O'Brien v Glass[2015] QMC 1

MAGISTRATES COURT OF QUEENSLAND

1. [1]
   This is an application by a police officer pursuant to section 694 (2) of the Police Powers and Responsibilities Act 2000 (PPRA) seeking a declaration as to the ownership of a motor vehicle being a two door 1973 LJ Torana.
2. [2]
   Section 694 PPRA^[1] provides:

694 Application by police officer for order if ownership dispute

3. [3]
   The evidence provided was by affidavit and a statement with cross examination of the two respondents who have been served with the application claiming ownership:

• Affidavit of Constable S O'Brien sworn 29 December 2014;
• Affidavit of Constable B Thrupp sworn 29 December 2014;
• Affidavits of Tyson Victor Glass (first respondent) sworn 30 December 2014 and 25 February 2015;
• Affidavits of Mark Manteufel (second respondent) sworn 29 December 2015 and 26 February 2015;
• Statement pursuant to section 110A Justices Act 1886 of Philip Allan Woodbridge dated 2 March 2015.

Background

4. [4]
   In early 1994 the first respondent purchased an unregistered 1973 two door LJ Torana from a car dealer on Logan Road in Brisbane.  It was blue at that time and was not roadworthy.  He paid $2,200 for it.
5. [5]
   The first respondent spent another $2,000 to make the Torana roadworthy and got it registered with registration number 081 CDN^[2].  He says he subsequently spent over $20,000 to improve the vehicle^[3].  Most of the items of expenditure referred to in his affidavits were from memory rather than from records long gone due to the passage of time.
6. [6]
   On 15 November 1995 the first respondent parked the Torana in the driveway of his home.  It was locked.  He awoke the next morning to find it missing and reported it as stolen to police.  It was not insured at the time.  The first respondent said he also undertook “some searches” around the Bethania area to no avail^[4]. 
7. [7]
   There appears little dispute that the Torana may have changed hands a number of times since it was stolen up until 2008.
8. [8]
   On 17 June 2008 the second respondent purchased the Torana from Philip Woodbridge who was an employee of a classic and second hand car dealer, “ChevyThunder Downunder” near Southport. He paid $7,600 for it and was given a receipt which is exhibited to his affidavit sworn 26 February 2015^[5].  It is not disputed that, prior to purchase, he did not obtain a certificate of clear title or undertake searches to ascertain whether or not the Torana was stolen.  However, he said he had no reason to suspect it was stolen and had some personal knowledge of the person who sold the Torana to Mr Woodbridge as being a person of good repute.
9. [9]
   In his statement to police Mr Woodbridge generally confirmed the second respondent’s version of events although it appears he sold it to the second respondent in his private capacity and not on behalf of “ChevyThunder Downunder”^[6].  He said in early 2008 he acquired the Torana from a person by way of trade.  That person, Brett Curran, was not known to Mr Woodbridge at the time.  Curran told Mr Woodbridge that he had bought it from a Steve McNeill who is also not known to Mr Woodbridge^[7].  No further details are provided.
10. [10]
    The second respondent bought the Torana for the purposes of restoration.  He has exhibited a large number of colour photographs to his latest affidavit showing the progress of restoration.  Including purchase price he had spent $49,828.78 on the Torana.  He spent an additional $4,506.08 on items not yet installed and has spent a further $430 for which he cannot provide receipts^[8].  Details of these are also exhibited to his latest affidavit.  The second respondent gave evidence that he compiled these figures from actual receipts which he had kept.  A folder of these receipts were available in court but no issue was taken that the items of expenditure referred to in his latest affidavit accurately reflect amounts of expenditure in the receipts.  The receipts were not tendered as there was no issue about this.
11. [11]
    The second respondent said that on 15 December 2014, over six years after purchase, he attended the Department of Transport with a view to registering the Torana.  It was now red in colour with black leather interior^[9].  He was informed that the Torana was recorded as stolen.  Police were contacted and the Torana was seized by police later that day.  I note that Constable O'Brien and the first respondent deposed that this occurred on 15 October 2014 but nothing turns on this^[10].
12. [12]
    The first respondent was then contacted by police who said that he wanted the return of the vehicle.  Up until then he had no involvement with the Torana since it had been stolen in 1995.
13. [13]
    Whilst in the possession of police, storage fees have been accumulating at $27.50 per week.  The applicant seeks recovery of these fees.  At the hearing both respondents agreed to pay these fees should a declaration be made in their favour.  After the hearing Sergeant Costa emailed all the parties claiming towing fees of $77 in addition.

