Cromwell's Auctioneers & Appraisers Pty Ltd v Commissioner for Fair Trading (No 2) [2006] NSWADT 6 (9 January 2006)

Last Updated: 23 January 2006

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL GENERAL DIVISION

CITATION: Cromwell's Auctioneers & Appraisers Pty Ltd v Commissioner for Fair Trading (No 2) [2006] NSWADT 6


PARTIES: APPLICANT
Cromwell's Auctioners & Appraisers Pty Ltd
RESPONDENT
Commissioner for Fair Trading



FILE NUMBERS: 053196

HEARING DATES: On the papers

SUBMISSIONS CLOSED: 09/09/2005



DECISION DATE: 09/01/2006

BEFORE: Montgomery S - Judicial Member





LEGISLATION CITED: Motor Dealers (Exemptions) Order 1986
Motor Dealers Act 1974
Motor Dealers Regulation 2004

CASES CITED: Briginshaw v Briginshaw ( 1938) [1938] HCA 34; 60 CLR 336
Commissioner for Fair Trading, Office of Fair Trading v Cromwell's Auctioneers & Appraisals Pty Limited (GD) [2005] NSWADTAP 25
Cromwell's Auctioneers & Appraisers Pty Ltd v Commissioner for Fair Trading [2004] NSWADT 281
Elder Smith Goldsbrough Mort Ltd v McBride & Anor (1976) 2 NSWLR 631
Pickles Auctions Pty Ltd v Registrar Consumer Claims Tribunal (unreported decision of the Supreme Court of NSW 9 December 1994)

APPLICATION: Motor Dealer - grant of licence
Motor Dealers Act - motor dealer - grant of licence

MATTER FOR DECISION: Principal matter


APPLICANT REPRESENTATIVE: APPLICANT
P Glissan, barrister

RESPONDENT REPRESENTATIVE: RESPONDENT
K Grant, solicitor

ORDERS: 1. The decision of the Commissioner for Fair Trading to refuse the application by Cromwell’s Auctioneers & Appraisers Pty Ltd for a dealer licence under the Motor Dealers Act 1974 is set aside
2. The matter is remitted for reconsideration by the Commissioner for Fair Trading with the recommendation that Cromwell’s Auctioneers & Appraisers Pty Ltd be granted the licence sought if it satisfies the other requirements provided for in section 12 of the Motor Dealers Act 1974.


Reasons for Decision:

REASONS FOR DECISION

Background

1 Mr. James Byrnes is the sole director of Cromwell’s Auctioneers & Appraisers Pty Ltd ("Cromwell’s"). The Commissioner for Fair Trading refused Cromwell’s’ application for a dealer licence under the Motor Dealers Act 1974 ("the Act") on two grounds. The first ground was that Cromwell’s was "not likely to carry on ... business honestly and fairly". The basis for that ground was an allegation that Cromwell’s has been acting unlawfully by auctioning motor vehicles without a licence. The second ground for the Commissioner’s decision was that if Mr. Byrnes were to apply for the licence personally, he would not be a fit and proper person to be granted such a licence. The basis for this ground was that Mr. Byrnes has been convicted of several criminal and traffic offences and had allegedly behaved in an intransigent manner towards officers from the Office of Fair Trading.

2 Cromwell’s applied to the Tribunal for a review of the Commissioner’s decision refusing its application for a dealer licence. That matter was heard ("the initial hearing") and determined. In Cromwell's Auctioneers & Appraisers Pty Ltd v Commissioner for Fair Trading [2004] NSWADT 281 ("the earlier decision") I set aside the Commissioner’s decision and remitted the matter for reconsideration with the recommendation that Cromwell’s be granted the licence if the Commissioner was satisfied that Cromwell’s complied with all the other necessary requirements.

3 The Commissioner appealed against that decision to the Tribunal’s Appeal Panel. In Commissioner for Fair Trading, Office of Fair Trading v Cromwell's Auctioneers & Appraisals Pty Limited (GD) [2005] NSWADTAP 25, the Appeal Panel set aside the earlier decision and remitted it to be heard and decided again, without the hearing of further evidence.

4 The Appeal Panel stated at paragraphs 28 to 30 of its decision:

"28 Did the Tribunal give adequate reasons in relation to selling vehicles while unlicensed? In our view, while the Tribunal’s reasons were adequate, it made an error of law in that it failed to determine or apply the relevant law in relation to the question of agency or bailment. The Tribunal merely said that it did not share Mr Wilson’s confidence that this is a settled area of the law. Regardless of whether the law is settled or not, it was the Tribunal’s duty to identify its understanding of the applicable law and then apply it to the facts of the case. While those facts may not have been sufficient for the Tribunal to conclude that the company was acting as an agent, its failure to identify the relevant law and then apply it to the facts constitutes an error.
Extension to the merits
29 This is a matter where the law needs to be determined and the facts applied. Although the appellant urged us to grant leave to extend the appeal to the merits of the decision, the disadvantage of doing so is that should either party wish to appeal against our findings, then they would need to do so in the Supreme Court. In those circumstances it is appropriate that the Tribunal, rather than the Appeal Panel, determine the merits of the application.
Orders
30 Having identified an error of law, we set aside the Tribunal’s decision and remit the case to be heard and decided again by the Tribunal as originally constituted, without the hearing of further evidence."

