Secure Funding Pty Ltd v Car Loans 2 Go Pty Ltd
[2013] QCATA 241
•30 August 2013
| CITATION: | Secure Funding Pty Ltd v Car Loans 2 Go Pty Ltd & Ors [2013] QCATA 241 |
| PARTIES: | Secure Funding Pty Ltd (Appellant) |
| v | |
| Car Loans 2 Go Pty Ltd (First Respondent) and Nicki Ann Vos (Second Respondent) and Troy Adams (Third Respondent) |
| APPLICATION NUMBER: | APL302-12 |
| MATTER TYPE: | Appeal |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | K S Dodds, Judicial Member |
| DELIVERED ON: | 30 August 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The Tribunal’s decision is affirmed. |
| CATCHWORDS: | APPEAL – OTHER CIVIL DISPUTE MATTER – MOTOR DEALER – CLAIM AGAINST FUND – where financier relied on invoice from motor dealer – where motor dealer allowed a third party to invoice through the business – where motor vehicle detailed in the invoice did not exist – where financier made claim against fund established under s 408 of the Property Agents and Motor Dealers Act 2000 – where s 470 provides that a person may make a claim against the fund if the person suffers financial loss because of false representations about property – where financier took no steps to satisfy itself that the vehicle existed – where Tribunal dismissed financier’s claim for compensation from the fund – where financier seeks to appeal that decision – whether Tribunal erred in placing a duty of due diligence on the financier – whether appeal should be granted Property Agents and Motor Dealers Act 2000 (Qld), s 408, s 470, s 488(3)(a) , s 488(3)(b), s 574(1) Micarone v Perpetual Trustees Australia Ltd [1999] SASR 1, cited |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009.
REASONS FOR DECISION
This is an appeal against a decision of the Tribunal dismissing a claim by a financier (the appellant) on the claim fund established by s 408 of the Property Agents and Motor Dealers Act 2000. The fund may be used to pay claims lodged under the Act.
The appellant had lent money purportedly to finance the purchase of a particular motor vehicle from a licensed motor dealer, the first respondent Car Loans 2 to Go Pty Ltd trading as Car Loans Online. The second respondent was the sole principal of the first respondent. The third respondent, Troy Adams, was a former licensed motor dealer at the time. He has been disqualified from holding a licence. His only connection with the first and second respondent was that Ms Vos had apparently agreed to allow him to use the first respondent to apply for finance for vehicles he was selling which needed finance.
The particular motor vehicle was to be security for the money lent. In fact, the motor vehicle described by its make and model, registered number, VIN and engine number on what purported to be a tax invoice similar to those produced by the first respondent’s business computer system did not exist although this was not ascertained by the appellant until well in excess of twelve months after the money was lent and after continuing default in repayment of the loan commencing shortly after the money was lent.
The Grounds of Appeal
The grounds of appeal were that:
§the Tribunal erred in placing a duty of due diligence on the appellant;
§the Tribunal erred in not finding that the appellant suffered loss as a result of the actions of the respondent;
§the Tribunal erred in distinguishing the case of National Australia Bank Limited v McGill[1];
§In the appellant’s submissions on the appeal it was further argued, that the applicant is entitled to the loan money as money paid as a result of mistake.
[1] [2010] QCAT 478 (‘McGill’).
The Tribunal’s Decision
The decision succinctly sets out the facts. That aspect of the decision does not seem to be in dispute.
The appellant’s policy was to provide finance only for purchases from licensed motor dealers, not for private purchases. Its practice was to proceed upon a tax invoice from a registered dealer as sufficient proof of the existence of the vehicle for which finance was to be provided. The vehicle would be security for the money advanced.
The Tribunal did not find Ms Vos was aware of the particular transaction. She denied she was. It found however, that she agreed to an arrangement with the third respondent for him to use her business for loan applications for vehicles he was selling and thus the false representation was one made by the first respondent.
The Tribunal’s decision that the claim against the fund be refused was because the appellant had failed to take any step to check on the existence of its security, i.e., the motor vehicle, when confirmation thereof, or in this case, its non-existence was a simple matter of obtaining a REVs check or contacting the first respondent before providing funds. In the words of the Tribunal, the appellant “had not taken even the simplest steps to protect itself. I find that Secure Funding did not suffer loss as a result of the representation but because of its own failure to complete simple due diligence procedures.”[2]
[2] Secure Funding Pty Ltd v Car Loans 2 Go Pty Ltd & Ors [2012] QCAT 364 at [20].
The Legislation
Section 470 of the Act provides for the circumstances under which a person may claim against the fund. Relevantly, the circumstance in this case is that provided for in s 574(1) of the Act: a false representation in what purported to be a tax invoice of the first respondent, namely that the vehicle described therein existed.
The Tribunal’s task is to decide whether the claim be allowed wholly or partly, or rejected.[3] It is constrained to only allow a claim against the fund if it be satisfied on the balance of probabilities that the event mentioned in s 470(1) of the Act causing the appellant’s loss (the misrepresentation) occurred and that the financial loss the appellant suffered was because of the happening of the event.[4]
[3] Property Agents and Motor Dealers Act 2000 s 488(1).
