Mulholland, C. and Ansar Homes Pty Ltd v Harradine, M. J., Palron Pty Ltd and Kodra, H. G. [2007] QCCTPAMD 58 (20 November 2007)

MULHOLLAND and ANSAR HOMES PTY LTD v HARRADINE, PALRON PTY LTD and KODRA [2007] CCT PC025-07

HARRADINE, Michael James, PALRON PTY LTD (In Liquidation) and KODRA, Howard G

Claim against the claim fund - Property Agents and Motor Dealers Act 2000, sections 470(1)(e) and 574 -purchase of motor vehicle, with trade in - sum owing in respect of traded vehicle - dealer to pay out sum owing - failure to do so - whether traded vehicle or part of purchase price was property entrusted to respondent as agent for someone else in a capacity as a person acting as a licensee - whether stealing or misappropriation of that vehicle or money - claim dismissed

1

This is a decision on a claim against the claim fund established under the Property Agents and Motor Dealers Act 2000 (the "PAMD Act"). The claim is made by Ansar Homes Pty Ltd (one of the applicants). The Tribunal has jurisdiction to hear and determine the claim pursuant to section 8 of the Commercial and Consumer Tribunal Act 2003 ("the CCT Act"), because the PAMD Act is an "empowering Act".

2

On 11 October 2006 Corey Mulholland (the other applicant) lodged a PAMD Form 50 claim against the claim fund with the Department of Tourism, Fair Trading and Wine Industry Development. In the form, Mr Mulholland named the first respondent Michael Harradine as the party he was making the claim against and the second respondent Palron Pty Ltd ("Palron") as Mr Harradine's company. In the form, Mr Mulholland named Mr Harradine and the third respondent, Mr Howard Kodra as the persons with whom he dealt. Mr Mulholland stated that the event alleged to give rise to the claim occurred on 24 April 2006 and that he became aware of the financial loss on 27 April 2006.

3

The chief executive of the Department caused an inspector to prepare a report on the claim. That report was completed on 16 April 2007 and filed in the Tribunal registry on 20 April 2007.

4

The relevant Tribunal papers were served on behalf of the applicants on the respondents on 15 May 2007 and a directions hearing took place on 13 June 2007.

5

Palron was not represented at the directions hearing. Directions were made for Ansar Homes Pty Ltd ("Ansar Homes") to be included as an applicant and it was noted that Palron was in liquidation. Mr Mulholland, who appeared for himself and for Ansar Homes, informed the Tribunal that the applicants did not wish to file any additional material and would rely on the material contained in the file from the Office of Fair Trading. This consisted of the Inspector's report of 16 April 2007. Directions were made for the respondents to file and deliver any statements of evidence, witness statements and other relevant documents by 20 June 2007. A direction was also made that no party would be allowed to present any evidence at the hearing that was not contained in the statements filed in the Tribunal, without justifying the need for such additional evidence to the Tribunal.

6

No material was filed by any of the respondents. A further directions hearing was held on 17 July 2007. Palron was not represented at the second directions hearing. A direction was made for the applicants to advise the Tribunal in writing (by 31 July 2007) whether or not they were proceeding with the claim, under which part of section 470 they were proceeding, and against which of the respondents they were proceeding.

7

On 31 July 2007 the applicants, by their solicitors, advised the Tribunal by fax that the applicants were proceeding with the claim under section 470(1)(e) of the PAMD Act against all of the respondents.

8

On 7 September 2007 the applicants, by their solicitors, advised the Tribunal by fax that the applicants no longer wished to proceed against Mr Kodra. That same day, the applicants filed an application in the proceeding seeking leave to file a further statement of evidence in respect of financial losses by 4:00 pm on 10 September 2007.

9

On 10 September 2007 the applicants filed a statement of Mr Mulholland.

10

On 12 September 2007 the applicants filed some further invoices.

11

The hearing took place on 13 September 2007. Mr Mulholland appeared for himself and as a director of Ansar Homes. Mr Harradine appeared and Mr Korda appeared. No representative of Palron attended the hearing. I was satisfied that due notice of the time, date and venue of the hearing had been sent to Palron. I therefore proceeded with the hearing in the absence of Palron in accordance with Section 59 of the CCT Act.

12

Mr Kodra sought an order excusing him from any further attendance in the proceeding. Mr Mulholland and Mr Harradine consented to that order. Mr Mulholland also explained that it was Ansar Homes that claimed to have suffered financial loss as a result of an event mentioned in section 470(1)(e) and not Mr Mulholland personally.

13

At the hearing the applicants relied on the Inspector's Report of 16 April 2007, the statement of Mr Mulholland of 10 September 2007 and the bundle of invoices filed on 12 September 2007. That material reveals the following.

14

Palron held motor dealer corporation licence No. 1400736 between 19 August 2004 and 19 August 2006. Mr Harradine held motor dealer principal licence No. 1105853 during the same period.

