Suburban Towing & Equipment Pty Ltd v Suttons Motor Finance Pty Limited

Coulton v Holcombe (1986) 162 CLR 1 at 7 CASES CITED : Lumbers v W Cook Builders Pty Limited (in liq) [2008] HCA 27; (2008) 82 ALJR 1037 at [80] Surrey Breakdown Limited v Knight [1999] RTR 84 Suttor v Gundowda Pty Limited (1950) 81 CLR 418 at 438

TEXTS CITED : Bowstead and Reynolds on Agency (16th ed 1996) at 156 Goff & Jones, The Law of Restitution (4th ed, 1993)

PARTIES : Suburban Towing & Equipment Pty Ltd - Plaintiff Suttons Motor finance Pty Limited - Defendant/Cross-Claimant

COUNSEL : Mr R C Scruby - Plaintiff Mr G K Burton SC - Defendant/Cross-Claimant

SOLICITORS : Hills Legal - Plaintiff Richard Harvey & Associates - Defendant/Cross-Claimant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION HOEBEN J

11664/2008 - SUBURBAN TOWING AND EQUIPMENT PTY LTD v SUTTONS MOTORS FINANCE PTY LTD

JUDGMENT 1 HIS HONOUR: Nature of Proceedings The plaintiff (which was the defendant in the Local Court) appeals pursuant to ss 73 and 74 of the Local Courts Act 1982 (LCA) from the decision of her Honour Schurr LCM of 19 March 2008. 2 Section 73 LCA relevantly provides: "(1) A party to proceedings under this Part who is dissatisfied with the judgment or order of a Court sitting in its General Division may appeal to the Supreme Court against the judgment or order, but only as being erroneous in point of law …" 3 Section 74 relevantly provides: "(1) A party to proceedings under this Part who is dissatisfied with the judgment or order of a Court sitting in its General Division may appeal to the Supreme Court against the judgment or order on a ground that involves a question of mixed law and fact, but only by leave of the Supreme Court. …" 4 Two issues were raised in the appeal. The first was that her Honour wrongly interpreted the Tow Truck Industry Act 1998 (the Act) when she held that it did not oblige the owner of a motor vehicle to pay towing and storage charges in the circumstances of this case. 5 The second issue was that her Honour erred in not finding that the owner of the motor vehicle was liable for towing and storage charges by application of restitutionary principles or by way of involuntary bailment. It was common ground that this second point had not been raised before her Honour.

Factual background 6 Unless otherwise indicated, the background facts were as follows. 7 The defendant provides finance for the leasing of motor vehicles. On 10 July 2004 it leased a Holden Barina motor vehicle to a Ms Akkan. As a result of the lease agreement between them, the defendant remained the owner of the vehicle at law, but Ms Akkan became the registered owner and was entitled to the immediate possession of it. 8 On 22 September 2005 Ms Akkan ceased making lease payments to the defendant. In early October 2005 she advised the defendant that the motor vehicle had been stolen. Thereafter, the defendant took steps in accordance with the lease agreement for the recovery of unpaid moneys and for the recovery of the motor vehicle. I am satisfied that as a result of those actions, the defendant by February 2006 had become entitled to the immediate possession of the motor vehicle. 9 By way of further background, the defendant since November 2005 had been unsuccessful in its attempts to contact Ms Akkan. In May 2006 the defendant commenced proceedings in the North Sydney Local Court for $14,274.11 being unpaid amounts under the lease as of that date. That matter did not proceed far because the defendant was unable to serve Ms Akkan with the originating process. 10 The plaintiff is a car towing company. On 27 November 2006 the police found the motor vehicle apparently abandoned at Baulkham Hills. Pursuant to the Act a police officer required the plaintiff to tow the car to its storage yard for the purpose of having it tested for fingerprints. The police officer authorised the vehicle to be "towed to the above location" - the "above location" being the storage yard of the plaintiff at Windsor Road, Baulkham Hills. The plaintiff complied with that direction. 11 The significance of this authority is that the "towing authority form" provides for one of two boxes to be ticked by the authorising person. One box authorises the vehicle to be "towed to the above location". The other box authorises the vehicle to be "towed to and stored at the above location". In this case the authority only extended to towing to the specified location. 12 The testing of the vehicle for fingerprints took place on 21 December 2006. Thereafter, attempts were made by the police to contact Ms Akkan so that she could collect the vehicle. Messages were left with her family and at an address where it was understood she was living. The plaintiff also attempted to contact her. Those efforts to contact her were unsuccessful. On 22 March 2007 the police advised the plaintiff that they had been unable to contact Ms Akkan. 13 On 21 June 2007 the plaintiff contacted REVS. It learned that the lease which Ms Akkan had taken out with the defendant was registered and discovered that the defendant was the owner of the vehicle. 14 The plaintiff contacted the defendant on that date. It advised the vehicle's whereabouts and that the vehicle could be collected at any time providing the towing and storage fees were paid. The defendant objected to paying the storage fees and in due course correspondence passed between the lawyers for the parties without any resolution being achieved. As of 4 October 2007 the plaintiff was claiming towing and storage fees of $3,377 which would continue to rise by $11 per day thereafter. 15 On 16 July 2007 the defendant commenced proceedings against the plaintiff in the Local Court seeking an order for the immediate delivery to it of the motor vehicle and payment of $1,900 in damages. This was based on the diminution in the value of the vehicle since 21 June 2007 when the defendant had first asked the plaintiff to deliver it up. The plaintiff did not challenge the defendant's entitlement to the vehicle but cross-claimed for towing and storage charges since 27 November 2006. These were the issues which were before her Honour on 4 March 2008. Her Honour delivered judgment on 19 March. 16 Her Honour ordered that the plaintiff deliver up the vehicle to the defendant, but rejected the defendant's claim for damages. Her Honour rejected the plaintiff's claim for towing and storage charges. The plaintiff appeals from her Honour's decision rejecting its claim for towing and storage charges.

