Victorian Civil and Administrative Tribunal|2010-01-08

Paul & Paul Pty Limited v Business Licensing Authority (Occupational and Business Regulation) [2010] VCAT 26 (8 January 2010)

Motor Car trader Act 1986, section 14(1)(b), imposition of a wholesale only condition.

Paul & Paul Pty Limited v Business Licensing Authority (Occupational and Business Regulation) [2010] VCAT 26

Paul & Paul is in breach of both of the conditions imposed on its licence, namely the failure to notify the BLA within 48 hours of the appointment of a new director and of the failure of the licensee to provide a complete set of financial statements for the year ended 30 June 2008.

The BLA also notes that Paul and Paul was previously in breach of condition 1 as it did not provide the financial statements for the period ending 30 June 2007 within 90 days of that period until 12 June 2008.

Paul and Paul has failed to notify the BLA of the change of its trading premises as required under section 20 of the Act.

The director, Mr Paul Cowling signed the 2008 Annual Statement and certified that the information contained in the Annual Statement was true and correct, when in fact he failed to provide details of the appointment of Mr Mykola Denysenko as a director of the licensee company.

It sought responses by 26 June 2009 and again mentioned the possibility of the imposition of a "wholesale only" condition were the requested information not to be forthcoming. This was followed by a further enquiry from BLA about the town planning permit applicable to the new premises.
This produced no appreciable result other than correspondence from the company's solicitors questioning BLA's right to seek some of the requested information and seeking an extension of time to respond to the 4 June letter. BLA responded by letter on 17 June 2009, clarified its request and granted an extension to 26 June 2009.
On 24 June 2009 the company's solicitors provided some of the information but advised that production of the 2008 accounts might take a further 4-6 weeks and sought a further extension to 24 July 2009.
BLA responded on 10 July informing the solicitors for the company that it had until 24 July 2009 to answer the queries and produce the 2008 accounts.
That deadline was not met and on 22 July 2009 the company (not the solicitors) wrote to BLA stating as follows:

We have just been informed by our accountants who are preparing documentation that you require has not been done as the partner of the accounting firm has just arrived back from England due to a family emergency. (sic)

We will keep you informed as to when the documentation that you require will be available.

Nothing further was forthcoming from the company and on 28 August 2009 BLA made a determination pursuant to section 14(1)(b) of the Motor Car Traders Act 1986 to impose additional conditions on the licensee. The conditions were as follows:
1. The licensee shall not offer to sell, sell or otherwise dispose of a motor vehicle except to a person who is the holder of a Motor Car Traders Licence under the Act
2. The licensee is authorised to carry on business as a motor car trader from the premises endorsed on this licence certificate only insofar as to do so is consistent with the requirements and restrictions, if any, of the relevant local planning authority.
3. The licensee must submit to the Business licensing Authority a copy in writing of the relevant planning authority's approval to lawfully trade in motor cars from the endorsed address within 14 days of the date of such approval.
That is the decision that the applicant seeks to review. A successful application for a stay of the decision was heard by Deputy President Dwyer in September and a stay is in place pending my decision. DP Dwyer gave directions for the filing of material. BLA filed its material as required by section 49 of the Victorian Civil and Administrative Tribunal Act within the time stipulated y DP Dwyer. No witness statements were provided on behalf of the applicant company.
At the commencement of this hearing, copies of two letters from the company's solicitors dated 6 November and 19 November 2009 were handed up. Counsel for the applicant submits that these two letters provide a full answer to all of BLA's enquiries including the provision of 2008 accounts under cover of the 6 November letter.
Mr Simon's first submission was that the respondent BLA had not complied with section 49 of the Victorian Civil and Administrative Tribunal Act 1998 ("the Act") because it had failed to provide reasons. The respondent's section 49 material consists of a lever arch folder containing details of the application to review, the relevant legislation, the background material and relevant documentation. It included the correspondence between the parties as well as various diary notes dating from as early as 2007. It is a most comprehensive document. As I understand Mr Simon's submission, it is that in the written decision of Ms Julienne Parsons (sitting as the member of the Business Licensing Authority), she failed to give proper reasons and failed to set out what documentation had been before her and on which she relied in making her decision. There are two responses to that. The first response is to be found in the legislation itself. Section 49 provides-

(1) If a proceeding is commenced for review of a decision, the decision-maker must lodge with the Tribunal as many copies as the rules require of-

(a) the statement of reasons given by the decision-maker under section 46(1) or, if no such statement has been given, a statement containing the matters set out in section 46(2) or, in the case of the Business Licensing Authority, section 46(2)(a); and

(b) every other document in the decision-maker's possession that the decision-maker considers is relevant to the review of the decision.

