Narita Imports Pty Ltd v Commissioner for Fair Trading

Background

1. Narita was issued with a motor dealer's licence on 25 March 2015. Narita operates as a used car dealership which purchases used cars and sells them to customers. Narita was incorporated on 19 June 2019. Mr Azizul Hakim Chowdhury has been a director of Narita since its incorporation. Ms Nahida Akhter, his wife has been a director of Narita since 1 May 2017. Mr Chowdhury has always been the Secretary of Narita. The company's principal place of business is in Lansvale.
2. The following information which led to the cancellation of the licence and disqualification of Narita is relevant to my consideration of whether to grant or refuse a stay.
3. On 8 August 2016, Narita was issued with four penalty infringement notices (PINs) as follows: 1. On 8 January 2016, failed to keep their Motor Dealer's Register (Form 1) in accordance with the Act contrary to s100(5) of the Act. Fined: $550 2. On 10 November 2016, failed to keep their Motor Dealer's Register (Form 1) in accordance with the Act contrary to s100(5) of the Act. Fined: $550 3. On 29 July 2016 sold a second-hand vehicle without the purchaser signing the Dealer Notice (Form 5) at or before sale contrary to s63(3) of the Act. Fined $330 4. On 29 July 2016 sold a second-hand vehicle without the purchaser signing the Dealer Notice (Form 5) at or before sale contrary to s63(3) of the Act. Fined $330
4. On 1 May 2018, the Applicant commenced sub-leasing part of 230 Hume Highway, Lansvale NSW 2166, from Le's Motor Group Pty Limited.
5. On 3 October 2018, Fair Trading investigators inspected Narita's premises at 240B Hume Highway, Lansvale NSW 2166. The Applicant's premises were found to be vacant as the Applicant had relocated to 230 Hume Highway, Lansvale. Fair Trading investigators then inspected Narita's premises at 230 Hume Highway, Lansvale. Fair Trading issued to Narita a notice under s152 of the Act to produce records to Fair Trading by 15 October 2018 which was extended to 22 October 2018.
6. Narita failed to provide all documents requested in the s152 Notice.
7. The Respondent's compliance activities demonstrated the following: 1. Between 4 August 2016 and 22 September 2018 Narita failed to keep their Motor Dealer's Register (Form 1) in accordance with the Act contrary to s100(5) of the Act. There were 118 omissions in the Form 1 Register. 2. Between 1 May 2018 and 16 October 2018 Narita failed to notify the secretary that the holder ceased to carry on a business at a place specified in their licence contrary to s37 of the Act. 3. Between 17 July 2018 and 22 September 2018, Narita sold four vehicles without the purchaser of each vehicle signing the Dealer Notice (Form 5) at or before sale contrary to s63(3) of the Act. 4. On 3 October 2018, Narita did not carry on the business of a motor dealer at a place for which the licence was granted contrary to s11(b) of the Act. 5. On 3 October 2018, Narita offered for sale two vehicles without an attached Dealer Notice (Form 5) contrary to s63(2) of the Act. 6. On 3 October 2018, Narita did not display the appropriate signage contrary to clause 7 of the Regulation.
8. On 7 February 2019, Fair Trading investigators inspected Narita's premises at 230 Hume Highway, Lansvale.
9. Further compliance activities demonstrated the following: 1. Between 3 October 2018 (i.e. since the last inspection) and 31 January 2019 Narita failed to keep their Motor Dealer's Register (Form 1) in accordance with the Act contrary to s100(5) of the Act. There were 41 omissions in the Form 1 Register. 2. On 24 December 2018, Narita submitted a document evidencing the sale of a vehicle (Form 5) to a person for their signature without all material particulars in the document having been completed contrary to s184 of the Act. 3. On 7 February 2019, Narita did not display the appropriate signage contrary to clause 7 of the Regulation.
10. On 11 February 2019, Narita was issued with 6 PINs as follows: 1. On 1 May 2018, failed to notify of a change in place of business contrary to s37 of the Act. Fined $330. 2. On 18 July 2018 sold a second-hand vehicle without the purchaser signing the Dealer Notice (Form 5) at or before sale contrary to s63(3) of the Act. Fined $330. 3. On 3 October 2018, failed to keep their Motor Dealer's Register (Form 1) in accordance with the Act contrary to s100(5) of the Act. Fined $550. 4. On 3 October 2018 failed to display signage as prescribed at place of business contrary to clause 7 of the Regulation. Fined $330. 5. On 22 October 2018 failed to comply with notice or requirement to answer questions contrary to s155(a) of the Act. Fined $330. 6. On 24 December 2018 submitted an incomplete sale document (Form 5) to the purchaser for their signature contrary to s184 of the Act. Fined $330.
11. On 5 March 2019 Narita lodged paperwork with the Respondent requesting 230 Hume Highway, Lansvale, be added as a place of business.
12. On 18 December 2019 Fair Trading investigators inspected Narita's premises at 230 Hume Highway, Lansvale. Fair Trading issued Narita with a notice under s152 of the Act to produce records to Fair Trading by 23 December 2019.
13. Narita did not produce all documents requested in the s152 Notice.
