Edward Lees Imports Pty Ltd v Commissioner for Fair Trading

1979] AATA 64; (1979) 36 FLR 482 Sabag v ACCC (2001) NSWSC 411 Smith v NSW Bar Association [1992] HCA 36; (1992) 176 CLR 256 Smith v The Queen [2001] HCA 50; (2001) 206 CLR 650 Sudath v HCCC [2012] NSWCA 171; SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; (2006) 228 CLR 152 Tosohn v Director General Department of Fair Trading [2003] NSWADT 1 Trlin v Commissioner of Fair Trading [2003] NSWADT 222 Category: Principal judgment Parties: Edward Lees Imports Pty Ltd (Applicant) Commissioner for Fair Trading (Respondent) Representation: Counsel: JR Young (Applicant) N Case (Respondent)

Solicitors: G & S Law Group (Applicant) Legal Services, NSW Fair Trading (Respondent) File Number(s): 2016/00378798

Background

1. The Applicant applied to the Respondent for a motor dealer's licence under the Motor Dealers and Repairers Act 2013 (the MDR Act) on 26 November 2014. Licence number MD054381 was granted to the applicant on 11 June 2015, with an expiry date of 10 June 2016.
2. On 16 February 2016 the Respondent and others attended the Applicant's car yard, issued a Notice to Show Cause (the First Show Cause) and seized documents On 20 September 2016 the Respondent issued a Notice of Determination (the First Determination) to take disciplinary action adverse to the Applicant.
3. On 6 October 2016, the Applicant applied to the Tribunal for review and stay of the First Determination. Interlocutory hearings took place on 12 October, 6 and 20 December 2016. On 12 October, the Tribunal granted a conditional stay of the First Determination. On 6 December 2016, the Tribunal remitted the matter under s 65 of the Administrative Decisions Review Act 1997 (the ADR Act) to the Respondent, to make a new determination. The reasons for that remit were published in Edward Lee's Imports Pty Ltd v Commissioner for Fair Trading [2017] NSWCATOD 13 on 23 January 2017. On 20 December 2016, the Tribunal granted the Applicant's stay application until further order of the Tribunal, and awarded the Applicant costs on the basis of a finding of special circumstances as a result of the Respondent's conduct. The reasons for the orders of 20 December 2016 were published in Edward Lee's Imports Pty Ltd v Commissioner for Fair Trading [2016] NSWCATOD 165.
4. On 6 January 2017, the Respondent issued a Notice to Show Cause (the Second Show Cause) and Notice of Suspension of Licence MD054381 pending determination of disciplinary action. On 20 January 2017 the Applicant applied to the Tribunal for a stay of the respondent's decision of 6 January 2017 to suspend the Applicant's licence. On 25 January 2017 the stay was granted until further order of the Tribunal, and the matter was listed for hearing on 27 and 28 April 2017.
5. On 28 February 2017, the Tribunal made directions for the filing and service of evidence and submissions According to those directions, the Applicant was due to file its grounds for review, evidence and submissions by 4 April 2017. That did not occur. On 14 March 2017 the Respondent issued a Notice of Determination (the Second Determination) to take disciplinary action pursuant to s 45 of the MDR Act against the Applicant, cancelling Licence MD054381 pursuant to s 45(1)(g) of the MDR Act and disqualifying the Applicant from being a licence holder or from being involved in the direction, management or conduct of a business for which a licence was required under the MDR Act for a period of ten years pursuant to s 45(1)(f) of the MDR Act.
6. At a further directions hearing on 11 April 2017, the April 2017 hearing was vacated and relisted for 16 and 17 May 2017, and the Tribunal made orders for the filing of grounds of review, evidence and submissions from the Applicant by 13 April 2017, and replies from the respondent by 11 May 2017. At some point between 13 and 21 April, the Applicant served the Respondent with its grounds for review, some evidence and submissions

Jurisdiction

1. Under s 176 of the MDR Act, the Applicant may apply to the Tribunal for review of the Second Determination under the ADR Act. The Tribunal is to decide what the correct and preferable decision is on the material before it: s 63 ADR Act.

MDR Act

1. The objects of the MDR Act are, relevantly to this application, consumer protection, the establishment and enforcement of standards of conduct and transparency and the prevention of misleading or dishonest conduct in relation to motor dealers, motor vehicle repairers and motor vehicle recyclers (s 3(a) - (c)).
2. The Second Reading speech relevantly outlines the reasons for introducing various aspects of the MDR Act licensing regime relied on in these proceedings, being "Fair Trading's ability to enforce the law against dodgy people in the motor industry", specifically focussing on issues of odometer tampering, "phoenixing" used to avoid regulatory sanctions by Fair Trading, and "close associates" "getting another licence and reoffending or ripping off consumers all over again".
3. A motor dealer is a person who "carries on the business of dealing in motor vehicles" (s 5) including "by" an employee, agent or other person (s 7).
4. The licensing provisions are set out in Part 2 of the MDR Act. Under section 11 of the MDR Act it is an offence to carry on the business of a motor dealer without a licence. A licence, therefore, privileges its holder from prosecution for activity that would otherwise be unlawful. A licence must specify the place at which the business is conducted (s 28).
5. Section 25 of the Act prohibits the grant of a licence to: 1. a person who is not "fit and proper" (s 25(2)(b)); 2. an applicant who is not likely to carry on the business for which the licence is sought honestly or fairly (s 25(4)(a); 3. a corporation if a: 1. director; 2. person involved in its management, or 3. any other person having control of the company would be prohibited from obtaining a licence (s 25(3)(a)).
6. Section 25 of the Act also gives the Commissioner a discretion to refuse to grant a licence to an applicant: 1. whose "close associate" is not a fit and proper person (s 25(5)(a)), or 2. if there is another licence in force in relation to the whole or part of a "place of business" to which the application relates (s 25(5)(b)).
7. Section 27 of the Act sets out some considerations relevant to but not limiting the considerations that may make a person "not fit and proper". What constitutes "fitness" in the context of determining whether a person is a fit and proper person general law "fitness" is derived from context (Australian Broadcasting Tribunal v Bond and Ors [1990] HCA 33; (1990) 170 CLR 321 at [380] per Toohey and Gaudron JJ). If the question is the fitness of a company, then the fitness of those controlling it may be imputed to the corporation (ABT v Bond).

Fitness and Propriety

1. In Hughes & Vale Pty Ltd v The State of New South Wales (No 2) [1955] HCA 28; (1955) 93 CLR 127 at 156 Dixon CJ, McTiernan and Webb JJ said, in relation to the "fit and proper person" test that its purpose: "... is to give the widest scope for judgment and indeed for rejection. "Fit" (or "idoneus") with respect to an office is said to involve three things, honesty knowledge and ability..."
2. Consistently with the decisions of the High Court in Hughes & Vale and ABT v Bond the holding of a licence under the Act attests that the holder is a person who will honestly perform his or her role as a licensee. What fit and proper means must be viewed in the light of, "... the activities in which the person is or will be engaged": Re Percival and Australian Securities Commission [1993] AATA 196; (1993) 30 ALD 280, at 290. What is fit and proper will depend on the legislative context and the nature of the particular profession, trade or occupation in question: Re Brennand & Australian Casino Surveillance Authority (1995) 38 ALD 794, at 796 para [41].

Onus and standard of proof

1. In merits review cases such as these proceedings there is no onus of proof as that term is generally understood: Nakad v Commissioner of Police, New South Wales Police Force [2014] NSWCATAP 10 at [28] - [30], [34]; Bushell v Repatriation Commission [1992] HCA 47; (1992) 175 CLR 408 at 424-425; SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; (2006) 228 CLR 152 at [40]. The Tribunal must decide what the correct and preferable decision is having regard to any relevant factual material: ADR Act, s 63(1).
2. It was previously thought that the applicable standard of proof was that laid down in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336. The Supreme Court has recently said in Bronze Wing Ammunition v Safe Work New South Wales (No. 2) [2016] NSWSC 988, however, that this is not the case (at [77]): "As a matter of logic, if there was no onus of proof cast upon either party, there can have been no standard of proof. If there was no standard of proof, including the civil standard of proof on the balance of possibilities, the principle in Briginshaw (it being a refinement of that standard) had no application to the proceedings before the single member
3. As held in the appeal to that decision, Bronze Wing International Pty Ltd v SafeWork NSW [2017] NSWCA 41 at [127], his Honour's findings: …reflect the strictly correct proposition that neither Briginshaw nor s 140 of the Evidence Act applies directly in decision-making by NCAT where the rules of evidence do not apply. They should not be regarded as standing against the proposition that what was said in Briginshaw and Neat Holdings reflects a more general approach to fact finding, which is applicable by analogy to NCAT.
4. As discussed in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170 at 171: "[T]he strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove.…
5. When reviewing a decision of an administrator, the Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice: Civil and Administrative Tribunal Act 2013 (the CAT Act), s 38(2). Although not bound by the rules of evidence, the Tribunal must base its decision on 'probative evidence': Re Pochi and Minister for Immigration and Ethnic Affairs [1979] AATA 64; (1979) 36 FLR 482 at 491-493.

