Volkswagen Financial Services Australia Pty Limited v Fishburn
[2024] FedCFamC2G 900
•13 September 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Volkswagen Financial Services Australia Pty Limited v Fishburn [2024] FedCFamC2G 900
File number(s): SYG 448 of 2024 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 13 September 2024 Catchwords: CONSUMER LAW – Application for orders under s 100 and s 101 of the National Credit Code for the delivery of a motor vehicle and entry into residential premises to repossess the motor vehicle – credit contract on the basis of which relief sought is not covered by the Code – no other relief claimed – application dismissed. Legislation: National Consumer Credit Protection Act 2009 (Cth) Sch 1, ss 5(1), 88(1), 100, 101
Personal Property Securities Act 2009 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 6.06, 6.14, 6.15, 17.05
Federal Court Rules 2011 (Cth) r 10.28(1)
Cases cited: Volkswagen Financial Services Australia Pty Ltd v Adra [2024] FedCFamC2G 653
Volkswagen Financial Services Australia Pty Limited v Feili [2024] FedCFamC2G 712
Division: General Number of paragraphs: 25 Date of hearing: 9 April 2024 Place: Sydney Solicitor for the Applicant: Ms T Dawood for the applicant, by telephone The Respondent: No appearance by, or on behalf of, the respondent ORDERS
SYG 448 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: VOLKSWAGEN FINANCIAL SERVICES AUSTRALIA PTY LIMITED (ABN 20 097 071 460)
Applicant
AND: MICHAEL FISHBURN
Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
13 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.Subject to order 2, the application is dismissed.
2.Order 1 does not, and is not intended to, prejudice or otherwise affect the rights and interests the applicant has in the 2018 Mercedes Benz C-Class Vin/Chassis: WDD2054872F726596 (Vehicle), including rights to commence a fresh proceeding for any relief in relation to the Vehicle.
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
INTRODUCTION
The applicant (VFSA) seeks an order pursuant to s 101 of Schedule 1 (Code) to the National Consumer Credit Protection Act 2009 (Cth) that the respondent, Mr Fishburn, deliver to VFSA’s agents a 2018 Mercedes Benz C-Class motor vehicle (Vehicle) and, if he fails to do so, an order pursuant to s 100 of the Code that VFSA have access to residential premises for the purpose of enabling it to repossess the Vehicle.
FACTS
On 27 February 2020 Mr Fishburn, on behalf of Off Shore International Pty Ltd (OSI), signed a document headed “Chattel Mortgage Loan Schedule” (Schedule). Immediately under the heading the Schedule contains details of a “Dealer”, after which the following appears:
The person or persons named below (“Borrower, you or your”) offer to borrow from Audi Financial Services (“the Lender, [sic] “we”, “our” or “us”) the Amount of Credit specified below on the terms of this Schedule, the Chattel Loan and Mortgage Terms and Conditions contained in the booklet which accompanies this Schedule and any Special Conditions. As security for your obligations under this Agreement, this Agreement creates a mortgage over the Goods described below.
The Schedule then sets out details which include OSI as borrower, and the amount of credit ($115,525). In a section headed “Loan Instalments” the Schedule provides that the loan is to be repaid over a period of 60 months by the borrower making 60 monthly loan instalments, the first 59 instalments each being $1,903.81, and the final payment being $39,133.82. The Schedule further provides that the first loan instalment was payable on 27 March 2020.
The Schedule also sets out details of the Vehicle, and identifies Mr Fishburn as the guarantor. The Schedule ends with the following:
By signing this Schedule:
1.the Borrower offers to borrow money on the terms set out in this Schedule, the Terms and Conditions contained in the booklet which accompanies this Schedule and any Special Conditions;
2.each person signing in his or her capacity as a director of a company or as a member of a partnership warrants he or she has the authority of the company or the partnership to sign this Agreement for and on behalf of the company or partnership;
3.each Guarantor agrees to provide the guarantee and indemnity set out in clause 14 of the Terms and Conditions.
4.This Schedule will be executed by you signing this Schedule and may be accepted by us by:
•us signing a duplicate of this Schedule (including a duplicate received by or on behalf of us by facsimile or by email) or by us countersigning this Schedule; or
•a person authorised by us using their password to access our electronic systems and cause notations to be made in those systems to the effect that we approve and enter into this Agreement.
There is in evidence a document titled “Terms and Conditions Commercial” which contains three sets of terms, one of which is titled “Chattel Loan and Mortgage Terms and Conditions” (Mortgage Terms). Clause 1.2 provides that VFSA accepts the borrower offers to borrow the “Amount of Credit” set out in the Schedule “when our authorised officer signs the Schedule or when we disburse the Amount of Credit in accordance with your directions, whichever occurs first”.
