The State of Western Australia v Burns - [2004] WADC 179

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: THE STATE OF WESTERN AUSTRALIA -v- BURNS & ANOR [2004] WADC 179

CORAM: CHANEY DCJ

HEARD: 30 AUGUST 2004

DELIVERED : 3 SEPTEMBER 2004

FILE NO/S: CIVO 47 of 2004

BETWEEN: THE STATE OF WESTERN AUSTRALIA
Applicant
AND
MATTHEW STEWART BURNS
First Claimant
MICHAEL DAVID HOCKINGS
Second Claimant

Catchwords:

Interpleader - Motor cycle stolen from original owner - Subsequent purchaser for value - purchase in good faith - Expenditure on maintenance and improvement by subsequent purchaser - Whether equitable interest attained by subsequent purchaser - Whether subsequent purchaser entitled to compensation

Legislation:

Nil

Result:

Property to be returned to original owner without compensation to subsequent purchaser

Representation:

Counsel:

Applicant:     Not applicable
First Claimant               :     Mr D O Price
Second Claimant           :     Mr J A Marquis

Solicitors:

Applicant:     No appearance
First Claimant               :     D O D Price & Associates
Second Claimant           :     Bruce Havilah & Associates

Case(s) referred to in judgment(s):

Muschinski v Dodds (1985) 160 CLR 583
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221

Case(s) also cited:

Australia and New Zealand Banking Group Limited v Westpac Banking Corporation (1998) 164 CLR 671
Oates v Blackburne and Anor [1999] WASC 112
Olsson v Dyson (1969) 120 CLR 365
South Australian Cold Stores Limited v Electricity Trust of South Australia (1957) CLR 65
Waterhouse v Power [2003] QCA 155

