Fin One Pty Ltd v Kucharski[2017] QMC 17

MAGISTRATES COURT OF QUEENSLAND

The originating application and relieve sought

1. [1]
   The applicant applies by originating application:

1. (a)
   for a declaration pursuant to s 123 Personal Property Securities Act 2009 (Cth) that it be entitled to lawfully repossess a Mitsubishi Triton Utility, the subject of a loan agreement between the parties;

2. (b)
   for orders allowing it to lawfully enter upon the respondent’s land;

3. (c)
   and directing any person who possesses it to hand it over;

4. (d)
   for orders that Queensland police officers assist;

5. (e)
   that the respondent be restrained from preventing the seizure;

6. (f)
   for costs.

2. [2]
   The application is supported by one affidavit, that of Brooke Milligan, Solicitor for the applicant.

3. [3]
   The application has been served on the respondent who does not appear.

4. [4]
   The applicant is legally represented by Counsel. In its submissions it challenges the practice and recent decisions of this Court to refuse these sorts of applications for lack of jurisdiction.

5. [5]
   It submits the narrow construction of this Court’s jurisdiction “to hear and determine every personal action in which the amount claimed” in those decisions has the practical effect of excluding relief and access to justice for the legitimate personal action of seizure of a chattel as collateral so that the concept no longer retains its original meaning in law. ^[1]  It argues the words “amount claimed” impliedly includes a reference to the value of the chattel. ^[2]

The Facts

6. [6]
   In May 2016 the respondent took out a loan of $25,261.40 from the applicant to buy a Mitsubishi Triton Utility.

7. [7]
   Exhibit “A” to the affidavit of Ms Mulligan is the “Loan Agreement” with a two and a half page schedule detailing variables such as the loan amount, disbursements, the payments, fees and costs, security, permission and contact details.

8. [8]
   On page 4 the borrower acknowledges that he has been provided with:

1. (a)
   Form 5 Information Statement; and

2. (b)
   Terms and Conditions.

9. [9]
   Neither of these are elsewhere referred to in the material nor annexed to Ms Mulligan’s affidavit.

10. [10]
    The application is brought out of practical necessity. The repossession agents cannot get access to the vehicle to seize it without forcible entry to a garage on private property.

The Issues

11. [11]
    The application raises two separate questions of law. The first is whether a Magistrates Court in Queensland has subject matter jurisdiction with respect to this application. The second is whether that jurisdiction is engaged.

The Jurisdictional Issue

Personal Property Securities Act 2009 (Cth) (PPSA)

12. [12]
    The PPSA establishes a national system governing the use of personal property as security for a debt post 2012. It applies to personal property interests other than land. Personal property can be tangible (a car) or intangible (a contract right, bank security).

13. [13]
    Chapter 4 deals with how to enforce a security interest in personal property. ^[3] 

14. [14]
    Chapter 4 complements and does not derogate from other statutory or legal rights and remedies the parties may have in relation to default. ^[4]  The parties may contract out of section 123 ^[5] for property which is not used predominantly for personal, domestic or household purposes.  The subject utility is potentially in this category but without the terms and conditions, a contradictor or the applicant swearing to the matter, it is impossible to say for sure whether section 123 has been negated as a matter of fact.

15. [15]
    A secured agreement is “an agreement or act by which a security interest is created, arises or is provided for”. ^[6] The first step is for the secured party (seller, lessor, lender) to seize the collateral secured.  A party is “entitled” by section 123 to repossess “by any methods permitted by law” if the debtor is in default in payment

16. [16]
    Having successfully seized possession of the collateral, the secured party may either retain or dispose of the collateral ^[7] by exercising a power of sale (after notifying the debtor) at market value.  Collateral can be redeemed before property passes to a third party. ^[8]

17. [17]
    Significantly, section 123 does not set out a mechanism or process for the secured party to follow when the debtor is in default. It merely entitles the secured party to seize the collateral by any method permitted by law.

