Purnell Motors Pty Limited v Commissioner for Fair Trading and Anor - [2007] NSWSC 19 - NSWSC 2006 case summary — Zoe

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Stock Rego Type D/N Purchaser Sale Date Sold $ Insurance DVA Compens- ation

          1   D703        ART30Q  Landrover Freelander  Demo  Gason        20/12/04   $47,000  $3,492.50  $2,000.00  $5,492.50
          2   D624        AMA34X  Landrover Discovery   Demo  Gerards      10/01/05   $56,295  $3,327.50  $2,000.00  $5,327.50
          3   7447        XYM745  Landrover Discovery   New   Herbert      25/01/05   $56,862  $3,327.50  $2,000.00  $5,327.50
          4   20148       ASK98C  Volvo S40             New   Infinity/Ho  20/2/05    $56,388  $4,649.70  $2,000.00  $6,649.70
          5   7432        ASK98B  Landrover Discovery   New   Townley      16/02/05   $51,847  $3,327.50  $2,000.00  $5,327.50
          6   D622        AMA34U  Landrover Discovery   Demo  Townsend     09/02/05   $44,500  $3,327.50  $2,000.00  $5,327.50
          7   D690        AQY21L  Volvo V50             Demo  Wharf Mgt    15/02/05   $54,000  $5,311.90  $2,000.00  $7,311.90
          8   D639        ANR84Y  Landrover Discovery   Demo  Jee          15/03/05   $51,233  $3,327.50  $2,000.00  $5,327.50
          9   D614        AMA34J  Volvo S40             Demo  Rider        04/03/05   $39,990  $4,649.70  $2,000.00  $6,649.70
          10  7431        Ab26NW  Landrover Discovery   New   Wardle       14/03/05   $52,380  $3,327.50  $2,000.00  $5,327.50
          11  D616        AMA34M  Volvo S40             Demo  Ansari       23/02/05   $30,000  $4,649.70  $1,500.00  $6,149.70
          12  7395/ D722  ARM85W  Landrover Discovery   Demo  Harbridge    07/03/05   $56,868  $3,327.50  $2,000.00  $5,327.50

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Stock Rego Type D/N Purchaser Sale Date Sold $ Insurance DVA

          13  D704        ART30R  Landrover Defender  Demo  Thompson   18/01/05   $50,420  $7,313.79  $2,000.00
          14  7442/ D717  ARM85Q  Landrover Defender  Demo  Barber     26/02/05   $39,500  $6,258.12  $1,500.00

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Stock Rego Type D/N Purchaser Sale Date Sold $ Insurance DVA Compens- ation

          15  7436   ARM85E  Range Rover          New   Dukest Trading               21/12/04   $120,000  $3,977.32  $3,000.00  $6,977.32
          16  7422   ARM85F  Landrover Discovery  New   Fishburn                     24/12/04   $60,000   $3,327.50  $2,000.00  $5,327.50
          17  20141  ARM85L  Volvo XC90           New   Hogg                         31/01/05   $83,065   $4,276.25  $3,000.00  $7,276.25
          18  7409   ARM85H  Landrover Discovery  New   Miles* Compens-ation $8,000  20/01/05   $58,739   $3,327.50  $2,000.00
          19  D674   NXG10L  Volvo S40            Demo  Romiti                       18/02/05   $60,250   $4,649.70  $2,000.00  $6,649.70
          20  D684   AQY21C  Volvo XC70           Demo  Auction Plus                 3/0/3/05   $71,573   $3,616.25  $3,000.00  $6,616.25
          21  D701   ART30E  Range Rover          Demo  JomHill P/L                  07/03/05   $120,000  $3,977.32  $3,000.00  $6,977.32
          22  7426   ASK98N  Landrover Discovery  New   Stockley                     04/03/05   $59,950   $3,327.50  $2,000.00  $5,327.50

