ACT CIVIL & ADMINISTRATIVE TRIBUNAL

KAUFMANN v BRADDON AUTOMART PTY LTD AND ORS (Civil Dispute) [2017] ACAT 29

XD 181/2016

Catchwords: CIVIL DISPUTE – bailment contract for reward – breach of contract - Australian Consumer Law – breach of guarantees for goods and services – unconscionable conduct – goods rejected and refund payable – damages for fines paid by consumer

Legislation cited: ACT Civil and Administrative Act 2008 s 18Australian Consumer Law ss 2, 3, 20, 21, 22, 52, 224, 227, 236, 244, 259, 261, 263, 267Competition and Consumer Act 2010 (Cth) sch 1Fair Trading (Australian Consumer Law) Act 1992 ss 9, 33National Consumer Credit Protection Act 2009 (Cth) sch1National Credit Code ss 5, 88Sale of Motor Vehicles Act 1977 ss 2, 3, 6, 7, 9, 38, 48, 67, 71

Cases cited: Australian Competition and Consumer Commission v CG Berbatis Holdings and Others (2003) 197 ALR 153Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682Blades v Higgs (1861) 10 BC (NS) 713Briginshaw v Briginshaw (1938) 60 CLR 386 Citizens Co-operative Assurance Company of Australia Ltd (1931) 46 CLR 41Company of Australia Ltd (1931) 46 CLR 41Colonial Mutual Life Assurance Society Ltd v Producers and Mutual Life Assurance Society (1931) 46 CLR 41Downes v Smith [2014] QCATA 350Kovac v The Australian Croatian Club Ltd [2014] ACAT 41Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623Marks v GIO Australia Holdings Ltd (1998) 196 CLR 949Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101Ltd

List of Papers/Texts Cited: McEniery, Contracts - Bailment, The Laws of Australia, TLA

Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed)

Tribunal: Senior Member L Beacroft

Date of Orders: 21 April 2017Date of Reasons for Decision: 21 April 2017

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ACT CIVIL & ADMINISTRATIVE TRIBUNAL XD 181/2016

BETWEEN:

CRAIG MICHAEL KAUFMANNApplicant

AND:

BRADDON AUTOMART PTY LTDFirst Respondent

CHRISTOPHER A CLEARIHAN T/ABRADDON AUTO MART

Second Respondent

SOLAR SOLUTIONS INTERNATIONAL PTY LTDThird Respondent

TRIBUNAL: Senior Member L Beacroft

DATE: 21 April 2017

ORDER

The Tribunal orders that:

1. The third respondent holds title to the car and is at liberty to dispose of it in any

way they see fit.

2. The respondents are to pay the applicant damages of $1422.00.

3. The respondents are to refund the applicant $2882.00.

4. The respondents are to pay the applicant’s filing fee of $140.00 and search fee

of $9.00.

5. The respondents will comply with Orders 2, 3 and 4 by close of business

26 May 2017 by transferring the total sum of $4453.00 to a bank account

which the applicant advises them of.

………………………………..Senior Member L Beacroft

REASONS FOR DECISION

Background

1. On 13 February 2014 the applicant, Craig Kaufmann, entered into an

arrangement for a car. The arrangement was made with a business named on the

Tax Sales Invoice as Braddon Auto Mart Pty Ltd (ABN 22 138 849 788)1 (the

first respondent), which trades at 37 Mort St Braddon ACT (the business

premises). The second respondent is Mr Christopher A Clearihan the sole

director of the first respondent,2 and he is also registered as an individual/sole

trader (ABN 98 652 001 552) trading as Braddon Auto Mart.3 The third

respondent, Solar Solutions International Pty Ltd (ABN 72 098 024 296), was

added by consent of the parties as a respondent during the proceedings and was

the owner of the car at the time the applicant signed the contract.4 The third

respondent trades as Braddon Auto Mart and Braddon Car Mart5 at the same

business premises as the first respondent, and has as its sole director Ms Cheryl

Love, who was authorised to represent all the respondents in these proceedings.

The third respondent holds Motor Vehicle Dealer License Number 17000568.6

An issue in the matter was what liability each respondent had, if any. This issue

is considered later below (see paragraphs 19 to 20, 52 to 55), but until then these

reasons simply refer to ‘the respondents’.

Chronology of key events

2. The arrangement was put in place on 13 February 2014. The applicant with his

partner, Ms Sarah Lynch, attended the business premises, where the second

1 Tax sales invoice 5826, dated 13 February 2014, attachment B, response – civil dispute, received 16 May 2016; ASIC Company Search extracted 16 February 2016

2 Current company extract, ASIC, extracted 16 February 2016, attachment to applicant’s civil dispute application dated 16 February 2016

3 ABN lookup, Australian Business Register, extracted 16 February 2016, attachment to applicant’s civil dispute application dated 16 February 2016

4 Statement of vehicle registration history, printed 2 May 2016, attachment E, response – civil dispute, received 16 May 2016

5 Current organisation extract, ASIC, extracted 20 December 2016, attachment to respondents submission dated 20 December 2016

6 Public register business and industry licensing, ACT office of regulatory services, search result, accessed 31 January 2016, at http://actoft.sbcit.com.au/LicenceSearch.asp; Sale of Motor Vehicles Act 1977, section 6

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respondent, Mr Clearihan, assisted the applicant to choose the car, and Ms Love

prepared the paperwork. The applicant took possession of the car that day. The

arrangement involved the applicant using the car, a RAV 4, and paying it off

over time. On 7 May 2015 the applicant was stopped by a police officer and

fined for using an unregistered and uninsured vehicle, and he paid $699.00 for

each fine.

3. On 16 February 2016, the applicant applied to the ACT Civil and

Administrative Tribunal (the Tribunal) for re-imbursement for out-of-pocket

expenses for his application, re-imbursement for the total sum he paid for two

traffic infringement fines ($1398.00), and other orders concerning final

repayments for the vehicle and transfer of the ownership to the applicant by the

respondents. A preliminary conference was conducted by ACAT on

4 April 2016 between the parties to consider whether the dispute would settle

and, if not, to issue directions for hearing. The matter did not settle.

