Riseley v Toyota Finance Australia Ltd

1. The appellants' application for a stay of the orders made by the Federal Circuit Court of Australia on 26 November 2021 be refused.
2. The appellants pay the respondent's costs of and incidental to the appellants' application for a stay, to be taxed in default of agreement. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BESANKO J: 1 Toyota Finance Australia Ltd (Toyota Finance) instituted a proceeding in the Federal Circuit Court of Australia against John Riseley and Colleen Riseley on 20 July 2021 in which it sought the following orders, relevantly: 1. An Order pursuant to Section 123(1) of the Personal Property Securities Act 2009 (Cth) (the Act) that the Respondent and/or any party in possession of the Collateral, being a white 2014 Toyota Hilux Utility Motor Vehicle VIN: MR0FZ29GX02554437, Engine Number: 1KDA555641, Registration Number: 1EPU461 (WA) (hereafter the Collateral), deliver, surrender and/or provide the location of the Collateral to the Applicant and/or its Agent. 2. The Applicant and/or its duly authorised agent be permitted to take reasonable step(s) in order to take possession of the Collateral, from either of the following premises: (a) Unit 124, 597 Kalamunda Road, High Wycombe WA 6057; or (b) any other premises in Australia at which the Collateral is reasonably believed to be located. 2 Toyota Finance's application was supported by an affidavit sworn by its solicitor, Mr Shane Eamonn Sankey on 20 July 2021. That affidavit identified the relevant commercial transaction concerning the Toyota Hilux which is the subject of the orders as a loan of $57,611.64 by Toyota Finance to a company controlled by Mr and Mrs Riseley, Riverscape Investments Pty Ltd. That company was deregistered on 25 February 2017. The Toyota Hilux was taken as collateral for the loan and the security interest in it registered under the Personal Property Securities Act 2009 (Cth) (the Act). Mr and Mrs Riseley guaranteed the repayment of the loan. There has been default in the repayment of the loan. 3 Mr Riseley, purportedly on behalf of his wife and himself, filed a Genuine Steps Statement on 19 August 2021 and sent a letter to the "Federal Court of Australia" dated 4 August 2021. That letter should have been addressed to the Federal Circuit Court of Australia. The proceeding was given a hearing date of 15 September 2021. The matter came on before a judge of the Federal Circuit Court on that day. Toyota Finance's solicitor appeared, but there was no appearance by the respondents. The matter came on again on 14 October 2021. Toyota Finance's solicitor appeared and there was an appearance by Mr Riseley in person and apparently on behalf of his wife. The matter came on for hearing on 26 November 2021. Toyota Finance's solicitor appeared and Mr Riseley appeared in person and again apparently on behalf of his wife. The two orders sought by Toyota Finance were made. There was also an order in relation to costs. No reasons for making the orders have been delivered. 4 Mr and Mrs Riseley have purported to appeal to this Court from the orders made by the Federal Circuit Court. Mr Riseley has signed the Notice of appeal, but both he and his wife are said to be appellants. The grounds of appeal are as follows: 1. Appellants contend Judge Brown errored in ruling Appellants had no standing in this matter, despite a Submission - a detailed Genuine steps statement clearly and directly linking Appellants to this matter emphatically. 2. Toyota by its actions, admissions, commitments to Appellant's in eventually, successfully acquiring of this vehicle in question, there was no doubt Appellants had standing in this matter. a. 13.07.2016 DISTRICT COURT GENERAL PROCEDURE CLAIM 11546/2016 $51,198.00 - Toyota confirmed Appellants standing in this matter, b. In late 2016 - Toyota ceased action 11546/2016 and entered into negotiation with Arns & Assoc. Lawyers for Appellants partners undertaking the free issue of this vehicle to Appellants. c. 26.06.2017 Mr. Sankey arranges pre-trial conference in the matter of 26.06.2017 - Toyota confirmed Appellants standing in this matter, a. Furthermore, Mr. Sankey (Wallmans) Toyota Representative, produced consent orders in this matter setting out how Appellants would pay $38,000 for this vehicle over an interest-free 3 year period, b. On or about 1st August 2017, Mr. Sankey negotiates a sale of Vehicle in question to Arns & Assoc. on Appellants behalf, at $25,000 at that point, vehicle worth no more than 10-12k at auction, c. 14.12.2017 Zurich Notification - Advises - Account $36,204.80 has been assigned to them (ZURICH), d. It has been from this point while waiting for the consequential District Court sanctioned solution to Appellants partnership dispute, Appellants have been attempting to consummate the purchase of said vehicle in question in their own right. e. Appellants have on file dozens of confusing conflicting communications from Toyota employees, to be used in any further legal proceedings, as Appellants attempt to purchase and utilize a vehicle, a special purchase vehicle, accommodating First Appellants Disability, facilitating wheelchair transfers and can be driven with one legal, a vehicle unavailable 36-48 months to Appellants as unlicensed and uninsured. 5 The application which is the subject of these reasons is an application by Mr and Mrs Riseley made in their Notice of appeal for an "immediate stay" of the orders under challenge. 