Volkswagen Financial Services Pty Ltd v Glass Shop Perth Pty Ltd
[2024] FedCFamC2G 537
•14 June 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Volkswagen Financial Services Pty Ltd v Glass Shop Perth Pty Ltd [2024] FedCFamC2G 537
File number: PEG 103 of 2024 Judgment of: JUDGE LADHAMS Date of judgment: 14 June 2024 Catchwords: CONSUMER LAW – application for orders under s 123 of the Personal Property Securities Act 2009 (Cth) to enter property to seize vehicle Legislation: Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 13.06(1)(e)
National Consumer Credit Protection Act 2009 (Cth) Sch 1
National Credit Code s 88
Personal Property Securities Act 2009 (Cth) ss 10, 12, 123, 206, 207
Cases cited: Bank of Queensland Limited v Star Trek Pty Ltd [2019] NSWSC 1712
Riseley v Toyota Finance Australia Ltd [2021] FCA 1566
Senworth Capital Pty Ltd v Galleria SUV Pty Ltd [2022] NSWSC 1513
Volkswagen Financial Services Australia Pty Limited v Tate [2024] FedCFamC2G 491
Division: Division 2 General Federal Law Number of paragraphs: 42 Date of hearing: 20 May 2024, 5 June 2024 Place: Perth Counsel for the Applicant: Mr K Lee Solicitor for the Applicant: Celtic Legal Respondents: No appearance by or for the respondents ORDERS
PEG 103 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: GLASS SHOP PERTH PTY LTD (ACN 169 764 765) AS TRUSTEE FOR GLASS SHOP AUSTRALIA (ABN 37 158 772 384)
First Respondent
SHANNON WISE
Second Respondent
ORDER MADE BY:
JUDGE LADHAMS
DATE OF ORDER:
14 JUNE 2024
THE COURT ORDERS THAT:
1.The respondents deliver, surrender and/or provide the location of a 2016 Mercedes-Benz Motor Vehicle VIN: WDB9066332P206456, Engine Number: 65195533135679, (the Vehicle) to the applicant and/or its agent.
2.The applicant and/or its duly authorised agent be permitted to take reasonable steps in order to take possession of the Vehicle from the following premises:
(a)XX XXXXX X Street, XXXXX X in the State of Western Australia;
(b)X XXXXX X Street, XXXXX X in the State of Western Australia; or
(c)any other premises in Australia over which the first respondent and/or the second respondent has apparent control and at which the Vehicle is reasonably believed to be located.
THE COURT NOTES THAT:
A.Pursuant to r 13.06(1)(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), the Court proceeded with the hearing of this matter in the absence of the respondents.
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 LADHAMS:
INTRODUCTION
The applicant and first respondent entered into a loan agreement for the purchase of a motor vehicle by the first respondent. The second respondent, who is the director of the first respondent, is guarantor for the loan agreement. The respondents defaulted on their obligations under the loan agreement and the applicant commenced proceedings in this Court on 2 April 2024 seeking, amongst other things:
(a)orders under the provisions of the National Credit Code (Code) in Schedule 1 of the National Consumer Credit Protection Act 2009 (Cth), to authorise the applicant or its agent to enter residential premises to take control of a 2016 Mercedes-Benz Sprinter, identified by VIN: WDB9066332P206456 and Engine No 65195533135679 (Vehicle);
(b)an order that the applicant is entitled, pursuant to s 123 of the Personal Property Securities Act 2009 (Cth) (PPS Act), to enter premises for the purpose of taking possession of the vehicle; and
(c)an order that the respondents pay the applicant’s costs of this proceeding.
For reasons explained later in this judgment, the applicant no longer seeks orders pursuant to the provisions of the Code, and instead seeks relief under s 123 of the PPS Act and costs.
PROCEDURAL HISTORY BEFORE THIS COURT
The applicant commenced proceedings in this Court on 2 April 2024 by filing an application together with an affidavit of Brendan Long.
The matter first came before the Court on 24 April 2024. There was no appearance by or for the respondents on that occasion. I adjourned the directions hearing until 6 May 2024 and I included a notation in the Order I made on that occasion to put the respondents on notice that, if there was no appearance by or for the respondents at the next directions hearing, the Court may consider making final orders without first giving the respondents a further opportunity to be heard.