4. On 7 April 2016 the car was repossessed by the respondents. As a result, in an

amended application received 27 April 2016 by ACAT the applicant amended

the orders he sought. He sought re-imbursement of the cost of the fines, a refund

of the money he had paid for the car, and other compensation taking into

account the vehicle had been recovered by the respondents and for alleged

breaches of various legal requirements by the respondents. The applicant

claimed compensation of $4553.00, plus out-of-pocket expenses and interest,

and he also raised that the respondents were liable for unconscionable conduct

due to the repossession of the car.

5. A response was filed dated 29 February 2016, denying the applicant’s claim and

cross claiming for a sum of money. A further response was filed on

16 May 2016 cross-claiming to the maximum allowed then under section 18 of

the ACT Civil and Administrative Act 2008 (the ACAT Act), in the sum of

$10,280, which was mostly made up of a claim for “loss of profit from car sales

from November 2014” due to the applicant’s alleged default in payments

against the repayment schedule.7 This cross-claim was later amended by the

respondents to damages for the remaining debt owed by the applicant for the car

7 Counter-claim attached to response, dated 16 May 2016

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and the costs to repair and to prepare the car for re-sale in the sum of $5587.448

plus out-of-pocket expenses. The respondents sought an order for the third

respondent to be declared the owner of the car and to be able to sell the car and

have its sale price credited against the latter damages claimed by the

respondents.

Conduct of the hearing

6. A hearing was held on 26 October 2016. The applicant was self-represented and

accompanied by his partner who also gave evidence. Ms Love, the sole director

of the third respondent, had authority to act for all respondents and gave

evidence. All the respondents were legally represented by Mr Harry Nyman,

Milford Haseldine and Williams, Solicitors and Accountants.

7. Prior to the hearing the parties attached various evidence to their applications

and responses filed with the Tribunal. These documents and attached evidence

were provided to the other parties. After the hearing the respondents provided a

final submission dated 20 December 2016.

8. During the proceedings the third respondent was joined by consent. As

explained above, Solar Solutions International Pty Ltd was the owner of the car

at the time the applicant signed the contract,9 trades as Braddon Auto Mart at

the business premises, and holds Motor Vehicle Dealer Licence Number

17000568.

Uncontested and contested issues

9. The uncontested facts were as follows:

(a) The two documents setting out the arrangement between the parties are a

‘Tax Sales Invoice 5826’ with a heading ‘Braddon Auto Mart Pty Ltd’

which is signed by both parties on 13 February 2014,10 and a ‘Repayment

Form’ dated 13 February 2014 signed by the applicant which records a

first payment of $200 and then subsequent repayments.11

8 Respondent submissions, received 20 December 2016, page 59 Statement of vehicle registration history, printed 2 May 2016,

attachment E, response – civil dispute, received 16 May 2016 10 Document B, attached to the response dated 16 May 201611 Document C, attached to the response dated 16 May 2016

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(b) The vehicle was unregistered and uninsured for various periods of time

while the applicant had it in his possession, and on 7 May 2015 the

applicant received two infringement notices from the Australian Federal

Police in the total sum of $1398.00, which he paid.12

(c) The vehicle was repossessed from the applicant on 7 April 2016 and there

is a police incident report about this repossession.13

(d) The amount owed by the applicant, taking into account repayments he

made for the price of the car and registration, varied between documents

provided by the parties. The applicant’s submissions suggested that

$1149.0014 was owed for the car, although reconciliation by the applicant

was difficult. The respondents’ submissions varied about the amount

owed, from $1117.00 to $1653.00.15

10. The contested issues are set out below:

(a) What was the nature and terms of the arrangement between the parties?

(b) What if any remedies including compensation are appropriate for the

applicant, and against which respondents?

(c) What if any remedies including compensation are appropriate for each of

the respondents against the applicant?

Legislation

11. The respondents contended that the arrangement with the applicant was a

bailment contract for reward (the contract). The applicant contended that the

Australian Consumer Law (ACL) applied to the contract and that the

respondents had breached this law. This section summarises relevant law on

bailment and on the ACL.

12 Document H, amended civil dispute application, dated 16 February 2016

13 Australian Federal Police, case 5944564, document G attached to the applicant’s amended application, received 27 April 2016

14 Applicant’s amended civil dispute application, dated 16 February 2016 15 Respondents’ claim for unpaid debt for car ranged from $1117.00 to

$1653.00 - compare letter from the third respondent to the applicant, dated 19 October 2015, attachment C to applicant’s amended civil dispute application, dated 27 April 2016 with schedule of repayments, attachment D, attached to respondent’s response dated 16 May 2016 and respondents’ submission dated 20 December 2016

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12. In summary, there is a well-developed common law on bailment which is

covered in most textbooks on contracts. The essence of a bailment is that

possession of the thing, in this case the car, is transferred by consent from the

bailor (in this case the respondent/s) to the bailee (the applicant in this case),

and ownership of the thing remains with bailor.16 Bailments can arise as a result

of contract for sale.17 Bailments for reward, in this case the payment of the price

for the car, have more onerous standards of care by the parties than those not for

reward for example when a thing is lent for no cost.18 Contractual bailments are

“governed not only by the law of bailment …but also by the …parties’ own

contract.”19 A bailor’s duty is to ensure that the thing is “fit for normal

purpose.”20 While it is not necessarily a bailee’s duty to insure the thing, the

bailee’s possession constitutes an insurable interest.21

13. Bailments can be terminated by virtue of a term of the contract for example the

period of the bailment expires, or by agreement. The bailee under a contract for

reward for a fixed term has a right to “quiet possession” of the thing bailed,

unless that possession is “lawfully disturbed by the bailor (such as might occur

if the bailee defaults)…”22 The bailment can be terminated due to a bailee’s

wrongful act, for example misusing or damaging the goods. However in such

situations the bailment is not automatically terminated. The case of Toyota

Finance Australia Ltd v Dennis (2002) 58 NSWLR 101 sets out that “the bailor

merely gets the right to terminate it and then the right to retake possession of the

goods, provided that can occur without a breach of the peace.”23 A right to

repossession can be exercised provided that it “does not involve a trespass on

16 Pentony, Graw, Lennard and Parker, Understanding Business Law (5th

ed), paragraph 20.1, page 65417 Pentony, Graw, Lennard and Parker, Understanding Business Law