Section 46(2)(a) of the Act provides that the decision-maker's statement must set out the reasons for the decision and section 46(7) provides that "a written statement of reasons for a decision by the Business Licensing Authority complies with sub-section (2)(a) if it sets out the statutory ground on which the decision is based."
Ms Parsons' decision commences with the clear unequivocal words "The Business Licensing Authority pursuant to section 14(1)(b) of the Motor Car Traders Act resolved to impose the following additional conditions on the licensee." Thus has the statutory ground been established.
Section 14 of the Motor Car Traders Act reposes in the Authority the power to impose conditions or restrictions on a licence at any time.
Whilst the first response might seem trite, there is a further reason why the submission cannot be made out. Leaving aside the precise terms of the legislation, this is an application de novo. One of the purposes of a section 49 statement is to ensure that the parties know the issues to be considered by the Tribunal and as well as ensuring that material before the Tribunal (which now stands in the shoes of the decision maker) clearly sets out the material that will enable the Tribunal to make the correct or preferable decision. The fact that this is an application de novo means that the Tribunal can consider what was before the decision maker and any other material that is relevant. It considers the entire matter afresh. It is notable that no witness statements were filed in support of this application. The Tribunal did not hear from any of the directors, from the company accountant or indeed from anyone. The section 49 statement was filed and served and was in the possession of the licensee well before the matter came before the Tribunal. It contains all the correspondence passing between the Authority, the company, its directors, its accountants and its lawyers. The licensee simply cannot seriously suggest that it was unaware of the Authority's requirements or the reasons for its action.
Mr Simon submitted that the Tribunal ought not to accept into evidence the recent statement of Graham McDonald. His rationale for this submission is that Mr McDonald was not the decision maker and therefore not part of the decision making process. As with the material supplied in the section 49 statement, there is nothing in this affidavit that is new or indeed unknown to the applicant. Indeed his earlier affidavit sworn 11 September is before the Tribunal having been part of the stay application heard by Deputy President Dwyer on 15 and 16 September 2009. The fact that Mr McDonald is not the decision maker is not a barrier to admitting his evidence. At the time of making his statement he was the Authority's registrar and made his statement based upon documents in the Authority's possession together with his knowledge of the applicant and his knowledge of the background to the proceeding, all garnered during his employment with the respondent. I infer that Mr Simon also objects to this statement on the basis that it was not filed and served as required by Deputy President Dwyer's order but a perusal of the Tribunal file indicates there is a reason for this. On 30 October 2007 the applicant's solicitors wrote to the respondent's solicitor advising as follows:

We advise that our client is not in a position to file its Statement of Evidence today and now proposes to do so by 5.00 pm on Friday 6 November 2009

We would accept service of the Respondent's Statement of Evidence on or before 6 November 2009 as well.

It is our view that this should not have any impact on the current scheduled Hearing date for the Review Application.

