UNCOLLECTED GOODS BILL 2004 Second Reading Speech

Northern Territory Second Reading Speeches

UNCOLLECTED GOODS BILL 2004

(This an uncorrected proof of the daily report. It is made available under the condition that it is recognised as such.)

Bills presented and read a first time.

Dr TOYNE (Justice and Attorney-General): Madam Speaker, I move that the bills be now read a second time.

The purpose of this bill is to provide a simple and effective scheme for the management of uncollected goods. The current legislation has been criticised for being unnecessarily complex and difficult to utilise. In fact, when we started looking at the current Disposal of Uncollected Goods Act we found areas of the disposal scheme that had never been used - not once since the act commenced in 1977. This bill repeals and replaces the current act with a more user-friendly scheme.

The goods which the disposal scheme covers are those which have been left in the possession of another party, at common law referred to as the bailee, usually by the owner of the goods, the bailor, and have not been claimed. Examples of these situations vary greatly. They range from a family member delivering goods to another for safekeeping, to a delivery of goods to another by mistake, to the most common situation where goods are left for repair. These arrangements affect each of us in our daily lives. You may need to have your shoes repaired, your clothes dry cleaned, or your motor vehicle may be due for a service at the local garage. Difficulties, however, arise when goods have been left with the bailee for repair and the bailor does not collect them and pay for the service performed. Often the bailee is left out of pocket and with goods of little value.

At common law, there is no right of sale by the bailee. Unless an agreement has been reached between the parties as to the disposal of goods or a statutory power of sale exists, the bailee cannot lawfully dispose of the goods, yet he or she has a common law duty to take care of the goods. In 1977, the Northern Territory introduced legislation intended to give those persons with possession of goods a legal avenue for their disposal. That legislation has undergone little change since its commencement, and has been criticised as being unnecessarily complex, confusing and containing remedies which are time consuming and inappropriate.

Agitation from the community over a number of years, and a report from the Northern Territory Law Reform Committee in 2001, prompted the release of an issues paper by the Department of Justice in May 2003. The review was finalised in August 2003 and it is against the framework of the review recommendations that the new legislative scheme has been developed. Based on the review, this bill will make a significant difference by creating a simpler, more equitable regime for the disposal of uncollected goods.

I will now briefly outline the main aspects of the Uncollected Goods Bill. As a result of criticism by the Northern Territory Law Reform Committee that the legislation contains confusing and inadequately explained common law terms, ‘bailee’ and ‘bailor’ have been replaced with the plain English terms ‘receiver’ and ‘provider’. Both terms are explained in the definitions clause.

Clause 6 sets out the meaning of relevant charge - the amount that the receiver is able to claim in relation to repairs to, or cleaning of, the goods, as well as the storage, carriage and maintenance costs. Clause 9 preserves the application of the existing Northern Territory legislation, dealing with the disposal of the uncollected goods, in some industry-specific situations. For example, the Warehousemen’s Liens Act, the Accommodation Providers Act, the Residential Tenancy Act, the Retirement Villages Act, the Consumer Affairs and Fair Trading Act, and the Traffic Act. The proposed legislation will apply in circumstances where it is not otherwise dealt with by specific legislation.

At common law, parties have the right to contract or negotiate their own agreement as to the manner of disposal of goods. Clause 11 of the bill preserves that right, and provides that only where agreement as to the manner of disposal of goods has not been, or cannot be reached, will the legislation apply. Parts 2 and 3 of the bill sets out the procedures for the disposal of uncollected goods both with or without a court order. If a dispute exists between the provider and the receiver regarding the relevant charge for uncollected goods, either party may apply to the court for an order determining the amount of the relevant charge. Once an application to the court is made, the receiver cannot dispose of the uncollected goods. To prevent matters being delayed in the event of a dispute occurring, a mechanism has been placed into the bill that allows the receiver to give notice to the provider of his or her intention to dispose of the uncollected goods. Notice is intended to prompt the provider to take action, by either applying to a court to resolve the dispute, or to leave matters as they are, and therefore risking the goods being disposed of under the act.