SUBMISSIONS

14. [14]
    The first respondent seeks a declaration that he is the owner of the Torana.  In reliance on a number of authorities which will be discussed below, it was submitted for the first respondent that “owner” in section 694 PPRA means the true owner and not ownership by merely having possession of a chattel^[11].
15. [15]
    The submission continues to the effect that in applying the common law principle “nemo dat quod non habit”, none of the people who possessed the Torana since it was stolen from the first respondent in 1995 had good title because each of those people’s title was infected by the invalidity of the thief’s title^[12].
16. [16]
    Further, it was submitted that section 24 Sale of Goods Act 1896 (Q’ld) (SGA)^[13] which is said to have modified the above common law position, does not apply in this case as the first respondent was not in any way responsible for the Torana being stolen^[14].  That is, unless the second respondent can demonstrate some conduct on the part of the first respondent precluding Mr Woodbridge’s authority in selling it to him, then the second respondent acquires no better title than what Mr Woodbridge had, or the thief had for that matter^[15]. 
17. [17]
    In citing passages of the judgement of Vickery J in Kino v Prestige Philately [2014] VSC 469^[16], it was submitted for the first respondent that if section 24 (1) did not apply by virtue of the exception, the first respondent must have been an intentional participant and have actual knowledge of the Torana being sold to the second respondent.  However, this is not the case.
18. [18]
    Section 24 provides:

24 Sale by person not the owner

19. [19]
    On the other hand the second respondent seeks a declaration that he is the owner.  In his latest affidavit he acknowledges that the first respondent would have suffered some loss and has offered to pay him $5,000 should a declaration be made in his favour^[17].  The first respondent rejects this.
20. [20]
    It was submitted for the second respondent that when he purchased the Torana on 17 June 2008, he had no reason to believe that the Torana was stolen^[18].  While it was unregistered, the Torana had a registration label attached (although expired) and registration plates^[19].  He was given a receipt.
21. [21]
    The second respondent has made significant improvements to the Torana at a considerable expense over a six year period and therefore is the owner of a significant portion of the components and improvements^[20].  He did not become aware that the Torana was stolen until he tried to register it on 15 December 2014^[21].
22. [22]
    In relying on Stephens v Williams [2008] QDC 320 and Hale v Bray [2009] QMC 2, it was submitted for the second respondent that he has at least possessory title to the Torana sufficient to sustain a declaration in his favour^[22].
23. [23]
    A submission was also made that section 25 SGA protects the second respondent being a bona fide purchaser for value.  Section 25 provides:

25 Sale under voidable title

When the seller of goods has a voidable title thereto, but the seller’s title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, if the buyer buys them in good faith and without notice of the seller’s defect of title.

DISCUSSION

24. [24]
    This case is complicated by the fact that the second respondent has invested large sums of money in significantly improving the Torana which raises the question about what orders this court can make on an application under section 694 PPRA.  Therefore, the consideration of the Sale of Goods Act 1896 below is subject to a consideration of the doctrine of accession which follows. 

Meaning of Owner

25. [25]
    A number of authorities have been referred to by the parties as to the meaning of “owner”.
26. [26]
    The first respondent referred to McCullough v Otto, an unreported decision of the Queensland Court of Appeal (10 December 1996) (Otto) which considered section 39 Justices Act 1886, the predecessor to section 694 PPRA so far as it relates to applications by police officers^[23]: 
27. [27]
    Section 39 relevantly provided:

Power of court to order delivery of certain property

39(1)  If property-

1. (a)
   has come into the custody or possession  - of police … The Magistrates Court may, on application by a police officer …

3. (c)
   make an order for the delivery of the property to the person who appears to be its owner; or

4. (d)
   if the owner cannot be ascertained – make such order in relation to the property as the court considers appropriate … (my emphasis)

2. (2)
   Subject to subsection (3), the order does not prevent a person from recovering the property by action from the person to whom the property is delivered under the order.

