a better title than he himself possesses.  The second is for the protection of commercial transactions:  the person who takes in good faith and for value without notice should get a better title.  The first principle has held sway for a long time, but it has been modified by the common law itself and by statute so as to meet the needs of our time.”

[7][1949] 1 KB 332 at 336.

1. The first of the principles stated by Denning LJ is the general rule as at today. See s.27 of the Goods Act 1958. That section states the rule that where goods are sold by a person who is not the owner and does not sell with the authority or consent of the owner, then the buyer acquires no better title to the goods than the seller had. It is to be noted that the section is subject to the provisions of Part 1 of the Act and any express enactment or the owner being estopped from denying the seller’s authority to sell. Mr Kettyle’s counsel did not suggest that there were any common law or statutory exceptions to that general rule applicable in the present case.

1. The principles were summarised by Lord Porter in Caxton Publishing Co v Sutherland Publishing Co[8] as follows:

“As to (3) conversion was defined by Atkin J as he then was, in Lancashire and Yorkshire Ry. Co. v MacNicoll.

‘Dealing’, he said, ‘with goods in a manner inconsistent with the right of a true owner amounts to a conversion, provided that it is also established that there is also an intention on the part of the defendant in so doing to deny the owner’s right or to assert a right which is inconsistent with the owner’s right’.

…

Atkin J goes on to point out that, where the act done is necessarily a denial of the owner’s right or an assertion of a right inconsistent therewith, intention does not matter.  Another way of reaching the same conclusion would be to say that conversion consists in an act intentionally done inconsistent with the owner’s right, though the doer may not know of or intend to challenge the property or possession of the true owner.”

[8][1939] A.C. 178 at 201.

1. The evidence established, if Mr Kettyle’s version was accepted in relation to his purchase, that he did intend to deny the owner’s right and did assert a right which was inconsistent with the owner’s right by purchasing the vehicle, it being registered in his name and thereafter being in his possession and used by him.  The fact that he did not have any notice of the rights of the true owner is irrelevant.  He is strictly liable.  The point was made by Diplock LJ in Marfani & Co Ltd v Midland Bank Ltd[9], where his Lordship said:

“Such, however, is the common law of England, and one of the consequences of the historic origin of a tort of conversion and its application to negotiable instruments as ‘goods’ is that the tort at common law is one of strict liability in which the moral concept of fault in the sense of either knowledge by the doer of an act that is likely to cause injury, loss or damage to another, or lack of reasonable care to avoid causing injury, loss or damage to another, plays no part.”

[9][1968] 1 WLR 956 at 970.

1. Whilst his Lordship’s observations were concerned with negotiable instruments, the fact is that the law had treated them as goods and in my respectful opinion, his Lordship’s observations apply equally to a case such as the present.  See also Rendell v Associated Finance Pty Ltd[10].

   [10][1957] VR 604 at p 613.

1. Mr Grinberg did not seek to argue to the contrary.  Accordingly, if I was wrong in relation to Mr Kettyle’s involvement in the original theft, he would liable on his version of his purchase from Mr Costa.  However, the consequences would be a lesser sum of damages because the general rule is that damages are to be assessed as at the date of the conversion.

1. However, I should add that I am persuaded on the evidence that if Mr Kettyle was not involved in the original theft, he was not a bona fide purchaser without notice.  There were so many features about his story of acquisition, which I have already highlighted, which show that any reasonable person in his position must have suspected that there were doubts about Mr Costa’s story that he had imported the vehicle from Japan and that he had good title to sell it.  The paperwork, the state of the service book, the fact that there was nothing about any of the documents to suggest that the vehicle was originally used in Japan, the lack of any receipt for the full amount, and Mr Kettyle’s attitude to servicing the vehicle and not taking it to a BMW dealership, all lead to the conclusion that he must have had doubts about the validity of the title.  His professed ignorance in relation to compliance plates and Australian Design Rules, which I do not believe, also supports that finding. 