Scope of Tribunal's review

1. The Second Show Cause Notice was issued by the Respondent on 6 January 2017 and forms the basis for the findings made in the Second Determination. Following the principles identified in Tosohn v Director General Department of Fair Trading [2003] NSWADT 1 (Tosohn) at [57] to [59], the Tribunal limits its review to those grounds identified in the Second Show Cause. The Second Show Cause alleged: 1. Contravention by the Applicant of s 38(1)(a) of the MDR Act, including: 1. Advertising vehicles as having odometer readings that were inaccurate and which the Applicant knew or reasonably suspected were inaccurate (Motor Dealers and Repairers Regulations 2014 (the MDR Regs), r 42); 2. Odometer tampering (s 52); 3. Failure to report suspected odometer tampering (s 54); 4. Failure to keep records (s 100 of the MDR Act and Sch 2 of the MDR Regs). 1. Carrying out the business of a motor dealer in a dishonest and unfair manner (s 39(b)) by: 1. Knowingly, reasonably suspecting or recklessly providing vehicles for sale with inaccurate odometer readings; 2. Obtaining records that inaccurately recorded vehicles' odometer readings; 3. Being the "phoenix" company of Edward Lee's Japanese Auto Centre Pty Ltd (ELJAC) for the purpose of it avoiding statutory obligations; 1. Not being a fit and proper person to hold a licence under the MDR Act (s 38(1)(c)) due to: 1. Serious nature of breaches of s 52 and s 54; 2. Serious and systematic nature of breaches of s 100 of the MDR Act and Sch 2 of the MDR Regs; 3. Application for a licence required to be refused because of: 1. Close associates not being fit and proper persons for the purpose of s 25(5)(a) due to their serious and systemic breaches of the MDR Act: 2. ELJAC; 3. Golee Pty Ltd (Golee); 4. Terrano Craft Pty Ltd (Terrano); 5. Edward Lee; 6. Philip Lee. 7. Being unlikely to carry on the business authorised by the MDR Act licence honestly or fairly (s25(4)(a)).
2. The Respondent's closing submissions articulated extensive findings it sought from the Tribunal: 1. the Applicant, contrary to s 38(1)(a) of the MDR Act: 1. altered the odometers of vehicles 1, 2, 3, 8, 10, 11, 13, 16, 17, 24, 26, 27, 30, 31, 32, 33, 34, 36 and 37, in contravention of s 52(1)(a) of the MDR Act; 2. advertised vehicles 4 and 26 as having odometer readings that were false and which it knew or reasonably suspected were false, in contravention of r 42 of the MDR Regs; 3. failed to keep records in contravention of s 100 of the MDR Act and Schedule 2 of the MDR Regs. 1. ELJAC, contrary to s 38(1)(a) of the MDR Act: 1. altered the odometers of vehicles 1, 2, 3, 8, 10, 11, 13, 16, 17, 24, 26, 27, 30, 31, 32, 33, 34, 36 and 37 in contravention of s 52(1)(a) of the MDR Act; 2. advertised vehicles 7, 8, 10, 11, 13, 14, 16, 17, 18, 19, 25, 28, 29 and 35 as having odometer readings that were inaccurate and which it knew or reasonably suspected were inaccurate in contravention of r 42 of the MDR Regs; 3. failed to keep records in in contravention of s 100 of the MDR Act and Schedule 2 of the MDR Regs; 1. Golee and Terrano, contrary to s 38(1)(a) of the MDR Act altered the odometers of vehicles 1, 2, 3, 8, 10, 11, 13, 16, 17, 24, 26, 27, 30, 31, 32, 33, 34, 36 and 37 in contravention of s 52(1)(a) of the MDR Act; 2. ELJAC is not a "fit and proper person" for the purposes of s 25(5)(a) of the MDR Act because of its serious and systematic contravention of the MDR Act (ss 52, 100, r 42); 3. Golee and Terrano are not "fit and proper persons" for the purposes of s 25(5)(a) of the MDR Act because of their serious and systematic contravention of the MDR Act (s 54); 4. Philip Lee is not a "fit and proper person" for the purposes of s 25(5)(a) of the MDR Act because he has been convicted of dishonesty offences (s 27(1)(a)) and has misled the Respondent and the Tribunal; 5. The Applicant is not a fit and proper person to hold a licence under the MDR Act (s 38(1)(c)) because of: 1. the serious nature of its contravention of s 52; 2. the serious and systematic nature of its contravention of s 100 and Schedule 2; 1. If the Applicant were not a licence holder, its application for a licence would be required to be refused because: 1. ELJAC, Golee, Terrano and Philip Lee are "close associates" of the Applicant who are themselves not fit and proper persons for the purposes of s 25(5)(a) of the MDR Act because of their serious and systematic contravention of the MDR Act and conviction for dishonesty offences and/or 2. The Applicant is unlikely to carry on the business authorised by a motor dealers' licence honestly or fairly because it has systematically engaged in conduct that is dishonest and unfair including but not limited to its contraventions of the MDR Act (s 25(4(a)). 1. The Applicant is not a fit and proper person for one or more of the grounds set out above and that the Tribunal is therefore required to cancel the Applicant's licence under s 46(b) of the MDR Act. 2. The serious and systematic nature of the contraventions of the MDR Act by the Applicant and its close associates justifies, in the public interest, the suspension of the Applicant's licence and disqualification of the Applicant from holding a licence for the maximum period of 10 years

The oral evidence

1. Eleven witnesses gave oral evidence and were cross examined during the course of the hearing. Ahmad Awad, Mohammed Khan, Steven Clark, Ben White, and Ismail Eyvaz are or were employed by the Respondent as investigators and/or were involved in the execution of the search warrant conducted by the Respondent on the Applicant's premises Philip Lee and Sonia Vongpraseuth are, respectively, an officer and employee of the Applicant. Elee Georges is the Applicant's solicitor Damon Jackson, Daryl McIntyre, and Michael Jeal were neither employees, agents or officers of either party. Damon Jackson is the managing director of Japan Export Vehicle Inspection Center Co Ltd (JEVIC), which provides certification for vehicles exported from Japan. Daryl McIntyre is a managing director of Autohub Australia, which is involved in freight forwarding for vehicle importers from Japan. Michael Jeal is a director of Jeal Computer Services, which provides dealer management software for used car dealerships, including the Applicant's business
2. The Respondent's allegations against the Applicant and its alleged "close associates" relied substantially on the documents sourced and compiled by its investigators. The origins, accuracy, reliability and veracity of those documents, largely contained in the five folders comprising the s 58 material, are disputed by the Applicant, as is the role those documents play in the import of vehicles from Japan into Australia. The oral evidence provided at hearing by the Respondent's investigators therefore played a substantial role in the proceedings

Ahmad Awad

1. Mr Awad was the Respondent's investigating officer of the Applicant and various of Phillip Lee's companies from 2013 until Mr Eyvaz took over that investigation in January/February 2016. Mr Awad swore the affidavits to obtain the search warrant, which were not included in the evidence before the Tribunal, and referred to a joint operation with NSW Police including notes in a TRIM database, of which evidence was also not provided to the Tribunal.
2. Mr Awad gave evidence via affidavit of his understanding of how vehicles were imported from Japan and the role of JEVIC which, in cross examination, he accepted was incorrect and not within his own knowledge. His information and purported understanding about the technical aspects of odometer tampering and the import/export of motor vehicles was obtained from "a number of people from Motor Vehicle Services Unit", only one of whom he could name, and from broad inquiries with the Department of Agriculture. The evidence of those conversations was not provided to the Tribunal. I place no reliance on this evidence as a result.
3. According to his affidavits, for the purpose of supporting the allegations against the Applicant, Mr Awad compiled documents from a number of sources Those documents were relied on by the decision maker and ultimately formed part of the section 58 material before the Tribunal. The reliability and veracity of those documents and their sources is questionable. Prior to the issue and execution of the search warrant, Mr Awad "saw information provided by a confidential informant", but there was no evidence of or from that informant before the Tribunal. Then, Mr Awad sought to "verify" the information provided by the confidential informant by conducting his own searches for the information and obtaining the "types of documents", which he "collated from various websites on the internet", including by googling a specific vehicle's VIN number The dates on which he conducted these internet searches and took screenshots are derived entirely from the 3 page table he annexed to his affidavit of 7 June 2017. In that affidavit he stated the table was compiled on 20 September 2016 and provided to the other investigators then. In cross examination he stated that the table was compiled prior to the search warrant, and then later contradicted that statement. In cross examination he stated that the dates and actual screenshots of the pages he sourced from the internet were "in the brief", but these were not provided to the Tribunal.