3. (3)
   An action for the recovery of the property may only be brought within 6 months after the making of the order.  …

28. [28]
    Pincus JA (with whom Thomas J (as he then was) agreed) considered whether the meaning of “owner” in the phrase “the person who appears to be its owner” in section 39 meant mere possessory title on the one hand or the true owner on the other.  In adopting the reasoning in Raymond Lyons v Metropolitan Police Commissioner [1975] 1 QB 321 (Lyons), they concluded that it meant true owner and that the words “appears to be the owner” simply suggested that a lower standard of proof and persuasion was required recognising that material before a Magistrate may be incomplete.  Section 694 PPRA does not have a like provision. 
29. [29]
    The circumstances in Otto and Lyons are somewhat different to the case at hand where there is a dispute between two persons as to the ownership of a specific chattel after significant improvements to the chattel have been made by the last person in possession.
30. [30]
    In Otto, police seized an enormous quantity of chattels^[24] worth hundreds of thousands of dollars from a barbed wire compound from a Mr Fee who was charged but who later died.  The police brought an application under section 39.  There was only one claimant, a Mrs Otto who was the administrator of Mr Fee’s estate.  The Magistrate ordered the return of all those goods to Mrs Otto despite harbouring suspicions about her evidence as to how they came into Mr Fee’s possession.  The Court of Appeal set aside the Magistrate’s decision because the Magistrate approached the matter on the basis that all Mrs Otto had to prove was de facto possession at the time of seizure. Also, the Magistrate should have considered whether Mrs Otto was owner in an absolute sense of each individual item specifically.
31. [31]
    In Lyons, the person seeking a declaration as to ownership, was a jeweller.  An expensive ring was left with him for valuation under suspicious circumstances.  The police obtained possession of the ring.  The owner could not be found.  The jeweller applied for an order that the ring be returned to him as the “person appearing to the …court to be the owner”. Pincus JA summarised the position in Lyons in Otto at p 19; 

  “It was clear that there was no question of the jeweller being the owner in an absolute sense; the argument was that the term “owner” means “the person appearing to the court to have the best right to possession in a case before civil courts”, such a person having good title against all except the true owner.  But the Divisional Court rejected that contention and held that the word “owner” was to be given its “ordinary popular meaning”.  The test adopted in the Lyons case was applied in Chief Constable of West Midland v White [1992] 157 J.P. 222 at 224.” 

32. [32]
    The above statements in Otto and Lyons were followed in Stephens v Williams [2008] QDC 320 (Williams) where Robertson DCJ said at [30]:

“In Otto (1996) 90 A Crim R 492 three members of the Court of Appeal considered the meaning of “owner” in s.39. As Thomas J (as his Honour then was) observed, the use of words “appears to be owner” suggest only a low standard of proof and persuasion is required. All members of the Court held that the word “owner” in s.39(1) refers to “the true owner of the particular property” according to its “ordinary popular meaning” of the word: Raymond Lyons & Co v Metropolitan Police Commissioner [1975] QB 311.  Depending on the circumstances of the case this could include possessory title through to the absolute owner. The Chief Justice [at 496] observed:

“In English law, there will often be a difficult relationship between concepts of “ownership” and “possession” and in a particular case the borderline may be difficult to state in a way that is beyond argument.  The common use of the phrase “possessory title “illustrates this. A good possessory title can often be the practical equivalent of ownership. At common law, the situation is that the person who is in possession of an item of personal property is, by virtue of that fact, entitled to claim it back from another person who, not being the owner of deriving title from the owner, tajes it out of his possession without his authority. As Isaacs and Rich JJ said in Russell v Wilson (at 546- 547): “Possession…is not merely evidence of absolute title: it confers a title of its own” and “possessory title is as good as the absolute title as against, it is usually said, every person except the absolute owner.”