14. Fair Trading further compliance activities demonstrated the following: 1. Between 15 April 2019 (i.e. since the last inspection) and 17 December 2019 Narita failed to keep their Motor Dealer's Register (Form 1) in accordance with the Act contrary to s100(5) of the Act. There were 84 omissions in the Form 1 Register. 2. Between 11 June 2019 and 17 December 2019 Narita included false and misleading particulars in 24 Dealer Notices (Form 5s) contrary to s62(1) of the Act. 3. Between 13 July 2019 and 13 November 2019 Narita submitted 20 Dealer Notices (Form 5s) to a person for their signature without all material particulars in the document having been completed contrary to s184 of the Act. 4. On 17 December 2019 Narita sold a vehicle without the purchaser of the vehicle signing the Dealer Notice (Form 5) at or before the sale contrary to s63(3) of the Act. 5. On 18 December 2019 Narita offered for sale 5 vehicles without an attached Dealer Notice (Form 5) contrary to s63(2) of the Act. 6. On 18 December 2019 Narita did not display the appropriate signage contrary to clause 7 of the Regulation.
15. On 18 September 2020 Narita was issued with two Court Attendance Notices (CANs) as follows: 1. On 19 September 2019 Narita tendered an incomplete sale document (Form 5) for signature contrary to s184 of the Act. This related to one of the twenty Dealer Notices identified in the preceding paragraph at 16(3). 2. Between 20 September 2019 and 17 December 2019 Narita failed to keep a Register (Form 1) in accordance with the Act contrary to s100(5) of the Act. This relates to admissions in respect of 8 vehicle entries in the Register form the 84 admissions identified in the preceding paragraph above 16(1).
16. On 29 September 2020 Narita was issued with two CANs as follows: 1. On 18 December 2019 Narita offered two vehicles for sale without a Dealer's Notice (Form 5) contrary to s63(2) of the Act. This related to two of the five vehicles identified at paragraph 16(5).
17. On 7 October 2020 Narita was issued with two CANs as follows: 1. On 26 October 2019 Narita tendered an incomplete sale document (Form 5) for signature contrary to s184 of the Act. This related to one of the twenty Dealer Notices identified at paragraph 16(3). 2. On 12 November 2019 Narita tendered an incomplete sale document (Form 5) for signature contrary to s184 of the Act. This related to one of the twenty Dealer Notices referred to above at paragraph 16(3).
18. On 29 January 2021 Narita was issued with seven CANs as follows: 1. On 10 August 2019 Narita made a false and misleading representation (in a Form 5) to a consumer concerning the existence of a guarantee contrary to s151(1)(m) of the Australian Consumer Law (NSW) (ACL). This related to one of the twenty-four Dealer Notices identified above at paragraph 16(2). 2. On 25 August 2019 Narita made a false and misleading representation (in a Form 5) to a customer concerning the existence of a guarantee contrary to s151(1)(m) of the ACL. This related to one of the twenty-four Dealer Notices identified above at paragraph 16(2). 3. On 3 September 2019 Narita made a false or misleading representation (in a Form 5) to a consumer concerning the existence of a guarantee contrary to s151(1)(m) of the ACL. This related to one of the twenty-four Dealer Notices identified above at paragraph 16(2). 4. On 4 September 2019 Narita made a false and misleading representation (in a Form 5) to a customer concerning the existence of a guarantee contrary to s151(1)(m) of the ACL. This related to one of the twenty-four Dealer Notices identified above at paragraph 16 (2). 5. On 16 September 2019 Narita made a false and misleading representation (in a Form 5) to a customer concerning the existence of a guarantee contrary to s151(1)(m) of the ACL. This related to one of the twenty-four Dealer Notices identified above at paragraph 16 (2). 6. On 30 September 2019 Narita made a false and misleading representation (in a Form 5) to a customer concerning the existence of a guarantee contrary to s151(1)(m) of the ACL. This related to one of the twenty-four Dealer Notices identified above at paragraph 16 (2). 7. On 4 October 2019 Narita made a false and misleading representation (in a Form 5) to a customer concerning the existence of a guarantee contrary to s151(1)(m) of the ACL. This related to one of the twenty-four Dealer Notices identified above at paragraph 16 (2).
19. Each of the false and misleading representations were made in Dealer Notices that were provided to buyers of vehicles at or before sale.
20. On 4 March 2021 Narita was issued a Notice to Show Cause (NTSC).
21. On 15 April 2021 Narita responded to the NTSC.
22. On 30 April 2021 Narita pleaded guilty in the Local Court to the offences disclosed in the above CANs. Narita was convicted and fined by the Local Court Magistrate as follows: 1. for two offences against s63(2) of the Act - $300 x 2 totalling $600; 2. for the offence against s100(5) of the Act - $330; 3. for three offences against s184 of the Act - $330 x 3 totalling $990; and 4. for the seven offences against s151(1)(m) of the ACL - $600 x 7 totalling $4,200. The Local Court Magistrate accepted the prosecution's submission that the s151(1)(m) offences involved serious false or misleading representations which the Magistrate reflected in the higher fine.
23. On 1 May 2021, Narita further responded to the NTSC. Narita referred to the recent charges and submitted that the findings of the Court be adopted by the Respondent in assessing the NTSC and that Narita had been appropriately punished by the fines imposed by the Court.
24. On 30 August 2021, the Respondent found that there were three disciplinary grounds on which it decided to take disciplinary action.

