Volkswagen Financial Services Australia Pty Ltd v Victorian Inspection Testing and Compliancing Services Pty Ltd

[2024] FedCFamC2G 641

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Volkswagen Financial Services Australia Pty Ltd v Victorian Inspection Testing and Compliancing Services Pty Ltd [2024] FedCFamC2G 641  

File number(s):

MLG 781 of 2024

Judgment of:

JUDGE CHAMPION

Date of judgment:

19 July 2024 

Catchwords:

CONSUMER LAW – Application for orders – Jurisdiction of the Court with respect to a matter arising under the Personal Property Securities Act 2009 – Where vehicle in possession of a third party – Declaration that Applicant entitled to take possession of the vehicle – Declaration that Applicant may enter premises over which the Respondent has apparent control  

Legislation:

Personal Property Securities Act 2009 (Cth) s. 123

Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021 r. 17.05

Cases cited:

Riseley v Toyota Finance Australia Limited [2021] FCA 1566

Senworth Capital Pty Ltd v Galleria SUV Pty Ltd [2022] NSWSC 1513

Volkswagen Financial Services Pty Limited v Glass Shop Perth Pty Limited [2024] FedCFamC2G 537

Volkswagen Financial Services Australia Pty Ltd v Tate [2024] FedCFamC2G 491

Division:

Division 2 General Federal Law

Number of paragraphs:

40

Date of last submission/s:

19 July 2024

Date of hearing:

19 July 2024

Place:

Melbourne

Solicitor for the Applicant:

Mr Long of Celtic Legal

Solicitor for the Respondent:

Ms Newton of Bailey Timms Lawyers

ORDERS

MLG 781 of 2024

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

VOLKSWAGEN FINANCIAL SERVICES AUSTRALIA PTY LIMITED

Applicant

AND:

VICTORIAN INSPECTION TESTING & COMPLIANCING SERVICES PTY LIMITED (ACN 639 000 043) AS TRUSTEE FOR ABQ TRUST (ABN 39 904 319 629)

Respondent

ORDER MADE BY:	JUDGE CHAMPION
DATE OF ORDER:	19 JULY 2024

Amended pursuant to r. 17.05 of the Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021 on 29 July 2024.

THE COURT DECLARES THAT:

1.The Applicant is entitled to take possession of the 2021 Ford Ranger vehicle, bearing the below identifiers (Vehicle) and any keys to the Vehicle:

a.VIN: MPBUMFF50MX381346;

b.Engine Number: P5AT4289641;

c.Registration Number: BVN054.

2.The Applicant and its lawfully appointed representatives 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.Costs reserved.

4.The parties have liberty to apply.

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 Transcript

JUDGE CHAMPION:

1. The Respondent, Victorian Inspection Testing & Compliancing Services Pty Limited (ACN 639 000 043) as trustee for ABQ Trust (ABN 39 904 319 629), entered an agreement with the Applicant, Volkswagen Financial Services Australia Pty Ltd, to finance the purchase of a vehicle, namely a 2021 Ford Ranger vehicle, registration number BVN054 VIN: MPBUMFF50MX381346, Engine No: P5AT42896 (Vehicle). The Respondent defaulted on its obligations under the Agreement and failed to comply with a notice of default issued to it on 18 October 2023.

2. By an amended application dated 3 June 2024 the Applicant seeks orders which entitle it to take possession of the Vehicle pursuant to its contractual rights under the Agreement and an order authorising the Applicant or its lawfully appointed agent to enter premises for the purposes of taking possession of the Vehicle and its costs of the application.

3. I have been persuaded to make orders largely, but not entirely, in conformity with the orders that the Applicant seeks. 

   WHAT IS THE NECESSARY BACKGROUND? 

   The chattel loan and mortgage

4. Mr Brendan Long, solicitor for the Applicant, made an affidavit on 2 April 2024. 

5. On 27 January 2022 the Respondent entered into a Chattel Loan and Mortgage with the Applicant (Agreement) to finance the purchase of a 2021 Ford Ranger vehicle. Mr Long annexed to his affidavit copies of the following documents:

   (a)the Agreement;

   (b)a Personal Property Securities Register search certificate for the Vehicle; and

   (c)the Default Notice.

6. The Agreement relevantly stated:

   4. Mortgage

   4.1      You give us a mortgage of the Goods described in the Schedule

   …

   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 to expenses and costs…

   e.3On default we 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.

7. The Agreement required the Respondent to repay the purchase price for the Vehicle by way of:

   (a)47 monthly repayments to the applicant in the amount of $1,323.52; and

   (b)one final payment of $1,323.46. 

   The security interest

8. On 31 January 2022, 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).

9. The Personal Property Securities Register search certificate under section 174 of the PPSA reflects data contained in the PPSR as of 9 February 2024. It notes the grantor of the security interest as Victorian Inspection Testing and Compliancing Services Pty Limited - that is, the Respondent.

