Volkswagen Financial Services Pty Limited v Dabbour & Sons Wholesalers Pty Ltd

[2024] FedCFamC2G 808

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Volkswagen Financial Services Pty Limited v Dabbour & Sons Wholesalers Pty Ltd [2024] FedCFamC2G 808

File number(s):

SYG 1396 of 2024

Judgment of:

JUDGE CAMERON

Date of judgment:

30 August 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 (Division 2) (General Federal Law) Rules 2021 (Cth) r 6.08

Corporations Act 2001 (Cth) s 109X

Cases cited:

Volkswagen Financial Services Australia Pty Limited v Feili [2024] FedCFamC2G 712

Bank of Queensland Ltd v Star Trek Pty Ltd [2019] NSWSC 1712

Riseley v Toyota Finance Australia Ltd [2021] FCA 1566

Maugham v Sharpe (1864) 144 ER 179

Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd (1999) 196 CLR 245

Division:

General

Number of paragraphs:

22

Date of hearing:

26 October 2024

Place:

Sydney and Brisbane by videoconference

Solicitor for the Applicant:

Mr B. O’Sullivan (Celtic Legal)

Counsel for the Respondent:

No appearance by or on behalf of the respondent

ORDERS

SYG 1396 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:

DABBOUR & SONS WHOLESALERS PTY LTD ACN 648 160 945

Respondent

ORDER MADE BY:	JUDGE CAMERON
DATE OF ORDER:	30 AUGUST 2024

THE COURT DECLARES THAT:

1.The applicant is entitled to take possession of the vehicle (Vehicle) bearing identification:

(a)VIN:  WAUZZZF35N1902456

(b)Engine No:  DNW035059

(c)Registration No:  NCF23A

THE COURT ORDERS THAT:

1.The applicant and its lawfully appointed representatives may enter:

(a)XXX XXXXX X Street, XXXXX XXXXX 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.

2.The Respondent pay the Applicant's costs fixed in the sum of $3,753.00.

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

1. This proceeding concerns a 2021 Audi RS Q3 with VIN: WAUZZZF35N1902456, Engine No: DNW035059 and Registration No: NCF23A (Vehicle) whose purchase by the respondent was funded by a chattel mortgage (Agreement) entered into by the parties in March 2022.  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.

2. The application initiating this proceeding sought relief under the National Credit Code (Code) but that was a mistaken approach as the Agreement was not a consumer contract of the sort governed by the Code.  An amended application filed on 2 August 2024 sought relief under s.123 of the Personal Property Securities Act 2009 (Cth) (PPS Act) instead. 

   LEGISLATION

3. Section 123 of the PPS Act 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

4. Relevantly, the Agreement provided:

   2.Payments

   2.1You 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.  You must also pay any other fees and charges levied by us to cover our costs in relation to this Agreement.

   …

   4.        Mortgage

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

   4.3Our 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 the Agreement if an Event of Default occurs.

   9.2On 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…

   9.3On 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;

   b)the Borrower is in breach of any other obligation under this Agreement;

   …

   BACKGROUND

5. The following facts, which I find, are drawn from the affidavit of Brendan Long sworn 25 June 2024.

6. On about 28 March 2022, the parties executed the Agreement to finance the purchase of the Vehicle.  The Agreement required the respondent to pay the applicant the Vehicle’s purchase price by:

   (a)59 monthly repayments of $1,391.33; and

   (b)one final payment of $1,391.31.

7. In or around June 2023, the respondent defaulted on its obligations under the Agreement by failing to pay the monthly instalment then due.  On 17 June 2023, the applicant issued the Notice to the respondent requiring the respondent to pay $1,311.66 on or before 1 July 2023.   That it failed to do.

8. 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.

   PROCEEDING IN THIS COURT

9. In its amended application, the applicant sought the following relief:

   2.An Order that the Applicant is entitled, pursuant to section 123 of the Personal Property Securities Act 2009 (Act), to enter premises for the purpose of taking possession of the 2021 Audi RS 03, VIN: WAUZZZF35N1902456, Engine No: DNW035059 and Registration No: NCF23A (Vehicle).

   4. 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)       XXX XXXXX X Street, XXXXX XXXXX XXX XXXX; or

   (b) any other premises in Australia at which the Vehicle is reasonably believed to be located.

   5.        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.

