9.8.2 Transactions 15-18
388 Transaction 15 is evidenced by 3 invoices rendered by SSS Melbourne on 3 March 2016, which identify the salesperson as "Laurie". All three orders include the same 11 part types. Eight are covered by the relevant registered designs, being; 1 x lower grille; 1 x left and right upper grilles; 1 x left and right fog lamp covers; 1 x left and right DRLs; and 1 x black bonnet mould. Three of the part types were not covered by registered designs, being; 1 x left and right fog lamps; and 1 x VE bonnet. The order relating to registration XXB626 also included 1 x HSV front bumper, which is covered by a registered design.
389 Transaction 16 is evidenced by 2 invoices rendered by SSS Melbourne on 17 March 2016, which also identify the salesperson as "Laurie". Both orders are for the same 10 part types. Eight are covered by the relevant registered designs, being; 1 x lower grille; 1 x left and right upper grilles; 1 x left and right fog lamp covers; 1 x left and right DRLs; and 1 x black bonnet mould. Two of the part types were not covered by registered designs, namely 1 x left and right fog lamps.
390 Transaction 17 is evidenced by 5 invoices, 3 of which were rendered by SSS Melbourne on 26 April 2016, and 2 of which were rendered on 31 May 2016 and 23 June 2016 respectively. All of the invoices identify the salesperson as "Laurie". All of the invoices are for a left and right DRL and one also includes a chrome bonnet mould; all three parts are the subject of registered designs. One of the invoices also includes a pair of DRL brackets, which are not the subject of a registered design.
391 Transaction 18 is evidenced by 1 invoice rendered by SSS Melbourne on 4 May 2016. Laurie is again the salesperson identified. The invoice is for a left and right DRL, which are the subject of the relevant registered designs.
The arguments
392 The case advanced by GMH in relation to these transactions focuses on the manner in which SSS Melbourne, via Mr Wills, applied the VIN policy. The ultimate suggestion in relation to transactions 15-18 is that SSS failed to implement it correctly, with the consequence that impugned parts were sold to MSC with knowledge that they would not be used for repair.
393 The order for transaction 15 was placed on 1 March 2016 and the sale proceeded on 3 March 2016. It consists of three invoices, all for identical sets of impugned HSV parts, being upper and lower grilles, fog lamp covers, DRLs, and a black bonnet mould. Mr Wills sent these orders to Mr Chuah for informal approval or a second opinion. GMH drew attention to a number of problems with the process of checking the photographs and the VINs of the orders comprising transaction 15:
(1) In relation to vehicle registration XXB626, the photograph attached to the email to Mr Chuah shows a white vehicle with a damaged front end, but with no bumper components visible. GMH therefore contends that it was not possible for Mr Wills to assess whether the parts ordered were damaged or not. This, in my view, is a trivial concern, because it is apparent that to sustain the damage visible from the photograph, the front of the car, including the bumper components, is likely to be damaged.
Also in relation to XXB626, the evidence of Mr Wakeman shows that, according to Holden's internal register, the vehicle of the VIN provided is a 2011 E3 HSV GTS. The evidence of Mr Pieris is that, according to the CarFacts database which Mr Wills was using to check VINs at that time, the vehicle of the VIN provided was a 2010 E2/E3 HSV GTS. However, the combination of parts ordered are for a different model of HSV (not a GTS) vehicle. In cross-examination, Mr Wills gave evidence that he does not know precisely which parts are used for which model of HSV vehicle, but was satisfied that the VIN was for a HSV vehicle.
(2) In relation to vehicle registration V6LIFE, the evidence of Mr Wakeman shows that, according to Holden's internal register, the VIN corresponds with a 2007 VE Series I Commodore Omega V-series (not a HSV vehicle). According to Mr Pieris' evidence, a search on CarFacts reveals that it is a 2006 Holden VE V Series sedan with a 3.6i engine (not a HSV). After seeing Mr Wakeman's evidence, Mr Wills states in his affidavit that he made an error. Based on the CarFacts website, he says that he saw that it was a V series, which he knew to be a higher specification variant of the Commodore. He considers that he likely confirmed that the VIN was for a higher spec variant without remembering that they were for sales of HSV parts. In cross-examination, he put the discrepancy down to human error.
