Secure Funding Pty Ltd v Car Loans 2 Go Pty Ltd
[2012] QCAT 364
•14 August 2012
| CITATION: | Secure Funding Pty Ltd v Car Loans 2 Go Pty Ltd & Ors [2012] QCAT 364 |
| PARTIES: | Secure Funding Pty Ltd |
| v | |
| Car Loans 2 Go Pty Ltd (deregistered) Niki Ann Vos Troy Julian Adams |
| APPLICATION NUMBER: | GAR024-12 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Peta Stilgoe, Senior Member |
| DELIVERED ON: | 14 August 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | The application for compensation from the statutory fund is dismissed. |
| CATCHWORDS: | MOTOR DEALER – where financier relied on invoice from motor dealer – where motor dealer allowed a third party to invoice through the business – where motor dealer allowed deposits by third parties where no cars sold through business – whether invoice was a representation by the motor dealer – where vehicle did not exist – where financier took no steps to satisfy itself that vehicle existed Property Agents and Motor Dealers Act 2000, ss 470, 488, 490(2) |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009.
REASONS FOR DECISION
In July 2007, Secure Funding Pty Ltd lent Andrew Papadopolous $47,000. The loan was arranged through Capitalcorp Financial Services, based on an invoice apparently issued by Car Loans 2 Go Pty Ltd. The loan was secured on a 2004 HSV Coupe GTO that Secure Funding thought Mr Papadopolous was buying from Car Loans 2 Go. Mr Adams introduced the transaction to Secure Funding.
Ms Vos was the sole director of Car Loans 2 Go. Car Loans 2 Go and Ms Vos were both licensed motor dealers. Mr Adams was a licensed motor dealer but, in 2007, he was disqualified from holding a licence for a period of five years. According to Ms Vos, Mr Adams facilitated all aspects of this transaction, using her details but without her knowledge.
Mr Papadopolous stopped making his loan repayments in September 2007. In October 2008, Secure Funding conducted a REVS search which indicated that the HSV did not exist. It has accepted that the security does not exist and cannot be recovered and it has not recovered any further amounts from Mr Papadopolous.
Secure Funding made a claim on the statutory claim fund for $86,552.53. Ms Vos and Mr Adams have received notice of the claim.
In considering a claim against the fund, the tribunal must be satisfied[1] that an event as mentioned in section 470(1) happened and that the claimant suffered financial loss because of the event.
[1] Section 488(2) Property Agents and Motor Dealers Act 2000.
The tribunal must also take into account any amount the claimant might reasonably have received or recovered if not for the claimant’s neglect or default and any amount ordered to be paid to the claimant as compensation to the claimant under sections 530A, 572D or 592A of PAMDA[2].
[2] Section 488(3)(a).
Finally in allowing a claim the Tribunal must decide the amount of the claimant’s financial loss and name the person who is liable for the loss[3].
[3] Section 488(3)(b) and (c).
The event
A representation in any way to someone else of anything that is false and misleading in relation to the sale of property is an “event” under s 470(1).
Secure Funding says that the Car Loans 2 Go tax invoice represents that: Car Loans 2 Go had verified the existence of the HSV; that it owned or had effective control of the car; that it had agreed to sell the car to Mr Papadopolous; that $47,000 was due and payable; and that Car Loans 2 Go was acting honestly in the course of the transaction.
[10] Ms Vos accepts that the HSV did not exist and Car Loans 2 Go never had the car in its possession. She also says that she never had any dealings with Mr Papadopolous. I accept that the presentation of the tax invoice to Secure Funding was a representation of the matters contained in it and, therefore, was false and misleading.
[11] Ms Vos says that she did not issue that invoice. She has provided copies of documents from her computer system to support her argument. As Ms Vos points out, the tax invoices generated by her computer system show an invoice number and a stock number. Neither of these details is shown on the invoice Secure Funding received. Ms Vos also argues that there is no evidence that the tax invoice in question was generated, or sent, by Car Loans 2 Go.
[12] Ms Vos does admit that she agreed that Mr Adams could invoice privately purchased cars through Car Loans 2 Go and that the settlement funds could be channelled through Car Loans 2 Go bank accounts. Ms Vos says that she was never a party to the true nature of Mr Adams’ dealings. In an undated statement of evidence filed in the tribunal, she says that her involvement was secured duress due to the birth of her child and threats from Mr Adams.