Ismail Eyvaz

1. Mr Eyvaz's evidence, which included his responsibility for the conduct of the investigation and search warrant commencing in the weeks prior to the search warrant occurring on 16 February 2016, was of limited assistance. He had no knowledge and did not check whether or to what extent the Respondent had documents supporting the First Show Cause, or the issuing of the search warrant, and relied wholly on a table provided by Mr Awad regarding the source and date of documents said to have been obtained from google or unspecified Russian online sources
2. He stated under cross examination that he would "bounce information" off Mr Awad, that they worked together, and that Mr Awad continued his involvement in the investigation after handing over to Mr Eyvaz, which I accept is likely on the evidence, but does not assist the Respondent in convincing the Tribunal of the reliability of his own evidence. He agreed under cross examination that ELJAC had not "phoenixed", and that his definition of "phoenix" activity was different to the commonly accepted definition: Well, the definition I put on phoenix was different. I just saw it as because he was being taken to NCAT on a number of occasions and then he moved all of his assets, he closed one licence and opened up another one, moved all the assets over to his new company. That's the definition I put on it but.
3. Included in Mr Eyvaz's written evidence was a table, "Annexure J" to his affidavit of 7 June 2017, expressing the Respondent's submissions regarding the source of the documents contained in Volumes 2 to 5 of the section 58 documents Between 5 June 2017 and 19 June 2017 the Tribunal was provided with multiple versions of Annexure J, and ultimately the "completed" version was tendered as exhibit R4. On the basis of his evidence at hearing regarding his reliance on Mr Awad's information, and his conduct during the execution of the search warrant, I place minimal weight on Mr Eyvaz's oral and written evidence, including regarding the source, veracity and reliability of the documents contained in Volumes 2 to 5 of the section 58 documents I also place minimal weight on the opinions expressed by him regarding the allegations against the Applicant. He had no or limited experience prior to being made case officer in this investigation, of any issues regarding motor dealerships or the processes and legalities involved in the importation of motor vehicles, having joined the Department of Fair Trading just two months prior His oral evidence demonstrated that he neither knew, nor cared to check whether and to what extent the allegations against the Applicant were supported by evidence, and relied entirely on the opinions of others, despite being the warrant holder for the search conducted at the Applicant's premises in February 2016, and the case officer for the investigation from around that date.

Mohammed Khan, Steven Clark, Ben White

1. Each of Mohammed Khan, Steven Clark and Ben White gave written and oral evidence of their role in the conduct of the search warrant on the Applicant's premises on 16 February 2016. The Respondent submitted that their evidence constituted a reliable account of how the search warrant was executed, and how the evidence contained in volumes 1 to 5 of the section 58 documents was obtained and subsequently handled. The Tribunal does not consider their evidence relevant to the determination of any of the issues in these proceedings

Philip Lee

1. The Respondent submitted that Mr Lee was dishonest, had previously lied to authorities to avoid consequences, fabricated evidence as a first resort in responding to allegations of any contravention of the law, and engaged in this conduct in order to avoid responsibility for his unlawful conduct. Support for those submissions was founded in previous proceedings, including Adams v Japanese Auto Centre Pty Ltd (Motor Vehicle) [2009] NSWCTTT 47, and a prosecution in 2015 for offences under clause 48 of the Road Transport (Vehicle Registration) Regulation 2007, including concealment of those offences. The Respondent submitted that Mr Lee's evidence should therefore not be accepted by the Tribunal unless it was corroborated by reliable independent evidence.
2. They are relevant to the Tribunal's determination of Mr Lee's credibility as a witness and the reliability and weight placed on his evidence in these proceedings. In evidence, Mr Lee claimed the charges and convictions were unfair and a product of the Respondent's investigation. He attempted to contradict statements in the Statement of Facts which supported the charges and convictions, and deflected responsibility to others. He also attempted to deflect responsibility for the multiple false statements contained in the disclosures section of the application for a Motor Vehicle Repairers Licence lodged on 2 September 2015. He deflected responsibility to Sonia Vongpraseuth for making false statements or records in both the criminal proceedings and in completing the licence application disclosures, but agreed that the obligations to makes those statements and records were ultimately his. I accept the Respondent's submission that the offences with which Mr Lee was previously convicted were offences involving dishonesty, and find that when faced with allegations of wrongdoing, he commonly deflected responsibility for his actions.
3. In relation to Mr Lee's oral evidence at hearing, the Respondent submitted extensively on the contradictions and inconsistencies in his evidence: 89. Mr Lee's evidence in cross-examination was frequently contradictory. For example, on 26 July 2017 he said at first that he only obtained odometer readings from Japanese suppliers by telephone (T: 26.7.17: 57, 58). Later, he said that he obtained odometer readings by email, but that those emails had been destroyed with the server/GILQ (T: 26.7.17: 73 - 75 and 80). Still later on that day, Mr Lee said that he first recorded the odometer readings of vehicles upon delivery to the yard (T: 26: 26.7.17: 78).

Sonia Vongpraseuth

1. The Respondent submitted that Ms Vongpraseuth was "biased in favour" of Mr Lee and the Applicant because of her familial relationship with Mr Lee, and that: …care should be taken by the Tribunal in its approach to Ms Vongpraseuth's evidence, with particular care in relation to evidence for which the only corroboration is Mr Lee. The evidence is that Ms Vongpraseuth will unquestioningly do Mr Lee's bidding (for example by creating a false log for him).
2. I reject those submissions. The evidence does not amount to a conclusion that she would "unquestioningly do Mr Lee's bidding", or that she had, in fact, knowingly created a false log for Mr Lee in circumstances subject to his 2015 criminal convictions. The evidence allows the conclusion that Mr Lee deferred responsibility for making the false entries to Ms Vongpraseuth, not that she actually made them. When questioned about her "loyalty" to Mr Lee, Ms Vongpraseuth sought appropriate clarification, which was not provided, resulting in her not responding to the question further. She was not, as submitted, evasive, but careful in seeking to understand the questions put to her, in circumstances where English was not her first language. Her evidence was considered and direct when the questions were clarified.
3. Ms Vongpraseuth's responsibility in the day to day management of the Applicant's business was considerable, according to both her and Mr Lee's evidence. This included the paperwork and record keeping required to comply with the MDR Act and Regulations. She was not a licence holder under the MDR Act, and was not alleged to be a "close associate" of the Applicant for the purposes of these proceedings. There is no evidence supporting an allegation or finding that she was aware of or had appropriate knowledge of the requirements of the MDR Act and Regs for the purposes of managing the Applicant's business, or any other of Mr Lee's businesses. Ms Vongpraseuth's evidence regarding her completion of the Form 1 entries supports her lack of knowledge about the obligations and requirements of the MDR Act and Regs, as she was ignorant to the specific legislative requirements. So whilst I do not accept there is evidence that Ms Vongpraseuth would do Mr Lee's bidding "unquestioningly", I accept Ms Vongpraseuth's evidence and the Respondent's submission that Ms Vongpraseuth worked at the direction and instruction of Mr Lee.

Elee Georges

1. Mr Georges, the Applicant's solicitor, gave evidence including a filenote created by him as a result of a telephone conversation between Mr Lee, Mr Jackson of JEVIC, and himself. I accept that filenote as Mr Georges' recollection of the conversation. The Respondent submitted that the Tribunal should prefer the evidence of Mr Jackson in relation to that conversation, because: a. Mr Jackson was a credible witness with no personal or vested interest in the outcome of the proceedings, and b. Mr Georges demonstrated himself to be careless about making incorrect and misleading statements (T: 24.7.17 [43-44]) and admitted that he was frequently mistaken (T: 24.7.17 [62-63])).
2. Whilst I do accept the Respondent's submission regarding Mr Jackson's credibility, I reject the Respondent's submissions about Mr Georges and his evidence as unnecessary and inaccurate. In cross examination, Mr Georges appropriately conceded errors and mistakes he had made in the day to day conduct of the litigation, which are understandable in protracted and aggressively conducted proceedings such as these. His credit was not relevant to the matters subject to the Tribunal's determination in these proceedings.

Damon Jackson

1. Damon Jackson is the managing director of JEVIC, which provides certification for vehicles exported from Japan. Both parties relied on his evidence and I accept the Respondent's submission that he was a credible witness with no personal or vested interest in the outcome of the proceedings.
2. His evidence significantly contradicted Mr Awad's about the processes for recording odometer readings and importing vehicles from Japan into Australia, and the reliability and veracity of the JEVIC records relied on by the Respondent. Where his evidence contradicted or conflicted with allegations made by the respondent or statements made by Mr Awad or Mr Eyvaz, I prefer the evidence of Mr Jackson.

Daryl McIntyre

1. Daryl McIntyre is a managing director of 'Autohub Australia', which is involved in freight forwarding for vehicle importers from Japan. He took over Autohub in April 2015, but had 17 years of experience in freight forwarding of vehicles including boats, cars and caravans. I accept that his written statement had been prepared by him at the request of Mr Lee, without assistance, as a summary of "what I thought would be helpful", and accept his oral evidence at hearing as clarification of the matters in his statement. His oral evidence was of assistance to the Tribunal in understanding the nature of possession of motor vehicles in the importing process according to industry acceptance and practice, and confirming the requirements for odometer checking.
2. Where his evidence contradicted or conflicted with the Respondent's allegations against the Applicant, or the evidence of Mr Awad or Mr Eyvaz, I prefer the evidence of Mr McIntyre.