18. [18]
    Chapter 6 PPSA headed “Judicial Proceedings” deals with the role of the courts in proceedings that relate to security interests in personal property. Part 6.2 is about judicial proceedings generally while Part 6.3 deals with proceedings for contravention and civil penalties. ^[9]

Magistrates Courts Jurisdiction and Proceedings

19. [19]
    Part 6.2 Division 1 of the PPSA confers this Court’s (and other Queensland Courts’) jurisdiction over “judicial proceedings with respect to a ‘PPS matter’ arising” under the Act or security.” ^[10] No role for the courts in s 123 seizures is mentioned in Chapter 6.

20. [20]
    Section 207 PPSA expresses the “Limits of Jurisdiction” as “the Courts general jurisdictional limits, including (but not limited to) limits as to the locality and subject matter, to the extent that the Constitution permits.”

21. [21]
    The Magistrates Court of Queensland is a creature of statute and an inferior court of record exercising summary civil jurisdiction under the Magistrates Court Act 1921 (MCA).

22. [22]
    Section 4 (MCA) confers civil jurisdiction on the Court. It provides that:

Subject to this Act –

1. (a)
   Every personal action in which the amount claimed is not more than the prescribed limit … may be commenced in a Magistrates Court, and all Magistrates Courts shall within their respective districts have the power and authority to hear and determine in a summary way all such actions.

23. [23]
    Accordingly the original process must meet the jurisdictional monetary and district limits. ^[11]

24. [24]
    The central issue is whether s 4 confers on this Court the jurisdiction to give any of the relief sought. This requires consideration of the relevant terms and their historical context as well as their contemporary framework. But first I will refer to those decisions the applicant relies upon and challenges.

The Decisions

25. [25]
    The District Court in Walsh v Creative Finance Australia Limited [2016] QDC 92 considered whether the Magistrates Court had jurisdiction to make an order for the recovery of possession of a vehicle, and if so, should it make the order on an ex-parte basis.

26. [26]
    This was an appeal from the Magistrates Court which allowed the holder of a security over a vehicle to seize possession after the owner had defaulted on the loan. The short answer to the questions were “yes” there was jurisdiction, but “no” to proceeding ex-parte.  In the absence of factors such as urgency, threat or irreparable damage or hardship, the making of an ex-parte application should only be undertaken with due care and in these circumstances the Magistrate had erred in allowing it.

27. [27]
    In arriving at the “yes” answer, the Court refers with approval to the Western Australian District Court decision in Frigger v Nigram [2005] WADC 127 where the defendant’s Counsel submitted that the Court (the WA District Court) lacked jurisdiction to deal with an application for the delivery of documents.  That Court’s jurisdiction was also set by statute “to hear and determine all personal actions where the amount, value or damages sought to be recovered is not more than the jurisdictional limit.”

28. [28]
    In Frigger Commissioner Schoombee noted their Act did not define “personal actions” but had been read as to include actions in detinue, ^[12] and an action to recover a chattel ^[13] and therefore the plaintiff’s claim for the return of goods was a valid one.

29. [29]
    In line with Frigger, the Court in Walsh, goes on to conclude “In my view there was jurisdiction here for the Magistrates Court to make the orders it did as the recovery of possession of property was within its general jurisdictional limit.”^[14]

30. [30]
    In GoGetta Equipment Funding Pty Ltd v Mansour (GoGetta)^[15] the Magistrate found the proceedings (for a declaration that the Applicant be entitled to seize a vehicle) constituted a personal action ^[16] but noted “These proceedings are not a personal action for the recovery of either monies owing or damages.”

31. [31]
    The court distinguished Walsh because it  had applied a District Court decision based on a differently worded jurisdictional provision and did not address the rider in section 4(a) MCA – “personal action in which the amount claimed”.  Moreover in noting the rider to section 4(c) MCA which gives jurisdiction to “equitable claim(s) … in respect of which the only relief sought is the recovery of money or of damages” the Magistrate concluded that, when read as a whole, section 4 “limits all civil claims in this court to monetary or damages claims”.