No application for variation of the Deputy President Dwyer's orders was made to the Tribunal.
It seems that on 6 November 2009 the applicant's solicitors served and filed a document entitled "Applicant's Response" which was to be placed "on the court file." In that response there was indication that the applicant's financial statements for the year ended 30 June 2008 had been provided to the respondent on 6 November 2009 and the document also contained some of the answers to the Authority's outstanding requests.
At the commencement of the hearing before me I was handed copies of two letters from Messrs Chadwick acting for the licensee (see para 16). The first of those letters was a copy of a letter to Mr McDonald at the BLA providing some information formerly requested by BLA back in June and purportedly enclosing the "Financial Statement for the period ending 2008". The second was dated 10 November 2009 and was addressed to the Registrar of the BLA and was headed "DRAFT" in the top right hand corner; further information was provided in that letter. Whether the information in those two letters essentially answers BLA's enquiries is not known to the Tribunal.
On 2 December 2009 (well after completion of the hearing), counsel for the licensee forwarded to the Tribunal a copy of the 2008 accounts. Unsurprisingly, the respondent's solicitor has objected to the Tribunal considering the contents of those accounts and I have put them to one side.
Leaving aside the peripheral requests for information, the two conditions to the licence were quite plain - provide accounts within 90 days and notify any change in directorship. It is clear to the Tribunal that Ms Cowling resigned on 2 April 2007 and that from then until November 2007, Mr Cowling was the sole director. According to the ASIC records, Mr Denysenko was appointed on 17 November 2007. The applicant's counsel submitted as follows:

The licence required notification to be made of appointment or resignation. This is to ensure the BLA has full knowledge of who is operating the business. The BLA was aware of the resignation of Mrs Cowling, having received notification of it and had advised Mr Cowling that it required a guarantee having rejected Mr Nicholls security. A guarantee was provided by the applicant and on 3 December Mr Cowling wrote the Consumer Affairs advising that Mr Denysenko had been appointed a director. This was also raised in a letter dated 24 December from the Applicant's accountant.

It was the evidence of Mr McDonald that no such notification was received from Mr Cowling and that the first BLA knew of this appointment was in early December 2008 as a result of its own enquiries. In addition Mr McDonald told the Tribunal that the 2008 document entitled "Annual Statement by a Corporate Licensed Motor Car Trader", which was required to be lodged by 28 August 2008 was apparently dated and signed by Mr Cowling on 9 September 2008 (received by BLA on 10 September) and attested to the fact of Mr Cowling being the only director. A copy of the letter which was said to have been written by Mr Cowling to BLA (but actually signed on his behalf by someone called Josh Blake) was including in correspondence from the licensee's solicitor in 2009 and that, according to Mr McDonald, was the first time the BLA had ever sighted this letter. In relation to notification by the company's accountants, counsel neglected to mention that the notification in question was actually received in 2008.
Of far greater import however was the company's failure to comply with the accounting requirement. Counsel submitted that -

The accounts were delivered late and the full accounts not delivered until after the decision was made. Time was sought for an extension and not responded to. The Applicant has always promised delivery and a short period of time would not have interfered with the Applicant's role of overseeing its requirements. The Applicant is well aware of its obligations.

Paul and Paul did not provide the 2007 accounts as required. The Applicant acknowledges its failure to comply which could have resulted in a fine being imposed. Having been provided those accounts there is no suggestion that there was any sinister motive for non compliance.

Again the company's response is disingenuous. The 2007 accounts were due on 30 September 2007. This was a plainly stated condition of the licence and one would not have thought it capable of misinterpretation. Notwithstanding the clarity of the condition, the financial accounts were not forthcoming until 12 June 2008, some nine months after the due date and almost twelve months after the end of the financial year. Reminder letters were sent by BLA including two letters in March 2008.
The 2008 accounts were due no later than 30 September 2008 and they were not delivered until a few days before this hearing. This was despite numerous reminders, the impositon of the new conditions, a stay application in this Tribunal and an imminent hearing. Counsel submitted that an extension had been requested and there had been no response. Again, this is not a particularly accurate statement in relation to either year.
In relation to the 2007 accounts, on 26 March 2008 (when the accounts were already six months overdue and there had already been written concern expressed by the Authority) the licensee was advised that the Authority had been advised of its breach but had decided to defer further consideration until 9 April 2008 to enable the accounts to be filed. The Tribunal was informed that on 3 April the licensee sought an extension of 14 days. The 26 March letter also indicated that were the accounts to show a loss, then further information would be required. Whatever transpired in the interim (if indeed anything did) the accounts were not received by the Authority until 12 June 2008. There is nothing before the Tribunal to indicate that there was any reason why the accounts were not ready and prepared and delivered up by 30 September 2007.
In relation to the 2008 accounts, due 30 September 2008, nce again, there was a failure to comply and, as before, no explanation was forthcoming. In its letter to the licensee on 24 December 2008, the Authority sought the accounts. As best the Tribunal can see, there was no response.
The matter of the outstanding 2008 accounts was mentioned again in BLA letters to the licensee dated 21 May 2009 and 4 June 2009.
On 15 June 2009 the licensee's solicitors indicated they might require "a short extension of time" to provide information and documentation and on 24 June 2009 they wrote saying (inter alia) -

