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[2012] NSWDC 6
respondent. Pursuant to s 219 LEPRA, the court found first respondent lawfully entitled to the BMW and ordered delivery of the BMW X5 (NSW Rego BLR96B), two keys, REVS papers, RTA registration papers and log...
A seller (first respondent) agreed to sell his BMW to a man using the name 'Jeffrey Zhang' and insisted in a written agreement that the registration papers would be handed over only after a Commonwealth Bank cheque cleared. The cheque was forged and later dishonoured. Unknown persons then sold the same car that evening to the second respondent for cash, who registered it with the RTA. Police seized the car and the court had to decide who lawfully owned it. The court held (1) on the particular facts the written agreement and retention of the registration papers meant property did not pass to the rogue until cheque clearance, so that sale was void and title remained with the first respondent; and (2) alternatively, the second respondent was not a bona fide purchaser because he wilfully ignored several obvious red flags. The court ordered return of the car to the first respondent and costs against the second respondent.
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4 cited instruments linked from this judgment.
This was a s 219 Law Enforcement (Powers and Responsibilities) Act 2002 (NSW) proceeding to determine lawful entitlement to a BMW X5 seized by police. The factual matrix, as found by Gibson DCJ, is:
The first respondent, Mr Hatem Abou-Yaghi, advertised his BMW for $95,000. On 6 July 2011 a person identifying himself as "Jeffrey Zhang" inspected the vehicle, produced a convincingly forged NSW driver licence and presented a Commonwealth Bank cheque for $95,000. The first respondent refused to hand over registration papers pending clearance of the cheque and had the purchaser sign a written statement that the registration papers would be sent only when the cheque cleared (Exhibit, affidavit evidence; findings at [15]-[21], [18], [19]).
The presented bank cheque proved to be a forgery; when it was presented for clearance it was dishonoured and the first respondent reported the vehicle stolen (see [24]).
In the same evening unknown persons (either the rogue or his confederates) sold the same BMW to the second respondent, Mr Jiaqi Guo, for $45,000 cash. Mr Guo conducted internet searches (REVS, VCheck) using motor vehicle identifiers provided to him by an intermediary, attended a meeting, handed over cash without a receipt, then registered the vehicle with the RTA the next day (see [28]-[46], [40], [45]-[46]).
Police investigation revealed the cheque and licence to be forged and led to seizure of the vehicle from the second respondent's residence on 16 July 2011 under warrant. The vehicle was no longer required as evidence; s 219 proceedings were brought to determine lawful entitlement ([6], [47]-[52]).
The core legal dispute at trial was two-fold: (a) whether the first respondent's sale to "Jeffrey Zhang" gave the rogue any title (void or voidable); and (b) if title could have passed, whether the second respondent was a bona fide purchaser for value without notice entitled to protection under s 28 Sale of Goods Act 1923 (NSW) ([10]-[13], [58]).
The District Court held (i) on the particular facts the written agreement and retention of registration papers meant the sale to "Jeffrey Zhang" was not complete until cheque clearance, so it was void and title remained with the first respondent ([96]-[99]); and (ii) alternatively, the second respondent failed to act in good faith and wilfully turned a blind eye to multiple indicia of wrongdoing and therefore was not protected by s 28 ([85]-[89]). Orders followed under s 219 delivering the car and documents to the first respondent and costs against the second respondent (Orders).
Two strands of legal reasoning drove Gibson DCJ's decision.
The judge accepted the well-established principle that parties can agree when property in goods passes, and that evidence that the parties agreed property should not pass until a condition (here, cheque clearance) is satisfied can prevent property from passing on delivery of possession alone. The court regarded the facts as stronger than earlier cases where sellers attempted to retain title pending payment, because here there was a contemporaneous written agreement to that effect and the seller retained the registration papers (see the analysis at [92]-[98]). The key finding is formulated at [98]:
"On the very unusual facts of this case, I am satisfied that the sale was not complete until the cheque was honoured, and that the parties entered into a written contract to this effect. Accordingly, ... the purported sale ... was void, and ownership did not pass."
This reasoning draws on authorities such as Godfrey v Sevenoaks and Davey v Robinson's Motors (both discussed at [92]-[96]) which consider whether a seller has parted with property where payment remains conditional.
Even if property might have passed to the rogue and then to a third party, s 28 Sale of Goods Act provides that where a person in possession transfers goods to a person who receives them in good faith and without notice of any prior sale, that recipient may obtain good title ([58]-[59]). The court therefore addressed whether Mr Guo acted in good faith. Gibson DCJ applied the statutory definition of 'good faith' (s 5(2) Sale of Goods Act: "done honestly") and the case authorities that 'good faith' can be defeated by wilful blindness or failure to make reasonable enquiries in suspicious circumstances ([63]-[67], [64]-[66], [67]). The judge found that Mr Guo:
and therefore "wilfully turned a blind eye" to obvious signs that the car may have been stolen ([85]-[89]). On that alternative basis the second respondent could not claim protection under s 28.
Because the court accepted the first (contractual) route, it was unnecessary to order forfeiture to the Crown under s 219 LEPRA; instead it ordered return to the first respondent and costs ([98]-Orders).
Before this decision (as the judgment itself notes), disputes of this character, the "sale to rogue, resale to third party" fact pattern, have produced unsettled law. The judge recorded that the law in this area had been unsettled and requires a fact-sensitive approach (see [70]-[72]). The judgment:
Re-affirms that parties may contractually fix when property passes and that contemporaneous evidence (especially a written agreement and retention of title documents) can sustain a conclusion that property did not pass on delivery of possession ([92]-[99]).
Re-affirms the protective policy behind s 28 Sale of Goods Act, to protect innocent third parties, but reiterates the statutory and case-law requirement of 'good faith' (honesty) and the well-established capacity to infer lack of good faith where purchasers ignore obvious red flags or wilfully refrain from enquiries ([58]-[67], [69]).
Post-decision practitioners should draw three practical points from Gibson DCJ's approach:
A seller who makes clear, contemporaneous arrangements that title will not pass until payment clears and who withholds original title documents strengthens a later claim to retain ownership if the payment fails ([18], [21], [96]-[98]).
A third-party buyer who transacts through intermediaries, pays significant cash sums, neglects identity checks and other ordinary precautions, and understates purchase price to registration authorities may be found to lack 'good faith' and be denied s 28 protection ([80]-[89]).
Where both lines are arguable, courts will assess the totality of proven facts and specific written terms, and not rely on categorical rules; the decision is highly fact-dependent ([70]-[73], [98]).
Passage (para 98): "On the very unusual facts of this case, I am satisfied that the sale was not complete until the cheque was honoured..."
Passage (para 89): "He wilfully turned a blind eye to obvious indications that this vehicle was likely to have been stolen."
Passage (paras 58-59): statutory text and Brennan J's explanation of s 28's purpose.
Passage (paras 71-72): commentary on unsettled nature of the law.
These are the fact patterns where Gibson DCJ's reasoning is most likely to be engaged:
Seller meets purchaser who provides apparently valid ID and a bank cheque but asks seller to delay transfer of title documents until cheque clearance; seller retains original registration papers and obtains a signed statement that the papers will be provided only on clearance; cheque is later dishonoured.
Shortly after the seller parts with (limited) possession, other persons sell the same goods to a third party for cash via intermediaries; the third party obtains possession and quickly registers the goods in his/her name.
The buyer (third party) deals with intermediaries, pays cash, fails to obtain identity or verification, does not secure a receipt, understates sale value on official forms, or otherwise fails to take ordinary safeguards that would have revealed irregularities.
Where those facts are present, a court may: (a) find the seller's written agreement and retention of title documents sufficient to prevent passage of property; or (b) find the third-party buyer not to have acted in good faith and thus not entitled to s 28 protection.