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The "Prescribed Damage" Issue 89 Mr Robertson SC submits that not all damage is required to be the subject of a notice under s.24(7) MD Act - the provision operates only where "prescribed damage" is done to a motor vehicle. Clause 32 MD Regulation does not require "superficial damage" to be the subject of a s.24(7) notice. Nor does clause 32 MD Regulation require damage of any sort to be the subject of a notice unless, relevantly, the damage required or requires repair of the whole or part of any panel by cutting and welding, by application of heat or by any other means to restore the vehicle to a reasonable condition, having regard to its age. 90 The Plaintiff submits that the repairs to the subject vehicles were conducted using paintless dent repair technology. It was submitted that this technology does not involve cutting or welding by the application of heat or by any other means. The outside of the panel is not touched. The method involves a skilled pushing technique so the inside surface of the panel is not affected and the reflection is put back to the way it was at the point of manufacture. 91 It was submitted that the Notice provided no specificity or particularity whatever in relation to individual motor vehicles, but operated upon an assumption that hail damage of any sort is "prescribed damage". Mr Robertson SC submits that significant and material error is disclosed in the Determination by way of the statement that the intention of s.24(7) MD Act was to "ensure that prospective purchasers of damaged new or demonstrator vehicles are made aware of any damage and advised whether it has been repaired or not". The Plaintiff submits that the Determination is fundamentally flawed in that it equates "any damage" with "prescribed damage" when the legislative terminology does not permit such a conclusion. 92 Mr Robertson SC submits that the Second Defendant has erred in his construction of the word "superficial". It is contended that the delegate relied upon a definition in the Collins Concise Dictionary where "superficial" is said to mean "of little substance or significance". Mr Robertson SC submits that the appropriate meaning to be given to the word "superficial", viewed in its statutory context, is "being at, on, or near the surface" (Macquarie Dictionary) or "of or pertaining to the surface; that is, lies or is found at or on the surface; constituting the surface, outermost part, or crust" or "appearing on the surface, external, outward" or "that is only on or near the surface; affecting only the surface, not extending much below the surface, not deep" (Oxford English Dictionary). 93 The Plaintiff submits that not only has the Second Defendant mistaken the meaning of the statutory language "not being superficial damage", but also as a matter of procedure and substance, has failed to treat the question as a matter of fact in relation to each vehicle. It is submitted that a blanket approach has been taken with respect to all vehicles contrary to the principle in 3WJ Pty Limited. For these reasons, the Plaintiff submits that the Determination is legally flawed and should be set aside. 94 Mr Robertson SC submits that further error arises from the qualification in clause 32(1)(b)(i) MD Regulation that the damage required not be any repair, but "repair by cutting and welding, by application of heat or by any other means". The Plaintiff submits that all words must prima facie be given some meaning and effect: Pearce and Geddes, "Statutory Interpretation in Australia", 6th edn, paragraph 2.22. Applying this principle, it is submitted that the provision cannot be read as "repair of the whole or part of any panel of the vehicle" nor can it mean "repair of the whole or part of any panel by any means". If the words "by any other means" are not read in context, the Plaintiff submits that the preceding words "by cutting and welding, by application of heat" are given no meaning or effect and that this would be contrary to principle. The Plaintiff submits that these are words of limitation which apply equally to the word "replace" in clause 32(1)(b)(i) MD Regulation. Clause 32(1)(b)(ii) deals with the replacement of four or more major external panels fitted by means of "bolts, screws or other mechanical fastening devices". A construction which fails to give meaning and effect to the words "by cutting or welding, by application of heat" in clause 32(1)(b)(i) will result, so the Plaintiff submits, in clause 32(1)(b)(ii) having no work to do. 95 Mr Robertson SC submits that the Second Defendant proceeded in his Determination on the basis that damage requiring any repair was required to be notified under s.24(7) MD Act. So to proceed, he submitted, involved a misconstruction of clause 32 MD Regulation. The Plaintiff submits that the Second Defendant must be taken to have so proceeded because there are no findings of fact about the repair required to any particular motor vehicle. The Plaintiff emphasises that the Second Defendant declined to provide particulars of this type in his letter of 12 September 2005. 96 Mr Robertson SC submits that the Determination is flawed in a manner attracting a grant of prerogative relief because of error of law in construction of the relevant legislation, through denial of procedural fairness (in declining to provide particulars) and by use of a process whereby generality, and not specificity, was relied upon contrary to the principles in 3WJ Pty Limited.

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Business Allegedly Being Carried on in a Dishonest and Unfair Manner 97 Mr Robertson SC made five general submissions before moving to specific areas of complaint with respect to this aspect of the Determination. · Firstly, it was submitted that the Determination involved findings of dishonesty on the basis of inexact proofs, indefinite testimony or indirect inferences in the Briginshaw sense. It was submitted that there must be adequate evidence of sufficient cogency to justify the delegate being comfortably satisfied in relation to the serious charges before him with their grave consequences: Greyhound Racing Authority (NSW) v Bragg [2003] NSWCA 388 at [74]. · Secondly, the Plaintiff submits that the Second Defendant appears to have treated the terms "dishonest" and "unfair" as synonyms. The Plaintiff submits that a finding of dishonesty is not the same as a finding of unfairness. The Plaintiff submits that dishonesty is a type of fraud and the Second Defendant erroneously conflated the two concepts. · Thirdly, the Plaintiff submits that there is no basis for construing either description as satisfied in every case. The Plaintiff submits that the Second Defendant has failed to apply himself to the question that the MD Act prescribes or has misunderstood the nature of the opinion which he was to form and, in consequence, there has been jurisdictional error: Coal & Allied Operations Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 at 208-209. · Fourthly, the Plaintiff submits that by reason of the Second Defendant's assumption that dishonesty was synonymous with unfairness, he failed to have regard to the mental element required for a finding of dishonesty: McCann v Switzerland Insurance Australia Ltd [2000] 203 CLR 579 at 596 [55], 617-618 [120]-[121]. · Fifthly, the Plaintiff submits that even if it be assumed that the Second Defendant was intending to indicate that he was satisfied that either dishonesty or unfairness was made out, his approach involves error. Such a finding, it was submitted, will result in damage to the Plaintiff's reputation. It was noted that the terms of the reprimand includes the word "dishonest", as does the wording of the letter required to be sent to purchasers. 98 The Plaintiff submits that these general submissions provide adequate foundation for setting aside the Determination. The Plaintiff's submissions then turned to particular findings made against the Plaintiff.