The matter came before me again on 6 May 2024. There was again no appearance by or for the respondents and the applicant’s lawyer requested that I proceed to consider the matter in the absence of the respondents pursuant to r 13.06(1)(e) of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (GFL Rules). I agreed to do so, but in the course of hearing the applicant’s submissions, I raised some concerns as to whether the default notice annexed to Mr Long’s affidavit complied with the requirements of s 88 of the Code. I stood the matter down to allow the applicant’s lawyer an opportunity to consider this matter further and, when the hearing resumed, the applicant’s lawyer indicated that the applicant no longer sought relief under the Code, but still sought the relief under the PPS Act.
The applicant’s written submissions filed on 23 April 2024 contained only passing mention of s 123 of the PPS Act, simply mentioning that the applicant seeks an order pursuant to s 123 of the PPS Act and extracting s 123(1) of the PPS Act. I indicated to the applicant’s lawyer that the Court would be assisted by written submissions addressing s 123 of the PPS Act and made an Order adjourning the matter to a hearing on 20 May 2024, requiring the applicant to file further submissions, requiring the respondents to file a notice of address for service, a response and any affidavits and submissions on which they intend to rely, and requiring the applicant to serve a copy of the Order on the respondents. The Order again included a notation that, if there was no appearance by or for the respondents at the hearing, the Court may consider making final orders at the hearing without first giving them a further opportunity to be heard.
The applicant filed further written submissions ahead of the hearing but the respondents did not file any documents and did not appear at the hearing on 20 May 2024.
The further written submissions filed by the applicant were not as helpful to the Court as I had hoped. At the hearing on 20 May 2024, I asked the lawyer for the applicant to address:
(a)the matters of which the Court would need to be satisfied to grant relief under s 123 of the PPS Act;
(b)the specific evidence that the applicant relied on to show each of those matters was satisfied; and
(c)the precise form of orders that the applicant would like the Court to make.
At the applicant’s lawyer’s request, I adjourned the matter part-heard and gave the applicant a further opportunity to file further written submissions on those matters. The applicant filed further written submissions on 24 May 2024.
The hearing of the matter resumed on 5 June 2024. Once again, there was no appearance by or for the respondents. I was satisfied, on each occasion the matter came before the Court, that it was appropriate to hear the matter in the absence of the respondents under r 13.06(1)(e) of the GFL Rules. I have considered the affidavits of service filed on behalf of the applicant, including:
(a)the affidavit of Norman Chan filed on 23 April 2024;
(b)two affidavits of Teonee Lorenzen-Taylor filed on 23 April 2024;
(c)the affidavit of Leahra McKendrick filed on 23 April 2024;
(d)the affidavit of Teonee Lorenzen-Taylor filed on 2 May 2024;
(e)the affidavit of Teonee Lorenzen-Taylor filed on 16 May 2024;
(f)the affidavit of Leahra McKendrick filed on 16 May 2024;
(g)the affidavit of Leahra McKendrick filed on 24 May 2024; and
(h)the affidavit of Emma O’Brien filed on 24 May 2024.
Based on these affidavits, I am satisfied that both respondents have been properly notified of these proceedings and the various listings in this matter. The respondents have not provided any explanation for their failure to appear and have not engaged with the Court at any stage of this proceeding.
FACTUAL BACKGROUND
The factual matters relevant to the resolution of this proceeding are set out in the affidavit of Brendan Long filed on 2 April 2024. Based on this affidavit, I am satisfied that:
(a)On 6 May 2022 the respondents executed a chattel loan and mortgage agreement with the applicant to finance the purchase of the Vehicle (Agreement). The first respondent was named as the borrower and the second respondent signed the agreement on behalf of the first respondent and was also the guarantor of the loan.
(b)Pursuant to the Agreement, the respondents were required to repay the purchase price of the Vehicle by way of 59 monthly payments of $807.95 and one final payment of $808.12.
(c)The applicant registered a security interest against the Vehicle on the Personal Property Securities Register (PPSR) on 11 May 2022.
(d)In or around June 2023, the respondents defaulted on their obligation to make payments under the Agreement.
(e)The applicant issued default notices to each of the respondents on 27 June 2023, requiring the default to be rectified within 14 days.
(f)The respondents did not rectify the default as required by the default notices and the respondents have not made any monthly payments since 2 June 2023.
APPLICATION FOR RELIEF UNDER THE PPS ACT
Jurisdiction of the Court
The applicant seeks an order under s 123 of the PPS Act. Subsection 123(1) of the PPS Act provides:
A secured party may seize collateral, by any method permitted by law, if the debtor is in default under the security agreement.
