Volkswagen Financial Services Australia Pty Ltd v Howard
[2024] FedCFamC2G 1047
•10 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Volkswagen Financial Services Australia Pty Ltd v Howard [2024] FedCFamC2G 1047
File number(s): MLG 2511 of 2024 Judgment of: JUDGE CHAMPION Date of judgment: 10 October 2024 Catchwords: CONSUMER LAW – Application for order under s. 101 of the National Credit Code – Where Vehicle under chattel mortgage was used for business purposes – Matter arises in relation to the Personal Property Securities Act 2009 – No appearance from Respondent – Declaration that Applicant entitled to take possession of the vehicle – Declaration that Applicant may enter premises and seize vehicle Legislation: National Consumer Credit Protection Act 2009 (Cth) Sch 1, s. 101
Personal Property Securities Act 2009 (Cth) s. 123
Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021 (Cth) rr. 4.03, 13.04 13.05, 13.06, 17.05
Cases cited: Bank of Queensland v Star Trek [2019] NSWSC 1712
Senworth Capital Pty Ltd v Galleria SUV Pty Limited [2022] NSWSC 1513).
Volkswagen Financial Services Australia Pty Ltd v Adra [2024] FedCFamC2G 653
Volkswagen Financial Services Australia Pty Ltd v Tate [2024] FedCFamC2G 491
Volkswagen Financial Services Pty Ltd v Glass Shop Perth Pty Ltd [2024] FedCFamC2G 537
Division: Division 2 General Federal Law Number of paragraphs: 39 Date of hearing: 10 October 2024 Place: Melbourne Solicitor for the Applicant: Ms Flack of Celtic Legal Respondent: No appearance ORDERS
MLG 2511 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: LIAM STANLEY HOWARD
Respondent
ORDER MADE BY:
JUDGE CHAMPION
DATE OF ORDER:
10 OCTOBER 2024
THE COURT DECLARES THAT:
1.The Applicant is entitled to take possession of the 2016 Holden vehicle, bearing the below identifiers (Vehicle) and any keys to Vehicle:
(a)VIN: 6G1FB4E30GL227949
(b)Engine Number: LFX160410216
(c)Registration Number: EYP72C
2.The Applicant and its lawfully appointed representative may enter any 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.The Respondent pay the Applicant’s costs fixed in the amount of $5,749.
AND THE COURT NOTES THAT:
A.Under r. 17.05(2)(a) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law), the Respondent may make an application to set aside or vary the judgment or orders made in his absence.
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).
EX TEMPORE REASONS FOR JUDGMENT
Revised from transcriptJUDGE CHAMPION:
INTRODUCTION
By an application dated 29 July 2024, Volkswagen Financial Services Australia Pty Ltd (VFSA) seeks orders against Mr Liam Howard in connection with his alleged default under a chattel loan and mortgage agreement the parties made on 13 May 2021 to finance the purchase of a 2016 Holden vehicle, bearing the below identifiers (Vehicle):
(a)VIN: 6G1FB4E30GL227949
(b)Engine Number: LFX160410216
(c)Registration Number: EYP72C
Mr Brendan Long, the Applicant’s lawyer, filed a supporting affidavit made on 3 July 2024 in support of the application. Among other matters, in the orders sought in the Initiating Application, the Applicant sought orders under the National Credit Code, more precisely described as s. 101 of Schedule 1 to the National Consumer Credit Protection Act 2009 (Cth).
For reasons which I will now provide, I have been persuaded that it is appropriate that I make declarations in favour of the Applicant that it is entitled to take possession of the 2016 Holden vehicle and that the Applicant or its lawfully appointed representative may enter any 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.
PROCEDURAL MATTERS
On 30 August 2024, when the matter was first listed before the Court. The Respondent did not appear.
I was satisfied that the Respondent had been served with the application and had notice of the time and date for the hearing by reference to an affidavit of service of Ms Teonee Lorenzen-Taylor made on 28 August 2024.
Further, Mr Long attached to a second affidavit he made on 28 August 2024 email correspondence he had received from the Respondent dated 7 August 2024 in which the Respondent wrote among other matters:
I have followed up with the agent looking for the car with an address of where it could be located sorry for the delay
I have been over seas I hope this helps
I will not be able to attend court due to work commitments, but I really hope this helps to get the car back and to settle this issue once and for all
Mr Long further deposed in his second affidavit at [5] that “between 7 August 2024 and 26 August 2024, our firm has been in correspondence with the Respondent through the Respondent’s email address”.