This judgment itself canvasses the relevant authorities (Godfrey, Davey, Associated Midland, Gamer's Motor Centre, Vassallo, Papas, Bird) and places weight on a fact-sensitive approach (see [70]-[73]). The judgment notes Shogun Finance Ltd v Hudson and the broader doctrinal tensions over identity/face-to-face rules but treats Shogun as of limited assistance in Australia without appellate interpretation (para 71). The decision therefore aligns with those authorities that permit a seller to demonstrate retention of title where there is clear contemporaneous evidence, and with authorities that deny protection to purchasers who exhibit wilful blindness.
Practitioners should treat Gibson DCJ's ruling as a careful, fact-specific application of settled principles rather than as a novel doctrinal shift; it is supportive of sellers who document conditional transfers and of courts applying a rigorous 'good faith' inquiry to purchasers who pay cash in suspicious circumstances.
Threshold for 'contemporaneous evidence': The judgment treats the presence of a written agreement plus retention of original registration papers as sufficient in these facts ([96]-[98]). But how far short of a written document would similar findings extend? The decision does not define a precise evidentiary threshold and leaves room for fact-sensitive variation.
Interaction with s 28 where the seller has given up all physical documents but claims an agreement that property not pass: the judgment stresses retention of registration papers as significant; different results may follow where title documents have left the seller's control.
Applicability beyond motor vehicles: many practical features of motor vehicle sales (RTA registrations, REVS checks) shaped the judge's inferences about notice and identity. It is open how heavily the approach would apply to other categories of chattels without comparable public registers.
The role of mistaken intermediaries or apparent authority: the decision treats the rogue as a non-agent; whether there are closer calls where an intermediary appears to have actual authority (or where the intermediary is a mercantile agent properly entrusted) will remain factual.
Impact of procedural fairness and translation/communication issues: the second respondent's limited English was noted; courts will need to balance such vulnerabilities against obligations to make basic enquiries.
Overall, Detective Senior Constable Wilkes v Abou-Yaghi demonstrates that careful contemporaneous recordkeeping by sellers and ordinary vigilance by purchasers are determinative in these fraud-driven, sale-then-resale disputes. The judgment is a reminder that s 28 protection is not automatic: it requires honest conduct and absence of notice or wilful blindness.
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First Respondent: Turks Legal Second Respondent: Wang & Associates File Number(s): 2011/342774 Publication restriction: None
The nature of the relief sought and the parties 1The applicant, by way of Summons filed on 24 October 2011, seeks the following orders: (1)A determination and subsequent order (pursuant to s 219 of the Law Enforcement (Powers and Responsibilities) Act 2002), in respect of the following property: (a)1 BMW X5 NSW Rego BLR96B (b)2 keys to BMW X5 NSW Rego BLR96B (c)1 REVS Papers for BMW X5 NSW Rego BLR96B (d)1 RTA Rego Papers for BMW X5 NSW Rego BLR96B (e)1 Log book for BMW X5 NSW Rego BLR96B. (2)Costs. 2The first respondent, Mr Hatem Abou-Yaghi, was the owner of a BMW X5 registration number BLR96B ("the BMW") up until 6 July 2011, and was registered with the Roads Traffic Authority ("RTA") as such. The second respondent, a Chinese national completing studies at a university in Australia as an international student, was registered with the RTA as the owner of the BMW for the period 7 July to 16 July 2011, on which date members of the NSW Police confiscated the BMW pursuant to a search warrant.
The circumstances leading to this application 3After an initial contact on 4 July 2011, a rogue calling himself "Jeffrey Zhang" agreed on 6 July 2011 to purchase the first respondent's BMW, which the first respondent had advertised for sale on the internet for $95,000. "Jeffrey Zhang" showed the first respondent identification information (including a driver's licence, which was a skilful forgery), and said he would pay the sum of $95,000 by bank cheque. The first respondent told him he would keep the registration papers until this bank cheque was cleared, and required "Jeffrey Zhang" to sign a contract acknowledging this. 4On the same date, and almost at the same time as these events (namely the evening of 6 July 2011), the same vehicle was sold by unknown persons to the second respondent, who paid $45,000 in cash for the vehicle and was given a forged copy of the registration papers, the original still being in the first respondent's possession pending the rogue's bank cheque clearing. 5When the first respondent presented the bank cheque for $95,000, it was dishonoured. He notified the NSW Police. In the interim, the second respondent had registered his ownership of the BMW with the RTA. Police searching for the BMW identified the second respondent from RTA records as the person with current custody of the vehicle, and seized the car on 16 July 2011. 6The reason for this application being brought is that the vehicle, which was seized in relation to the investigation of alleged offences pursuant to ss 192E(1)(a) and 253(b)(i) of the Crimes Act 1900 (NSW), is no longer required to be retained as evidence by police, and the applicant is unable to determine who is lawfully entitled to the vehicle. The applicant, the police officer in charge of the investigation, filed applications in Blacktown Local Court pursuant to s 219 of the Law Enforcement (Powers and Responsibilities) Act 2002 (NSW) ("LEPRA") seeking orders for the disposal of the vehicle. Those proceedings have been transferred to this court by reason of the sum involved being in excess of the jurisdictional limit of the Local Court.
The legislative scheme 7Division 2 of Part 17 of LEPRA regulates disposal of property in police custody. Section 216(1) states that the Division applies to (a)property in the custody of a police officer or member of the NSW Police Force in connection with an offence, whether or not proceedings for the offence have been commenced, (b)property that is lawfully in the custody of a police officer or member of the NSW Police Force other than in connection with an offence. 8Section 218 of LEPRA provides: "(1) A police officer who, in exercising a function conferred by or under this Act, seizes a thing or has custody of other property to which this Division applies must return the thing to the owner or person who had lawful possession of the thing before it was seized or came into custody if the officer is satisfied that: (a) its retention as evidence is not required, and (b) it is lawful for the person to have possession of the thing. (2) This section is subject to any order made under section 219." 9Section 219 of LEPRA provides: "(1) A court may, on application by any person, make an order that property to which this Division applies: (a) be delivered to the person who appears to be lawfully entitled to the property, or (b) if that person cannot be ascertained, be dealt with as the court thinks fit. (2) In determining an application the court may do any one or more of the following things: (a) adjust rights to property as between people who appear to be lawfully entitled to the same property or the same or different parts of property, (b) make a finding or order as to the ownership and delivery of property, (c) make a finding or order as to the liability for and payment of expenses incurred in keeping property in police custody, (d) order, if the person who is lawfully entitled to the property cannot be ascertained, that the property be forfeited to the Crown, (e) make any necessary incidental or ancillary orders. (3) Property ordered to be forfeited to the Crown: (a) in the case of money, is to be paid to the Treasurer for payment into the Consolidated Fund, or (b) in any other case, may be sold by or on behalf of the Commissioner at public auction and the proceeds of sale are to be paid to the Treasurer for payment into the Consolidated Fund. (4) If the property is not money or is not fit or suitable for sale, or fails to sell at public auction, it is to be disposed of in accordance with the directions of the Commissioner."
The issues for determination 10The issues for determination are: (a)Was the vehicle validly sold by the first respondent? Did "Jeffrey Zhang" obtain a void or voidable title to the vehicle? (b)Was the vehicle validly purchased by the second respondent, and if so, was he a bona fide purchaser entitled to protection under s 28 Sale of Goods Act 1923 (NSW) ("the Sale of Goods Act ")? (c)If neither the first nor the second respondent can establish a claim for the vehicle, should the vehicle be confiscated to the Crown in accordance with s 219(2)(e) of LEPRA? 11As set out above, the first respondent was tricked into selling his vehicle to a rogue, "Jeffrey Zhang". Unknown persons then tricked the second respondent into purchasing this vehicle. Issues relevant to the question of whether or not the second respondent was a bona fide purchaser without notice include an assessment of the honesty of the buyer and seller, with particular regard to the steps that the buyer took or failed to take. 12An additional issue is whether, by reason of the first respondent having required "Jeffrey Zhang" to sign a written agreement, the effect of which is argued to be that property would not pass until the bank cheque was cleared, "Jeffrey Zhang" acquired even voidable ownership of the vehicle: Davey v Robinson's Motors Pty Ltd (1958) 75 WN (NSW) 56; Godfrey v Sevenoaks (1958) 75 WN (NSW) 487. 13I shall first set out the factual background relevant to the issues in question.
