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[2008] VSC 377
Supreme Court of Victoria
2008-09-25
VICKERY J
Original judgment source is linked above.
Road Safety Act 1986 (Vic) sections 7, 5, 5AA(a) - 5AB(1)(a) and (l), 95, 9(1), 5AA(a), (1)(a) and (l), (a) and (c_) - Road Safety (Vehicles) Regulations 1999_ regulations 202(1), 203(1), 203(1)(b), 101(a)(i) and (ii), 202(1), 203(1)(b), 211(g) ) , (1), 16D Vehicle Assessment Signatory Scheme ("VASS") - VASS Guidelines - Registration of motor vehicles - Re-shelling of accident damaged vehicles - Registration of re-shelled vehicles - Declarations sought to effect that statutory authority's (viz. VicRoads) power was - Plaintiff argued that (a) the Re-shelling Guidelines were the powers conferred on VicRoads by the and the Regulations; (b) Re-Shelling Guidelines imposed an impermissible fetter on the discretion of VicRoads; (c) Re-shelling Guidelines satisfy the condition precedent for the grant of registration; (d) Re-shelling Guidelines were contrary to regulations; (f) Re-shelled Motor Vehicles are "New Vehicles"; (g) Business Rules Permitted the Use of Variant Shells; (h) 28 March Business Rule went beyond what was reasonable in order to attain the ends of the power and therefore was beyond power and unlawful - all claims rejected - no basis for the declaratory relief claimed - no practical utility in declaration - Claim in Negligence - that administration of the procedure for the registration of re-shelled motor vehicles was negligent - Foreseeability, Proximity identifiable, but no Duty of Care owed - Claim for damages against VicRoads and Illegality of business for which damages sought a Bar to Damages_._
1 It is a self-evident truth that Australia's transport system is dominated by the automobile. The machine has also assumed a revered cultural status in our society. Australian historian Graeme Davison described the evolution in these terms:[1]
Like a human love affair, our love affair with the car unfolded, step by step, from its first moment of distant admiration through casual acquaintance, infatuation and deep bonding to taken-for-granted familiarity.
As an object of mass consumption, it has entrenched itself economically and has spawned many related industries.
2 The motor car however is not without some less desirable characteristics which provide the context for this case. It is present on our roads in large numbers, it is a source of pollution, it has the potential to cause injury or death to occupants and other road users, and it is relatively easy to steal. Consequently, it has generated a rich and complex regulatory regime which focuses upon vehicle standards, road safety initiatives, protection of vehicle occupants and law enforcement directed to curtailing trade in stolen motor vehicles.
3 The plaintiffs, Bob Sami ("Mr Sami") and Roshni Sami ("Mrs Sami") developed an enterprise in the motor vehicle industry in Victoria which operated under the business name "JAPS Imports". In about 1996 the business commenced operations as a motor vehicle wrecker and importer of car parts used for the "re-shelling" of accident damaged vehicles for sale in Australia. The practice of re-shelling involved rebuilding damaged motor vehicles by applying a new or used body shell, which was either imported or sourced locally, to a wreck and supplying the rebuilt vehicle to customers with the object of making a profit.
4 The defendant Roads Corporation is a statutory corporation established pursuant to s.15 of the Transport Act 1983. Pursuant to s.15A of that Act, the Roads Corporation is entitled to and does carry on business under the name "VicRoads" ("VicRoads" or the "Corporation").
5 The plaintiffs claim that they successfully conducted their motor car re-shelling business until early 2003 within the regulatory system administered by VicRoads. They say that they were able to re-shell vehicles for customers, have the re-shelled vehicles registered by VicRoads for use on public roads and derive a profit from the enterprise. They claim however, that on 28 March 2003 because of a change in procedure in the registration process of re-shelled vehicles introduced on that date by VicRoads, their business became unviable and could no longer continue to operate. Mr and Mrs Sami contend that the procedure for the registration of re-shelled motor vehicles, including the change introduced on 28 March 2003, was ultra vires (beyond its power) and seek a declaration to that effect. They also claim damages for negligence against VicRoads arising from its administration of the procedure for the registration of re-shelled motor vehicles.
Legislative and Regulatory Structure for Motor Vehicle Registration in Victoria
6 Adopting the language of Kirby and Callinan JJ in Tepko Pty Ltd v Water Board [2], in this case the parties moved within a legislative and regulatory regime with which the common law interacts. The system for the registration of motor vehicles in Victoria, particularly as it applied to re-shelled vehicles, had developed into a structure of some complexity, involving as it did, a significant interplay with Commonwealth legislation and regulation.
7 The key to the regulation of motor vehicles in Victoria is the system of registration. It is essentially by this means that the central objectives of road safety and law enforcement directed against motorcar theft are addressed.
8 Section 7 of the Road Safety Act 1986 (Vic) ("the Act") provides that it is an offence to use a motor vehicle on a highway unless the vehicle is registered.
9 Pursuant to s.5AA (a) of the Act, VicRoads has the function of administering the registration system for motor vehicles in Victoria. Pursuant to s.5AB (1) (a) and (l), VicRoads may, for the purpose of carrying out its functions and in accordance with the regulations, register or refuse to register a motor vehicle, and may exercise other powers conferred by the Regulations.
10 Section 5 of the Act establishes the purposes of registration of motor vehicles in Victoria. The purposes are as follows:
(a) to ensure that the design, construction and equipment of motor vehicles and trailers which are used on a highway meet safety and environmental standards; and
(b) to enable the use of motor vehicles and trailers on highways to be regulated for reasons of safety, protection of the environment and law enforcement; and
(c) to provide a method of establishing the identity of each motor vehicle or trailer which is used on a highway and of the person who is responsible for it.
11 The Road Safety (Vehicles) Regulations 1999 ("the Regulations") were made under the power contained in s 95 of the Act. Section 9(1) of the Act relevantly provides that registration, renewal of registration and transfer of registration may be applied for and granted or refused only in accordance with the Regulations.
12 Insofar as the Regulations provide objectives to be achieved by the registration system, these objectives are specified in r.101(a) as follows:
(a) to establish a registration and permit system for motor vehicles and trailers used on highways that-
(i) ensures that vehicles are appropriately registered having regard to whether they meet standards for registration; and
(ii) records the identification details of each vehicle and the name and address of the person responsible for it; and
(iii) provides for the collection of associated fees.
A vehicle is eligible to be registered without conditions if-
(a) the vehicle complies with the provisions of the standards for registration that apply to the vehicle; and
(b) the requirements of the Transport Accident Act 1986 and the Duties Act 2000 are complied with in respect of the vehicle.
Since 1999, the standards for registration have been contained in Schedule 8 of the Regulations.[3]
The Corporation may accept as evidence that a vehicle complies with the standards for registration -
(a) an identification plate relating to the vehicle; or
(b) a certificate to that effect issued by the manufacturer of the vehicle or another person the Corporation considers qualified to issue it.
15 An "identification plate" referred to in r.203(1)(a) of the Regulations is defined in s.5 of the Motor Vehicle Standards Act 1989 (Cth). It is a plate declaring the status of a road vehicle in relation to the national standards as approved and is to be placed on vehicles of that type or description. The national standards are currently the Australian Design Rules ("ADRs"). The identification plate is also called a "Compliance Plate".[4] The identification plate or Compliance Plate may be affixed to a vehicle to satisfy r.203(1)(a). However, this is not the invariable practice. The scheme for the issue of identification plates or Compliance Plates administered under the Motor Vehicle Standards Act 1989 only applies to certain categories of vehicles and vehicle components. Pursuant to s.10A of the Act, the relevant Minister must give written approval for identification plates to be placed on vehicles or components of particular types.[5] However, it is clear that this is a facilitative section designed to assist manufacturers of new locally manufactured vehicles and new imported vehicles and manufacturers of motor vehicle components. In order to take advantage of the scheme, a manufacturer would first need to make application to the Vehicle Safety Standards branch of the Department of Infrastructure (Cth), or similar predecessor body.[6] When the information contained in the application is received, including the necessary design and test evidence, and found by the administrator to comply with all of the applicable ADRs, an Identification Plate approval will be issued in respect of that vehicle or component under s.10A(1) of the Act. This in turn entitles the applicant manufacturer to affix an Identification Plate to those vehicles or components which have demonstrated compliance with the ADRs.
16 However, the Commonwealth Motor Vehicle Standards Act scheme for the issue of Identification Plates (or Compliance Plates) had no application to individually constructed vehicles which were not mass produced by the manufacturer, or to second-hand components such as imported used body shells employed in the business conducted by JAPS Imports. Consequently, an identification plate (or Compliance Plate) was not available to be issued for a vehicle which had been individually re-constructed as a result of re-shelling incorporating a second-hand body shell.
17 No doubt it was for this reason that r.203(1) of the Regulations provided an alternative means for VicRoads to be satisfied that a vehicle complied with the standards for registration - either by accepting as evidence of compliance the identification plate (or Compliance Plate) (r.203(1)(a)) or a certificate to that effect issued by the manufacturer of the vehicle or another person VicRoads considers qualified to issue it (r.203(1)(b)).
18 In the course of its administration of the Act, VicRoads established a scheme of private inspectors to enable certificates to be issued under r.203(1)(b). This scheme has operated since 2002 and is called the "Vehicle Assessment Signatory Scheme" ("VASS"). Under VASS, VicRoads entered into agreements with persons it considered qualified to issue certificates to the effect that a vehicle complies with the standards for registration pursuant to r.203(1)(b). VASS replaced the earlier system under which VicRoads maintained a register of persons classed as a "Recognised Engineering Signatory" ("RES") who performed a similar task.
19 The persons who enter into agreements with VicRoads under VASS are termed "Signatories". For example, JAP Imports engaged the services of Graham Docker to certify their re-shelled vehicles. He was a Signatory to a VASS agreement with VicRoads.
20 As part of VASS, VicRoads also published "Guidelines for Assessment of Vehicle Work" ("VASS Guidelines") for use by VASS Signatories in the assessment of vehicles. The purpose of the VASS Guidelines was expressed in the opening paragraph of the document to be:
To establish guidelines, standards and technical requirements for use by Signatories in the assessment of vehicle work.
21 The VASS Guidelines provided for a set of procedures and standards to be followed by VASS Signatories in the course of their duties in assessing motor vehicles, including re-shelled motor vehicles, for compliance with the standards for registration pursuant to r.203(1)(b) of the Regulations.
22 Since 1 January 1989 every vehicle on an Australian road which has been manufactured after that date is required to have affixed to it a Vehicle Identification Number ("VIN"). This is part of a national motor vehicle identification system.[7]
23 In Victoria, under the registration system maintained by VicRoads, a "VIN" is required to be marked on a vehicle in accordance with clause 58 of Schedule 8 of the Regulations. Pursuant to this clause motor vehicles registered in Victoria are to have two numbers: an engine identification number and a vehicle identification number. Both the engine identification number and the vehicle identification number must be located on the motor vehicle where they can be easily read. Typically, a VIN will be stamped on the firewall, a suspension tower or on a windscreen frame. VINs may be stamped or impressed onto a plate which is in turn affixed to the shell of the vehicle.
24 A VIN is a unique 17 character number. The first three characters of a VIN provide a world recognised manufacturer identifier. The remaining characters then designate various other attributes of the motor vehicle such as series, model, body shape, engine size and finally a serial number which is unique to the motor vehicle.
25 In Victoria, a motor vehicle without a VIN cannot be registered. This is because having a VIN allocated to a motor vehicle is one of the requirements of the ADRs. The VIN is also used as a motor vehicle identifier recorded in the registration process.
26 In the case of a crash damaged vehicle where the repair of the vehicle involved replacing the shell of the vehicle with another imported body shell, for example imported from Japan, the repaired vehicle would be without a VIN and could not be registered in Victoria. To cover this and other like situations, VicRoads developed a procedure to issue surrogate VINs which could be affixed to the repaired vehicle in order to make it eligible for re-registration.
(a) to curtail trade in stolen motor vehicles by preventing vehicle information about written-off vehicles, particularly vehicle identifiers, being used to register stolen motor vehicles;
(b) to facilitate inspections of written-off vehicles that have been repaired;
(c) to make information available to prospective purchasers about whether a motor vehicle has previously been written-off.
