(c) making such other orders as it thinks just,
(d) remitting the matter to the Magistrate who made the conviction or order, or imposed the sentence, to hear and determine the matter of the appeal.
7 Of the grounds of appeal in the notice of appeal, only ground 1 was argued. It was as follows.
The learned Magistrate erred in law in finding the transactions relied upon by the prosecution to establish that the appellant was carrying on the business of a pawn broker were pawns or pledges.
8 The evidence adduced below was relevantly as follows.
9 A statement by Mr K W Gowans, an inspector with the Department of Fair Trading was tendered (Exhibit 1). He also gave oral evidence. The following is an extract from his statement.
17. On the 16th February 2001 I returned to the Byron Bay Police station to continue my enquiries. This included a taped interview with a Leon Murray who had carried out transactions with Cash Counters Byron Bay that were current at that time. Mr Murray indicated that he had carried out various transactions with Cash Counters Byron Bay and all had been on the basis. He would enter the store, Darrin would say how much he was prepared to loan, the paperwork was then signed, the goods left as security and Mr Murray would then leave with the money.
18. On the 20th February 2001 I again went to the Byron Bay Police Station to check evidence and again was involved in a taped interview with a Guy Bampling. Mr Bampling had a current transaction in place with Cash Counters Byron Bay at that time. He said that Darrin had offered a sum as a loan on the goods and when agreed to had taken the goods into storage as security and gave him the cash. He indicated that he had 7 days to pay back the money with interest to redeem the goods.
19. I continued my enquiries over the next 2 months approx and interviewed other persons in relation to transactions carried out by them at Cash Counters Byron Bay.
20. All persons interviewed indicated they had taken in goods which were valued by the manager of Cash Counters Byron Bay Mr Darrin Page. They all indicated that when the details were agreed to Mr Page took the items into storage as security and gave them a loan against the goods. The money along with the interest had to be paid within 7 days or the goods were sent to auction in Brisbane.
10 A statement by Senior Constable D L Hurt was tendered (Exhibit 4). He also gave oral evidence. On 15 February 2001, he executed a search warrant in relation to the appellant's premises. A quantity of goods were seized, including computers, jewellery, CDs, stereos, surfboards, mobile phones and tools.
11 Five ring binders containing copies of some hundreds of transaction documents numbered 144 to 949, found on the premises, were tendered (Exhibit 5). The transactions occurred between 16 October 2000 and 1 March 2001.
12 The transaction documents in Exhibit 5 included the 36 transactions particularised. The documentation was in standardised form, having been generated by computer on the premises in relation to each transaction. It consisted of sections entitled "Secured Loan Agreement" and "Bill of Sale/Goods Mortgage".
13 Particulars of the bill of sale incorporated in the document included the name of the appellant as "Mortgagee", the name of the borrower as "Mortgagor", and a description of the goods as "Mortgaged Property". Then followed a particular "Location of Goods" against which, in all cases, the following words appeared: "In storage at mortgagors request". The terms of the bill of sale/goods mortgage were attached. These included the following terms.
If the Mortgaged Property is situated in Queensland, New South Wales, the Australian Capital Territory, Tasmania, South Australia or the Northern Territory, you transfer title in the Mortgaged Property to us as security for the repayment of the Secured Moneys.
… … …
You must take out comprehensive insurance
(a) you must maintain insurance in connection with the Mortgaged Property against loss, theft, damage, accident, fire, storm, tempest and any other risk that a prudent owner would insurance against;
(b) you must insure the Mortgaged Property for any value that we may reasonably require;
(c) you must insure our interest as well as your interest in the Mortgaged Property and you must note our interest on any insurance policy.
You must provide evidence of any insurance
Upon request, you must show us evidence that satisfies us of any invoice and its currency in connection with the Mortgaged Property.