Justice Besanko considered whether the Federal Circuit Court had jurisdiction to make orders similar to those sought by the applicant in the present case in Riseley v Toyota Finance Australia Ltd [2021] FCA 1566 (Riseley). In that judgment, his Honour said at [19]-[22]:
19As I have said, I raised the question of the power of the Federal Circuit Court to make the orders with the solicitor for Toyota Finance. I did so because the first order of the Federal Circuit Court states that it was made pursuant to s 123 of the Act. That section provides, relevantly:
(1)A secured party may seize collateral, by any method permitted by law, if the debtor is in default under the security agreement.
Note: For seizure of accessions, see sections 95 to 97.
On the face of it, this section gives the secured party a right which it may exercise, not power or jurisdiction to the Court.
20Section 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.
21Toyota Finance referred to the decision of the Supreme Court of New South Wales in Bank of Queensland Limited v Star Trek Pty Ltd [2019] NSWSC 1712 (Bank of Queensland v Star Trek) in which Adamson J said that there was support for a secured party who falls within s 123 approaching the Court to obtain authority from the Court that its methods are unquestionably “permitted by law” within the meaning of s 123. Justice Adamson considered that there was support for the bank’s approach in Duggan A and Brown D, Australian Personal Property Securities Law (2nd ed, 2016, LexisNexis Butterworths) at [12.36]. In the circumstances, her Honour considered that the secured creditor in that case had established a right to declarations in property and an entitlement to seize property. In this case, declarations were not actually made by the Federal Circuit Court, but it seems that declarations could have been made following the authority of Bank of Queensland v Star Trek. Justice Adamson went on to say that where it was necessary to gain entry and access to property for the purposes of seizing it, the debtor could be restrained from preventing the secured party from doing those acts. Her Honour said (at [18]):
I regard these orders as appropriate ancillary orders to permit the Bank to enforce its security, to require Star Trek to allow this to occur and to require the Trustee to grant entry and access to the Matraville property for that purpose.
22I consider the orders made in this case to be in the nature of orders which follow from declarations that could have been made by the Court had they been sought. A similar approach has been adopted in other cases: BOQ Credit Pty Ltd v Chatah [2017] NSWSC 1444; Porter Equipment Australia Pty Ltd & anor v Barton Ventures Pty Ltd & anor; Porter Equipment Australia Pty Ltd v Tyremil Pty Ltd & ors [2018] QDC 87. In the circumstances, it seems that there was power to make the order.
I am satisfied, based on this consideration, that this Court has jurisdiction to consider granting to the applicant the relief sought in this proceeding under the PPS Act. This Court, like the previous Federal Circuit Court, has jurisdiction with respect to a ‘PPS matter’, subject to a limit on its jurisdiction preventing it from awarding an amount for loss or damage that exceeds $750,000: item 2, s 207 of the PPS Act. ‘PPS matter’ is defined in s 206(1) in the following way:
This Part deals with the jurisdiction of a court with respect to a matter (a PPS matter):
(a) arising under a provision of this Act authorising an application to be made to a court; or
(b)otherwise arising in relation to this Act, other than a matter in respect of which the Federal Court or the Federal Circuit and Family Court of Australia (Division 2) has jurisdiction under the Administrative Decisions (Judicial Review) Act 1977; or
(c)otherwise arising in relation to a security agreement or a security interest.
I am satisfied that the present application relates to a ‘PPS matter’.
Consideration of the application
The applicant submitted that it is appropriate for the Court to grant relief under s 123 of the PPS Act considering the following matters, which are similar to the matters considered in Bank of Queensland Limited v Star Trek Pty Ltd [2019] NSWSC 1712:
(a)the applicant and the first respondent entered into the Agreement, which was the subject of a guarantee provided by the second respondent;
(b)the Agreement granted the applicant a security interest in the Vehicle;
(c)the applicant registered its security interest in the Vehicle on the PPSR;
(d)the first respondent has defaulted on repayments under the Agreement, and that default has not been remedied by the second respondent; and
(e)notice of the applicant’s intention to seize the Vehicle has been sent to the first respondent and the second respondent.
I am satisfied that it is appropriate to have regard to these types of matters, taking into account the terms of s 123 of the PPS Act and the relevant definitions in the PPS Act.