28 Motor vehicle property damage resulting from accidents varies considerably in type and extent. The system administered by VicRoads is also designed in part to determine which damaged motor vehicles can be safely repaired and which cannot.
29 In effecting these objectives, VicRoads is required pursuant to s.16D of the Act to maintain a "Written-Off Vehicles Register" which is a register of written-off vehicles. Two categories of vehicles are provided for in the Written-Off Vehicles Register. A "Repairable Write-Off", is a vehicle that has been damaged to the extent that its salvage value together with the cost of repairing the vehicle for use on the road exceeds its market value. A Repairable Write-Off is considered safe enough to be repaired and registered for use. On the other hand, a "Statutory Write-Off" is a vehicle that has been damaged to such an extent that it is considered unsafe for repair and can only be used for parts, unless it is damaged by salt water immersion, in which case no structural components, panels or doors can be used to repair another vehicle.
30 Mr Sami in his evidence described how JAPS Imports carried on the business of re-shelling motor vehicles. He said:
(a) I personally visited wrecking yards both in Victoria and interstate in order to locate vehicles that had been damaged in an accident that would be suitable for a re-shell. Primarily I was looking for Toyota Corollas, as there was demand for these cars, however I also looked for other cars.
(b) When I located cars that I thought would be suitable for JAPS Imports to use, I paid a deposit of $100 for each damaged car to the wrecking yard. Once I had paid this, I was given a list of the VINs for those cars that I had paid a deposit for.
(c) When I returned to my workshop in Clayton, I rang the Written-Off Vehicles Register ("WOVR") to check whether any of the cars were statutory write-offs, in which case they couldn't be used to re-shell.
(d) After I visited wrecking yards, I had a number of damaged cars that were available to me to re-shell. When a customer came in and said that they wanted a re-shell of a particular car, I would check the details of the cars I had sourced in the wrecking yards and I was able to say to the client whether I had the type of car they were looking for.
(e) I then contacted the wrecking yard to pay the balance of the money owing on the damaged car. If the damage to the car was not too great, I also arranged for it to be transported to my workshop. When it arrived at the workshop, I arranged for it to be inspected by the RES/VASS engineer, who during this period was usually Graham Docker but sometimes Jeremy Banks.
(f) If the car was badly damaged, then I arranged for it to be inspected by the RES/VASS engineer at the wrecking yard. After the inspection had taken place, the wrecking yard would cut out the VIN and salvage useable parts, including items such as the engine, and send these to JAPS Imports.
(g) After a client had asked me to provide them with a re-shelled car, I ordered a second-hand vehicle of the same model from Japan. Generally I used a company called Fuji Planning International Inc in Osaka, Japan to supply the vehicles.
(h) The Japanese supplier provided me with the body shell number of the second-hand vehicle I had ordered. I then applied for import approval from the Commonwealth Department of Transport and Regional Services to bring the vehicle into Australia.
(i) I also sourced some imported re-shells from within Victoria from local suppliers who had imported those re-shells themselves for re-shelling. I met those local suppliers at public auctions.
(j) When the vehicle from Japan arrived in Melbourne, I would take it to my work shop, dismantle it and arrange for it to be inspected by the RES/VASS engineer.
(k) After the inspection I re-built a car with components from the damaged car, such as the engine and other parts if they were not damaged, as well as from the imported car, and where necessary from other sources as well. The work required to make the imported body-shell comply with Australian standards and design rules included:
(i) Replacing the seat belts with the seat belts from the damaged car;
(ii) Adding in child restraint anchorages, that were usually certified Mercedes Benz anchorages that I riveted to the underside of the parcel shelf;
(ii) Replacing the driver's side mirror, taken from the damaged car if it was not damaged;
(iv) Adding an Australian tyre placard, usually supplied by the engineer;
(v) Adding an Australian emissions control notice, usually supplied by the engineer;
(vi) Adding a petrol tank insert for unleaded petrol as well as an unleaded fuel sticker;
(vii) Adding a rear brake light in the rear window, which were usually universal high mounted brake lights purchased from Burson Autoparts that were fixed to the window by an adhesive.
(l) After I had performed these works, I obtained a road worthy certificate, and the RES/VASS engineer inspected the vehicle and provided me with the necessary documents so that I could attend at VicRoads.
(m) I then took the car and the necessary documents to VicRoads, where I was issued with a surrogate VIN after giving the VIN and compliance plate of the damaged car to VicRoads. On each occasion that I can recall VicRoads officers inspected the vehicle visually, and looked under the bonnet and at the body shell plate, and then checked the car with the information on the documents provided by the engineer**.**
31 Sometimes the engine of the damaged vehicle was damaged beyond repair. One source of replacement engines for Toyota Corollas was an engine known as a 5A series engine that could be imported from Japan. However, the engine in a Toyota Corolla in Australia was a 4A engine. The 5A engine passed the necessary test, and consequently, according to Mr Sami, was able to be put into the re-shelled Corolla motor vehicles.
32 On other occasions the accident damage to a damaged vehicle was so significant that very little, if anything, could be salvaged from the damaged vehicle for use in the re-shelled vehicle. In such circumstances, it was legally open to proceed with the re-shelling and obtain registration of the re-shelled vehicle, provided that the VIN from the damaged vehicle was still intact.
33 Mr Sami claimed that JAPS Imports derived substantial profit from this enterprise. His re-shelling business was ranked the third or fourth largest of its kind in Victoria, but was a relatively small enterprise compared to the two main businesses in the area, which were producing some hundreds of re-shelled motor vehicles each year.
34 The defendant VicRoads presented an elaborate case which sought to demonstrate that JAPS Imports imported relatively low priced used vehicles from Japan, obtained an identity of a local accident damaged vehicle, paid the necessary fees for certifications and registrations, and sold the vehicles to members of the public. It also advanced a case that the Samis enhanced the profit margin in the process by purchasing say a 1992 imported vehicle then selling it as a 1996 vehicle. For reasons which will become apparent, it is unnecessary to make findings about these allegations. It was alleged further that the Samis, not having a statutory motor car traders licence, acted in contravention of the Motor Car Traders Act 1986 (Vic). This matter will be addressed in findings which I make in these reasons.
35 The practice of re-shelling of motor vehicles existed for some time in Victoria. From about 1995, the practice of re-shelling had expanded considerably, to the point where it had become a small but burgeoning local industry.
36 The government of the day considered it desirable to introduce uniform controls to regulate the practice in the State. By a memorandum dated 13 August 1997, the then Minister for Roads and Ports (Vic) approved the introduction of "revised registration requirements for repaired vehicles, which have had their original identification marks obliterated". The memorandum stated that a purpose of the revised requirements was to reduce the potential for "re-birthing" stolen vehicles. "Re-birthing" or "ghosting" involves the practice of swapping the identification plates from legitimate wrecked cars with those of stolen cars to mask their identity.
37 The memorandum of 13 August 1997 attached what were described as "proposed business rules" ("the proposed Business Rules"). The proposed Business Rules contained procedures which required the owner of a re-shelled vehicle, on presentation of the vehicle for registration:
(a) to produce proof of purchase of the vehicle and of all major parts used in re-building the vehicle;
(b) to provide receipts to be sighted and stamped by the registration officer;
(c) to provide a report from a RES if the body shell used to re-build the vehicle was not built in Australia, or had no previous history of registration in Australia.
38 The proposed Business Rules were adopted by VicRoads and applied by it between 1997 and July 2002 ("the adopted 1997 Business Rules"). VicRoads used the adopted 1997 Business Rules to assess whether a rebuilt or re-shelled vehicle was to be permitted to be registered.
39 Upon satisfaction of the criteria and steps defined in the adopted 1997 Business Rules, VicRoads would provide the vehicle with a "Surrogate VIN" (sometimes called a "rebuild VIN"). Further, vehicle owners were "encouraged to cut out the VIN from the damaged vehicle and present it to VicRoads for verification and destruction". Vehicle owners were also "encouraged to refit the original compliance plate ... to the rebuilt vehicle to assist police to trace the origin of the vehicle without reference to VicRoads records". [8]
40 The growth of the re-shelling industry in Victoria gave rise to a rapid increase in the use of imported body shells, both new and second-hand. These were not always of a standard which corresponded with the standards for registration in Victoria. Further, imported body shells were imported without any identification plate or Compliance Plate affixed to them. This called for an extra step to be introduced into the process, namely: before a re-shelled vehicle which had incorporated an imported body shell could be registered, an engineer's report was required to be produced which verified that the re-shelled vehicle met all of the Australian ADR requirements to evidence compliance with the standards for registration.
41 On 11 July 2002, VicRoads published "Registration & Licensing - Business Rule - Registration requirements for reshelled vehicles" ("the 11 July 2002 Business Rule"). The opening paragraph of the 11 July 2002 Business Rule made the rule applicable to the process of re-shelling undertaken by JAPS Imports. The second paragraph then stated:
― the damaged vehicle has been previously registered in Australia; and
― the damaged vehicle is not recorded as a statutory write-off on any jurisdiction's Written-Off Vehicle Register (WOVR) after April 2002; and
― the replacement body shell is of the same make, model and body style as that of the damaged vehicle or that of any of the variants certified under the same Compliance Plate Approval (CPA) number; and
― the repaired vehicle complies with the standards for registration.
42 The 11 July 2002 Business Rule also provided for the following procedure to be followed to produce an acceptable certificate for a re-shelled vehicle evidencing compliance with the standards for registration:
― the damaged vehicle has been previously registered in Australia; and
― the damaged vehicle has not been recorded as a statutory write-off on any jurisdiction's WOVR after April 2002.
― The body shell of the vehicle presented is the replacement body shell identified on the VASS Identity and Eligibility Certificate issued for the damaged vehicle; and
― The vehicle has been stamped with the surrogate VIN supplied in respect of that VASS Identity and Eligibility Certificate; and
― The vehicle complies with the standards for registration.
43 When Mr Sami visited VicRoads from time to time to get the re-shelled vehicles registered, he observed the Business Rules relating to re-shelling which had been prepared by VicRoads. He recalled seeing the first detailed Business Rule that set out the requirements for re-shelling motor cars some time in 2002. The Business Rule observed by Mr Sami must have been that dated 11 July 2002. As a result of seeing these rules, Mr Sami said that he made sure that JAPS Imports complied with them.
44 The 11 July 2002 Business Rule was then updated on 14 March 2003 ("the 14 March 2003 Business Rule") and further on 28 March 2003. On that day VicRoads introduced the "Registration & Licensing - Business Rule registration requirements for re-shelled vehicles" ("the 28 March 2003 Business Rule"). The new rules had the following requirements (with the additional requirements underlined or struck through, as the case may be):
― the damaged vehicle has been previously registered in Australia; and
― the damaged vehicle is not recorded as a statutory write-off on any jurisdiction's Written-Off Vehicle Register (WOVR) after April 2002; and
― the replacement body shell is of the same make, model and body style as that of the damaged vehicle or that of any of the variants certified under the same Compliance Plate Approval (CPA) number; and
― The repaired vehicle is identical in build specification to the damaged vehicle; and
― the repaired vehicle complies with the standards for registration.
45 The procedure set out in the 28 March 2003 Business Rule to produce an acceptable certificate of compliance for a re-shelled motor vehicle then relevantly required :
Procedure for Obtaining a Surrogate VIN and Issuing an Approval Certificate for a Reshelled Vehicle:
― the body shell of the vehicle presented is the replacement body shell identified on the VASS Identity and Eligibility Certificate issued for the damaged vehicle; and
― the build specification of the repaired vehicle is identical to that of the original damaged vehicle; and
― the vehicle has been stamped with the surrogate VIN supplied in respect of that VASS Identity and Eligibility Certificate; and
― the vehicle complies with the standards for registration;
the Signatory may issue a VASS Approval Certificate.
For registration purposes, in addition to the usual proof of ownership and proof of identity documents, the applicant will need to produce:
― a Vehicle Assessment Signatory Scheme (VASS) Approval Certificate; and
46 The critical change for JAPS Imports was the new requirement in step 4 of the 28 March 2003 Business Rule that the damaged vehicle and the replacement body shell must be present at the same place and the same time for inspection by the VASS signatory ("the 'side-by-side' inspection rule"). The effect of the 28 March 2003 Business Rule was that, unless the appointed VASS signatory conducted a side-by-side inspection of the accident-damaged vehicle and the replacement body shell for such vehicle at the same premises and at the same time, the VASS signatory could not issue a VASS Identity and Eligibility certificate for registration of the relevant vehicle and VicRoads would not register the re-shelled vehicle when it was completed and presented for registration.