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The "Prescribed Damage" Issue 112 Ms Henderson submitted that no error of law had been demonstrated in the Second Defendant's construction of s.24(7) MD Act and clause 32(1)(b) MD Regulation. Put shortly, it was submitted that no error was revealed in the Second Defendant's approach to the term "damage (not being superficial damage)" and that it was open to the Second Defendant to conclude that "prescribed damage" had been demonstrated with respect to each of the vehicles which were the subject of findings under s.20D(1)(c) MD Act. The Defendants submitted that the present cases fell within clause 32(1)(b)(i) MD Regulation in that the damage occasioned to the body or frame of the motor vehicles required replacement or repair of the whole or part of any panel, structural member or component of the vehicle "by any other means". The Defendants submitted that the Plaintiff's construction which served to confine the words "by any other means" by reference to the earlier words "by cutting and welding, but application of heat" strained the ordinary meaning of the provision. 113 The Defendants submitted that subclauses (i) and (ii) of clause 32(1)(b) may be properly understood as applying to two distinct concepts. Subclause (ii) involves the removal of the damaged area and its replacement by means of bolts, screws or other mechanical fastening devices - the owner of the vehicle has the benefit of a vehicle where the damaged area is entirely removed and replaced by means of bolts, screws etc which ordinarily serve the purpose of affixing the panel to the vehicle. Subclause (i) on the other hand, involves replacement or repair of the whole or part of a panel, structural member or component by cutting and welding, by application of heat or by any other means - this process leaves in place the original panel which has been repaired. 114 The Defendants submit that the process of paintless dent repair is comfortably accommodated within the terms of clause 31(1)(b)(i) MD Regulation. 115 Ms Henderson submitted that no error had been demonstrated on the part of the Second Defendant in his approach to this issue. The Plaintiff had conceded that each of the vehicles in question was hail damaged, and had been subjected to repairs, with quotations for repairs being provided to the insurance company for the vehicles ranging from $3,327.50 to $7,313.79. The cost of repair reflected in these quotations, so it was submitted, supported the Second Defendant's conclusion that the damage to each vehicle was not superficial. 116 Ms Henderson submitted that the decision of Austin J in 3WJ Pty Limited was distinguishable from the present case. The MD Regulation was made in 2004 and did not exist at the time of events relevant to the decision in 3WJ Pty Limited. The requirements contained in clauses 32 and 51 MD Regulation, which affect the present case, constitute a material basis for distinguishing the cases. 117 With respect to the Plaintiff's complaint concerning particulars with respect to the s.20D(1)(c) MD Act complaint, Ms Henderson submits that the Plaintiff was well aware of the factual matters underlying the complaint. It was submitted that the Notice identified the vehicles, the purchasers (with respect to sold vehicles) and the Plaintiff's stock numbers with respect to the vehicles. It was submitted that the documents which underlay this complaint were documents emanating from the Plaintiff itself. In truth, the Defendants submit, the facts concerning this aspect of the complaint were not in dispute. The Plaintiff conceded that each vehicle had been damaged and was aware of the extent of the damage. The real issue was the question of statutory construction with the Plaintiff contending that "prescribed damage" did not exist with respect to the vehicles. The Second Defendant, however, rejected this submission and held that "prescribed damage" had been demonstrated with respect to the vehicles, with the consequential requirement that the Plaintiff comply with statutory requirements which it had not in fact done.

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Carrying on Business in a Dishonest or Unfair Manner 118 With respect to Ground 2.1, Ms Henderson submitted that no basis for relief had been demonstrated by the Plaintiff concerning the finding arising from the Plaintiff's failure to advise purchasers of hail-damaged vehicles that they had been so damaged. It was submitted that this was a further consequence of the finding, which was open to the Second Defendant, that s.24(7) MD Act and clauses 32 and 51 MD Regulation applied to those new and demonstrator vehicles which fell below the luxury vehicle limit. Ms Henderson submitted that the finding made by the Second Defendant with respect to all vehicles was open. It was emphasised that these were new or demonstrator vehicles which (with the exception of two vehicles) had been subject to extensive repairs following hail damage. Yet purchasers and potential purchasers were not informed of this fact. It was submitted that it was open to the Second Defendant to conclude, inter alia, that the withholding of this information by the Plaintiff affected the ability of consumers to make an informed choice as to whether they should purchase a new or demonstrator vehicle which had, in fact, been hail damaged and repaired. It was submitted that it was open to the Second Defendant to conclude that the withholding of this information constituted dishonest or unfair trading. 119 With respect to the Plaintiff's complaint concerning the refusal to provide particulars, Ms Henderson submitted that the Plaintiff was well aware of the identity of the vehicles and the purchasers of the vehicles. It was submitted that the Second Defendant was not required to provide particulars of paragraph 2.1.7 of the Notice as sought by the Plaintiff in its Response. The Plaintiff was aware of the identity of the purchasers of the vehicles. Insofar as the Plaintiff contended that there was a dispute concerning the matters contained in paragraph 2.1.7 of the Notice, there was no impediment to the Plaintiff providing such information as it saw fit to the Second Defendant with respect to what was the attitude of the purchasers to the failure of the Plaintiff to inform them that vehicles had, in fact, been hail damaged and repaired. 120 Ms Henderson submitted that the finding of the Second Defendant with respect to Ground 2.1 was open and that no denial of procedural fairness had been demonstrated. 121 With respect to Ground 2.2, Ms Henderson submitted that no basis for relief had been demonstrated by the Plaintiff with respect to the finding of unfair conduct arising from the advertising of vehicles for sale which had, in fact, already been sold. It was submitted that the vehicles had been adequately particularised. It was submitted that the Second Defendant's passing reference to bait advertising under s.51 Fair Trading Act 1987 did not give rise to any basis for relief. 122 With respect to Ground 2.3, Ms Henderson submitted that the Second Defendant's findings concerning the sale of vehicles for more than the advertised price did not give rise to any basis for relief. It was submitted that the Plaintiff had adequate notice of the nature of the allegation raised and that no denial of procedural fairness was demonstrated. 123 With respect to Ground 2.4 concerning log books, Ms Henderson submits that the finding was open to the Second Defendant. On this point, the Determination was confined to the circumstances surrounding Mr Stockley and this was open on the material before the decision maker. 124 With respect to Ground 2.5 concerning insurance quotations, Ms Henderson took the Court to a number of documents contained within Exhibit C in support of the argument that there was evidence before the Second Defendant to support the finding made by him (T43-45, 9 August 2006). I will return to this material later in this judgment. 125 Generally, Ms Henderson submitted that, in undertaking judicial review of administrative action, it was appropriate to consider the substance of the reasons and not to engage in excessive scrutiny of individual words to determine whether error was demonstrated: Minister for Immigration and Ethnic Affairs v Wu Shan Liang at 271-272. It was submitted that each of the findings of the Second Defendant was open and that no basis in substance, or by reference to procedural unfairness, has been demonstrated so as to impeach any of the findings made against the Plaintiff. Ms Henderson made an alternative submission that, if any particular finding is to be quashed, then, if it can be shown that there is a basis, otherwise unimpeached, upon which the decision was reached, unaffected by error or a failure to accord procedural fairness, then relief may be withheld from the Plaintiff: SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 at [231]. 126 With respect to the Plaintiff's complaint concerning the calculation of compensation in the Determination, Ms Henderson submitted that the approach adopted by the Second Defendant was open to him and that no error has been demonstrated which would call for the intervention of the Court. She submitted that the assessment of diminution in value of each vehicle is not without its difficulties given that events surrounding the vehicles did not come to the attention of the OFT until the particular vehicles had been repaired and sold. It was submitted that the use of calculations made by Allianz in its dealings with the Plaintiff concerning each vehicle was a relevant and permissible way to approach the issue of compensation. That figure related to each individual vehicle and was relied upon by both the Plaintiff and Allianz in this respect. Ms Henderson submitted that the MD Act did not require the calculation of compensation in accordance with s.6 Fair Trading Act 1987. She submitted that the Court should bear in mind the beneficial nature of the legislative scheme comprised in the MD Act and its intention to protect consumers, in determining whether the approach taken by the Second Defendant was permissible in law. Ms Henderson submitted that the Court should reject the Plaintiff's argument that the process used for calculation of compensation in each case disclosed error of law or was ultra vires the MD Act.