14 Ms J Rafter gave evidence in relation to three of the subject transactions. As to the first of them, she said that she pooled certain goods with two other persons, that the transaction went through in her name, and that the one sum of money was lent which she split up with the other two. She said that the manager of the appellant just took the goods, the implication being that there was no suggestion that she and her friends had the option of taking the goods away with them and that there was no request by them for the appellant to store the goods during the currency of the loan. There was then evidence of two further transactions entered into by Ms Rafter. In relation to those transactions there was explicit evidence that no suggestion was made that the goods could be taken away and there was no request for the appellant to store the goods. She said she was not asked at any stage whether she had insurance.
15 Mr Z S Jacobs gave evidence of several transactions with the appellant. He said he did not request the manager, with whom he dealt, to hold the goods. No suggestion was made that he could retain the goods and there was no request by him that the appellant store them.
16 A statement by Mr R M Ferris was tendered. He said that on 12 February 2001 he borrowed $80 on the security of a portable radio and a mobile phone. After the documents had been signed, the appellant's manager with whom Mr Ferris dealt, said he would keep the goods at the shop. Mr Ferris said in his statement that he assumed he had to leave the goods with the appellant because that is the way a pawnbroker normally works.
17 A statement by Ms K A Vagne was tendered. She said that on 9 February 2001 she borrowed $60 on the security of a microwave and a set of speakers. She had dealt with the appellant previously. She had asked a few times where the goods were kept and the appellant's manager had said they were kept out the back. He had said that the goods would be kept there until the loan was paid off. She had noticed the reference in the documentation to the goods being kept in storage at the borrower's request. She said she had never quite understood what that meant. She had never been asked about it and had assumed that that was necessary to get the loan. The implication was that she had never been given the option of taking the goods away and had never requested that they be stored by the appellant.
18 A statement by Ms M C Boyne was tendered. She said that on 8 January 2001 she had borrowed $40 on the security of a ring. Before the documentation was completed, the ring had been put in a plastic bag and taken out the back. She said she was not made aware that she did not have to leave the ring as security in order to get the loan. Indeed, the person with whom she dealt had said that she would have to leave the ring as security. She took this to be the usual thing.
19 A statement by Mr M S Hunt was tendered. He said that on 2 February 2001 he borrowed $60 on the security of a guitar. Before the documentation was prepared, the person with whom he dealt took the guitar out the back. Mr Hunt said he was not told that he was not required to leave the guitar there, and he did not make a request to have it kept in storage.
20 A summary of a taped interview with Mr G N Bampling was tendered. In the transaction to which he referred, a radio/CD player and a video player had been provided as security. He had left the goods because he believed that was part of a normal hock transaction. He did not make any request to have the goods stored at the shop.
21 A statement by Mr P R Farrell was tendered. He had borrowed $100 on the security of a Ford Falcon motor car. He left with the car. He was not requested to leave the car with the appellant. The formula "In storage at mortgagors request" nonetheless appeared in the documentation relating to this transaction.
22 That was the evidence for the prosecution.
23 In all, apart from the tender of documentation in the very large number of transactions in Exhibit 5, evidence was adduced, by statement or orally, in relation to 17 transactions entered into between 17 October 2000 and 28 February 2001, involving eight separate borrowers.
24 Mr M C White was called for the appellant. He was administration officer for Cash Counters Pty Limited. The appellant was a licensee of that company which carried on a lending business in Queensland. He said the paperwork tendered was in a standard format used by the company in Queensland, where it had been approved by the relevant state government department. He had seen Mr Page, the manager of the Byron Bay business, doing particular loans. Mr White was permitted to give an explanation for the formula appearing in the documentation to the effect that the goods were stored at the borrower's request. This was that the borrower was under a contractual obligation to insure the property. Borrowers did not have insurance. Accordingly, the company, at the borrower's request, performed the borrower's obligations in that regard by keeping the goods on the premises where they were covered by the appellant's insurance policy. In that regard, Mr White said, the appellant was acting as agent for the borrower in relation to the borrower's obligation to keep the goods insured.