The first respondent sells his car to the rogue, "Jeffrey Zhang" 14The first respondent, who had purchased the BMW as a used car on 30 May 2010, advertised it for sale on a website for $95,000 on 4 January 2011. On 4 July 2011, the first respondent received a telephone call from a man who identified himself as "Jeffrey". He provided general information about the state of the motor vehicle and "Jeffrey" asked if he could see the car on 5 July 2011 after work. The first respondent agreed and told this man what his address was. On 5 July 2011, "Jeffrey" attended the first respondent's address and inspected the vehicle. They had a conversation as follows: Jeffrey said: "This is a nice car, how long have you had the car for?" I said: "1 year and 3 months." Jeffrey said: "That's good and clean car." I said: "So Jeffrey, what is your profession?" Jeffrey said: "I am a Solicitor and I wanted a nice car." I said: "Ok." Jeffrey said: "I am going tomorrow to see another car, and I will let you know next day if I will be going ahead with the purchase." I said: "Ok, no problem." Jeffrey said: "Is the price negotiable?" I said: "$95,000 is the best price." (Paragraph 18 of Mr Abou-Yaghi's affidavit, Exhibit B) 15Following this conversation, "Jeffrey" left, but shortly thereafter he sent an SMS requesting the first respondent's full name. On the following day (6 July 2011) at approximately 2:20pm, "Jeffrey" sent an SMS requesting information to conduct a REVS check, namely the engine number. He also telephoned "Jeffrey" and they had a conversation as follows: I said: "hi Jeffrey, it's Hatem, did you receive my SMS yesterday?" Jeffrey said: "Yes I did." Jeffrey said: "Hatem, I really like the car and I would like to purchase the vehicle, I would provide you with a Commonwealth Bank cheque in the amount of $95,000.00." I said: "If that is the case, I need to hold the registration paper until the CBA bank cheque is cleared. Just to be on the safe side, that is big money. I will get a stat dec [sic] ready with the agreement so everything is documented." Jeffrey said: "Ok, no problem." (Paragraph 23 of Mr Abou-Yaghi's affidavit, Exhibit B) 16The first respondent and his wife sought advice from the Commonwealth Bank of Australia as to whether a bank cheque was a safe way to accept money. They received advice that the person providing the bank cheque would normally have the funds available before the bank would provide them with a bank cheque. Accordingly, the first respondent cancelled the insurance of his vehicle at about 4:00pm and proceeded to wait for the arrival of "Jeffrey" to pay the money and pick up the vehicle. At approximately 5:58pm "Jeffrey" called to say he was on the way and should be at the first respondent's place "shortly to pick up the car". 17When "Jeffrey" arrived, he brought a colleague, whom he never introduced. "Jeffrey" asked to take the vehicle for a test drive. As the first respondent was unwell, he asked his brother-in-law, John Hoogerbrug, to go in the car with him. "Jeffrey" got into the passenger side of the vehicle and his colleague got into the driver's seat. The first respondent's brother-in-law sat in the rear seat of the vehicle. Mr Hoogerbrug has provided an affidavit setting out the conversation during this drive, which is of little relevance to the facts in issue in these proceedings. 18When "Jeffrey" and his colleague returned after the test drive, the first respondent invited them into his home as it was dark. "Jeffrey" said "I really like the car and have brought a bank cheque for $95,000" and the first respondent provided him with a document in the following terms: "I Hatem Abou-Yaghi state that I have sold my car, a BMW X5 2009 model, registration number: BLR96B on Wednesday the 6 th of July 2011. The selling price was $95,000, the payment for the car was by bank cheque. The registration papers for the BMWX5 will be sent when the bank cheque is cleared from Jeffrey Zhang NSW licence number: 16893252. This is an agreement between myself, Hatem Abou-Yaghi, and the new owner, Jeffrey Zhang, that the above arrangement is suitable and legally binding. Signed: Hatem Abou-yaghi [signature] (previous owner) Signed: [signature] (new owner) Witnessed by John Hoogerbrug [signature] Date: 6/7/2011" (Exhibit B, Affidavit of Mr Abou-Yaghi, 20 August 2011, paragraph 30 and Annexure M) 19The first respondent recorded Jeffrey's details on the reverse side of the agreement as follows: " 21 Jacques Street Chatswood 2067 NSW 94122163 bank cheque 545844 6 July 2011 545844.063.978.1006.994" 20In addition, "Jeffrey" showed the first respondent his NSW driver's licence containing his address ( 21 Jacques Street Chatswood) and name ("Jeffrey Zhang") as well as a licence number (168932252) which Mr Abou-Yaghi considered looked "legitimate". He also provided a bank cheque in the sum of $95,000 drawn on the Commonwealth Bank Operation Centre, Level 3, 83 Batman Street, Serial Number: 545844) which appeared to be correct. During the meeting "Jeffrey Zhang" said he was a solicitor working at Wang & Associates located in Sussex Street, Sydney. "Jeffrey Zhang" gave as his reason for wanting to buy the car that he had sold his current vehicle, a BMW M3, and wanted the BMW X5 as it was a safer car on the road. 21The first respondent provided the log book of the vehicle and two keys together with a BMW key ring. "Jeffrey Zhang" signed the registration transfer details, as did the first respondent, but the first respondent explained that he would keep these documents until the bank cheque cleared. Before "Jeffrey Zhang" left the house, he took a photograph of the RTA registration paper on his mobile, stating that he may need this if he was stopped by police. 22The first respondent wished "Jeffrey Zhang" all the best (paragraph 33 of his affidavit) and he and his colleague then left, driving the vehicle away. At 6:52pm, the vehicle was detected using The Hills M2 motorway travelling east without paying the toll (Exhibit B, Affidavit of Mr Abou-Yaghi, 19 September 2011, paragraph 3 and Annexure S) and at 6:56pm using the Lane Cove Tunnel travelling east without paying the toll (Exhibit B, Affidavit of Mr Abou-Yaghi, 19 September 2011, paragraph 4 and Annexure T). The vehicle then travelled across the Sydney Harbour Bridge at 7:05pm where it was detected on the Sydney Harbour Bridge Motorway travelling south without paying the toll (Exhibit B, Affidavit of Mr Abou-Yaghi, 19 September 2011, paragraph 5 and Annexure U). 23It was while the rogue calling himself "Jeffrey Zhang" was carrying out these activities that the second respondent was conducting the transaction which would lead to his purchase of the same vehicle on that same night. 24On 7 July 2011, the first respondent attended his local Westpac branch to deposit the cheque and was told that the cheque would clear by 11 or 12 July 2011. He received notification on 12 July 2011 that the bank cheque had been dishonoured as it was in fact a fraudulent cheque. He attempted to contact "Jeffrey Zhang" on his mobile, but this mobile was switched off. Mr Abou-Yaghi contacted Blacktown Police and reported his vehicle as stolen.