(5th ed), paragraph 20.1, page 65518 Pentony, Graw, Lennard and Parker, Understanding Business Law

(5th ed), paragraph 20.4, page 65819 Pentony, Graw, Lennard and Parker, Understanding Business Law

(5th ed), paragraph 20.4, page 65820 Pentony, Graw, Lennard and Parker, Understanding Business Law

(5th ed), paragraph 20.14, page 66521 Respondents’ Submission, 20 December 2016, citing Ben McEniery,

Contracts - Bailment, The Laws of Australia, TLA [8.5.530]22 Pentony, Graw, Lennard and Parker, Understanding Business Law

(5th ed), paragraph 20.12, page 66423 Pentony, Graw, Lennard and Parker, Understanding Business Law

(5th ed), paragraph 20.21, page 669, citing Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101

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private property.”24 If the bailor unlawfully disturbs the bailee’s possession

under a contract for reward for a fixed term, the bailor may be liable for

damages in “trespass, conversion and/or breach of contract.”25

14. Bailments under contract for reward may be subject to the ACL. The ACL is

contained in schedule 2 of the Competition and Consumer Act 2010 (Cth) and

related regulations. The ACL applies in the ACT pursuant to section 7 of the

Fair Trading (Australian Consumer Law) Act 1992. The Commissioner for Fair

Trading (ACT) performs various functions under this Act including receiving

complaints and investigating compliance.26 Under this Act a reference to a court

includes the ACAT.27 The ACL applies to contracts for goods or services

supplied by a supplier to a consumer, which is the case here.28

15. ‘Unconscionable conduct’ by a supplier is prohibited,29 and contraventions in

this regard may attract pecuniary penalties30 and/or damages payable to the

consumer.31 Unconscionable conduct by a supplier is indicated by a non-

exhaustive list of matters set out in section 22 of the ACL, and includes

“consideration of the manner in which …the contract is carried out…and is not

limited to consideration of the circumstances relating to formation of the

contract.”32 Recent authorities note that unconscionable conduct is not conduct

that is just “unfair or unreasonable, or what merely amounts to a hard

bargain.”33 Rather it “involves notions of serious misconduct…something which

is clearly unfair or unreasonable, and requires that the deliberate actions of the

wrongdoer show no regard for conscience…some moral fault …would be

24 Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101, per Sheller JA, Meagher JA concurring (a majority), paragraph 9, citing Blades v Higgs (1861) 10 BC (NS) 713 and a line of supportive authority

25 Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 20.12, page 664

26 Fair Trading (Australian Consumer Law) Act 1992, section 3327 Fair Trading (Australian Consumer Law) Act 1992, section 928 ACL, sections 2(1), 3 29 ACL, sections 20-2230 ACL, section 22431 ACL, sections 227, 236, 24432 ACL, section 21(4)(c)(ii)33 Pentony, Graw, Lennard and Parker, Understanding Business Law

(5th ed), paragraph 6:43, page 182; Australian Competition and Consumer Commission v CG Berbatis Holdings and Others (2003) 197 ALR 153

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involved.”34 Even if the consumer obtains less than full title, the ACL imposes a

range of guarantees that cannot be excluded by contract, for example the

supplier (even if for hire or lease only) “will not disturb the consumer’s

possession” of the goods,35 and for services a supplier will render “due care and

skill”, and supply services that are “fit for purpose” and that are “supplied

within a reasonable time.”36

16. The ACL provides for various consumer remedies against non-compliant

suppliers, including damages for contraventions by the supplier37 and non-

pecuniary remedies such as a supplier publishing an advertisement.38 The ACL

includes offences for various contraventions.

17. One of the respondents to the proceedings is a licensed motor vehicle dealer,

namely, Solar Solutions International Pty Ltd, and holds Motor Vehicle Dealer

Licence Number 17000568 trading as Braddon Auto Mart.39 As such they are

subject to the requirements that apply to a licensed dealer under the Sale of

Motor Vehicles Act 1977 (SMV Act). A contract, if it is a “hire purchase

agreement” under the SMA Act,40 is deemed to be a sale under the SMA Act

(section 3). A requirement under the SMV is that a person shall not present as a

dealer unless they are licensed and operating at the licensed premises.41

18. The Commissioner for Fair Trading regulates licenses under the SMV Act. A

corporation is eligible to hold a license if the executive officer, in this case the

sole director, Ms Love, is a suitable person.42 If the executive officer of a

corporate licensee is not a suitable person this is grounds for occupational

34 Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 6:43, page 184, citing Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682, per Gordan J at [113-115]

35 ACL, section 52(3) and (4)36 ACL, sections 61-62 37 ACL, part 5-238 ACL, section 24639 Public Register Business and Industry Licensing, ACT Office of

Regulatory Services, search result, accessed 31 January 2016, at http://actoft.sbcit.com.au/LicenceSearch.asp; Sale of Motor Vehicles Act 1977, section 6

40 Sale of Motor Vehicles Act 1977, section 2 (Dictionary), section 341 Sale of Motor Vehicles Act 1977, section 742 Sale of Motor Vehicles Act 1977, section 9

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discipline.43 Certain contraventions of the law by a licensed dealer are relevant

to their suitability as a license holder.44

19. Where there are multiple parties allegedly liable for an alleged contravention of

law, as was the case here, the issue of vicarious liability arises. In the case of

Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101 there were four

defendants in a case of an alleged assault on the consumer’s wife. It allegedly

occurred when one of the defendants, who was the agent of Toyota,

subcontracted another party to take possession of the car due to a breach of a

hire purchase agreement. An individual who controlled the sub-contractor then

attempted to repossess the car, and the wife of the consumer alleged she was

assaulted by him. An issue in the case was whether any of the defendants were

vicariously liable for any assault committed by the individual who controlled

the sub-contractor.

