Macquarie Leasing v Combined Home Loans

Supreme Court of NSW|2006-06-01|Before: McHugh JJ, Harrison J

Background 7 Combined Home Loans Pty Limited, the plaintiff in the Local Court proceedings, purchased a TVR Camira motor vehicle (the motor vehicle) for the sum of $50,250 on 10 March 2003 at a public auction conducted by The Pickles Group, agents of Macquarie Leasing, the defendant in those proceedings. Combined Home Loans sought damages and an order setting aside the contract for purchase of the vehicle. Such relief was claimed upon the basis of misleading or deceptive conduct in the form of misrepresentations said to be contrary to s 52 of the Trade Practices Act 1974. It was claimed these misrepresentations were made by Pickles employees concerning the ability of a purchaser to have the vehicle registered in Australia. 8 On 8 November 2005 the Magistrate firstly, set aside the contract between the parties for the sale of the TVR Chimera; secondly, ordered that the defendant refund to the plaintiff the sum of $50,250; thirdly, once payment was made the plaintiff was to return the motor vehicle to the defendant; and fourthly, the defendant compensate the plaintiff for the repair and transport of the vehicle in the sum of $2,689.50 and a portion of the processing fee in the sum of $1,430.

Issues in dispute 11 The plaintiff submitted that the Magistrate erred when her Honour stated "The plaintiff's case is based upon a misrepresentation which it says were made by Pickles' employees about the ability of the purchaser to have the car registered in Australia." The plaintiff says that this is factually incorrect and in making this statement the Magistrate misdirected herself and made a material error of fact. The pleadings are not before the Court. The defendants submitted that three misrepresentations were pleaded of which one referred to misrepresentation as to the car's ability to be registered in Australia. 12 The three misrepresentations alleged were, firstly, when an employee of Pickles said to Mr Damien that the subject vehicle had been registered in Queensland with number plate 40TVR. The second alleged misrepresentation occurred, when the car was available for inspection prior to the auction. It had a sign on it, which read, "The ability to register the vehicle is in doubt". Lastly, the alleged third misrepresentation representation was by the auctioneer when he stated words "We've had a sign on this saying that there is a re-registration issue here. There is a problem with compliance and the registration ability for this car could be doubtful in this country. Doubtful [if] you re-register in this country but we never know about you people with the trick of the trade." [J 5.8-13 & Statement, Stephen Allen 10/10/2005] (my emphasis added). The auctioneer, a Pickles employee, was alleged to have said "registration ability for this car could be doubtful in this country, ie, Australia. The Magistrate in making reference to Australia was correct.

Admissibility of documents 13 The plaintiff submitted that the Magistrate admitted into evidence a number of inadmissible and irrelevant documents and relied upon these documents when exercising her discretion and making a finding of fact that a Pickles representative made the representation to the respondent. 14 The disputed documents are those that passed between Macquarie Leasing and the auctioneer Pickles concerning the motor vehicle. They were documents produced on subpoena. They were not documents to which Mr Damien or his company were privy. It is my view that these documents fall within the definition of business records. That being so the documents are admissible. But are the documents relevant? Relevance is determined by reference to s 55 of the Evidence Act 1995. Section 55 reads: "55 Relevant evidence

