Volkswagen Financial Services Australia Pty Limited v Pairama
[2024] FedCFamC2G 1395
•13 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Volkswagen Financial Services Australia Pty Limited v Pairama [2024] FedCFamC2G 1395
File number(s): CAG 56 of 2024 Judgment of: JUDGE CAMERON Date of judgment: 13 November 2024 Catchwords: CONSUMER LAW – Chattel mortgage of motor vehicle (“Vehicle”) – security interest registered under the Personal Property Securities Act 2009 (Cth) – application for orders sanctioning seizure of Vehicle. Legislation: National Credit Code
Personal Property Securities Act 2009 (Cth), s 123
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), r 13.06
Cases cited: Bank of Queensland Limited v Star Trek [2019] NSWSC 1712
Riseley v Toyota Finance Australia Limited [2021] FCA 1566
Volkswagen Financial Services Australia Pty Limited v Victorian Inspection Testing and Compliance Services Pty Limited [2024] FedCFamC2G 641
Division: General Number of paragraphs: 18 Date of hearing: 13 November 2024 Place: Sydney, Canberra and Brisbane by videoconference Solicitor for the Applicant: Mr B. O’Sullivan (Celtic Legal) Solicitor for the Respondent: No appearance by or on behalf of the respondent ORDERS
CAG 56 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: VOLKSWAGEN FINANCIAL SERVICES AUSTRALIA PTY LIMITED
Applicant
AND: MICHAEL JAMES PAIRAMA
Respondent
ORDER MADE BY:
JUDGE CAMERON
DATE OF ORDER:
13 NOVEMBER 2024
THE COURT DECLARES THAT:
1.The applicant is entitled to take possession of the vehicle (Vehicle) bearing identification:
(a)VIN: MNAUMFF50GW640272
(b)No: P5AT2321098
(c)Registration No: 793FY5
THE COURT ORDERS THAT:
1.The respondent is required to deliver to the applicant or its lawfully appointed agent at such time and at such address nominated by the applicant any keys to the Vehicle held by him.
2.The applicant or its lawfully appointed representatives may enter:
(a)X XXXXX XXXX Close, XXXXX XXX XXX XXXX; and
(b)any other premises in Australia over which the respondent has apparent control and at which the Vehicle is reasonably believed to be located
for the purpose of taking possession of the Vehicle.
3.The respondent pay the applicant’s costs fixed in the amount of $5,874.82.
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
JUDGE CAMERON
INTRODUCTION
This proceeding concerns a 2016 Ford Ranger with VIN: MNAUMFF50GW640272, Engine No: P5AT2321098 and Registration No: 793FY5 (Vehicle) whose purchase by the respondent was funded by a chattel mortgage (Agreement) entered into by the parties in December 2021. The respondent defaulted on its repayment obligations under the Agreement and subsequently failed to comply with a notice of default (Notice). In this proceeding the applicant seeks orders that will result in it obtaining physical possession of the Vehicle.
The application initiating this proceeding sought relief under the National Credit Code (Code), but that was a mistaken approach as, for reasons to be canvassed later, the agreement was not a consumer contract of the sort governed by the Code. Upon the applicant's solicitor, Mr O'Sullivan, realising that at the hearing of this application, relief was sought under s.123(1) of the Personal Property Securities Act 2009 (Cth) (PPSA) instead. I will allow that amendment to the claim.
Substituted Service
The respondent has not appeared, but I am satisfied that he was served personally on 17 September 2024 and that he was advised by letter of today's date.
Despite service, the respondent has not engaged with the Court at all. In the circumstances, I am prepared to determine the matter under r.13.06(1)(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (Rules).
RULES AND LEGISLATION
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.
…
AGREEMENT
Relevantly, the Agreement provided:
2. Payments
2.1 You must repay the Amount of Credit and pay interest in accordance with these terms and the payment details set out in the Schedule. Payments must be made on or before the due dates specified…
…
4. Mortgage
4.1 You give to us a mortgage of the Goods described in the Schedule …
…
4.3 Our interest in the Goods and all Proceeds is a Security Interest and this Agreement is a Security Agreement.
…
9. Default
9.1 You will be in default under this Agreement if an Event of Default occurs.
9.2 On default, you must pay us the full amount owing under this Agreement which may include the balance outstanding, arrears, interest, fees and charges, enforcement expenses and costs …
9.3 On default, we may do any one or more of the following …
e) enter any premises and take possession of the Goods;
f) sell or otherwise deal with the Goods.