20. In the absence of any employment relationship between the defendants, the

court in Toyota Finance Australia Ltd v Dennis considered the nature of the

relationships between the defendants, particularly the level of control they had

over the individual who allegedly committed the assault. In that case the Court

unanimously found that, while Toyota had “delegated the task of …

repossession”, it had not authorised any of the other defendants “to engage on

its behalf in tortious conduct.”45 (such as assaulting the consumer’s wife). In his

judgment, Sheller JA cited as precedent the case of Colonial Mutual Life

Assurance Society Ltd v Producers and Citizens Co-operative Assurance

Company of Australia Ltd (1931) 46 CLR 41. Sheller JA distinguished the facts

in Toyota Finance Australia Ltd v Dennis from those in Colonial Mutual Life

Assurance Society Ltd where Dixon J did find vicarious liability as follows:

…the liability of a master for the torts committed by its servant …is not imposed upon the appellant by the agency agreement [alone]…

…

In most cases in which a tort is committed in the course of the performance of work for the benefit of another person, he cannot be

43 Sale of Motor Vehicles Act 1977, section 4844 Sale of Motor Vehicles Act 1977, section 2 (Dictionary), section 71,

particularly section 71(7)(c)45 Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101, Sheller

JA, at [116]

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vicariously liable if the actual tortfeasor is not his servant and he has not directly authorized the doing of the act which amounts to a tort … The independent contractor carries out his work, not as a representative but as a principal. [However in this case] [a] difficulty arises when the function entrusted is that of representing the person who requests its performance in a transaction with others, so that the very service to be performed consists in standing in his place and assuming to act in his right and not in an independent capacity…46

Applicants’ contentions

21. The applicant has the burden of proving his case on the balance of probabilities.

His contentions on the three contested issues in paragraph 10 above are

summarised below. Due to the nature of his allegations, particularly his claim

that the respondents engaged in unconscionable conduct, the Tribunal has taken

the view that the principle in Briginshaw v Briginshaw (1938) 60 CLR 386

applies. Professor Spender has explained that “Briginshaw is authority for the

proposition that the more serious the allegation, the more weighty the evidence

must be for the Tribunal to be satisfied that it is proven.”47 The Tribunal has

sought corroboration in the form of documentation or other evidence to support

any oral evidence given by the applicant.

22. The applicant’s initial contentions in the proceedings were summarised in a

letter from Youth Law Centre ACT to the respondents.48 In the letter the legal

basis for the arrangement was contested, whereby the registration of the car was

not to be transferred to the applicant’s name until the debt had been repaid. In

short, ownership of the vehicle was contested. Also the letter raised that the

respondents had breached various guarantees under ACL and that the applicant

may seek damages. At that stage, prior to repossession of the car, the letter

proposed that firstly the applicant pay the balance of the debt owed for the car

less the amount of the fines, and secondly that the car’s ownership be

transferred to the applicant.49

46 Colonial Mutual Life Assurance Society Ltd Dixon J, pp48-49, cited in Toyota Finance Australia Ltd v Dennis (2002) 58 NSWLR 101, Sheller JA at [117]

47 Kovac v The Australian Croatian Club Ltd [2014] ACAT 41 at [94]48 Letter from Youth Law Centre to Braddon Auto Mart, dated 19

November 2015, attachment document D, amended civil dispute application, dated 16 February 2016

49 Letter from Youth Law Centre to Braddon Auto Mart, dated 19 November 2015, attachment document D, amended civil dispute application, dated 16 February 2016

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23. Since the car was not in the name of the applicant, the applicant argued that the

respondents were liable for the fines. The applicant contended that the

respondents’ continuing ownership of the car even after the applicant took

possession of it meant that the respondents received all communications about

registration for the car from the regulator. The applicant also contended that

there was an agreement that the respondents would provide a service to

maintain the registration of the car. The applicant and his partner, Ms Lynch, in

their oral evidence denied ever receiving a document provided during the

proceedings by the respondents titled ‘Terms and Conditions’, which states

among other terms that “Registration is your responsibility.”50 The document is

not signed by either party, even though it has a format to allow for this.

24. The applicant pointed out that whether he was in arrears or not, the respondents

had paid for three renewals in 2014, in May, September and December 2014.51

But the respondents failed to do so in a timely manner for the renewal due on

7 March 2015.52 The applicant paid the registration fee to the respondents on

4 March 2015,53 and this was received in the bank account of the first

respondent on 5 March 2016, with the correct tax sales invoice number as the

identifier, that is 5826.54 However the respondents only paid the registration on

11 May 2015.55 The applicant gave oral evidence that he rang the office of the

respondents to advise them he had made the payment for registration, and

although he did not speak to Ms Love he said he didn’t know he had to speak to

Ms Love.

25. After the applicant had begun these proceedings and days after a conference

between the parties conducted by ACAT, the car was repossessed by the

respondents (see paragraph 9 above). The letter from the respondents to the

applicant dated 4 December 2015, in reply to their letter from Youth Law

50 Attachment to response – civil dispute dated 3 March 201651 Repayment form, document C, attached to the response dated 16 May

201652 Statement of vehicle registration history, dated 2 May 2016,

attachment E, response – civil dispute, dated 16 May 201653 NAB payment receipt, $280.00, dated 4 March 2015, attachment to

applicant’s amended civil dispute application, dated 16 February 201654 NAB account balance summary, attachment G, response – civil

dispute, dated 16 May 201655 Statement of vehicle registration history, dated 2 May 2016,

attachment E, response – civil dispute, dated 16 May 2016

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Centre, said “Could you please ask Craig to contact us immediately, return the

car to Braddon Auto Mart….”56 But the applicant contended that this was not a

notice to repossess, and he did not know that the respondents intended to do so.

The police incident report for the repossession event57 described an incident

lasting from 10:05am to 11am, “in the driveway of the premises”, that the

applicant “refused” to hand over the keys so the car was removed by “dragging”

it onto the tow truck and that “on one occasion the vehicle was moving when

Ms Lynch [the applicant’s partner] was half inside removing property.”58 The

police described the incident as a “disturbance” involving a “verbal fight over

the ownership of the car.”59 The applicant and Ms Lynch gave oral evidence that

they didn’t refuse to give over the keys, but in the stress of the repossession

couldn’t locate them in a hurry. The police incident report says “keys to be

dropped off at a later date”60, and at a later date the applicant handed the keys

over to the respondents.