Damages

1. In the Caxton Publishing Co[11] case, Lord Porter stated the principle as follows:

“As to (4) there is no dispute as to the principle on which in general the measure of damages of conversion is calculated.  It is the value of the thing converted at the date of the conversion, … .”

[11]Supra at p 203.

1. There was no dispute between the parties that the value of the BMW as at 14-15 November 2000 was $212,009.70.  From this sum was to be deducted the net proceeds of the sale of the vehicle, being $39,800.50.  The cost of transporting the vehicle and the assessment cost of $528.99 are to be added.  This gives total damages of $172,738.19. 

1. Safari also claimed the costs incurred in recovering the BMW less the amount received from Mr Kettyle, being the sum ordered to be paid by him at the interpleader proceeding.  It was put on behalf of Safari that the expenses incurred amounted to $37,960.45, and taking into account the amount paid by Mr Kettyle, the claim was for $36,710.45.  This claim was very much in dispute between the parties. 

1. In general terms, the amount is made up of the legal costs incurred by the insurer in seeking recovery of the BMW vehicle and obtaining an order in the interpleader summons.  The evidence that was placed before the Court was a bundle of invoices prepared by the insurer’s solicitors in an itemised form setting out the amounts claimed.  The documents were tendered without any further proof.  No objection was made to that course.  The solicitor who prepared the documents and who did the work was not called as a witness.  Accordingly, the Court is placed in the position of making its own assessment based upon the documents and no other evidence.  One thing which did emerge in the course of discussion, and which is apparent from the face of the documents, is that some of the items set out in the documents related to the present proceedings.  It was contended by Safari’s counsel that no objection was made to the tendering of the documents and, accordingly, that full weight should be given to them.  On the other hand, counsel for Doncaster Motors stated that the documents could not provide any more evidence than they could on their face.  That is clearly correct.  It places the Court in a difficult position.  However, the authorities are well established and they state that the Court must do its best in assessing damages on the evidence placed before it.  On the other hand, a Court is entitled to receive the best evidence available on the question of loss.

1. The Court gave counsel the opportunity to prepare a short statement on this issue after the Court had reserved its judgment.  In the course of final submissions, Safari’s counsel did produce a document in which it was conceded by Safari’s solicitors that certain items were not recoverable, but were costs incurred in the present proceeding. The concession made by Safari’s solicitors reduced the claim to $31,358.25. Counsel, however, did not take up the opportunity to make further submissions concerning the claim by Safari for legal costs. 

1. I have closely examined the documents.  The starting point is the amount of $31,358.25.  The exercise has been made difficult by the fact that in conceding part of a bill rendered on a certain date, it is impossible to determine what items of the bill have been deducted;  for example, bill number 79274.  Having perused the bills, and relying only on the description and in light of no party seeking to attack the items, I find that the sum of $31,358.25 is the sum of damages that should be awarded for the recovery of the BMW.  There is no doubt that Safari is entitled to recover the amount as damages being expenses incurred to mitigate one’s loss.[12]

   [12]         See McGregor on Damages, 16^th ed at paras.333-335.

1. It follows that Safari is entitled to recover against Mr Kettyle a judgment in the sum of $204,096.95.

1. If the damages had to be assessed in relation to the alternative claims put against Mr Kettyle, then the amount is $75,728.49 plus the amount of the costs expended in recovering the BMW, being $31,358.25, giving a total of $107,086.74.  Doncaster Motors is entitled to recover from Mr Kettyle the amount it has to pay to Safari pursuant to the compromise, up to a total of $204,096.95.

Conclusion

1. The proceeding between Safari and Doncaster Motors having been compromised, there will be no judgment in favour of Safari against the first defendant.  However, Safari is entitled to recover the amount of $204,096.95 against Mr Kettyle, together with damages in the nature of interest.  Doncaster Motors is entitled to an order for indemnity, in the event that it pays any money, up to a total of $204,096.95.

1. I will hear the parties on the questions of damages in the nature of interest and costs, and the form of judgment.  It will be necessary for the Court to be informed of the agreement between Safari and Doncaster Motors.  The parties will have to place evidence of the compromise before the Court.