33. [33]
    There was a dispute between two parties in Williams as to the ownership of a motor vehicle.  Stephens, who said he bought the vehicle in 2002 from a car yard, was later convicted of insurance fraud after claiming it was stolen^[25].  The vehicle, thought to be abandoned in 2006, was impounded by the local council pursuant to section 100 Transport Operations (Road Use Management) Act 1995 (TORUM) and later sold at public auction to Caloundra Wreckers who made improvements to the vehicle and resold it subject to registration.  Upon attempting to register it, the vehicle was recorded as stolen.  Robertson DCJ decided the case on the basis that Caloundra Wreckers were “bona fide purchasers for value without notice who had improved the vehicle in good faith”^[26] as against a claim by Williams who had been convicted of fraud for reporting the vehicle as stolen when it was not^[27].
34. [34]
    While adopting Otto as to the approach a court should take in determining “owner”, Robertson DCJ clearly did not accept William’s version of events.  The case was decided on that basis and not with reference to the provisions of the SGA argued in the present case.
35. [35]
    It should also be noted that Caloundra Wreckers bought the vehicle from the local council exercising a power of sale pursuant to statutory authority i.e. section 100 TORUM.  Although that provision was considered^[28], it seems to me that the decision may also be supported by reference to section 24(2) (b) SGA.  Section 24 (1) cited above provides for the “nemo dat quod non habit” rule.  Subsection 24 (2) (b) provides for exceptions to that rule:

   24 Sale by person not the owner

 (1)  …

 (2)  This Act does not affect—

   (a)  …

   (b)  the validity of any contract of sale under any special common law or statutory power of sale or under the order of a court of competent jurisdiction. (my emphasis)

36. [36]
    Stephens v Williams was referred to in Hale v Bray & Symons [2009] QMC 2 where, unlike the present case in which the Torana was stolen, Bray bought a vehicle as a wreck and spent money in improving it.  He then sold the vehicle to X who took possession of it.  X’s cheque was dishonoured.  In the meantime the vehicle was sold to Y who then sold it to Symons.  Bray had reported it stolen to the police although it was obtained by fraud, not stolen.  After considering a number provisions in the SGA and finding against Bray, the matter was decided finally in Symons’ favour^[29] on the basis of section 25 SGA cited above.
37. [37]
    Unlike Otto and Lyons, there are two persons claiming ownership in this case.  Those decisions in my view can be explained.  Although a court must consider the natural meaning of “owner”, mere possession of a chattel at any given point in time is not necessarily sufficient to establish ownership.  In Otto, the fact that Mr Fee had physical possession of all those chattels in suspicious circumstances, did not constitute proof of ownership in accordance with the ordinary popular meaning of “owner”.  In Lyons, the jeweller’s possession of the ring left in suspicious circumstances for a valuation was not enough to establish ownership in accordance with the ordinary popular meaning of “owner”.  But that is not to say that a court is precluded from concluding that possession is sufficient to determine ownership within the facts and legislative context of a particular case.  This was the result in Hale v Bray & Symons.
38. [38]
    Like the present case, there were two persons claiming ownership in Hale v Bray & Symons.  While the court accepted the meaning of “owner” as in Otto, the decision was based on the provisions of the SGA as they applied to the facts of that case.  There, section 25 SGA applied in favour of the ultimate purchaser who was in possession of the vehicle.  He was a bona fide purchaser for value without notice of any defect in the seller’s title in circumstances where the seller’s voidable title was not avoided by the owner (Bray) prior to the purchase.

Transfer of Title – section 24 Sale of Goods Act 1896 (Nemo dat quod non habit)

39. [39]
    The “nemo dat quod non habit” rule i.e. no one can transfer a better title to goods than he himself possesses, is expressed in section 24 SGA cited earlier.  The first respondent referred to Kino v Philately & Ors [2014] VSC 469 per Vickery J at paras [44] & [45] dealing with the Victorian cognate provision in an action for conversion^[30]:

“44 The nemo dat rule means that a true owner does not lose his or her title to goods simply because of some wrongful act on the part of a thief who transfers possession of those goods to an innocent third party who acted in good faith in paying money to the thief for the goods. The rule was stated by Lord Cairns LC in the House of Lords decision of Cundy v Lindsay ^[31]in the following terms:

[W]ith regard to the title to personal property, the settled and well known rules of law may, I take it, be thus expressed ... the purchaser of a chattel takes the chattel as a general rule subject to what may turn out to be certain infirmities in the title ... If it turns out that the chattel has been stolen by the person who has professed to sell it, the purchaser will not obtain a title.