   The default

10. In or around September 2023 the Respondent defaulted on its obligations under the Agreement.

11. On 18 October 2023, the Applicant issued a default notice addressed to Victorian Inspection Testing and Compliancing Services Pty Ltd. It relevantly reads:

    You are currently in default of your credit contract.  Your account is currently 21 days overdue because we have not received the following agreed payments: 

    […]

    Balance outstanding                $1428.52. 

    The action necessary to remedy default 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.

12. The Respondent did not pay the arrears on or before 1 November 2023 in compliance with the default notice or otherwise remedy the default.

13. On 2 April 2024 the Applicant commenced this proceeding against the Respondent. 

    The course of the proceeding and other relevant background

14. As of 2 April 2024, the date of the originating application in this matter, Ms Wiriaya Sirachai, was the Respondent's sole director. 

15. Mr Long submitted today, 19 July 2024, that on an ASIC search, Ms Sirachai remains the Respondent's sole director.

16. At an earlier directions hearing on 7 June 2024, an affidavit of Ms Jacqueline Newton, Ms Sirachai's lawyer, made on 29 May 2024 was read. Ms Newton was Ms Sirachai's lawyer in family law proceedings. Ms Sirachai and Mr Adam Hainsworth were de facto partners and separated on a final basis on 20 September 2022.  Ms Newton deposed that Mr Hainsworth demanded that Ms Sirachai vacate a property at 50 Raglan Street, Wallan, Victoria, which had been the matrimonial home.  As is explained below, on 21 March 2024, this Court made final property orders binding Ms Sirachai and Mr Hainsworth. 

17. On 10 February 2020 Mr Hainsworth had registered the Respondent to conduct his engineering business.  Although Mr Hainsworth had established that business, and although Ms Sirachai did not recall signing any paperwork to be appointed as a director, Ms Sirachai was the Respondent’s sole named director and shareholder from the date of its registration. 

18. After separation on 18 October 2022 Mr Hainsworth set up another company with a slightly different name, Victorian Inspection Testing and Compliance Services Pty Limited (ACN 663 199 344) through which to operate his engineering business. The first company and the Respondent may be referred to as “Compliancing”.  The second company is “Compliance”. There is only that very minor difference in the names of the two companies.

19. Under Order 19 of the final property orders, following the payment of certain amounts, there was an order that Ms Sirachai, within a 60 day period, resign as a director of the Respondent, appoint Mr Hainsworth as the director of the company, and transfer her shareholding in the Respondent to Mr Hainsworth. I was informed today by Ms Newton that, as of today (19 July 2024), Ms Sirachai remains the sole director of the Respondent. 

20. Order 20 of the family law orders was as follows:

    The De Facto Husband shall assume and be solely liable for and indemnify the De Facto Wife against any liability present or contingent, including tax and bank liabilities, in respect of each of the following entities:

    (a)Inspection Testing and Compliance Services Pty Limited - ACN 663199344;

    (b)Inspection Testing and Compliancing Services Pty Limited - ACN 639000043;

    (c)ABQ Trust; and

    (d)Volkswagen finance in respect of the 2022 black Ford Ranger (BVN 054).

21. I note that despite the reference to the vehicle being a 2022 black Ford Ranger, I am satisfied it is the Vehicle in which Volkswagen, the Applicant, has a security interest in this case.  The further history is as follows. 

22. Following the breakdown of the relationship, Mr Hainsworth, on Ms Newton's affidavit, had excluded Ms Sirachai from the Wallan property.  Pursuant to a warrant for possession executed in the week commencing 8 April 2024, she had obtained vacant possession of the Wallan property.  When she regained possession of the Wallan property, the Vehicle was not there, but she located correspondence dated 22 January 2024 from Victoria Police addressed to Victorian Inspection Testing and Compliance Services Pty Limited (that is, Mr Hainsworth's new company) advising that Victoria Police had impounded the Vehicle.  In circumstances in which the Victoria Police correspondence was addressed to Mr Hainsworth's company, "Compliance", it would appear that registration of the Vehicle had been transferred by Mr Hainsworth from the company registered in Ms Sirachai's name — that is, “Compliancing” — to the company registered in Mr Hainsworth's name - that is, “Compliance”. 

23. Ms Newton deposed that she was informed by Senior Constable Scott Bilby of Victoria Police on 29 May 2024 that, on 20 May 2024, Victoria Police had released the Vehicle to Mr Hainsworth as director of “Compliance”. 

24. In all of those circumstances, on 7 June 2024, I made orders that the Respondent notify both “Compliance” and Mr Hainsworth of these proceedings, and that he may be served Court documents via Facebook Messenger, email, and SMS message. In a notation to the order, I set out that I would consider on the next court date whether Mr Hainsworth and “Compliance” ought to be joined to the proceeding. 