Legal principles

1. The general rule is that an application for administrative review of a decision does not prevent the decision from taking effect. The Tribunal has power, however, to make an order "staying or otherwise affecting the operation of the decision under review" (s 60 of the ADR Act).
2. In QLD Protection Security Pty Ltd v Commissioner of Police, NSW Police Force [2018] NSWCATAP 113, an Appeal Panel of this Tribunal led by Wright J, summarised the considerations which should be applied when considering a stay in matters such as this as including: 1.whether the order is appropriate to secure the effectiveness of the determination of the application for review: s 60(2), ADR Act; 2. whether the order is desirable taking into account: the interests of any persons who may be affected by the determination of the application for review: s 60(3)(a), ADR Act, Loveday v Commissioner for Fair Trading [2018] NSWCATAD 80 (Loveday) at [10], Re Scott and Australian Securities and Investments Commission[2009] AATA 798 (Re Scott) at [4]; any submission made by or on behalf of the administrator who made the decision to which the application relates: s 60(3)(b), ADR Act, Loveday at [10], Re Scott at [4]; the public interest: s 60(3)(c), ADR Act, Loveday at [10], Re Scott at [4]; 3. the applicant's prospects of success on the application for review: AVS Group of Companies Pty Ltd v Commissioner of Police [2010] NSWCA 81 (AVS Group) at [129], Loveday at [10] and [11], Re Scott at [4].
3. The circumstances that are relevant in any particular case to the considerations identified above may well overlap or be interrelated.
4. In AVS Group of Companies Pty Ltd v Commissioner of Police [2010] NSWCA 81 at [129] the Court of Appeal held that securing the effectiveness of the determination of the application involves matters such as ensuring that the lapse of time before the determination is actually made does not deprive the review of practical point. The Court went on to say that it also involves considering the possibility that the result of the review might be that the decision is affirmed, with the consequence that, if stay is granted, the decision has not been implemented during the period of the stay.
5. In Loveday v Commissioner for Fair Trading [2018] NSWCATAD 80 at [14] the Tribunal referred with approval to the following passage from Re Pellingand Secretary, Department of Aviation [1984] AATA 179; (1984) 5 ALD 638 at 639: 6 If, after the facts have been ascertained at the hearing, the Tribunal considers that the applicant did deliberately flout the law and that his conduct warrants suspension of his licences in spite of the hardship which it will cause him and the company, the right or preferable decision may well be to affirm the decision under review. But, if its implementation before the facts have been established is likely to cause him or the company serious irreparable harm (irreparable in the sense that no recompense for it can be obtained if the application for review is successful) and so to affect adversely the effectiveness of the hearing and determination of the application under review, it may be appropriate to stay the implementation of the decision pending the hearing and decision of the application. However, in considering whether that is so, it is necessary that their interests be weighed against the interest of the public in the safe operation of aircraft. Only thus can the right or preferable decision regarding the stay be given.