Division 2 of Part 2 sets out a new regime for the disposal of uncollected goods without a court order. This replaces the lengthy onerous notice requirements of the current legislation. The new regime breaks the notice requirements into three categories according to the value of the goods:

· for low value goods, those valued at less than $200, the receiver may dispose of the goods if, after 28 days since the giving of oral or written notice to the provider of the intention to dispose of the goods, the provider has not claimed them nor given direction as to their delivery. The goods may be disposed of by sale, destruction, appropriation or by any other means;

· for medium value of goods, those valued at $200 or more, but less than $1000, notice is required to be given to the provider, the owner of the goods, and any other person having or claiming an interest. After a period of two months, if the provider has not claimed the goods or given direction as to their delivery, disposal can take place by auction or private sale at a fair price;

· For high value goods, those valued at $1000 or more, but less than $7000, notice is required to be given to the provider, the owner of the goods, any other person having or claiming an interest, and the Commissioner of Police. A period of three months must elapse before the disposal can take place. Twenty eight days prior to the disposal an advertisement must be placed in a daily Northern Territory newspaper advising of the proposed sale. The goods can then be auctioned or sold by private sale at a fair price.

In addition, where the receiver is dealing with the motor vehicle of high value or above, a certificate must be obtained from the Commissioner of Police to certify the vehicle is not stolen. Further, to protect a person with a publicly registered interest, such as a bank, or a finance company, a REVS search must be obtained for motor vehicles that are of medium value or greater.

A court order must be obtained to dispose of goods valued of over $7000, the high value amount. However, a receiver who wishes to have the security of a court order can apply for a disposal order for goods of any value. As maybe expected, the notice requirements increase as the value of goods increase. However, the notice provisions are a great improvement on the current act. For example, the current act provides that for goods valued at less than $200, two separate notices have to be given with a total waiting period of four months before disposal. In conjunction with the second notice to the bailor, notice must also given to the Commissioner of Police and every other person known to the bailee to have an interest in the goods and published in the Government Gazette. Further, under the current scheme, disposal is by way of public auction in separate lots. It is only when the sale by auction is unsuccessful that goods can be sold privately or otherwise disposed.

This bill will do away with the onerous notice provisions and unnecessarily expensive disposal scheme and allow a receiver to dispose of goods in an efficient and equitable manner whilst protecting the interests of the provider. Special provisions will also apply for the disposal of perishable goods.

The question may be raised: what constitutes a fair price? A fair price is in effect what the market will pay for the goods. Factors that influence market price can include, but are not limited to, the age and condition of the goods, the market supply and demand for those goods. There are a number of tools available to help a receiver determine a fair price. For second-hand goods, a receiver may wish to obtain a valuation from a second-hand dealer, or if the goods are specific to an industry, they may wish to obtain a valuation from that industry. For a motor vehicle, a receiver might decide to refer to the Red Book value when determining a fair price or may wish to obtain a valuation from a car yard. On the other hand, a receiver may have specific industry knowledge of motor vehicles and may determine that the vehicle is of little value and the only suitable way of disposing of the vehicle is by selling it for parts.

However, these are only examples of the tools that a receiver can use to determine a fair price. Generally, people working in industry-specific areas have some expertise on what goods are worth because they deal with them on a day-to-day basis and, as a result, can ascertain a fair price by using their own knowledge and expertise.

Part 3 of the bill sets out the regime for applications to the court for various orders. ‘The court’ is defined as the Local Court. The application must be served upon the provider, the owner, the Commissioner of Police, any person with a publicly registered interest in the goods, and any other person known by the receiver having or claiming an interest in the goods. There is flexibility in the new regime in that it allows for, at any time prior to the goods being disposed of, either by way of a court order or notice provisions, the provider to claim the goods after paying the relevant charges due to the receiver. The interests of the receiver are protected in that so long as the receiver complies with the provisions in the bill relating to the disposal of uncollected goods, he or she will not be liable to any other person who may claim an interest in the goods.