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(b) that such damage required replacement or repair of the whole or any part of any panel, structural member or component of the vehicle by cutting and welding, by application of heat or by any other means to restore the vehicle to a reasonable condition, having regard to its age. 133 Mr Robertson SC submitted that it should be kept in mind that s.24(7) and (11) creates a criminal offence. In any prosecution for such an offence, an issue may arise with respect to the phrased "damage (not being superficial damage)". Is the phrase "not being superficial damage" an exception, exemption, proviso, excuse or qualification to an offence for the purpose of s.417A Crimes Act 1900 with the consequence that it is for the accused person to prove that he falls within the exception? This involves consideration of substance and not form: Chugg v Pacific Dunlop Limited (1990) 170 CLR 249 at 257-258; Director of Public Prosecutions v Belani (2005) 64 NSWLR 319 at 330-332. An argument in favour of such a construction may arise from the fact that the nature of the damage sustained to the vehicle might be considered (certainly in this case) a matter peculiarly within the knowledge of the dealer: Chugg v Pacific Dunlop Limited at 258. An argument against such a construction may arise from s.24(12) MD Act which provides expressly for a statutory defence if the accused person proves certain matters. These issues were not raised during the hearing and I express no conclusion with respect to the issue for the purpose of the present case. 134 What is clear, however, in the circumstances of this case is that the Plaintiff was well aware of the nature and extent of damage sustained by each of the vehicles on its premises on 13 December 2004. Each vehicle was the subject of inspection, quotation and repair with an associated insurance claim made by the Plaintiff to Allianz. The Plaintiff concedes that each vehicle was hail damaged. It was common ground that the new and demonstrator vehicles which were hail damaged and repaired were not the subject of any notification to actual or prospective purchasers that the vehicles had been damaged in any way or had been subjected to relatively expensive repairs. The Plaintiff maintains that it was not required to disclose these matters to prospective purchasers. 135 The provisions falling for interpretation lie within a statutory scheme which is intended to regulate the conduct of motor dealers and to provide a measure of protection to consumers, including actual and prospective purchasers of motor vehicles. This is a significant starting point in the construction of these provisions. 136 A fair reading of the Second Defendant's Determination on this point (see paragraph 77 above) does not reveal that he rejected the Plaintiff's construction of the word "superficial" as "being at, on, or near the surface". Rather, the Second Defendant acknowledged that the word bore other meanings as well including "apparent rather than real" and "of little substance or significance". 137 The Second Defendant found that damage to the motor vehicles caused by hail was not confined to the surface of the panel but involved indentation to the panel extending beyond the surface. Reference was made to measures taken to repair the damage, including "massaging" by paintless dent repair methods involving removal of interior trims and parts to obtain access to the underside of the damaged panel. The steps which were required to be taken with respect to each vehicle were revealed in the documents obtained from the Plaintiff which were before the Second Defendant as decision maker (Exhibit C). It was open to the Second Defendant to form the view that the Plaintiff was well aware of these matters which involved steps taken by the Plaintiff following the damage to the vehicles occasioned by the hail storm. 138 In reaching his findings, the Second Defendant applied the meaning which the Plaintiff ascribed to the word "superficial". In my view, it was open to the Second Defendant to conclude that there was evidence that each of the vehicles had suffered damage (which was conceded by the Plaintiff) and that such damage was not superficial damage (which was not conceded by the Plaintiff). It was open to the Second Defendant to conclude (as he did) that the substantial cost of repair of each of the specified vehicles supported a conclusion that the damage was not superficial. 139 To determine these proceedings, it is not necessary for me to decide whether the sole meaning to be given to the word "superficial" in clause 32(1) MD Regulation is that advanced by the Plaintiff, being at, on, or near the surface. I am satisfied that it was open to the Second Defendant to conclude that the damage occasioned to each of the vehicles was not superficial in this sense. That is sufficient to reject the Plaintiff's argument on this ground. 140 It seems to me, however, that there are good reasons, both textual and contextual, for not confining the meaning of the word "superficial" in this way. Damage to a motor vehicle may take a multitude of forms. To confine the meaning of the word "superficial" in clause 32(1) MD Regulation to a geographical sense relating to the surface of the vehicle may be an unduly confined construction. There is much to be said for other meanings which are not so confined including those referred to by the Second Defendant, being "apparent rather than real" or "of little substance or significance". However, as I have said, it is not necessary for me to determine this question in the present proceedings. 141 The second matter of construction arising concerns the meaning of clause 32(1)(b)(i) MD Regulation. The Plaintiff submits that the repairs effected to each of the subject vehicles did not involve cutting and welding or application of heat and therefore the damage to each of the vehicles does not fall within the definition of "prescribed damage". In my view, the Plaintiff's submission strains the meaning of clause 32(1)(b)(i) MD Regulation. The Plaintiff's argument gives no sensible meaning to the words "or by any other means" contained within that provision. I accept the submissions of the Defendants concerning the proper construction of clause 32(1)(b)(i) and (ii) MD Regulation. This construction does not render otiose any part of subclause (b). Even if it was arguable that it did have that effect, it is still necessary to give meaning to the clear and broad words "or by any other means" as contained in subclause (i). 142 In my opinion, it was open to the Second Defendant to conclude, on the evidence before him, that with respect to each of the vehicles, there was repair to the whole or part of any panel, structural member or component of the vehicle by means of paintless dent repair or conventional means as revealed in the quotations and as relied upon in the Determination (Exhibit A, page 3). 143 I do not accept the Plaintiff's submission that the Second Defendant equated any damage or any hail damage with "prescribed damage". A fair reading of the Second Defendant's findings reveals that he was aware of, and addressed, the statutory definition. He started and finished with the correct test: Minister for Immigration and Ethnic Affairs v Wu Shan Liang at 271-272. 144 The Plaintiff has failed to demonstrate any error of law on the face of the record with respect to the Second Defendant's findings under s.20D(1)(c) and s.20E MD Act. I am satisfied that there was evidence capable of supporting the findings of the Second Defendant in this respect. I am not satisfied that any denial of procedural fairness was occasioned to the Plaintiff with respect to this ground. The Plaintiff was well aware of the nature and extent of damage occasioned to each of the vehicles and the steps taken to repair the vehicles. The Plaintiff was in a position to make such submissions as it saw fit, and to adduce evidence, for the purpose of replying to the Notice. No practical injustice has been occasioned to the Plaintiff. 145 I am not satisfied that the Plaintiff has demonstrated jurisdictional error in the way in which the Second Defendant has approached this aspect of the Determination. The Second Defendant adverted to the quotations for repairs for the subject vehicles and has inferred that the repairs were undertaken in accordance with the quotations. Insurance claims were made by the Plaintiff and paid by Allianz on this basis. I am not satisfied that any error has occurred of the type found in 3WJ Pty Limited, a decision reached with respect to a significantly different statutory scheme. 146 Having regard to my findings with respect to this aspect of the proceedings, it follows that I reject the Plaintiff's challenge to that part of the complaint based on s.20D(1)(c) arising from the failure of the Plaintiff to comply with clause 51(1) MD Regulation by incorporating in advertisements reference to the fact that the advertised new and demonstrator vehicles had been hail damaged and repaired.