5 The present matter requires consideration of the question of whether, in carrying on a business that involved the auctioning of cars, Cromwell’s fell within the meaning of "dealer" in the Act and so required a licence for those activities. There are two aspects to this question.

Firstly, whether a person who conducts a business of auctioning vehicles is required to hold a motor dealer's licence; and
Secondly, whether the business conducted by the Cromwell’s requires the holding of a motor dealer's licence.

6 By consent, I ordered the parties to file and serve any written submissions in respect of that question. Each of the parties has made written submissions in relation to this particular issue and I have taken them into account in this determination. I have also taken into account the evidence presented at the earlier hearing.

Applicable legislation

7 The Act provides for the licensing and regulation of persons carrying on the business of motor dealers and other dealings in vehicles. Division 1 of Part 2 of the Act deals with the licensing of motor dealers. Section 9 prohibits persons, other than exempted persons, from carrying on the businesses of a dealer except in accordance with a licence. Clause 4 of the Motor Dealers (Exemptions) Order 1986 provides for certain classes of "exempted persons". Auctioneers of vehicles are not one of the classes exempted.

8 "Dealer" is defined in section 4 of the Act to mean "a person who carries on the business of buying, selling or exchanging motor vehicles, but does not include a financier" and "sell" means "to sell as principal or agent".

9 Section 12 of the Act sets out grounds on which an application for a licence may be refused. It provides in part:

"12 Grounds on which application to be granted or refused
(4) An application for a licence made by a body corporate shall be refused if it appears to the Director-General that:
...
(d) the body corporate is not likely to carry on such a business honestly and fairly,
...
(h) a director of, or a person concerned in the management of, the body corporate is not of good reputation or character or in any other way would not be a fit and proper person to be the holder of a licence if the director or person were to apply for the licence personally".

10 The Act makes particular reference to sale of vehicles by auction. For example, a dealer who sells a vehicle by auction is required to enter prescribed particulars in the register kept for the purposes of the Act (section 21(3)(c)). The register (Form 2 in the Motor Dealers Regulation 2004) requires the dealer to complete the details of disposal including the licence number of a "private purchaser at auction". A vehicle sold by auction must have attached to it a roadworthy certificate or a notice in "the prescribed form" (section 23B(1) and (2)). The prescribed form is Form 9 entitled "Auction Notice" and advises the purchaser that an inspection report will be provided at the time of delivery of the vehicle and that the warranty provisions of the Act do not apply. Section 28(7) of the Act provides that a vehicle sold at bona fide auction is not subject to the warranty provisions (as set out in section 27(1) and Schedule 1 of the Act) provided a Form 9 is attached to the vehicle at the time of the auction.

11 Section 56D of the Act provides a presumption with respect to a person who sells or offers for sale more than 4 vehicles within a 12-month period. That section states:

"56D Evidence of carrying on business as dealer
(1) If in any proceedings for an offence under this Act or the regulations it is proved that a person sold, or offered or displayed for sale, more than 4 motor vehicles within a 12 month period to any other person or persons (other than a dealer), it is presumed in the absence of proof to the contrary that the person was carrying on business as a dealer during that period.
(2) Nothing in subsection (1) precludes a person who sells, or offers or displays for sale, 4 or less motor vehicles within a 12 month period to any other person or persons from being found to be a dealer."

The Commissioner’s case

12 At the initial hearing the Commissioner argued that Cromwell’s’ conduct required a motor dealer's licence and that the fact that it had been prepared to conduct the business without a licence showed that, if granted a licence, it was not likely to carry on the business honestly and fairly within the meaning of section 12(4)(d) of the Act.

13 The Commissioner directed argument to the two aspects of the question at hand. The Commissioner says that both these questions should be answered in the affirmative.

14 The Commissioner submitted that as an auctioneer of vehicles, Cromwell’s was acting as agent for the seller and therefore fell within the definition of "dealer", so requiring a licence. The Commissioner relied upon the case of Pickles Auctions Pty Ltd v Registrar Consumer Claims Tribunal (unreported decision of the Supreme Court of NSW 9 December 1994) for the proposition that an auctioneer acts as an agent for the vendor and upon the documentation provided by Cromwell’s in which it describes itself as acting as agent in auctioning vehicles on behalf of sellers.

