Ivan Matas v Jolanda Bartulin [1997] ACTSC 76 (3 October 1997)

SUPREME COURT OF THE ACT

IVAN MATAS v. JOLANDA BARTULIN
No. SCA 40 of 1996
Number of pages -
5
Contract

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

MILES CJ

CATCHWORDS

Contract - illegality - sale of second-hand motor vehicle registered in Queensland - cheque for payment dishonoured - claim on cheque - whether lack of consideration for cheque - proper law of contract - negotiations in Queensland, delivery of vehicle and of cheque in ACT - jurisdiction with which contract had closer connection Queensland - statutory provision in Queensland that requires certificate of roadworthiness for transfer of vehicle - no certificate of roadworthiness - contract unenforceable - no consideration for cheque.

Motor Vehicles Safety Act 1980 (Qld.), s. 32

Cheques and Payment Orders Act 1986 (Cth), s. 36

Magistrates Court Act 1930

Bonython v. The Commonwealth [1950] HCA 37; [1951] AC 201 at 219

Buckland v. Massey [1985] 1 Qd.R. 502

HEARING

CANBERRA, 10 April 1997 (hearing), 3 October 1997 (decision)

3:10:1997

Appearances

Counsel for the appellant: Mr. G. Lunney

Solicitors for the appellant: Romano & Co.

Counsel for the respondent: Mr. R. Refshauge

Solicitors for the respondent: Deacons Graham & James

ORDER

THE COURT ORDERS THAT:

1. The appeal be dismissed.

DECISION

MILES CJ

This is an appeal by a plaintiff against a decision given in the ACT Magistrates Court on 6 June 1996.

The plaintiff sued on two causes of action and for interest.

First the plaintiff claimed $4,500 on a dishonoured cheque drawn by the defendant on the National Australia Bank and dated 4 March 1994. He alleged that he "presented the cheque for credit to his bank, Advance Bank Australia Limited, and on presentation that cheque was not met". Presentation of the cheque to the plaintiff's bank is of course irrelevant. It is the presentation to the bank on which the cheque is drawn that matters. However, the plaintiff further alleged that he gave notice to the defendant of the dishonour of that cheque and that the defendant has failed to make good that cheque and that that sum is still due and payable. Those latter allegations probably disclose a cause of action. The notice of grounds of defence is in a discursive narrative form. It appears to set up the lack of consideration for the cheque, or illegality, or both, relying on provisions of the Motor Vehicles Safety Act 1980 (Qld.) (the Motor Vehicles Safety Act).

Secondly, the plaintiff sued for $3,700 lent to the defendant by the plaintiff at his request repayable on demand. He claimed that he had demanded repayment and that the defendant had refused or neglected to repay the same.

According to the particulars of claim, the plaintiff also claimed "interest pursuant to section 227A and calculated in accordance with section 227(b)(2) of the Magistrates Court Act from the date of the accident to date and thereafter to the date of hearing, and costs".

There is no reference to any accident elsewhere in the particulars of claim.

The Magistrate dismissed both the claim on the cheque and the claim for moneys lent. It was therefore not necessary for a decision to be made on the matter of interest. Although there is no appeal against the dismissal of the claim for moneys lent, it is relevant to observe that the Magistrate considered that, in respect of the claim, the plaintiff was "a less than impressive witness" and "vague in the extreme". The defendant was, in the Magistrate's view, "extremely articulate and not successfully moved in her evidence by cross-examination". The Magistrate therefore concluded, "I simply cannot prefer the evidence of the plaintiff over that of the defendant". Hence the claim for moneys lent was dismissed. These findings as to credit are relevant in the present appeal against the Magistrate's dismissal of the claim on the cheque. Where findings depend, even if only in part, on the credit of witnesses, then the court hearing the appeal will accept those findings.

The Magistrate's reasons for decision are less than comprehensive. Apart from the findings as to credit, already mentioned, the findings as to facts appear to be as follows:

1. The defendant's son, Filipovic, came to Canberra from Queensland in order to collect a motor vehicle from the plaintiff. That motor vehicle had been the subject of discussions between the plaintiff and the defendant when the plaintiff had been staying with the defendant in Queensland.