The second respondent's purchase of the motor vehicle 25At about 5:52pm on 6 July 2011, an unknown person or persons placed an advertisement on the TigTag website (Annexure A, statement of Jiaqi Guo of 22 July 2011). From about 6:00pm onwards, the second respondent was surfing the internet on this Chinese language website (Affidavit of Jiaqi Guo of 12 December 2011, paragraph 22), which website is used to advertise goods for sale in many countries. The second respondent had previously purchased a BMW 320i, in a private sale in Queensland on 16 February 2011 for $40,000, but found it to be mechanically unreliable, and had to sell it for less than he paid (namely $30,000). He sold this car through the Sydney Motors Group in about mid-June 2011 (Affidavit of Jiaqi Guo, 12 December 2011, paragraph 13) and began looking for another car. His evidence was that this purchase made him more cautious about purchasing cars privately and that next time he purchased a vehicle he would carry out the searches recommended to him by Sydney Motors Group. 26Sydney Motors Group told the second respondent about a BMW 320i going to auction on 5 July. The second respondent had withdrawn $40,000 in cash from his bank account on 5 July 2011, as he had hoped to buy another 2010 BMW 320i for no more than $42,000, but his bid was unsuccessful. The second respondent was not able to tell the court very much about this vehicle, such as the year, the price or the auction details. He did recall that he decided to keep the $40,000 cash in a brown leather bag in his room, in the event that he saw another car he wanted to buy some time in the future. 27Up until this time, the second respondent had never considered buying a BMW X5, as he had been hoping to obtain a 2010 BMW 320i, which was in a lower price range. He wanted a recent model with low mileage, and had previously decided against purchasing a BMW X5 for sale on TigTag for $25,000, on the basis that it was a 2004 model with around 80,000-90,000kms. 28The text of the rogue's advertisement, which the second respondent saw whilst surfing TigTag's "Australia" ( 澳 洲 ào zhōu) and "cars" ( 汽 车 qì chē) section at about 6.30 p.m., was as follows: " 出 售 宝 马 X5 出 售 银 色 宝 马 X5, 价 格 55000。有 意 请 联 系 QQ:2420560656 " ["Selling BMW X5 Selling Silver BMW X5, price 55000. If interested, please contact QQ: 2420560656"] 29No in formation was provided as to the year, the mileage or the address at which the vehicle could be inspected. Notwithstanding the absence of these details, the second respondent immediately responded at 6:31pm that he was interested, and he gave his QQ social networking number so that he could be contacted: " 我 感 兴 趣 请 加 我 103442955" [I'm interested. Please add me 103442955] 30The second respondent then had a conversation online with the advertiser through his QQ network in Mandarin. No written record is available of this conversation (which was not electro nically stored once the conversation was finished), but the second respondent said it was to the effect that they agreed they would meet in 10 minutes at the nearby Kingsford McDonalds restaurant, as the car was said to be located there. The second respondent asked his friend, Eric Jiao, to drive him to this location. It should be noted that the motor vehicle in question was in fact observed to be travelling along The Hills M2 motorway from Mr Abou-Yaghi's home at Seven Hills at 6:52pm, which was after these events, and so was not at Kingsford either at the time of the second respondent's electronic conversation, or by the time the second respondent arrived at the meeting place. 31The second respondent told the court that he met up with the person selling the car outside McDonalds on Barker Street, Kingsford, at about 7:25pm. There is no evidence as to how many other persons were in the vicinity. It is unclear how the second respondent was able to identify this person from any other persons in the vicinity, other than for the fact that this person was of Chinese nationality and spoke to him in Mandarin. The second respondent did not ask this person for his name, or at any time ask who he was, or ask for any form of identification. He did, however, ask where the car was and was told that the car was not there, but was on its way (statement 22 July 2011, paragraph 37). 32The whole conversation was as follows: "Are you here to see the bao ma (BMW)?" I replied: "Yes." He said: "We spoke on QQ just now. Have you eaten?" I replied: "Just ate. And you?" He said: "Yes." I said: "That's good. Where is the car?" He said: "It's not here yet, but it's on its way." I said: "The advertisement on Tigtag said $55,000.00, can you go any lower?" He replied: "How much can you pay for it?" I said: "Forty thousand plus." He replied: "Let me talk to my friend. Please wait." (Exhibit C, Affidavit of Mr Guo, 12 December 2011, paragraph 42) 33The second respondent must have realised the person he was speaking to was not the owner of the car. He heard him speak in Mandarin to this other person on his mobile phone, but the contents of this conversation are not before the court. After this person ended his call, he had the following conversation with the second respondent: "My friend has graduated from University, and has to leave Australia because his visa is expiring." I said: "I can afford about forty thousand." He said: "As the car needs to be sold quite urgently, the lowest you can have it is for $45,000.00." I replied: "I need to think about this. Can I have the car details? I want to make sure the car is fine before I buy it." (Exhibit C, Affidavit of Mr Guo, 12 December 2011, paragraph 44) 34The second respondent's evidence was that after his previous bad experience with a private seller for BMW, he was advised by an employee of Sydney Motors Group (identified only as "Tony") that to avoid problems of the kind which he had with his previous vehicle, he should do a history check with the RTA to see if the car had been badly damaged, and that there was a similar search called VCheck. He was also advised to do a REVS check. He was also advised that these checks could show whether the car had been stolen. 35The second respondent then proceeded to make those enquiries of the unnamed representative of the car owner, who was able to take a piece of paper out of his pocket and read the details of the car to him, which he had already written out in advance. 36The second respondent made a note of the following on the Notes function of his iPhone: "plate: BLR96B VIN: WBAFE42040LK98726 Engine: 03167156N52B30AF" 37This note was time-stamped as having been created on 6 July 2011 at 19:35, namely approximately 10 minutes after the second respondent arrived outside the entrance to McDonalds. 38After the second respondent recorded these details in his iPhone, he had a conversation with this unnamed person to the following effect: "Since the car has not arrived yet, can I go home to check the details of the car?" The advertiser replied: "Oh, the car is good, you will be very pleased with it." I said: "I would just like to ensure that everything is fine before I buy it." He replied: "Alright, go ahead and do your checks then, you won't find any problems with it. Can you come back in about an hour? The car should be here by then." I said: "Thank you. If I find any problems with the car, I won't buy it. I'll let you know if that happens." He said: "I'm very sure the car is great. I'll see you in an hour." (Exhibit C, Affidavit of Mr Guo, 12 December 2011, paragraph 48) 39The second respondent then walked home, his home being quite nearby. He felt reassured that the car did not have any problems as if this had been the case this person would have tried to avoid giving him these details, and said in his evidence that if he had not been able to perform these searches, he would not have bought the car (Exhibit C, Affidavit of Mr Guo, 12 December 2011, paragraph 49). 40The second respondent arrived home at about 7:45pm, opened the RTA website and carried out a Vehicle History Check on the website. He obtained a Certificate of Registered Interests from NSW Fair Trading at 19:49. He then made a check with VCheck at 20:24. This search told him that the car was first registered in NSW in November 2009 (Exhibit "A" to the affidavit of Jiaqi Guo), which meant the car he was looking at was about 18 months old. This was important information as to the value of the car and as to whether $45,000 was a realistic price. The other BMW X5 which he had looked at, as being in his price range, was a 2004 model with extensive mileage on the clock. 41The second respondent got ready to return to meet the representative of the car owner. He took the $40,000 out of his brown leather bag and also another $5,000, which he had been keeping in his wallet (paragraph 55 of the affidavit). Since it was late at night (around 8:35pm) and he did not want to be robbed, he put the $45,000 in the inner chest pocket of his jacket and carried the brown leather bag in his hand. He then walked to Kingsford McDonalds. He arrived about 10 minutes later, at about 8:45pm. He saw a Chinese person walking towards him and they had a conversation as follows: He said: "How did everything go?" I said: "I checked everything and it seems fine. Where is the car?" He said: "I told you everything is fine. You can trust me. Follow me, I'll take you to the car." (Exhibit C, Affidavit of Mr Guo, 12 December 2011, paragraph 55) 42The second respondent followed the unknown person into Harbourne Road and saw a BMW X5 parked by the eastern gutter. There was no one else in the street apart from the two of them, but there was street lighting where the car was parked. The second respondent immediately "fell in love" (Exhibit C, Affidavit of Mr Guo, 12 December 2011, paragraph 59) with the car. He noted that it looked quite new from the outside and said to the unknown person: "Can I test drive this?" He replied: "Oh, I don't have the keys with me at the moment, my friend is eating. But you can see for yourself, the car is in great condition. You know you can trust me. I told you the checks would be fine, and they were, right?" (Exhibit C, Affidavit of Mr Guo, 12 December 2011, paragraph 59) 43The second respondent felt very persuaded by these words, as it was true that the checks to the vehicle had not shown any problems. He decided that he would buy the car and they had a conversation as follows: "Alright, is the price still $45,000.00?" He replied: "$45,000.00 is already a great price." I said: "Alright, I'll buy it. I have the money here with me." He replied: "Oh, that's good. Let me get the keys from my friend and I'll be back in 5 minutes." (Exhibit C, Affidavit of Mr Guo, 12 December 2011, paragraph 60) 44The unknown person went away to get the keys from the unnamed owner. At around 9:03pm, this unknown person returned, handing the second respondent the car keys, and the second respondent handed over the money. They had a conversation to the following effect: I said: "Do we need to sign a contract?" He said, pointing into the windscreen of the car: "It is all finished. My friend was expecting to sell you the car, so he already signed the rego papers. They are in the car. You'll be very happy with it." I said: "Thank you." (Exhibit C, Affidavit of Mr Guo, 12 December 2011, paragraph 62) 45It was now 9:05pm. The unknown person left in the same direction he had come from and the second respondent then unlocked the car and got in. He found the registration papers on the dashboard but did not read them, although he noted they had been signed. He then drove the car back to his garage and, after his return to his home, downloaded the RTA forms and filled them out. He attended the Botany RTA the following day (7 July 2011) and lodged the forms, paying for the transfer of the car by his Commonwealth Bank debit card as he did not have any cash (Exhibit C, Affidavit of Mr Guo, 12 December 2011, paragraph 67). The sale price was listed, on both the Notice of Disposal and Registration Transfer Details as $40,000, not $45,000. The explanation given for this by the second respondent in his evidence was that he was very excited by these events and by obtaining this car when it was such a "good deal". 46By coincidence, the first respondent was also visiting the RTA registry on 7 July 2011. He was at the RTA at Blacktown lodging the upper section of the Certificate of Registration (titled Notice of Disposal) to advise the RTA of the sale of his vehicle to the rogue, "Jeffrey Zhang".