Because, as of 30 August 2024, the 28 days for the filing and service of a response provided for under r. 4.03(3) of the Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021 (Cth) had not yet passed, I made orders that the Respondent file and serve a response not later than 3 September 2024 and listed the matter for final hearing today, 10 October 2024. I made a notation that the Applicant serve a copy of the orders via the email address from which the Respondent had corresponded with Mr Long on 7 August 2024. The Applicant duly filed an affidavit of service of Mathumika Kumar made on 13 September 2024, that the orders I made on 30 August 2024 had been served.
As of today’s date (10 October 2024), the Respondent has not filed a response before the time for the Respondent to file a response under the rules has expired. He has also not complied with the orders that the court made on 30 August 2024. As a result, the Respondent is in default under r. 13.04.
Further, when the matter was called on for hearing today on 10 October 2024, I had the matter called outside the court, and there was no appearance from the Respondent. I proceeded in his absence under rr. 13.05 and rule 13.06.
I note that under the Rules, the court may vary or set aside a judgment or order after it has been entered if it was made in the absence of a party, under r. 17.05(2). If the Respondent seeks to set aside or vary the judgment or order, that will be a matter for a future application by him. In any event, I proceeded this afternoon in the absence of the Respondent and on the basis of the submissions of the lawyer for the Applicant and the evidence which I will now identify.
BACKGROUND
I admitted the affidavit of Mr Long made on 3 July 2024. Mr Long annexed to his affidavit copies of the following documents:
(a)the Facility Agreement and Terms and Conditions;
(b)a Personal Property Securities Register Certificate; and
(c)a Notice of Default dated 3 November 2022.
The following facts can be drawn from Mr Long’s affidavit.
The Agreement
On 13 May 2021, the Respondent entered into a Chattel Loan and Mortgage with the Applicant (Agreement) to finance the purchase of a 2016 Holden Vehicle.
The Agreement states, among other matters, at clause 4:
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.
Among the Terms and Conditions included in the Agreement, section 9 is titled ‘Default’ and reads partly as follows:
9. Default
9.1 You will be in default under the 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.
…
Under “Definitions and Interpretation”, “Event of Default” is defined as:
Event of Default means if any one or more of the following occur:
(a)the Lessee does not pay any amount payable under this Agreement on the due date;
(b)the Borrower is in breach of any other obligation under this Agreement;
…
The Agreement required the Respondent to repay the purchase price of the vehicle by way of :
(a)59 consecutive repayments to the applicant in the amount of $724.08; and
(b)one final payment of $724.10.
On 14 May 2021, the Applicant registered a security interest on the Personal Property Securities Register (PPSR) against the Vehicle under the provisions of the Personal Property Securities Act 2009 (Cth) (PPS Act). Under “Collateral type”, detailed on the PPSR Serial Number Search Certificate, the Vehicle is classified as “commercial property”.
Default
In or around November 2022, the Respondent defaulted on his obligations under the Agreement.
On 3 November 2022, the Applicant issued a notice of default to the Respondent. Relevantly it read as follows:
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:
…
Balance Outstanding $797,90
Including Fees of: $35.00
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.
Mr Long deposed, and has not been challenged as to his affidavit, that the Respondent failed to pay the arrears on or before 17 November 2022 in compliance with the notice of default, or otherwise remedy the default.
THE LAW
On 29 July 2024, the Applicant commenced this proceeding against the Respondent. In its application, the Applicant seeks the following orders:
1.An Order pursuant to section 101 of the National Credit Code (Code), requiring the Respondent to delivery 2016 Holden Ute, bearing the below identifiers (Vehicle) and any keys to the Vehicle:
(a) VIN: 6G1FB4E30GL227949
(b) Engine No: LFX160410216
(c) Registration No: EYP72C (Vehicle).
to the Applicant, or its lawfully appointed agent, at such time and at an address nominated by the Applicant.
2.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) 44a Roberts Street, West Footscray VIC 3012; or
(b) any other premises in Australia at which the Vehicle is reasonably believed to be located.
3.The Applicant may report the Vehicle as stolen if it is unable to recover the Vehicle.
4.The Respondent to pay the Applicant’s costs of and incidental to this application.
Under Order 1, the Applicant seeks an order that the Respondent deliver up the vehicle to the Applicant, under s. 101 of the National Credit Code.