Also in relation to V6LIFE, Mr Wills' attention was directed to the registration number which refers to "V6", whereas HSV vehicles are equipped with "V8" engines. Mr Wills referred to this in cross-examination as "a very serious misjudgement on [his] end". Finally, the photograph of the V6LIFE vehicle:
(a) did not show any grilles or fog lamp covers, which Mr Wills agreed during cross-examination meant that he could not assess whether the parts were damaged; and
(b) showed a bonnet with a style of vents or 'fins', which on another photograph, Mr Wills recognised was not a HSV bonnet.
(3) In relation to registration 177HSV, Mr Wakeman points out that the VIN given by Mr Dee is 18, rather than 17 digits long, suggesting an invalid VIN. When the VIN number shown in a photograph provided by Mr Dee is entered, the Holden records show it to be a 2008 VE Series 1 Commodore Lumina (Omega) sedan, and CarFacts shows it to be a 2011 VE Series II Omega, SV6 or SS vehicle. In his affidavit, Mr Wills contends that the strong likelihood is that he would have entered the 18 digits, meaning that the first 17 digits would have been checked against the CarFacts database, and the vehicle would have been identified as a valid VIN for a 2011 SV-6 model. This model is a higher specification variant (albeit not a HSV) and the bumper bar for that model is an SSS restricted part (but it wasn't ordered in any of the orders that make up transaction 15). It was also pointed out in cross-examination that the 3rd digit "K" in the VIN signified that it could not be a HSV vehicle. Unsurprisingly, Mr Wills was unaware of that level of detail about the VIN.
Further, in relation to 177HSV, the photograph of the vehicle did not show any grilles or fog lamp covers, which Mr Wills accepted meant that he could not assess whether the parts were damaged.
394 Transaction 16 involved orders for parts for two vehicles, registration XSC358 and XXB626. GMH drew attention to the following matters:
(1) In relation to XSC358, the CarFacts search indicated that the vehicle was a 2010 E2 HSV GTS, whereas the combination of parts ordered were for a different type of HSV vehicle (not a GTS). Furthermore, the photograph supplied with this order was the same photograph supplied in relation to order 2 in transaction 15 and the photograph did not show any grilles or fog lamp covers, which Mr Wills accepted meant he could not assess whether they were damaged.
(2) In relation to XXB626, the VIN and registration number are identical to that provided for in transaction 15, as described above in paragraph [393] item (1). As stated above, a search of CarFacts would have revealed that the vehicle of the VIN provided was a 2010 E2/E3 HSV GTS. However, the combination of parts ordered are for a different model of HSV (not a HSV GTS) vehicle. In contrast, the photograph provided for this transaction was not the same photograph as that provided in transaction 15, despite the VIN and registration being the same. GMH also contends that the photograph does not show any damage to the parts ordered, as they have been removed from the vehicle, as had the vehicle badge; and the bumper reinforcement is straight, with none of the plastic, bonnet or headlights appearing to be damaged. However, it does not cite any evidence in support of this contention.
395 For transaction 17, similar discrepancies are relied upon. However, it is important to note that the sales identified in (1), (2) and (3) below took place on 26 April 2016, whereas (4) took place one month later on 31 May 2016 and (5) took place on 23 June 2016. Whilst (1)-(3) may be regarded as one transaction, (4) and (5) must be considered separately. In relation to these:
(1) For vehicle registration 325HSV the description of the vehicle is a black E2 HSV Senator, whereas the CarFacts search reveals it to be for a 2008/2009 Holden Commodore VE SV6 (not a HSV). Further, GMH contends that the photograph depicts a style of bonnet which Wills identified (on a different photograph of the same car) as not being a HSV bonnet. Finally, GMH also contends that a detailed photograph was provided that showed no visible damage to the DRLs to be replaced. Mr Wills stated during cross-examination that "unfortunately, pictures with lights, in particular, are very, very hard to distinguish what kind or damage here may be on there", which GMH cites as support for its submission that the photograph provided Mr Wills with no basis for believing that the order was for the purpose of repair.