47 The plaintiffs claimed that the 28 March 2003 Business Rule created an additional financial burden for JAPS Imports because of the requirement for a side-by-side inspection of the accident-damaged motor vehicle and the replacement body shell for such vehicle at the same premises and at the same time. By reason of this alteration in the regime administrated by VicRoads, JAPS Imports claimed that it has been precluded from carrying on its business because the changes to the Business Rules rendered the JAPS Imports re-shelling business unviable. It was claimed that this occurred because JAPS Imports was unable to meet all the costs arising from importing shells from overseas and transporting those shells to its business premises, including payment of customs duties, agent fees, transport fees and freight for a side by side inspection with the donor vehicle, which also had to be transported to its premises from the wrecking yard.
48 The plaintiffs claim that the Re-shelling Guidelines ("the Re-shelling Guidelines"), being the VASS Guidelines and the "Business Rules" comprised in the adopted 1997 Business Rules, the 11 July 2002 Business Rule, the 14 March 2003 Business Rule and the 28 March 2003 Business Rule) were ultra vires the powers conferred on VicRoads by the Road Safety Act 1986 and the Regulations. The plaintiffs seek a declaration to this effect.
Whether Re-shelling Guidelines "A means of attaining the ends of the power"
49 As a starting point, it is necessary to identify the source of the power in the Act or in the Regulations which enabled VicRoads to introduce and apply the Re-shelling Guidelines. In order to be valid, the guidelines developed by VicRoads must have been reasonable as "a means of attaining the ends of power". Williams v Melbourne Corporation[9], was concerned with the validity of a by-law made by the City Of Melbourne. At 155 Dixon J said: [10]
Although in some jurisdictions the unreasonableness of a by-law made under statutory powers by a local governing body is still considered a separate ground of invalidity, in this Court it is not so treated.
To determine whether a by-law is an exercise of power, it is not always enough to ascertain the subject matter of the power and consider whether the by-law appears on its face to relate to that subject. The true nature and purpose of the power must be determined, and it must often be necessary to examine the operation of the by-law in the local circumstances to which it is intended to apply. Notwithstanding that ex facie there seemed a sufficient connection between the subject matter of the power and that of the by-law, the true character of the by-law may then appear to be such that it could not reasonably have been adopted as a means of attaining the ends of the power. In such a case the by-law will be invalid, not because it is inexpedient or misguided, but because it is not a real exercise of the power. [Edited with citations omitted]
50 The supporting powers in this case are derived from a number of sources (together called "the Registration Powers") which may be summarized as follows:
(a) VicRoads has the function of administering the registration system for motor vehicles in Victoria (s.5AA (a) of the Act);
(b) For the purpose of carrying out its functions, VicRoads may, in accordance with the Regulations, register or refuse to register a motor vehicle, and may exercise other powers conferred by the Regulations (s.5AB (1) (a) and (l) of the Act);
(c) The purposes of registration of motor vehicles in Victoria include (s.5 (a) and (c) of the Act):
(i) To ensure that motor vehicles meet safety standards; and
(ii) To provide a method of establishing the identity of each motor vehicle;
(d) The objectives of the registration system include (r.101(a) (i) and (ii) of the Regulations):
(i) Ensuring that motor vehicles meet the standards of registration; and
(ii) Record the identification details of each vehicle;
(e) A motor vehicle is eligible to be registered if the vehicle complies with the standards for registration that apply to the vehicle (r.202(1) of the Regulations);
(f) VicRoads may accept as evidence of compliance with the standards for registration a certificate provided by a person that VicRoads considers qualified to issue it (r.203(1) (b) of the Regulations); and
(g) VicRoads was entitled to require an applicant for registration to furnish supporting evidence in a form acceptable to VicRoads, which verified a number of matters, including any information specified by VicRoads in the registration application form (r.211(g) of the Regulations).
51 In my opinion, when these provisions are considered as a whole and in their context, the purposes to be served by the Registration Powers entrusted to VicRoads were twofold:
(a) To provide for the safety of road users by registering only those motor vehicles which complied with the relevant safety standards; and
(b) To aid in law enforcement by curtailing the trade in stolen motor vehicles through a system of motor vehicle identification.
52 Further, the Registration Powers expressly conferred on VicRoads discretions to do the following things:
(a) accept a certificate provided by a VASS Signatory as evidence of compliance with the standards for registration (r.203(1)(b)); and
(b) require an applicant for registration to furnish supporting evidence in a form acceptable to VicRoads verifying any information specified by VicRoads in the registration application form (r.211(g)).
53 The discretionary power conferred upon VicRoads by r.203(1) (b) of the Regulations is broad. VicRoads was empowered to accept as evidence of compliance with the standards for registration a certificate provided by a person that VicRoads considers qualified to issue it. In my opinion, to give practical effect to this provision, it was necessary for VicRoads to establish a system of certification by qualified persons. To achieve this end, VicRoads did the following things:
(a) Provided for a system to register specially qualified engineers to act as VASS Signatories;
(c) Prescribed the procedures referred to in the Re-shelling Guidelines.
Each of these was a complement to the express power in r.203(1) (b) and each was introduced and implemented for the attainment of the purposes of the registration system.
54 The power conferred on VicRoads by r.211(g) of the Regulations is similarly broad. Regulation 211(g) deals with "Supporting Evidence" and gives VicRoads a discretion to require further evidence which may be considered necessary or desirable in the course of registering a motor vehicle. Regulation 211(g) provides:
The Corporation may require an applicant for registration of a vehicle to submit evidence, in a form acceptable to the Corporation, verifying -
(g) any other information specified by the Corporation in the application form.
55 The "application form" referred to in r.211(g) was the form of application approved by VicRoads [the Corporation] under r.210. The form approved by VicRoads included a section on "Vehicle Details" which in turn included a requirement that an applicant for registration of a vehicle was to provide a number of details about the identity of the motor vehicle which was the subject of the application. Such details included the year the vehicle was first registered; the previous registration number; the make, model and body type of the vehicle; its compliance plate number; VIN and engine numbers; as well as a number of technical details about the vehicle. In the exercise of its discretion pursuant to r.211(g), VicRoads could require the production of further supporting evidence of the identity of a vehicle presented for registration. VicRoads could also require further supporting evidence as to the identity of particular classes of vehicles, such as re-shelled vehicles for the purposes of determining an application for registration.
56 The VicRoads Re-shelling Guidelines provided a procedure for the provision of supporting evidence to verify the identity of a re-shelled motor vehicle which was to be the subject of an application for registration. For example, the 28 March 2003 Business Rule sets out a procedure for obtaining the supporting evidence considered by VicRoads to be necessary to verify the identity of a re-shelled motor vehicle by setting out a series of preliminary steps to be taken in advance of the prescribed certification by the appointed VASS Signatory. Step four of the business rule required the VASS Signatory to inspect the damaged vehicle and the replacement body shell "at the same premises at the same time". Re-shelled motor vehicles presented particular problems for identification. In the first place, there was a need to ensure that the re-shelled vehicle to be constructed would match the identity of the damaged vehicle it was to replace - otherwise a new and different vehicle would be produced which would not constitute the repair of an existing one. Secondly, if an imported second-hand body shell was to be used, no compliance plate would usually accompany the part to enable ready verification of its identity. The "side-by-side" inspection procedure was designed to provide evidence that the replacement body shell was of the same make, model, series and body style as that of the damaged vehicle, by enabling the inspector to undertake an accurate comparison between the damaged vehicle and the proposed replacement shell. The only time this comparison could be undertaken was prior to re-shelling, when the donor vehicle and the imported body shell were separate components.
57 A clear purpose of this exercise was to ensure that the re-shelled motor vehicle to be constructed was able to be properly identified and then accurately described in the VIN that was ultimately to issue. To this end, the 28 March 2003 Business Rule further provided:
If the [VASS] Signatory is satisfied that the identity of the damaged vehicle and that of the replacement body shell can be established and has confirmed that the replacement shell is eligible to be used, the signatory may apply to VicRoads for approval to proceed with the reshell (Step 5).
The VicRoads approval to proceed with the re-shell was to be provided in writing. The approval to proceed would provide a measure of assurance to the vehicle builder that the proposed re-shelling work could be undertaken using the selected damaged vehicle and body shell.
58 The 28 March 2003 Business Rule also required the VASS Signatory to produce a "VASS Identity and Eligibility Certificate" (Step 6). VicRoads prescribed the form for the Identity and Eligibility Certificate which was annexed to its VASS Guidelines. The Identity and Eligibility Certificate provided for the appointed VASS Signatory to certify as follows:
I certify that I have inspected the donor (wrecked) vehicle and the imported body shell and that the descriptions above are true and correct. I verify that
59 The Identity and Eligibility Certificate was also to be produced as part of the "Registration Requirements" specified in the 28 March 2003 Business Rule. The requirement was expressed in the following manner:
For registration purposes, in addition to the usual proof of ownership and proof of identity documents, the applicant [for registration of a re-shelled vehicle] will need to produce:
― a Vehicle Assessment Signatory Scheme (VASS) Approval Certificate and
60 These steps set out in the 28 March 2003 Business Rule were directed towards providing proof of the identity of the re-shelled vehicle comprising the damaged (or donor) vehicle and the replacement body shell. The requirement for these components to be inspected at the same premises and at the same time was a standardized form of evidence gathering required by VicRoads in the case of re-shelled vehicles and provided the conditions for a comprehensive and precise inspection to take place. The report of that evidence, as required by the 28 March 2003 Business Rule, was to be embodied in the Identity and Eligibility Certificate, which in turn was to be produced as further supporting evidence as to the identity of a vehicle presented for registration.
61 In my opinion the Re-shelling Guidelines were designed to supplement and give practical effect to the express powers conferred on VicRoads by rr.203(1) (b) and 211 (g) of the Regulations. As such, they were introduced and implemented for the attainment of the purposes of the registration system.
62 A second issue arises as to whether the Re-shelling Guidelines introduced and administered by VicRoads unduly fettered the discretion conferred on it by the enabling Act and Regulations and for this reason were ultra vires.
63 Pursuant to the 28 March 2003 Business Rule, an applicant for registration of a re-shelled vehicle was required to produce a VASS Approval Certificate signed by a VASS Signatory. This certificate could be presented to VicRoads as the evidence of compliance with the standards for registration under r.203(1)(b). The question is whether, in the proper exercise of its power, VicRoads could specify a procedure to provide for relevant evidence as a pre-condition to the issue of a VASS Approval Certificate, or whether the 28 March 2003 Business Rule imposed an impermissible fetter on the discretion of VicRoads to accept a certificate provided by a VASS Signatory as evidence of compliance with the standards for registration.
64 Under r.211(g) VicRoads, as I have found, had a discretion to require the production of further supporting evidence as to the identity of a vehicle presented for registration. The question is whether the r.211(g) power extended to enable VicRoads to require further supporting evidence as to the identity of a particular class of vehicles, namely re-shelled vehicles, for the purposes of determining an application for registration and whether it could specify a procedure for the provision of such supporting evidence, or whether such steps amounted to an impermissible fetter on the discretion conferred on VicRoads under the regulation.
65 It is the nature and context of the power which informs as to the manner in which the discretion may be exercised. Take for example a discretion to be exercised in an arbitral context involving hearings conducted on a case by case basis. Here individual considerations relating to a party or the facts giving rise to the application may assume paramount importance. A case illustrating the exercise of this type of discretion is Sagnarta Investments Ltd v. Norwich Corporation[11]. Here the Court of Appeal was concerned with a decision by a local government authority, pursuant to its statute-bestowed discretion, to approve a gaming machine operator's application to set up gaming machines in an area within the jurisdiction of the authority. The authority purported to give the applicant a fair hearing prior to announcing its decision. However, having lost the application, the applicant appealed the decision on the ground, inter alia, that the authority had effectively shut its eyes and ears to the particulars of the application and had reverted to its pre-existing "general policy" to refuse to grant permits for gaming machines. This approach was said to effectively negate the proper exercise of the discretion thereby subverting the role Parliament had envisaged the authority would perform. Lord Denning M R observed [at 626] that:
[A]n administrative body ... which may have to consider numerous applications of a similar kind, is entitled to lay down a general policy which it proposes to follow in coming to its individual decisions, provided always that it is a reasonable policy which it is fair and just to apply. Once laid down, that administrative body is entitled to apply the policy in the individual cases which come before it. The only qualification is that the administrative body must not apply the policy so rigidly as to reject an applicant without hearing what he has to say. It must not shut its ears to an application.