Michael Jeal

1. Michael Jeal is a director of 'Jeal Computer Services', which provides dealer management software for used car dealerships. I accept that his written statement had been prepared by him at the request of Mr Lee, and that he had been shown evidence by Mr Lee, but had not received any help from Mr Lee or Mr Georges in the drafting of his statement. I accept his oral evidence at hearing as clarification of the matters in his statement, and as of assistance to the Tribunal in explaining the differences between the Police Book, Form 1, Log of Changes, and the extent to which his software can and does record data.

The written evidence

1. The documentary and written evidence to be relied on by the Tribunal was the subject of extensive correspondence, objections and submissions Ultimately, the Tribunal received all material into evidence and sought submissions from the parties as to weight.

The section 58 documents

1. Eight volumes of documents were identified by the Respondent at the hearing as the Section 58 documents For the reasons below, I accept volumes 1 to 5 inclusive as the section 58 documents The remaining three volumes, I accepted as evidence filed by the Respondent to support its submissions, and address further below.
2. Volume 1 contained: 1. Documents relating to the execution of a search warrant conducted at the Applicant's premises on 16 February 2018; 2. Statements of Ben Minh White, Mohammed Ayub Khan, Steven Phillip Clark, Simon Xia Li; 3. ASIC records for the Applicant and various other companies and individuals; 4. Licensing records issued by the respondent to the Applicant and various other companies and individuals; 5. Property and leasing records;
3. Volumes 2 to 5 contained records for 37 vehicles The VINs for those vehicles were: PE52-003195, NE51017716, E51114743, FK10014241, WGNC34133102, JZX1106021444, E51260280, E51265137, WGNC34104432, EP31003201, CPV35600863, NE51105334, E51263453, NE51059611, BNR32308033, EP31001533, AE865072646, ACR307034902, MNH100056031, ANH100088768, BNR32306589, NE51106037, BNR32306796, CV5W0109574, NE51262850, NE51110770, S15008195, NE51104970, EP31001399, JZA801004129, TRH2140025147, TRH2140024513, S15007727, EP31300012, BZ11344272, NE51230605, CV5W0012848.
4. Volumes 1 to 5 inclusive were filed as the section 58 documents for the First Show Cause and First Determination, which were subject to the Tribunal's decision to remit on 6 December 2016.

Source of s 58 documents

1. The Respondent provided a table in evidence, as an annexure to the investigating officer, Ismail Eyvaz's affidavit, of the origins of each of the documents contained in Volumes 2 to 5 of the section 58 documents, which became "Exhibit R4". The vast majority of the documents were stated to have been sourced from the search warrant conducted at the Applicant's business premises on 16 February 2016.
2. The Applicant submitted that the Tribunal could not rely on the documents identified as having been sourced from the search warrant of its premises because the exhibits book does not assist in identifying any of the documents seized, the exhibits officer did not give any evidence, and the video of the execution of the search warrant does not provide that level of detail either Further, the First Show Cause was issued on the same day as the execution of the search warrant, which indicated that the Respondent already had the material on which it relied for the purpose of making the relevant allegations, prior to the execution of the search warrant.
3. I accept the Applicant's submissions The exhibits book from the execution of the search warrant itemises 115 hanging files as seized Item 29, but does not specify which of the documents relied on in these proceedings, if any, were contained in those files The audio visual recording of the search warrant does not provide support for the conclusion that each of the documents said to have been located during the search warrant were, in face, sourced from the Applicant's premises as alleged.
4. Nor does the evidence of Mr Awad and Mr Eyvaz sufficiently support their assertions of the sources of the documents in question. Mr Awad was the Respondent's investigating officer of various of Phillip Lee's companies from 2013 until Mr Eyvaz took over that investigation in January/February 2016. Mr Awad swore the affidavits to obtain the search warrant, which were not included in the evidence before the Tribunal, and referred to a joint operation with NSW Police including notes in a TRIM database, of which evidence was also not provided to the Tribunal. He gave evidence of his understanding of how vehicles were imported from Japan and the role of JEVIC which, in cross examination, he accepted was incorrect and not within his own knowledge. I place no reliance on this evidence as a result.

Categories of s 58 documents

1. Volumes 2 to 5 of the section 58 documents contained records for each of the 37 vehicles subject of the Second Show Cause and Second determination, divided by vehicle. Included in each of the vehicle's records were the following types of documents: 1. "export certificates", also known as a "Japanese Export Certificates" or "JECs"; 2. Documents upon which a stamp was affixed denoting "Japanese Export Vehicle Information Centre", known as "JEVICs" or "JEVIC Certificates"; 3. Auction records, also referred to in submissions as "Alleged Deregistration Sheets", and "Alleged Japanese Auction Sheets"; and 4. Vehicles sale advertisements; 5. Invoices issued to AR from Japanese suppliers and Australian Customs, Bills of Lading issued to Japanese suppliers, and Customer Information Notices (CINs) issued by Golee and Terrano pursuant to the Registered Automotive Workshop Scheme (RAWS) established by the Motor Vehicle Standards Act 1989 (Cth) (MVS Act); and 6. Copies of screens printed from the New South Wales Road and Maritime Services (RMS) system of "vehicle ownership history".
2. The significance of those documents is that the Respondent relied on the JECs, JEVIC records, auction records and vehicle sale advertisements for each vehicle to support submissions that the vehicles' odometers had been tampered with by the Applicant, or a "close associate" of the Applicant. The Applicant submitted that the Tribunal could place no reliance on the JECs, JEVICs, and auction records, or any of the information contained in those documents

JECs

1. Japanese Export Certificates (JECs) are obtained from the Japanese Ministry of Land, Infrastructure, Transport and Tourism - Transport Bureau (Japanese Transport Bureau) by a registered owner, and can only be applied for once a vehicle has been deregistered. JEVIC is approved by various international regulatory authorities to translate JECs from Japanese.
2. JEVIC provides a paid service called a "background check" which verifies odometer readings by comparing the information contained in the JECs against the CVRH and auction records The Respondent obtained a background check for 19 vehicles from JEVIC in relation to their investigation subject to these proceedings
3. The auction reports are obtained by JEVIC from Nippon Auto Auction Association (NAAA) or the Japanese auction houses and are not independently verified. I accept Mr Jackson's evidence that JECs can be (and have been) fraudulently altered, and the Applicant's submission that they are unreliable.

JEVIC records

1. The Respondent relied on records supplied by JEVIC, located at pages 3 - 4, 9 -13, 37 - 43, 92 - 100, 146 - 155, 200 - 203, 222 - 229, 233 - 239, 322 - 330 of Volume 2, pages 3 - 11, 306 - 309 of Volume 3, pages 71 - 79, 139 - 143, 176 - 183 of Volume 4, and pages 2 - 8, 39 - 45, 82 - 88, 115 - 121, 162 - 170, 199 - 205, and 251 - 259 of Volume 5 of the s 58 documents The Respondent submitted that the JEVIC certificates and particularly the CVRH (Certificate of Vehicle Registration and History) from the Japanese Transport Bureau and auction documents (including translations) provided by JEVIC, were a reliable, independent source of vehicle odometer readings The Respondent submitted that: JEVIC certificates have been relied upon for this purpose by this Tribunal in other proceedings dealing with odometer fraud (Mishra v Prestige Auto Centre Pty Ltd and Khan Motorcar Co Pty Ltd [2015] NSWCATOD 106 at [46] (Mishra)).
2. Mishra is not general authority for the reliability of JEVIC certificates or other JEVIC records Mr Jackson conceded that the records he had provided to the Respondent from JEVIC contained errors, some of which were consistent over multiple records such as the erroneous description of multiple cars as "Mitsubishi Delica". He explained that at the time JEVIC produced the certificate he did not know that the JEVIC certificates were to be used in proceedings The Tribunal infers from Mr Jackson's evidence that the JEVIC records were not checked sufficiently in relation to their source material, for accuracy and reliability, prior to them being provided to the Respondent.
3. The source of the information in the JEVIC certificates was identified by Mr Jackson to have come from: 1. Copies of CVRH obtained by JEVIC, which were then translated by JEVIC staff; 2. Information recorded on the NAAA database, which is sometimes provided on request to JEVIC; 3. Auction reports from car auction houses
4. Mr Jackson also agreed in cross examination that the Respondent had provided him with odometer readings to include in the JEVIC certificates
5. Whether and to what extent the information contained in each particular JEVIC certificate was reliably sourced and verified was not ascertained by Mr Jackson prior to providing the records to the Respondent. Nor was the reliability and veracity of the information in the source material of the JEVIC certificates checked. Inaccuracies, errors, false reporting and recording could have taken place at any stage prior to the information being obtained by or provided to JEVIC, according to Mr Jackson's evidence, which I accept. I accept the Applicant's submission that the JEVIC records relied on by the Respondent in these proceedings are unreliable.

Auction records

1. The Respondent relied on auction records which were verified by Mr Awad as accurate on the basis that he was able to locate similar records by searching Google and unspecified Russian online sources These are located at pages 166-202 of Volume 1, pages 1, 34, 90, 143, 204, 217, 230, 267, 304, 318 of Volume 2, pages 1, 40, 58, 96, 122, 133, 168, 203, 236, 310 of Volume 3, pages 1, 47, 70, 101, 147, 173, 207, 256, 310 of Volume 4, and pages 9, 10, 46, 89, 122, 171, 206 and 260 of Volume 5 of the s 58 documents
2. As detailed above, I reject Mr Awad's evidence regarding the sourcing and verifiability of these records This is confirmed by the evidence of Mr Jackson, who stated that "the Russian website" contained inaccurate information and from whose evidence I infer that the auction house records were unverifiable as to their accuracy.
3. I accept the Applicant's submission that the auction records contained in the section 58 documents are unreliable.

