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  4. Warrehe Pty Ltd t/a Activfreight v Millards Noosa Motors Pty Ltd - [2015] QCAT 38

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Warrehe Pty Ltd t/a Activfreight v Millards Noosa Motors Pty Ltd[2015] QCAT 38

Warrehe Pty Ltd t/a Activfreight v Millards Noosa Motors Pty Ltd[2015] QCAT 38

CITATION:

Warrehe Pty Ltd t/a Activfreight v Millards Noosa Motors Pty Ltd & Ors [2015] QCAT 38

PARTIES:

Warrehe Pty Ltd t/a Activfreight

(Applicant)

 

v

 

Millards Noosa Motors Pty Ltd

Brian Lennox Millard

Lee Millard

(Respondent)

APPLICATION NUMBER:

GAR231-14

MATTER TYPE:

General administrative review matters

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Paratz

DELIVERED ON:

9 February 2015

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. Warrehe Pty Ltd and the Chief Executive may make any further submissions as to the issue of financial loss, and as to any appropriate orders, with a copy to be filed in the Tribunal and a copy to be given to each of the other parties and to the Chief Executive, by 4pm on 6 March 2015.

CATCHWORDS:

PAMDA – CLAIM AGAINST THE FUND – where the lessor put a car on consignment for sale with a car dealer – where the dealer sold the car but did not pay out the finance owing – where the car has not been repossessed - where the financier has made demand for moneys owing against a third party guarantor – whether the claimant lessee has suffered financial loss – where the parties are invited to make submissions as to financial loss

Property Agents and Motor Dealers Act 2000 (Qld), s 470(1), s 488(2)

Money 3 Corporation Ltd v Schwenke and Anor [2011] QCAT 512

Powell v Sunshine CCC Pty Ltd t/a Sunshine Coast Cars and Caravans & Ors [2014] QCAT 004

Cornish v Vacchini [2013] QCAT 002

Pattino v Cottam [2012] QCAT 309

Smeeton v The Chief Executive, Department of Justice and Attorney-General [2013] QCAT 339

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).

REASONS FOR DECISION

  1. [1]
    Warrehe Pty Ltd t/a Activfreight (‘Warrehe’) purchased a 2011 Mercedes Benz C250 CDI Avantgarde sedan on 24 November 2011, by obtaining an Asset Loan from Mercedes Benz Financial Services (‘Mercedes’). The loan was secured by a Chattel Mortgage over the vehicle, and the interest was registered on the Personal Property Securities Register. The loan provided for monthly repayments of $1,173.62 with a residual of $34,909.00 due on 26 November 2014.
  2. [2]
    Warrehe placed the car on consignment to sell with Millards Noosa Motors Pty Ltd t/a Millards Noosa Motors (‘Millards’) on 6 November 2012.
  3. [3]
    Millards sold the vehicle on 22 December 2012 for $65,500.00, but did not pay out the finance at the time.
  4. [4]
    The Directors of Millards at all material times were Brian Lennox Millard and Lee Millard.
  5. [5]
    Millards paid Warrehe an amount of $3,800 on 15 January 2013, saying this represented the “profit” on the sale. It said that it would pay out the finance.
  6. [6]
    Millards did not pay out the finance. Mercedes debited the usual payment of $1,173.62 from Warrehe’s account on January 2013. Warrehe contacted Millards who agreed to pay future monthly payments until the finance was paid out.
  7. [7]
    Warrehe made monthly payments of the finance from 23 December 2012 until 24 April 2014 when it ceased making payments. The amount paid by Warrehe to Mercedes was $19,951.54. In that period Millards paid Warrehe $9,384.62 representing 8 monthly payments
  8. [8]
    Warrehe instructed solicitors to take legal proceedings against Millards on or about 17 October 2013 and incurred legal costs of $2,449.52.
  9. [9]
    On 8 April 2014 Warrehe lodged a Claim against the fund pursuant to the Property Agents and Motor Dealers Act 2000 (Qld). The claim was for $54,508.15 calculated as follows:

Mercedes Finance payout $43,843.29

7 x missed monthly payments $ 8,215.34

Current legal costs  $ 2,449.52 

  1. [10]
    Mr Millard wrote to the Office of Fair Trading on 16 May 2014. He did not dispute any of the facts and apologised for the situation. He said he was hoping to be able to recoup some monies from some property sales.
  2. [11]
    The claim was initially referred to the Tribunal by the Chief Executive for determination under the Act on 9 July 2014. Directions were made on 14 July 2014 for the filing of material by the parties. On 27 August 2014 the Chief Executive further advised as to the inclusion of Lee Millard as a respondent, based on further company searches, and further Directions were made on 7 October 2014 allowing for Lee Millard to file material.
  3. [12]
    Mr Millard provided a submission by an email dated 8 September 2014 to the Tribunal as follows:

Due to the collapse of the above business the above claim has no defence and I am in agreement with the applicants version of what has happened.