Clause 9.1 of the Mortgage Terms provides that the borrower will be in default if an “Event of Default” (as defined in cl 17.1) occurs, one of those events being the borrower not paying any amount payable under “this Agreement”. The word “Agreement” is defined in cl 17.1 to mean the agreement between VFSA and OSI set out in the Schedule and the Mortgage Terms. If an event of default occurs, cl 9.2 provides that OSI must pay the full amount owing under the Agreement, which may include the balance outstanding, arrears, and, among other things:
the net present value of all Loan Instalments and the final payment referred to in the Schedule payable from the date of repayment to the end of the Term, calculated by applying a discount rate equal to a percentage rate per annum below the rate implicit in the return to us under this Agreement, such percentage rate not exceeding 4% as determined by us in order to cover our administration and other costs and losses arising directly and indirectly from the default.
Paragraphs (e) and (f) of cl 9.3 provide that, in default, VFSA may also “enter any premises and take possession of the Goods” (that is, the Vehicle), and “sell or otherwise deal with the Goods”.
Clause 14.1 of the Mortgage Terms provides:
The Guarantor unconditionally and irrevocably guarantees the Borrower will pay the Lender all amounts payable under this Agreement when they are due. If the Borrower does not pay any amount under this Agreement on time and in accordance with this Agreement, then the Guarantor agrees to pay that amount to the Lender on demand from the Lender (whether or not the Lender made demand on the Borrower).
In addition to signing the Schedule, Mr Fishburn signed a document titled “Business Use”, which declares that “the credit to be provided to” OSI “is to be wholly or predominantly for . . . business purposes; or . . . investment purposes other than investment in residential property”.
It may be inferred that Mr Fishburn took possession of the vehicle on behalf of OSI, from which it may further be inferred that VFSA advanced $115,525 to OSI by paying that amount to the dealer at Mr Fishburn’s direction.
On 28 February 2020 VFSA registered a security interest against the Vehicle in the Personal Property Securities Register established under the Personal Property Securities Act 2009 (Cth) (PPS Act).
On 17 September 2020 VFSA issued a document titled “Default Notice” addressed to OSI. It states:
You are currently in default of your credit contract. Your account is currently 21 days overdue because we have not received the following agreed repayments:
Contract Number: . . . . .
Balance Outstanding $1,938.81
Including Fees of: $35.00
(“Default”)
The action necessary to remedy the default(s) is payment of the Balance Outstanding within 14 days from the date of this letter.
Failure to make the payment may result in us taking possession of the collateral. We may also disclose information about the Balance Outstanding of $24,288.32 to an external credit reporting body. The information will be included in your credit information file.
. . . .
A near identical default notice was issued to Mr Fishburn. Neither OSI nor Mr Fishburn paid the amount demanded in the notices.
PROCEEDING IN THIS COURT
The matter came before me on a first court date on 9 April 2024. Mr Fishburn did not appear.
Ms Dawood, who appeared for VFSA, read the following affidavits:
(a)An affidavit made by Mr O’Sullivan on 3 April 2024 in which he deposes he sent an email to Mr Fishburn at an email address “michaelfishburn . . . @ . . .” attaching the application and affidavit made by Brendan Long on 25 March 2024 (Long affidavit) (to which I refer below). Mr O’Sullivan is a paralegal working in the offices of VFSA’s lawyers.
(b)An affidavit made by Ms Johnson on 5 April 2024, in which she deposes that on 18 March 2024 she placed the application and the Long affidavit in an ordinary post envelope addressed to Mr Fishburn at an address at Yanderra, New South Wales (Yanderra Address), and depositing the sealed envelope in the Australian Post postal box at 4 Ebor Street, Toowong. Ms Johnson is a receptionist working in the offices of VFSA’s lawyers.
(c)An affidavit made by Mr Dane Ruddock deposing that on 27 March 2024 he served the application and the Long affidavit by leaving those documents at the Yanderra Address.
(d)The Long affidavit in which Mr Long, VFSA’s lawyers, annexes the Schedule, Mortgage Terms, extract from the PPS Act Register, and the Default Notice.
After Mr Ms Darwood read his affidavits, I reserved judgment.
DETERMINATION
Two issues arise on VFSA’s application.