(1) The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding. …" 15 One of the issues central to the dispute in the proceedings was whether the Pickles employee made a representation to the effect that the vehicle had previously been registered in Queensland with number plates 40TVR and that the vehicle had only driven on the road 15,690 kilometres. These documents, which came into existence in 2001, two years before the auction, record that the motor vehicle's registration number was 40TVR in Queensland. There was a reference to the odometer reading of 15,690, which also accords with Mr Damien's version of what was said by the Pickles employee. The evidence, if accepted, could rationally affect the existence of a fact in issue, namely whether representations were made by a Pickles employee that the vehicle had been registered in Queensland with number plates 40TVR. Hence, in my view the documents were relevant and the evidence was admissible. 16 The Magistrate, in the light of this evidence, did make a finding (J 4.23-28). "Moreover there were documents in the possession of Pickles, which became exhibit 3 in these proceedings, before the auction which linked that registration number 40TVR with the subject car. Which tend in my view to support Mr Damien's evidence that he was given that information by a Pickles' employee." 17 Next, the plaintiff submitted that Karl Damien (statement, 10/10/2005 [3]) gave hearsay evidence as to a conversation he allegedly had with a female person at Queensland Transport. Macquarie Leasing objected to the reading of this paragraph. The Magistrate admitted it into evidence but not as evidence of proof of the fact intended to be asserted by the representation. There is no error in this approach. The plaintiff then submitted that the Magistrate referred to this evidence of the fact in her judgment. Nevertheless, the defendant's evidence that he called the Queensland motor registry office is admissible, as is the evidence of the steps he subsequently took after that conversation. 18 At this point in this judgment it is necessary to mention that there was an important piece of evidence concerning the ability to register the motor vehicle. A letter (B61) by the Commonwealth Department of Transport and Regional Services addressed to Pickles Auctions dated 26 April 2001 stated: "I refer to our telephone conversation of today, and some earlier correspondence regarding TVR Sports Car VIN PRWDCC4P3TL011052. Our records indicate, and as confirmed by your photographs, that this vehicle has attached a Compliance Plate fitted under Approval No. 10720, by TVR Engineering Ltd. As of 1 January 1996, Approval No 10720 was no longer a valid approval for the attachment of Compliance Plates to TVR Sportscars, as these vehicles no longer comply with the applicable Australian Design Rules. It may be an offence under the Motor Vehicles Standards Act 1989, to make a vehicle available to the market place that is not fitted with a valid Compliance Plate. … For your further information, it is known that there have been a number of TVR vehicles imported to Australia, post January 1998, including the subject vehicle, however none of these vehicles can be legally registered unless they are fitted with a valid compliance plate, and as above, there are no available options at this time to fit them with a valid compliance plate." 19 The last paragraph of the letter makes it clear that there are no available options to grant that motor vehicle a compliance plate and without one, it cannot be legally registered. I might also add that there was evidence from Mr Peterson, the customer accounts manager of Macquarie Leasing, where he admitted that he knew at 8 March 2003 that the motor vehicle was not capable of being registered in Australia [t 7 November 2005 51.51]. Likewise, Mr Steven Allen the National Manager - Prestige of the Pickles Group, admitted that he was well aware that the motor vehicle could not be registered in Australia as at March 2003, and that it had been to auction two times before without success [t 7 November 2005 46.5-15]. There is no error of law.