Submissions

1. In support of the application for the stay, Narita relies upon written submissions prepared by Mr Andrew Luong, solicitor for Narita. A large bundle of documents marked 'Annexure 1 to Show Cause Notice' filed 6 October 2021 were also relied upon. Narita's submission is that the effectiveness of the Tribunal's decision on the merits will be futile if a stay is not granted because Narita will have already suffered irreparable harm in relation to the finances and reputation of the business. Furthermore, if a stay is not granted, Narita will likely be unable to continue to seek a merit review of the decision by the Tribunal as it will be forced to go out of business.
2. Narita is the sole income source for the two Directors and their young family. The submissions set out that an investment and commitment of over $900,000 has been put into the business. Reference is made to pages 340-356 of Narita's tender bundle evidencing current stock held in the business.
3. Narita concedes that it has been the subject of a number of fines and Court proceedings initiated by the Respondent. It says that no consumer detriment was suffered as a result of the offences and conduct of Narita. It contends that each ACL charge attracted a capped $10,000 fine in the Local Court and, given Narita was fined $600 for each ACL offence, I should be persuaded that the conduct of Narita was at the lower end of offending.
4. Narita says that a decision that the licence '… has been carried on in a dishonest or unfair manner (under s39(b) of the Act); and the Applicant is not a fit and proper person to hold a motor dealer's licence (under s38(1)(c) of the Act)' flies in the face of the findings of the Local Court and the concessions made by the Respondent's lawyer (the offending were 'errors' and not deliberate acts).
5. A great deal of Narita's submissions set out the implementation of a new computer programme 'Virtual Yard'. It says that by using the new computer programme it has been able to rectify previous deficiencies in its record keeping.
6. Narita says the Respondent unreasonably refers to 'potential' risk to the public, when in reality there has never been any consumer detriment, even in circumstances where Narita's paperwork has been found to be erroneously kept.
7. Narita says that the Respondent unfairly asserts that the Virtual Yard computer programme will not reduce the 'potential' risk to the public, when there has been no evidence of contravention of the legislation since the implementation of the Virtual Yard computer programme.
8. Narita says that it has a strong case and the stay is appropriate so the effect of a final determination is effective.
9. The Commissioner submits that it is not in the public interest for a stay to be granted and the interests of consumers and the public outweigh those of Narita. It says a person obtaining and retaining a licence under the Act requires that person to have and continue to act with honesty, integrity and fairness. While Narita's Directors have an interest in avoiding any decision that will affect their financial security, Narita had duties and responsibilities under the Act as a licensee to conduct itself according to requisite standards that would support Narita in continuing to remain licensed under the Act. This included complying with the statutory obligations imposed by the Act with respect to basic and fundamental requirements such as maintaining a register (Form 1) and providing customers with prescribed information about second-hand motor vehicles (Form 5). It is the continued and longstanding failure of Narita and its Directors to comply with their statutory obligations over a period of 5 years that has resulted in the disciplinary action Narita now faces.
10. This direct failure to comply resulted in the issuing of the PINs as set out above and the CANs to which Narita pleaded guilty.
11. The Respondent says that the personal hardships to Mr Chowdhury and Ms Akhter is not a factor the Tribunal should consider in exercising its discretion (Lal v Department of Transport and Infrastructure [2001] NSWADT 74).
12. The Respondent says that the repeated failure of Narita over the 5 year period to comply with its statutory obligations of basic and fundamental record keeping and the provision of accurate information to consumers cannot give the Tribunal confidence that Narita has put effective systems in place and trained its staff to address the shortcomings which it describes as 'human errors'. At the very least, Narita has demonstrated a complete disregard for the requirements set out in the statutory regime aimed at protecting consumers. The Respondent submits that Narita put its own commercial interests ahead of the interests of its consumers.
13. Mr Kapeleris, the solicitor for the Respondent, made a persuasive submission in response to the new computer programme which has been said to be implemented by Narita. He said there is no evidence before the Tribunal, except the submissions put forward by Mr Luong, that the implementation of the new computer system ensures Narita is complying with its statutory obligations. The Respondent would need to send out its investigators to make the appropriate enquiries about the effectiveness of the computer system and ensure ongoing compliance is being met by Narita. Without the opportunity to conduct initial and ongoing inspections, the weight the Tribunal should attach to the submission by Narita with respect to the computer system should be minimal. I accept these submissions.
14. In relation to the submission that the $600 fines for the ACL offences was at the lower end of offending, Mr Kapeleris said that the learned Magistrate noted misrepresentation in documents as serious and they are different issues. He submitted that what has occurred is a repeated and consistent failure to comply with the Act. Narita has shown a consistent disregard for the legislation and its obligations to comply. Despite being given numerous opportunities to address its failures, Narita continued in its failure to keep proper records over a 5 year period which ultimately led to the actions which the administrative review seeks to explore.