[13] Ms Vos’ protestations of innocence do not sit well with letters she wrote to the Chief Executive on 15 June 2009 and 24 August 2010. In those letters, Ms Vos acknowledges that she had an arrangement with Mr Adams that he would use her invoices and bank account and she would receive a commission of $200 per transaction. Ms Vos also admits that Mr Adams promised that he would refer clients to Car Loans 2 Go. I am satisfied that Ms Vos knew, or should have known, that Mr Adams would issue invoices of which she had no knowledge. I am further satisfied that, by her arrangement with Mr Adams, Ms Vos and Car Loans 2 Go accepted responsibility for any invoices that he issued in her name. It follows, therefore, that I am satisfied that the representations were made by Car Loans 2 Go.
[14] I am also satisfied that the representations were made by Mr Adams who was the person who presented the invoice to Secure Funding.
Financial loss
[15] There is no doubt that Secure Funding has suffered financial loss. The critical question is whether Secure Funding suffered that loss as a result of the representation.
[16] Secure says that it will not finance private purchases. Secure’s lending policy is to rely on the existence of a tax invoice from a registered motor dealer as proof of the existence of the vehicle. In defence of its policy, Secure relies on a previous decision of National Australia Bank Limited v McGill[4] in which I said:
While members of the public may think it imprudent for a bank to lend a large sum of money without independently ascertaining whether the security existed, there was nothing in the transaction that should have put the Bank on notice.
[4] [2010] QCAT 478 at [13].
[17] I have previously expressed the view[5] that:
The presence of the statutory fund is no reason for financiers of motor vehicles to be complacent. There is no reason to think that the fund will be available to cover a finance company’s losses if it fails in its due diligence, does not take appropriate action to secure its loans or fails to mitigate its loss.
[5]Secure Funding Pty Ltd v Mascotbury Pty Ltd t/a Brisbane Auto Centre & Bazvand (No 1) [2010] QCAT 655.
[18] I remain of that view. If Secure Funding had obtained a REVS search at the time of the initial loan, it would have known that the HSV did not exist. Presumably, it would not then have advanced $47,000 on the basis of a non-existent security. It did not do any searches until more than a year had passed and Mr Papadopolous had defaulted on his loan.
[19] This case can be distinguished from National Australia Bank Limited v McGill. In the previous decision, Mr McGill himself created the false invoice. Here, Secure acted at all times through an intermediary, Mr Adams, and had no direct contact with Car Loans 2 Go. Mr Adams created the false invoice. Even a simple email or telephone call to Car Loans 2 Go at the time of the loan would have revealed the problems with the transaction. Further, this loan was secured over a highly portable consumer orientated vehicle, a very different security proposition from the prime mover and 45’ trailer in McGill.
[20] I can see no reason why Secure Funding should be able to rely on the largess of the public purse, when it 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.
[21] Given my findings about the cause of the loss, I do not need to consider the amount of the loss. In any event, I would not be satisfied that Secure Funding has demonstrated the amount of its loss. In his affidavit of 3 August 2012, Mr Forster purports to prove that the loss is $86,552.53. The copy of the ledger annexed demonstrates only a loss of $76,451.75, although I acknowledge that this is as at 20 October 2009. Mr Forster’s evidence does not go far enough.
[22] I note that the claim includes a brokerage fee of $880 which, presumably, was paid to Mr Adams. I also note an email from Secure Funding’s credit analyst to Mr Adams dated 13 July 2007 that the interest rate Secure Funding charged included a “trail” of 6%. A “trail” is the fee payable to the introducer of the finance. The introducer was Mr Adams. It would be a very odd result if a successful claim on the statutory fund included an amount payable back to one of the parties who caused the loss.
Other matters
[23] I am required to take into account any amount Secure Funding may have received or recovered if not for its neglect or default.
[24] Once Mr Papadopolous defaulted, it is apparent that Secure Funding took steps to gain possession of the HSV and/or for Mr Papadopolous to bring the loan up to date. Of course, none of this would have been necessary if Secure Funding had done a REVS search before advancing the money.
Who is liable for the loss?
[25] Section 490(2) provides that a person is liable to reimburse the fund if the person is:
a) A responsible person;
b) If the responsible person was a corporation, each person who was an executive officer of the corporation.
[26] As a director of Car Loans 2 Go, Ms Vos was an executive officer of the company. If I had found that there was a loss to which the fund responded, then Car Loans 2 Go was a responsible person. It follows, therefore, that Ms Vos must also be a responsible person.
[27] Even though Mr Adams is not entitled to hold a licence, he is also a responsible person. “Licensee” includes a person who acts as a licensee[6]. If Ms Vos’ account of her arrangement with Mr Adams is correct, and I have no reason to doubt her in that regard, Mr Adams was acting as a licensee in selling motor vehicles (even if they didn’t, in fact, exist).
[6] Section 469 PAMDA.
Orders
[28] The claim by Secure Funding for compensation from the fund is dismissed.
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