45 By way of summary: a thief, as a non-owner, cannot convey ownership in a chattel to another. In this situation the true owner retains his or her title to recover it by a claim in conversion. This claim can be maintained against the thief or another defendant, (or defendants for that matter), as long as the owner can identify her or his property in the hands of the relevant defendant.”

40. [40]
    On the available evidence in the present case, I accept that the first respondent acquired good title to the Torana when he purchased it in 1994 and that it was stolen from his driveway in 1995^[32].  For the purposes of section 24 SGA in this case, the “goods’ are the Torana, the “seller” is Mr Woodbridge, the “owner” is the first respondent, and the “buyer” is the second respondent. 
41. [41]
    Subject to the exception in section 24 SGA, in applying the “nemo dat” rule as expressed therein, the thief did not acquire good title to it and any person who possessed it thereafter did not.  I accept the first respondent’s submissions on this point. 
42. [42]
    The next question is to consider the exception in section 24 SGA i.e. whether the first respondent is precluded by his conduct from denying the seller’s authority to sell.
43. [43]
    The exception is commonly referred to as title by estoppel.  Apart from the law of agency, it can arise in a range of circumstances for example where an owner represents that the seller is the owner or where the owner, through negligence, enables the seller to give the impression of owning the item.  On the facts of the current case, it is unnecessary to consider these further^[33]. 
44. [44]
    The first respondent again referred to Kino on this point.  There, valuable stamps were stolen, on-sold, and then purchased by an innocent third party.  It was argued that the true owner was estopped from denying the seller’s authority to sell because she failed to report the stamps missing to the appropriate authorities.  There was no positive conduct or statement by the owner which would enable the thief to give the appearance of being the owner or of being authorised to dispose of the stamps^[34].  In fact, the owner did not know or suspect the stamps had been stolen until much later^[35].  At paragraphs [73] & [74] Vickery J. said:

“73 To my mind, the proper construction of the section requires an owner to be an intentional participant, the necessary intent being based upon actual knowledge of the essential facts which should inform the owner’s conduct before a duty will arise. It is a duty, which, if breached and is the proximate or real cause of a third party being induced to purchase the goods, will establish the exception to the nemo dat principle, with the further consequence that the owner may lose title.

74 In the circumstances of the present case, it is actual knowledge on the part of the property owner, Mrs Kino, of the fact that Mr Kino had come into possession of the stamps and had done so dishonestly which needs to be established before a s 27 duty will arise to refrain from remaining silent. The duty, if it arose, was to speak out on the basis of the dishonesty of Mr Kino, the person who came into possession of the stamps and who may have sought to transact with others in relation to them. If this was unknown to Mrs Kino, how could she discharge her duty? What was she to say and to whom? In the absence of some other positive failure on the part of Mrs Kino, in my opinion, a mere failure to act when she had no knowledge of any relevant wrongdoing, does not operate to preclude the operation of the nemo dat rule.”   

45. [45]
    In this case, the first respondent bore no responsibility for the Torana being stolen and he took immediate action to report it to the police and searched for it unsuccessfully.  He has not done anything that would preclude him from denying Mr Woodbridge’s authority to sell to the second respondent.  In my view, the exception in section 24 SGA does not apply.  This means the thief and every subsequent person in possession of the Torana including Mr Woodbridge and the second respondent did not acquire title.

