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- Unreported Judgment
MAGISTRATES COURTS OF QUEENSLAND
Hubbard v Holmes Establishment PL and Wananchi PWP PL  QMC 10
Daniel Gregory HUBBARD
Holmes Establishment Pty Ltd ACN 624 110 658
Wananchi Portable Water Purification Pty Ltd ACN 622 467 387
Application under s.694 Police Powers and Responsibilities Act 2000
21 August 2019
30 July 2019
The First Respondent is declared to the be owner. The water filter should be returned to the First Respondent.
Ownership – Possession – Equitable interests – Jurisdiction of Magistrates Court - Return of property to ‘owner’ by police – competing common law claims and security interests – identity of holder of equitable rights
Acts Interpretation Act 1954 - s.35C(1)
Corporations Act 2001 - s.127
Police Powers and Responsibilities Act s. 694
Personal Property Securities Act 2009 ss.19, 21, 123, 156. Part 5.6, Chapter 5,
Magistrates Court Act 1921 s.4
Uniform Civil Procedure Rules r.3, 430(2)
Stephens v Williams  QDC 320.
M.R. Parker of Stinchcombe & Haney Legal
B. O’Brien of Whitehead Crowther Lawyers
- The second respondent was a company set up to market large commercial water filters. One of the directors was Ms Holmes who also controlled the First Respondent. She seized a large water filter from the Second Respondent alleging she was the silent investor who provided funds to purchase it and who had rights to it as collateral.
- The Second Respondent was later controlled by Mr Hembrow. He sent people to recover the goods from the First Respondent. Police were called and seized the goods. They determined no offences had been committed in the second seizure. The investigating officer applied to the court for an order as to who the owner was for him to be able to return the goods to.
The ‘Silent Investor’
- Four persons including Ms Holmes, Mr Hembrow and Mr and Mrs Cullen decided to go into business marketing large scale commercial water filters in the Asia Pacific region. The filters were made in the UK.
- The Second Respondent was incorporated under another name initially. $70,000 was advanced from the First Respondent’s bank accounts to the Second Respondent’s bank accounts in 13 Feb and 9 Mar 2018. The Second Respondent had ordered the equipment from the UK in March 2018. It was paid for on 19 March 2018 with the monies advanced.
- The four directors were aware that the money had come from someone who wished to remain a ‘silent investor’.
- A live factual issue before me was who that was.
- There was a one page document called an “Investor Agreement” which provided that the Silent Investor had collateral over the listed items purchased from the UK. This was signed by the Silent Investor and Ms. Holmes (for the company). It was not executed by Ms. Holmes under seal nor was she the sole director nor was any direct evidence produced of the express authorisation or ratification of that document. It is dated 9 March 2018.
- Ms Holmes said it was her. Mr Hembrow said it was another man, Mr Mark Elm. I made a direction that Mr Elm be made aware of the application. Detective Hubbard, the Applicant, spoke with Mr Elm shortly before the hearing. He was made aware of the application. He chose to not appear, to instruct anyone to appear or to file any material.
- I declined to allow material in from Mr Elm which the First Respondent sought to led as he was not present for cross-examination in accordance with the directions.
- I also declined to allow materials from Mr and Mrs Cullen to be read given that they were not present and the Second Respondent wanted to cross-examine them.
- Most of the material which they apparently had and which Mr Hembrow relied upon was hearsay. I have ruled it as inadmissible. This is an application under the PPRA s.694 and r.3 of the Uniform Civil Procedure Rules 1999 applies the UCPR to it. It seeks final relief and so cannot rely on hearsay. 
- Ultimately it appears that there is no direct evidence from anyone claiming to be the supplier of the $70k except the entity who supplied the funds, the First Respondent. Only Ms Holmes knows where the money came from. She gave evidence it came from the safe of a since deceased uncle and proved via Austrac that these amounts were deposited by her in cash into the First Respondent’s bank accounts. She said she was the investor but clearly means the First Respondent.
- Her account of getting $70,000 on one occasion does not explain the 3 cash deposits into the bank over a month shown in AUSTRAC.
- Her explanation for the use of the word ‘his’ varied. In her affidavit she said it was to hide that it was in fact her. In the witness box she said it was because she was aware from her role as a teacher that a reference to the masculine includes the feminine.
- Her explanation of the reason for the money coming from her anonymously makes little sense. It is said to be to ensure it wasn’t seen to be a ‘power play’ within a group of people working as equals.
- The ‘Investor Agreement’ also sought to keep confidentiality between the Second Respondent and the Silent Investor. That would not be hard since on her evidence, Ms Holmes was the only one who knew the identity of the Silent Investor.
- I have heard no satisfactory explanation of why the ‘silent investor’ sought to claim the collateral based on the disclosing of identity which was to remain confidential in the agreement in the ‘Seizure Order’ . While various parties thought they knew who it was, only Ms Holmes knew for sure.
- On the balance of probabilities, it seems more likely that the First Respondent was the Silent Investor rather than Mr Elm but this is not determinative of who the Silent Investor was.
- It seems even at this early stage those in and around the company did not trust one another.
- What is undisputed is the minutes of the 13 March 2018 director meeting. They refer to the investment and the conditions including ‘the demo equipment will sit as collateral for the investor’.