Advertisements

1. The section 58 documents contained advertisements for each of the subject vehicles, purported to have been placed by the Applicant either on one of its websites or via eBay, located by Mr Awad through internet searches These are located at pages 6, 48, 106, 162, 213, 220, 247, 248, 292, 293, 305, 351 of Volume 2, pages 19, 41, 85, 111, 123, 159, 188, 220, 236, 278, 279, 301, 302, 311 of Volume 3, pages 26, 68, 87, 125, 165, 196, 229, 259, 345 of Volume 4, pages 26, 66, 100, 150, 186, 187, 234, 273, 274 of Volume 5. For the reasons expressed above, I reject the evidence of the dates on which they are said to have been accessed online and screenshot by Mr Awad, and therefore have no verifiable evidence of the date on which each of these advertisements was placed or published by the Applicant. I do accept, however, in the absence of evidence or submissions to the contrary from the Applicant, that these advertisements were likely to have been published online as pictured.

Vehicle Ownership Histories

1. Included in Volumes 2 to 5 of the section 58 material was a "Vehicle Ownership History" for each of the 37 vehciles, submitted by the Respondent to have been printed by Mr Eyvaz from searches of the "RMS system". This was not contested by the Applicant, and from my review of the subject documents I accept that submission.

Search warrant documents

1. The balance of material contained in Volumes 2 to 5 of the section 58 material were documents stated by the Respondent to have been located at the Respondent's premises during the execution of the search warrant. These are the documents marked "search warrant" in the Annexure J to Mr Eyvaz's affidavit, relied on by the respondents as a table identifying the source of each of the documents
2. For the reasons expressed above at [84], I do not accept that the entirety of the balance of material was obtained from the search warrant, as claimed by Mr Awad and Mr Eyvaz. However, I do accept that they were documents which were before the decision maker and therefore relevant to the Tribunal, and that it is likely that some of those documents were sourced from the execution of the search warrant on the applicant's premises
3. In any event, the location from which the "search warrant" documents identified were, in fact, obtained by the respondent does not significantly affect the extent to which they can be relied on by the Tribunal, in the absence of other issues regarding their reliability and veracity.

Emails

1. In written evidence, Mr Lee alleged that the Respondent had "changed" emails contained in the section 58 documents submitted to have been sourced from the execution of the search warrant on the Applicant's business premises, on the basis that some emails displayed Mr Eyvaz's name at the top of the printed page, and that he had searched Ms Vongpraseuth's computer for the emails but could not locate them there. This allegation was not addressed in submissions by the Applicant, and I decline to infer any fabrication of evidence as a result.
2. Connected with the issue regarding authentication of various emails in the section 58 documents was evidence from the applicant and respondent about a damaged hard drive which had been seized during the execution of the search warrant. I accept the evidence of Mr Lee and Ms Vongpraseuth of their consequent difficulty in accessing certain records including older emails alleged to contain JEC's It is not otherwise relevant to the Tribunal's determination to consider how, why, by whom, or the extent to which the hard drive was damaged.

Volumes 6, 7, 8

1. Records for an additional 9 vehicles were included in Volume 6. The VINs for vehicles included in Volume 6 were: PE52003061, TRH2140026083, ACR30-0284237, MCR30-0072666, GGH20-8049395, GGH20-8017762, ACR30-0283198, GGH258010353, NE51050940. None of those vehicles were the subject of findings in the Second Show Cause, or the Second Determination. The Respondent submitted that they were relevant to the Tribunal as demonstrating a course of conduct by the Applicant. Whilst I accepted those documents into evidence, I agree with the Applicant's submission that minimal weight should be afforded to those records in the circumstances, and that they do not properly form part of the section 58 documents
2. Volume 7 contained the following affidavits: 1. Susan Bravo Robosa dated 24 January 2017; 2. Susan Bravo Robosa dated 27 February 2017; 3. Ismail Eyvaz dated 14 March 2017; 4. Ahmad Awad dated 14 March 2017; 5. Steven Phillip Clark dated 14 March 2017; 6. Mohammed Ayub Khan 15 March 2017.
3. The Second Determination was issued on 14 March 2017. On review of the affidavits contained in Volume 7, I consider it unlikely, on the basis of their contents and the dates on which they were sworn, that the affidavits of 14 March 2017 and 15 March 2017 were before the decision maker who made the Second Determination of 14 March 2017. I find that they were drafted for the purpose of supporting the Second Determination post-fact, and therefore do not fall within the parameters of section 58 of the ADR Act.
4. The affidavits of Ms Robosa dealt with the conduct of the litigation and were not relevant to the Tribunal's determination. The affidavits of Mr Eyvaz, Mr Clark and Mr Khan dated 14 and 15 March 2017 dealt narrowly with the execution of the search warrant and I consider them of limited relevance and weight for the reasons expressed above at [53] to [56]. For the reasons expressed above at [42] to [52], I place no reliance or weight on the evidence in Mr Awad's affidavit dated 14 March 2017.
5. Volume 8 contained the JEVIC records already included in Volumes 2 to 6. It was filed by the Respondent as reply evidence in response to the Applicant's objections and submissions regarding the veracity and origins of the JEVIC documents. They therefore do not fall within the parameters of section 58 of the ADR Act, and I place minimal reliance and weight on those documents for the same reasons as those expressed above at [91] to [96].

Biosecurity inspection records

1. The Department of Agriculture requires biosecurity inspections for vehicles imported into Australia. These physical inspections can be done prior to or after importation into Australia. Whilst the Department itself conducts these inspections, they can also be done by approved third-party sites JEVIC has approval to undertake these inspections in various facilities located throughout the major ports of Japan, and I accept Mr Jackson's uncontested evidence that biosecurity odometer readings were included in the biosecurity inspections requested and recorded at port in Japan prior to shipping to Australia. I distinguish JEVIC's biosecurity inspection records from the balance of JEVIC material before the Tribunal on the basis that their reliability is uncontested and the evidence supports their accurate recording from the vehicles in question.
2. Mr Lee referred to the biosecurity inspection in the recorded conversation of 4 August 2016 when he stated to Mr Awad and Mr Eyvaz, "Why don't you check all the records of when the cars hit the wharves because they record the mileage, and that will tell you the answer to the story and you obviously haven't done that yet", which I infer to refer to the biosecurity inspections required by the Department of Agriculture. Mr Eyvaz confirmed in cross examination that this had not been done by the Respondent, stating that the biosecurity data was being sought through the Attorney-General as part of an "ongoing investigation".
3. The Applicant alleged that the Respondent was aware of or otherwise had the biosecurity inspection records for the 37 vehicles but had either refused or failed to provide them to the Applicant and Tribunal when requested. It relied on the evidence of Mr McIntyre, who at hearing stated that he had received and complied with a request from the Respondent pursuant to section 20 of the Fair Trading Act 1987 in mid-2016 seeking access to biosecurity inspection data recorded by JEVIC in Japan, and emails located in summonsed records which showed requests from the respondent to JEVIC for biosecurity inspection records in 2016.
4. Mr Jackson stated in evidence that JEVIC received a request for records for Japanese odometer histories from the respondent prior to November 2016, and the JEVIC records were produced to the Respondent in November 2016 as a result. He confirmed in evidence that even if the Respondent had requested the biosecurity inspection records, he would not have provided those to the Respondent, because the information belonged to the client which had paid for the biosecurity inspections, which was Autohub. On review of the evidence, including the summonsed material produced by the Respondent, I accept Mr Jackson's evidence.

Antecedents

1. On about 18 February 2009, Mr Lee was found by this Tribunal to be an "unsatisfactory" witness and to have engaged in conduct calculated to conceal earlier misconduct, in Adams v Japanese Auto Centre Pty Ltd (Motor Vehicle) [2009] NSWCTTT 47. In those proceedings, the Tribunal inferred that Mr Lee "was endeavouring to conceal the extent of his own failings whilst also undermining the applicant's claim."
2. On about 18 February 2015 Mr Lee attempted to conceal his commission of offences under clause 48 of the Road Transport (Vehicle Registration) Regulation 2007, which provides that: Any driver or person in charge of a registrable vehicle to which a trader's plate is affixed or any person to whom a trader's plate has been issued must, when required to do so by any police officer, immediately answer truthfully all questions that are put to the person concerning the purpose for which the plate is used.
3. According to the amended facts relevant to Mr Lee's plea of guilty and conviction on about 30 June 2015, Mr Lee not only failed to "answer truthfully" but gave a false story to Police, asked another person to lie to Police to corroborate that story, and instructed Ms Vongpraseuth to create a log containing false information to corroborate that story.
4. Whilst Mr Lee's previous convictions and findings about his character in other Tribunal proceedings were not a basis on which the Applicant's licence was suspended or cancelled pursuant to the Second Show Cause or the Second Determination, I reject the Applicant's submission that it would be a "denial of procedural fairness to allow this material to be used as a ground for supporting cancellation because of the failure to put this evidence in the required NSC, or in the s 58 documents or in evidence at all". The material is not accepted by the Tribunal as a "ground" for supporting cancellation, but is evidence available to the Tribunal on which it can make findings regarding the grounds which are before the Tribunal, specifically the fitness and propriety of the Applicant's "close associates". The evidence was tendered at hearing and the Applicant had sufficient opportunity during the hearing and in written submissions to address that evidence.