Terms and conditions of the auction 20 Macquarie Leasing submitted that the Magistrate erred when her Honour made assumptions and drew inferences about the meaning of the terms and conditions of the auction which were not open on the evidence and which were inconsistent with unchallenged evidence. According to Macquarie Leasing the Magistrate applied a certain interpretation to the terms and conditions which was not supported by the evidence and which resulted in the Magistrate exercising her discretion in favour of Combined Home Loans, and further that evidence was given by Combined Home Loans to challenge the terms and conditions or to support the interpretation adopted by the Magistrate. 21 Condition 9 relevantly provides: "9. EXCLUSION OF WARRANTIES 9.1 All lots are open for inspection prior to the sale and it is deemed that the goods have been inspected by the Purchaser. All lots are sold in their current state of repair and condition at the time of the auction or sale with all defects and faults latent, patent or otherwise (if any). No error or misdescription shall vitiate the sale and the Purchaser shall be bound to take delivery of the goods sold without allowance or abatement in price…" 22 Clause 9.3 provides: "The Auctioneer and the Vendor make no warranties and give no guarantees as to the condition, suitability, fitness for purpose or merchantable quality of any goods and the Purchaser expressly acknowledges that: 9.3.1 s 71 of the Trade Practices Act 1974 excludes the implied undertakings as to quality and/or fitness for purpose contained in that Act in the case of sales by auction; … 9.3.3 any warranties, guarantees or conditions as to quality or fitness for purpose implied by the common law or provided by statue are herby expressly excluded…" [J 7.45-55] 23 The Magistrate referred to Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd [1987] ANZ ConvR 357 and Benlist Pty Ltd v Olivetti Australia Pty Ltd (1990) ATPR 41-403, and then stated: In Benlist and Olivetti Mr Burchett J [at 51,590] said, "It has been held on many occasions (and I interpolate that in Collins Marrickville v Henjo Mr Wilcox J listed what he called the abundant authorities) that the perpetrator of misleading conduct cannot, by resorting to an exclusion or disclaimer clause, evade the operation of the Trades Practices Act. Of course if the clause actually has the effect of erasing whatever is misleading in the conduct the clause will be effective not by any independent force of it's own but by actually modifying the conduct. However I should think that it would only be in rare cases that a formal disclaimer would have that effect." 24 On this topic the Magistrate stated: "Cl 9 by its terms and applying the principles in the authorities to which I've referred cannot in my view be construed to refer to exclude or correct the misleading statements made about the ability of the vehicle to be registered. That is not in my view a quality of the state of repair or condition of the vehicle. I am satisfied to the requisite standard that the plaintiff relied on the misrepresentations in entering the contract to buy the car." 25 This interpretation of Clause 9 was one which was open to the Magistrate. 26 Macquarie Leasing submitted that the Magistrate failed to consider its case upon a consideration of the real strength of the evidence upon which it relied. Macquarie Leasing says that the Magistrate did not deal with or did not deal adequately with the evidence adduced by Macquarie Leasing and also did not deal with their submissions. I find this submission somewhat vague but then a reference to the sign is made. According to Macquarie Leasing the Magistrate rejected the evidence of Macquarie Leasing as to the reasons why there was not a sign on the vehicle stating that the vehicle could not be registered and why the auctioneer did not state that the vehicle could not be registered. Macquarie Leasing say that this evidence should have been rejected as it was not challenged. The words on the sign "the ability to register this car is in doubt" speak for themselves. 27 Macquarie Leasing also submitted that the Magistrate rejected its evidence as to the difference between registration issues and compliance issues. The evidence concerning registration and compliance became irrelevant because the contents of the letter from the Commonwealth Department of Transport (referred to earlier in this judgment), said that the motor vehicle cannot be legally registered without a valid compliance plate and there are no available options at that time to fit them with a valid compliance plate. In any event, there were searches which revealed that the motor vehicle had never been registered in Queensland (Ex 5). There is no error.

Reliance 28 It appears that the plaintiff submitted that there was no evidence that Mr Damien on behalf of Combined Housing Loans relied on any representations made by it or its agent. Having found the representations misleading, her Honour considered the issue of reliance. Noting that the representations did not need to constitute the sole inducement for the plaintiff to act, her Honour then stated [J 7.13-16]: "I am satisfied on the basis of Mr Damien's evidence that he relied on the combined information that he obtained from Pickles and the Queensland Transport Department about the car having been registered previously." 29 There is evidence of reliance upon the representation made by the Pickles employee, the plaintiff's agent. It was upon this representation together with that made by Queensland Transport that led Mr Damien to act to his company's detriment. As the Magistrate stated, the representation by the plaintiff did not need to constitute the sole inducement. There was evidence of reliance.