Application of the Code
The first relates to the grounds on which VFSA claims relief; those grounds assume the loan recorded in the Schedule and Mortgage Terms, are contracts regulated by the Code. That would be so, however, only if the credit provided by the Schedule and the Mortgage Terms falls within s 5(1) of the Code, which provides:
This Code applies to the provision of credit (and to the credit contract and related matters) if when the credit contract is entered into or (in the case of precontractual obligations) is proposed to be entered into:
(a) the debtor is a natural person or a strata corporation; and
(b) the credit is provided or intended to be provided wholly or predominantly:
(i)for personal, domestic or household purposes; or
(ii) to purchase, renovate or improve residential property for investment purposes; or
(iii)to refinance credit that has been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes; and
(c) a charge is or may be made for providing the credit; and
(d)the credit provider provides the credit in the course of a business of providing credit carried on in this jurisdiction or as part of or incidentally to any other business of the credit provider carried on in this jurisdiction.
Given the “Business Use” declaration form Mr Fishburn signed, it is clear the Code does not apply to the transactions documented or effected by the Schedule and the Mortgage Terms. Even if the Schedule and the Mortgage Terms were covered by the Code, VFSA would not have complied with the Code because the default notice gave OSI 14 days to remedy the default, whereas s 88(1) of the Code requires the giving of 30 days after the date of a notice by which the default may be remedied.
Service of application
The second issue arises from Mr Fishburn’s not having been personally served with the application.
Service of documents starting a proceeding in this Court is governed, in the first instance, by r 6.06 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules), which provides:
(1)Service by hand is required for an application starting a proceeding or a subpoena requiring attendance of a person.
(2)However, service by hand is not required if:
(a)there are current proceedings for which there is a notice of address for service for the person to be served; or
(b)the Court directs that an application may be served in another way; or
(c)a lawyer accepts service for a party and subsequently files an address of service; or
(d)a lawyer accepts service for a person other than a party.
Rule 6.06 is subject to r 6.14 and r 6.15 of the GFL Rules:
6.14 Substituted service
(1)If, for any reason, it is impracticable to serve a document in a way required under this Part, the Court may make an order dispensing with service or substituting another way of serving the document.
(2)The Court may specify the steps to be taken for bringing the document to the attention of the person to be served.
(3)The Court may specify that the document is to be taken to have been served on the happening of a specified event or at the end of a specified time.
6.15 Matters to be taken into account
In making an order for dispensing with service or for substituted service, the Court may have regard to:
(a)whether reasonable steps have been taken to attempt to serve the document; and
(b)whether it is likely that the steps that have been taken have brought the existence and nature of the document to the attention of the person to be served; and
(c)whether the person to be served could become aware of the existence and nature of the document by means of advertising or another means of communication that is reasonably available; and
(d)the likely cost to the party serving the document, the means of that party and the nature of the proceedings; and
(e)any other relevant matter.
It is the case that cl 16.2 of the Mortgage Terms permits VFSA to give to OSI or to Mr Fishburn “a document about this Agreement” by the means provided for in that clause, which include leaving the document at, or sending it by post to, Mr Fishburn’s residential, business, or postal address last known to VFSA, or by email. In Volkswagen Financial Services Australia Pty Ltd v Adra,[1] I held that an identical clause engaged r 10.28(1) of the Federal Court Rules and, on that basis, found that personal service was not required. In Volkswagen Financial Services Australia Pty Limited v Feili [2] however, Judge Cameron held that the clause did not have the effect I held it did. His Honour said:[3]
Although the contractual relationship between the parties provides that the lender may give notice to the borrower in accordance with the finance agreement, the agreement does not purport to affect the operation of the Court's rules concerning personal service in a proceeding’s initial stages, as was the case with the agreement considered in Kosmos Capital Pty Ltd v Turiya Ventures LLC [2019] FCA 528.
[1] Volkswagen Financial Services Australia Pty Ltd v Adra [2024] FedCFamC2G 653
[2] Volkswagen Financial Services Australia Pty Limited v Feili [2024] FedCFamC2G 712
[3] Volkswagen Financial Services Australia Pty Limited v Feili [2024] FedCFamC2G 712, at [6]
In his Honour’s view, r 10.28(1) of the Federal Court Rules does not apply to an agreement concerning the service of documents unless the agreement expressly or by implication applies to an originating document. On reflection, I am satisfied his Honour is plainly correct. That means that VFSA has not served Mr Fishburn with the application.
DISPOSITION
Given that VFSA is not entitled to the relief it seeks, I propose to make an order dismissing the application, but on terms that the order does not, and is not intended to, prejudice or otherwise affect the rights and interests VFSA has in the Vehicle, including rights to commence a fresh proceeding for any relief in relation to the Vehicle. Had I been satisfied that the application stated a proper claim for relief, I would have listed the matter for a directions hearing to allow for personal service of the application.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 13 September 2024
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