The police seize the car 47After the first respondent reported the theft of the vehicle to the police on 12 July 2011, the applicant, Detective Senior Constable Alan Wilkes, was assigned to investigate the theft. A copy of the COPS event E39124289 is Annexure A to his affidavit. According to the COPS event, while the victim was at the police station reporting the matter, police carried out searches and noted that the vehicle had been transferred to the second respondent and they obtained a telephone number for him. According to the COPS event, the second respondent told police he had purchased this vehicle from a website known as "TicTac" (the TigTag website). The COPS entry went on to note: "Guo has gone further to state that he had purchased the vehicle on 7 July 2011 after viewing it on the website several weeks prior. Police were unable to obtain any further details from Guo due to his limited English but were informed that he had purchased the vehicle using cash but did not obtain any details of the owner of the vehicle." (Annexure A to the Affidavit of Detective Senior Constable Wilkes) 48The second respondent's limited English was put forward as the explanation for the reference to "several weeks" when the vehicle had in fact only been seen on the website on the night he bought it, and I accept this explanation. 49Police carried out searches of all of the information provided by the first respondent. They discovered that the NSW driver's licence provided by "Jeffrey Zhang" was fraudulent, as was the bank cheque. As the second respondent had indicated, during this telephone conversation with police, that he would not hand the vehicle over to the police (see Annexure D to the Affidavit of Detective Senior Constable Wilkes), a search warrant was obtained for the second respondent's residence (Annexure B to the Affidavit of Detective Senior Constable Wilkes). On 15 July 2011 police attended the second respondent's residence. The vehicle was not there. The second respondent was contacted by telephone and said he would return home in one hour. The police waited for one hour at the premises but he did not return home. When contacted again, he stated that he is still in Parramatta and would seek advice from a solicitor before returning home (see Annexure D to the Affidavit of Detective Senior Constable Wilkes). 50On 16 July, police received a telephone call from a firm of solicitors called Wang & Associates. According to the statement of facts set out in Annexure D, as a result of this phone call, police attended the second respondent's home and seized the property sought under the search warrant, namely the BMW and other property listed in the Summons. The property seized was conveyed to Blacktown Police Station for entry in the exhibits book. 51While the search was being carried out, the police spoke to a second occupant of the premises, who identified himself as Jian Wang (born 31 August 1984) (see Annexure A to the Affidavit of Detective Senior Constable Wilkes). 52The search was carried out by Detective Senior Constable Stephen Papandrea, whose conversations with both Mr Jian Wang and the second respondent were somewhat hampered by the fact that they were carried out without an interpreter. During the search the second respondent told Detective Senior Constable Papandrea that he had purchased the vehicle for either $40,000 or $45,000 after reading an advertisement on the TigTag website and showed him the website on his laptop. He agreed with Detective Senior Constable Papandrea that it was a "good deal". While the second respondent's English is limited, he clearly understood what a "good deal" was and in fact used this phrase in English in the course of his cross-examination. The second respondent told police that he would not make a formal statement until he received advice from his solicitor. He telephoned his solicitors immediately (see the Affidavit of Mr Guo, 12 December 2011, paragraph 69).
Subsequent developments 53The police immediately commenced proceedings in the Local Court seeking the orders sought in these proceedings and obtained a statement from the second respondent on 21 July 2011. A statement was also obtained from the first respondent. 54On 22 July 2011, as well as making a statement, the second respondent wrote to the Office of State Revenue stating he had given the wrong sale price of the vehicle ($40,000 instead of $45,000) and enclosing a Commonwealth Bank cheque for $150 additional stamp duty (Affidavit of Mr Guo, 18 January 2012, paragraph 18-20 and Annexure E). 55In her very helpful and comprehensive submissions, Ms Bayley, for the applicant, has set out the following summary of police investigation activities: (a)there are no known fingerprints in the vehicle; (b)there are no known fingerprints on the bank cheque; (c)the bank cheque was forged (the actual value was $40); (d)the forgery of the bank cheque was of a high standard because it was not detected by the first respondent or by the bank teller and was only later detected by the bank's fraud department; (e)the person who obtained the bank cheque is unable to be identified; (f)"Jeffrey Zhang" is a false name; (g)the applicant conducted a search of police databases regarding the residential address provided by "Jeffrey Zhang" (21 Jacques Street Chatswood) and its occupants and made nil adverse findings; (h)"Jeffrey Zhang" does not hold a NSW driver licence; (i)the driver licence was forged; (j)"168932252" is a false licence number; (k)the forgery of the driver licence was of a high standard because it was not detected by the first respondent; (l)the name "Jeffrey Zhang" does not appear on the online directory of New South Wales solicitors who hold a current practising certificate; (m)there is no CCTV depicting "Jeffrey" buying the vehicle from the first respondent; (n)there is no CCTV retained depicting "the advertiser" meeting the second respondent outside Kingsford McDonalds; (o)there is no CCTV depicting "the advertiser" selling the vehicle to the second respondent on Harbourne Street; (p)the applicant obtained CCTV of depicting the second respondent at the RTA Registry at Botany at around 8-8:30am on 7 July 2011; (q)police are unable to obtain a statement from the second respondent's friend, Eric Jiao, because he is currently overseas. The applicant telephoned Eric Jiao (albeit without the benefit of an interpreter) and is of the view that he is unlikely to provide any evidence which could assist the investigation; (r)the applicant obtained the original Application for Transfer of Registration form and the original Certificate of Registration (with the Notice of Disposal and Registration Transfer Details completed on the reverse side) provided by the second respondent to the RTA but determined that they would not be suitable for finger print testing because they had already been handled by multiple employees at Roads and Maritime Services; (s)the original Certificate of Registration (with the Notice of Disposal and Registration Transfer Details completed on the reverse side) provided by the second respondent to the RTA was forged; (t)the forgery of the Certificate of Registration (with the Notice of Disposal and Registration Transfer Details completed on the reverse side) provided by the second respondent to the RTA was of a high standard because it was not detected by the RTA; (u)the applicant obtained a subscriber check for the mobile number provided by "Jeffrey Zhang" to Hatem Abou Yaghi (0431913382) and conducted a search of police databases regarding that name and residential address but was unable to establish any link to the fraud; (v)the applicant obtained the footage of the vehicle passing through the motorway on 6 July 2011 but (due to the poor quality of the footage) is unable to identify the driver or conduct facial recognition testing on the footage. 56The investigation is ongoing and, in addition, other detectives at Bankstown are investigating a similar fraud.