- While there is no evidence that Ms Holmes had authority to grant the security interest on 9 March 2018, the Company clearly did. Ms Holmes, Mr Hembrow and Mrs Cullen all signed those minutes as Directors. They are company books and evidence of what is contained in them. These minutes evidence the granting of security interest to the silent investor.
- The parties were at odds about what s.694 required me to do. The Second Respondent asserted it was the absolute owner of the goods at common law and that is all the section contemplated. I invited the parties to make submissions about the wording of s.694 (3) which references equitable interests.
- The Second Respondent provided at the hearing the authority of Stephens v Williams  QDC 320. Paragraph  explores just what it meant by ‘owner’. His Honour Judge Robertson upheld the Magistrates decision to award a car to a ‘bone fide purchaser for value without notice’ over Mr Stephens. The later said he purchased it in a false name, registered it in his name, reported it stolen and was convicted of a fraud for doing so, it never having been stolen. At common law, it was his.
- His Honour was not apparently referred to s.693 PPRA which provides that where police have held a thing for more than 30 days:
(3) A person with a legal or equitable interest in the relevant thing may apply to a magistrate for an order that the thing be returned to the person or to someone else named in the application as the person to whom the thing may be delivered (the nominee).
- The magistrate need only be satisfied that the person or nominee ‘may lawfully possess the thing’ and that it is appropriate it be returned to them. The application is not restricted to the common law owner. The section is entitled ‘693 Application by owner etc. for court order for return of relevant thing’. The heading is relevant to the interpretation of the section. 
Personal Property Securities Act
- Since that case, the concept of ‘ownership’ has been turned on its head in Australia by the Personal Property Securities Act 2009. It is an Act that takes some time to even begin to understand.
- The PPSA does away with concepts of ownership in relation to granting and enforcing rights in respect of collateral. Registration is the basis on which a party gets rights in priority to any later or unregistered interests.
- This Court is given jurisdiction in s.207 PPSA subject to its general jurisdictional limits including subject matter and locality. The goods are here and worth less than the jurisdictional limit. The parties are here. While as a non-monetary dispute, I would have no jurisdiction under s.4 Magistrates Court Act 1921 as the subject matter of this dispute is determination of who to deliver goods to.
- I consider that s.694 PPRA has given me jurisdiction to consider every legal and equitable claim on the property. One such claim is the first respondent’s registered charge. I conclude that I have the jurisdiction to consider the PPSR in the context of the PPRA application.
- The chronology of events discloses that the goods were taken by the First Respondent in mid-2018 and taken back by the Second Respondent in November 2018. In December 2018, the First Defendant registered under s.156 PPSR a charge over Seon RO Seawolf water purification system serial number WSRO1003 and any property which is from time to time subject to a security interest between the Grantor and the Secured Party.
- The company minutes grant a security interest over the demo equipment. That appears to be all the items obtained from the UK.
- The Grantor is named as The Second Respondent and the Secured Party is the First Respondent.
- The so called ‘Investor Agreement’ dated 9 March 2019 lists:
- Seon UV
- Seon RO
- Solar Mat
- Transfer Tank and accessories
- The affidavit of Detective Hubbard includes an unsigned version of the ‘Seizure Order’ which Ms Holmes said she served on the Second Respondent. It lists 4 charges under the PPSR. Only 52253964 is attached. It is over the Seon RO which appears to be the description of the whole system. It also includes any other property the subject of a security interest.
- That charge may be invalid especially if the First Respondent is not actually the holder of a charge. However, registration grants rights upon registration. If the registered interest is to be challenged there is a procedure in the Act to be followed beginning with issuing and Amendment Demand. The Second Respondent has not done this. While it might also have invoked the Courts to correct the register it has not.
- The First respondent having registered a security interest over the Seon RO may seize it from the Second Respondent even if the later was the common law owner.  The security interests became ‘perfected’ on registration and seizure and attached when value was given or when the grant was made by the company.
- It follows that the common law ownership of the Second Respondent is trumped by the registration of the First Respondent’s interest unless and until the Second Respondent takes further legal action. I am bound to give effect to all legal and equitable interests in the property. The First Respondent has a statutory right to possess (and dispose of or keep) the Seon RO. Subject to the requirements in the Act relating to giving the company notice of how it is dealing with the collateral which the First Respondent appears not to have complied with. 
- Ms Holmes resigned on 24 April 2018 transferring her shares and debt to the other directors. This agreement did not transfer the rights of the First Respondent.
- The minutes of 13 March 2018 are sufficient to create a charge over all the equipment purchased from the UK and the perfected registered security interest of the First Respondent entitles it to possession over the Second Respondent.
- I order the Applicant to release the Seon RO and any other goods described in PPSR charges numbered 5223964, 52253983, 52254010 and 52254025 goods to the First Respondent pursuant to those charges. Any unlisted property is to be given the First Respondent as the person who, of the two contended for by the parties, is more likely to be the silent investor as the PPSR charges are wide enough to incorporate that property also.
- Published Case Name:
Daniel Gregory Hubbard v Holmes Establishment Pty Ltd and Wananchi Portable Water Purification Pty Ltd
- Shortened Case Name:
Hubbard v Holmes Establishment Pty Ltd
 QMC 10
21 Aug 2019