CHANEY DCJ: This matter comes before the Court by way of an interpleader application.
The first claimant, Mr Burns, purchased a 1997 Model Honda CR250 motor cycle sometime in 1997. He paid $6900 for it.
On 19 April 1999, the motor cycle was stolen from the first claimant's home. The theft was reported to police at the time.
From the affidavit of Jason Lennox, a police officer, it appears that the motor cycle changed hands several times after its theft in April 1999, and eventually came into the hands of the second claimant, Mr Hockings, on 9 April 2001.
According to Mr Hockings, in March 2001, he wished to purchase an off road motor cycle. He saw an advertisement in an advertising magazine known as the "Quokka" for the sale of a motor cycle by an organisation known as Pal Panther Motor Cycles, whose business is located in North Perth. Mr Hockings inspected the motor cycle but considered it to be in poor condition and needing approximately $1500 worth of work on it to bring it to a standard with which he would have been content. He was given something of the history of the bike by the owner of Pal Panther Motor Cycles.
A few weeks later, he saw a further advertisement in the Sunday Times newspaper. He rang the person advertising that motor cycle and was told that the motor cycle was at Pal Panther. He said that he could not remember the name of the person with whom he spoke. He then went to Pal Panther Motor Cycles the next day, on 9 April 2001, and realised that the motor cycle advertised in the Sunday Times was the same as the one which he saw a few weeks earlier. The price had been reduced from $4800 to $4500.
Mr Hockings said that he then spoke again to the advertiser from the Sunday Times and eventually negotiated a purchase of the motor cycle for $4250. The motor cycle was delivered by the vendor to Mr Hockings' address on 9 April. He did not obtain a receipt and did not know the name of the vendor. Because it was dark when the motor cycle was delivered, he was unable to give any useful description of the vendor.
Mr Hockings subsequently arranged to register the motor cycle for off road use, which involved giving the frame number and engine number to the registering authority.
According to Mr Hockings, over the next 18 months he spent approximately $5000 on the motor cycle, as well as applying a good deal of his own labour to the improvement of the bike.
Eventually, Mr Hockings decided to sell the motor cycle in October 2002. He advertised it in the Quokka, and negotiated a sale for $4600. However, when the purchaser arrived to collect the motor cycle, he first undertook a search of the data base known as REVS and maintained by the Ministry of Fair Trading. That search revealed that the cycle had previously been stolen. The purchaser immediately withdrew from the transaction, and the police were notified. They then seized the motor cycle, and in view of the dispute which subsequently emerged between Mr Burns and Mr Hockings, interpleader proceedings were commenced by the State of Western Australia to enable the competing claims to the motor cycle to be adjudicated upon by the court.
A number of affidavits were filed in relation to the application. Mr Burns swore an affidavit on 12 May 2004 which was essentially designed to establish that the motor cycle that had been recovered by the police was identifiable by him as that which had been stolen from him in 1999. By the time the matter came to be heard by me, there was no issue between the parties that Mr Burns is the legal owner of the motor cycle that eventually ended up in Mr Hockings' possession, and is now the subject of these proceedings.
Mr Hockings filed an affidavit dated 16 June 2004. In that affidavit he deposed to having spent approximately $5000 on the motor cycle and having replaced a number of parts which he identified. He again said that he had done a great deal of work himself on the bike to bring it into a vastly superior condition than the condition in which it was when initially purchased by him. He disputed a number of matters deposed to by Mr Burns as to the condition of the motor cycle at the time that it as stolen from Mr Burns. He reiterated that he did not know the motor cycle was stolen at the time that he acquired it. An affidavit was also filed from a proprietor of a motor cycle wreckers business who said that when he first saw the motor cycle in Mr Hockings' possession in March or April 2001, it was in "below average condition" and that Mr Hockings purchased "thousands of dollars worth of gear for the motor cycle".
Mr Burns filed a responsive affidavit dated 24 June 2004 disputing the claims as to the condition of the motor cycle made by Mr Hockings, and suggesting that the period that Mr Hockings had the machine, it was likely that normal wear and tear would have required replacement of a number of the parts which Mr Hockings said he had replaced.
Finally, Mr Hockings swore an affidavit which was filed just prior to the hearing, in which he annexed a quotation from a Honda motor cycle dealer itemising the new cost of parts which Mr Hockings said he replaced on the motor cycle. It is evident that that quotation was prepared purely for the purposes of the proceedings, and on the basis of other affidavits filed by Mr Hockings throughout the course of the proceedings, it seems highly unlikely that he in fact purchased the parts new as his affidavit suggests. The consequence is that the true extent of expenditure by Mr Hockings on the motor cycle is somewhat uncertain.
It is against that background that I must determine the respective interests that the parties have in the motor cycle.
The first claimant's position is that he is the legal owner of the motor cycle, a fact not in issue, and he contends that therefore the motor cycle should be returned to him.
The second claimant's position is that, having expended a substantial amount of money both on the purchase of the motor cycle, but perhaps more particularly, its improvement, he should in some way be compensated for an interest in the motor cycle. The second claimant did not identify any particular amount of compensation which he claims to be entitled to, but rather suggested that the motor cycle should be sold by public auction, and the proceeds divided in a way determined, by the Court in its discretion, which reflects an equitable resolution to the competing claims.
The basis upon which the second claimant seeks recognition of an entitlement to some form of compensation is not entirely clear. In the written submissions made on behalf of the second claimant, reference is made to unconscionable conduct, unjust enrichment, and payment under mistake of fact. In oral submissions, the second claimant's claim appeared broadly to distil into the proposition that the second claimant had innocently paid money which had the effect of improving the motor cycle, and that the first claimant stood to benefit from that expenditure if he receives the motor cycle without having to account for that benefit, or compensate the second claimant in any way.
Although there may be some uncertainty as to the true extent of the benefit that Mr Burns may enjoy by reason of Mr Hockings' expenditure, I am satisfied that the two central propositions put by the second claimant are correct. That is, I accept that Mr Hockings did expend money and effort on the improvement and maintenance of the motor cycle, and that Mr Burns will benefit from that expenditure in the sense that the motor cycle was, at the time it was seized by the police, in better condition than it was when Mr Hockings purchased it. Given that Mr Hockings purchased it some two years after it was stolen from Mr Burns, it may well have deteriorated significantly in that period. It may well be, therefore, that the motor cycle was in similar condition when stolen from Mr Burns as it was when seized by the police from Mr Hockings. Much of the evidence as to what improvements and work Mr Hockings did, which was hotly contested at the hearing, seems to ignore that two year gap between the theft and Mr Hockings' purchase of the motor cycle.
Be that as it may, the first question to be asked is whether the expenditure of money on the motor cycle gives rise to an interest in it, or an entitlement to compensation, as against the rights of the legal owner of it. In my view it does not. Notions of unjust enrichment have no place in the present factual circumstances. In this case, Mr Burns obviously knew nothing of the expenditure by Mr Hockings on his motor cycle. It cannot be said that this case is analogous to those where a payment be made, or work is done, by one party at the implied or express request of another. It cannot be said that Mr Burns acquiesced in any work being done on the motor cycle, or money being spent on it. There is no suggestion of some acceptance of the benefits accruing from the efforts of Mr Hockings by Mr Burns. There is nothing in the nature of some joint enterprise between the competing claimants as considered by the High Court in Muschinski v Dodds (1985) 160 CLR 583 at 620‑621. As Deane J pointed out in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256, to identify a basis of action as restitution "is not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate".
In this case, returning the motor cycle to Mr Burns imposes upon Mr Hockings a real hardship in the sense that, having in good faith, purchased a motor cycle for value, and then expended funds on it, he suddenly and unexpectedly finds he has no title to the vehicle, and is deprived of possession of it. He has acted at all times in good faith, and whilst his failure when he purchased it to undertake thorough enquiries as to title to the motor cycle was unwise, it was understandable, given the involvement of a dealer in the initial attempts to sell the motor cycle at the time Mr Hockings purchased it. All of the factors evoke sympathy for Mr Hockings, but, unfortunately for him, do not give rise to rights at law or in equity, against the true owner of the motor cycle. His remedy is against the vendor who sold it to him. It may be that that remedy is of no value, even if the vendor can be located, but that possibility provides no basis to deprive Mr Burns of his property, or to require him to pay some compensation to Mr Hockings.
Notwithstanding Mr Hockings' misfortune, Mr Burns is the legal owner of the motor cycle. It was stolen from him, and he has not acquiesced in anything which was done to it after it was stolen. He is entitled to its return. In my view, there is no basis in equity upon which the second claimant can establish any interest in the motor cycle which is enforceable as against the true owner.
It follows that there should be an order that the motor cycle be delivered to the first claimant. I will hear the parties on the question of costs.