The respondents' submissions as to their entitlement to the BMW 57This brings me to a determination of the issues in these proceedings. While the case was put before me on behalf of the first respondent on the principal basis that the contract was void and not merely voidable, it is also necessary for me to make findings as to whether or not the second respondent was a bona fide purchaser without notice before the first respondent's contract with "Jeffrey Zhang" was voided. For the sake of convenience, I have dealt with this issue first, as it was the principal issue which was the subject of argument before me.
Section 28 of the Sale of Goods Act 1923 (NSW) 58Although the respondents have not filed pleadings in reply, each has relied upon the provisions of the Sale of Goods Act , and in particular s 28, which provides as follows: " Section 28 - Seller or buyer in possession after sale (1) Where a person having sold goods continues or is in possession of the goods or of the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for that person of the goods or documents of title under any sale pledge or other disposition thereof to any person receiving the same in good faith and without notice of the previous sale shall have the same effect as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same. (2) Where a person having bought or agreed to buy goods obtains with the consent of the seller possession of the goods or the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for that person of the goods or documents of title under any sale pledge or other disposition thereof to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods shall have the same effect as if the person making the delivery or transfer were a mercantile agent intrusted by the owner with the goods or documents of title. (3) In this section the term "mercantile agent" means a mercantile agent having in the customary course of business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods." 59The purpose of s 28 of the Sale of Goods Act was explained by Brennan J in Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia (1987) 163 CLR 236 as follows: "The plain purpose of s 28 of the Sale of Goods Act 1923 (NSW) (the Act) is to give a measure of protection to third parties to whom goods or the documents of title to goods are delivered or transferred under a sale, pledge or other disposition by a seller of the goods who has parted with his property in them or by a buyer of the goods who has not acquired property in them. Sub-section (1) deals with the effect of delivery or transfer by such a seller to a third party; sub-s (2) deals with the effect of delivery or transfer by such a buyer to a third party. (In passing, it may be noted that there is some difficulty in giving meaning to the words "bought or" in sub-s (2), for the effectiveness of a delivery or transfer by a buyer who is the true owner and who delivers or transfers to a third party under a sale, pledge or other disposition needs no support from the sub-section unless, perhaps, the seller has retained a limited interest in the goods. It may be that the words are surplusage: see Atiyah, The Sale of Goods 7th ed (1985), p 294.) In this case the protection of s 28(2) is invoked by a third party (Natwest) in circumstances set out by the Chief Justice in his judgment. The question is whether Natwest acquired, by virtue of the operation of s 28(2), a better title to eight motor vehicles seized by Gamer than the title which Gamer had. Section 28 prescribes exceptions to the general rule that a person who has no title to goods cannot pass title to another though he delivers the goods to the other intending to pass title. The section requires that the person who makes the delivery and who has no title to pass to the other person is a seller who continues or is in possession of the goods or is a buyer who has obtained possession of the goods with the seller's consent. For the purpose of s 28, a person is in possession of goods when he has the goods in his actual custody, the object of the section being "to protect an innocent purchaser who is deceived by the vendor's physical possession of goods or documents and who is inevitably unaware of legal rights which fetter the apparent power to dispose": Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd (1965) 112 CLR 192 at 202; [1965] AC 867 at 886." 60Brennan J goes on to note: "Then it is necessary to go to s 5 of the Factors (Mercantile Agents) Act 1923 (NSW) (the Factors Act) to ascertain the effect of a sale, pledge or other disposition of goods made by a mercantile agent who is "entrusted as such with the possession of any goods or the documents of title to goods", to quote the text of that section. Section 5 provides that any such sale etc, made by such a mercantile agent "in the ordinary course of business of a mercantile agent" is - subject to the provisions of this Act ... as valid as if he were expressly authorised by the owner of the goods to make the same: Provided that the person taking under the disposition acts in good faith, and has not at the time of the disposition notice that the person making the disposition has not authority to make the same." 61Thus even though the BMW was purchased by a rogue with a cheque that was later dishonoured, the second respondent has obtained possession of the BMW, with voidable title. Any delivery or transfer of the BMW by "Jeffrey Zhang", the rogue, would have the same effect as if "Jeffrey Zhang" were a mercantile agent for the purpose of the Factors (Mercantile Agents) Act 1923 (NSW) (written submissions of the second respondent, paragraphs 18 and 19). 62The question of "good faith" is relevant both to s 28 of the Sale of Goods Act and s 5 of the Factors (Mercantile Agents) Act , as is expressly stated in each of these legislative provisions.
Good faith 63On the submissions before me, "good faith" is not a disputed issue in relation to the first respondent's sale to "Jeffrey Zhang". The parties agreed that the onus of proving good faith in relation to the second respondent rests on the first respondent: International Alpaca Management Pty Ltd v Ensor (1995) 133 ALR 561 at 592.8; Vassallo v Haddad Import & Export Pty Ltd (2004) 2 DCLR (NSW) 123 at [89]. 64"Good faith" is defined by s 5(2) of the Sale of Goods Act as follows: "A thing is deemed to be done "in good faith" within the meaning of this Act when it is in fact done honestly, whether it be done negligently or not." 65"Good faith" has been defined as acting honestly by Clarke J in Associated Midland Corporation v Sanderson Motors Pty Ltd [1983] 3 NSWLR 395 at 401 and by Newnes M in Lelato Pty Ltd v Halse Holdings Pty Ltd [2004] WASC 267 at [21]. 66Examples of conduct considered to be lacking in good faith include: (a)Actual notice of lack of title or of the involvement of the rogue would clearly amount to circumstances in which a lack of good faith can be found. However, lack of good faith can be inferred if there is a lack of reasonable care which, when coupled with other facts, might lead to an inference that the purchaser was suspicious and refrained from enquiring for fear of learning of an irregularity ( Associated Midland Corporation v Sanderson Motors Pty Ltd at 401 and 402). (b)Purchasing goods at much less than their ordinary price ( Heap v Motorists' Advisory Agency Ltd [1923] 1 KB 577). (c)Failure to make enquiries where the circumstances of the sale are suspicious: see the cases discussed by Rein SC DCJ in Vassallo v Haddad Import & Export Pty Ltd at [76]. 67Rein SC DCJ, in Vassallo v Haddad Import & Export Pty Ltd at [75]-[76] explained the process of drawing inferences as follows: "[75] Actual notice of lack of title or the involvement of the fraudster in a fraud or racket is not the only circumstance in which a lack of good faith can be found. If it can be inferred that the purchaser was suspicious and refrained from inquiry because of a fear that to do so would make him aware of the absence of title, that would be sufficient: see Associated Midland Corporation v Sanderson Motors Pty Ltd [1983] 3 NSWLR 395 at 401. In Ingram v Little , Sellers LJ said: The defendant and his servants, like so many who buy and sell secondhand motor cars, might have been more astute and more careful, but it requires more than that to justify a finding of bad faith: p 47. [76] A failure to make inquiries where the circumstances of the sale are suspicious justifies a finding of lack of good faith: see Whitehorn Bros v Davison [1911] 1 KB 462 per Vaughan Williams LJ at 892, and Jones v Gordon (1877) 2 App Cas 616 per Lord O'Hagan and Lord Blackburn at 625, 628 and 629. In Re Gomersall (1875) 1 Ch D 137, relied on by Doff, the Court regarded the fact that one group of cheques drawn had a face value of £1727 and were sold for £200, and the other were drawn for £3593 and sold for £150, respectively, pointed to the lack of good faith (the difference was not between £200 and £250, as described by counsel in argument). In International Alpaca Management Pty Ltd v Ensor (1995) 133 ALR 561 at 596-597, the Full Court cited with approval the words of Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378, that acting in reckless disregard of others' rights or possible rights can be a tell-tale sign of dishonesty, and that the court will, in deciding whether a person acted honestly, look at all the circumstances known to the third party at the time, and the personal attributes of the third party, such as his experience and intelligence, and the reason why he acted as he did. " 68Any finding as to the absence of good faith must fall within the principles of Briginshaw v Briginshaw (1938) 60 CLR 336 ( Rejfek v McElroy (1965) 112 CLR 517). I must take into account the seriousness of the finding as to whether or not on the balance of probabilities there was an absence of good faith. 