Toyota Finance Australia Limited v Reid
[2025] FedCFamC2G 458
•31 March 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Toyota Finance Australia Limited v Reid [2025] FedCFamC2G 458
File number: MLG 352 of 2025 Judgment of: DEPUTY CHIEF JUDGE MERCURI Date of judgment: 31 March 2025 Catchwords: CONSUMER PROTECTION – RECOVERY ACTION – where the applicant seeks a declaration and orders for recovery of a vehicle in respect of which it loaned moneys to the first respondent – where the contract pursuant to which those moneys were loaned was entered into as a result of identity theft – where the applicant seeks remedies available to it under the National Credit Code and under the Personal Property Securities Act 2009 (Cth) – finding that the applicant is entitled to recovery of the vehicle – declarations and orders made for recovery. Legislation: National Consumer Credit Protection Act 2009 (Cth), s 187
Personal Property Securities Act 2009 (Cth), ss 123, 207
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), r 6.14
Cases cited: Bank of Queensland Ltd v Star Trek [2019] NSWSC 1712
Riseley v Toyota Finance Australia Limited [2021] FCA 1566
Division: Division 2 General Federal Law Number of paragraphs: 42 Date of hearing: 28 March 2025 Place: Melbourne Solicitor for the Applicant: Mr A Foster of Sinisgalli Foster Legal Counsel for the First Respondent: The first respondent did not appear Counsel for the Second Respondent: The second respondent did not appear Counsel for the Third Respondent: The third respondent did not appear ORDERS
MLG 352 of 2025 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: TOYOTA FINANCE AUSTRALIA LIMITED
(ABN 48 002 435 181)Applicant
AND: WILLIAM REID
First Respondent
SUSTAINABLE SOLAR PANELS RECYCLING PTY LTD
Second Respondent
ZOHAL RASOOLI
Third Respondent
ORDER MADE BY:
DEPUTY CHIEF JUDGE MERCURI
DATE OF ORDER:
31 MARCH 2025
THE COURT DECLARES THAT:
1.The applicant is entitled to take possession of the 2021 Toyota Kluger with Vehicle Identification Number 5TDLZ3AH10S060035 (‘Vehicle’) Registration Number 2AV3CN, Engine Number 2GRG238118, pursuant to section 123 of the Personal Property Securities Act 2009 (Cth).
THE COURT ORDERS THAT:
2.Pursuant to rule 6.14 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021, postal service on the third respondent at her address of 234 Ormond Road Narre Warren South Victoria 3805 posted on 19 February 2025 is deemed sufficient service of this application on the third respondent.
3.The second respondent and/or the third respondent, (including by their agent or in the case of the second respondent, their employees) deliver up, surrender and/or provide the location of the Vehicle to the applicant or its duly authorised agent within seven (7) days of making this order.
4.If the second and/or third respondents do not comply with order 3 within the time specified, the Applicant, or its duly authorised agent, be entitled to take reasonable steps to recover the Vehicle including entering into the second respondent’s registered address at 3 Waterside Drive Cranbourne East Victoria 3977 or the third respondent’s residential address at 234 Ormond Road Narre Warren South Victoria 3085, including in either case any garage or carports, or any other premises in Australia over which the second or third respondents have apparent control and at which the Vehicle is reasonably believed to be located for the purpose of taking possession of the Vehicle pursuant to section 123 of the Personal Property Securities Act 2009 (Cth).
5.The applicant’s application filed on 4 February 2025 otherwise be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
DEPUTY CHIEF JUDGE MERCURI:
INTRODUCTION
Before the court is an application under section 187 of the National Consumer Credit Protection Act 2009 (Cth) (‘Credit Code’) and section 207 of the Personal Property Securities Act 2009 (Cth) (‘PPSA’). The applicant relies upon the following affidavits filed in support of this application:
·Affidavit of Alan James Foster filed on 4 February 2025;
·Affidavit of Alan James Foster filed on 21 February 2025; and
·Affidavit of Alan James Foster filed on 28 February 2025.
In addition, the applicant relies upon Contentions of Fact and Law filed on 28 February 2025 and a further Outline of Submissions filed on 25 March 2025.
The applicant seeks a declaration and orders for the recovery of a vehicle in respect of which it loaned moneys to the first respondent. The vehicle being a:
·2021 Toyota Kluger – Registration No 2AV3CN, Engine No 2GRG238118 and Vehicle Identification No (‘VIN’) 5TDLZ3AH10S060035 (‘the Vehicle’).
BACKGROUND
The following background is taken from the affidavit evidence filed in these proceedings by Mr Foster in circumstances in which the second and third respondents have not participated in these proceedings, notwithstanding having been put on notice of the proceedings and the orders sought.
In relation to the first respondent, the applicant has advised the court that it accepts that the first respondent did not enter into the Loan Agreement, which I will discuss shortly, but rather that he was the victim of identity theft, a matter which the applicant understands has been referred to the police by the first respondent.
The applicant provides financial services to individuals and businesses purchasing a motor vehicle including by way of consumer loans.