(2) For vehicle registration U00000, the vehicle described is a black E2 GTS. GMH does not adduce direct evidence from Mr Wakeman or Mr Pieris in relation to this invoice and there is no evidence to suggest that a CarFacts search would indicate that the VIN was incorrect. However, GMH submits that a person with knowledge of the VIN system ought to know the VIN was for a HSV from manufacturing year 2009, and the E2 series was not released until manufacturing year 2010 and would have an "A", "B" or "C" in the model year position of the VIN. Further, when ordering these parts, Mr Dee stated that the reason for ordering 2 x left and right DRLs and DRL brackets was "hairline cracks". GMH submits that the photograph does not show any damage to the DRL, for which replacement was sought, and relies on Mr Wills' evidence during cross-examination that DRL brackets would not be required to repair hairline cracks in a DRL but would be required to fit HSV DRLs to a Commodore.
(3) For vehicle registration YQM618, the vehicle described by MSC is a black E2 HSV Grange. No evidence suggests that the VIN is incorrect. Rather, GMH contends that the image does not show any damaged or cracked DRL lenses, for which replacement was sought.
(4) For vehicle registration LILBRO, the description given was for a black E2 HSV GTS. The VIN provided was the same as the VIN provided for the sale identified in (3) above and the same contentions are made by GMH in relation to this sale. The car in the photograph is also the same car in the photograph provided for the sale identified in (3) and Mr Wills admitted that the photo was not clear enough to determine whether there was evidence of a minor impact requiring a new bonnet mould.
(5) Similar criticisms are made in relation to the final sale in this transaction relating to registration number 325HSV, which is the same registration and VIN provided in relation to the sale identified in (1) above.
396 For transaction 18, the description for vehicle IGN 8NH (an order for a pair of DRLs) is of an E2 HSV Grange, which is different to a 2014/2015 Gen-F HSV Grange identified in a CarFacts search and allegedly not a vehicle that is compatible with the DRLs ordered. Again, GMH criticises the photographs as not showing any evidence of damage to the existing DRLs.
Consideration of transactions 15-18
397 It is appropriate to consider the invoices reflected in transaction 15 as a whole as they took place on the same day, for the same customer and were processed by the same salesperson. It came at a time after SSS Melbourne had implemented a regime requiring the provision of VINs and photographs of the vehicle to be repaired. Mr Wills subsequently checked and approved each transaction. The evidence does not disclose whether he did so all at once, or spaced throughout the day.
398 The particular circumstances of the transaction cannot be ignored. One factor is that Mr Wills was aware that MSC might be acquiring the parts for non-repair purposes because MSC is a business that specialises in HSV cars. Of course, that also makes it more likely that it would want HSV parts for repairs, but nevertheless it put Mr Wills on alert because, as Mr Wills acknowledged, it also provided services for modification (enhancement). It was for this reason, for example, that he emphasised the requirements of the SSS policy to Mr Dee in respect of the 25 February 2016 order from MSC, which then did not proceed.
399 Mr Wills knew that the VIN system provided a means of verifying that a customer was acquiring a part for repair. On 1 March 2016, he received the orders for transaction 15. They were for three identical "nose clips" (parts for the front of a HSV). The VINs for two of the vehicles were manifestly incorrect. For V6LIFE, the CarFacts search indicated MSC had incorrectly informed SSS that the vehicle to be repaired was a HSV vehicle, when it was a 2006 Holden VE V Series sedan with a 3.6i engine. For registration 177HSV, the VIN was not valid at all and, accepting Mr Wills' explanation for the CarFacts search, the vehicle would still not have been identified as a HSV model, but rather a 2011 SV-6 model.
400 Where a CarFacts search reveals that the VIN provided is not for a HSV model at all, I accept that this is sufficient to infer constructive knowledge on the part of Mr Wills, even if the search reveals a higher specification variant that is not a HSV. However, I do not accept GMH's contentions that rely on more detailed analyses of the VIN numbers or the distinctions between models of HSV vehicles and the parts applicable to one or the other. The enquiries made must be considered in the context of the business of SSS. The forensic approach to such matters by GMH tended at times to the obsessive. That was perhaps understandable in the context of legal proceedings, but not particularly apposite in the context of determining what Mr Wills ought reasonably to have known in the circumstances of the transaction.