Sale under a voidable title – Section 25 Sale of Goods Act 1896

46. [46]
    The second respondent submitted that section 25 SGA gives him good title to the Torana.  On the evidence I accept that the second respondent was a bona fide purchaser for value without notice of the seller’s defect in title.  The bone of contention is whether the seller’s title was voidable or not.
47. [47]
    Section 25 SGA is directed to those cases where title passes to the seller from the owner which is voidable for a variety of reasons e.g. fraud, misrepresentation, non-disclosure, duress or undue influence to name a few^[36].  An example to hand is Hale v Bray & Symons discussed above.  Pursuant to a contract, title passed to the seller who took possession of the vehicle before the cheque was cleared.  The cheque was dishonoured.  The owner could have avoided the seller’s title but did not in that case affording Symons the benefit of section 25 SGA.
48. [48]
    In the current case, the Torana was stolen.  There was no contract.  The thief did not acquire any title at all.  There was no title in the thief or subsequent person in possession of the Torana to be avoided.  The seller, in this case Mr Woodbridge, did not acquire any title as against the owner (the first respondent) from whom the Torana was stolen and neither did the second respondent.  Consequently, section 25 SGA is of no assistance to the second respondent in this case.
49. [49]
    I shall now consider the doctrine of accession.

ACCESSION

50. [50]
    The word “accession” is relevantly defined in the dictionaries; Being added; thing added (e.g. book to library), increase, addition; (law) improvement or natural growth of property^[37].

An increase by something added^[38]

51. [51]
    Halsbury’s Laws of Australia says (footnotes omitted):

[315-350] Accession Where personal property is increased, improved upon or added to, whether by natural means such as pregnancy of animals or growth of crops, or artificial means, such as embroidery or attachment such that separation is impracticable, the owner of the original item is entitled to the improved item.

52. [52]
    Halsbury’s Laws of England 4^th edition (Vol 35, para 1138 at 634)^[39] describes it in similar fashion:

“If any corporeal substance receives an accession by natural or artificial means, as by the growth of vegetables, the pregnancy of animals or the embroidery of cloth, the original owner is entitled by his right of possession to the property in its improved state.  Similarly, when the goods of one person are affixed to the land or chattel, for example a ship, of another, they may become part of it and so accrue to the owner of the principle thing.”

53. [53]
    Put simply, this principle, which had its origins in Roman law modified by English law, is that title in a minor chattel is divested if it has been incorporated into the major chattel.  That is, the owner of the principal chattel acquires ownership of the minor chattel by operation of law^[40].
54. [54]
    The first respondent has referred to two cases which examine in some detail the history and application of the doctrine of accession: Rendall v Associated Finance Pty Ltd [1957] VR 604 (Full Court Victoria Supreme Court)^[41] and McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303 per Young J.
55. [55]
    In Rendall, the plaintiff hired an engine to P who put it in a truck that was subject to hire purchase. P defaulted and the hire purchase company repossessed.  After considering and accepting the approach taken in another motor vehicle case, Lewis v Andrews and Rowley Pty Ltd (1956) 73 WN (NSW) 670^[42], it was concluded that ownership of the engine remained with the plaintiff and did not pass to the hire purchase company by accession.  The court applied the test articulated in Lewis at page 6 (austlii report):

“We consider the test laid down by Ferguson J (in which Roper CJ in Eq concurred) is the proper one to apply in this class of case in which accessories in the nature of spare parts are attached to a motor vehicle.  Prima facie the property in the accessory does not pass to the owner of the vehicle if the owner of the accessory did not intend it to pass.  It is for the defendant by proper evidence to show that the necessity of the case requires the application of principles whereby the property is deemed to pass by operation of law.  The accessories continue to belong to their original owner unless it is shown that as a matter of practicability they cannot be identified, or, if identified, they have been incorporated to such an extent that they cannot be detached from the vehicle.”