32. [32]
    In Silver Chef Rentals Pty Ltd v The Alliance of Congalees in the Northern Territory (& Ors) and GoGetta Equipment Funding Pty Ltd v Valamiou (Silver Chef) ^[17] the Court adopted the same approach as GoGetta and observed that even if the Applicant had included an “amount claimed” it doubted jurisdiction could extend to seizure of the items in proceedings commenced by way of an originating application. ^[18]

33. [33]
    The Courts in both GoGetta and Silver Chef therefore concluded that the PPSA claim was incompetent because it was not expressed to be a money claim.

Section 4 MCA and Personal Actions

34. [34]
    It is the applicant’s case that “personal action” includes the recovery of a chattel^[19] and the word “amount” means “quantity or extent” or “the full effect, value or import”^[20]. 

35. [35]
    Unlike its District Court counterpart s 4 MCA does not expressly refer to the value of a chattel and this has been interpreted in GoGetta and Silver Chef to mean that the Magistrates Court of Queensland is confined to dealing with personal actions where the “amount claimed was not more than the prescribed limit” which, as a matter of construction, excluded claims to the return of a chattel or its value instead.  I agree with the former conclusion but respectfully disagree with the latter.

36. [36]
    The notion of “personal action” referred to in s 4 MCA, developed in England during the medieval period is based on personal obligations rather than title to land or other immovable objects. ^[21]

37. [37]
    The current application is akin to the old common law action of detinue in tort which gives the plaintiff a right to recover a thing or chattel or in the event of a failure through lack of cooperation by the defendant, its value instead, plus damages and costs. ^[22]

38. [38]
    In his commentary on the Queensland Magistrates Court ^[23] Cairns states:

“Detinue is a personal action; but it does not fall within any of those personalactions allowed by section 4(1) to be commenced in a Magistrates Court.  The relief claimed in an action for detinue is an order for the return of the subject chattels or payment of their assessed value in lieu, with damages for detention, and costs; but special provision for that detinue relief which is available in a Magistrates Court has been provided by the Rules, the validity of which is supported by adequate rule-making powers.”^[24]

39. [39]
    Under the various Magistrates Court(s) Rules in effect between 1921 and 1999, a Magistrates Court could sanction a return of the chattel whilst not formally ordering its return. ^[25]  Rule 197 provided that although the relief for detinue available in the Magistrates Court was limited to a money claim ^[26] any judgment for the Plaintiff:

“…shall be for the value of the goods detained, together with a sum to be stated in the judgment by way of damages for the detention and for costs; but it may be made part of the order that on payment of damages for detention and costs, and the return of the goods on or before the day to be named, satisfaction shall be entered.”

40. [40]
    Accordingly I respectfully disagree with the relevant conclusion in GoGetta and Silver Chef.  Section 4 MCA has always been taken to have conferred jurisdiction on this Court to make a money order equivalent to the value of the detained goods as compensation for the loss in lieu of its return.

41. [41]
    The Court has also doubted in obiter comments^[27] that “this Court’s jurisdiction extends to seizure of the items in proceedings commenced by way of an originating application.”  The current proceedings are by way of originating application.

42. [42]
    The form of the original process for “civil proceedings”, is prescribed by the Rules and has varied from time to time since the commencement of MCA – 1991 Supreme Court Act and Uniform Civil Procedure Rules (UCPR) and their predecessor Magistrates Courts Rules 1921 and 1960.

43. [43]
    The UCPR provides for proceedings to be started by “originating process” including “by claim and by application” (originating). ^[28]

44. [44]
    Proceedings must be started by claim unless the Rules require or permit them to be started by application. ^[29]  The claim must state “the nature of the claim of relief sought”. ^[30]

45. [45]
    Applications must specify “the orders or other relief sought in the proceeding” ^[31] and state the name and section of the Act under which it is made. ^[32]

46. [46]
    Both claims and applications must show that this court has jurisdiction to decide it. ^[33]

47. [47]
    The original Rules for Magistrates Courts^[34] required “actions” and “proceedings” to be commenced by plaint in writing stating the substance of the action intended to be brought and upon being filed a summons would be issued under the seal of the        court. ^[35]