26. The applicant and his partner gave oral evidence that the repossession took

place unexpectedly, on a work and school-day morning, lasted about an hour

and caused the neighbours to observe the situation, indeed some neighbour’s

cars were blocked from exiting the complex. They gave evidence that the event

was embarrassing and very stressful to them.61 They were inconvenienced in

that they couldn’t pick up their child from school. They had to quickly purchase

another vehicle, and they paid $1200.00 for this replacement vehicle. The

applicant claimed that the respondents breached legal requirements for

repossession and also trespassed on their private land. Ms Lynch gave evidence

that she entered the car to retrieve their child’s personal items however the

respondents were moving the car while she did this. After the car was

repossessed, as mentioned above (paragraph 9) the applicant amended his

56 Document E, applicant’s amended civil dispute application, dated 16 February 2016

57 Australian Federal Police, case 5944564, document G attached to the applicant’s amended application, received 27 April 2016

58 Australian Federal Police, case 5944564, document G attached to the applicant’s amended application, received 27 April 2016

59 Australian Federal Police, case 5944564, document G attached to the applicant’s amended application, received 27 April 2016

60 Australian Federal Police, case 5944564, document G attached to the applicant’s amended application, received 27 April 2016

61 Oral evidence of applicant and Ms Sarah Lynch, hearing 26 October 2016

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application to include a claim arising from the repossession, being a claim for

damages due to breaching the contract, breaching the ACL and unconscionable

conduct.62

Respondent’s contentions

27. The respondents’ contentions against the three issues listed in paragraph 10

above are summarised below.

28. In the respondents’ initial response63 they contended that the applicant signed a

financial agreement for the vehicle, and made irregular payments. The

respondents contended that they were not responsible for the payment of

registration. They contended that they had a right to repossess the car and that it

was an appropriate action given the applicant’s poor payment history.

29. After seeking legal assistance, the respondents filed an amended response. They

contended that the only respondent relevant to the applicant’s claims is the third

respondent, since that entity owned the vehicle at the time the applicant entered

into a contract. In regard to issue (a), they contended that the arrangement

between the parties was a “favour” and a “poor business deal”, and legally was

a bailment “for reward and multiple advantage”64: “the signed document [tax

invoice no 5826] recorded the negotiated agreement that the vehicle would be

released to the applicant on the condition that the ownership of the vehicle

would not transfer to the applicant until such time as the vehicle was paid in

full.”65 At the bottom of the tax sales invoice 5826 a paragraph titled

‘Acceptance of Contract’, was the sentence “Title is not transferable until all

monies are paid in full” and the applicant had signed this section.66 Ms Love

gave evidence that she personally wrote up the tax sales invoice and the

repayment form when the invoice was issued by Christopher Clearihan.

Ms Love also gave oral evidence that she would have given the applicant the

document titled ‘Terms and Conditions’67 and explained these terms to him,

even though she did not have a copy signed by the parties in her records. She

62 Amended civil dispute application, dated 16 February 201663 Response – civil dispute, received 16 May 2016, attachment A64 Respondents’ submissions, received 20 December 2016, page 465 Respondents’ submissions, received 20 December 2016, page 166 Tax sales invoice 5826, dated 13 February 2014, attachment B,

response – civil dispute, received 16 May 201667 Attachment to response – civil dispute dated 3 March 2016

13

gave oral evidence that she did not discuss the consequences of defaulting on

payments with the applicant.

30. The respondents contended that, at the request of the applicant’s partner, three

payments to maintain registration were made by the respondents. Any unpaid

contributions for registration were added to the debt owed by the applicant for

the vehicle – two quarterly registration fees were unpaid by the applicant but

paid by the respondents, and a third registration due 21 August 2014 was paid

by the respondents on 8 September 2014 with the applicant re-paying the

respondents for this registration fee on 16 September 2014.68 The respondents

contended that they were not responsible for payments for registration , and that

this is consistent with the bailment contract terms and law on bailment. They

also contended that the applicant did not communicate with the respondents

about having forwarded money for payment of the registration in March 2015,

and in any case even if he had his communication was too late to ensure it was

registered.69 On these bases the respondents contended that they have no

liability for the fines due to the vehicle being unregistered and uninsured.

31. The respondents contended that the letter they received from the Youth Law

Centre on behalf of the applicant, dated 19 October 2015, “amounted to a

complete repudiation of the contract… [and that the contract was repudiated

with] the complete failure to meet agreed payments and [the receipt by the

respondents of the latter letter] …stating that no further funds were owed and

the vehicle should be immediately transferred to the applicant.”70 On this basis

they contended that they had a right to repossession of the vehicle. Both

Ms Love and Mr Clearihan attended the repossession, and Ms Love confirmed

with attending police that the third respondent owned the vehicle.

32. In regard to issue (c), what remedies should be available to the respondents,

they cross-claimed on the basis that the applicant breached the duties of the

bailee. They contended that he did not return the vehicle in the same condition

as it was delivered to him “ie cleaned and unmarked paintwork, working keys

68 Statement of vehicle registration history, printed 2 May 2016, attachment E, response – civil dispute, received 16 May 2016

69 Respondents’ submissions, received 20 December 2016, page 270 Respondents’ submissions, received 20 December 2016, page 4

14

and registered.”71 Their counter claim was in the sum of $5,587.44 damages

plus out-of-pocket expenses, less the sale price of the vehicle once known.

Findings

Issue (a): What was the nature and terms of the arrangement between the parties?

33. The Tribunal accepts the evidence of the respondents that the arrangement was

a bailment contract for reward (refer to paragraphs 11 to 14 above). The

Tribunal notes that the contract was signed by the applicant but not by another

person, the applicant’s mother-in-law ‘Jo’, who is noted on the tax sales invoice

as paying $125/week towards the repayments.72 Neither party called Jo to give

evidence. During the hearing all parties approached the matter as if the contract

was valid. On this basis the Tribunal accepts that the bailment contract was

valid, and repayment by the applicant was a total of $225/week (with the tax

sales invoice noting that the applicant may be assisted in his repayments by his

mother-in-law, Jo). While the agreement did not include explicit terms about

what would happen if the applicant defaulted in his payments, and what the

repossession procedure would be, this did not make the contract invalid.73

34. While the respondents made no submissions disputing that the ACL applies

here, in the interests of clarity the Tribunal finds that the ACL applies to the

contract between the parties.