Based on the terms of s 123 of the PPS Act, I need to be satisfied that the applicant is a ‘secured party’, that the Vehicle is ‘collateral’, that the Agreement is a ‘security agreement’ and that the respondents are in default under that Agreement. I also need to consider whether the method by which the applicant wishes to seize the Vehicle is one permitted by law.
A ‘security agreement’ is defined in s 10 of the PPS Act as:
(a)an agreement or act by which a security interest is created, arises or is provided for; or
(b) writing evidencing such an agreement or act.
The term ‘security interest’ is defined in s 12 of the PPS Act. That section provides:
(1)A security interest means an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property).
Note: For the application of this Act to interests, see section 8.
(2) For example, a security interest includes an interest in personal property provided by any of the following transactions, if the transaction, in substance, secures payment or performance of an obligation:
(a) a fixed charge;
(b) a floating charge;
(c) a chattel mortgage;
(d)a conditional sale agreement (including an agreement to sell subject to retention of title);
(e) a hire purchase agreement;
(f) a pledge;
(g) a trust receipt;
(h) a consignment (whether or not a commercial consignment);
(i) a lease of goods (whether or not a PPS lease);
(j) an assignment;
(k) a transfer of title;
(l) a flawed asset arrangement.
(3) A security interest also includes the following interests, whether or not the transaction concerned, in substance, secures payment or performance of an obligation:
(a)the interest of a transferee under a transfer of an account or chattel paper;
(b)the interest of a consignor who delivers goods to a consignee under a commercial consignment;
(c)the interest of a lessor or bailor of goods under a PPS lease.
(3A) A person who owes payment or performance of an obligation to another person may take a security interest in the other person’s right to require the payment or the performance of the obligation.
(4) Without limiting subsection (3A):
(a)an account debtor, in relation to an account or chattel paper, may take a security interest in the account or chattel paper; and
(b)an ADI may take a security interest in an ADI account that is kept with the ADI.
(5) A security interest does not include:
(a) a licence; or
(b)an interest of a kind prescribed by the regulations for the purposes of this section.
(6)A security interest is not created only by an agreement or undertaking to do either of the following:
(a) to postpone or subordinate a person’s right to payment or performance of all or any part of a debtor’s obligation to another person’s right to payment or performance of all or any part of another of the debtor’s obligations;
(b)to postpone or subordinate all or any part of a secured party’s rights under a security agreement to all or any part of another secured party’s rights under another security agreement with the same grantor.
Pursuant to the Agreement, a mortgage was given over the Vehicle to secure the respondents’ obligations under the Agreement. Further, cl 4.3 of the Terms and Conditions of the Agreement provides:
Our interest in the Goods and all Proceeds is a Security Interest and this Agreement is a Security Agreement.
I am satisfied that the applicant has a ‘security interest’ in the Vehicle and that the Agreement is a ‘security agreement’ as defined in s 10 of the PPS Act.
Pursuant to s 10 of the PPS Act a ‘secured party’:
(a)means a person who holds a security interest for the person’s own benefit or for the benefit of another person (or both); and
(b)if the holders of the obligations issued, guaranteed or provided for under a security agreement are represented by a trustee as the holder of the security interest—includes the trustee; and
(c)in relation to a registration with respect to a security interest—includes a person registered as a secured party in the registration.
The applicant registered its security interest on the PPSR and is a ‘secured party’ within the meaning of s 10 of the PPS Act.
Section 10 of the PPS Act provides that ‘collateral’:
(a) means personal property to which a security interest is attached; and
(b)in relation to a registration with respect to a security interest—includes personal property described by the registration (whether or not a security interest is attached to the property).
Under the Agreement, the security interest is attached to the Vehicle and I am satisfied that the Vehicle is collateral, as defined in s 10 of the PPS Act.
As indicated above, I am satisfied based on the affidavit of Mr Long that the respondents have defaulted on their obligation under the Agreement to make repayments.
It is also appropriate to consider whether the method by which the applicant wishes to seize the Vehicle is one permitted by law. Section 123 of the PPS Act only authorises the seizure of collateral by methods permitted by law.
The applicant seeks to be permitted to take reasonable steps to take possession of the Vehicle, including from the following premises:
(a)XX XXXXX X St, XXXXX X, in the State of Western Australia;
(b)X XXXXX X St, XXXXX X, in the State of Western Australia; and
(c)any other premises in Australia at which the Vehicle is reasonably believed to be located.