There is a winding up order on the company due to go before the courts on the 24th September and again there is no funds to repeal the action.

As for myself, I need to wait and see if I have any way of paying these debts I am about to incur, otherwise I will have to go bankrupt.

  1. [13]
    Lee Millard made a written submission dated 17 October 2014 saying that she was bankrupt, but not addressing or contesting any of the issues.
  2. [14]
    The Chief Executive made submissions dated 8 July 2014. It noted that:[1]

In order to establish to establish a valid claim against the Claim Fund, the Second Applicant must demonstrate that it suffered financial loss due to the happening of an event mentioned in section 470(1) of PAMDA by a relevant person. Section 470(1) relevantly provides that:-

  1. (1)
    A person may make a claim against the fund if the person suffers financial loss because of the happening of any of the following events –
    1. (a)
      The contravention of any of the following provisions by a relevant person –
  • Section 573
  1. (e)
    a stealing, misappropriation or misapplication by a relevant person of property entrusted to the person as agent for someone else in the person’s capacity as a relevant person.
  1. [15]
    The Chief Executive submitted that Warrehe was the proper applicant; and that the vehicle was sold on consignment, but that the dealer had failed to remit the net proceeds of the sale, and that an event within the meaning of section 470(1) of the Act had occurred.[2]
  2. [16]
    The basis of a claim by Warrehe is not disputed by the respondents, and is supported by the submissions of the Chief Executive. I accept that a claim against the claim fund by Warrehe is made out, if financial loss can be established.

Financial Loss

  1. [17]
    There is difficulty in assessing what financial loss Warrehe has suffered. To date, there is not clear evidence of the actual loss that has been suffered by it.
  2. [18]
    Warrehe has a contingent debt owing to Mercedes. No judgment has been obtained by Mercedes against Warrehe.
  3. [19]
    It seems that Mercedes have elected not to pursue their rights as Mortgagor under the chattel mortgage to seize the vehicle and sell it, and to then pursue Warrehe for any shortfall between the sale price and any amount owing under the loan at that time.
  4. [20]
    It is not disclosed why Mercedes has not sought to either repossess the vehicle, or to take action against Warrehe for default on the monthly payments and payment of the residual.
  5. [21]
    It is likely that correspondence has passed between the solicitors for Warrehe and Mercedes advising them of the claim against the claim fund, and that Mercedes has elected not to pursue its rights to repossess the vehicle (leaving the vehicle with the innocent third party purchaser), and has agreed not to pursue action against Warrehe for default, pending resolution of this claim. Mercedes may have chosen to do so for matters of public relations.
  6. [22]
    However, Mercedes assert a right to interest at 14% under the Loan Agreement on all unpaid monies. Warrehe have included such a calculation in their submissions.
  7. [23]
    Whilst forsaking action against either of the innocent owners and buyers of the Mercedes vehicle is of benefit to those customers, this may have the effect of increasing the impost on the Claim Fund which is effectively being asked to bear the cost of the course of action of Mercedes who benefit if they gain interest at a rate well above the rate that would be awarded on a default judgment debt (which is currently 6.5%). Mercedes do not appear to have mitigated their loss.
  8. [24]
    Alternatively it might be argued that this course of action by Mercedes is the most commercially prudent, as it avoids the costs of recovery action which may outweigh the interest component. This may be another motivation for Mercedes to forebear from such action.
  9. [25]
    The need for a claimant to establish a financial loss was discussed by the learned Senior Member in Pattino v Cottam[3] where a claimant bought a car which was subject to finance:

(9) Although the car is subject to an encumbrance to ANZ, Mr Pattino retains possession of it and, to date, has not been asked to clear the debt owing to that financier.