   6.        The Applicant may report the Vehicle stolen if it is unable to recover the Vehicle.

   7. The Respondent to pay the Applicant's costs of and incidental to this application.

   8.        Such further order as the Court considers appropriate.

   Service

10. The Agreement provided no basis to infer that service other than service in accordance with the Court’s rules would be adequate:  Volkswagen Financial Services Australia Pty Limited v Feili [2024] FedCFamC2G 712. The Federal Circuit and Family Court (Division 2) (General Federal Law) Rules 2021 (Cth) relevantly provide at r.6.08(2) that personal service on a corporation may be effected in accordance with s.109X of the Corporations Act 2001 (Cth), namely by leaving the necessary documents at, or posting them to, the company’s registered office. According to the affidavit of service of Emma O’Brien sworn 24 July 2024, the initiating application and supporting affidavit of Brendan Long affirmed 25 June 2024 were served in that manner. The accompanying “Notice of Filing and Hearing” stated that the matter was listed for a first court date on 26 July 2024. According to the affidavit of Teonee Lorenzen-Taylor sworn 13 August 2024, a copy of the amended application was served by posting it to the respondent’s registered office on 8 August 2024. The accompanying “Notice of Filing and Hearing” stated that the matter was listed for directions on 16 August 2024. At no time since has the respondent appeared or contacted the Court and the applicant has not suggested that the respondent has contacted it either. I am satisfied that the Court should determine the matter notwithstanding the respondent’s absence from the hearing of the application.

    CONSIDERATION

    Entitlement to Vehicle

11. In draft orders provided to the Court, the principal relief sought was recast as follows:

    1. The applicant is entitled to take possession of the vehicle (Vehicle) bearing identification:

    a.         VIN:  WAUZZZF35N1902456

    b.        Engine No:  DNW035059

    c.         Registration No:  NCF23A

12. That proposed relief is not directed at anyone in particular, as an enforceable order would be, but is instead in the nature of a declaration of right upon which orders might be based.

13. Authority holds that s.123 of the PPS Act, 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 Ltd v Star Trek Pty Ltd [2019] NSWSC 1712; Riseley v Toyota Finance Australia Ltd [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, I find, the respondent’s default has been. I find that the applicant is entitled to possession of the Vehicle and there will be a declaration to that effect.

    Seizure of Vehicle

14. 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.”

    It is appropriate in this case that an order be made under s.123 of the PPS Act authorising the seizure of the Vehicle at premises over which the respondent has control or apparent control.  In that connection, the Agreement records the respondent’s address as one in Mt Lewis, which is different from its registered office address.

15. I note that the applicant has not sought to rely on whatever rights of seizure it might, in the circumstances, have under the Agreement.

    Motor vehicle registration records

16. Amongst other relief, the amended application sought the following order:

    5. 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.

    This was developed in the draft orders submitted by the applicant to:

    3. For the purpose of the enforcement of Orders 1 and 2 hereof, Applicant and/or its duly authorised agent is 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.

17. No submissions were addressed to the propriety of such an order or even to the identity of the party or parties to whom it might be addressed.  In the circumstances, the entitlement to such relief has not been made out.

    Report of theft

18. The amended application sought an order that:

    The Applicant may report the Vehicle stolen if it is unable to recover the Vehicle

    which in the proposed orders supplied to the Court was updated to a notation that:

    The Applicant may report the Vehicle as stolen if it cannot be recovered.

19. Presumably, this relief was based on applicant having some title to the Vehicle as a consequence of the Agreement being a chattel mortgage:  Maugham v Sharpe (1864) 144 ER 179 at 187; Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd (1999) 196 CLR 245 at 261 [20]. However, despite enquiry by the Court at the hearing, an argument of that sort was not made and the basis for an assertion of theft was not identified.

20. Consequently the notation sought will not be included in the Court’s order.

    Costs

21. The applicant sought its costs of the application based on the Court’s scale as it stood prior to 4 January 2023 and the orders it proposed sought costs of $3,753.  I infer that that figure is made up of items 1 and 9(a) of the scale together with a $285 filing fee particularised in its written submissions.  Costs should follow the event and I consider the sum sought to be reasonable.  There will be an order accordingly.

    CONCLUSION

22. The applicant has made out its entitlement to seize the Vehicle and to be awarded its costs of the proceeding.  However, some of the ancillary relief it sought will not be granted as the case for granting it was not sufficiently developed.

I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Cameron.

Associate:

Dated:       30 August 2024