35. The Tribunal accepts the evidence of the applicant that there was an orally

agreed term to the contract that the respondents pay the registration. The ‘Terms

and Conditions’ document was not signed by either party and therefore offers

no guidance about the agreed terms of the bailment. The respondents’ behaviour

in 2014 provides evidence in support of the applicant’s contention that the

respondents agreed to be responsible for registration of the vehicle: the

respondents made three payments for registration even though the applicant was

in arrears and only paid the respondent for one of these registration fees. The

applicant relied on this agreement for the registration payment due in March

2015, which he pre-paid using the correct identifier for his sales tax invoice.

However, the March 2015 registration payment was not paid by the respondents 71 Respondents’ submissions, received 20 December 2016, page 472 Tax sales invoice 5826, dated 13 February 2014, attachment B,

response – civil dispute, received 16 May 201673 Downes v Smith [2014] QCATA 350

15

until May 2015, a delay of two months, which the respondents should have

known left the car unregistered and uninsured since they received the

registration communications from the regulator.

36. The Tribunal finds that it is irrelevant whether the applicant or his partner spoke

to Ms Love to arrange this March 2015 payment – the respondents received the

registration notices and knew when it was due or overdue, and there was an

existing pattern of behaviour established in 2014 that the applicant relied on to

confirm his view that it was a term of the contract that the respondents maintain

the registration. It is irrelevant that the applicant could have made other

arrangements for registration to be paid, a point that the respondents made. The

fact is he did not, and the respondents knew that he had not. The applicant relied

on the contractual agreement that the respondents would keep the vehicle

registered.

37. The arrangement between the parties was unusual in that there was no fees

charged, no interest payable by the applicant, no express terms about the

consequences of any default in payment by the applicant and no express end

date to the contract. The Tribunal accepts the evidence of the respondents that

they entered into the arrangement to be helpful to the applicant as a favour to

the applicants mother-in-law Jo. However, this does not mean that the contract

is beyond the law.

Issue (b): What if any remedies including compensation are appropriate for the applicant, and against which respondents?

38. The Tribunal set out a finding above that it was a term of the contract that the

respondents were responsible for the registration. In not maintaining the

registration of the car, the respondents breached various guarantees for service

under the ACL, including lack of due care and skill, services and product not fit

for purpose, and services not “supplied within a reasonable time.”74 As a

consequence of these breaches by the respondents, the applicant incurred fines

due to the unregistered state of the car in May 2015 ($1398.00), and also the

applicant and his partner paid for temporary registration for the car on

11 August 2015 in the sum of $24.00.75

74 ACL, part 3-2, sections 60-6275 Statement of vehicle registration history, printed 2 May 2016,

attachment E, response – civil dispute, received 16 May 2016

16

39. For the breach of service guarantees under the ACL in regard to the term of the

contract to maintain the registration of the car, the Tribunal awards the applicant

damages in the sum of $1422.00 for his financial loss, being the sum of the fines

that the applicant paid, plus the cost of re-registering the car to move it. More

substantial damages due to these breaches of service guarantees might have

been appropriate here. For example, it appears from the evidence that the

applicant was unaware that the respondents’ payments for registration during

2014 were untimely, leaving the car also unregistered and uninsured at various

times in 2014.76 But the Tribunal takes into account that the arrangement was

unusual and meant to be helpful to the applicant.

40. If the respondents had not repossessed the vehicle in the manner employed (see

paragraphs 25 to 26 above), it might have been that this would have been the

end of the findings and orders in these proceedings. However, the respondents

made a very serious error of judgement when they repossessed the vehicle in the

circumstances of this case.

41. Considering the law that applies to this repossession, the Tribunal finds that the

National Credit Code and law does not apply to the arrangement between the

parties because the respondents did not charge for providing the credit.77 On this

basis the Code’s requirements for repossession, asserted by the applicant, do not

apply here.78

42. In regard to the repossession, the Tribunal finds that the respondents in

repossessing the car breached further consumer guarantees under the ACL,

breached the bailment contract and engaged in unconscionable conduct.

43. The ACL provides for a consumer guarantee (even if for hire or lease only) that

the supplier “will not disturb the consumer’s possession of the goods.”79 The

Tribunal finds that this guarantee was breached by the respondents. Even if the

ACL did not apply here, under the law of bailment if the respondents had a right

to repossess the car they were required to do so without trespassing and without

76 Statement of vehicle registration history, printed 2 May 2016, attachment E, response – civil dispute, received 16 May 2016

77 National Credit Code, section 5, schedule 1 National Consumer Credit Protection Act 2009

78 National Credit Code, section 88(1)79 ACL, sections 52(3) and (4)

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causing a breach of the peace (see above paragraph 13). In this case the Tribunal

finds that the respondents had no right of repossession. The bailment contract

did not specify under what circumstances, if any, repossession might occur, and

Ms Love’s oral evidence was that the consequences of a default were not

discussed with the applicant when the contract was made. Despite this, the

respondents entered the applicant’s driveway in order to repossess the car, they

caused a disruption to the neighbourhood and they demonstrated risky

behaviour by moving the car while the applicant’s partner was in it, according

to the police incident report (see paragraphs 25 to 26 above).

44. The Tribunal accepts the evidence of the applicant that no notice was given by

the respondents to the applicant about the repossession. The Tribunal rejects the

respondents’ contentions that they had given notice – the evidence shows that

they merely requested that the applicant return the car. Also, the Tribunal rejects

the contention by the respondents that the applicant repudiated the contract in

the letter from the Youth Law Centre. Repudiation refers to an intention by a

party (in this case the applicant) to “abandon altogether, or refuse performance

of, the contract.”80 On the contrary, the relevant letter from the applicant’s

representative confirmed that there was a debt owed under the contract and it

proposed an off-set in the sum of the fines paid by the applicant. The Tribunal

finds that the respondents breached the bailment contract due to the

repossession of the car.