However, his Lordship who found that the authority's decision to rely upon its general policy when exercising its discretion was valid, found himself in the minority. Edmund Davies and Phillimore LJJ found against the authority. Their Lordships placed emphasis upon the right of the individual applicant to have its case heard and considered without the authority being fettered in the exercise of its statutory discretion by an unyielding self-imposed policy. Edmund Davies LJ. said [at 632] that it was proper to adopt a general policy "provided that no inflexible, unvarying attitude was adopted and that the [Authority] ... was prepared to depart from it where the justice of a particular case so required." Moreover, Phillimore LJ, finding that the Authority's decision ought to remain overturned, said [at 639] that the members of the Authority "had failed to keep an open mind and had applied their policy without regard to the facts of the individual case."
66 Administrative decisions founded in legislation may also be required by their context to take individual considerations into account, particularly where the statutory scheme is intended for the benefit of particular classes of persons. A good example is North West Lancashire Health Authority v A, D & G[12] In this case three transsexuals issued an application in the High Court (UK) seeking to challenge what they alleged was a policy administered by the Authority which amounted to imposing a blanket ban on funding medical treatment for the purposes of gender reassignment. The Authority lost before Hidden J in the High Court, a decision which the Court of Appeal subsequently upheld. Auld LJ reasoned as follows [at 993-994]:
In my view, the stance of the Authority, coupled with the near uniformity of its reasons for rejecting each of the respondents' requests for funding was not a genuine application of a policy subject to individually determined exceptions of the sort considered acceptable by Lord Scarman in Findlay. It is similar to the over-rigid application of the near "blanket policy" questioned by Judge J in R v. Warwickshire County Council, ex p. Collymore [1995] ELR 217, at 224-226,
"which while in theory admitting of exceptions, may not, in reality result in the proper consideration of each individual case on its merits."
In that case the implementation of the policy, not the policy itself, was quashed, Judge J considering it unnecessary to decide whether the latter was unlawful. The policy there and that in this case are not so obviously unlawful as that in R v. London Borough of Bexley, ex p. Jones [1995] ELR 42, where it effectively admitted no exceptions by reference to individual circumstances. Nevertheless, it has the same basic flaw both in form and application. Leggatt LJ said, at 55:
"It is ... Legitimate for a statutory body ... to adopt a policy designed to ensure a rational and consistent approach to the exercise of a statutory discretion in particular types of case. But it can only do so provided that the policy fairly admits of exceptions to it. In my judgment, the respondents effectually disabled themselves from considering individual cases and there has been no convincing evidence that at any material time they had an exceptions procedure worth the name. There is no indication that there was a genuine willingness to consider individual cases."
Accordingly, given the Authority's acknowledgment that transsexualism is an illness, its policy, in my view, is flawed in two important respects. First, it does not in truth treat transsexualism as an illness, but as an attitude or state of mind which does not warrant medical treatment. Second, the ostensible provision that it makes for exceptions in individual cases and its manner of considering them amount effectively to the operation of a "blanket policy" against funding treatment for the condition because it does not believe in such treatment.
67 However, as can be seen from the context of the North West Lancashire Health Authority case, where the medical scheme being administered by the Authority was for the benefit of persons who included the respondents, in the exercise of its discretion to grant funding for medical treatment, an obligation arose for the Authority to formulate its policy to take into account and give proper weight to the particular medical condition of the respondents, apply that weighting when setting its level of priority for treatment and make effective provision for exceptions in individual cases from any general policy restricting the funding of treatment.
68 Different considerations arise in a case such as the present, where the relevant discretions are to be exercised in the course of administering a State-wide registration system governing motor vehicles in high volume through an administrative structure spread over a number of metropolitan and regional offices. The Business Rules were variously described by witnesses called by VicRoads as being "for the use of VicRoads staff", to "guide the customer staff at these offices [VicRoads offices throughout Victoria] in processing applications" and "to make sure that re-shelling was dealt with in a uniform manner across the State." Further, as was expressly contemplated by the VASS Guidelines and r. 203(1)(b) of the Regulations, VicRoads "contracted out" much of its inspection role in the registration system to the independent VASS Signatories. In this context, where the ends of law enforcement and the maintenance of safety standards are central purposes, fairness and practicality call for a much greater emphasis on uniformity and certainty in administrative practice if the legislative objects are to be achieved.
69 In Wetzel v District Court of New South Wales and Ors[13] the NSW Court of Appeal (Mason P, Priestley and Sheller JJA) considered a case somewhat analogous to the present. In Wetzel the appellant was the registered holder of a mining claim which had to be renewed annually, subject to a condition - 8(b) - that the holder was required to attend personally to collect the renewal certificate and year tags. The condition was imposed under s.32(1)(b) of the Mining Act 1973(NSW). The appellant's agent sought to collect the certificate and tags. The Mining Registrar refused to hand them to him and they remained uncollected beyond the permitted period. Consequently, the Chief Mining Warden cancelled the registration of the appellant's claim for breach of the condition. The appellant's appeal to the District Court was dismissed on the basis that the condition required personal attendance by the appellant and the agent's attendance was not sufficient.
70 Section 32(1)(b) of the Mining Act 1973 (NSW) relevantly provided:
(1) Registration and the renewal of the registration of a claim -
(b) may be effected subject to such conditions as may be prescribed, or as may be imposed by the Mining Registrar in any particular case; ...
It was common ground that condition 8(b) of the appellant's mining claim was not a prescribed condition within the meaning of s.32(1)(b). This left open for determination the exercise of the Mining Registrar's discretion to impose conditions on a mining claim conferred by the words "or as may be imposed by the Mining Registrar in any particular case".
71 In agreeing with Priestley JA, Mason P said in Wetzel [at 688]:
A system of responsible ministerial government is a key element in our polity. Executive power is made accountable, by various means, to the organs of representative government: Lange v Australian Broadcasting Corporation (1997) 189 CLR 510 at 559. In concept, there is a clear distinction between the exercise of public and private authority or power. Control of the former, politically, is ensured through "line management" accountability; and, legally, through strict adherence to rule of law principles. Effective line management permits, indeed requires, control to be exercised through ministers, department heads or senior executive officers, and thereafter through the public sector pursuant to the mechanisms provided (in this State) by the Public Sector Management Act 1988. Parliament is free to establish executive bodies that are accountable to none but itself and the courts. But the constitutional principles I have referred to mean that the onus rests clearly upon those who would construe a grant of legislative authority to do a ministerial act as conferring an independent discretion that can ignore (lawful) policy directives issued with the authority of a minister. As Priestley JA demonstrates, such legislative authority is clearly lacking in the present case. Effective, consistent and ultimately accountable decision-making amply support construing the Mining Registrar's power under s32(1)(b) of the Mining Act 1973 as one which is amenable to such policy directives as the Registrar's superiors in the department may issue.
72 Priestley JA delivered the principal judgment in Wetzel. After reciting the facts, his Honour first determined that the purpose of the impugned condition 8(b) of the mining claim was to address an illicit practice. He said [at 689]:
[I]t seems to me that the words of the condition show a clear intention of requiring the relevant attendance to be by the registered claim holder in person and not by some representative. Such a requirement provides some safeguard against "dummying", a practice well known and understood in New South Wales in regard to various kinds of property since its early days as a colony.
His Honour then considered the submission of the appellant [at 690], namely that condition 8(b) of the mining claim was imposed on all claims within the Lighting Ridge area renewed for the period 1988 to 1989, and that in relation to the claim of the appellant, the Mining Registrar gave no consideration to whether or not the condition was particularly appropriate to that claim. The appellant contended that the condition was therefore an unlawful exercise of power because the Mining Registrar's discretion did not extend to making general conditions to be imposed upon classes of claim, but could only be imposed individually, case by case. On this issue Priestley JA arrived at the following conclusion [at 692]:
I do not think that the Mining Registrar's power can be confined in the way submitted. The language of ...[s. 32 (1)(b) of the Mining Act 1973 (NSW)] seems to me to be quite wide enough to permit a Mining Registrar, if he or she were to consider that a number of claims in a particular district should all be subject to the one condition because of the similarities in the considerations relating to each claim, to go ahead and, as each individual claim was renewed to impose the one same condition in each particular case.
73 There is, however, an important caveat in the case law on the principles of ultra vires which calls for consideration in each instance, namely, to remain within the enabling power, the conduct of the statutory actor or his subordinates cannot be inconsistent with the power. The issue was addressed by Green v Daniels[14] where Stephen J said [at 9]:
The Director-General is not concerned, in his administration of s. 107, with the carrying out of any policy. No general discretion is conferred upon him; instead specific criteria are laid down by the Act and all that is left for him to do is to decide whether or not he attains a state of satisfaction that the circumstances exist to which each of these criteria refer. He must, no doubt, for the benefit of his delegates and in the interests of good and consistent administration, provide guidelines indicating what he regards as justifying such a state of satisfaction. But if, in the course of doing this, he issues instructions as to what will give rise to the requisite state of satisfaction on the part of his delegates and these are inconsistent with a proper observance of the statutory criteria he acts unlawfully; should his delegates then observe those instructions, their conclusions concerning an applicant's compliance with the criteria will be vitiated.
74 In my opinion, pursuant to r.203(1)(b), VicRoads had the power to determine the necessary pre-requisites for the issue of a VASS Approval Certificate of the kind referred to in the VASS Guidelines and the Business Rules. In the case of re-shelled motor vehicles, the Business Rules provided a definition of the evidence considered necessary to support the issuing of a VASS Approval Certificate, and provided a standardised procedure for obtaining such evidence.
75 Further, the Re-shelling Guidelines provided a standardized procedure for gathering the evidence necessary to confirm the identity of a re-shelled vehicle. In my opinion, this was permitted under r.211(g). It was a legitimate and practical form of guidance as to the manner in which VicRoads expected the VASS Signatories to go about the task of requiring an applicant to furnish additional supporting evidence to verify information specified in the registration application form for a re-shelled motor vehicle. Although the provisions in the Re-shelling Guidelines relating to the inspection of and reporting about re-shelled vehicles for the purposes of registration were expressed in mandatory terms and were to be applied without exception, given the context and purposes of the powers being exercised under rr.203(1)(b) and 211(g) of the Regulations, in my view, this approach was not unreasonable. It was a fair means by which VicRoads could carry out its responsibilities under the Act and the Regulations in order to achieve the law enforcement ends of the registration system established by the legislation.
76 For these reasons, the Re-shelling Guidelines did not unduly fetter the enabling discretions conferred on VicRoads pursuant to rr.203(1)(b) and 211(g) of the Regulations and were not ultra vires on this basis.
Ultra Vires and the Plaintiffs' Specific Grounds
77 However, the plaintiffs put their ultra vires claim in three alternative ways. It was submitted that:
a) The Re-shelling Guidelines were not an exercise of the regulation making power under the Act and as such did not satisfy the condition precedent for the granting or refusal to grant registration of a motor vehicle;
b) The Re-shelling Guidelines permitted the registration of vehicles contrary to the criterion for eligibility for the registration of a motor vehicle in r. 202(1)(a) of the Regulations; and
c) The Re-shelling Guidelines as they were since 28 March 2003, were not reasonable as a means of attaining the functions of VicRoads or of exercising its powers.
Whether the Re-shelling Guidelines Satisfy the Condition Precedent for the Grant of Registration
78 It was submitted by the plaintiffs that despite the extensive regulation making power in s.95 of the Act, no regulations have been enacted specifically in relation to the registration of re-shelled motor vehicles. Registration however, may be effected "only in accordance with the regulations" (ss.5AB and 9(1) of the Act). The Plaintiffs say that the Re-shelling Guidelines therefore do not satisfy the condition precedent for effecting registration and are an unlawful exercise of power.