17. Definitions and Interpretation
DEFINITIONS
17.1 …
Event of Default means if any one or more of the following occur:
a)the Borrower does not pay any amount payable under this Agreement on the due date;
…
BACKGROUND
The following facts, which I find, are drawn from the affidavit of Brendan Long sworn or affirmed 19 August 2024.
On about 29 December 2021, the parties executed the Agreement to finance the purchase of the Vehicle. In doing so the respondent declared that the credit to be extended to him was to be wholly or predominantly for business or investment purposes. The Agreement required the respondent to pay the applicant the Vehicle’s purchase price by:
(a)59 monthly repayments of $1,110.18; and
(b)one final payment of $1,110.44.
On 5 January 2022, the Applicant registered a security interest on the Personal Property Securities Register against the Vehicle pursuant to the PPSA.
In or around May 2023, the respondent defaulted on his obligations under the Agreement by failing to pay the monthly instalment then due. On 20 May 2023, the applicant issued the Notice to the respondent requiring him to pay $1,180.18 on or before 3 June 2023. The respondent failed to comply with the Notice.
Mr Long annexed to his affidavit copies of the following documents:
(a)the Agreement;
(b)a Personal Property Securities Register search certificate concerning the Vehicle; and
(c)the Notice.
CONSIDERATION
Although, as I said earlier, the application sought relief under the Code, the business use declaration signed by the respondent took the Agreement beyond the scope and reach of the Code. Instead, the parties' relationship is relevantly regulated by the Agreement and by the PPSA. Authority holds that s.123 of the PPSA, on which the applicant relies, permits a person in the applicant's position to seize collateral security as long as that step is undertaken by a method permitted by law: Bank of Queensland Limited v Star Trek [2019] NSWSC 1712 and Riseley v Toyota Finance Australia Limited [2021] FCA 1566.
The first step is to determine whether the applicant is entitled to possession of the vehicle. The terms of the Agreement have been proven, as too has the respondent's default. I find that the applicant is entitled to possession of the Vehicle, and there will be a declaration to that effect.
Seizure of Vehicle
In Bank of Queensland v Star Trek Adamson J said at [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.”
I note that the applicant has not sought to rely on whatever rights of seizure it might, in the circumstances, have under the Agreement. In submissions, it has relied on the nature of a mortgage at common law and how such a mortgage transfers ownership of a mortgaged property to the mortgagee. I accept that the applicant is the owner of the vehicle at common law, subject to any remaining equity of redemption. It relies on that title for the relief sought.
It is appropriate in this case that an order be made under s.123 of the PPSA authorising the seizure of the Vehicle at premises over which the respondent has control or apparent control. As, with respect, correctly perceived by Judge Champion in Volkswagen Financial Services Australia Pty Limited v Victorian Inspection Testing and Compliance Services Pty Limited [2024] FedCFamC2G 641 at [36], such an order is drawn with a view to minimising the risk of sanctioning trespass, noting that the applicant's lawful right of entry is limited by the power to enter granted to it by the Agreement.
I should also note that an order which the applicant seeks would require the respondent to deliver to it not only the vehicle but also its keys. In all the circumstances, it seems to me appropriate and incidental to the order which I will make permitting the applicant and its lawfully appointed representative to enter premises over which the respondent has or would appear to have control to require him to deliver up the keys to the Vehicle as well. The delivery up of keys would appear to be a matter purely incidental to the taking of possession of the Vehicle and an appropriate order to make.
Costs
The applicant has also sought its costs on the Court's scale as it stood prior to 4 January 2023, quantified at $4726. I consider that under the Rules costs should be awarded in accordance with the scale and specifically the scale items 1(a); 9(a), for one mention in the interlocutory stages of this proceeding; 9(b), uplifted by 50 per cent advocacy loading arising out of item 10; and a filing fee of $295. On my calculations in accordance with the current Rules, that amounts to $5,874.82, and there will be an order accordingly.
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron. Associate:
Dated: 13 December 2024
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