2. Filipovic handed the plaintiff the defendant's cheque for $4,500.

3. The plaintiff delivered the vehicle to Filipovic and Filipovic drove it to Queensland.

4. On the same day the defendant stopped payment on the cheque.

5. The consideration for the cheque was the completion of a contract of sale of the vehicle between the defendant and Filipovic.

6. The contract of sale was prohibited under s.32 of the Motor Vehicles Safety Act.

7. The consideration for the cheque therefore totally failed and the plaintiff was not entitled to payment in accordance with the tenor of the cheque.

The notice of appeal of 27 June 1996 is not easy to follow, but the substantial grounds in relation to the claim on the cheque appear to be as follows:

* Failure by the Magistrate to find a contract for sale of the vehicle between the plaintiff and the defendant and therefore the defendant was able to raise the defence of total failure of consideration.

* The cheque was handed over to the plaintiff by the defendant's son as holder in due course under s.37 of the Cheques and Payment Orders Act 1986 (Cth) (the Cheques Act).

* There is a presumption that the plaintiff was a holder in due course under paras.52(a) and (b) of the Cheques Act.

* Pursuant to s.72 of the Cheques Act, the defendant is estopped from denying the above.

* The defendant is liable to the plaintiff under paras.71(a) and (b) of the Cheques Act.

* The plaintiff has a claim for damages under ss.36, 37 and 76 of the Cheques Act.

* Pursuant to sub-s.28(1) of the Cheques Act, delivery by the drawer of a cheque to the holder is conclusive proof that the latter is a holder in due course.

* The defendant was not entitled to rely on s.32 of the Motor Vehicles Safety Act when the defendant was not a party to the contract of sale of the motor vehicle.

It appears that the case did not receive the attention at the Magistrates Court level for the issues raised in the notice of appeal to be properly identified, ventilated and determined. On the other hand, it must be said that it is difficult to see how some of the issues raised in the notice of appeal could ever have arisen on the matters raised in the statement of claim and defence. However, if the Magistrates Court is a court of summary jurisdiction and not a court of pleading, the Magistrate was entitled, even bound, to deal with all the issues that arose on the evidence, regardless of the statement of claim and defence. That does not make the task of the appeal court any easier, particularly if the issues are not identified in the judgment appealed against.

Mr. Lunney, for the plaintiff/appellant, submitted that the contract of sale of the motor vehicle was made between the plaintiff as vendor and the defendant/respondent as purchaser. The relevant evidence before the Magistrate, on which no findings were made, was that the plaintiff on a trip to the Gold Coast in 1992 met the defendant and moved into her premises as a flatmate. The plaintiff had with him a car, originally registered in the ACT, but which he subsequently registered in Queensland. There were discussions between the plaintiff and the defendant about the plaintiff selling the car to the defendant. The defendant's son, Filipovic, also took part in these conversations. The plaintiff returned to Canberra. A friend drove the car to Canberra. Filipovic came to Canberra. The plaintiff's evidence as to what happened then appears at various places in the transcript. The essentials appear to be as follows:

Page No. Quotation 19 "Tonci come pick up vehicle. Mother sent him with cheque to pick up vehicle. They want take it there for mother ... in Queensland. He take it Queensland.

47 And you have no road-worthy certificate, did you, for the car, no transfer papers for the car, did you? - No.

49 When Tonci came down from Queensland to collect the car, or prior to him coming down, rather, had you and Ms. Bartulin agreed how payment was to be made for the car? - I want to ... payment ... cash a bank cheque that's all ... And not given cheque, cheque - personal ... I tell him I can't sign any paper, must - cheque pass first ... And he take the car, he go."

The defendant said in her evidence that the possible sale of the car was discussed between the three persons in February 1994. She said that the plaintiff said that the car was "a good buy" at $7,000. In evidence, which was objected to, but on which there was no ruling, the defendant said that she told her son on another occasion when the plaintiff was absent that she would lend him money by way of a cheque in order that he made sure that on producing the moneys to the plaintiff he obtained "the signed documentation that the car is in good working order, that the car has got a roadworthy certificate".

In my view, that evidence was inadmissible against the plaintiff. In any event it is of no probative value for the purpose of determining what contractual arrangements there were, if any, between the plaintiff and the defendant.