69I have set out my factual findings in relation to lack of good faith below. The very unusual facts of this case mean that a finding of lack of good faith in relation to the second respondent is clear. Before I do so, however, I should note the principles of law underlying s 28 and in particular a series of decisions concerning disputes between buyers and sellers where a party has been duped into selling a vehicle to a rogue who has then on sold it. 70The law in this area has been unsettled for many years: Vassallo v Haddad Import & Export Pty Ltd at [47]-[71], and I have adopted the same approach to the resolution of issues as did Rein SC DCJ in Vassallo v Haddad Import & Export Pty Ltd . There is also a helpful discussion of some of the earlier cases, notably Phillips v Brooks Ltd [1919] 2 KB 243, in Fawcett v Star Car Sales Ltd [1960] NZLR 406. 71In Shogun Finance Ltd v Hudson [2003] All ER (D) 258 (Nov); [2003] UKHL 62; [2004] 1 AC 919; [2004] 1 All ER 215; [2003] 3 WLR 1371; [2004] 1 All ER (Comm) 332, Lord Nicholls of Birkenhead stated at [34]-[38] that, for the law of contract to be rescued from its "unsatisfactory and unprincipled state" (at [34]), the House of Lord had the choice of upholding the approach adopted in Cundy v Lindsay (1878) 3 App Cas 459 and overruling Phillips v Brooks Ltd and Lewis v Averay [1972] 1 QB 198; [1971] 3 All ER 907; [1971] 3 WLR 603, or of preferring these later decisions to Cundy v Lindsay , and that the latter course is preferable. Lewis v Averay is still good law in Australia, particularly in relation to the so-called "face-to-face" principle ( Shogun Finance Ltd v Hudson at [58]). Shogun Finance Ltd v Hudson is a case where the relevant documents relate to the construction of a written contract, and it is a decision which has not yet had the benefit of appellate interpretation in Australia, so it is of limited assistance. 72Determination of disputes between sellers and buyers in such circumstances turn of the facts in each case. The correct method of approach is as set out in decisions such as Papas v Bianca Investments Pty Ltd (2002) 82 SASR 581, Vassallo v Haddad Import & Export Pty Ltd and Bird v DMBA Pty Ltd (District Court of New South Wales, Gibb DCJ, 14 April 2011, unreported). 73This brings me to an application of the legal principles set out above in determining issues such as the honesty of the buyer and seller, and the steps which each of the first and second respondent took or failed to take.
The transaction between the first respondent and the rogue 74Mr Abou-Yaghi sold his car to a rogue named "Jeffrey Zhang" in circumstances where he obtained the full name and employment details of the rogue, including sighting his driver's licence and obtaining his address and telephone number. In addition, he did not give the rogue the registration papers and instead required him to sign a contract, with a proviso that the registration papers would not be sent until the bank cheque cleared. 75Are there steps that Mr Abou-Yaghi did not take which are of relevance to the transaction? These are submitted by the applicant to be as follows: (a)Verify the rogue's address and place of employment; (b)Copy or verify the rogue's licence; (c)Obtain the rogue's business card or other identification including details of his employment as a solicitor; (d)Did not notice that the driver's licence or bank cheque was forged. 76As the police investigations conclude, the driver's licence produced by "Jeffrey Zhang" was a convincing document, as was the bank cheque, so it is hardly surprising that the first respondent did not notice these documents were forged. It was not put to Mr Abou-Yaghi in cross-examination that there was any specific feature of either the bank cheque or the driver's licence which should have attracted his attention. 77It would have been difficult for the first respondent to verify that "Jeffrey Zhang" was indeed a solicitor at Wang & Associates in the evening after business hours, and the value of a business card as proof of employment or identification is low. These are not significant omissions. 78By withholding the registration papers pending the bank cheque being met, and requiring the rogue to sign a written contract to this effect, the first respondent was acting sensibly and cautiously, and submissions to the contrary were not put by counsel for the second respondent. 79However, a very different picture emerges from the transaction that the second respondent entered into with either the same rogue or other unknown persons on the same evening.
The transaction between the second respondent and the rogue 80The second respondent submits that his purchase of the BMW was in good faith and without notice of any lien or right of another party and relies upon the following evidence: (a)The second respondent purchased the BMW after seeing it advertised on sale on the internet (Affidavit of Jiaqi Guo of 12 December 2011 at paragraph 27-29); (b)The second respondent conducted checks before proceeding with the purchase of the BMW (Affidavit of Jiaqi Guo of 12 December 2011 at paragraph 45-52); and (c)The second respondent registered the BMW with the RTA the day after the purchase (Affidavit of Jiaqi Guo of 12 December 2011 at paragraph 64-67). 81The steps taken by the second respondent need to be seen in the context of the transaction as a whole. I set out these steps, with the assistance of the helpful summary prepared by the applicant, as being the following: (a)He communicated with the rogue electronically, or through the rogue's agent, over an approximate 2.5 hour period on one evening, but never spoke to the rogue, or ascertained his identity. The second respondent's explanation for this was that it would not have been polite to do so. However, seeing the registration papers was an essential part of this transaction, and I find this explanation implausible. (b)He never ascertained the identity of the rogue's representative, although he overheard the rogue and his representative speaking in the Chinese language. Again, I find the explanation that it was not polite to ask this man's name to be implausible. (c)He copied down the VIN number, the rego number and the engine number of the vehicle from a handwritten document and not from the registration papers or from the car. The value of having information such as the engine number, the VIN number and the registration number and the satisfactory searches he obtained as a result would be very little if there was in fact no motor vehicle corresponding to these documents. He knew from these searches that he was buying a November 2009 BMW X5 for $45,000 and this low price should have put him on his guard, however slight his inquiries about the actual value of such a vehicle may have been. (d)Despite not even seeing the vehicle, he was sufficiently persuaded by these searches to bring $45,000 in cash to a car park adjacent to the McDonald's restaurant in circumstances where he knew that it was dangerous. (e)He handed over the money in circumstances where he still had not seen the registration documents, although he said he saw them through the windscreen of the car and accepted that the relevant details had been inserted by the true owner. He did not bother to check those details before going ahead; if he had he would immediately have noticed that the name of the seller was not a Chinese name. (f)He accepted what he believed to be the keys to the vehicle without even trying them in the lock before allowing the person to whom he gave the money to depart. (g)He never took any of the following steps: (i)Obtain rogue's name; (ii)Obtain rogue's identification; (iii)Obtain rogue's address; (iv)Obtain rogue's employment; (v)Verify rogue's QQ number; (vi)Obtain rogue's mobile phone number; (vii)Obtain rogue's landline; (viii)Obtain name of "friend"; (ix)Obtain any confirmation of the rogue's authority to deal with vehicle owned by the "friend"; (x)Inspect interior; (xi)Mechanic inspection; (xii)Test drive; (xiii)Obtain receipt from the rogue for the cash; (xiv)Compare the insurer details on the Vcheck and the registration papers; (xv)Did not notice that the seller's name and signature on the registration papers appeared to be the same; (xvi)Did not notice that the registration papers were forged; (xvii)Did not notice that the seller's name appeared not to be a Mandarin name; (xviii)Communicate directly with the apparent owner (the rogue's friend). 82Counsel for the first respondent also drew my attention to the second respondent's failure to insure the vehicle. In cross-examination, the second applicant said he could not afford to pay for this. In addition, the compulsory insurer code for the green slip on the documents in the second respondent's possession (Exhibits 1 and 5) is wrong; the compulsory third party insurer for the first respondent was Allianz, which had a different number (the receipt number is, however, identical with the number on the first respondent's certificate of registration, a clear indication that this forged document was prepared from the photo of his registration papers taken by "Jeffrey Zhang"). While compulsory third party insurance carries on with the motor vehicle, the documents in the second respondent's possession were inconsistent with this policy. 