79 The Regulations conferred a discretion which could be exercised by VicRoads enabling it to accept a certificate provided by a VASS Signatory as evidence of compliance with the standards for registration (r.203(1)(b) of the Regulations). The Regulations also conferred a discretion which could be exercised by VicRoads enabling it to require the production of further supporting evidence as to matters referred to in the application form in respect of a vehicle presented for registration (r.211(g) of the Regulations). The VicRoads application form included inquiries about the identity of the subject vehicle. In both cases the Regulations did not limit the exercise of the discretions by the type, character or origin of the motor vehicle presented for registration. Indeed, rr.203(1)(b) and 211(g) expressly contemplated variety and provided an administrative facility to deal with the registration of non-standard vehicles such as re-shelled motor vehicles. Further, nothing in the Regulations provided that re-shelled motor vehicles were not eligible for registration. Accordingly, I reject the submission that the Re-shelling Guidelines were beyond power on this basis.
Whether the Re-shelling Guidelines were contrary to Regulation 202
80 It was further submitted by the plaintiffs that the Re-shelling Guidelines were contrary to r.202 of the Regulations in that they permitted the registration of motor vehicles which were not eligible to be registered in that they did not comply with the standards for registration provided in Schedule 8 of the Regulations. This was said to arise because the Re-shelling Guidelines dispensed with the following regulatory requirements for registration of re-shelled vehicles in Victoria:
(a) The Regulations provided that a plate known as a 'Compliance Plate' issued under the Motor Vehicle Standards Act 1989 (Cth) was required to be fitted to a motor vehicle registered in Victoria because this was a requirement of the Australian Design Rules;
(b) Re-shelled motor vehicles are "new Vehicles" and are required to comply with the ADRs as at the date of the re-shell and not at any other preceding time; and
(c) The registration of re-shelled vehicles went beyond the scope of the Vehicle Standards in Schedule 8 of the Regulations.
81 It was submitted that second-hand vehicle shells imported from Japan did not have Compliance Plates. Therefore, a damaged car that is re-shelled with an imported second-hand shell would not have a Compliance Plate and would not therefore comply with the ADRs. Consequently, neither will it comply with the Vehicle Standards and as such would not be eligible for registration pursuant to r.202 of the Regulations. Notwithstanding this requirement, the Business Rules issued by VicRoads expressly provided for re-shelling with "a used ... imported body shell" and as such, so it was put, permitted vehicles to be registered without the required Compliance Plate.
82 Australian Design Rule (ADR) 61/02 governing Vehicle Marking was originally determined on 22 September 1994 in Road Vehicle (National Standards) Determination No. 3 of 1994. It applied to passenger vehicles manufactured on or after 1 July 1995. Clause 6 provided in relation to compliance plates:
6.1 Every motor vehicle and every applicable trailer must bear an 'Approved' 'Compliance Plate' which must be placed in a conspicuous position on the vehicle.
83 However, nothing in the Re-shelling Guidelines detracted from this obligation in relation to re-shelled motor vehicles. Indeed, Compliance Plates were expressly recognised in the VASS Guidelines and the annexed Identity and Eligibility Certificate where "a variant certified under the same CPA [Compliance Plate Approval] number" could be matched with an imported body shell and certified accordingly. True it is that second-hand vehicle shells imported from Japan may not have had Compliance Plates and these shells were permitted to be used for the re-shelling of a damaged wreck. However, this did not prevent a Compliance Plate from later being affixed to the re-shelled vehicle. Indeed, it is only when the VASS Signatory is satisfied that, amongst other things, the vehicle proposed for registration "complies with the standards for registration" that a VASS Approval Certificate may be issued enabling registration to proceed. The Re-shelling Guidelines did not provide for any contrary standards or seek to dispense with any of the existing standards. There is nothing in this argument.
Whether Re-shelled Motor Vehicles are "New Vehicles"
84 The plaintiffs relied upon the following sections of the Motor Vehicle Standards Act 1989 (Cth) ("the MVSA"):
(1) Subject to section 14A, a person must not supply to the market a new vehicle that:
"new vehicle" means a locally made vehicle, or a new imported vehicle, that has been neither:
(b) used in transport in Australia by its manufacturer or importer;
and includes a locally made vehicle, or a new imported vehicle, that has been supplied to the market but not yet used in transport in Australia.
"locally made vehicle" means a road vehicle in whose manufacture at least the last step was carried out in Australia, but does not include a road vehicle (if any) in whose manufacture none of the steps was carried out in Australia by a Corporation.
"manufacture" , in relation to a road vehicle, includes modify the vehicle and assemble the vehicle.
85 The Plaintiff contends, from a consideration of these sections of the MVSA, that "[t]herefore, a vehicle that is re-shelled by dismantling the damaged vehicle and re-building it using a body shell and parts from other vehicles constitutes a 'new vehicle' under the MVSA."
86 This conclusion depends entirely on taking 're-shelling' to be synonymous with 'manufacture' on the basis that 'manufacture' includes 'modify the vehicle and assemble the vehicle' with the result that re-shelling is an act of 'modification' or 'assembling'.
87 However, s 5 of the MVSA refers specifically to vehicles - whether 'locally made' or 'new imported' - which (a) have been neither supplied to the market nor used by its manufacturer or importer for transport, or (b) have been supplied to the market but not used in transport. 'Manufacture', therefore, can only refer to a process which either precedes the vehicle's supply to the market and its use transport, or follows its supply to the market but precedes its use in transport. The 'modification' or 'assembling' of a vehicle captured by the definition 'manufacture' must therefore also precede the vehicle's supply to the market and its use in transport, or follow its supply to the market but precede its use in transport.
88 In the case of a re-shelled motor vehicle, and certainly in the re-shelling procedure adopted and as described by Mr Sami, both 'the damaged vehicle', and the 'other vehicle' which supplies the second-hand body shell have been both previously supplied to the market and used in transport, and therefore do not constitute a 'new vehicle'. Accordingly, this argument by the Plaintiff is also rejected.
Whether the Business Rules Permitted the Use of Variant Shells
89 The Business Rules which operated until commencement of the 28 March 2003 Business Rule stated that repair by re-shelling was only acceptable if:
The replacement body shell is of the same make, model and body style as that of the damaged vehicle or that of any of the variants certified under the same Compliance Plate Approval. (Underlining added)
90 It was said by the plaintiffs that the Business Rules which were in place prior to 28 March 2003 therefore permitted a new model of vehicle to be built which was an outcome not permitted by the ADRs or Schedule 8 of the Regulations.
91 Again, there is nothing in this argument. None of the documents comprising the Re-shelling Guidelines permitted the registration of vehicles that went beyond the scope of the Vehicle Standards in Schedule 8 of the Regulations. On the contrary, when they are read as a whole, the Re-shelling Guidelines permitted registration of a re-shelled motor vehicle only where it complied with the standards for registration, being those referred to in Schedule 8 of the Regulations.
92 By way of conclusion, as to whether the Re-shelling Guidelines were contrary to r.202 and the vehicles standards of Schedule 8 of the Regulations, in my opinion, there was nothing inconsistent in the Re-shelling Guidelines with the proper observance of the Act or the Regulations in any respect.
Reasonableness of the 28 March 2003 Business Rule
93 The plaintiffs submitted that the 28 March Business Rule went beyond what was reasonable in order to attain the ends of the power and therefore was beyond power and unlawful.
94 I reject this submission. The Re-shelling Guidelines as they stood from 28 March 2003 provided a reasonable means of fulfilling the functions assigned to VicRoads and were a reasonable exercise of its powers. As I have already found, it was within the power of VicRoads to require an applicant for registration of a re-shelled vehicle to furnish additional supporting evidence verifying the identity of the motor vehicle presented for registration. In the case of a vehicle which was about to be re-shelled, the requirement that the donor body was to be inspected at the same place and at the same time as the imported body shell, and a requirement for the production of a document which evidenced compliance with this procedure, was not an unreasonable exercise of the power. Both steps could be undertaken by VicRoads in furtherance of the purposes of the registration system as I have found them to be.
95 In Council of Civil Service Unions v Minister for Civil Service[15], Lord Diplock [at 410] defined an unreasonable decision within the Wednesbury principle[16] as being one which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question could have arrived at it. In Bromley London Borough Council v Greater London Council[17] Lord Diplock [at 821] further observed that this ground of invalidity is reserved for "decisions that, looked at objectively, are so devoid of any plausible justification that no reasonable body of persons could have reached them."
96 The High Court of Australia reviewed the principle in Minister for Immigration & Multicultural Affairs v Eshetu[18]. Gleeson CJ and McHugh J [at 40] said:
Someone who disagrees strongly with someone else's process of reasoning on an issue of fact may express such disagreement by describing the reasoning as "illogical" or "unreasonable", or even "so unreasonable that no reasonable person could adopt it". If these are merely emphatic ways of saying that the reasoning is wrong, then they may have no particular legal consequence.
97 In my opinion there is no basis for setting aside the 28 March 2003 Business Rule on the ground of unreasonableness. Far from being unreasonable in the accepted sense, the conduct of VicRoads in introducing its guideline of 28 March 2003 was a reasonable administrative step designed to introduce State-wide consistency into the procedures for the registration of re-shelled vehicles and to implement a process of full and accurate inspection of the component parts of a vehicle which was proposed to be re-shelled prior to it being assembled and subsequently presented for registration.
98 The plaintiffs sought relief by way of a declaration in the following terms:
A declaration that the Re-shelling Guidelines are ultra vires the defendant's statutory powers granted under the Road Safety Act 1986 (Vic).
99 Having found that the Re-shelling Guidelines were not ultra vires the statutory and regulatory powers of VicRoads, it follows that there is no basis for the declaratory relief claimed. However, even if I am wrong about that, I would not have granted the declaration sought in this case. Pursuant to r.23.05 of the Supreme Court (General Civil Procedure) Rules 2005 it is open to the plaintiffs to have sought merely a declaration of right, whether or not any consequential relief is or could be claimed.
100 I accept that the Court has a wide discretion to grant relief by way of a declaration. However, a party seeking a declaration must show that the declaration would be of practical utility at the time when the Court makes its order[19]. In Kuek v Wellens and County Court[20] Gillard J said [at 120]:
The court will not make an order that is futile and hence in those circumstances a declaration would be refused. But despite the fact that a declaration is unenforceable courts do make declarations confident that responsible citizens, bodies, Corporations, governments and others will abide by it and not do anything contrary to it.
Lord Denning MR was of the same view in Boulting and Another v Association of Cinematograph, Television and Allied Technicians[21] when he said [at 629], after stating that the Court could grant a declaration that certain rules were unlawful:
But a declaration I would grant, in the confident expectation that, once the law is declared, the union, or at any rate, their officers, would not seek to do anything contrary to it.
101 The Re-shelling Guidelines in various iterations were applied from 1997 to 2004, the last version being the 28 March 2003 Business Rule.
102 However, in late 2004 the Commonwealth Government put an end to the practice of re-shelling motor vehicles in Australia. Following the 200th meeting of the Australian Motor Vehicle Certification Board, held on 7 December 2004, the Administrator of Vehicle Standards referred to in s.22 of the Motor Vehicle Standards Act 1989 (Cth.) advised that, for the purposes of this act, a re-shelled motor vehicle was from then on to be considered a 'new vehicle'. The consequence of a re-shelled vehicle being treated as a 'new vehicle' was that it was required to comply with the ADRs current at the date of manufacture, which would be the date of the re-shell. Prior to this time, re-shelled motor vehicles had been constructed to comply with the ADRs as they were at the time of the original manufacture of the accident damaged motor vehicle. The new approach had the effect that re-shelled vehicles from that time could not be registered. By a letter dated 15 December 2004 VicRoads advised VASS Signatories that accordingly, applications for approval for the re-shelling of standard motor vehicles could "no longer be processed." This letter stopped the practice of re-shelling in Victoria.
103 I am satisfied that the Sami business of re-shelling motor vehicles since December 2004 could no longer legally operate in Victoria as a result of the position taken by the Commonwealth Government. As a consequence, the VicRoads Re-shelling Guidelines, including the 28 March 2003 Business Rule, have ceased to operate since that time.