25 Mr White said that the manager of the Byron Bay store at the time of the relevant transactions, Mr Darren Page, was no longer employed by the appellant and was now in Perth. He conceded in cross-examination that Mr Page was a relative of one of the directors of Cash Counters Pty Limited and that Mr White had made no inquiry as to Mr Page's availability to attend court and give evidence.
26 The learned magistrate gave reasons for his decision in writing. These included the following passages.
The defendant company is charged with an offence under Section 6 Pawnbrokers and Second-hand Dealers Act 1996 which is in these terms "A person must not carry on a business of lending money on the security of pawned goods except in accordance with a licence held by the person."
At the outset it was conceded by the defendant that it did not at the relevant time hold a licence under the provisions of the act and early in the proceedings it was conceded that the issue in the case relates to the need for such a licence bearing in mind the method of lending adopted by the defendant.
27 His Worship then described the nature of the business and the standard documentation. He continued:
Each of the lay witnesses indicated an expectation that, except in respect of one transaction concerning a car that the goods would remain with the defendant until the loans were repaid.
Clause 4.1 provides that default occurs if, as a borrower:
(1) you do not repay any of the secured money to us when due;
(2) you do not make a repayment in full by the due date under the loan contract … you are in default under the loan contract
Clause 4.2 provides "If you are in default under this Goods Mortgage we may send you a default notice. This notice will tell you (a) what the default is; (b) what you have to do to remedy the default". Further clause 4.3 provides "If you do not comply with the default notice: (a) you become liable to pay us immediately the secured moneys, and (b) we may repossess and sell the mortgaged property; and (c) we will apply the proceeds of sale towards repayment of the secured moneys".
In practice it is difficult to imagine that the machinery provided above would be activated for loans of the nature and amount provided by the defendant and of course the formal documentation is at odds with the reality of the evidence of civilian witnesses and the provisions of the supplementary documentation (exhibit 2) which indicates an expectation on the one part and a notice on the other that the goods would on default be sold without notice.
In a similar vein the provisions requiring the borrower to insure and keep insurance unless the good are "stored" with the defendant are clearly not in accordance with the practical and actual position. The goods with rare exception remained with the defendant until redeemed.
The civilian witnesses gave evidence to the effect that goods were taken to the defendant premises with the expectation that a cash advance would be provided as security for the goods and that the sum borrowed plus interest would be repaid in a time frame failing which the goods would be sold by the defendant. Exhibit 2 before me contained notices in this form:-
"CUSTOMERS NOTE! If loans are not paid by the due date the items left as security will be sold".
Evidence was given that goods not the subject of repayment were shipped to Brisbane and disposed of by auction or such other method as the defendant determined. In respect of goods taken to the premises by the witness Jodie Rafter evidence was given by her that the loan received was for goods owned by her together with goods owned by friends, pooled for the purpose of a single loan transaction. She gave uncontradicted evidence that this method was known to and approved by Darren Page the manager of the defendants business. I accept Ms Rafters evidence. The mortgage documentation in respect of that transaction was clearly a sham as the title to the goods, or part of them, were incapable of being the subject of a bill of sale or any form of security as they were not owned by the borrower, to the defendants knowledge.
28 The reasons for decisions then continue:
The defendant contends that it is not the subject of the legislation due to the manner in which the loan agreement is structured, that is for the goods to be in effect "mortgaged", the goods theoretically remaining in the possession of the borrower (para 2 of the loan agreement) and the lender being requested (See "location of Goods" in the loan agreement) to store the goods on the borrowers behalf. The prosecution on the other hand contends that the transaction is in realistic terms an act of pawning and is caught by the legislation. The clear contention of the prosecution is that the documentation does not reflect the reality of the arrangement and indeed the purported transactions were a sham. Certainly at one time the defendant believed that the legislation applied because a second hand dealers licence issued from the Department of Fair Trading (part of Exhibit 3) on the 6th September 2000. This in turn brought in to play the Pawnbroker provisions but that licence was surrendered at the Defendants request on or about the 13th December 2000.