45. The Tribunal finds that the circumstances of the repossession demonstrate

unconscionable conduct by the respondents under the ACL.81 Unconscionable

conduct is not defined in the ACL but, as explained above (see paragraph 15),

can concern the conduct of the supplier after the arrangement was entered into.82

It refers to “serious misconduct…something which is clearly unfair or

unreasonable, and requires that the deliberate actions of the wrongdoer show no

regard for conscience…some moral fault …would be involved.”83 80 Pentony, Graw, Lennard and Parker, Understanding Business Law

(5th ed), paragraph 7.34, page 210, citing Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623

81 ACL, section 21(1)(a)82 ACL, section 22(1)(j)(iv)83 Pentony, Graw, Lennard and Parker, Understanding Business Law

(5th ed), paragraph 6:43, page 184, citing Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682, per Gordan J [113-115]

18

46. The circumstances of the repossession by the respondents in this case did not

just involve attempting to gain possession of the keys in a parking lot, as

occurred in the Toyota case. The police incident report confirms the applicant’s

evidence that the respondents engaged in serious misconduct over an hour in

duration, including entering the applicant’s driveway and removing the car from

that location, risky behaviour by moving the car while the applicant’s partner

was in it, and damaging the car by moving it without the keys. More

specifically, the matters that the Tribunal takes into account in finding

unconscionable conduct are as follows:

(a) The consumer was required to comply with a condition, namely the

repossession of the car, when it was “not reasonably necessary for the

protection of the legitimate interests of the supplier”, given the matter was

before ACAT and a relatively small percent of the price was owed on the

car.84

(b) The repossession in this case demonstrated a use of ‘unfair tactics’ in that

it was a planned event by the respondents, but unexpected for the

applicant, and involved the applicant facing an intimidating and publically

embarrassing situation for an hour, aggravated by the fact that the

respondents entered onto the applicant’s land to execute the

repossession.85

(c) The respondents did not disclose to the applicant their intention to

repossess the vehicle, and the surprise nature of the repossession was

unnecessary in all the circumstances and caused extra stress for the

applicant.86

(d) The repossession involved the respondents entering the applicant’s

driveway and moving the vehicle while the applicant’s partner was trying

to remove personal property from the car, demonstrating a disregard for

foreseeable risks to the safety of the applicant and his family.87

84 ACL, section 22(1)(b)85 ACL, section 22(1)(d)86 ACL, section 22(1)(i)(i)87 ACL, section 22(1)(i)(ii)

19

47. There remains the question of the appropriate remedies that apply here, given

the Tribunal’s findings above. Firstly, the order about ownership is considered.

The Tribunal finds that title to the car never passed to the applicant, so an order

to confirm the ownership by the third respondent is technically redundant. If the

Tribunal is incorrect about this finding about title to the car, in the alternative

the Tribunal accepts that the applicant notified the respondents in his amended

application that remedying the failure of the respondents to comply with the

consumer guarantees by returning the car was rejected by him, due to the

possible damage caused to the car during repossession. On this basis, if title

ever was held by the applicant, upon repossession it re-vested with the

respondents.88 In either case, for clarity the Tribunal makes an order that the

third respondent holds title to the car and is at liberty to dispose of it in any way

they see fit.

48. Secondly, the applicant seeks damages for his economic loss for the

respondents’ breaches of guarantees of service to maintain the registration of the

car and for breaches of contract. As the Tribunal set out earlier (see paragraph

39 above), the Tribunal awards damages in the sum of $1422.00.

49. Thirdly, the applicant seeks a refund of money paid for the car by the

applicant.89 The Tribunal finds that the applicant has validly notified the

respondents that he rejects the car under section 259(3) of the ACL because the

car has been repossessed and is likely damaged due to the nature of the

repossession. The Tribunal finds that the applicant has elected to have a refund

of any money he paid for the car under section 263(4) of the ACL. The Tribunal

notes the many varied submissions, including by the respondents themselves

about the total sum that the applicant had paid for the car before its

repossession. The respondent’s submissions vary about how much was paid for

registration,90 and the document relied on by the respondents for their final

claim of $1653.00 outstanding does not show the payment of $200.00 on

13 December 2014.91 It is surprising that the respondents who conduct the

88 ACL, section 26389 ACL, section 261(d)90 Compare attachment C with document F in the applicant’s amended

civil dispute application91 Letter to applicant from the third respondent, dated 19 October 2015,

attachment C to applicant’s amended civil dispute application, dated 27 April 2016

20

business of selling cars have such poor records, indeed one critical record is

hand-written. This state of affairs with their records raises a question about the

compliance of their systems with requirements under the SMV Act.92

50. The Tribunal has relied on the hand-written version of the repayment form of

the respondents93 since it reconciles best with all the evidence about repayments.

This document shows that the price the applicant paid for the car ($3999.00)

and the four registration payments ($1042.00) came to a total of $5041.00. This

document also shows that the applicant owed $1117.00, including for any

unpaid registration, when he stopped payments due to this dispute and at

repossession. So the applicant had paid the respondents a total of $3924.00. In

assessing the amount of the refund, the Tribunal finds that the applicant should

not be refunded the cost of the registration since he was the user of the car, so

the refund is the sum he paid for the car less the registration costs, being $2882.

The Tribunal makes an order that the applicant be refunded the sum he paid for

the car, being $2882.00 under section 263(4)(a)(i) of the ACL.

51. The applicant also seeks further damages due to the repossession. The Tribunal

set out above that the repossession was a breach of customer guarantees under

the ACL, the contract and demonstrated unconscionable conduct by the

respondents. While pecuniary penalties can be imposed for unconscionable

conduct, preference is to be given to compensating victims of the conduct. The

Tribunal prefers to award damages to the applicant.94 However, the Tribunal

finds no basis for further damages beyond those set out above and in the orders.