25. I made a further notation that I may deal with the matter to finality on the next court date (today, 19 July 2024) where there was not an attendance by “Compliance” and/or Mr Hainsworth.  On 17 July 2024, Ms Newton, the Respondent's solicitor, filed an affidavit of service that this proceeding had been brought to the attention of Mr Hainsworth and “Compliance” in accordance with my orders. 

26. When the matter was called on for hearing on 19 July 2024, I called the matter outside the Court, and there was no appearance by either Mr Hainsworth or Compliance. 

    THE LAW

27. Section 123(1) of the Personal Property and Securities Act 2009 (Cth) (PPSA) provides as follows:

    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.

28. In Riseley v Toyota Finance Australia [2021] FCA 1566, Besanko J said as follows as to the PPSA at [20]:

    Section 206 of the Act provides that Part 6.2 deals with the jurisdiction of a court with respect to a matter (a PPS matter) arising under a provision of this Act authorising an application to be made to a court; or otherwise arising in relation to this Act; or otherwise arising in relation to a security agreement or a security interest.  By reason of s 207, jurisdiction with respect to a PPS matter is conferred on the Federal Circuit Court subject to the limit of the Court’s jurisdiction in terms of an award not exceeding $750,000 or such other amount as may be prescribed by regulations. Section 10 defines a PPS matter as having the meaning given by s 206 of the Act.

29. I am satisfied I have jurisdiction as to this matter, as the application is with respect to a “PPS matter”.

    WHAT ORDERS SHOULD BE MADE? 

30. Before me today on 19 July 2024, the Applicant and the Respondent are in broad agreement that I ought to make consent orders. 

31. So far as is reasonably practicable within the ambit of the Court's powers and the proper orders to be made, I should make orders entitling Volkswagen to possession of the Vehicle.  It is of concern to me that it is apparent that Volkswagen has not been paid pursuant to the Agreement now for a period of at least nine months since September 2023 and has been unable to regain possession of the Vehicle under the Agreement.

32. Ms Sirachai or, more particularly, the Respondent, consents to orders that the Applicant is entitled to take possession of the Vehicle. She notes, however, the practical position that she is not in possession of the Vehicle. Nor is the Respondent in possession of the Vehicle because of the narrative I have recounted above. The most likely inference is that a third party, Mr Hainsworth, or, perhaps, more particularly, the company “Compliance” is in possession of the Vehicle, again by reason of the narrative set out above and by reason of the release by Victoria Police of the Vehicle to him (or “Compliance”) on or about 20 May 2024. 

33. I am satisfied that the Agreement itself contractually provides sufficient legal basis for the Applicant to take possession of the Vehicle. I note that the Agreement before me is relevantly in the same form as the agreement Judge Cameron considered in the recent decision of Volkswagen Financial Services Australia Proprietary Limited v Tate [2024] FedCFamC2G 491, in which he reached a similar conclusion at [20]. I respectfully agree with and adopt, in this case, Judge Cameron's conclusions in Tate as follows:

    … 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.

34. In this case, I consider it is appropriate that I make declarations that provide a clear statement of the Applicant’s rights to possession in relation to the Vehicle.

35. It appears to me that the declaration will, however, only bind the parties to this proceeding in a formal sense. I note that neither Mr Hainsworth nor Compliance are parties to this proceeding.  As to the making of declarations, I propose to adopt a similar approach to that Judge Cameron adopted in Tate. I raised with the parties today an issue as to the ambit of any order it was proper for me to make as to the Applicant entering premises to take possession of the Vehicle. 

36. I intend to adopt the same approach as did Judge Cameron in Tate at [20] to [22] and frame the order in terms that the court will declare that the Applicant may enter any premises 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 reason that Judge Cameron so confined the orders appears to have been because of a concern his Honour had, perhaps arising from the common law of trespass, although his Honour did not say so specifically.

37. I refer to the decision of Judge Ladhams in Volkswagen Financial Services Pty Limited v Glass Shop Perth Pty Limited [2024] FedCFamC2G 537 at [34], with reference to a decision in Senworth Capital Proprietary Limited v Galleria SUV Pty Limited [2022] NSWSC 1513, where Fagan J had cautioned against the making of orders that may interfere with third parties’ rights or amount to trespass without joining the third parties as defendants.

    CONCLUSION

38. I will make orders accordingly.

39. I note, for completeness, that the Applicant sought a further order that the Applicant may report the Vehicle as stolen if it is unable to recover the Vehicle. I have not made an order to that effect in the absence of being pointed to any appropriate statutory authority or other power of the Court which means that it is appropriate for the Court to frame an order in those terms.

40. Finally, the Applicant sought that the costs be reserved and there be liberty to apply, should the Applicant be able to locate and recover possession of the Vehicle in the difficult circumstances I have outlined above. These orders were not published in the sealed copy of the orders distributed on 19 July 2024 due to accidental slip or omission. The orders have now been amended to include such orders pursuant to r. 17.05(h) of the Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021.

I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Champion.

Associate:

Dated:       19 July 2024