401 Mr Wills accepted in his evidence that he had made mistakes in relation to the checking process for transaction 15. It was not put to him that this evidence was false, and I accept that the errors to which I have pointed were accidental and that he was not aware at the time that they were mistakes. However, I do consider that, in the circumstances of the transaction, Mr Wills ought reasonably to have known that MSC had failed to comply with the SSS requirements. I find that a CarFacts search of V6LIFE was conducted with the VIN provided and that it revealed a non-HSV vehicle. I also find that a similar search was conducted with the VIN provided for 177HSV and that it was shown to be invalid (because of too many digits). At that point, a person in the position of Mr Wills ought reasonably to have known that MSC was providing incorrect information to circumvent the SSS sales only policy. This could only be because the acquisition by MSC was not for the purpose of repair.
402 My findings in relation to Mr Wills are sufficient to determine in favour of GMH that the section 72 defence is not made out for transaction 15. In my view, where 2 out of the 3 orders within transaction 15 were flawed in this way, a person in the position of Mr Wills ought reasonably to have been aware that MSC was gaming the system. However, insofar as GMH relies on the knowledge of persons other than Mr Wills, for the reasons given earlier, I reject that submission.
403 I set to one side for present purposes the other criticisms made by GMH of the process; it is by no means apparent to me from the evidence, that the photographs would not indicate sufficiently that there was damage depicted. Mr Wills considered that they did, albeit with the concession that, in relation to lights in particular, it can be "very very hard to distinguish what kind of damage there may be…". In the absence of evidence to the contrary, I do not consider that view to be unreasonable. I also repeat my comments at paragraph 393 item (1) regarding the absence of photographic evidence of certain parts to be replaced. These findings apply equally to GMH's contentions in relation to the photographs for the remaining MSC transactions that I consider below and I do not repeat them.
404 Transaction 16 took place a little later, on 17 March 2016. Prior to transaction 16, Mr Wills says that he approached future sales with MSC with some caution, and he wanted to avoid any misunderstanding. He telephoned Mr Dee to make sure that he understood the 'repair only' policy and sent him an email asking for an acknowledgement of his acceptance of it. None was forthcoming before transaction 16.
405 The details that Mr Dee provided on 17 March 2016 for transaction 16 were incorrect for the reasons that I have identified above. Broadly, in both cases the VIN provided was for a particular type of HSV but the combination of parts ordered were for a different model of HSV (not a GTS) vehicle.
406 Mr Wills gives evidence that he was not aware of the distinctions between different HSV models, and it was not suggested to him in cross-examination that this evidence was false. I accept that evidence. In my view, it is not reasonable to require a person in the position of Mr Wills, who is dealing with a busy sales environment where many parts are sold daily, to absorb and check such details. He was able to verify that a VIN and photograph had been supplied and that the customer had confirmed it was for a HSV vehicle. Nor do I consider that Mr Wills should have cross-referenced the details for transaction 16 against these for transaction 15, which took place a fortnight before. In my view, this imposes an obligation that is unrealistic.
407 In those circumstances, Mr Wills was entitled to rely on the policies put in place by SSS and the apparent adherence by MSC. Mr Dee's lack of response to Mr Wills' email prior to the completion of transaction 16 does not change my view. Significant processes had been implemented to try and ensure that all sales were for a repair purpose and for the reasons explained above, I do not consider that these minor technicalities ought to have been apparent to Mr Wills in view of the overall context. I do not consider that a person in the position of Mr Wills ought reasonably to have known that MSC was not ordering parts for the purpose of repair, and that accordingly the sale by SSS to MSC was not for a repair purpose.
408 Transaction 17 must also be viewed in a similar context, taking place as it did over a month after transaction 16 on 26 April 2016, 31 May 2016 and 23 June 2016. I find that for vehicle registration 325HSV the description of the vehicle is a black E2 HSV Senator, whereas the CarFacts search reveals it to be for a 2008/2009 Holden Commodore VE SV6 (not a HSV). Mr Wills denies having knowledge of this discrepancy, or of the other discrepancies to which GMH refers. It was not suggested to him that he did, and I do not find that this evidence is false.
409 The position in relation to transaction 17 is to be considered in the context of Mr Wills' apparently increasing concern that Mr Dee chose not to abide by the terms of the SSS repair only policy. He insisted on receiving by email a confirmation from him that he understood "that the supply of HSV/SS items can only be used for the repair use only and not for upgrade/up-spec purposes". On 19 March 2016, Mr Dee's response says "Yes I understand and acknowledge what you are advising here and As [sic] I have stated to you personally on more than 25 occasions the following information". The email then proceeds to state that MSC supplies reconditioned, used and mainly brand new genuine HSV parts to Motortrade-RWC-Mechanics, caryards, bodyshops and insurance assessors. He stated that "[w]e [a]re the HSV REPAIR specialists…". He also said (emphasis added):
This in my opinion is classified as a REPLACEMENT OF AN EQUIVALENT PART ls and from my understanding would be approved under your NEW MARCH 2016 strict guide lines.