I am satisfied that there is an evidentiary basis to support the applicant’s proposal to enter premises at X XXXXX X St and XX XXXXX X St to take possession of the Vehicle. The Agreement records the address for both respondents as X XXXXX X St, XXXXX X and an ASIC extract annexed to the affidavit of Ms Lorenzen-Taylor filed on 23 April 2024 shows that the principal place of business of the first respondent and the address of the second respondent are both XX XXXXX X St, XXXXX X.
Clause 9.3 of the Terms and Conditions of the Agreement sets out several options of the applicant upon default of the Agreement, one of which is to ‘enter any premises and take possession of the Goods’.
I am satisfied that the applicant or its agents may lawfully enter the premises which are noted in the evidence to be the addresses for the respondents for the purposes of seizing the Vehicle.
The question of whether the applicant should be allowed to enter any other premises is more complex. In Senworth Capital Pty Ltd v Galleria SUV Pty Ltd [2022] NSWSC 1513 (Senworth Capital), Fagan J cautioned against the making of orders that may interfere with third parties’ rights or amount to trespass without joining the third parties as defendants.
The applicant in the present case submitted that the orders sought do not relate to any third party. This submission appears to be inconsistent with the breadth of the relief sought to be able to enter any other premises. When I expressed concern to the applicant’s lawyer about the breadth of the order allowing entry to ‘any other premises in Australia at which the Vehicle is reasonably believed to be located’, the applicant’s lawyer acknowledged the Court’s concern and suggested that it could be modified to replace the words ‘any other premises in Australia’ with ‘any other premises in Australia owned by the respondents’.
Given the concerns raised in Senworth Capital regarding the possible interference with third party rights, the order sought by the applicant to allow it to enter ‘any other premises in Australia at which the Vehicle is reasonably believed to be located’ is too broad. I note that in the recent judgment of Judge Cameron in Volkswagen Financial Services Australia Pty Limited v Tate [2024] FedCFamC2G 491, his Honour made a declaration that the applicant 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 am satisfied that similar wording would be appropriate in the present case.
Form of orders sought
The applicant seeks orders in the following form:
a.An Order, pursuant to s 123(1) of the Personal Property Securities Act 2009 (Cth) (the Act) that the Respondents and/or any party in possession of the Collateral, being a 2016 Mercedes-Benz Motor Vehicle VIN: WDB9066332P206456, Engine Number: 65195533135679, (hereafter the Collateral), deliver, surrender and/provide the location of the Collateral to the Applicant and/or its Agent.
b.The Applicant and/or its duly authorised agent be permitted to take reasonable step(s) in order to take possession of the Collateral, from either of the following premises:
i. XX XXXXX X Street, XXXXX X in the State of Western Australia;
ii. X XXXXX X Street, XXXXX X in the State of Western Australia; or
iii.any other premises in Australia at which the Collateral is reasonably believed to be located.
The applicant also seeks an order for costs, but I am not certain of the precise quantum of costs sought by the applicant.
I raised the form of orders with the applicant at the hearing on 20 May 2024, noting that in some other cases before the courts, declaratory relief has been granted. The applicant submitted that it seeks orders similar to those granted in Riseley. In Riseley, after some consideration, the Federal Court accepted that this Court had the power to make orders in similar terms to those sought by the applicant in the present matter. On the basis of Riseley, I accept that it is appropriate to make orders substantially to the effect of those sought by the applicant in the present case, notwithstanding that in some other cases, declaratory relief has been granted.
I have, however, chosen to make orders using different wording to that used in the orders proposed by the applicant, as I consider it appropriate to confine the scope of the orders in two ways:
(a)I consider it appropriate to confine the scope of the first order sought so that it does not extend to third parties who may be in possession of the Vehicle, given that no third parties have been joined to this application, there is no evidence before the Court to indicate that the Vehicle may be in the possession of any third party and the applicant did not seek an order against a third party in the application; and
(b)I also consider it appropriate to limit the breadth of the third limb of the second order sought, for the reasons explained above.
CONCLUSION
For the reasons given, I am satisfied it is appropriate to grant relief to the applicant pursuant to s 123 of the PPS Act. I do not accept that it is appropriate to grant any relief under the provisions of the Code, given that the relevant notice does not comply with the requirements of s 88 of the Code.
I will hear submissions from the applicant in relation to the quantum of costs that would be appropriate in this matter.
I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Ladhams. Associate:
Dated: 14 June 2024
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