Application for MV licence

1. The Respondent tendered the Applicant's application for a Motor Vehicle Repairer Licence, lodged 2 September 2015. That application lists Mr Lee as an "associated party", and contains multiple false statements regarding required disclosures of Mr Lee's convictions, charged offences, disciplinary proceedings, contravention of the MDR Act, winding up of corporations and shared premises. Mr Lee agreed that he was responsible for the accuracy of those false disclosures, but stated that Ms Vongpraseuth completed the application form incorrectly.
2. I accept the Respondent's submission that the Applicant's repair licence renewal was obtained on false information, and that it was Mr Lee's responsibility to ensure the accuracy of the application's contents. Whilst the applicant submitted that the false disclosures could only be considered by the Tribunal as relevant to Mr Lee's credit as a witness, I disagree. It is directly relevant to the fitness and propriety of Mr Lee, a close associate of the Applicant, and the Applicant was given sufficient notice and opportunity to deal with that issue. It is not a new ground, but rather evidence to support the currently existing grounds, which can be put before the Tribunal at any time, subject to an appropriate opportunity for the Applicant to respond and be heard.

Customer statutory declarations

1. A number of statements and statutory declarations were filed by the Applicant from individuals who were not called for cross examination. I accept their evidence, therefore, on its face. These included: 1. Rick Kelly, a co-owner of 'Nissan Motorsport' who purchased Vehicle 4 from the Applicant which was included in the Respondent's allegations. Mr Kelly expressed knowledge of the allegations against Mr Lee and the Applicant, stated that he was never contacted by the Respondent in relation to those allegations, and confirmed the Applicant's evidence that he was warned about the unreliability of the odometer history. He described the circumstances of his purchase of Vehicle 4 from the Applicant and his satisfaction with that purchase. 2. Francesco Bellissimo, a solicitor, who purchased Vehicle 20 from the Applicant which was included in the Respondent's allegations. Mr Bellissimo expressed knowledge of the allegations against Mr Lee and the Applicant, stated that he was never contacted by the Respondent in relation to those allegations, and confirmed the Applicant's evidence that he was warned about the unreliability of the odometer history. He described the circumstances of his purchase of Vehicle 20 from the Applicant and his satisfaction with that purchase. 3. Sami Nasif, an importer of used cars from Japan, licensed motor dealer and motor mechanic. Mr Nasif's evidence confirmed the evidence which the Tribunal has accepted regarding the importation process and requirements. 4. Adrian Alexander, who purchased Vehicle 5 from the Applicant which was included in the Respondent's allegations Mr Alexander expressed knowledge of the allegations against Mr Lee and the Applicant and confirmed the Applicant's evidence that he was warned about the unreliability of the odometer history. He described the circumstances of his purchase of Vehicle 5 from the Applicant and his satisfaction with that purchase. 5. Colin May, a school principal who purchased a number of vehicles from the Applicant and Mr Lee. Mr May expressed knowledge of the investigation against Mr Lee and the Applicant, and described his satisfaction with his dealings with them. 6. Peter Skarmoutsos, from 'IT professional solutions', who gave evidence about the problems accessing and re-installing computer hard drives seized by the Respondent during the execution of the search warrant on the Applicant's premises. 7. Zoran Kulevski of 'Trilogy Towing Services', who gave evidence confirming his experience of the process the Applicant undertook when "booking in" motor vehicles Mr Kulevski had delivered to the Applicant's premises from the importation ports. 8. Milan Jevremovic, an importer of used cars from Japan and licensed motor dealer. Mr Jevremovic's evidence supported the Applicant's submissions about the unreliability of the JEVIC records and the weight to be placed on them by the Tribunal in these proceedings

The Audio and Audio Visual evidence

1. An audio recording and audio visual recordings were included in the evidence before the Tribunal, being audio visual recordings taken by the Respondent of the search warrant conducted at the Applicant's premises on 16 February 2016, and the audio recording of a conversation between Mr Philip Lee, Mr Eyvaz, and Mr Awad on 4 August 2016 which was the subject of some controversy. Each party tendered their own transcript of the audio recording.

Audio recording of 4 August 2016

1. The Respondent sought to have the audio recording of 4 August 2016 excluded on the basis that the recording was made in breach of the Surveillance Devices Act 2004 (NSW) because Mr Lee did not notify Mr Awad and Mr Eyvaz that he was recording their conversation and did not obtain their consent to that recording. The Applicant submitted the conversation was not private, because it took place in public and because it was between investigators and their subject. The Respondent also submitted that the purpose of the recording was to protect a lawful interest of Mr Lee.
2. The Tribunal determined that, pursuant to s 38 of the CAT Act, s 138 of the Evidence Act 1995 and the relevant sections of the Surveillance Devices Act 2004, notwithstanding the assertion by the respondent that the evidence was improperly obtained, the Tribunal was satisfied that the probative benefit of the admission of the evidence outweighed exclusion of the evidence. The parties each tendered a transcript of the audio recording.
3. The Respondent submitted that the audio recording and their transcript of it: 1) corroborated Mr Eyvaz and Mr Awad's recollection of the subject conversation; (ExR33 [17-19]) (ExR32 [2-14]); 2) revealed that Mr Lee's account (ExA6: p. 1-7) of the conversation was partial and deliberately misleading; and 3) revealed no conduct by Mr Awad and Mr Eyvaz that would found an allegation of bias of any kind.
4. The Applicant submitted that the audio recording and its transcript: 1) Clearly shows Mr Awad and Mr Eyvaz with a view to and the purposes of intimidating Mr Lee: a) Mr Awad suggested that Fair Trading had a secret legal point about 'possession' which they would use against him. b) Mr Awad also suggests that: 'smoke was bellowing out of this place' referring Mr Lee's premises and the alleged evidence of odometer tampering from within it. c) The promise of giving Mr Lee a fair go and interviewing him later proved to be entirely false. 2) Did not corroborate Mr Awad and Mr Eyvaz's version of events in their written affidavits; and 3) Identified a serious issue relevant to the substantive application: that Mr Eyvaz was seeking information from Mr Lee about Bio-security checks done by JEVIC, and that Mr Lee was confident that those checks would exonerate him. The significance of Mr Eyvaz's interest in the subject becomes obvious from the cross-examination of Mr Mclntyre that he had provided this Bio-security inspection material in 2016.

Audio visual recording of the search warrant

1. The execution of the search warrant in February 2016 was video and sound recorded by the Respondent. The recording, which was comprised of seven video files, was relied on by the Respondent to corroborate the evidence of its witnesses regarding how the warrant was executed and the evidence in the section 58 documents was obtained and subsequently handled. The Applicant submitted that in accordance with Mundarra Smith (Smith v The Queen [2001] HCA 50; (2001) 206 CLR 650), it is "for the Tribunal of fact to make findings on what can be seen in video footage", which it submitted involved: There is no chain of custody of evidence, i.e. not a single document relied upon in the proceedings was identified in the video as being obtained at the Applicant's premises during the raid. … At all times (apart from at Video 0003, 31.04-31.35) during the boxing and taking of un-identified files Michael Magyar "Exhibit Officer is not present. There was not a single document relied upon in the proceedings documented clearly identified in the exhibit book by the Exhibits Officer Michael Magyar who was in charge of maintaining the chain of custody at the raid.
2. On my review of the video footage, I accept the Applicant's submissions in relation to the lack of identification of documents during the execution of the search warrant, as expressed at [84] above. The conduct of the search warrant is not otherwise relevant to the matters before the Tribunal for determination.

