Campbelltown City Motors Pty Ltd v Commissioner for Fair Trading

Legislation

1. The Act regulates the licensing and conduct of motor dealers, motor vehicle repairers, motor vehicle recyclers and motor vehicle repair tradesperson in NSW. The objects of the Act are set in section 3 and relevantly state: The objects of this Act are as follows-- (a) to provide consumer protections and remedies for consumers who purchase motor vehicles from motor dealers or obtain motor vehicle repair services, (b) to establish appropriate standards of conduct and transparency for motor dealers, motor vehicle repairers and motor vehicle recyclers, (c) to provide enforcement mechanisms to prevent misleading or dishonest conduct and illegal dealings with motor vehicles and parts,
2. Section 25(3) of the Act states that the Secretary must not grant a licence to an applicant that is a body corporate if the Secretary is satisfied that a director is involved in the management of the body corporate.
3. Section 27 of the Act provides a non-exhaustive list of matters that may be considered in determining whether a person is a fit and proper person to hold a licence: (1) In determining whether a person is a fit and proper person to hold a motor dealer's licence, a motor vehicle repairer's licence or a motor vehicle recycler's licence, the Secretary may have regard to any of the following-- (a) whether the applicant has, in the preceding 10 years, been found guilty of an offence involving fraud or dishonesty (whether in this State or elsewhere), (b) whether proceedings for such an offence have been commenced against the applicant but have not been finally determined, (c) whether the applicant has been convicted of an offence against this Act or the regulations or another Act administered by the Minister, (d) whether the applicant has failed to pay any contribution or other payment required to be paid by the applicant to the Compensation Fund under this Act. … (4) This section does not limit the grounds on which the Secretary may determine that a person is not a fit and proper person to hold a licence.
4. Part 3 of the Act deals with disciplinary provisions. Sections 38 and 39 of the Act sets out the grounds for disciplinary action for licences including motor dealer licences. Section 38(1)(c) states that disciplinary action may be taken against a licence holder if the person is not a fit and proper person to hold a licence. Section 38(1)(d)(d) mandates the Commissioner to consider whether if the licence holder was applying for an application for a licence, the provisions of the Act would require refusal.
5. Section 39(b) of the Act states that disciplinary action may also be taken against the holder of a licence if the business has been carried on in a dishonest or unfair manner.

The background facts

1. On 22 April 2021, Mr Kork was charged with two offences under s192G(b) of the Crimes Act 1900 (NSW) for the offence of 'publish etc false misleading material to obtain financial advantage or cause disadvantage'.
2. The charges arose from Mr Kork's conduct on 19 April 2021 in respect of obtaining two falsified roadworthy inspection reports, referred to as 'blue-slips' for two vehicles owned and advertised for sale by CCM. The vehicles were a Toyota Hilux and a Ford Ranger.
3. Mr Kork initiated the process by telephoning a person and asking them to complete an e-AUVIS Report without inspecting the vehicles. Mr Kork's conduct meant that the vehicles were not tested to ensure that they were safe and roadworthy by a mechanic. Mr Kork was required to have the vehicles inspected by an examiner under the Authorised Inspection Scheme (AIS) and he knowingly failed to do so.
4. In his affidavit relied on in the criminal proceedings in the Local Court, Mr Kork stated that he purchased the Toyota Hilux at an auction for $8 649.99. The registration for the vehicle lapsed. In April 2021 there was interest in the vehicle.
5. Mr Kork stated that prior to the pandemic he would have ordinarily had 3 employees working at the yard but throughout 2020 and 2021 it was common for him to work in the yard by himself because of staff shortages. Also CCM was trading at a loss and had significant financial debt.
6. Mr Kork's reason for engaging in the criminal conduct was that he did not want to leave the yard to register the motor vehicles as he was scared that he would 'miss out on a sale'. He stated 'I now realise how poor of a decision that was.'
7. The Toyota Hilux was subsequently sold to a consumer on 20 April 2021 for $10 990. Mr Kork kept the Ford Ranger for himself.
8. On 10 December 2021 the Commissioner issued a Notice to Show Cause under s41 of the Act.
9. On 11 July 2022, Mr Kork pleaded guilty to both offences and on 23 August 2022 Mr Kork was found guilty and sentenced to a Conditional Release Order for 18 months and placed on a good behaviour bond until 23 February 2024.
10. On 13 February 2023 the Commissioner made a decision resulting in disciplinary action which took effect on 20 February 2023. On 13 March 2023, CCM filed an Internal Review Application and on 20 March 2023 the internal reviewer affirmed the Commissioner's decision.