On or about 30 November 2021, the applicant entered into an agreement which it understood was with the first respondent for the sum of $60,842.75 to be loaned at a fixed rate of interest of 6.45% for a term of 72 months to allow the first respondent to purchase the Vehicle (‘the Loan’). The Loan is secured by a first-ranking security interest over the Vehicle (‘the Security Interest’).
The Loan Agreement contained various relevant terms including terms:
·requiring the first respondent to make 72 equal monthly instalments of $1,030.94;
·that the first respondent must pay all fees and charges specified in the Loan Schedule;
·that the first respondent would be in default if any payment was not made by the repayment date or if any other obligation under the Loan Agreement was not complied with or remedied during the ‘grace period’.
Clause 10.2(b) and 11(a) of the Terms and Conditions of the Loan Agreement also provide that the applicant may take enforcement action, including enforcing the Security Interest by way of taking possession of the Vehicle if the first respondent fails to rectify any default after being given written notice by the applicant.
Clause 11(b) provides that the applicant may enter any premises where it believes the Vehicle to be to effect repossession and the first respondent authorises such entry and the first respondent must pay the costs of such repossession. Clause 10.2(d) further provides that the first respondent must pay any enforcement expenses incurred by the applicant as a result of the default of the first respondent.
On or about 30 November 2021, the applicant registered the Security Interest over the Vehicle on the Personal Property Securities Register (‘PPSR’) and advanced the sum of $60,842.75 to the first respondent and the first respondent acquired the Vehicle.
After making only two repayments, no further repayments were made under the Loan Agreement and on or about 15 January 2022, the applicant issued a Notice of Default requesting payment of the overdue repayments.
The default was not remedied.
The applicant asserts that by reason of the default, the balance of the loan and all monies payable under the Loan Agreement, which as at 15 January 2025 was $76,835.33 became due and payable.
In his affidavit filed 4 February 2025, Mr Foster deposed to the steps taken prior to initiating these proceedings to recover the outstanding amounts and/or to recover the Vehicle. In that affidavit, Mr Foster deposes to the fact that on 12 August 2024, the applicant’s agents conducted a PPSR search which revealed that the Vehicle was then registered in Victoria with new registration plates, namely 2AV3CN and that it was registered to 1 August 2025. Further this search disclosed that the Vehicle was registered to the second respondent and the Vehicle was sighted at the registered address of the second respondent.
Mr Foster further deposes to the third respondent being the sole Director of the second respondent and the person likely to be in possession of the Vehicle.
In his affidavit of 21 February 2025, Mr Foster further says that the applicant is now satisfied that the Loan Agreement entered into on 30 November 2021 was the result of identity theft and that it was not entered into by the first respondent. As a consequence, the applicant no longer seeks any orders against the first respondent.
It is submitted for the applicant that in circumstances where the Loan Agreement was entered into as a result of identity theft, effectively this gave rise to a right to the applicant to either rescind the contract ab initio or to affirm it and seek to exercise the remedies available to the applicant under the National Credit Code and/or the PPSA.
Substituted Service
The second and third respondents have not participated in these proceedings. They have not filed any responding material, nor have they attended when the matter was heard late last week. Mr Foster deposes to the steps taken to bring these proceedings to the attention of the second and third respondents.
I am satisfied that the applicant has served the application on the second respondent by post to its registered office on 5 February 2025.
Mr Foster also gives evidence that he believes that the third respondent is on notice of these proceedings in circumstances where on 14 February 2025, he received a call from a person who identified himself as the third respondent’s brother who indicated that they wished to purchase the Vehicle and negotiate an agreed price.
Mr Foster also details the discussions had with a person who purported to be acting to assist the third respondent who identified himself as ‘Naz’.
In his further affidavit filed on 28 February 2025, Mr Foster deposes to having received a number of emails from a Mr Naz Shafi about these matters. The content of these emails are consistent with the information provided to the service agent and deposed to earlier by Mr Foster, namely that Naz (or someone he was assisting) had purchased the Vehicle in Sydney, that it was damaged and that they undertook repair works on it and that they did not know that it was subject to finance. The email goes on to say that Naz wishes to negotiate an arrangement prior to the matter going to court. Also attached to this email are photos of the damage which the author of the email indicates was there when he purchased the car. I note that the VIN in the photos is the same as the VIN for the Vehicle (STDLZ3AH10S060035).
Mr Foster deposes to arranging for the details of the hearing of the applicant’s application to be sent by email to ‘Naz’ at the email address given by them.
In those circumstances, I am satisfied that the second and third respondents are on notice of these proceedings and propose to determine the matter under rule 13.06(1)(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (‘the Rules’).
LEGISLATION
National Credit Code
In circumstances where the Loan Agreement was entered into with the first respondent (a natural person) for the purposes of purchasing a vehicle which on the face of it was for personal use, I am satisfied that the National Credit Code applies to this transaction.[1]
[1] See also paragraph 13(1) of the National Credit Code.
The National Credit Code also provides the circumstances in which a credit provider may commence enforcement proceedings where a debtor is in default.
Paragraph 100 of the National Credit Code provides:
100. The court may, on application of a credit provider that is entitled to take possession of mortgaged goods, authorise the credit provider to enter residential premises for the purposes of taking possession of the mortgaged goods.
