Volkswagen Financial Services Australia Pty Ltd v Adra
[2024] FedCFamC2G 653
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Volkswagen Financial Services Australia Pty Ltd v Adra [2024] FedCFamC2G 653
File number(s): SYG 1359 of 2024 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 23 July 2024 Catchwords: CONSUMER LAW – Application for orders under s 100 and s 101 of the National Credit Code (Code) in relation to default by borrower of terms of a credit facility – whether Code applies given borrower declared that the credit to be provided under credit facility was solely for business purposes – Code does not apply – whether orders authorising entry into premises of debtor or under the apparent control of the debtor should nevertheless be made – declarations made. Legislation: National Consumer Credit Protection Act 2009 (Cth) Sch 1, ss 100, 101
Personal Property Securities Act 2009 (Cth) ss 12, 123, 207
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 1.06(2), 6.06, 6.14, 6.15
Federal Court Rules 2011 (Cth) r 10.28(1)
Cases cited: Volkswagen Financial Services Australia Pty Limited v Tate [2024] FedCFamC2G 491 Division: General Number of paragraphs: 21 Date of hearing: 16 July 2024 Place: Sydney Solicitor for the Applicant: Ms E Flack of Celtic Legal, by telephone The Respondent: No appearance by, or on behalf of, the respondent
Table of Corrections 23 July 2024 In paragraph 8 two references to “Ms Stack” have been corrected to show “Ms Flack”. 23 July 2024 In paragraph 9 one reference to “Ms Short” has been corrected to show “Ms Flack”. 23 July 2024 In paragraph 10 two references to “Ms Stack” have been corrected to show “Ms Flack”. ORDERS
SYG 1359 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: HAYTHAM ADRA
Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
23 JULY 2024
THE COURT DECLARES THAT:
1.The applicant is entitled to take possession of the vehicle (Vehicle) bearing identification:
(a)VIN: MRoHA3CD300430106;
(b)Engine No: 1GDA250190; and
(c)Registration No: YIC31U.
2.The applicant and its lawfully appointed representatives may enter:
(a)XXX XXXXX Road, Riverwood NSW 2210; 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.
THE COURT ORDERS THAT:
3.Subject to order 4, the respondent pay the applicant’s costs set in the amount of $3,500.
4.The applicant have liberty to apply to vary the amount referred to in order 3
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
On 24 June 2024 the applicant (VFSA) filed an application in this Court claiming an order under s 100 of Schedule 1 (Code) to the National Consumer Credit Protection Act 2009 (Cth) that VFSA have access to residential premises for the purpose of enabling it to repossess a 2019 Toyota Hilux (Vehicle) or, in the alternative, an order under s 101 of the Code that the respondent, Mr Adra, deliver the Vehicle to VFSA or its agents. VFSA’s claims are based on the allegations that Mr Adra defaulted under a loan agreement it entered into with VFSA, and that such default gave rise to a right in VFSA to repossess the Vehicle pursuant to a chattel mortgage Mr Adra granted to VFSA as security for its obligations under the loan agreement.
FACTS
On or about 1 August 2022 Mr Adra signed a document (Loan Contract), which begins as follows:
This is an offer by you, the Borrower/s named below, to us, Volkswagen Financial Services Australia Pty Ltd (“we”, “us”). You have asked us to lend you money under the terms and conditions of the Consumer Loan Contract, which is made up of this Loan Schedule (“Loan Schedule”) and the Terms and Conditions (“Terms and Conditions”). If we accept your offer it will form a binding contract between us (“Contract”). As security for your obligations under this Contract, this Contract creates a mortgage over the Goods described below.
The “Goods described below” is the Vehicle.
There is attached to the form of the Loan Contract a document headed “Chattel Mortgage Loan Schedule” which is apparently signed by Mr Adra. The document contains a declaration that “the credit to be provided to me/us by the credit provider is to be wholly or predominantly for . . . business purposes; or . . . investment purposes other than investment in residential property”.