56. [56]
    The plaintiff in Lewis leased a vehicle from the owner without notice that it was subject to a bill of sale and made improvements to it.  The owner defaulted and the innocent third party (the defendant) seized it.  It was held by the majority that the plaintiff intended to retain the property and once it was found that it was his property when affixed to the vehicle, the onus shifted to the defendant to show that the property in them had passed (at 673).  It was further held that accession only applies where as a matter of practical necessity, namely, in cases of inextricable mixture or in cases where the chattel could not be removed without irreparable damage, that property passed with the vehicle (at 672).  The submission that the attached chattel becomes fixed to the vehicle if essential to its operation so that accession applies was rejected (at 672, 673).  These observations were adopted in Thomas v Robinson [1977] NZLR 385.
57. [57]
    In Thomas v Robinson [1977] NZLR 385 at 391, T bought a car in good faith from C without notice that it was subject to a hire purchase agreement.  T made significant improvements to the car.  C defaulted and the car was repossessed. T brought an action in conversion and detinue in respect of the chattels replaced by him in the car.
58. [58]
    In taking a practical approach, Speight J concluded that if the minor chattel could be detached, an order for its return could be made or alternatively, compensation^[43].  A schedule of motor parts replaced since purchase are included in the judgment at 386 & 387.  They include the reconditioned engine, extractors, carburettor, exhaust system and manifold, muffler, clutch and pressure plate and list goes on.  Speight J contrasted those cases where the chattels were added by some irreversible process e.g. welding, compared with mechanical constructions that could be separated into their integral parts: at 389, 390 and 392.  He also found that where the chattels annexed belong to an innocent third party, there is no intention by that party to pass property in them; the intention being to add those chattels to the principle chattel believing both to be his: 390. 
59. [59]
    And at 392 Speight J concluded:

“…I hold that the correct conclusion in respect of the “functional” parts of the machinery, viz, engine, extractors, carburettor, exhaust muffler, and the like, is that they remained the property of the appellant.  Had they been available the appellant would have been entitled to their return, he paying for the labour of removal, and being obliged to reinstate the original parts or their equivalent.  Because the vehicle has been sold the appellant is entitled to a measure of damages representing the value by way of addition to the vehicle measured doubtless by a comparison of prices before and after alteration.” 

60. [60]
    The principles in Thomas v Robinson have been applied with approval in Australia: see McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303 per Young J. 
61. [61]
    In the present case, the second respondent has exhibited to his latest affidavit (MM6) his restoration expenses of items already installed in the Torana.  The list exceeds five pages including a 186 cc motor ($2,200), reconditioning of that motor ($1,387), gear box ($350) and the like which appear to fall within Speight J’s test.  On the other hand there is the cost of replacing the front end and painting the Torana ($15,400), and the cost of interior upholstering ($4,125) which appear not to fall within that test.
62. [62]
    The first respondent submitted that title to unidentified work passes to the first respondent.  They cannot therefore be separated from the Torana.  Here a detailed list of work done is in evidence.  It appears many of those items have been identified.
63. [63]
    It was further submitted that the identified work, as a matter of practicality, cannot be detached from the Torana.  It was submitted that the engine and slip differential for example cannot be removed without destroying their ability to function.  Accordingly, it was submitted that title in them passes to the first respondent by accession.  Submissions did not deal with any of the other items in the list.
64. [64]
    In support of that, the first respondent relied on comments made in McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303 per Young J. as apposite to this case.  In that case, a laminated hull of a yacht was worth $1,777 whereas the work done on that hull over time was worth $24,409.  Work was done gradually.  At 311 Young J said:

“Whilst it may be that in some cases one can deal with such a distinction by way of comparing the respective values of the things involved, in the instant case counsel for the plaintiff, I believe, put up a complete answer to the proposition.  He submitted that it was quite incorrect to compare the total of the work done to the laminated hull with the value of the hull.  Quite clearly the work was done gradually and the true position was that some work was done to the laminated hull making it more valuable, at that stage that work acceded to the laminated hull, and the whole of the product belonged to the plaintiff.  A little further work was done and that little further work acceded to the hull and again the hull became the plaintiff’s property, and this was the result as each extra bit of work was gradually done to the hull.  In my view, that is the correct way of looking at the case.”