"Close Associates"

1. The Respondent's Determination and its submissions relies on the relationships between the Applicant and various other entities, including ELJAC, Golee, Terrano, Angela Reidy Pty (AR), ELIOS Pty Ltd, 4 Wheelers Pty Ltd, and AutoHub Pty Ltd, and the roles that Edward Lee and Philip Lee did or did not have in those companies
2. The Second Show Cause alleges that ELJAC, Golee, Terrano, Edward Lee and Philip Lee are "close associates" of the Applicant. The extent to which those relationships identified in the Second Show Cause are "close associates" is relevant to the Tribunal's determination as to whether the Applicant has contravened s 39(b) of the MDR Act, or falls within the parameters of s 25 of the MDR Act for the purpose of determining fitness and propriety.
3. "Close associate" is defined at section 8 of the MDR Act: (1) For the purposes of this Act, a person is a "close associate" of an applicant for a licence or a licence holder if the person: (a) holds or will hold any relevant financial interest, or is or will be entitled to exercise any relevant power (whether in the person's own right or on behalf of any other person), in the business of the applicant or licence holder that is or will be carried on under the authority of the licence, and by virtue of that interest or power is or will be able (in the opinion of the Secretary) to exercise a significant influence over or with respect to the management or operation of that business, or (b) holds or will hold any relevant position, whether in the person's own right or on behalf of any other person, in the business of the applicant or licence holder that is or will be carried on under the authority of the licence, or (c) is or will be engaged as a contractor or employed in the business of the applicant or licence holder that is or will be carried on under the authority of the licence. (2) For the purposes of this section, a financial institution is not a close associate merely because it has a relevant financial interest in relation to a business (3) The provisions of this section extend to relevant financial interests and relevant powers even if those interests and powers are not payable, exercisable or otherwise enforceable as a matter of law or equity, but are nevertheless payable, exercisable or otherwise enforceable as a matter of fact. (4) In this section: "relevant financial interest" in a business means: (a) any share in the capital of the business, or (b) any entitlement to receive any income derived from the business, or to receive any other financial benefit or financial advantage from the carrying on of the business, whether the entitlement arises at law or in equity or otherwise, or (c) any entitlement to receive any rent, profit or other income in connection with the use or occupation of premises on which the business is or is to be carried on (such as, for example, an entitlement of the owner of the premises at which the business is carried on to receive rent as lessor of the premises). "relevant position" means: (a) the position of director, manager or secretary, or (b) any other position, however designated, if it is an executive position. "relevant power" means any power, whether exercisable by voting or otherwise and whether exercisable alone or in association with others: (a) to participate in any directorial, managerial or executive decision, or (b) to elect or appoint any person to any relevant position.

Angela Reidy Pty Ltd

1. The Respondent's closing submissions relied heavily on the conduct of Angela Reidy Pty Ltd, which it submitted retained legal title to the vehicles according to the Form 1 and records obtained from RMS. The Applicant submitted that the Tribunal's consideration of AR's conduct or culpability was outside the scope of the review application, as there were no allegations or particulars in the Second Show Cause in relation any involvement in odometer tampering by AR, and there was no reliance in the Second Show Cause on it as a "close associate" for the purpose of determining the Applicant's fitness and propriety.
2. AR was not referred to in the Second Show Cause, but was referred to extensively in the Second Determination on the basis of the Applicant's response to the Second Show Cause. The limitations of the Tribunal's review to the grounds in the Second Show Cause are not breached by consideration of AR's conduct or culpability in those circumstances, as they do not form new allegations. Further, the Applicant has been on notice since the Second Determination that AR's involvement was considered relevant to supporting the allegation, on the basis of the Applicant's response to the Second Show Cause.

Odometer recording

1. The recording of a vehicle's odometer took place at various stages of its sale in Japan, exportation from Japan, importation into Australia and sale in Australia. For the reasons expressed above, I consider the readings in the JECs and auction records from Japan to be unreliable. I accept the readings in the JEVIC biosecurity inspection records as reliable. I accept that the vehicles were advertised with the submitted odometer readings, but consider the date on which those advertisements was published to be unreliable. I accept the odometer readings recorded in the RAW CINs as reliable, and rely on the Form 1 dated 9 November 2016 as accurately recorded. I also rely on the Contracts for Sale located in the section 58 material as reliable copies of those prepared or executed on their stated dates.
2. A comparison table of the odometer readings which I rely on is as follows: Table 2 - Comparative odometer readings Car No VIN ODO at JEVIC biosecurity ODO in ad ODO in RAW CIN ODO in F1 dated ODO in contract for sale 9 Nov 2016 1 PE52-003195 7,000 7,895 7,871 2 NE51017716 56,000 56,416 56,420 3 E51114743 62,174 62,000 62,187 62,179 4 FK10014241 66,152 90,000 113,218 113,000 113,259 5 WGNC34133102 107,034 107,035 107,035 107,035 107,238 6 JZX1106021444 42,040 42,040 44,571 7 E51260280 38,120 38,121 a) 38,127 b) 38,129 8 E51265137 25,032 25,066 25,032 9 WGNC34104432 63,046 63,046 10 EP31003201 42,080 42,080 42,080 11 CPV35600863 48,000 56,070 56,080 12 NE51105334 46,0675 46,065 46,000 13 E51263453 12,891 12,909 12,891 14 NE51059611 64,211 64,213 64,224 64,224 15 BNR32308033 74,498 16 EP31001533 52,000 51,123 52,000 17 AE865072646 86,000 81,859 18 ACR307034902 58,000 58,136 58,124 19 MNH100056031 52,000 20 ANH100088768 45,000 43,034 43,335 21 BNR32306589 71,000 22 NE51106037 58,198 58,000 58,236 58,200 23 BNR32306796 74,000 24 CV5W0109574 26,000 26,148 26,151 25 NE51262850 19,115 18,000 19,130 26 NE51110770 38,127 38 137 38 199 27 S15008195 61,000 61,223 61,252 61,221 28 NE51104970 60,131 60,000 60,135 60,135 29 EP31001399 48,931 46,000 48,957 48,958 30 JZA801004129 54,602 54,629; 54,602 31 TRH2140025147 15 000 16 034 16 079 32 TRH2140024513 19 000 19 113 19 100 33 S15007727 58 212 58 212 58 215 34 EP31300012 42 000 43,023 42 082 42 122 35 BZ11344272 38,125 37 000 38 209 38 346 36 NE51230605 29 000 29 478 29 478 37 CV5W0012848 76 301 76 321 76 332

1. n this table, the columns are as follows: 1. Car No.: Car numbers 1 to 37 according to the Respondent's section 58 documents 2. VIN: Vehicle Identification Number, the unique 17 character serial number used to identify a motor vehicle. 3. ODO at JEVIC biosecurity: Odometer reading, where recorded, at JEVIC biosecurity inspection. 4. ODO in ad: Odometer reading listed in online advertisement. 5. ODO in RAWS CIN: Odometer reading taken at inspection for compliance with the Registered Automotive Workshop Scheme (RAWS) established by the Motor Vehicle Standards Act 1989 (Cth), recorded in the Customer Information Notice (CIN). 6. ODO in F1 dated 9 Nov 2016: Odometer reading recorded in F1 dated 9 November 2016. 7. ODO in contract for sale: Odometer reading recorded in contract for sale.

Findings under s 38(1)(a) of the MDR Act

1. The Second Show Cause and Second Determination particularised four specific contraventions of the MDR Act and Regulations as grounds for a finding under s 38(1)(a) of the MDR Act: 1. Advertising vehicles as having odometer readings that were inaccurate and which the Applicant knew or reasonably suspected were inaccurate (Reg 42); 2. Odometer tampering (s 52); 3. Failure to report suspected odometer tampering (s 54); 4. Failure to keep records in accordance with s 100 of the MDR Act and Sch 2 of MDR Regs
2. In closing submissions, these were particularised as: 1. advertising vehicles 4 and 26 as having odometer readings that were false and which it knew or reasonably suspected were false; 2. altered the odometers of vehicles 1, 2, 3, 8, 10, 11, 13, 16, 17, 24, 26, 27, 30, 31, 32, 33, 34, 36 and 37; 3. failing to keep records
3. On the evidence before the Tribunal, there is insufficient support for the allegations against the Applicant pursuant to s 38(1)(a) of the MDR Act, that the Applicant has contravened, or the Secretary has reasonable grounds to believe that the Applicant is likely to contravene, sections 52 and 54 of the MDR Act or regulation 42 of the MDR Regs. I agree that the Applicant has contravened section 100 of the MDR Act.

Regulation 42

1. Regulation 42 of the MDR Regs applies to offences that are alleged to have occurred on or after 1 December 2014. Of the 37 vehicles, the only vehicles sold after 1 December 2014 are vehicles 4, 9 and 32. The Tribunal has placed no reliability on the evidence from Mr Awad or Mr Eyvaz regarding the dates on which the Respondents claim to have created the screenshot of the advertisements included in the section 58 documents, so the Tribunal cannot therefore find, in the absence of other corroborative evidence, that an advertisement was placed on a date after 1 December 2014 for the purposes of applying Regulation 42 in relation to any of the advertisements.
2. Of the 37 vehicles, Vehicles 4, 11, 20, 29, and 31 were recorded as having odometer readings relatively higher than their alleged advertisements. Without the ability to rely on the dates those vehicles were advertised, the Tribunal can make no adverse findings against the Applicant in relation to the advertisement of those vehicles.
3. Specifically regarding Vehicle 4, there is no date ascertainable from the document of the date on which an advertisement was placed or accessed. Additionally, the Tribunal accepts Mr Lee's evidence that the advertisement ascribed by the Respondent to Vehicle 4 is not, in fact, for Vehicle 4.
4. Regarding Vehicle 26, the evidence relied on by the Tribunal as expressed in the Table above does not support a finding that there was any false advertising of the odometer reading by the Applicant.