6 There may be an issue as to whether the orders made by the Federal Circuit Court constitute an interlocutory judgment and, therefore, the "appellants" require leave to appeal (see s 24(1A) of the Federal Court of Australia Act 1976 (Cth)) or a final judgment. In view of the conclusions I have reached, it is not necessary for me to resolve that issue. 7 The application for a stay came on for hearing before me on 3 December 2021 and Mr Riseley appeared remotely in person. 8 I advised Mr Riseley during the course of that hearing that, in broad terms, in considering whether to grant a stay, I would consider the prospects of success of his "appeal" and the issue of prejudice to the respective parties in the period before the hearing of the appeal. I granted an adjournment for a relatively short period to enable Mr Riseley to put forward such evidence as he considered appropriate. I granted an interim stay solely to preserve the position so that Mr Riseley had this opportunity. I also asked Toyota Finance to identify the source of power for the orders made by the Federal Circuit Court. 9 Mr Riseley filed a document entitled "List of Documents & Affidavit" on 9 December 2021 and the matter came back on before me on 10 December 2021. On that day, and in the course of submissions, Mr Riseley said that the Toyota Hilux was not registered or insured and had not been for some years, that it was secure and in good condition, that there were settlement negotiations for the sale of the vehicle by Toyota Finance to Mr and Mrs Riseley, but a price was never "formalised in writing". He complained of Toyota Finance's conduct in the course of negotiations. Toyota Finance's solicitor was not in a position to address the Court on the power of the Federal Circuit Court to make the orders. He submitted that there was no final agreement reached for the sale of the vehicle. He submitted that Mr and Mrs Riseley had no standing to challenge the orders. He referred to the fact that they were not the borrower. 10 I adjourned the hearing from 10 December 2021 to 13 December 2021 to enable the solicitor for Toyota Finance to provide submissions on the power of the Federal Circuit Court to make the orders. I indicated I would deliver my decision on 13 December 2021. 11 The solicitor for Toyota Finance provided submissions on the issue of power shortly before the hearing on 13 December 2021. 12 On 13 December 2021, I made an order dismissing the application for a stay and an order that the appellants pay the respondent's costs of the application to be taxed in default of agreement. I said that I would deliver reasons and these are my reasons. 13 The power to grant a stay is contained in r 36.08 of the Federal Court Rules 2011 (Cth). The relevant legal principles are not in doubt. In Mitolo Wines Aust Pty Ltd v Vito Mitolo & Son Pty Ltd (No 3) [2019] FCA 2116 I said the following (at [10]-[13]): 10 The principles which are relevant to an application for a stay of the enforcement of a judgment pending an appeal are well-established: see Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685; (1985) 10 ACLR 42 per Kirby P, Hope and McHugh JJ; Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65; (1996) 137 ALR 498 per Burchett, Heerey and Whitlam JJ; Maher v Commonwealth Bank of Australia [2008] VSCA 122 per Redlich and Dodds-Streeton JJA. They were not in dispute on this application. 11 An applicant for a stay bears the onus of demonstrating that the stay should be granted. However, there is no need for the applicant to demonstrate "special" or "exceptional" circumstances. The applicant need only demonstrate that it is appropriate for the Court to exercise its discretion in favour of granting a stay. Nevertheless, the applicant must establish that there is at least an arguable ground of appeal. 12 A party that is successful at trial has a prima facie entitlement to the full benefit of their judgment and the presumption that that judgment is correct. Where there is a real risk that the successful party may be deprived of the full benefit of their judgment if a stay is granted and the appeal is ultimately unsuccessful, this is a strong reason for not granting a stay. 13 Conversely, where there is a real risk that a successful appellant would be deprived of the fruits of their appeal if a stay is not granted such that the appeal is rendered nugatory, this is a strong reason for granting a stay. This includes circumstances in which there is a real risk that the enforcement of the judgment below would result in the successful appellant being unable to be substantially restored to its former position. 14 As I said above, Toyota Finance has a prima facie entitlement to the full benefit of its judgment and the presumption that the judgment is correct. 