If a client has existing VE E2/E3 HSV PARTS on their VEHICLE at the time that the VIN NUMBER + REGISTRATION has been supplied with IMAGES to myself, you advised me that you are happy to supply parts with these details + CORRECT?
410 Mr Wills denied ever making the statement attributed to him by Mr Dee and considered that, as he had on many occasions informed Mr Dee of the correct position that the whole purpose of obtaining the VIN was to ascertain whether it was a HSV vehicle, it was not necessary for him to respond to Mr Dee's email. GMH submits that, by not responding in writing to correct the statement, Mr Wills was content for Mr Dee to proceed with an incorrect understanding. In context of the whole of the email, I accept as more likely that Mr Wills' evidence is correct. Nevertheless, Mr Dee's response might reasonably be regarded to amount to further notice to Mr Wills that Mr Dee either did not understand or, perhaps more likely, preferred not to understand the SSS repair only policy.
411 Even so, I note that there are aspects of the criticism advanced by GMH of the adherence by Mr Wills to the VIN regime that are, in my view, excessive. It is not in keeping with the policy or purpose of s 72 to require a busy wholesaler such as SSS to ensure that its sales staff or Sales Managers are familiar with the minutiae of the 17 digit VIN system. Nor would one reasonably expect a person in the position of Mr Wills to know that a HSV GTS does not use the same type of fog light cover as a Maloo. Equally, there is room for the making of mistakes. It is to be recalled that it is the purpose of SSS (via Mr Wills) that is the question.
412 However, transaction 17(1) reveals clearly that the VIN is for a non-HSV vehicle and the photograph provided shows that the vehicle did not have a HSV bonnet, a fact that Mr Wills accepted in cross-examination (albeit in relation to a different photograph of the same car). These discrepancies are such that a person in the position of Mr Wills ought reasonably to have known that MSC was seeking to circumvent the repair only policy. In light of this, and the other matters to which I have referred in relation to MSC, Mr Wills, or a person in his position, ought reasonably to have scrutinised the orders of (2) and (3) accompanying order (1) with more care. This in turn would have revealed that transaction 17(2) was for an order including DRL brackets, which Mr Wills accepted were not required in order to replace the allegedly damaged part (the lens). Overall, these discrepancies lead me to find that Mr Wills, or a person in his position, ought reasonably to have known that none of the parts ordered on 26 April 2014 (namely orders (1)-(3) of transaction 17) were for a repair purpose.
413 In contrast, transaction 17(4) took place over a month later. The character of the discrepancy identified by GMH is not such that I am prepared to find in its favour. I would not expect SSS to compare past sales or search to see whether an earlier VIN (supplied one month before) has been duplicated. Nor is it expected to have knowledge of fine details such as the differences in HSV models. I repeat the comments made above regarding the assessment of damage from the photographs provided. In these circumstances, I do not consider that Mr Wills knew or ought reasonably to have known that the parts ordered on 31 May 2016, being order (4) of transaction 17, were not for a repair purpose.
414 Transaction 17(5) is in the same position as transaction 17(1). For the reasons given, I find that Mr Wills, or a person in his position, ought reasonably to have known that none of the parts ordered on 26 April 2014 (namely orders (1)-(3) of transaction 17) were for a repair purpose.
415 Transaction 18 took place on 4 May 2016 (prior to transaction 17(5) and (6) and after transaction 16). The salesman is again Laurie. The discrepancy relied upon by GMH is that whilst the VIN details are for a HSV Grange, it is the wrong model. In my view, this is not the sort of detail that Mr Wills, or a person in his position, ought reasonably to have identified as a basis for concluding that the sale is not for the repair purpose.
416 My findings in relation to Mr Wills are sufficient to determine in favour of GMH that the section 72 defence is not made out for transactions 15, Transactions 17(1)-(3) and (5) but not for transactions 16, 17(4) or 18. Insofar as GMH relies on the knowledge of persons other than Mr Wills, for the reasons given earlier, I reject that submission.