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Carrying on the Business in a Dishonest or Unfair Manner 147 Ground 2.1 involves a finding of carrying on business in a dishonest or unfair manner by not revealing to purchasers or prospective purchasers that any of the new or demonstrator vehicles, the subject of the Determination, had been hail damaged. This finding is not dependent upon the statutory provisions contained in s.24(7) MD Act and clauses 32 and 51 MD Regulation. Nevertheless, the existence of such a requirement is a clear basis for distinguishing this case from 3WJ Pty Limited. The finding is based upon an expectation that the Plaintiff, as a motor dealer, will not withhold information which would be reasonably expected to influence a consumer's decision to purchase a new or demonstrator motor vehicle. 148 There are further bases for distinguishing the decision in 3WJ Pty Limited from the present case. There, Austin J held that there was clear error in importing the concept of misleading or deceptive conduct under s.42 Fair Trading Act 1987 in construing the meaning of the words dishonest or unfair in s.20D(1)(e) MD Act. No such error has been made in this case. Further, it is important to observe that the vehicles in question in 3WJ Pty Limited were second-hand vehicles whilst the vehicles in question in the present case were new and demonstrator vehicles. The approach adopted by the Second Defendant in his findings with respect to Ground 2.1 appear especially applicable to the attitudes of prospective purchasers to the existence of damage and repair in a new or demonstrator vehicle. 149 Insofar as the Plaintiff complains that the Second Defendant has erred in this finding in not considering the individual circumstances of each vehicle and each purchaser to determine the possible impact of the withholding of information from those purchasers, it is pertinent to note the approach adopted by the Plaintiff and its insurer, Allianz, in determining the amount to be paid to the Plaintiff by Allianz with respect to the hail damage to each vehicle. The documents before the Second Defendant (Exhibit C, Tabs 6, 7 and 8) reveal the application of a diminished value allowance concerning each vehicle. In addition to the cost of repair, the Plaintiff recovered from Allianz such a new vehicle diminished value allowance calculated in accordance with clause 17 of its insurance policy (Exhibit C, Tab 8, page 12). This allowance provides for figures of $1,500.00, $2,000.00 or $3,000.00 depending upon the value of the vehicle and the cost of repairs. In my view, the factoring in of such an allowance reflects and supports the finding made by the Second Defendant concerning Ground 2.1. It accords with a commonsense view of the attitude of prospective purchasers of new and demonstrator vehicles if they were aware that a vehicle had been damaged and repaired. In my view, this additional evidentiary feature in this case supports the approach of the Second Defendant and constitutes a further basis for distinguishing 3WJ Pty Limited. 150 The Second Defendant has made findings, at various points, that conduct of the Plaintiff constitutes dishonest or unfair trading. I am not satisfied that the Second Defendant has approached the issue upon the basis that the two terms are synonymous. 151 It is possible to envisage circumstances where conduct may be unfair, but not dishonest. The meaning of "unfair" includes "not just or equitable" and "unjust" as well as "marked by deceptive dishonest practices" (Macquarie Dictionary). I accept the Plaintiff's submission concerning the meaning of "dishonest" in s.20D(1)(e) MD Act. It may be that some conduct is capable of being both dishonest and unfair. 152 With respect to Ground 2.1, the Second Defendant gave reasons for his findings (see paragraph 79 above) which emphasised the disadvantaged position of a consumer in making an informed choice with respect to the purchase of a new or demonstrator vehicle when information bearing upon the history of the vehicle is withheld from the consumer. In my view, it was clearly open to the Second Defendant to conclude that conduct of this type constituted unfair trading. It may be that the conduct could extend to dishonest trading as well. It is not necessary to determine this question to finality to resolve the present challenge. It is sufficient to observe that there was evidence to support the finding of unfair trading and no error of law on the face of the record is revealed in this respect. 153 It is important to bear in mind that s.20D(1)(e) refers to the concept of carrying on business in a dishonest or unfair manner. The term "business" is not capable of a precise definition and its meaning is to be derived from the context in which it is to be used: Sirway Asia Pacific Pty Limited v Commonwealth of Australia [2002] FCA 1152 at [51]. The expression "carry on a business", in its ordinary meaning, signifies a course of conduct involving the performance of a succession of acts and not simply the effecting of one solitary transaction: Sirway at [52]. The finding of the Second Defendant adverted to the course of conduct engaged in by the Plaintiff and the effective advantage extended to the Plaintiff over the consumer as a result of the withholding of information concerning the damage to vehicles being advertised for sale as new and demonstrator vehicles. 154 I am not satisfied that any error has been demonstrated with respect to Ground 2.1. 155 The Plaintiff's challenge concerning Ground 2.2 asserts that the finding of the Second Defendant involves an abstract and theoretical proposition. The Plaintiff seeks to call in aid the decision in 3WJ Pty Limited. 