The Loan Contract is expressed to be an offer by Mr Adra to VFSA that VFSA lend Mr Adra $50,425 to pay the purchase price of the Vehicle for $49,000, and for other items. The Loan Contract provided that the loan would be repaid over 60 months, in monthly instalments, the first 59 monthly instalments each being $936.45, and the last instalment being $14,936.12; and it also provided that Mr Adra give a mortgage over the Vehicle to VFSA to secure his obligations under the Loan Contract. Mr Adra signed the Loan Contract on 1 August 2022 and, by so doing, was bound by the terms of the Loan Contract, and also by the “Terms and Conditions”, being the terms contained in a document titled “Chattel Mortgage Terms and Conditions” (Mortgage Terms).
On 4 August 2022 VFSA registered its security interest in the Vehicle with the Personal Property Securities Register pursuant to the Personal Property Securities Act 2009 (Cth) (PPS Act).
By September 2022 Mr Adra defaulted; and, on 22 September 2022, VFSA issued a default notice in which VFSA stated that Mr Adra was in default in that VFSA had not received payment; demanded that Mr Adra remedy the default by paying VFSA $965.35 within 14 days from the date of the default notice; and stated that Mr Adra’s failure to make that payment may result in VFSA “taking possession of the collateral”. Mr Adra did not remedy the default. That had the consequence, among other things, of entitling VFSA, under cl 9.3 (e) of the Mortgage Terms, to “enter any premises and take possession of” the Vehicle.
THE HEARING
The matter came before me on a first court date on 16 July 2024. Mr Adra did not appear. Ms Flack, who appeared on behalf of VFSA, proceeded on the application. Ms Flack read four affidavits of service of the application filed in this proceeding.
(a)The first is made on 11 July 2024 by Ms O’Brien in which she deposes she served the application, the affidavit made by Brendan Long, and a covering letter, by ordinary post to the address Mr Adra provided in the Loan Contract.
(b)The second is made by Ms Kumar on 11 July 2024 in which she deposes that on 28 June 2024 she served Mr Adra the application, the affidavit made by Brendan Long, and a covering letter, by email.
(c)The third is made by Ms Kumar on 11 July 2024 in which she deposes that on 10 July 2024 she served the Mr Adra “with the correspondence from the Court dated 9 July 2024”. The “correspondence from the Court” is an email my Associate sent to VFSA’s lawyer on 9 July 2024 noting that the matter was listed for a first court date at 9:30 am on 16 July 2024, providing dial in details, and requesting that “the applicant please provide a copy of this email to the respondent”. Ms Kumar further deposes that “[s]ervice was effected by email to the Respondent’s nominated email address of . . . @live.com.au”. Ms Kumar, however, does not identify the basis on which she deposes that the email address to which she says the application was sent was Mr Adra’s “nominated email address”.
(d)The fourth is made by Ms Johnson on 11 July 2024 in which she deposes that on 10 July 2024 she served Mr Adra “with the correspondence from the Court” by placing the correspondence into an express post envelope addressed to the address Mr Adra provided in the Loan Contract.
Ms Flack also read the affidavit of Mr Long.
At the hearing I asked Ms Flack whether it was not necessary that Mr Adra should be personally served. Ms Flack made two submissions. The first was that service by post and mail was authorised by the terms of the Loan Contract or Mortgage Terms. The second was, in effect, that I should be satisfied that Mr Adra had in fact been served, and that I should make an order confirming service.
WAS MR ADRA SERVED?
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.
Potentially relevant is r 10.28(1) of the Federal Court Rules 2011 (Cth), which may apply to a proceeding in this Court pursuant to r 1.06(2) of the GFL Rules. Subrule 10.28(1) provides:
If a respondent in a proceeding has agreed that an originating application or other document in the proceeding may be served on the respondent, or on another person for the respondent, in a way or at a place mentioned in the agreement, the document may be served in accordance with the agreement.