15

On or about 31 May 2005 Ansar Homes (then known as GKG Homes) borrowed $48,112.48 from General Motors Acceptance Corporation, Australia ("GMAC") to be repaid by 35 monthly instalments of $1,058.28 and a final repayment of $19,040.44. Ansar Homes gave GMAC a mortgage over a new (i.e. 2005) Mitsubishi Triton utility (the "Triton"). Ansar Homes purchased the Triton from Zupps Gold Coast Pty Ltd.

16

The Loan Contract and Mortgage with GMAC was signed by Mr Mulholland as a director of Ansar Homes on 27 May 2005. A copy was included in the Inspector's Report. The GMAC loan was wholly or predominantly for business or investment purposes. The terms and conditions of the Loan Contract and Mortgage included a number of relevant terms, including:

•

(clause 1.3) that in consideration of GMAC agreeing to provide the credit and to secure the punctual payment of the balance of the loan, Ansar Homes agreed to transfer by way of mortgage the whole of its right, title and interest in and to the Triton to GMAC;

•

(clause 7.1(g)) that Ansar Homes agreed not to part with possession of the Triton or, without first obtaining GMAC's written consent, assign, sell or part with the Triton or attempt or purport to do so; and

•

(clause 9.2(f)) that Ansar Homes would be in default if GMAC believes on reasonable grounds that it had disposed of the Triton without GMAC's written consent.

17

In January 2006 Ansar Homes purchased a Ford F150 motor vehicle from the second respondent Palron which was trading as Supacarz, and, as part of that transaction, traded in the Triton.

18

In a statement given to the Inspector, Mr Mulholland said that:

"In January 2006, I borrowed $100,000 from Westpac and this amount was transferred into Michael Harradine's personal account, and not into any of his business accounts. The reason for this transfer, was to purchase another vehicle that he had in stock, which was a F150 4x4 Utility ... for which I paid $120,000. I put the other $20,000 in for the purchase of this vehicle. The loan through Westpac was a business loan."

19

In his subsequent statement filed on 10 September 2007, Mr Mulholland provided the Inspector with a copy of a tax invoice from Palron dated 20 January 2006 for $120,000.00 for a 2003 F150 vehicle (the "F150").

20

The Inspector's Report also includes a copy of the PAMD Form 37/38 (pre-purchase information) dated 21 January 2006 and the MTAQ Contract/Order Form To Buy a Used Motor Vehicle for the F150. The MTAQ contract specifies a cash price of $120,000.00 for the F150. It also gives settlement details for a trade in allowance of $35,526.52, less a payout to GMAC of $45,526.53. The "Net Traded Equity" is shown as "Minus $10,000.00", the amount financed as $100,000.00 and the balance of payment as $30,000.00.

21

Mr Mulholland's statement to the Inspector continued:

"To my knowledge, Michael Harradine was going to pay to GMAC the payout figure of $44,000 or near abouts to clear the encumbrances of the finance on the vehicle. I signed the transfer of ownership of the Triton over to Michael Harradine of Supercarz and as far as I was aware, this transaction was completed and my finance would be paid out."

22

Mr Mulholland stated that on 29 January 2006 he received a fine for parking the Triton in a taxi zone. He contacted Mr Harradine and asked why it was still registered in the name of Ansar Homes. He stated that Mr Harradiine "danced around the subject". Mr Mulholland then stated that he contacted GMAC and:

"advised them that I had traded [the Triton] in, and that they would obtain the pay out figure. They were a little cagey about it as they had the security interest in the vehicle."

23

Mr Mulholland also asked his accountant "to look into what was happening, as I found out that I had paid 2 repayments that I shouldn't have." He contacted Mr Harradine, who told him "that he was a bit short that month" and "he would pay the amount to them ASAP."

24

On 10 March 2006 the registration for the Triton was transferred to a Mr Warren and another mortgage of the Triton (in favour of Macquarie Leasing Pty Ltd) was registered on 13 March 2006.

25

It appears that on about 24 April 2006 Independent Finance Brokers drew a cheque in favour of GMAC for $42,795.65. The cheque was signed by Mr Kodra, who was a director of that company. It was presented by GMAC and dishonoured.

26

On 4 August 2006 Ansar Homes, by its then solicitors, made a creditor's statutory demand on Palron for the payment of a debt of $40,485.41. The debt was not paid. Palron was deemed to be insolvent.

27

Subsequently liquidators were appointed to Palron and an order made for it to be wound up.

28

Ansar Homes makes its claim under section 470 of the Act, in particular under section 470(1)(e) which entitles the person to make a claim against the fund if the person suffers financial loss because of happening the following event:

"a stealing, misappropriation or misapplication by a relevant person of property entrusted to the person as agent for someone else in the person's capacity as a relevant person".

29

Ansar Homes has put its claim on the basis that each of Palron and Mr Harradine was a relevant person. A relevant person is defined in section 479 as being a licensee or an employee or agent of a licensee or a person carrying on a business with a licensee, or apparently having charge or control of a licensees registered office or business, amongst other things. As each was a licensee at the relevant time, it follows that each was a relevant person.

30

Next Ansar Homes alleges that the amount owing to GMAC under the Loan Agreement was stolen, misappropriated or misapplied by Palron or Mr Harradine. This cannot be the case, as that amount was a debt owed by Ansar Homes to GMAC. It was a liability rather than an asset. It was not property entrusted to Palron or Mr Harradine.