156 The Second Defendant found that advertising vehicles for sale which had already been sold was unfair to prospective purchasers. He found that such conduct might be seen as a form of bait advertising (cf s.51 Fair Trading Act 1987), but did not purport to make an express finding to that effect. It seems to me that the finding of the Second Defendant is clear enough. To carry on business in a manner involving the advertising for sale of vehicles which have already been sold may serve to attract consumers to the dealership seeking the particular advertised vehicles, when those vehicles have already been sold. It does not seem to me to be an erroneous construction of the term unfair trading to characterise such advertising as unfair. 157 I detect no error with respect to these findings. 158 Ground 2.3 involved findings adverse to the Plaintiff concerning the sale of three vehicles for prices higher than advertised. The Second Defendant was satisfied that conducting business in this way was dishonest or unfair. I detect no error of law in this finding. As observed earlier, it is necessary to bear in mind the statutory context in which these terms are used which serve to focus attention on actions of motor dealers. 159 In my view, there is no error of law in the face of the record with respect to these findings. The vehicles and consumers were readily identified to the Plaintiff which made submissions with respect to the substance of the complaint. It was a matter for the Second Defendant to make findings of fact with respect to the issues raised. 160 I am not satisfied that the Plaintiff has demonstrated any basis in substance or by reference to procedural unfairness which may attract a grant of relief arising from these findings. 161 Ground 2.4 involves an adverse finding against the Plaintiff that its sales person had suggested to Mr Stockley that a log book ought be completed by a licensed repairer with respect to his vehicle, even though Mr Stockley had serviced the vehicle himself at all times. Mr Stockley declined to accede to this suggestion. 162 In my view, it was open to the Second Defendant to conclude that the suggestion by the Plaintiff's sales person to create a false log book involved the carrying on of business in a dishonest or unfair manner. No error has been demonstrated in this respect which would entitle the Plaintiff to relief. 163 The finding of the Second Defendant with respect to Ground 2.5 (see paragraph 83 above) involves a finding that the creation of fraudulent quotation forms constitutes trading in a dishonest or unfair manner. 164 The factual basis for this ground was dealt with briefly in the Notice. It should be kept in mind that the Notice was required to provide the Plaintiff with reasons for the holding of an opinion that there were reasonable grounds for believing that the business was being carried on in a dishonest or unfair manner in a way relevant to the particular complaint: s.20D(1) MD Act. 165 The reasons in the Notice in this respect are somewhat cryptic (Exhibit A, pages 18-19, paragraphs 2.5.1-2.5.5). The Second Defendant declined to provide the Plaintiff with further particulars with respect to this ground. 166 I accept the Plaintiff's submission that the finding of the Second Defendant with respect to Ground 2.5 involves one of fraud. There is an express finding that "fraudulent quotation forms" were created. 167 Fraud is proved when it is shown that a false representation has been made knowingly, or without belief in its truth, or recklessly, careless whether it be true or false. A person who makes a statement recklessly, careless whether it be true or false can have no real belief in the truth of the statement: Derry v Peek (1889) 14 App Cas 337 at 374; Banditt v The Queen (2005) 224 CLR 262 at 265 [2]. 168 The finding of fraud constituted the foundation for the ultimate finding that the Plaintiff traded in a dishonest or unfair manner. 169 The process whereby the Second Defendant has made this finding is troubling. The question for me, however, is whether there is error of law on the face of the record, whether there is no evidence to support the finding or whether there has been a denial of procedural fairness in reaching the finding. 170 I have considered the documents contained within Exhibit C to which Ms Henderson referred in her submissions (T43-45, 9 August 2006). The documents before the Second Defendant reveal the involvement of representatives of Dent Erasers and Allianz soon after 13 December 2004. A number of documents were created concerning particular damage to individual vehicles and the cost of repair of those vehicles. It appears that representatives of Allianz examined the damaged vehicles and there was material in the OFT file which supports this fact and appears inconsistent with any finding of fraudulent conduct (Exhibit D). 171 As I have observed, there is a close rein on the Court on an application for judicial review interfering with a finding of fact. Nevertheless, having carefully considered the material contained within Exhibits C and D and the matters contained in the Notice, the Response and the Determination (Exhibit A), I am satisfied that there is no evidence to support the finding of fraud made by the Second Defendant. This finding is sufficient to set aside the finding. However, I am also satisfied in this area that a denial of procedural fairness has been demonstrated in the failure of the Second Defendant to provide reasons as required by s.20D(1) MD Act either in the Notice or by means of particulars provided in response to the Plaintiff's request. 172 I am satisfied that the Plaintiff has demonstrated a basis for setting aside that part of the Determination under paragraph 5.5 and the heading "Insurance Quotations" (Exhibit A, pages 6-7) which is reproduced in its entirety in paragraph 83 above. As the finding of dishonest or unfair trading in Ground 2.5 was entirely dependent upon the finding of fraud, the entire finding ought be set aside.