Clause 16.2 of the Mortgage Terms deals with the manner in which VFSA may give to Mr Adra a “document about this Agreement”:
If the Lender needs to give the Borrower or Guarantor a document about this Agreement, the Lender can do so by:
a) delivering it to the Borrower or Guarantor personally; or
b) leaving it at, or sending it by post or facsimile to, the Borrower’s or Guarantor’s residential, business or postal address, or facsimile number, last known to the Lender; or
c) sending it to the email address the Borrower or Guarantor has authorised and only if the Borrower or Guarantor has agreed to receive documents this way; or
d) making it securely available on the Lender's website for retrieval by electronic communication and only if the Borrower or Guarantor has agreed to receive documents this way.
I am satisfied that an originating process that claims relief on the basis of the Mortgage Terms is a “document about this Agreement”; and it was therefore open to VFSA to serve Mr Adra with the application in this proceeding by posting the application to Mr Adra’s address last known to VFSA. I am also satisfied that the address to which VFSA posted the application is Mr Adra’s address last known to VFSA.
DETERMINATION
In its application VFSA seeks the following orders:
1.An Order, pursuant to section 100 of the National Credit Code (Code), authorising the Applicant, or its lawfully appointed agent, to enter residential premises for the purpose of taking possession of the 2019 Toyota Hilux, bearing the below identifiers (Vehicle) and any keys to the Vehicle:
. . . .
2. Further and/or in the alternative, an Order pursuant to section 101 of the Code requiring the Respondent to deliver the Vehicle (and any keys to the Vehicle) to the Applicant, or its lawfully appointed agent, at such time and at an address nominated by the Applicant.
3. The Applicant and/or its duly authorised agent be permitted to enter and remain on any premises/land and is further authorised to take any and all steps reasonable and necessary in order to take possession of the Vehicle from the following premises:
(a) 34B Wiggs Road, Riverwood NSW 2210; or
(b) any other premises in Australia at which the Vehicle is reasonably believed to be located.
4. That the Applicant be provided with a current extract from the register of information about the Vehicle’s current registered operator, including the name and address of the registered operator.
5. The Respondent to pay the Applicant's costs of and incidental to this application.
Orders 1 and 2 are sought pursuant to s 100 and s 101 of the Code. Under s 5(1) of the Code, however, the Code only 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.
As I have already noted, Mr Adra signed a declaration that “the credit to be provided to me/us by the credit provider is to be wholly or predominantly for . . . business purposes; or . . . investment purposes other than investment in residential property”. The Code, therefore, does not apply to the agreement between VFSA and Mr Adra; and VFSA cannot claim any orders purportedly pursuant to the Code.
The third order VFSA claims is not based on the Code. It may be taken to be based on s 123 of the PPS Act, which provides that a “secured party may seize collateral, by any method permitted by law, if the debtor is in default under the security agreement”. Section 207 of the PPS Act confers jurisdiction on this Court “with respect to a PPS matter”. The expression “with respect to a PPS matter” is broad, and would include any application for relief in relation to a “security interest” within the meaning of s 12 of the PPS Act, such as an application for an order for possession of the collateral. The Court, therefore, has jurisdiction to make orders in relation to the possession of the Vehicle.
I am satisfied that an order in terms of paragraph 3(a) of the application is appropriate. I am not satisfied, however, that it is appropriate to make an order in terms in paragraph 3(b) of the application; it is too broad. In those circumstances, I propose to make orders similar to the declarations Judge Cameron made in Volkswagen Financial Services Australia Pty Limited v Tate.[1] That is, I will declare VFSA is entitled to take possession of the Vehicle, and that VFSA and its lawfully appointed representatives may enter the premises located at the address Mr Adra specified in the Loan Contract, and may enter any other premises in Australia over which the respondent has apparent control and at which the Vehicle is reasonably believed to be located.
[1] Volkswagen Financial Services Australia Pty Limited v Tate [2024] FedCFamC2G 491
I will also order that Mr Adra pay VFSA’s costs. I propose to set those costs in the amount of $3,500, but reserve to VFSA liberty to apply for an order to vary that amount.
I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 23 July 2024
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