The Evidence

1. CCM relied on numerous documents including: a report from Ms Georgiadis, Clinical Psychologist dated 23 May 2023, registration details for Van Sales Pty Ltd (Van Sales) and CCM, CCM's Facebook, the respondent's Guidelines to Determine a Disciplinary Action Outcome and Van Sales Statement of Account for premises at Campbeltown. Mr Kork was cross examined during the hearing. The Commissioner relied on materials filed pursuant to s58 of the Administrative Disputes Review Act 1997 (NSW). Both parties relied on written submissions and made closing oral submissions.

The Applicant's Evidence and Submissions

1. Mr Kork submitted that he has sold thousands of cars and been in the industry for seventeen years and has had no compliance issues. He made full admissions immediately and provided useful evidence to the police which assisted them with investigations.
2. Mr Kork stated in his affidavit that as a step to prevent re-offending, on 27 August 2022 he enrolled in a Certificate III in Automotive Administration at the Motor Trader's Association of New South Wales. Mr Kork stated 'I have never received formal training before on automotive administration as it is not a requirement to obtain a Motor Dealer Licence. I am therefore looking forward to learning new skills and improving my business practices during the 1 year course.'
3. During cross examination, Mr Kork stated that he in fact never attended the training course as he was waiting to see what the Commissioner's attitude was to his internal review.
4. Mr Kork also stated that he attended on his general practitioner, Dr Girgis after he had been charged with the offences and discovered that he was living with undiagnosed mental health issues for some years. Dr Girgis' certificate dated 28 July 2022 stated that Mr Kork first started seeing her in early 2022 'for management of anxiety related to a workplace grievance' and that as a result of receiving threats from his co-accused he was dealing with symptoms of anxiety.
5. In the affidavit he expressed deep regret for failing to uphold important responsibilities as to road user safety. He stated that the decisions he made on 19 April 2021 were 'careless and irresponsible'.
6. Since the charges, Mr Kork has continued to work in the industry without any issues. His conduct on 19 April 2021 was an isolated incident. He stated that he committed the crime impulsively and that it could not be described as a pattern of behaviour, and it is not indicative of his business behaviour. He stated that his clean record of compliance is indicative of his honest behaviour.
7. As to Van Man he stated that the tenancy lease for the premises from which CCM operates from is in the name of Van Man as this was a formality of the lease and he could not change it. He stated that he is the guarantor for the lease and is personally liable for the lease payments.
8. Mr Kork submitted that the Tribunal should take into account the fact that the business closed for nearly two months and is now only selling 75 vehicles.
9. Mr Kork stated that he purchased the two cars with pink slips and registration from an auction house and believed that they were roadworthy. He stated that vulnerable consumers were not involved in his wrongdoing and clients were lost because of the licence cancellation.

Commissioner's Submissions

1. The Commissioner submitted that Mr Kork was dishonest because his company Van Man did not close in October 2020 as he stated in his affidavit to the Local Court in the criminal proceedings but continues to trade and continues to incur debts and that there was no evidence that CCM was suffering from financial hardship as at April 2021.
2. As CCM is only in infancy, Mr Kork's submission that there has been no compliance action against carries no weight. Mr Kork has not led any evidence as to his past lawfulness.
3. It was submitted that Mr Kork was involved in the criminal conduct to advance his own interests. His attitude to training and rehabilitation has been misleading. He stated in the affidavit to the Local Court in the criminal proceedings that he was enrolled to study at TAFE however he has not done that and his excuse was that he was waiting to see the Commissioner's position prior to undertaking study demonstrates that he is not genuine about developing his knowledge.
4. The Commissioner submitted that Mr Kork's attitude to the training demonstrated that he has taken no steps towards rehabilitation.
5. The Commissioner identified three grounds for disciplinary action against CCM. First, that the business authorised by the licence has been carried out in a dishonest or unfair manner. The second and third grounds are that Mr Kork is not a fit or proper person within the meaning of s25 of the Act which goes to the Commissioner's obligations in s38(1)(c) of the Act.