I note, however, that in this case, the borrower declared that the credit to be provided under the credit facility was solely for business purposes. I refer to the declaration that appears at the commencement of the chattel mortgage.
It appears therefore, although it does not ultimately matter in the result, that the provision of this credit fell outside the ambit of s. 5(1)(b) of the National Credit Code because it was not credit provided wholly or predominantly for personal, domestic or household purposes. Section 5 of the Code is as follows:
5 Provision of credit to which this Code applies
(1)This Code applies to 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
…
In Volkswagen Financial Services Australia Pty Ltd v Adra[2024] FedCFamC2G 653 Judge Manousaridis at [18] said:
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.
In the same way as the National Credit Code did not appear to apply in the circumstances of Adra, so for similar reasons it does not appear to apply in this case. I note, however that Order 2, in terms of the orders set out in the application, does not rely solely on the applicability of the Code.
Another recent and relevant decision referred to by Judge Manousaridis in Adra, was the decision of Judge Cameron in Volkswagen Financial Services Australia Pty Ltd v Tate[2024] FedCFamC2G 491. In that case, Judge Cameron was persuaded to make orders in favour of VFSA in circumstances in which the Code did not apply. Judge Manousaridis expressly followed the approach Judge Cameron had adopted in Tate in Adra.
In Tate, Judge Cameron said the following at [20]:
Although the Code does not apply in this case, the Agreement provides sufficient legal basis for the applicant to take possession of the Vehicle. That right is supported in the circumstances of this case by s. 123 of the PPS Act, which governs dealings with security interests and which, in effect, provides that the PPS Act is not a barrier to the applicant’s exercise of its rights under the Agreement.
In Adra, Judge Manousaridis said as follows at [20]:
I propose to make orders similar to the declarations Judge Cameron made in Volkswagen Financial Services Australia Pty Limited v Tate. 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.
The agreement before me is relevantly in the same form as the agreement Judge Cameron considered in Tate. Clause 9.3 of the Agreement itself contractually provides sufficient legal basis for the Applicant to take possession of the Vehicle. I am satisfied that s. 123 of the PPS Act permits the Applicant to seize collateral security as long as it is undertaken by a method permitted by law (Bank of Queensland v Star Trek [2019] NSWSC 1712, [16] (Adamson J).
WHAT ORDERS SHOULD BE MADE?
I intend to adopt the same approach Judge Cameron adopted in Tate at [20] to [22], and consider it appropriate that I make declarations that provide a clear statement of the Applicant's right to possession in relation to the Vehicle.
In circumstances in which it appears to me that the Applicant is entitled to relief under the contract to which the PPS Act is no barrier, rather than the National Credit Code, it is appropriate to make a declaration of the Applicant’s entitlement to take possession of the Vehicle, and therefore “provide a clear statement of the applicant’s rights in relation to the Vehicle”: Tate, [21].
I will also make an order that the Applicant may enter any premises in 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 order is confined in such a way to ensure that the orders do not interfere with third parties’ rights (see: Volkswagen Financial Services Pty Ltd v Glass Shop Perth Pty Ltd [2024] FedCFamC2G 537 at [34] (Judge Ladhams), with reference to the decision of Fagan J in Senworth Capital Pty Ltd v Galleria SUV Pty Limited [2022] NSWSC 1513).
The Applicant also sought a further order that the Applicant may report the Vehicle as stolen if it is unable to recover the vehicle. I have not been persuaded it is appropriate to make such an order that the vehicle is stolen because of important issues that arise in the criminal law as to serious allegations of theft. The lawyer for the Applicant was not able to point me to any authority or reasons which would support the making of such an order. As the Applicant did not identify the source of power to make such an order, I decline, in all the circumstances, to make it.
CONCLUSION
I will make declarations declaring that the Applicant is entitled to take possession of the Vehicle. I will also make a declaration that the Applicant or its lawfully appointed representative 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.
I will make a notation to my orders that the respondent may make an application under r. 17.05(2)(a) of the Rules to vary or set aside the judgment and orders that have been made in his absence.
Costs
As to costs, I will make an order as to the Applicant’s costs as sought. The Applicant itemised its costs in the amount of $5,749, by reference to Schedule 2 to the Rules. I am satisfied that the amount of $5,749 is appropriate, by reference to Item 1 of Part 1, being an amount for initiating an application ($3,147), the issuing fee ($1,960), and two short hearings at Item 9, each in the amount of $321.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of Judge Champion. Associate:
Dated: 30 October 2024
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