We advise that the licensee is still in the process of finalising its financial statements for the financial year ended 30 June 2008. The Licensee apologises for any inconvenience caused in this regard and will ensure that the financial statements are provided to the BLA as soon as they have been finalised (estimated to take approximately 4-6 weeks).

On 10 July 2009 BLA responded and granted an extension to 24 July 2009.
On 28 July 2009 the licensee company (as distinct from its solicitors) wrote a letter to BLA in the following terms:

We note that we had until the 24th July to respond to your requirements. As we haven't heard from you we are concerned, therefore we attach a copy of the letter sent to you on the 22nd July 2009.

The letter in particular (dated 22 July) was once again written on the licensee's letterhead and signed by Mr Denysenko and stated as follows:

We will keep you informed as to when the documentation that you require will be available. (sic)

The tribunal did not hear from the accountants or the directors and in the absence of such evidence it considers the submission put forward by counsel to be entirely lacking in substance. The necessity for the filing of accounts is not a minor or insignificant matter. What the Tribunal infers from the evidence before it is that the directors of the licensee company have a particularly cavalier attitude to the regulatory framework in which they operate, they see no reason to comply with regulatory timelines and appear to be entirely contemptuous of the role of the BLA. The Tribunal finds it astonishing that, faced with the possibility of a "wholesale only" licence flagged as a possibility as early as June 2007, it did nothing to ensure its position, nothing to comply with the Authority's requirements and indeed only provided the requested information a matter of days before this hearing. One would have thought that establishing the solvency and efficiency of the company to the satisfaction of the Authority would have been at the forefront of the directors' thoughts. Counsel's submission that now all the information has been provided it should be "business as usual" entirely disregards the purpose of the legislation and the regulatory regime in which motor car traders operate.
The purpose of the Motor Car Traders Act 1986 is spelled out with considerable clarity in section 1 of the Act. It is expressed as follows:

The purpose of this Act is to provide for the regulation of motor car traders and to ensure that licensing is carried out efficiently and equitably and that the rights of those who purchase motor cars are adequately protected.

When this legislation was initially introduced into Parliament the then Minister for Consumer Affairs expressed the objects in the following vein:

The objects of the Bill are to ensure that people who wish to trade in motor vehicles are fit and proper and that they will deal with the public in ways that are fair and reasonable. Particular attention has been given to putting in place provisions which will ensure that the rights of purchasers are protected and, where necessary, enhanced.

In meeting these objectives, the Government has been conscious of the need to avoid unnecessary or onerous regulation. It has sought to balance the often conflicting and competing requirements of motor car traders and consumers in a way that provides for efficient procedures and optimum protection for all parties.

It is no doubt with these objects in mind that the Authority determined that the conditions it imposed were a proper response to its regulatory duty and were designed to sit comfortably with its responsibility for the efficient and equitable trading in vehicles and the provision of optimum protection to consumers.
The recent and most important condition imposed on the licensee (as distinct from the two relatively minor planning conditions) is that it "shall not offer to sell, sell or otherwise dispose of a motor vehicle except to a person who is a holder of a Motor Car Traders Licence under the Act". The result of the condition is that the licensee can no longer deal with members of the public. In the circumstances set out and for the reasons expressed herein the Tribunal sees no reason to tamper with the conditions and affirms the decision.

Car Traders Act 1986

Civil and Administrative Tribunal Act 1998

Paul & Paul Pty Limited v Business Licensing Authority

At a glance

Court

Decision date

Source

Judgment (37 paragraphs)

Paul & Paul Pty Limited v Business Licensing Authority (Occupational and Business Regulation) [2010] VCAT 26 (8 January 2010)

Parties

Legislation Cited (2)