Consideration

1. Narita contends that it will suffer irreparable harm and deprive its Directors of an income if a stay is not granted. Scant material was placed before me in this regard and I can only make a preliminary view and accept the impact the business may be exposed to if a stay is not granted.
2. I accept and agree with the Commissioner's submissions that there has been a repeated and constant contravention by Narita and its Directors of its statutory obligations in conducting its business. The objects of the legislation are to, amongst other things, ensure protection of consumers. I do not accept the submission that, despite there being no evidence of detriment to consumers, that the continual contravention is not a material factor which could have had the likely possibility of affecting a consumer. The statutory obligations of motor dealers, particularly keeping accurate records, is important. I have placed particular weight on the contention raised by the Commissioner that during a two year period between August 2016 to September 2018, Narita failed to keep a Form 1 Register, which led to 164 breaches. For a period from 8 December 2016 to 6 March 2018, there is a complete omission of Narita from recording any entries in the Register in an 18 month period. Mr Luong confirmed with the Director of Narita Mr Chowdhury, that over that period 98 vehicles were bought and sold where there are no entries at all recorded in the Register. However, Mr Chowdhury gave evidence through his solicitor that during that period there was a Form 1 book which has been lost. Mr Chowdhury's evidence in this regard only compounds the Commissions submissions relating to at the minimum, Narita's failure to comply with the legislation and keep mandatory records.
3. Despite Narita being aware that its record keeping was dilatory between that period, it continued in its failure in not being able to produce records to the Commissioner as required by the legislation.
4. It is a requirement that a register for cars be kept to ensure, amongst other things, within 30 days of a sale, the car has a RMS inspection and that a Form 5 records the inspection and a report number is inserted. A failure to do so places consumers at particular risk, and potentially other road users, should an inspection not have been completed and a car have a defect.
5. I have considered while not granting a stay may result in an adverse effect upon Narita and its Directors and their family, which in turn may adversely affect the effectiveness of the review, these matters must be balanced against the interests of the public, customers and others in being able to safely deal with Narita.
6. I find that the repeated non-compliant conduct over a period of 5 years, of which the conduct leading to prosecution represents only a small portion, and the continual failure to take any remedial action despite numerous opportunities, or only taking remedial action recently in terms of the computer programme, which cannot be substantiated without further investigation, the stay should be refused.
7. The number and seriousness of the continual breaches of the legislation and failure to keep records in my view creates a serious public safety concern which leads me to conclude that these matters outweigh the interests of Narita and its Directors.
8. I have considered whether an undertaking or condition on the stay as proposed by Narita may meet my concerns. That condition would require Narita to provide evidence to the Respondent that its computer system is in place and provide details of its transactions and its statutory obligation to keep records weekly, fortnightly or monthly. Mr Kapeleris submitted that the condition will require input of data. Given Narita's extensive history of providing inaccurate information and its participation in misleading conduct, the Tribunal should have no confidence as to the accuracy of the information which would require to be inputted.
9. I am not satisfied that the proposed undertaking is sufficient to grant a stay given the history of Narita and its Directors in a continual failure to comply with the legislation. I have no confidence in Narita or its Directors in being able to input accurate data which would be required given the history which led to the decision of the Respondent.
10. The application for an order staying the operation of the decision under review is therefore refused.

Orders 1. The request by Narita Imports Pty Ltd to stay the decision of the Commissioner for Fair Trading on 30 August 2021 to cancel Narita Imports Pty Ltd motor dealer's licence and disqualify it from holding a motor dealer's licence for 3 years and from being involved in the direction, management or conduct of a business for which a motor dealer licence is required for a period of 3 years is refused.

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 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: 21 October 2021