Damages 30 The plaintiff submitted that the Magistrate made findings of fact with respect to issues of mitigation based upon inferences that were not available to be drawn, as there was no evidence to support such inference. The plaintiff drew attention to page 9 of the Magistrate's judgment where her Honour stated [J 9.53-4]: "It seems to me not surprising that the car cannot be sold since it cannot be registered." There was evidence to support that finding: viz the letter from the Commonwealth Department of Transport and evidence of Messrs Peterson and Allen. 31 Macquarie Leasing submitted that the Magistrate made an adverse finding against it and the Pickles Group based upon the fact that Macquarie Leasing had been attempting to sell the vehicle for two years and based upon a document from Queensland Transport. In making this finding Macquarie leasing say the Magistrate failed to give adequate reasons and ignored and applied an incorrect interpretation to the Queensland document in that she ignored the fact that there is a difference between registration and compliance issues. Mr Allen, the plaintiff's own witness, gave evidence that Pickles had been trying to sell the motor vehicle for nearly two years prior to the auction 10 March 2003. I have already mentioned registration and compliance issues. Given the statements of Messrs Peterson and Allen referred to earlier in this judgment there was evidence to support a finding that the motor vehicle could not be registered at the time of auction. 32 The plaintiff submitted that the Magistrate made an error of law in making a finding that the representation made by the Macquarie Leasing was intentionally misleading and deceptive and that as a result of the representation Combined Home Loans suffered loss and damage. 33 The Magistrate stated [J 6.39-49]; "…I do not have to find that the statements were intentionally misleading, but in the context of a two year period in which Pickles had been trying to sell the car on behalf of the defendant company and two unsuccessful attempts to sell the car at auction and Mr Allen and Mr Peterson acknowledging that the car was difficult to sell because of the registration issue, it is difficult to avoid the conclusion that Pickles with the acquiescence of Macquarie Leasing softened the statements about the car's registration problem so that they were misleading." 34 It is my view that there was evidence to support this finding. In any event, all that the Magistrate had to establish was that there was misleading conduct. She referred to this being the case in her reasons for judgment. There is no error. 35 The second submission concerns the mitigation of damage. According to Macquarie Leasing the Magistrate made assumptions and drew inferences about the witnesses for which it was not open on the evidence. According to Macquarie Leasing the Magistrate made adverse finding against it and Pickles based upon the fact that Macquarie Leasing had been attempting to sell the vehicle for two years and based upon a document from Queensland Transport. This is not so. According to Macquarie Leasing, in making this finding the Magistrate failed to give adequate reasons and ignored and applied an incorrect interpretation to the Queensland document in that she ignored the fact that there is a difference between registration and compliance issues. I have already covered these issues in my judgment. The Magistrate's approach to assessing damages was one that was open to her Honour. 36 There were also submissions that the plaintiff was denied procedural fairness. Having read the transcript and judgment, it is my view that the plaintiff was afforded a reasonable opportunity to present its case and a reasonable opportunity to make submissions. The plaintiff availed itself of those opportunities. There has been no denial of procedural fairness. 37 There is no error of law. In my view this appeal is without merit. It certainly does not warrant leave being granted for mixed questions of fact and law. 38 Leave to appeal is refused. The appeal is dismissed. The judgment of Magistrate Sweeney dated 8 November 2005 is affirmed. The amended summons filed 22 February 2006 is dismissed. 39 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed.

(3) The judgment of Magistrate Sweeney dated 8 November 2005 is affirmed.

(4) The amended summons filed 22 February 2006 is dismissed.

(5) The plaintiff is to pay the defendant's costs as agreed or assessed. **********

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.

CITATION : Macquarie Leasing v Combined Home Loans [2006] NSWSC 541

Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Carr v Neill [1999] NSWSC 1263 Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd (1987) 72 ALR 601 Benlist Pty Ltd v Olivetti Australia Pty Ltd (1990) ATPR 41-403 CASES CITED : Devries v Australian National Railways Commission (1993) 177 CLR 472 Jebeli v Modir and Golyaei [2005] NSWCA 184 R L & D Investments Pty Ltd v Bisby (2002) 37 MVR 479 Ronald Wallace Gould and Another v Peter Vaggelas and Others (1984) 157 CLR 215 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) [1999] HCA 3 Swain v Waverley Municipal Council [2005] HCA 4

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Cases Cited (11)