[64]

The Determination and Disciplinary Measures 173 I have rejected the Plaintiff's challenge to all aspects of the Determination with the exception of that relating to Ground 2.5 concerning the insurance quotations. Mr Robertson SC submits that demonstration of any substantial basis for relief ought see the quashing of the entire Determination given that the Second Defendant did not relate particular disciplinary measures to particular findings made. Ms Henderson, on the other hand, submits that it is appropriate to consider whether the Determination ought be quashed having regard to the unimpeached findings which remain on foot. 174 At the outset, I note that the Second Defendant proceeded by way of reprimand under s.20E(1)(a) and the imposition of requirements and conditions under s.20E(1)(b) and (e) MD Act. Each of the requirements and conditions incorporated in the Determination spring from matters extraneous to the adverse findings in Ground 2.5 concerning the insurance quotations. The foundation for the requirements and conditions relate to findings made by the Second Defendant which remain unimpeached in the present proceedings. 175 I am satisfied that the error revealed with respect to Ground 2.5 ought not have the consequence that the entire Determination be set aside. There was a global reference (in paragraph 6 of the Determination reproduced at paragraph 84 above) to the fact that "the conduct of the licensee in this matter shows the business has been conducted in a dishonest and unfair manner and disciplinary action is appropriate". I have concluded that it was open to the Second Defendant to make findings, in one or other respect, of dishonest or unfair trading or both. Accordingly, there remains a clear and unimpeached basis for such a finding. 176 The Second Defendant proceeded by way of reprimand, and not suspension or cancellation of the Plaintiff's licence. This was the least serious course available of these three options. The requirements and conditions imposed relate entirely to parts of the Determination which I have upheld. In these circumstances, subject to any further ground being demonstrated relating to the approach to assessment of compensation, I decline to grant the Plaintiff any relief by way of quashing the entire Determination.

[65]

The Compensation Issue 177 Section 20E MD Act does not confine the nature of requirements or conditions which may flow by way of disciplinary measures against the licensee. The statutory context of s.20E leaves open the prospect that a requirement or condition may involve the payment of sums of money to consumers arising from the conduct of the licensee. In circumstances where this arises, the MD Act creates no mechanism for calculation of sums of money by way of compensation as part of a condition or requirement. 178 In this case, the Second Defendant has utilised, as a starting point, the insurance payout made by Allianz to the Plaintiff with respect to each vehicle. This approach utilises the cost of repairs together with a diminished value allowance used for insurance purposes as part of the process of calculation (Exhibit C, Tabs 6, 7 and 8). In circumstances where the MD Act does not require a particular approach such as the calculation of actual loss or damage suffered by a consumer (contrast s.68 Fair Trading Act 1987), it seems to me that it is open to the Second Defendant to utilise the approach adopted in setting the compensation amounts as part of the requirements and conditions. 179 In circumstances where the conduct giving rise to the findings involves the sale of new or demonstrator motor vehicles which had been damaged and repaired without notice to purchasers, I am satisfied that the imposition of such conditions and requirements is not ultra vires. Nor is error of law or jurisdictional error revealed in such an approach. The figure set with respect to each vehicle is referable to the circumstances of that vehicle and reflect figures paid by Allianz to the Plaintiff as a consequence of hail damage occasioned to the vehicles and their subsequent repair. Although there may be other ways to determine compensation in such circumstances, the question for me is whether the manner in which these sums have been calculated in this case gives rise to an entitlement for relief in the nature of certiorari in favour of the Plaintiff. I am not satisfied that the approach adopted by the Second Defendant in this case gives rise to such an entitlement.