(10) There are letters from Mr Pattino’s lawyer to the Office of Fair Trading advising that Mr Pattino is trying to negotiate a payout, but there is no evidence of what the payout figure might be. The Act does not allow for the payment of compensation “in case” a claim is made in the future; I must be satisfied that Mr Pattino, in fact, has suffered a financial loss.

(11) Because Mr Pattino retains possession of the Honda, and there has been no claim from ANZ, I am not satisfied that Mr Pattino has suffered a financial loss because of Mr Cottam’s breach of the Act in failing to ensure clear title.

  1. [26]
    In Smeeton v The Chief Executive, Department of Justice and Attorney-General,[4] I considered when a financial loss arose:

[25] However, Mr Smeeton arguably did not suffer financial loss until either the finance company repossessed the vehicle on 14 June 2011, or more likely when the finance company demanded payment of $28,579.39 from him on 23 August 2011 after having sold the vehicle. The latter date is the first date upon which a loss crystallised.

  1. [27]
    The determination of financial loss in this matter is problematic. The Claimant has put forward a number of different claims which have varied as interest has accrued.
  2. [28]
    The Chief Executive submitted that Warrehe “should furnish the Tribunal with an up-to-date transaction statement from the financier, which includes the amount required to pay out the loan and a list of all loan repayments made since 22 December 2012, in order to assist the Tribunal in making an appropriate order.”[5]
  3. [29]
    It is unclear what the payout figure as at the date of sale on 22 December 2012 was. No clear figure has been provided. The sale price was $65,500.00 and Millards refers to “profit” of $3,800.00. This may suggest that the payout figure as at the date of sale was the difference between those figures, being $61,700.00.
  4. [30]
    Warrehe has variously claimed as follows:-
    1. a)
      It claimed $52,058.63 (exclusive of legal costs) in its Claim Form on 8 April 2014. (This was comprised of a payout figure of $43,843.29 plus missed payments of $8,215.34)
    1. b)
      In a submission to the Tribunal dated 4 August 2014 it claimed $54,844.03 + Interest. (This was comprised of a payout figure at that date of $37,239.73 plus missed payments of $17,604.30)
    1. c)
      In a submission to the Tribunal dated 10 November 2014 it claimed $55,684.03. (This was comprised of the Residual of $34,909.00 plus missed payments of $18,777.92 plus interest it calculated of $1,997.11)
  5. [31]
    The only document that appears to evidence a claim against Warrehe by Mercedes is an email from Mercedes to Paul Shaw (a Director of Warrehe) dated 30 October 2014 which says simply “The Interest rate for any instalment and the residual that is presented after due date is 14%”.
  6. [32]
    Mr Shaw sent an email to the Tribunal dated 29 January 2015 which advised:

Also Mercedes Benz Financial Services have advised that they will now be pursuing Legal Action against myself to recoup the residual of the loan as I have given them a Directors Guarantee over the contract. This puts myself into a very difficult position wherein the only asset to cover the cost of the residual is the family home.

  1. [33]
    It therefore now appears that Mercedes are in fact making a claim against Mr Shaw personally.
  2. [34]
    This situation highlights the difficulty where a claim is made prematurely and the financial loss has not crystallised. The claim by Warrehe is premature as it has as yet not suffered any loss (apart from the monthly payments it has made). If Warrehe had in fact paid out the loan, then it would be clear that it had suffered a loss and a payment could be made from the Claim Fund to Warrehe.
  3. [35]
    In this matter, Mercedes have so far suffered a financial loss, as they have not been paid the monies due on a loan contract that is in default, and under which all monies are due and payable. If the vehicle had been repossessed, then the purchasers would have suffered a financial loss.
  4. [36]
    As matters stand, Warrehe has not yet suffered financial loss, except for the monthly payments it has made since the sale, and which were not repaid by Millards. The claim is not yet properly made.
  5. [37]
    It is understandable why Warrehe has not paid out the loan, as it does not have the vehicle, and has presumably used the funds that would have gone towards the residual to put towards a replacement vehicle.
  6. [38]
    Mr Shaw suggests that he can only pay the amount demanded by Mercedes by selling his house. There is no suggestion that Mr Shaw is not an innocent party.
  7. [39]
    The difficulties that Warrehe has expressed in calculating a claim figure is precisely because interest is said to still be running and the figure is therefore changing. This highlights that the loss has not crystallised.
  8. [40]
    Warrehe would not in the usual course of events be the claimant. The Financier would repossess the vehicle, and the innocent Third Party purchaser would be the one making a claim on the Fund, and they would clearly have suffered financial loss. As long as the sale price of the vehicle exceeded the amount outstanding on the finance there would be no claim by Mercedes against Warrehe. It is only because of the arrangement that seems to have been arranged with Mercedes, of which no evidence is available, that Warrehe is still involved in this matter at all.
  9. [41]
    Section 488(2) of the Act provides as follows:

488 Deciding claims other than minor claims

  1. (1)
    The tribunal may allow the claim, wholly or partly, or reject the claim.
  2. (2)
    However, the tribunal may allow the claim only if satisfied, on the balance of probabilities, that –
  1. (a)
     an event mentioned in section 470(1) happened; and
  1. (b)
     the claimant suffered financial loss because of the happening of the event
  1. [42]
    The effect of s 488(2) is clearly that a claim can only be allowed if financial loss has been suffered.
  2. [43]
    I will not make any final order until Warrehe and/or the Chief Executive has an opportunity to make submissions as to the question of financial loss, and as to any suitable orders which I can, and should make. I will allow time for those submissions.

Costs

  1. [44]
    Warrehe has claimed $2,449.52 for legal costs. These were costs it incurred in pursuing Millards outside the Claims Fund process through Magistrates Court action.
  2. [45]
    As the Chief Executive has noted in other matters, the Tribunal has previously held that the Fund should not pay an applicant’s legal costs to obtain judgment before making a claim against the Fund; and the Fund should not bear the costs of an applicant’s decision to pursue a course of action that it was not required to pursue before making a claim.[6]
  3. [46]
    I therefore will not order that the costs of $2,449.52 be paid from the fund.

Directions

  1. [47]
    I direct that:
    1. (1)
      Warrehe Pty Ltd and the Chief Executive may make any further submissions as to the issue of financial loss, and as to any appropriate orders, with a copy to be filed in the Tribunal and a copy to be given to each of the other parties and to the Chief Executive, by 4pm on 6 March 2015.

Footnotes

[1]  Submissions Chief Executive 8 July 2014 at [17].

[2]Powell v Sunshine CCC Pty Ltd t/a Sunshine Coast Cars and Caravans & Ors [2014] QCAT 004; Cornish v Vacchini [2013] QCAT 002.

[3]  [2012] QCAT 309.

[4]  [2013] QCAT 339.

[5]  Submissions Chief Executive 8 July 2014 at [26].

[6]Money 3 Corporation Ltd v Schwenke and Anor [2011] QCAT 512 at [13].

Close

Editorial Notes

  • Published Case Name:

    Warrehe Pty Ltd t/a Activfreight v Millards Noosa Motors Pty Ltd & Ors

  • Shortened Case Name:

    Warrehe Pty Ltd t/a Activfreight v Millards Noosa Motors Pty Ltd

  • MNC:

    [2015] QCAT 38

  • Court:

    QCAT

  • Judge(s):

    Member Paratz

  • Date:

    09 Feb 2015

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Cornish v Vacchini [2013] QCAT 2
2 citations
Jump To
Cite 1 - [2013] QCAT 2
Cite 2 - [2013] QCAT 2
Money 3 Corporation Ltd v Schwenke and Anor [2011] QCAT 512
2 citations
Jump To
Cite 1 - [2011] QCAT 512
Cite 2 - [2011] QCAT 512
Pattino v Cottam [2012] QCAT 309
2 citations
Jump To
Cite 1 - [2012] QCAT 309
Cite 2 - [2012] QCAT 309
Powell v Sunshine CCC Pty Ltd t/a Sunshine Coast Cars and Caravans & Ors [2014] QCAT 4
2 citations
Jump To
Cite 1 - [2014] QCAT 4
Cite 2 - [2014] QCAT 4
Smeeton v The Chief Executive, Department of Justice and Attorney-General [2013] QCAT 339
2 citations
Jump To
Cite 1 - [2013] QCAT 339
Cite 2 - [2013] QCAT 339

Cases Citing

Case NameFull CitationFrequency
Nowill v Millards Noosa Motors Pty Ltd [2015] QCAT 1781 citation
Senlake Pty Ltd t/as Auscolour v Millards Noosa Motors Pty Ltd [2016] QCAT 2202 citations
Warrehe Pty Ltd v Millards Noosa Motors Pty Ltd (No 2) [2015] QCAT 1511 citation
1

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