The applicant seeks an order under this provision.
PPSA
In addition, the applicant relies upon the court’s powers under the PPSA in circumstances where the Loan Agreement expressly provided that the loan would be secured by a Security Interest over the Vehicle as described and where the applicant registered the Security Interest it held over the Vehicle on 30 November 2021, thereby perfecting its Security Interest for the purposes of section 21 of the PPSA.
Section 123 of the PPSA relevantly provides:
123 Secured Party may seize collateral
(1)A secured party may seize collateral, by any method permitted by law, if the debtor is in default under the security agreement.
I am satisfied on the material before me that a contract was entered into for the provision of a loan used to purchase the Vehicle. In circumstances where the applicant has advised the court that it accepts that the first respondent did not enter that contract but someone else did using their identity and, importantly, that the applicant no longer seeks any orders against the first respondent, I am satisfied that it is appropriate to proceed to deal with this matter in the circumstances without the first respondent present.
It is arguable that by using the first respondent’s identity the person who entered into the Loan Agreement misrepresented their identity. In those circumstances I am satisfied that it was open to the respondent to elect to rescind the Loan Agreement or to affirm it and seek to enforce it by seeking recovery of the vehicle against the person or persons with actual possession of the vehicle, including by relying upon statutory mechanisms which it has at its disposal to recover the Vehicle in circumstances where it cannot recover the outstanding debt under the loan agreement.
As stated, the second and third respondents have not filed any material or provided any information about the circumstances in which they obtained the vehicle. On the evidence before me, it appears that they purchased they car from a third party, that the car had some damage which they had repaired and that they were not aware that the car was subject to finance.
In these circumstances, it is not clear how these claims may need to be taken into account under the National Credit Code. However, for the following reasons, it is not necessary for me to determine that issue as I can deal with this matter under the PPS Act. I am satisfied that the security interest that the applicant has in respect of the Vehicle takes precedence over any interest that the second or third respondent might have under the PPSA, such that the orders the applicant seeks under that legislation ought to be granted.
The applicant has provided evidence, which I accept that it registered its security interest in the Vehicle on or about 30 November 2021. The second or third respondent have not led any evidence to suggest that they purchased the vehicle from an authorised and licensed motor vehicle trader. Had they done so, their interest in the vehicle would have taken precedence over the earlier registered interest of the applicant.
In Bank of Queensland Ltd v Star Trek [2019] NSWSC 1712 Adamson J considered whether to make orders permitting access to premises to recover property the subject of a security interest.[2]
[2] See also Riseley v Toyota Finance Australia Limited [2021] FCA 1566, [20].
Relevantly, her Honour said:
[16]In order to enforce its right under s 123 of the Act to seize the Secured Property, it will be necessary for the Bank to enter onto the Matraville Property, which is owned by the Trustee and, potentially, disturb the operation of Star Trek and the business conducted on the Matraville Property. The Bank has taken the view that it ought obtain authority from this Court for this course so that its methods are unquestionably “permitted by law” within the meaning of s 123. There is support for the Bank's approach in the following passage from Anthony Duggan, David Brown, Australian Personal Property Securities Law (2nd ed, 2016, LexisNexis Butterworths) at 12.36:
“According to subs 123(1), the secured party may seize the collateral ‘by any method permitted by law’. At general law the main limitations are to be found in the laws governing breach of the peace and trespass. The secured party or its agent may not use unlawful force to seize the collateral. For example, if the grantor is present and resists the seizure, the secured party may not resort to violence. The appropriate response is to back down and obtain a court order for seizure of the collateral.”
…
[18]The Bank also seeks an order that it be granted entry and access to the Matraville Property for the purposes of seizing the Secured Property pursuant to s 123 of the Act and an order that Star Trek be restrained from interfering or otherwise impeding the Bank's access to the Matraville Property for those purposes. I regard these orders as appropriate ancillary orders to permit the Bank to enforce its security, to require Star Trek to allow this to occur and to require the Trustee to grant entry and access to the Matraville Property for that purpose.
Applying these principles to the current application, I am satisfied that I have the power to make the orders sought by the applicant under the PPS Act.
CONCLUSION
I am satisfied that the applicant has established that it is entitled to possession of the Vehicle. As stated, the terms of the agreement which the applicant has affirmed, provide for the recovery of the vehicle in circumstances where there is a default. The applicant has established the default. Moreover, in circumstances where a third party has an ostensible interest in the vehicle, the court must be satisfied that the applicant’s interest takes priority. On the basis of the evidence before me, I find that having perfected their security interest for the purpose of the PPS Act, the applicant’s interest in the vehicle takes precedence over any interest that of the second and third respondents might otherwise have. As such the applicant has established that it is entitled to possession of the Vehicle and I propose making a declaration to that effect.
In relation to the seizure of the vehicle I am satisfied that it is appropriate to make an order under section 123 of the PPSA authorising the recovery of the Vehicle at premises over which the second and or third respondents have control or apparent control.
I therefore make the orders and declarations set out at the commencement of these written reasons.
I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment of Deputy Chief Judge Mercuri. Associate:
Dated: 31 March 2025
0
2
3