Part 3 also provides for the effect of other proceedings upon a court order made under this part. The provision can be used where an owner wishes to recover their goods because they have been stolen or the person who delivered the goods for repair has done so without authority. The interests of both the receiver and the owner would be determined by a court, but the provision allows an order that has been made for the disposal of the goods to be suspended and an order made for recovery.

Part 4 of the bill sets out the record keeping requirements. The current legislation requires that records of disposal must be kept for six years and for all goods, regardless of their value. The proposed legislation has reduced the time frame from six years to three years, but as with the current act, records must be kept for all goods.

Part 4 also provides for a method of distributing the proceeds of sale. After uncollected goods are sold, the receiver is entitled to retain the relevant charge and disposal costs. If the proceeds of sale are insufficient to pay the relevant charge and disposal costs, the receiver may recover it as a debt in a court of competent jurisdiction. If, however, there is an excess of funds, the receiver must within 28 days after the sale of the uncollected goods pay the excess amount of the proceeds of sale to the accountable officer for payment into an accountable officer’s trust account. The receiver must also supply to the accountable officer a copy of the records under clause 28.

The penalties are severe for those who do not comply with these requirements. A maximum of six months imprisonment or $11 000 for a natural person and a maximum of $55 000 for a body corporate. Stringent penalties are necessary to act an as effective deterrent for those who may decide to keep for themselves excess money from the proceeds of sale.

It should also be remembered, while the legislative proposals are designed to facilitate effective disposal of goods by people who might otherwise be burdened by the cost of repairs, storage and maintenance, the goods are those in which other parties, including banks or finance companies, might also have an interest.

Part 7 of the bill deals with transitional provisions which have been drafted with the criticisms of the current act in mind. The current act is not being utilised and industry members, particularly those in the motor trades, are waiting for this bill to commence to be able to dispose of uncollected goods in their possession. As such, the transitional provisions provide for the disposal of goods under bailment prior to the commencement of the new scheme. There are some conditions on the operation of the transitional provisions. If a receiver has, under the current act, given notice of his or her intention to sell the goods or to dispose of them by way of a court order, then the current act will apply to those transactions.

I now turn to the Uncollected Goods (Consequential Amendments) Bill 2004. An amendment to the Motor Vehicles Act was required to facilitate the transfer of an uncollected registered motor vehicle disposed of under the new scheme from the owner of the vehicle to the new purchaser. The amendment provides that, upon the sale of the vehicle, the receiver must give the purchaser a receipt of sale and, within 14 days, provide the Registrar of Motor Vehicles with a notice of disposal. The purchaser must then apply to the Registrar in the form of a statutory declaration to transfer the vehicle from the owner’s name to the purchaser’s name.

As the law currently stands, property which is subject to a security is first available to the security holder. With respect to bailed goods, this may result in a detriment to the receiver. For example, a receiver who repairs and therefore improves bailed goods may lose those goods to a person with a registrable interest, who gets the benefit of the repairs without payment to the receiver. Consequently, as a result of the recommendations from the National Vehicles Security Project report, which were approved by the Ministerial Council of Consumer Affairs, the Registration of Interest in Motor Vehicles and Other Goods Act will be amended to provide that a receiver who has repaired goods, and therefore has lien over the goods, will have priority for payment of their services over any registrable interest in the goods.

Finally, in the event that a security holder has not removed their security interest over a motor vehicle sold under this act, a purchaser who obtains good title to the vehicle may apply to the registrar of the Registration of Interest in Motor Vehicles and Other Goods Act to have that interest removed. If the Registrar is satisfied that the interest is to be removed, the Registrar must do so but must inform the security holder that their interest has been cancelled. The security holder may make a monetary claim by application to the accountable officer.

This bill provides a clear, simple and effective regime for the care and disposal of uncollected goods. This bill provides for a scheme which will be a significant improvement on that which currently exists, and which I am sure will be welcomed by all Territorians.

Madam Speaker, I commend the bill to honourable members.

Debate adjourned.

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