[4] Ibid s 488(2).
If a claim is allowed wholly or partly, the Tribunal must take into account any amount a claimant might reasonably have received or recovered if not for the claimant’s neglect or default and decide the amount of the claimant’s financial loss[5]
[5] Ibid s 488(3)(a),(b).
The Grounds of Appeal and the Appellant’s Submissions
The case of McGill the respondent was a licensed motor dealer. He issued tax invoices for the sale of a prime mover and trailer to a company (Lanham). McGill did not sight the vehicles before issuing the invoices. He issued them for another person. The vehicles in fact did not exist. The transaction was part of a series of fraudulent transactions perpetrated by one Mr Best. NAB provided the money. It claimed against the fund. It asserted McGill did not ensure the vehicles existed before issuing the invoices, that he knew or ought reasonably to have known a third party would believe the invoices represented a record of sale, that but for the invoices NAB would not have lent the money that McGill’s false representation caused the loss.
McGill submitted that the bank’s loss was the result of its lack of due diligence. It did not conduct its own searches, speak to McGill, ask for proof of the existence of the vehicles or seek to verify their existence independently.
The Tribunal concluded that the clear inference from the invoices was that McGill owned the vehicles or had possession of them. The invoices made no reference to any other seller or any other third party involved in the transaction and recorded a deposit paid on each vehicle. In fact there was none paid. It found the representation by the invoices was that the vehicles existed and that McGill had effective control of them. There was nothing in the transaction that should have put the bank on notice. The claim against the fund succeeded.
The facts in the present case differ in that the tax invoice, whilst it was a tax invoice which on its face appeared similar to those of the first respondent, was not signed by Ms Vos. It differed to tax invoices generated from the first respondent’s business computer system in that they have an invoice number and a stock number whereas the material invoice had neither. The appellant made no contact with the licensed dealer. It never contacted it or Ms Vos. The Tribunal also thought it significant that in the present case the security, the car, was a “highly portable consumer orientated vehicle, a very different security proposition from the prime mover and a 45’ trailer in McGill”.[6]
[6] Secure Funding Pty Ltd v Car Loans 2 Go Pty Ltd & Ors [2012] QCAT 364 at [19].
In its submission the appellant referred to passages extracted from Perpetual Trustees Australia Ltd v Schmidt and Ors[7], Micarone v Perpetual Trustees Australia Ltd[8] and Secure Funding Pty Ltd v Moon & Anor[9].
[7] [2010] VSC 67.
[8] [1999] SASR 1.
[9] [2012] QSC 244.
The passages refer to there being no obligation on a lender on receipt of an apparently regular and satisfactory loan obligation to pursue further enquiries into the applicant’s circumstances. It may be noticed they do not touch upon the question of enquiry about the existence and sufficiency of security to secure a loan. Indeed I venture to say it should be a rare case where a potential financier neglected careful consideration into the existence and sufficiency of security.
The facts and the issues in those cases were different from those in the instant case. Moreover the instant case is to be considered against the statutory regime providing for the claim and its requirements.
The appellant also made submissions to the effect that the appellant is entitled to succeed because the money was paid as a result of a mistake. It submitted in that circumstance there was a prima facie obligation on the part of the fund to make restitution.
Two things may be said about this submission. Firstly the money paid by the appellant was paid to the dealer. Secondly, this claim is made against the statutory fund and is required to be determined under the statute provisions. I reject the submission.
Decision
According to the Tribunal’s findings of fact the event which set in train the appellant’s financial loss was the receipt by the appellant of the apparent tax invoice from a registered motor dealer for sale of a particular motor vehicle and upon which it proceeded as establishing the existence of the motor vehicle. However simple enquiry about the motor vehicle which was to secure the money to be lent would have avoided the loss. Simple enquiry would have revealed the security did not exist. Failure to undertake enquiry, if enquiry were called for was causative of the loss.
The Tribunal concluded that it was not satisfied on the balance of probabilities the appellant’s financial loss was because of the misrepresentation. Rather it was suffered because of its own failure to complete simple due diligence procedures in the circumstances of this particular case. It proceeded on the basis the tax invoice upon which the appellant relied differed from other tax invoices from the first respondent in that it contained no invoice or stock number for the vehicle. It was different from McGill. In McGill the financier relied upon a false invoice created by McGill, the registered dealer, himself. In this case the appellant acted through an intermediary, Adams. The appellant made no direct contact with the dealer whose invoice it purported to be which would have revealed the problem with the transaction and did not make any enquiry which would have revealed the vehicle did not exist.
I am of the opinion none of the grounds of appeal are made out. I am not persuaded the Tribunal was wrong in its conclusion. It was not satisfied on the balance of probabilities that the appellant suffered financial loss because of the misrepresentation inherent in the tax invoice that the vehicle nominated therein existed. The evidence before it was sufficient for that conclusion. The invoice was the commencement of what ultimately occurred. The appellant’s financial loss was not suffered because of that but because of its failure to make simple enquiry which would have certainly avoided the loss.
The Tribunal’s decision is affirmed.
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