104 I am also satisfied that the plaintiffs do not have any motor vehicle wrecks presently in their possession which had been purchased in anticipation of having them re-shelled. Nor do they have any re-shelled motor vehicles presently in their possession awaiting registration pending the making of the declaration which they seek.
105 Another relevant matter is the nature of the business enterprise conducted by the plaintiffs. The position taken by the plaintiffs in the trial was that they were providing a service to customers of re-shelling vehicles on their behalf and were not selling re-shelled vehicles to the public. However, the defendant says that the plaintiffs have been conducting a business which was illegal. They submitted that prior to 3 October 2002, the Samis through their business JAPS Imports were engaged in selling of motor vehicles to the public, as defined in the Motor Car Traders Act 1986 (Vic) ("the MCTA"). The defendant said further that neither Mr Sami nor Mrs Sami ever possessed a motor car traders licence as required under the MCTA and that their conduct contravened s.7 of the MCTA. This section provides:
(1) Subject to this Act, a person must not carry on a business of trading in motor cars unless that person is the holder of a motor car trader's licence.
Penalty: 100 penalty units for each motor car bought, sold or exchanged or offered to be bought, sold or exchanged in contravention of this subsection.
(2) If a person is convicted of an offence against subsection (1), the court may, in addition to or substitution for any penalty it may impose, order the person to pay a fine equal to 15 per centum of the sale price of each motor car with respect to which the offence was committed.
106 The making of an allegation of illegal conduct of this nature is a serious matter. The standard of proof applicable in relation to this issue is on the balance of probabilities. However, in adopting this standard I also apply the approach laid down in Briginshaw v Briginshaw[22] by Dixon J [at 362]:
But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters `reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences.
The majority in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd[23] (Mason CJ, Brennan, Deane & Gaudron JJ) adopted a similar approach when they said [at 450] that "the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove."
107 In make the findings in these reasons on the issue of illegality, consistently with the statements made in Briginshaw v Briginshaw and Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd, I do so in recognition of the gravity of these findings. I am satisfied on the balance of probabilities to the requisite degree that prior to 3 October 2002, the selling of motor vehicles to the public, as defined in the Motor Car Traders Act 1986 (Vic) ("the MCTA"), was a central activity of the business of JAPS Imports. Indeed, such sales were essential to its operations.
108 The evidence on the issue of illegality reveals four significant factors. In the first place, the case pleaded on behalf of the plaintiffs was that the business sold motor vehicles to members of the public.[24] Secondly, the damages claimed by the plaintiffs were advanced on the basis of the loss of sales of vehicles.[25]
109 The third factor is this: The business of JAP Imports commenced in about 1996 and operated until late in 2002. The business conducted between 20 to 30 transactions per year during this time in relation to re-shelled motor vehicles. However, the plaintiffs called no witness to establish that they were merely providing a service of re-shelling of damaged vehicles to customers which did not involve the selling of motor vehicles to members of the public. Nor did they seek to produce or tender any documents to this effect. No explanation was offered for these failures. Indeed, the only document adduced in evidence concerning a transaction with a customer was a receipt issued by Mr Sami which evidenced a vehicle sale to Mr Wei Zhao.
110 The circumstances entitle me to apply the principles in Jones v Dunkel[26]. That case was concerned with a trial arising out of a motor car collision where the driver of the defendant's car was not called to give evidence as to how the accident occurred. Windeyer J stated the principles as follows [at 320-321]:
Then, I think, his Honour should, when the juryman asked his question, have given an answer in accord with the general principles as stated in Wigmore on Evidence 3rd ed. (1940) vol.2, s.285, p.162 as follows: `The failure to bring before the tribunal some circumstance, document, or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavourable to the party. These inferences, to be sure, cannot fairly be made except upon certain conditions; and they are also open always to explanation by circumstances which made some other hypothesis a more natural one than the party's fear of exposure. But the propriety of such an inference in general is not doubted.
This is plain commonsense. If authority be needed, two passages from R v Burdett (1820) 4 B & Ald 95 may be cited. Abbott C.J. said: `No person is to be required to explain or contradict, until enough has been proved to warrant a reasonable and just conclusion against him, in the absence of explanation or contradiction; but when such proof has been given, and the nature of the case is such as to admit of explanation or contradiction, if the conclusion to which the proof tends be untrue, and the accused offers no explanation or contradiction; can human reason do otherwise than adopt the conclusion to which the proof tends? The premises may lead more or less strongly to the conclusion, and care must be taken not to draw the conclusion hastily; but in matters that regard the conduct of men, the certainty of mathematical demonstration cannot be required or expected.' And Best J. said: `Nor is it necessary that the fact not proved should be established by irrefragable inference. It is enough, if its existence be highly probable, particularly if the opposite party has it in his power to rebut it by evidence, and yet offers none; for then we have something like an admission that the presumption is just.'
111 In the circumstances, I do draw an inference adverse to the plaintiffs that no witness, had any been called, would have provided evidence favourable to the plaintiffs on the issue of whether Mr and Mrs Sami through JAPS Imports sold motor vehicles to the public.
112 The fourth factor which bears upon the question of illegality stems from the legislation. The provisions of the MCTA define what is meant by a 'sale' of a motor vehicle. Putting to one side the exceptions (which are not relevant here), Section 3 defines "motor car" to mean "a motor vehicle within the meaning of the Road Safety Act 1986 (Vic) whether or not in working condition or complete". Again putting to one side the exceptions (which are not relevant here), Section 3 of the Road Safety Act 1986 (Vic) defines motor vehicle to mean "a vehicle that is used or intended to be used on a highway and that is built to be propelled by a motor that forms part of the vehicle." Section 7A of the MCTA[27] then provides:
(1) A person who buys, sells or exchanges, or offers to buy, sell or exchange, 4 or more motor cars in any period of 12 months (whether as a principal or as an agent) is deemed to be a motor car trader carrying on a business of trading in motor cars.
(2) Subsection (1) does not apply if the person can prove that she, he or it did not, in that period, carry on the business of trading in motor cars and did not hold herself, himself or itself out as carrying on the business of trading in motor cars.
113 The evidence demonstrates that the plaintiffs sold or at least offered to sell more than four motor cars each year to members of the public, even if such motor vehicles were not in working condition or complete. Mr Sami's evidence was that his business had a turnover of 20 to 30 re-shelled vehicles per year. He said that his usual practice was to pay a $100 deposit to a wrecker to secure an accident damaged vehicle for re-shelling. He would then usually import a second hand shell from Japan suitable for the donor vehicle. It was conceded in submissions made on his behalf at trial that Mr Sami "also placed orders for and paid for a number of shells from Japan". He would then construct the re-shelled vehicle after obtaining the necessary certification from a VASS Signatory and arrange to present the re-shelled vehicle for registration. At some point in the process, a customer for the vehicle would be obtained. On these facts I infer that Mr Sami would customarily make at least offers to sell motor vehicles, which were not necessarily in working order or complete, to members of the public within the meaning of the MCTA or would sell the constructed re-shelled vehicle to members of the public. He would need to do this to recoup his outlay in purchasing the accident damaged vehicle and the imported body shell in order to make a profit. Further, the plaintiffs did not bring themselves within the exculpatory ambit of s.7A (2) of the MCTA.
114 On 3 October 2002 the Melbourne Magistrates Court granted injunctions restraining the plaintiffs Bob Sami and Roshni Sami from trading in motor cars without a license under the MCTA. The injunctions remain in force.
115 On the evidence before me I find that Mr and Mrs Sami in conducting the enterprise of JAPS Imports without a motor car trader's licence were acting in contravention of s. 7 of the MCTA and would have intended to continue to operate in this manner if they had not been enjoined from doing so and if re-shelled motor vehicles could still be registered in this State.
116 In these circumstances, a declaration would serve no practical purpose. Further, to grant a declaration in the light of the facts as I have found them would be in aid of an enterprise which I have found was conducted in contravention of Victorian law. In the exercise of my discretion I would decline to grant the declaration, even if the plaintiffs had been able to establish a legal basis for the relief sought.
117 In this case the plaintiffs alleged that VicRoads owed them a duty of care to ensure that it did not cause them financial loss or damage by requiring them to act otherwise than in accordance with the regulations made pursuant to the Act. Properly understood, a claim of this kind is founded on the proposition that a public authority owes a duty of care to act within its powers. Such a duty may arise if the interests of others could foreseeably be harmed by the authority exceeding its powers, there is the requisite degree of proximity and a consideration of the salient features of the case leads to the conclusion that a duty of care arises.
118 If I am wrong in finding that VicRoads acted within its statutory powers in introducing and implementing its Re-shelling Guidelines, I here consider whether a tortious duty arose on the assumption that the Corporation did act ultra vires as alleged.
119 Discussion of this area of the law is frequently centred on the so-called distinction between policy (or planning) decisions and operational decisions. The thesis is that liability in negligence will more readily attach to operational decisions and will rarely, if ever, arise where policy decisions are made. Quilliam J, sitting as a member of the Court of Appeal of New Zealand in Rowling v Takaro Properties Pty Ltd[28] considered the question of a duty of care in these terms [at 35]:
The distinction between the policy and the operational areas can be both fine and confusing. Various expressions have been used instead of operational, e.g. 'administrative' or 'business powers'. It may not be easy to attach any of these labels to the decision of the Minister in this case, but what appears to me to emerge clearly enough is that for the reasons I have indicated his decision was the antithesis of policy or discretion. I therefore equate it with having been operational. The result of that conclusion is that I consider the prima facie existence of a duty of care has been established.
120 However, the approach of Quilliam J. did not find favour with the Privy Council when the matter went before the Board as Rowling v Takaro Properties Ltd.[29] Lord Keith, in speaking for the court said [at 171]:
Their Lordships feel considerable sympathy with Quilliam J' s difficulty in solving the problem by simple reference to this distinction. They are well aware of the references in the literature to this distinction (which appears to have originated in the United States of America), and of the critical analysis to which it has been subjected. They incline to the opinion, expressed in the literature, that this distinction does not provide a touchstone of liability, but rather is expressive of the need to exclude altogether those cases in which the decision under attack is of such a kind that a question whether it has been made negligently is unsuitable for judicial resolution, of which notable examples are discretionary decisions on the allocation of scarce resources or the distribution of risks (see especially the discussion in Craig on Administrative Law at pp. 534-538). If this is right, classification of the relevant decision as a policy or planning decision in this sense may exclude liability; but a conclusion that it does not fall within that category does not, in their Lordships' opinion, mean that a duty of care will necessarily exist.
121 I am inclined to agree with this approach. The question, when it arises, as to whether an administrative decision concerns matters of government policy or is an operational decision, usually dictates whether or not a cause of action is justiciable by a court. For example, courts are generally disinclined to regard matters which encroach upon the administration of foreign policy as justiciable. This was the case in R (Abbasi) v Secretary of State for Foreign and Commonwealth Affairs [30] in which the Court of Appeal (UK) held there was no enforceable duty for a government to make representations or diplomatic negotiations to intervene to protect a British citizen suffering at the hands of a foreign state. The position was re-stated by the House of Lords in R (Al-Rawi) v Secretary of State for Foreign and Commonwealth Affairs[31] where it was noted that this was an area where the courts are cautious to tread. A similar approach is taken by the courts to discretionary decisions involving allocation of resources. A high water mark of this position is the statement of Sir Thomas Bingham MR in R v. Cambridge Health Authority, ex p. B[32] [at 906]:
It is common knowledge that health authorities of all kinds are constantly pressed to make ends meet. The cannot pay their nurses as much as they would like; they cannot provide all the treatments they would like; they cannot purchase all the extremely expensive medical equipment they would like; they cannot carry out all the research they would like, they cannot build all the hospitals and specialist units they would like. Difficult and agonising judgments have to be made as to how a limited budget is best allocated to the maximum advantage of the maximum number of patients. That is not a judgment which the court can make.
A body of case law has developed in this area which distinguishes between policy and operational decisions for the purpose of determining whether the matter is justiciable by a court. In my opinion, the distinction is best dealt with at this level and is not helpful in determining the existence of a duty of care.