Consideration

1. The Tribunal's jurisdiction to hear and determine this application is derived from section 176 Act and section 30 of the Civil and Administrative Tribunal Act 2013 (NSW). The role of the Tribunal is to make the correct and preferable decision on the material before it.
2. There are very few disputed facts in this case. Mr Kork has admitted that he contravened s192G(b) of the Crimes Act on two occasions by publishing false, misleading material to obtain financial advantage and cause disadvantage by obtaining two falsified road worthy inspection reports (blue slips) for two vehicles (a Toyota Hilux and a Ford Ranger). He is subject to a Conditional Release Order until 23 February 2024.

Business carried out in a dishonest and unfair manner

1. Mr Kork's conduct, in his capacity as director of CCM indicates that CCM's conduct on 19 April 2021 was 'dishonest or unfair' within the meaning of s39(b) of the Act.
2. Mr Kork knowingly initiated the criminal conduct. He stated that he decided to engage in the conduct for personal financial interests. As a result of the criminal conduct the two vehicles were never tested for compliance with applicable safety standards.
3. The criminal conduct Mr Kork engaged in were indictable offences. As a sole director of a motor dealership he holds responsibilities and accountabilities to the public. He operates in a regulated industry that requires him to demonstrate honesty and integrity.

Fit and Proper Person

1. The fit and proper person test applies in a wide number of statutes and its meaning is well settled. As Toohey and Gaudron JJ explained in the context of a commercial broadcasting licence in Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 380 [36]: The expression "fit and proper person", standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of "fit and proper" cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question.
2. The content of fitness and propriety was considered to have three components 'honesty, knowledge and ability'. Hughes & Vale Pty Ltd v State of New South Wales [1955] HCA 28; (1955) 93 CLR 127 at 156-7 [9].
3. An assessment of whether Mr Kork is a fit and proper person must be considered in a practical way taking into account the nature of the industry and his role within it. The Tribunal must consider not only the past criminal conduct but also the person's conduct following the offending, the person's explanation for the offending as well as all other relevant surrounding circumstances. In re Davis [1947] HCA 53; (1947) 75 CLR 409 at 416; Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 388.
4. Mr Kork needs to show that he possesses sufficient moral integrity and rectitude to be accredited to the public as a person to be entrusted with the work the subject of the licence. Sobey v Commercial and Private Agents Board (1979) 22 SASR 70 per Walters J.
5. It is the notion of honesty which is of concern to the Commissioner. The Commissioner's submission as to whether Mr Kork as a director of CCM is a 'fit and proper person' is correct that the question must be answered in light of the objects of the Act, which is to provide consumer protections to the public.
6. However the Commissioner's submission that simply because Mr Kork was found guilty of two dishonesty offences 'interlinked with and indivisible from the business itself' he is not a 'fit and proper person to hold a licence' fails to grasp that a person may have been dishonest at the time he committed the offences, however the question for the Tribunal is whether now and in the future Mr Kork is a dishonest man.
7. I have considered the submissions and evidence of the parties and I am not satisfied that Mr Kork has demonstrated that he now possesses sufficient mortal integrity and rectitude. I do not consider that at the present time he is a fit and proper person within the meaning of s27 of the Act.
8. Mr Kork's responses to the questions about the training during cross examination were unsatisfactory. First, Mr Kork made no attempt to correct his evidence that he has not attended the training as set out in his affidavit. This only came to light when he was cross examined. Secondly, and much more critically, Mr Kork's responses made clear that he was only intending to attend the training as some negotiating chip with the Commissioner and not as he stated in the affidavit that he genuinely wanted to learn about compliance.
9. The opinion I formed of Mr Kork was that he enrolled in the training course in an attempt to give the impression to the court that he was being pro-active in growing his skills and knowledge about compliance and safety. However during cross examination his evidence about the training course was that he wanted to wait until this matter was determined before deciding whether to complete the course. I formed the view that Mr Kork's evidence in paragraph 53(b) of his affidavit that he desired to learn 'new skills and improving his business practices' to be disingenuous. In paragraph 82 of the affidavit he stated that the professional training was already underway. That statement was clearly incorrect as Mr Kork stated that he never started the training course.
10. In paragraph 83, Mr Kork makes a reference to being 'adequately retrained and rehabilitated', however Mr Kork has not attended any training or taken any steps to develop his knowledge of compliance.
11. I reject Mr Kork's evidence that he should not be responsible for what is in his affidavit because it was written by his solicitors and he was too rushed to read it. Failure to take responsibility and blaming others for his incorrect evidence gave me concern about his character.