65. [65]
    In McKeown, the work undertaken is described at pages 305 & 306 of the report.  It included making the floors and stringers^[44] which were incorporated into the hull to complete the hull moulding and then furniture, hatches and headliner^[45] were made.  The engine had to be fitted before the deck was joined on.  The deck and deckliner were then joined to the hull. 
66. [66]
    After considering cases such as Lewis and Thomas v Robinson, Young J at page 311 understandably came to the view that as the yacht is almost ready to be sailed, it is a chattel that would be injuriously affected if the accretions added were removed.  The work was gradually done “by building upon the laminated hull piece by piece until it has taken its current form.  To remove the accretions would just be to destroy the current article.  Accordingly … the doctrine of accession appears to apply.”
67. [67]
    The first respondent said the work on the Torana was done gradually over six years and invited this court to take the same approach.  The submission is rejected.
68. [68]
    The work done on the yacht was in a sense customised with progression of work being integrated into or onto the hull.  Work was done on the hull itself and other work e.g. the installation of the engine had to be done before the deck was joined on to the hull.  To remove the engine, for example, would require the deck be removed from the hull and other items dismantled.  In applying the tests on accession outlined earlier and accepted in McKeown, the conclusion on the facts in McKeown is understandable^[46].
69. [69]
    That case is in contrast to the present case.  While work was done over time, as outlined in Lewis, in the modern age of motor cars, “automobile parts are generally standardised and interchangeable”: at 7 (austlii report).  This approach has been adopted in other motor vehicle cases including Thomas v Robinson the principles of which were applied to the facts in McKeown.  However, McKeown is distinguishable to the present case.

DISPOSITION

70. [70]
    Given the conclusions above, it is difficult to determine what orders should be made in an application such as this.  This case has not been conducted as a common law action in conversion or detinue where there are broader ranging powers as to the orders a court can make.  There are no authorities on whether the scope of section 694 extends to awarding compensation or not.
71. [71]
    Subsection 694(2) provides simply for a court to make a declaration as to ownership. Subsection 694(4) provides the court can make the order considered appropriate.  I take this to mean that the appropriate order is one of a declaration of ownership to a particular person.  If a court cannot decide ownership, then an order for disposal can be made that is appropriate: subsection 694(5).  There is no express power to award compensation as in the case of common law actions in conversion or detinue.  In any case, such an order cannot be made on the state of the evidence and lack of submissions in that respect. 
72. [72]
    I also note that section 694 does not have a similar provision to subsections 39 (2) & (3) Justices Act 1886 which provide that any person can bring an action within 6 months against the person in whose favour an order has been made under section 39^[47].  In Otto, the majority treated an order under section 39 as “not immediately binding” (at 17 per Pincus JA). That does not appear to be the case in the current application. 
73. [73]
    In the present case, while there is evidence as to the extent of the work undertaken by the second respondent on the Torana, there is no evidence as to the current market value of the vehicle in its current state.  The current market value may not necessarily equate to the value of the work undertaken by the second respondent.  Further, except for the engine and slip differential, there have been no submissions or evidence as to the severability or otherwise of the other items installed by the second respondent in accordance with the principles on accession outlined above. 
74. [74]
    The first respondent owns the Torana.  However, the second respondent has identified a number of improvements which appear to remain his property.  He has spent a huge amount of money in this respect compared to the original cost of the vehicle.  The Torana is in the possession of the Police Service accruing storage fees at $27.50 per week.
75. [75]
    At this point, the parties should have the opportunity of resolving the matter in the light of these reasons.  This should be attempted expeditiously.  If the parties cannot agree on who retains the Torana with appropriate adjustments as to compensation, then the parties will have to turn their minds to who will be responsible for removing the detachable items that remain the property of the second respondent and restoring, as far as possible, the vehicle to its previous condition.  The question then remains as to what orders this court can make on an application under section 694 as opposed to a common law action.  Section 694 does not have provisions similar to those in subsections 39(2) & (3) Justices Act 1886 where any party could instigate common law proceedings despite an order made under that section.
76. [76]
    I will adjourn the matter to the registry with liberty to apply on 3 clear days’ notice.  If the matter is brought back on, directions will need to be given as to the further conduct of the matter.  The question as to the court’s power to award compensation or any other ancillary orders in this application will need to be addressed.  Given their competing claims, if the parties cannot resolve the matter by agreement, they should also direct their mind to the courts powers in section 694(5).