122 In any event, in the present case the decision on the part of VicRoads to introduce and implement the "side-by-side" inspection rule for vehicles about to be re-shelled was clearly an operational decision. A serious question arises as to whether it is appropriate to impose liability in negligence on a public authority where it has acted ultra vires or whether or not litigants should be confined to their traditional administrative law remedies such as an injunction or a declaration. The claim is not novel, however the law on the subject is undeveloped in Australia. No case was cited to me in which it has been squarely decided that where a public authority acts in error, either by exceeding its statutory powers or by taking an irrelevant matter into account in its decision-making, an aggrieved party has a remedy in the tort of negligence sounding in damages.
123 The issue was canvassed in the Privy Council in Dunlop v Woollahra Municipal Council[33]. In that case the plaintiff Dr Dunlop suffered financial loss when his plans to develop a multi-storey block of flats were thwarted by resolutions passed by the Woollahra Municipal Council. The Council passed two resolutions which were impugned, one purported to fix a building line for a property owned by the plaintiff, and the other purported to limit the number of storeys in any residential flat building erected on it. The resolutions were subsequently declared to be ultra vires and void by the Supreme Court of New South Wales. The plaintiff then sought to recover damages from the Council for financial losses suffered because the resolutions had obstructed the development of his property. The basis of the plaintiff's allegation of negligence arising from the Council passing the resolution regulating the number of storeys that might be contained in any flat building at not more than three, was that they owed him a duty to take reasonable care to ascertain whether such a resolution was within its statutory powers. The breach of this duty of care that was alleged was the Council's failure to seek proper detailed legal advice. The legal advice which the Council had received from their solicitors turned out to be wrong. In rejecting the plaintiff's claim in negligence, Lord Diplock, who delivered the judgment, expressed doubts [at 171] as to whether a duty of care could arise in such circumstances. However, it was found unnecessary to conclusively decide the issue because, on the assumption that such a duty did exist, there was found to be no breach of it on the facts. Lord Diplock however did make the following observation on the matter [at 172]:
The effect of the failure is to render the exercise of the power void and the person complaining of the failure is in as good a position as the public authority to know that that is so. He can ignore the purported exercise of the power. It is incapable of affecting his legal rights.
124 The question also received the attention of the Privy Council in Rowling v Takaro[34]. In that case, a minister of government refused an application to allow a company to issue shares in favour of an overseas company as part of a scheme to rescue a failing enterprise. The Minister was held to have taken into account an irrelevant factor in the course of making his decision. As a result of the Minister's decision the enterprise collapsed and the company suffered economic loss. In its claim for damages against the minister, the company alleged that the Minister was negligent because: (a) the Minister allowed an irrelevant consideration to dominate the exercise of his discretion; and (b) he had failed to take reasonable care to ascertain the extent of his legal powers in making his decision. A central question was, did any actionable duty arise, given that economic loss was a foreseeable result of the ultra vires conduct. The Privy Council again decided the matter on the basis that there was no breach of the duty, even if a duty did exist. However, the court observed that a duty to take legal advice did not arise simply because there was a question about the considerations which a public authority should properly take into account in the making of a decision. Lord Keith, in speaking for the Board said [at 503]:
[I]n the great majority of cases where it is alleged that there has been negligence in the construction of a statute, it is likely to prove that the error cannot be described as negligent; and they have come to the conclusion that, on the findings of fact of Quilliam J., the present is quite simply a typical example of such a case.
125 Given the dearth of direct authority on the subject, the plaintiffs fell back on general principles. They relied upon the observations of Gillard J in Johnson Tiles Pty Ltd v Esso Australia Pty Ltd[35], where his Honour concluded following an extensive review of the relevant authorities, that a three step methodology was appropriate to determine whether a duty existed in economic loss cases. He said at [745]:
In my view, the three step methodology of reasoning is -
(ii) whether there is a relationship of proximity; and
(iii) identification and consideration of competing salient features for and against the finding of a duty of care.
126 In approaching the matter in this way, Gillard J adopted the reasoning of Kirby J in Perre v Apand Pty Ltd[36] as the proper approach to determine a duty of care to avoid economic loss. Kirby J said at [282]:
A threefold approach or methodology of reasoning is required. Even if foreseeability and proximity are first established, there is no escaping the evaluation of the competing arguments of policy for and against the attachment of legal liability in the particular case. It cannot be escaped by formulating so-called new `principles' of universal operation. To do this would be to show that we have learned nothing from the successive rejections of early judicial attempts to express the criteria for the existence of a duty of care in terms of universally applicable rules devoid of policy choices.
127 Section 83 of the Wrongs Act 1958 (Vic) is relevant to the duty of care alleged by the plaintiffs. VicRoads was a public authority for the purposes of the section. Section 83 provides:
In determining whether a public authority has a duty of care or has breached a duty of care, a court is to consider the following principles (amongst other relevant things) -
(a) the functions required to be exercised by the authority are limited by the financial and other resources that are reasonably available to the authority for the purpose of exercising those functions;
(b) the functions required to be exercised by the authority are to be determined by reference to the broad range of its activities (and not merely by reference to the matter to which the proceeding relates);
(c) the authority may rely on evidence of its compliance with the general procedures and applicable standards for the exercise of its functions as evidence of the proper exercise of its functions in the matter to which the proceeding relates.
128 Section 84 of the Wrongs Act 1958, on the other hand, has no application to this proceeding because it does not involve a claim for damages for an alleged breach of any statutory duty by a public authority in connection with the exercise of or a failure to exercise a function of the authority. The plaintiffs' did make reference to Pyrenees Shire Council v Day [37] where Brennan CJ (at [24]) stated:
Thus a duty to exercise a power may arise from particular circumstances, and may be enforceable by a public law remedy. Where a purpose for which a power is conferred is the protection of the person or property of a class of individuals and the circumstances are such that the repository of the power is under a public law duty to exercise the power, the duty is, or in relevant respects is analogous to, a statutory duty imposed for the benefit of a class, breach of which gives rise to an action in damages by a member of the class who suffers loss in consequence of a failure to discharge the duty.
However, the plaintiffs in fact framed their case upon an alleged breach of a duty of care in negligence and not on any breach of a statutory duty on the part of VicRoads.
129 As to s.83(a) of the Wrongs Act, VicRoads was undoubtedly a public authority which was limited by the financial and other resources that were reasonably available to it for the purpose of exercising its functions. In this case the introduction and implementation of the Re-shelling Guidelines, as I have found, provided a standardized procedure for the gathering of evidence considered necessary to support the issue of a VASS Approval Certificate and to confirm the identity of a re-shelled vehicle. These tasks were to be undertaken, as r.203(1)(b) envisaged, by a group of specially qualified persons. VicRoads appointed the VASS Signatories for this purpose. The expenses of the inspection and approval work of these privately engaged inspectors were met by the individual applicant in each case. I am unable to come to the view that the financial or other resources of VicRoads impacted on its capacity to draw the Re-shelling Guidelines in a manner which should relieve it of any duty of care in undertaking this exercise.
130 With regard to s.83(b) of the Wrongs Act, in determining whether or not a duty of care arises, the functions required to be exercised by VicRoads as the public authority are to be determined by reference to the broad range of its activities and not merely by reference to the matter to which the proceeding relates. In considering the matter from this perspective, the relevant conduct of VicRoads gave rise to inconsistent obligations. The conduct complained of by the plaintiffs was to introduce and enforce the 28 March 2003 Business Rule requirement for a side-by-side inspection of the accident-damaged motor vehicle and the replacement body shell at the same premises and at the same time. I have found that the requirement that the donor body was to be inspected at the same place and at the same time as the imported body shell, and a requirement for the production of a document which evidenced compliance with this procedure, was not an unreasonable exercise of the enabling power. I have also found that this was a standardized form of evidence gathering required by VicRoads in the case of re-shelled vehicles and provided the conditions for a comprehensive and precise inspection to take place. Such a procedure was undertaken for the purpose of maintaining safety standards and establishing the identity of the re-shelled vehicle. These were both objects of the Registration Powers contained in the Act and the Regulations, which in turn were designed to serve the Victorian public as a whole. Against this, the Samis claimed a separate duty of care which was owed to them individually. This duty obliged VicRoads not to introduce or enforce the "side-by side" inspection guideline because to do so would foreseeably cause economic harm the plaintiffs and their business. In this regard, the observations of the High Court in Sullivan v Moody[38] are relevant. Although the facts of Sullivan are quite different to the present case[39] the reasoning of the High Court (Gleeson CJ, and Gaudron, McHugh, Hayne and Callinan JJ) is instructive. The Court said [at 582]:
The circumstance that a defendant owes a duty of care to a third party, or is subject to statutory obligations which constrain the manner in which powers or discretions may be exercised, does not of itself rule out the possibility that a duty of care is owed to a plaintiff. People may be subject to a number of duties, at least provided they are not irreconcilable. A medical practitioner who examines, and reports upon the condition of, an individual, might owe a duty of care to more than one person. But if a suggested duty of care would give rise to inconsistent obligations, that would ordinarily be a reason for denying that the duty exists. Similarly, when public authorities, or their officers, are charged with the responsibility of conducting investigations, or exercising powers, in the public interest, or in the interests of a specified class of persons, the law would not ordinarily subject them to a duty to have regard to the interests of another class of persons where that would impose upon them conflicting claims or obligations.
131 As to s.83(c) of the Wrongs Act, VicRoads did not present evidence of the introduction of the Re-shelling Guidelines, and in particular the "side-by-side" inspection rule in the 28 March 2003 Business Rule as complying with any general procedures and or applicable standards for the exercise of its functions. This no doubt was because the rule appeared to be a "one-off' rule introduced without the benefit of any precedent which had previously been administered by the Corporation. Section 83(c) therefore has no application.
132 The plaintiffs sought to make out a duty of care derived from the following matters:
(a) VicRoads could reasonably foresee that by administering the registration of re-shelled cars in the manner they did that it would lead to economic loss of the plaintiffs, or people like the plaintiffs, when the practice was changed;
(b) The was a relationship of proximity between the Samis and VicRoads, because the Samis relied on VicRoads to carry out the registration of vehicles in accordance with the law in order for them to carry on their business;
(c) The Samis were vulnerable to VicRoads changing the Re-shelling Guidelines. The Samis relied on the Re-shelling Guidelines in conducting their business, and given that these guidelines had been in place since 1997 with only relatively minor modifications, the Samis were entitled to be able to plan their business on the basis that at least sufficient notice would be given to them prior to a change that would affect their viability;
(d) The class of persons that would be owed such a duty is limited and ascertainable, and is those conducting re-shelling businesses in Victoria. There were about four such businesses in Victoria, with Mr Sami being about third or fourth in terms of the number of re-shelled cars produced.
133 I accept these underlying facts which go towards establishing the existence of foreseeability and proximity. The "side-by side" inspection requirement could have been complied with by the Samis, however it was foreseeable that economic loss would be caused to them by this procedure, brought about by increasing their costs of compliance with the Re-shelling Guidelines.
134 I find that the Samis were vulnerable to VicRoads changing the Re-shelling Guidelines in a manner which may have adversely impacted on the way in which they conducted the JAPS Imports business. The plaintiffs' business operated in a tightly regulated commercial arena over which they had no control, either as to the form of the Re-shelling Guidelines or as to the manner of their implementation.
135 Mr and Mrs Sami regularly dealt with VicRoads in the course of presenting re-shelled vehicles to the Corporation for registration and were totally dependant on registration of motor vehicles which had been re-shelled by them on the system administered by the defendant. They were well known to relevant officers of VicRoads in this capacity. The element of proximity is therefore also made out.
136 However, even if foreseeability and proximity are established in this case, I am still obliged to evaluate questions of policy in determining the existence of a duty of care.
137 The underlying facts relied upon by the plaintiffs which I have accepted, also evidence a number of salient facts which point to the existence of a duty of care. However, these matters must be balanced against other factors which go the other way.
138 In Rowling v Takaro Properties Ltd[40] their Lordships considered a number of matters which they considered to be of importance on the question of whether or not a duty of care should be found. These included the following considerations of immediate relevance to the present case [at 502-503]:
[I]n the nature of things, it is likely to be very rare indeed that an error of law of this kind by a Minister or other public authority can properly be categorised as negligent. As is well known, anybody, even a judge, can be capable of misconstruing a statute; and such misconstruction, when it occurs, can be severely criticised without attracting the epithet "negligent". Obviously, this simple fact points rather to the extreme unlikelihood of a breach of duty being established in these cases, a point to which their Lordships will return; but it is nevertheless a relevant factor to be taken into account when considering whether liability in negligence should properly be imposed.