31

Alternatively, Ansar Homes puts its case on the basis that the $20,000.00 paid by it and/or part of the $100,000.00 funded by Westpac was stolen, misappropriated or misapplied by Palron or Mr Harradine. These sums were paid pursuant to the contract between Ansar Homes and Palron for the sale and purchase of the F150. Clause 4(a) of that contract required Ansar Homes to pay those amounts to Palron "forthwith upon notification that the vehicle is ready for delivery" by Palron. Under the contract those sums became the property of Palron once they were paid to it, extinguishing the previous contractual liability of Ansar Homes to Palron.

32

The position does not change in this respect if, as appears from the evidence of Mr Mulholland, the $100,000.00 was paid into a personal account of Mr Harradine, presumably at the direction of Palron, rather than into a Palron account. There was no evidence that the sums paid by Ansar Homes and Westpac were stolen, misappropriated or misapplied. In fact there was no evidence at all as to the fate of those sums.

33

A further alternative basis for the claim might be that the Triton was property that was stolen, misappropriated or misapplied. Under the contract between Ansar Homes and Palron, Ansar Homes was required to assign to Palron title to the Triton. Clause 1(a) of the contract prevented Palron from disposing of the Triton before Ansar Homes notified Palron that finance of the contract had been approved. There was no other relevant contractual restraint. In the circumstances there is no evidence to support a finding that Palron or Mr Harradine stole, misappropriated or misapplied the Triton.

34

If Ansar Homes had been able to adduce evidence that Palron or Mr Harradine stole, misappropriated or misapplied the sums paid under the contract or the Triton, it would be necessary for Ansar Homes to establish, on the balance of probabilities, that either the sums or the Triton were property entrusted to Palron (or Mr Harradine) in its (or his) capacity as a licensed motor dealer (or motor dealer principal).

35

There was no evidence that Palron had assumed any obligation to hold all or part of the payment for the F150 on trust for Ansar Homes. It was not alleged and there was no evidence that Palron was obliged to deposit any sum into its trust account. Nor is there any evidence that the Triton was delivered to Palron to hold in any trust capacity.

36

It follows that the claim by Ansar Homes against the claim fund must fail.

37

A further alternative basis for the claim was explored at the hearing. This was the possibility that Ansar Homes might make its claim on the basis of an alleged contravention of section 574 of the PAMD Act, which, amongst other things, deals with false or misleading representations by licensees in relation to the exchange or sale of property. Mr Mulholland for Ansar Homes did not make the claim on the basis of any contravention of section 574. In submissions filed with the Tribunal after the hearing (as to which see below), Ansar Homes confirmed its contention that the claim against the claim fund was made on the basis of section 470((1)(e) and not on the basis of an alleged contravention of section 574. It follows that it is not necessary or appropriate for the Tribunal to consider the prospects of a claim under this further alternative basis.

38

It may be that the applicant has various claims at common law against Palron or Mr Harradine as a result of Palron's failure to pay out the security interest of GMAC in the Triton. Ansar Homes may have other remedies under other statutes in respect of its dealings with the respondents. However, Ansar Homes may not make a claim against the claim fund under section 470(1)(e) in respect of that conduct.

39

At the conclusion of the hearing, I reserved my decision, subject to the completion of two further steps, which were the subject of directions. Among the evidence Ansar Homes relied on at the hearing was the statement of Mr Mulholland filed on 10 September 2007. Annexure D to that statement is a "statement of account" from GMAC. It is a faxed copy and the final entries on the second page were not legible. Accordingly, at the conclusion of the hearing a direction was made that the applicants file and deliver to the respondents a legible copy of the document within seven days of the hearing; and a further direction was made permitting any respondent to make written submissions to the Tribunal in respect of the document within a further seven days.

40

On 20 September 2007 the applicants filed a letter from Mr Mulholland, as director of Ansar Homes. There were 37 pages of attachments to the letter. However, the attachments did not include a copy, legible or otherwise of the second page of Annexure D.

41

On 21 September 2007 the applicants filed a further document entitled "Further Submissions of the Applicant". It was four pages in length and attached copies of seven previous decisions of the Tribunal.

42

None of the respondents filed written submissions in respect of the GMAC statement of account. This was unsurprising, as the illegible page had not been produced by the applicants.

43

No direction was made for the filing of any further evidence or submissions by the applicants.

44

The Tribunal is bound to conduct proceedings in accordance with the rules of natural justice. The conduct of the applicants in filing additional material and submissions after the conclusion of the hearing, without the benefit of any order to that effect, might give rise to obvious questions about procedural fairness. For the reasons set out above, the conclusion I have reached on the claim is unaffected by the further material and further submissions filed on behalf of the applicants. Had that material or those submissions been more significant in the resolution of the claim, it would have been necessary to make further directions to permit the respondents a proper opportunity to consider and respond to them.

45

Accordingly the order of the Tribunal will be that the applicants' claim is dismissed.

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