15 It is submitted that this proposition is sound and that to interpret the Act in any other way would be to deny rights that the legislature intended to give to consumers, including the right to make a claim on the Motor Dealers Compensation Fund under section 40 of the Act. It is further submitted that if Parliament did not intend the sale of vehicles by auction to be regulated by the Act, it would not have made provisions that specifically deal with auction sales. The only logical explanation is that the legislature intended the sale of vehicles by auction to come within the Act and the regulatory powers of the Commissioner.

16 The Commissioner submitted that in interpreting the Act the Tribunal should take a purposive approach and read the legislation in a manner that would promotes the purpose for which the Act was brought into force. The Act establishes a licensing and regulatory regime so as to set standards of conduct for dealers and provide protections for persons who purchase vehicles from dealers. Compliance with the Act by dealers plays a significant part in assisting police and the Office of Fair Trading to trace information about vehicles and motor vehicle parts so as to counter theft and re-birthing of vehicles. The Commissioner contends that Cromwell’s should not have continued to trade without a licence after it had received legal advice that the matter was not free from doubt.

17 The Commissioner disputes Cromwell’s' argument that it takes vehicles on "temporary bailment" and that this does not require a licence. Ms Grant referred to Halsbury's Laws of Australia, Volume 2 at 65,021 in support of her argument that bailment occurs where a bailor delivers possession of goods to a bailee and the bailor has the right to receive the goods back when the bailment comes to an end and that an essential feature of such a relationship is that it is intended that the goods be returned to the bailee at some stage, for example, when a car is left for repairs, or a coat left with a concierge at a hotel. She says that the intention of the arrangements between Cromwell’s and its "Sellers" is quite different from this. Cromwell’s takes a seller's vehicle for the purpose of selling it at auction as the agent of the seller. If not sold at auction the agreement makes specific provision for Cromwell’s to sell the vehicle ''as exclusive agent for the Seller" for a period of 60 days following the auction.

18 Ms Grant contends that the relationship between Cromwell’s and its sellers cannot be described as one where there is a temporary bailment with the intention that the vehicle is returned to the seller. Quite the contrary, if the vehicle were returned to the seller, this would indicate that the purpose for which the agreement had been entered into had failed, that is, the vehicle did not sell, either at auction or within a 60 day period thereafter.

19 Ms Grant further contends that even if the relationship between Cromwell’s and its sellers was a bailment, a bailment does not preclude an agency relationship. She argues that regardless of any bailor-bailee arrangement, Cromwell’s was nevertheless acting as an agent for the owner for the explicit purpose of selling a vehicle. It follows, she submits, that a major component of Cromwell’s business is the auctioning of vehicles as agent for sellers and Cromwell’s is therefore dealer within the meaning of the Act. Cromwell’s was therefore required to hold a licence for the conduct of its activities. The fact that Cromwell’s was content to trade without a licence demonstrates that it cannot be trusted to operate honestly and fairly within the meaning of section 12(4)(d) of the Act.

Cromwell’s’ case

20 Cromwell’s conceded that the Act is for the protection of consumers and that auctioneers of motor vehicles are not a class of "exempted person" provided for by Clause 4 of the Motor Dealers (Exemptions) Order 1986. However, it points to the fact that the definition of "dealer" in section 4(1) of the Act does not specifically refer to the business of auctioning motor vehicles nor does the definition of "sell" in section 4(1) of the Act specifically include auction, or sell as auctioneer.

21 Neither party has referred to any authority in which it has been decided that a person who carries on the business of auctioning motor vehicles is a "dealer" within the meaning of the Act. Mr Glissan submits that Pickles does not lay down any general rule that an auctioneer who sells, or attempts to sell, a motor vehicle does so as agent for the vendor. Each case must turn on its own particular facts. At page 13 of Pickles, Studdert J said:

"As was recognised in Chelmsford Auctions v Poole the conditions of sale exhibited at the auction premises may alter the common law position."

22 Mr Glissan also refers to the decision of Sheppard J in Elder Smith Goldsbrough Mort Ltd v McBride & Anor (1976) 2 NSWLR 631 who followed Chelmsford Auctions Ltd v Poole [1973] Q.B. 542, and said at pages 638 G -639 A:

"When an auctioneer sells goods on behalf of a disclosed principal there are three contracts, namely, the contract between the vendor and purchaser, a contract between the vendor and the auctioneer and a contract between the auctioneer and the highest bidder, that is the purchaser".

23 In Elder Smith, Sheppard J found that the Plaintiff auctioneer sold a bull as agent for its owners, as disclosed principals. At page 645 E-F Sheppard J said:

"Each case must depend upon its own circumstances."