... the danger of overkill. It is to be hoped that, as a general rule, imposition of liability in negligence will lead to a higher standard of care in the performance of the relevant type of act; but sometimes not only may this not be so, but the imposition of liability may even lead to harmful consequences. In other words, the cure may be worse than the disease. There are reasons for believing that this may be so in cases where liability is imposed upon local authorities whose building inspectors have been negligent in relation to the inspection of foundations, as in the case of Anns itself; because there is a danger that the building inspectors of some local authorities may react to that decision by simply increasing, unnecessarily, the requisite depth of foundations, thereby imposing a very substantial and unnecessary financial burden upon members of the community. A comparable danger may exist in cases such as the present, because, once it became known that liability in negligence may be imposed on the ground that a Minister has misconstrued a statute and so acted ultra vires, the cautious civil servant may go to extreme lengths in ensuring that legal advice, or even the opinion of the court, is obtained before decisions are taken, thereby leading to unnecessary delay in a considerable number of cases.
... it is very difficult to identify any particular case in which it can properly be said that a Minister is under a duty to seek legal advice. It cannot, their Lordships consider, reasonably be said that a Minister is under a duty to seek legal advice in every case in which he is called upon to exercise a discretionary power conferred upon him by legislation; and their Lordships find it difficult to see how cases in which a duty to seek legal advice should be imposed should be segregated from those in which it should not. In any event, the officers of the relevant department will be involved; the matter will be processed and presented to the Minister for decision in the usual way, and by this means his mind will be focused upon the relevant issue. Again, it is not to be forgotten that the Minister, in exercising his statutory discretion, is acting essentially as a guardian of the public interest; in the present case, for example, he was acting under legislation enacted not for the benefit of applicants for consent to share issues but for the protection of the community as a whole.
139 In my consideration of the salient features of this case which are relevant to the existence of a duty of care, I am aided by the analysis already referred to in Rowling v Takaro, which militates against such a finding. In my view the imposition of a duty of care in a case such as this would give rise to the following consequences: first, the risk of "overkill" described by Lord Keith, caused by encouraging public servants to seek legal advice at every turn to ensure that they have not misconstrued their statutory powers and are not acting ultra vires. High cost and delay in administrative decision making would be a likely consequence; second, it would expose the inherent difficulty in determining a case where a Minister or public authority should seek legal advice in construing powers conferred under a statute or regulation, and the circumstances where this is not necessary. An additional layer of decision making of some sophistication will be introduced into a regulatory regime which is already overburdened with complexity.
140 To these considerations I add the following: third, in my opinion the duty of care contended for by the plaintiffs would give rise to inconsistent obligations for VicRoads. Applying the approach in Sullivan v Moody set out in the passage already cited[41], this would ordinarily be a reason for denying that the duty exists. Fourth, VicRoads, in administering the motor vehicle registration system in this State was acting under legislation enacted not for the benefit of businesses of the type operated by the Samis, but for the protection of Victorians as a whole. The administration of VicRoads' registration powers was purely operational and in no sense arbitral. It would impose an intolerable and unjustified burden on the Corporation if it was compelled to consider the impact on individual enterprises which had sprung up around its regulatory structure each time it considers that administrative change to its registration system becomes necessary.
141 Taking into account all of the salient features of this case, I find that no duty of care as alleged arose.
Motor Car Traders Act and Illegality a Bar to Damages
142 As I have found, the Sami's business was being conducted contrary to s.7 of the MCTA because neither Mr Sami nor Mrs Sami possessed a motor car traders licence which they were obliged to have in the course of selling re-shelled motor vehicles to members of the public. Further, I have found that they would have intended to continue to operate in this manner if they had not been enjoined from doing so and if re-shelled motor vehicles could still be registered in this State.
143 Damages are not recoverable in circumstances where the compensable losses claimed are in respect of profits that the plaintiff made by operating a business illegally or are in respect of future profits which would be made by conducting a business illegally.
144 In Smiths Newspapers Ltd v Becker[42] the High Court held that a person who pursues an unlawful vocation, or engages in unlawful acts or transactions cannot maintain an action for libel regarding his conduct in such vocation acts or transactions. Rich J put the position plainly as this: "I think no damages can be given for loss of gains attributable to a past or future course of infringement upon the statute." In Brownbill v Kenworth Truck Sales (NSW) Pty Ltd[43] the evidence demonstrated that a prime mover was repeatedly used by the applicant with an overloaded trailer contrary to road laws of New South Wales. Sheppard J held that the applicant would be deprived of damages that came about as a result of an inability to operate the business lawfully. In applying Smiths Newspapers his Honour said [at 202]:
[The plaintiff] may be prevented, as was the position in the Smith's Newspapers case, from recovering such portion of his damages as depends upon unlawful carrying out of a profession or business.
145 More recently in Lee v McClellan[44] Hulme J also followed the High Court in Smiths Newspapers in holding that the plaintiff in that case could not recover damages which included compensation for the earnings he would have derived in breach of the Migration Act and which were lost to him by the defendant's negligence or for the lost capacity to earn income in breach of the Migration Act.
146 It follows from my findings that no part of the lost future earnings claimed by Mr and Mrs Sami are recoverable as damages by reason of the illegality of their conduct in operating their business, and their intention to continue to operate that business in the future in this manner, if they had not been enjoined from doing so and if re-shelled motor vehicles could still be registered in this State.
147 In any event, the Samis have not established that the losses which they claim, arising from the cessation of their business JAPS Imports, were caused by any conduct on the part of VicRoads in introducing or administering the "side-by-side" inspection rule contained in the 28 March 2003 Business Rule.
148 The business of JAPS Imports relied heavily on the services of a VASS Signatory Mr Graham Docker ("Docker"). Docker acted as the registration certifier of re-shelled motor vehicles for the Sami business almost invariably. Docker was suspended by VicRoads as a VASS Signatory on 29 April 2003. The letter from VicRoads dated 29 April 2003 which suspended (and later terminated) the services of Docker as a VASS Signatory did so on grounds that he had ceased to meet the eligibility criteria of VASS, failed to perform the obligations of a signatory in a competent or professional manner or at all, and failed to comply with the VASS manual. These findings and the decision based upon them were in turn founded on evidence in relation to four vehicles which had been certified as compliant for registration by Docker but which had not been described accurately in each case.
149 The defendant submitted that it was the termination of Docker as a VASS Signatory which brought about the demise of the Sami business. True it is that after 29 April 2003 Docker was no longer available to certify the re-shelled vehicles of JAPS Imports for registration. However, it was also open to the Samis to engage another VASS Signatory to undertake the certification role in place of Docker. In fact they did this in June of 2003 when they engaged the services of another VASS Signatory Mr Sanjay Bhide. Accordingly, I do not accept the contention of the Samis that it was the termination of Docker as a VASS Signatory which destroyed the JAPS Imports business and caused the claimed losses to the plaintiffs.
150 However, in late 2004 the Commonwealth government put an end to the practice of re-shelling motor vehicles in Australia. At least from then on the business of JAPS Imports could no longer continue to operate and no losses attributed to any conduct of VicRoads could be sustained after this time.
151 As to the interim period between the time of the introduction of the "side-by-side" inspection rule on 28 March 2003 and late 2004, I am not satisfied that the Samis suffered any damage which was caused by the introduction of the new inspection rule. As I have already found, on 3 October 2002 the Melbourne Magistrates Court granted injunctions restraining the plaintiffs Bob Sami and Roshni Sami from trading in motor cars without a license under the MCTA. The injunctions remained in force after that time and continue to this day. Mr Sami's evidence was that since the grant of the injunctions, and in compliance with them, he and his wife had not sold any motor vehicles. This occurred some time before the introduction of the new VicRoads business rule on 28 March 2003. It was the grant of the injunctions, rather than the introduction of the new business rule, which ruined the Sami business.
152 In any event, as to the interim period between the time of the introduction of the "side-by-side" inspection rule on 28 March 2003 and late 2004, I am not satisfied that the Samis suffered any monetary loss as a result of the cessation of the JAPS Imports business.
153 The Samis claimed that they conducted their business successfully in accordance with the business rules that existed prior to 28 March 2003. They claimed that the changes made by VicRoads to its Re-shelling Guidelines on 28 March 2003 rendered their business no longer viable.
154 However, the taxation returns produced by the Samis in relation to their business of JAPS Imports demonstrate that their business was not in fact operating successfully prior to 28 March 2003. The returns show that in 1999 the business had a net income of $7000, the following year in 2000 it lost $9000, the following year in 2001 it lost $4000, the following year in 2002 it made a profit of only $4000. When these four years are averaged out, the business made a net loss. On the last return, in respect of the financial year ended 30 June 2002 - only ten months before the introduction of the 28 March 2003 Business Rule - the evidence was that the Samis were drawing upon their bank overdrafts to derive income because no profit was being generated from the enterprise.
155 Accordingly, I am not satisfied that the plaintiffs suffered any compensable loss arising from VicRoads amending its business rules in March 2003 and I would decline to award them any damages.
156 It follows that I dismiss the plaintiffs' claim in its entirety.
[2] [2001] HCA 19; (2001) 206 CLR 1 at 51.
[3] The object of the Vehicle Standards is to set standards for the construction and performance of motor vehicles, trailers and combinations that are uniform throughout Australia. See: Schedule 8 clause 2(1).
[4] A Compliance Plate is a small metal plate which is permanently attached to the vehicle, usually in the engine bay, on vehicle door pillars or near the passenger side footwell. A Compliance Plate identifies the vehicle by make, model, date of manufacture, Vehicle Identification Number (VIN) and /or chassis number. The Compliance Plate will specify that it has been affixed with the approval of the Australian Motor Vehicle Certification Board alternatively that the vehicle is "manufactured to comply with the Motor Vehicles Standards Act 1989".
[5] Sections 10A and 5 Motor Vehicle Standards Act 1989.
[6] See, for example: Circular 0-3-4 "New Motor Vehicle Identification Plate Approval", Administrator of Vehicle Standards, Issue 6, March 2008.
[7] The National VIN database is housed in NSW and is operated by the New South Wales RTA. Each State and Territory may access the NSW database and provide regular updates to the national database.
[8] See: VicRoads Business Rules for Re-shelled Motor Vehicles, 1997 ("the adopted 1997 Business Rules").
[10] See also: Weigall Constructions Pty Ltd v Melbourne and Metropolitan Board of Works [1972] VicRp 93; [1972] VR 781 per Pape J at 800.
[12] [2000] 1 WLR 977; [1999] Lloyd's Rep Med 399.
[14] [1977] HCA 18; 13 ALR 1. See also: [1977] HCA 18; 51 ALJR 463.
[16] Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223at 229-230: If a tribunal makes a decision which is so unreasonable that no reasonable tribunal could have come to it, the decision can be reviewed by a court.
[19] See Thorne v Doug Wade Consultants Pty Ltd [1985] VicRp 48; [1985] VR 433 per Kaye and Marks JJ at 495.
[24] See: Plaintiffs' Amended Statement of Claim, Particulars to paragraphs 7 and 17 (v).
[25] See: Schedule to Amended Statement of Claim, third last column.
[27] Section 7A was inserted by the Motor Car Traders (Amendment) Act 1996, No. 74.1996 which was assented to on 17 December 1996.
[30] [2002] EWCA Civ 1598; [2003] UKHHR 76.
[39] Moody v Sullivan involved an alleged duty of care on the part of public officers to protect suspects in the course of investigating and reporting about allegations of sexual abuse of children.
[44] (NSW Supreme Court) 15 September 1995.
Sami & Anor
Roads Corporation [2008] VSC 377
(1997) 189 CLR 510
(2001) 206 CLR 1
(1933) 49 CLR 142
(1998) 42 NSWLR 687
(1999) 197 CLR 611
(1938) 60 CLR 336
(1992) 110 ALR 449
(1959) 101 CLR 298
(1999) 198 CLR 180
(1998) 192 CLR 330
(1932) 47 CLR 279
(1982) 39 ALR 191