83Mr Butterfield, for the first respondent, submitted that while the second respondent may have paid little attention to these details, they were matters which I should take into account when determining whether he had acted in good faith, especially in the context of his claiming to have paid $40,000 for the vehicle. He pointed out that I have only the evidence of the second respondent that he even received the forged registration papers when he said he did. Mr Butterfield pointed to this evidence, and to the likelihood that the second respondent knew that the vehicle was worth more than he paid at the time he spoke to his solicitors (and paid the extra stamp duty for a purchase of $5,000) as evidence that the second respondent had, if not actual notice of the theft, then something close to it. 84I am not satisfied, on the Briginshaw onus of proof, that these facts have been made out. The first respondent had only had the BMW in his possession for about 10 days before the police seized it, and he may not have given much thought to insurance beyond its cost. 85What the evidence does point to, however, is that the second respondent willingly turned a blind eye to a series of factual events which indicated a real likelihood that this vehicle was stolen. I find these facts to be as follows. In a matter of hours, the second respondent agreed to purchase an obviously valuable 2009 BMW, sight unseen, from a person he never met, represented by an intermediary whose name he did not know; he gave $45,000 in cash to this person without receiving a receipt or inspecting the registration papers; he let this person walk away without even unlocking the car. The only evidence he had that the car was not stolen was the result of searches; these were based, not on his inspection of the vehicle, but on information written by some unknown third party on a piece of paper. The car was not even available to be looked at on his first visit, and sat, locked, by the roadside while he paid the cash during his second visit. These circumstances, individually or in combination, should have alerted him to the possibility that the car could have recently been stolen or was being sold without the permission of the owner. 86The second respondent also wilfully closed his eyes to matters which he must have known that investigations would have revealed, such as checking the name of the former owner on the registration papers, which would immediately alerted him to the fact that a person with such a name was unlikely to be Chinese, or to be able to speak in Chinese to his unnamed agent. This was important because there was no evidence that the car which was parked beside the kerb was in fact the car with the engine and VIN numbers that he had searched. 87The circumstances in which the second respondent filled out documents at the RTA the following day indicating that he had paid $40,000 for the vehicle are also of relevance. I do not accept the evidence of the second respondent that his reason for making this mistake was excitement. By misstating the purchase price, in circumstances where there was written evidence as to what the purchase price was, he was paying less duty than he was obliged to pay. This is not a matter going to the second respondent's credit. 88In cross-examination, the second respondent agreed this was a "good deal". He knew this BMW model was a more expensive kind of car than a BMW he had been unable to afford to buy at auction. Any inquiry as to price would have alerted him to the fact that he was buying for 50% of the car's value. 89Taking all of the above matters into account, I am not satisfied that the second respondent was a bona fide purchaser without notice before the first respondent's contract with the rogue was voided. He wilfully turned a blind eye to obvious indications that this vehicle was likely to have been stolen. 90The second respondent was not a buyer in good faith. This brings me to the question of whether I should make an order under s 219(2)(b) of LEPRA that the first respondent owns the vehicle.
Was the contract void or voidable? 91I shall first deal with the first respondent's argument that for the reasons explained by the Court of Appeal in Godfrey v Sevenoaks (1958) 75 WN (NSW) 487 the first respondent never parted with possession of the motor vehicle and the contract was void and not voidable. If I accept this submission, the second respondent's bona fides would be irrelevant, as ownership of the vehicle could not pass to him in the first place. The transaction would be not voidable, but void. 92What makes this purchase of the first respondent's vehicle by the rogue "Jeffrey Zhang" different to the transaction in cases such as Bird is that the first respondent sought to defer the passing of property, in a written contract, until the bank cheque had cleared, and held back the registration papers on this basis. The first respondent submitted that this was comparable to an agreement being "subject to finance" or "subject to cheque clearance", in circumstances which are similar to two 1958 decisions: Godfrey v Sevenoaks and Davey v Robinson's Motors Pty Ltd (1958) 75 WN (NSW) 56. 93In Godfrey v Sevenoaks , the plaintiff accepted a cheque for a vehicle and allowed him possession of the car, whilst entering into an oral contract that no title to the car was to pass until the cheque was honoured. The Court of Appeal in Godfrey v Sevenoaks held that these conversations formed part of the transaction by which the rogue became possessed of the car, and it was a term of the contract that no title was to pass until the cheque offering payment was met. The Court of Appeal upheld the trial judge's rejection of the argument that title, although voidable, passed to the defendant in such circumstances. 94In Davey v Robinson's Motors Pty Ltd at 58, Street CJ put the issue as follows: "The question is whether that evidence is such as to outweigh the other clear evidence that the plaintiff, again in some muddled fashion, thought that he had protected himself by retaining title in himself throughout and only giving limited possession to Allen as a bailee." 95As Street CJ noted, the trial judge found that the plaintiff never intended to part with property or title in the car until after payment was received. While the belief that ownership could be retained was considered to amount to "muddled thinking" (at 58), once such a finding of fact was made, it became clear that "the plaintiff's intention was to keep title in himself until he was paid" (at 59). While that in itself did not determine the matter, such a finding was sufficient to amount to evidence that ownership of the vehicle did not pass at the same time as possession. 96The facts in the present case are considerably stronger than those in both these cases, as there was both a written contract to this effect and the registration papers withheld. The rogue, or his minions, had to go to the trouble of forging the registration papers in order to complete the transaction to the second respondent. 97While retention of the registration papers by the first respondent is similarly "muddled thinking" ( Davey v Robinson's Motors Pty Ltd (1958) 75 WN (NSW) 56 at 58) as to what constitute ownership, it is nevertheless capable of being evidence that ownership of the vehicle would not pass until such time as the cheque had been met, following which time the registration papers would be provided. 98On the very unusual facts of this case, I am satisfied that the sale was not complete until the cheque was honoured, and that the parties entered into a written contract to this effect. Accordingly, independent to my finding as to lack of good faith by the second respondent, I am satisfied the purported sale of the motor vehicle by the first respondent to the rogue was void, and ownership did not pass. 99As I am satisfied that the contract between the first respondent and "Jeffrey Zhang" was void, the first respondent is entitled to claim the BMW. It is not necessary, therefore, for any orders to be made in favour of the applicant pursuant to s 219(2)(e) of LEPRA.
Orders (1)Pursuant to s 219 Law Enforcement (Powers and Responsibilities) Act 2002 (NSW), I find that the first respondent is lawfully entitled to the property the subject of these proceedings, namely the BMW motor vehicle. (2)The following properties are to be delivered to the first respondent pursuant to s 219 Law Enforcement (Powers and Responsibilities) Act 2002 (NSW): (a)1 BMW X5 NSW Rego BLR96B (b)2 keys to BMW X5 NSW Rego BLR96B (c)1 REVS Papers for BMW X5 NSW Rego BLR96B (d)1 RTA Rego Papers for BMW X5 NSW Rego BLR96B (e)1 Log book for BMW X5 NSW Rego BLR96B. (3)The applicant's summons is otherwise dismissed. (4)The second respondent pay the costs of the applicant and first respondent with liberty to apply for any variation of this costs order. (5)Exhibits retained until further order.
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: 08 February 2012
Detective Senior Constable Wilkes
Abou-Yaghi
[2004] WASC 267
(1938) 60 CLR 336
(1987) 163 CLR 236
(1995) 133 ALR 561
(2002) 82 SASR 581
(1965) 112 CLR 517
(1965) 112 CLR 192
Pursuant to s 219 LEPRA, the court found first respondent lawfully entitled to the BMW and ordered delivery of the BMW X5 (NSW Rego BLR96B), two keys, REVS papers, RTA registration papers and log book to the first respondent; otherwise the applicant's summons dismissed; second respondent to pay costs of applicant and first respondent; exhibits retained (Orders).