Under the ACL, it is not clear that non-economic loss or exemplary damages

can be awarded.95 Under contract law, damages are intended to “put the

innocent party into the position [they] would have been in had the contract been

properly performed.”96 The Tribunal is of the view that under contract law there

is no basis for further damages beyond those set out above and in the orders. If

the Tribunal was satisfied there was a trespass to the applicant’s land, then this

92 See section 38(2)(b) of the SMV Act93 Document G, applicant’s civil dispute application, dated 16 February

201694 ACL, section 23695 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 94996 Pentony, Graw, Lennard and Parker, Understanding Business Law

(5th ed), paragraph 7.47, page 220, citing Robinson v Harman (1848) 1 Ex 850

21

would provide a basis for further damages of a non-economic nature since the

tort of trespass is “actionable per se.”97 While there may have been a trespass,

the applicant did not specifically address this issue in proceedings and the

Tribunal cannot be satisfied that there was a trespass on the evidence before it.

52. Finally considering the liability of each of the respondents, the Tribunal notes

that the entities that the consumer was contracted to and then transacting with

was confusing for the consumer, and not transparent. He was an inexperienced

consumer and perceived his dealings as being with two individuals, the second

respondent being Christopher Clearihan, and Cheryl Love who is the sole

director of the third respondent. Both these individuals were at the premises of

Braddon Auto Mart yard when the contract was signed by the applicant, and

were present at the repossession of the car.

53. The Tribunal accepts the evidence of the respondents that the third respondent

was and remains the owner of the vehicle. However, the first correspondence in

evidence from the third respondent to the applicant in relation to the contract is

a letter from Cheryl Love dated 19 October 2015, although a later letter, the

reply to letter from Youth law Centre, dated 4 December is simply headed

Braddon Auto Mart with the License Motor Vehicle number shown.

Importantly, the tax sales invoice showed the party to the bailment to be the first

respondent, the second respondent, Christopher Clearihan, is the sole director of

the first respondent and is included as a respondent on this basis. The first and

second respondents are not licensed motor dealers, and it may be that they have

held themselves out to be the dealer and breached section 7 of the SMV Act. In

any case, it appears that the third respondent had an arrangement with the first

respondent and/or the second respondent, Christopher Clearihan, to sell its

vehicles. Both the second and third respondents use the trading name Braddon

Auto Mart, and Ms Love described Christopher Clearihan, as her “business and

personal partner” in 2014 in her statement dated 10 October 2016. This was not

a hands off arrangement as occurred in the Toyota case (see paragraphs 19 to 20

above), since the sole director of the third respondent, Cheryl Love, worked

closely with the first and second respondents, and indeed prepared the contract

documents at the time the contract was signed. On this basis, the Tribunal finds

97 Pentony, Graw, Lennard and Parker, Understanding Business Law (5th ed), paragraph 22.5, page 733

22

that the third respondent is vicariously liable for any breaches of legislation or

of the general law by the first and second respondents, and vice versa.

54. While no respondents had a right to repossess the vehicle, the third respondent

was its owner and the first respondent was the supplier under the contract.

When the repossession took place, the sole directors of the first and third

respondents were present and actively guiding the repossession. On this basis,

the Tribunal finds all respondents liable for breaches due to the repossession,

and if this view is not preferred then each is vicariously liable to the other for

breaches of the law.

55. A sale by a non-licensed entity at the premise of Braddon Auto Mart (refer to

paragraph 53 above) is a matter that may be a contravention of the SMV Act

and relevant to the suitability of the third respondent, whose sole director

prepared the documents, to hold a motor dealers licence.98 The evidence before

the Tribunal raises questions about the compliance of the respondents systems

with requirements under the SMV Act, as mentioned above (refer to paragraph

49). The manner of the repossession is a contravention of the ACL as set out

above (paragraphs 40 to 46), and may also be an offence under the ACL. Given

the latter, this decision and reasons are being referred to the regulator in the

ACT for the SMV Act and the ACL, the Fair Trading Commissioner, for their

information, investigation and follow-up as necessary under the SMV Act and

ACL.

Issue (c): What, if any, remedies including compensation are appropriate for the respondents?

56. Given the findings above, it follows that the Tribunal rejects the respondents’

cross claim. It is the respondents, not the applicant, who breached the contract,

as the Tribunal has set out in its findings above.

Summary of findings and orders

57. The Tribunal finds that:

(a) there was a bailment contract for reward between the applicant and the

respondents, there was no credit contract;

98 Sections 48(1),71(7)a)

23

(b) a term of the contract was that the respondents maintain registration of the

vehicle which they did not, and they therefore breached the contract and

also guarantees for service under the ACL;

(c) the respondents repossession of the vehicle was a breach of the contract

and also of guarantees under the ACL;

(d) the respondents had no right to repossession and repossessed the car in

circumstances that amount to unconscionable conduct;

(e) there is insufficient evidence for the Tribunal to be satisfied that the

respondents trespassed on the applicant’s land, and so there is not a basis

for awarding damages for non-economic loss without further evidence;

and

(f) the respondents are jointly and severally liable for the paying the applicant

a refund of the money he paid for the car, damages for the fines he paid

and a related expense he incurred, and re-imbursement for his filing fee

and search fee.

58. The Tribunal orders as follows:

1. The third respondent holds title to the car and is at liberty to dispose of it

in any way they see fit.

2. The respondents are to pay the applicant damages of $1422.00.

3. The respondents are to refund the applicant $2882.00.

4. The respondents are to pay the applicant’s filing fee of $140.00 and search

fee of $9.00.

5. The respondents will comply with orders 2, 3 and 4 by close of business

26 May 2017 by transferring the total sum of $4453.00 to a bank account

which the applicant advises them of.

………………………………..

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Senior Member L Beacroft

25

HEARING DETAILS

FILE NUMBER: XD 181/2016

PARTIES, APPLICANTS: Craig Michael Kauffman

PARTIES, RESPONDENT: Braddon Automart Pty Ltd (1st resp), Christopher A Clearihan T/A Braddon Auto Mart (2nd resp) and Solar Solutions International Pty Ltd (3rd resp)

COUNSEL APPEARING, APPLICANT N/A

COUNSEL APPEARING, RESPONDENT N/A

SOLICITOR FOR APPLICANT Self-Represented

SOLICITOR FOR RESPONDENTS Milford Haseldine and Williams, Solicitors and Accountants

TRIBUNAL MEMBER: Senior Member L Beacroft

DATE OF HEARING: 26 October 2016

26