48. [48]
    Later the Magistrates Courts Rules, 1960 ^[36] also adopted that the plaint and summons (either general or special) form but introduced a requirement for “Statements of Particulars of Claim” containing a concise statement of the essential facts relied upon to establish the claim. ^[37]

49. [49]
    It is clear that the form by which personal actions are brought as varied from time to time is merely the vehicle for relief, not the source of the courts’ jurisdiction. ^[38] Putting to the side the question of seizure orders, a proceeding commenced in this Court claiming, on its face, the value of the detained goods, is one which the MCA envisages.

50. [50]
    But what is also apparent is that s 4 MCA, on its own, does not confer general jurisdiction on this Court to make seizure, injunctive or declaratory orders and GoGetta and Silver Chef  in this respect are respectfully correct.

51. [51]
    I am mindful that this conclusion conflicts with the decision in Walsh. Not following a decision of a higher court is not done lightly not only because inconsistency adversely impacts on the predictability of outcomes that litigants and legal representatives require but also out of respect for the higher court.  It is done only because I am convinced the law has been misapplied and where the decision departed from is per incuriam.^[39]

Civil Proceedings Act 2011 (CPA) 

52. [52]
    The Civil Proceedings Act 2011 (CPA) also makes it clear that the Court may order the payment of the value of detained goods.  The CPA applies to “court” which means “if otherwise appropriate, in the context of the Magistrates Courts – a Magistrate Court”.^[40] 

53. [53]
    Relevantly, for this Court, Part 13 Enforcement Division 1 Judgments picks up r 197 by providing

“80(2) Judgment for the detention of goods must be that:

(c) the defendant pay the value of the goods, whether with or without a condition that the value is not payable if specific the goods are returned within a stated time.”

54. [54]
    Moreover, if there was any doubt, s 49A Acts Interpretation Act, 1954 (Qld) operates to extend this Court’s jurisdiction.

49A Jurisdiction of courts and tribunals

If a provision of an Act, whether expressly or by implication, authorises a proceeding to be instituted in a particular court or tribunal in relation to a matter, the provision is taken to confer jurisdiction in the matter on the court or tribunal.

District Court of Queensland Act 1967 (DCA)

55. [55]
    Comparisons with the District Court’s jurisdiction in these matters is also informative. The District Court is not a court of general jurisdiction like the Supreme Court but has limited and prescribed statutory jurisdiction, as does the Magistrates Court. It has civil jurisdiction to hear and determine “all personal actions, where the amount, value or damage sought to be recovered does not exceed the monetary limit” including those specified.

56. [56]
    Originally, like the Magistrates Court, the District Court lacked jurisdiction to make seizure or declaratory orders. So in the 1968 decision of Kirwin v Mason^[41]  for example, the plaintiff brought an action in the Supreme Court for the return of personal articles valued at $1,428 (within the monetary limits of the District Court).  Because the District Court had no power to order specific restitution of the chattels, the Plaintiff recovered costs on the Supreme Court scale.

57. [57]
    Now, s 68(1)(a)(ii) DCA specifically gives it jurisdiction over any claim for the detention of chattels. Section 69 allows it to exercise all the powers and authority of the Supreme Court including the making of a declaration of rights of the parties.^[42]

58. [58]
    There is no equivalent source of power in the MCA.

Relief Under PPSA

Invested Jurisdiction

59. [59]
    Assuming that PPSA can potentially invest this court with a broader jurisdiction than s 4 MCA, the next question is whether it does in fact and if so, to decide if the relief claimed by the applicant is within that jurisdiction.

60. [60]
    Section 15C Acts Interpretation Act 1903 (Cth) (AIA) provides that any provision in an Act, which expressly or impliedly, authorises a civil proceeding to be instituted in a particular court in relation to a matter:

1. (a)
   that provision shall be deemed to vest that court with the jurisdiction in that matter;

2. (b)
   the jurisdiction so vested is not limited by any limits to which any other jurisdiction of the court may be subject.