15 With respect to the possible loss of the subject-matter of the appeal, this can be a strong reason for granting a stay. In this case, if a stay is not granted, Toyota Finance can repossess the motor vehicle. It has given no undertaking not to sell the vehicle. I was told in the course of submissions, and I accept, that the outstanding loan, which of course includes interest, well exceeds the value of the vehicle. It is not clear to me that Mr and Mrs Riseley have any ownership or possessory interests in the vehicle, but if they do, and it is subsequently found that Toyota Finance has unlawfully interfered with those rights, then they may have a claim in damages against Toyota Finance. There is no suggestion that Toyota Finance will not be able to meet any claim for damages the appellants may have. 16 With respect to the risk that Toyota Finance may not be able to recover its judgment should a stay be granted, the evidence concerning the vehicle is that it is unregistered and uninsured. It has not been registered for six years. It is stored and has not been driven for years. 17 With respect to the question of whether there is a reasonably arguable ground of appeal, care must be taken in assessing this matter that the appeal is not to be determined at this stage. Nevertheless, the Court must be satisfied that there is at least one reasonably arguable ground of appeal. As I have said, the judge who made the order has not delivered reasons for his decision. The appellants have not identified anything in the material that suggests that they have at least one reasonably arguable ground of appeal. When I refer to the "material", I include in that description the first appellant's "List of Documents & Affidavit"; that material has been put forward after the orders were made and the appellants would need to persuade the Court hearing the appeal to receive that material. In any event, I am not satisfied that there is a reasonably arguable ground of appeal. 18 Toyota Finance submitted that Mr and Mrs Riseley have no standing to challenge the orders. I reject that submission. They are directly referred to in the orders and the orders require them to perform various acts. They are parties affected by the orders and have standing to challenge them. It should be borne in mind when considering the standing issue that it is Toyota Finance which brought the proceedings against Mr and Mrs Riseley. 19 As I have said, I raised the question of the power of the Federal Circuit Court to make the orders with the solicitor for Toyota Finance. I did so because the first order of the Federal Circuit Court states that it was made pursuant to s 123 of the Act. That section provides, relevantly: (1) A secured party may seize collateral, by any method permitted by law, if the debtor is in default under the security agreement. Note: For seizure of accessions, see sections 95 to 97. On the face of it, this section gives the secured party a right which it may exercise, not power or jurisdiction to the Court. 20 Section 206 of the Act provides that Part 6.2 deals with the jurisdiction of a court with respect to a matter (a PPS matter) arising under a provision of this Act authorising an application to be made to a court; or otherwise arising in relation to this Act; or otherwise arising in relation to a security agreement or a security interest. By reason of s 207, jurisdiction with respect to a PPS matter is conferred on the Federal Circuit Court subject to the limit of the Court's jurisdiction in terms of an award not exceeding $750,000 or such other amount as may be prescribed by regulations. Section 10 defines a PPS matter as having the meaning given by s 206 of the Act. 21 Toyota Finance referred to the decision of the Supreme Court of New South Wales in Bank of Queensland Limited v Star Trek Pty Ltd [2019] NSWSC 1712 (Bank of Queensland v Star Trek) in which Adamson J said that there was support for a secured party who falls within s 123 approaching the Court to obtain authority from the Court that its methods are unquestionably "permitted by law" within the meaning of s 123. Justice Adamson considered that there was support for the bank's approach in Duggan A and Brown D, Australian Personal Property Securities Law (2nd ed, 2016, LexisNexis Butterworths) at [12.36]. In the circumstances, her Honour considered that the secured creditor in that case had established a right to declarations in property and an entitlement to seize property. In this case, declarations were not actually made by the Federal Circuit Court, but it seems that declarations could have been made following the authority of Bank of Queensland v Star Trek. Justice Adamson went on to say that where it was necessary to gain entry and access to property for the purposes of seizing it, the debtor could be restrained from preventing the secured party from doing those acts. Her Honour said (at [18]): I regard these orders as appropriate ancillary orders to permit the Bank to enforce its security, to require Star Trek to allow this to occur and to require the Trustee to grant entry and access to the Matraville property for that purpose. 22 I consider the orders made in this case to be in the nature of orders which follow from declarations that could have been made by the Court had they been sought. A similar approach has been adopted in other cases: BOQ Credit Pty Ltd v Chatah [2017] NSWSC 1444; Porter Equipment Australia Pty Ltd & anor v Barton Ventures Pty Ltd & anor; Porter Equipment Australia Pty Ltd v Tyremil Pty Ltd & ors [2018] QDC 87. In the circumstances, it seems that there was power to make the order. 23 I am not satisfied that Mr and Mrs Riseley have established an arguable ground of appeal. In addition, it is of concern that the vehicle is presently uninsured. 24 It was for these reasons I made the orders I did on 13 December 2021. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Besanko.