Parties

Applicant/Plaintiff:

Purnell Motors Pty Limited

Respondent/Defendant:

Commissioner for Fair Trading and Anor

Cases Cited (25)

CITATION : Purnell Motors Pty Limited v Commissioner for Fair Trading and Anor [2007] NSWSC 19

Roos v Director of Public Prosecutions (1994) 34 NSWLR 254 Wyong Shire Council v MCC Energy Pty Limited [2005] NSWCA 86 Attorney-General for New South Wales v Quin (1989-1990) 170 CLR 1 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 Abebe v Commonwealth of Australia (1999) 197 CLR 510 Corporation of the City of Enfield v Development Assessment Commission (1999) 199 CLR 135 Craig v South Australia (1994-1995) 184 CLR 163 Minister for Aboriginal Affairs v Peko-Wallsend Limited (1985-1986) 162 CLR 24 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 Saville v Health Care Complaints Commission [2006] NSWCA 298 Hanna v Department of Immigration Multicultural and Indigenous Affairs [2004] NSWCA 275 Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Absolon v New South Wales TAFE [1999] NSWCA 311 CASES CITED : YG v Minister for Community Services [2002] NSWCA 247 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] 214 CLR 1 Hall v University of New South Wales [2003] NSWSC 669 Greyhound Racing NSW v Cessnock & District Agricultural Association [2006] NSWCA 333 3WJ Pty Limited v Director General, Fair Trading [2003] NSWSC 331 Briginshaw v Briginshaw (1938) 60 CLR 336 Greyhound Racing Authority (NSW) v Bragg [2003] NSWCA 388 Coal & Allied Operations Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113 Project Blue Sky Inc v Australian Broadcasting Authority [1998] 194 CLR 355 Chugg v Pacific Dunlop Limited (1990) 170 CLR 249 Director of Public Prosecutions v Belani (2005) 64 NSWLR 319 Sirway Asia Pacific Pty Limited v Commonwealth of Australia [2002] FCA 1152 Derry v Peek (1889) 14 App Cas 337 Banditt v The Queen (2005) 224 CLR 262 McCann v Switzerland Insurance Australia Ltd [2000] 203 CLR 579

As Basten JA (Beazley and Hodgson JJA agreeing) put it in Greyhound Racing NSW v Cessnock & District Agricultural Association [2006] NSWCA 333 at [75], "the obligations of procedural fairness must be assessed against the practical realities, in particular circumstances" .

Carrying on Business in a Dishonest or Unfair Manner - s.20D(1)(e) MD Act 65 With respect to the allegation that the Plaintiff's business was being carried on in a dishonest or unfair manner for the purpose of s.20D(1)(e) MD Act, the Plaintiff's reply raised a number of issues. 66 With respect to Ground 2.1 of the Notice which asserted that consumers had been dealt with unfairly because purchasers were not advised of hail damage, the Plaintiff joined issue with the claim that repaired hail damage would invariably affect the value of the vehicle or its ability to be insured or its manufacturer's paint warranty (Exhibit A, page 34). Reliance was placed upon the decision of Austin J in 3WJ Pty Limited v Director General, Fair Trading [2003] NSWSC 331, to which reference will be made later in this judgment. The Plaintiff contended that allegations of dishonesty or unfairness were serious in nature and required particularity and satisfaction in accordance with the principles in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362 before an adverse finding could be made (Exhibit A, page 36). 67 With respect to paragraph 2.1.7 of the Notice (reproduced at paragraph 55 above), the Response stated (Exhibit A, page 37): "2.1.7 This allegation is not particularised with dates of conversations and by whom so that it can be tested. The licensee has equally had conversations with each and every customer and did not get the response, which the Commissioner refers to. Please provide particulars of conversations between officers or employees of the OFT and customers which the Commissioner contends establish that the actions of the licensee were unfair or dishonest. How many customers have been spoken to? What was the substance of what was said to them and what they said?" 68 With respect to Ground 2.2 of alleged dishonest or unfair conduct, the Plaintiff contended that this ground could not be established relying upon advertisements for vehicles which had already been sold without more (Exhibit A, pages 37-38). 69 With respect to Ground 2.3 concerning the sale of vehicles for more than the advertised price, the Plaintiff proffered explanations for the examples particularised in the Notice and denied that the conduct alleged was capable of constituting dishonest or unfair conduct (Exhibit A, pages 38-40). 70 With respect to Ground 2.4 concerning log books, the Plaintiff joined issue with aspects of the Notice concerning Mr Stockley and Mr Townsend and denied that the matters raised could constitute dishonest or unfair conduct (Exhibit A, page 40). 71 With respect to Ground 2.5 concerning insurance quotations, the Plaintiff joined issue with the allegation and contended that the Dent Eraser forms were not used as quotations or as representing any matter on behalf of Dent Eraser. With respect to the matter concerning an Allianz insurance assessor (paragraph 2.5.5 of the Notice), the Plaintiff sought further particulars of the complaint made (Exhibit A, page 41). 72 The Response concluded in the following way (Exhibit A, page 42): "Our client seeks to be provided with the requested particulars as soon as possible. Our client reserves the right to an oral hearing of this matter and to make oral submissions at the hearing."

(2000) 203 CLR 194

(1994) 34 NSWLR 254

(1996) 185 CLR 259

(1999) 197 CLR 510

(1999) 199 CLR 135

(2001) 206 CLR 323

(1985) 4 NSWLR 139

(1990) 170 CLR 321

(1938) 60 CLR 336

(2003) 57 NSWLR 113

(1990) 170 CLR 249

(2005) 64 NSWLR 319