24 Mr Glissan further submitted that, notwithstanding that the Tribunal is not bound by the rules of evidence, but because the Tribunal is required to act according to equity, good conscience and the substantial merits of the case, the Commissioner bears the onus of establishing the allegation in accordance with the test stated by Dixon J (as he then was) in Briginshaw v Briginshaw ( 1938) [1938] HCA 34; 60 CLR 336 at361-362 :

"[W]hen when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal."

25 Cromwell’s conceded that, in interpreting the Act, a purposive approach is appropriate. However, in contrast to the Commissioner’s submission with respect to the interpretation to be given to the Act, Mr Glissan submitted that if Parliament intended the sale of vehicles by auction to be regulated by the Act, it could have made provisions that specifically deal with auction sales.

26 Mr Glissan submits that, after applying the applicable law to the evidence adduced by the parties, I should adhere to the view which I expressed at paragraph 60 of the earlier decision, namely that such evidence is inconclusive as to whether Cromwell’s had been carrying on the business of a "dealer" without a licence, in contravention of section 9(1) of the Act.

27 Mr Glissan further submitted that, in any event, a determination as to whether or not Cromwell’s had been carrying on the business of a "dealer" without a licence, in contravention of section 9 (1) of the Act is utterly irrelevant to the second ground of refusal, namely that Cromwell’s, if granted the licence, is not likely to carry on its business as an auctioneer of motor vehicles honestly and fairly. In support of this submission Mr. Glissan referred to the views that I set out at paragraphs 59 to 63 of the earlier decision.

28 Mr. Glissan submitted that if Cromwell’s had only carried on its business dishonestly or unfairly in the past because of a failure to hold a licence under the Act, any such dishonesty or unfairness would immediately cease upon the grant of the licence, ipso facto. Accordingly, for all the above reasons, the earlier decision should be affirmed.

Findings

29 I note the views of the Appeal Panel in relation to my findings in the earlier decision. Insofar as the Appeal Panel found no error associated with those findings I adopt them for the purposes of this determination.

30 With respect to the issue that remains for determination, I agree that it is appropriate to adopt a purposive approach in interpreting the Act. The Act is beneficial legislation in that it is for the protection of consumers. The interpretation urged by the Commissioner is consistent with that purpose. In my view, for the reasons argued by the Commissioner, it is probable that Parliament intended the sale of vehicles by auction to come within the scope of the Act and the regulatory powers of the Commissioner.

31 I also agree with Ms Grant’s submission in relation to the issue of bailment. Having reconsidered the material before me I am now satisfied that the relationship between Cromwell’s and its sellers can be categorised as an agency relationship. It follows, in my view, that the business that Cromwell’s was conducting was a business for which it was required to hold a licence.

32 However, it does not follow that if it is granted a licence Cromwell’s cannot be trusted to operate honestly and fairly within the meaning of section 12(4)(d) of the Act. While Cromwell’s continuing to conduct its business without a licence is clearly a factor that must be taken into account, that conduct must be considered in light of the whole of the circumstances. These include the fact that Cromwell’s was operating under legal advice, the fact that no allegation has been made that Cromwell’s has engaged in dishonest or unfair practices and the stated intention to cooperate with the regulator.

33 At paragraph 60 of the earlier decision I stated:

"I am not prepared to draw any negative inferences from the Applicant’s conduct of its motor vehicle auctions to date."

34 At paragraph 62 to 63 of the earlier decision I stated:

"62... It is apparent that Cromwell’s has sought professional assistance in relation to compliance with the regulatory regime. There is no allegation that Cromwell’s has engaged in dishonest, sharp or deceptive practices in the course of its various businesses. In the circumstances of the type of activity that Cromwell’s proposes to undertake it is my view that the public can have confidence in this continuing.
63 While I am aware of the caution that should be taken in matters of this kind, I am satisfied that within the confines of its auction operations Cromwell’s is likely to carry on the business of a motor dealer honestly and fairly. I cannot see any benefit flowing from continuing to exclude Cromwell’s from trading in that manner. However, I recommended that the Commissioner consider whether a condition should be imposed on the licence that would limit Cromwell’s’s activities to those that Mr. Byrnes has identified as falling within its immediate future proposed operations."

35 I remain of that view. Accordingly, the decision of the Commissioner made on 17 December 2003 to refuse Cromwell’s a dealer’s licence under the Act is set aside.

Orders

1. The decision of the Commissioner for Fair Trading to refuse the application by Cromwell’s Auctioneers & Appraisers Pty Ltd for a dealer licence under the Motor Dealers Act 1974 is set aside.
2. The matter is remitted for reconsideration by the Commissioner for Fair Trading with the recommendation that Cromwell’s Auctioneers & Appraisers Pty Ltd be granted the licence sought if it satisfies the other requirements provided for in section 12 of the Motor Dealers Act 1974.