61. [61]
    Accordingly a Magistrates Court Queensland’s jurisdiction is extended to encompass any matter of invested Federal legislation that:

1. (a)
   naturally falls within the terms of section 4 MCA as properly interpreted; or

2. (b)
   is added by virtue of any later specific legislation enacted by the Commonwealth Parliament.

62. [62]
    In principle there does not seem to be any reason why the Commonwealth Parliament could not enlarge the Magistrates Court of Queensland’s jurisdiction to include seizure. But whether 15C AIA, sections 123 and 207 PPSA have the combined effect of actually doing that is another matter. I doubt that it does.

63. [63]
    As a general comment the array of lawful recovery and seizure options open to an applicant depends on the terms and conditions of the Security Agreement. Routinely, commercial and security contracts outline the agreed default and recovery processes including a right to go on to the borrower’s land and use reasonable measures to take back the goods.

64. [64]
    Here, the Loan Agreement (Exhibit BM “A”) refers to but does not include the terms and conditions. It may have been an oversight not to include these in the material or it may be that there are no terms and conditions. But it is for the applicant, not the Court, to work out what the terms and conditions are and keep within their limits.

65. [65]
    The first form of relief claimed is an order that the applicant “be entitled to take possession of the secured goods by any means permitted by law”.  This claim lacks utility and is superfluous.  The applicant does not need a court order to be entitled to retake the vehicle.  It already is entitled to seize the collateral by virtue of s 123 PPSA if the preconditions can be met.

66. [66]
    Section 123(1) PPSA merely vests a secured party with authority, by any means permitted by law, to seize collateral, if the debtor is in default under the security agreement.  It does not provide any supplementary statutory mechanism or judicial process for effecting seizure.  It is a statement or declaration of right that a debtor is entitled to use lawful means to seize collateral.  Accordingly this Court has no supervisory role to play in facilitating seizure by confirming s 123 enforcement rights and approving methods of repossession. ^[43]

67. [67]
    The second relief claimed is an order authorising access to the alleged debtor’s land to effect repossession. There is no source of power for this Court in the PPSA or elsewhere to make this kind of order. In any event this is fraught with danger. It is up to the applicant to recover the collateral by any lawful means. If that does not include entry onto private property, this Court cannot authorise either actual trespass or curtailment of the user’s rights.

68. [68]
    Section 267 of the Criminal Code allows the person in peaceful possession of a dwelling to use reasonable force to prevent another from attempting to enter that property in certain circumstances.  Great care is needed not to overstep the bounds and become a trespasser (or worse) and breach the peace or trigger the debtor’s self-defence or protection of private property rights. ^[44]

69. [69]
    Likewise, as to the claim to delivering up and not obstruct or prevent seizure. ^[45]

70. [70]
    This Court has no express or implied mandatory injunctive power. It is not empowered or authorised to supervise a statutory seizure procedure limited to lawful means especially when it does not have all the contextual facts, including what the parties agreed in the event of default.

71. [71]
    Finally paragraph 4 of the application seeks directive orders to police. This is misconceived. The Queensland Police Service does not normally lend out officers to assist repossession agents or mortgagees enforcing civil seizure rights and there is no power in PPSA to make them. The doctrine of Separation of Powers prevents the courts giving directions to a department of the State unless clearly permitted by an enabling statute to do so. The applicant has not referred me to any.

72. [72]
    The orders sought in 1(a) and (b) are misconceived and unnecessary and those in 1(c) (d) and (e) are beyond power. The application should be dismissed.

73. [73]
    The proper course for the applicant is to either exercise the statutory right of seizure strictly in accordance with s 123 and the terms of the contract without the assistance of court orders or issues common law proceedings in the District court for wrongful detention remedies including recovery of the vehicle under s 68(1)(a)(ii) DCA. Otherwise it can take detinue action in this Court for the assessed dollar value of the vehicle plus damages and costs up to the Court’s monetary limit. If it succeeds judgment will be given in terms of s 80(2)(c) CPA.