The Magistrate did not make the necessary express findings to give effect to the final decision. However, it is open and indeed incumbent upon this Court to make the necessary findings and rulings on the material before the Magistrate for itself, except insofar as those findings and rulings are not inconsistent with the Magistrate's views as to credibility. The Magistrate clearly preferred the evidence of the defendant to that of the plaintiff, but that does not mean that positive findings can be made where the evidence is silent, or such that inferences contended for cannot be drawn.

On my reading of the evidence before the Magistrate and bearing in mind the Magistrate's view as to credit, the necessary findings on relevant matters are as follows.

After negotiations in Queensland in which all three persons participated, the plaintiff offered the motor vehicle for sale to the defendant's son for a purchase price of $4,500. The plaintiff's offer was accepted by the defendant's son on his own behalf when he came to Canberra and handed the defendant's cheque for the agreed amount to the plaintiff. The car was then delivered by the plaintiff to the defendant's son. It was unaccompanied by any certificate of roadworthiness as required by s.32 of the Motor Vehicles Safety Act. There was a separate contract, implied from all the circumstances, that in consideration of the plaintiff selling the motor vehicle to the defendant's son at the agreed price and delivering the motor vehicle to the son in Canberra, the defendant would pay for the purchase by her cheque. Consideration for a cheque is ordinarily presumed until the contrary is proved: see s.36 of the Cheques Act. The proper law of the contract between the plaintiff and the defendant was the law of Queensland (including the Cheques Act as part of the law of Queensland), that being the jurisdiction in which the negotiations amongst all three parties took place and the jurisdiction with which the contract between the plaintiff and defendant had the closer connection: see Bonython v. The Commonwealth [1950] HCA 37; [1951] AC 201 at 219.

Section 32 of the Motor Vehicles Safety Act provided as far as is relevant that a person shall not dispose of a second-hand motor vehicle unless he has duly obtained a certificate of roadworthiness that relates to that vehicle, and that a person who disposes of a second-hand motor vehicle shall give to the person to whom delivery of possession is made the prescribed duplicate copy of the certificate of roadworthiness.

In Buckland v. Massey [1985] 1 Qd.R. 502 a Full Court of the Supreme Court of Queensland held that s.32 impliedly intended to prohibit a contract of sale between parties who contemplate that its performance will involve a breach of the act. The effect of the Motor Vehicles Safety Act was, in the Court's opinion, to render unlawful the delivery of a second-hand motor vehicle unless the roadworthiness has been certified prior to delivery, and further to render unlawful the contract by which such unlawful act is done and which contemplates the doing of the illegal act in the course of the performance of the contract. In addition, it must be the clear intention of the parties that the person disposing of the vehicle will refrain from obtaining a certificate so that delivery under the contract will occur without the accompanying certificate: Buckland v. Massey at 508, 512. Although the evidence in the present case is far from clear, I am of the view that the proper inference from all the evidence in the light of the Magistrate's views as to credit is that whilst it might not have been intended that there be a deliberate flouting of the Motor Vehicles Safety Act, neither party had any intention that the plaintiff vendor should deliver the motor vehicle with the necessary certificate of roadworthiness required to make the transaction lawful according to the Motor Vehicles Safety Act.

Last, it should be acknowledged that there is a conflict of laws problem in this case which the parties have not addressed. Can it be said that the Motor Vehicles Safety Act is directed towards the delivery outside Queensland of a second-hand vehicle registered within Queensland? I think that if the vehicle concerned is a Queensland registered vehicle, then the Motor Vehicles Safety Act is directed to delivery, no matter where it might take place. It must be emphasised that in the present case the Motor Vehicles Safety Act applies to the sale because the law of Queensland is the proper law of the contract. If the sale of a Queensland registered vehicle took place in the ACT in accordance with a contract of which the proper law was the law of the ACT, there may be no room for the operation of the Motor Vehicles Safety Act, but this is not such a case and the point does not need to be decided.

Accordingly, the consideration for the defendant drawing a cheque in favour of the plaintiff was illegal and for that reason such consideration wholly failed. The plaintiff is not entitled to sue the defendant on the cheque. The appeal will be dismissed. Unless the parties wish to be heard I propose that the plaintiff pay the defendant's costs of the appeal and each party pay his and her own costs before the Magistrate.