Appropriate disciplinary action

1. Having determined that CCM's conduct on 19 April 2021 was carried out in a dishonest manner contrary to s39(b) of the Act and that CCM is not a fit and proper person to hold a licence because of Mr Kork's conduct, I come to assess the correct and preferable disciplinary action.
2. As set out above, CCM's was disqualified from holding any licence under the Act or being involved in the direction, management or conduct of a business for which a licence is required for a period of four and a half years from 20 February 2023.
3. In determining the disciplinary action, the Commissioner considered the 'Guidelines for Determining a Disciplinary Action Outcome' and the associated Schedule (the Guideline).
4. The Guidelines are not mandatory but they do 'promote values of consistency and rationality in decision-making, and the principle that administrative decision-makers should treat like cases alike': Plaintiff M64/2015 v Minister for Immigration and Border Protection [2015] HCA 50; (2015) 258 CLR 173 at [54]
5. The Guideline assess the severity of the conduct. The Commissioner assessed the severity of the conduct as 'Major'. The other two assessments are 'Minor' and 'Extensive'. There are a number of factors that point in the direction of the severity being 'Minor', they include the fact that a single consumer was impacted by CCM's conduct and there is no evidence that 'vulnerable consumers were involved'. On the other hand, there are factors that are in the category of 'Major'. These are that there was a risk to public safety and to the integrity of the industry.
6. Overall, I consider that the severity of the conduct to be 'Major' because the criminal conduct caused a substantial risk to public safety and the integrity of the industry .
7. Secondly, the Guideline assesses the culpability of the conduct. On Mr Kork's own evidence, his conduct was deliberate. He initiated the conduct and was aware at the time that it was wrong and improper. He took part in the conduct in a deliberate and intentional manner.
8. Accepting that Mr Kork was under significant stress at the time of the conduct does not change the fact that Mr Kork knew at the time that he was asking another person to create two false e-AUVIS Reports.
9. The Guideline determines the overall severity of the conduct by considering the harm and culpability assessed. Major harm coupled with deliberate conduct proposes a 'major severity' assessment. The Schedule to the Guideline suggests that a person with a 'major severity' be disqualified for up to 6 years.
10. The Commissioner's decision to disqualify for a period of four and a half years is squarely within the range, up to 2 years being the recommended period for a finding of 'moderate severity'.
11. The Guideline contains a list of non-exhaustive factors to consider in determining the appropriate disciplinary action. The factors broadly go to the level of control and responsibility held by the person, the person's personal circumstances, the extent of the damage caused and the person's conduct following the conduct.
12. I accept that the offending was a once off. I accept that Mr Kork engaged in the conduct because he was concerned about leaving the business and potentially losing a sale of a motor vehicle. I accept that Mr Kork cooperated with the police and made full admissions. However, there is no evidence that Mr Kork has taken any steps to improve his conduct, skills, knowledge or operations for future compliance despite stating in his affidavit that he did so.
13. Mr Kork's responses during cross examination as to why he did not attend the training course demonstrated that he was not genuinely interested in learning about compliance and improving his business practices.
14. I assess there to be minor mitigation to the adjustment of the disciplinary action which is between 2 years and 6 years. Taking into account all of the evidence and submissions I consider 4 and a half years to be the correct and preferable decision.

Order 1. The application is dismissed. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 14 November 2023