Sections 52 and 54

1. There is no evidence on which the Tribunal can rely which supports a finding that the Applicant has engaged in odometer tampering within the meaning of section 52 of the MDR Act.
2. To contravene s 54 of the MDR Act, the Applicant or its employee must have "reasonable grounds" to suspect the alteration or inaccuracy of an odometer reading, and have failed to inform the Secretary. In circumstances where the evidence confirmed that "odometer tampering was rife in Japan" and the Second Reading Speech of the Act demonstrated how prevalent and consistently this was an issue in the industry, the "reasonable grounds" would have to be more than a generalised suspicion. There was no reliable evidence before the Tribunal which would support a finding that the Applicant had contravened this provision.

Section 100 and Schedule 2

1. The Respondents alleged that the Form 1 records obtained from the Applicant and ELJAC, printed on 9 November 2016, demonstrate the Applicant's non-compliance with s 100 of the MDR Act and Schedule 2 of the MDR Regs because ELJAC's Form 1 fails to properly record VINs or ownership.
2. I accept Mr Jeal's evidence that the "Log of Changes" is an audit trail record of entries into the Form 1 in the "Easycars" system which the Applicant used. I accept Mr Lee's evidence that he removed the VIN numbers from the Easycars system, after entering them.
3. Section 100(3) of the MDR Act requires a register "to be in the form, and contain the particulars, prescribed by the regulations and to be kept at the place or places prescribed by the regulations". Schedule 2 to the MDR Regs specifies that the relevant register must include "VIN or chassis No." On Mr Lee's own evidence, he removed the VINs from the Form 1. I accept the Respondent's submission that the Form 1 is the required register under the MDR Act and Regs, and is a different record to the Log of Changes. I therefore accept the Respondent's submission that the Applicant has failed to keep records pursuant to s 100 of the MDR Act. I do, however, agree with the Applicant's submission that the Applicant's actions constituted a "technical" or minor breach of the relevant provisions.

Findings under s 39(b) of the MDR Act

1. The Second Show Cause and Second Determination particularised three specific grounds upon which the Applicant was alleged to carry out the business of a motor dealer in a dishonest and unfair manner pursuant to s 39(b) of the MDR Act: 1. Knowingly, reasonably suspecting or recklessly providing vehicles for sale with inaccurate odometer readings; 2. Obtaining records that inaccurately recorded vehicles' odometer readings; 3. Being the "phoenix" company of ELJAC for the purpose of it avoiding statutory obligations;
2. In the Second Determination, the "dishonest and unfair manner" was particularised by the Respondent as: 1. Providing vehicles for sale whose odometer readings were inaccurate and which the Applicant in respect of vehicles 4, 7 and 26 and ELJAC in respect of vehicles 2, 10, 11, 13, 16, 25, 28 and 36 knew or reasonably suspected were inaccurate or as to the accuracy of which they were reckless; 2. Obtaining records that inaccurately recorded vehicles' odometer readings: the Applicant in relation to vehicles 20, 26 and ELJAC in relation to vehicles 10, 11, 13, 16, 17, 18, 19, 28 and 29. 3. The Applicant being the "phoenix" company of ELJAC in order that ELJAC could avoid its statutory obligations under the MDR Act and MDR Regs
3. I accept the Applicant's submission on the basis of the evidence from Mr Lee and those customers who provided statutory declarations, that he informed customers of the general unreliability and inaccuracy of odometer histories. I accept Mr Lee's evidence and that of his industry colleagues to the effect that odometer tampering was rife in Japan and that Mr Lee dealt with this assumption by both verbally informing his customers of the unreliability of odometer records for imported second-hand Japanese vehicles, and by including a notice or sign to that effect in the contract for sale.
4. Whilst I therefore accept the probability that Applicant sold vehicles with inaccurate odometer records and readings, I find that this was not done in an unfair or dishonest manner.
5. I also find, on the evidence, that whilst some of the records obtained by the Applicant are likely to have included inaccurate odometer readings, there is no reliable evidence to support a finding that this was done by the Applicant in a dishonest or unfair manner.
6. The Respondent abandoned its allegation regarding the Applicant being the phoenix company of ELJAC in its closing submissions. The evidence before the Tribunal does not support a finding that the Applicant carried out its business in a dishonest or unfair manner by being the phoenix company of ELJAC.

Findings under s 38(1)(c) of the MDR Act

1. The final basis on which the Respondent suspended and cancelled the Applicant licence was pursuant to s 38(1)(c) of the MDR Act, on the basis of the Applicant not being a fit and proper person to hold a licence.
2. Two of the grounds alleged to support the Applicant's failure of fitness and propriety, being the serious nature of breaches of s 52 and s 54, and serious and systematic nature of breaches of s 100 and Sch 2 of the MDR Act have already been addressed above and are not established.
3. The Respondent also alleged that the Applicant was not a fit and proper person to hold a licence because, pursuant to s 38(1)(d) of the MDR Act, the Applicant's licence application would be required by this Act to be refused because of close associates not being fit and proper persons.
4. For the reasons expressed above at [148] and [149], Mr Lee is a close associate of the Applicant, and is particularised as a close associate in the Second Show Cause and the Second Determination. His fitness and propriety, as discussed previously, is relevant to the Tribunal's determination in relation to the Applicant's licence and is particularised as a ground supporting the Second Show Cause.
5. The Applicant objected to the Tribunal's consideration of Mr Lee's fitness and propriety on the basis that it was not specifically particularised in the Second Show Cause in the same manner as was put to the Tribunal by the Respondent at hearing and in submissions. I accept the Applicant's submission that in disciplinary matters, the enquiry by the Tribunal is confined by the matters relied on by the complainant or moving party in their particulars of complaint: Sabag v ACCC (2001) NSW SC 411; King v HCCC (2011) NSWCA 353; Sudath v HCCC [2012] NSWCA 171; Smith v NSW Bar Association [1992 HCA 36; (1992) 176 CLR 256. However these proceedings are not analogous to the cases referred to by the Respondent in its submissions, because Mr Lee's fitness and propriety was particularised as a ground for the disciplinary action, and the Applicant was put on notice throughout the course of the hearing that the Respondent intended to prove and submit that Mr Lee's conduct would be used to support an allegation that he was not a fit and proper person, for the purpose of demonstrating that the Applicant was not a fit and proper person. The Applicant continuously objected to evidence which supported that allegation, and the Tribunal ruled that it was relevant, both to credit and to the Tribunal's determination, which included Mr Lee's fitness and propriety: Mr YOUNG: But, in terms of allegations of impropriety by the licence holder, and those must be particularised. They must be done in the notice to show cause. This has never been done. This is not a matter in the notice to show case. It's not a matter in the determinations. It is not a matter referred to in opening and it's -- SENIOR MEMBER DINNEN: I understand the point that you are making Mr Young and I have had - I don't know how many times I have said it during the course of these proceedings, but I am to have regard to whatever evidence is before me that I consider is relevant to my determination.

Penalty

1. The grounds for the Second Show Cause relied on Mr Lee's fitness and propriety pursuant to ss 38(1)(c), 38(1)(d) and 25(5)(a) of the MDR Act. Section 38(1)(c) of the MDR Act provides a basis for disciplinary action, that the Applicant is not a fit and proper person. Section 38(1)(d) of the MDR Act provides a separate basis for disciplinary action, that the Secretary would be required to refuse an application for a licence by the Applicant. Section 25(5)(a) of the MDR Act is the mechanism by which the Secretary, and therefore the Tribunal in these proceedings, can exercise a discretion to refuse to grant a licence to the Applicant, on the basis that their "close associate" is not fit and proper.
2. The basis for the disciplinary action against the Applicant is found. The Applicant is not a fit and proper person, on the basis that its close associate, Mr Lee, is not a fit and proper person.
3. Section 46 of the MDR Act requires mandatory licence cancellation if the licence holder is not a fit and proper person. Accordingly, the Applicant's licence must be cancelled. The Respondent's Second Determination included disciplinary action of disqualification for 10 years, pursuant to s 45(1)(f) of the MDR Act. The question remains whether that penalty is appropriate in the circumstances held by the Tribunal, for the purpose of determining the correct and preferable decision.
4. The objects of the MDR Act include "to establish appropriate standards of conduct and transparency for motor dealers, motor vehicle repairers and motor vehicle recyclers". The underlying purpose of disciplinary action is protective, not punitive. The Respondent's allegations against the Applicant were certainly on the high end of the scale of possible contraventions of the MDR Act, including serious and systematic contraventions of the very provisions for which the MDR Act was introduced, as described in [15] above. Of all the allegations levelled at the Applicant by the Respondent, the only ones the Tribunal has accepted are a technical breach of s 100 of the MDR Act, and the fitness and propriety of Mr Lee. While the finding that Mr Lee is not a fit and proper person is indeed serious, the penalty of cancellation goes some way to provide the public with protection they may need from the Applicant as a result. However, it is not sufficient in circumstances where the Applicant could, upon cancellation, reapply for a licence immediately.

Orders: 1. The Respondent's Second Determination dated 14 March 2017 is set aside. 2. In substitution for that decision, the Tribunal cancels the Applicant's motor dealer licence number MD054381 and disqualifies the Applicant for 2 years from the date of this decision, from being a licence holder or involved in the direction, management or conduct of a business for which a licence is required under the MDR Act.

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

Amendments 03 August 2018 - Personal identifiers removed 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: 03 August 2018