Submissions and consideration Statutory Argument 17 The plaintiff's first argument depended upon an understanding of how the Act worked. The Act provided for the establishment of a Tow Truck Authority (TTA). Part 4 of the Act made provision for a job allocation scheme. The TTA and other authorised persons (such as the police) allocated work under the scheme. The job allocation scheme in essence overrode any private contract that might be in force. 18 Sections 47 - 49 of the Act had the effect that if a tow truck operator wanted to do work to which the job allocation scheme applied, it must be a participant in the scheme and it must obtain a towing authorisation. A towing authorisation authorised the towing only of the motor vehicle that was specified in the authorisation and the vehicle could only be towed to the destination specified in the authorisation. 19 The plaintiff placed considerable weight on the provisions of s 54 of the Act. That section provided: "(1) The TTA may from time to time determine the maximum charges that may be charged by tow truck operators and drivers for the towing, salvage or storage of motor vehicles (including the charges for different classes of such towing, salvage or storage). (2) The regulations may prescribe procedures for or with respect to charging for any such towing, salvage or storage." 20 The plaintiff submitted that the Act had to be read with the Tow Truck Industry Regulation 1999. The regulation defined "police towing work" as: "Means any towing work by a tow truck that is arranged by the Police Service: (a) for towing a motor vehicle that is required by the Police Service to be examined for forensic purposes, or (b) for towing a motor vehicle that, in the opinion of a police officer, is causing an unreasonable obstruction to traffic (but only to the extent that it is necessary to tow the vehicle so that it is no longer causing the obstruction)." 21 Regulation 24 set out the towing work to which the job allocation scheme applied. "24(1) A JAS applies to the following kinds of towing work: (a) accident towing work, (b) ambulance break down towing work, (c) limited access towing work (d) obstruction towing work, (e) police towing work. … 22 Subsection 46(6) of the Act provided: "(6) The TTA, or any person or body acting on behalf of the TTA, or the Crown, is not liable to compensate any person for any loss suffered by the person as the result of the establishment, administration, or operation of the job allocation scheme under this Division." 23 Against that statutory background, the plaintiff put its argument as follows. It accepted that the Act made no provision for any specific entity paying towing or storage charges. Section 54, however, made it clear that the Act envisaged that charges would be rendered by a tow truck operator and authorised the rendering of such charges at a specified rate. The Act also envisaged that tow truck operators could be required by the police or TTA to perform involuntary towing and storage work, i.e. without the knowledge and consent of the owner or any person authorised to drive the motor vehicle in respect of which work was performed. 24 The plaintiff submitted that it must be implicit from the scheme of the Act that in such circumstances, a tow truck operator, participating in the job application scheme, should be entitled to charge an owner for performing towing and/or storage work. The owner was the logical person who should be charged for such work and such a result must have been contemplated by the Act otherwise s 54 would not have been enacted. 25 I do not agree. As a matter of basic statutory construction, if the Act imposed an obligation on the owner of a motor vehicle to make a payment for services which the owner neither requested nor was even aware of, one would expect that obligation to be set out clearly and unambiguously in terms within the Act or regulations. It is not the sort of obligation which arises by implication. 26 The interpretation sought by the plaintiff is not available on a normal reading of s 54. Section 54 does no more than recognise the right of tow truck operators to charge fees when they render services and it seeks to regulate those fees. What it does not do is to create by force of statute an entitlement to charge those fees nor does it identify an entity against whom those fees can be charged. The right to charge fees for towing and storage services arises under the general law. Equally, the parties who can be charged for the performance of those services are also to be identified by reference to general law principles. 27 I appreciate that such an interpretation of the Act may appear to operate harshly against a tow truck operator on the particular facts of this case. That, however, is not a basis for trying to give a meaning to the clear provisions of the Act which cannot be supported. On the contrary, the Act seems to envisage a requirement for tow truck operators to perform a measure of public service for which they may not be adequately paid or paid at all. The examination of motor vehicles for "forensic purposes" seems to be such a situation. This was the price of participating in a regulatory scheme which conferred other benefits. 28 One also has to balance the position of the tow truck operator against that of an owner who may have no knowledge of what has happened to a motor vehicle, particularly in the case of theft, or if some crime has been committed by the use of the vehicle. The Act appears to envisage their competing interests being resolved by the application of general law principles rather than by itself prescribing a specific outcome. Given the wide range of possible factual scenarios, that is not an unreasonable approach on the part of the legislature. 29 Her Honour was correct to reject the plaintiff's arguments based on its interpretation of the Act and no error in her Honour's approach has been established. This challenge to her Honour's judgment fails.

Restitutionary Argument - Competence 30 The second argument raised by the plaintiff seeks to identify a general law principle which would enable it to be paid by the owner/defendant for the services which it provided. The plaintiff's reliance upon restitutionary principles and the concept of involuntary bailment, confronts a threshold difficulty in that these matters were never raised or argued before her Honour. That being the case, it is difficult to see how her Honour's decision in relation to the general law issues could be properly characterised as "erroneous in point of law" as required by s 73 LCA. 31 Given the adversarial system under which our courts operate, it would be unreasonable to require her Honour to canvass all possible legal issues arising from a particular set of facts where those issues had not been raised or relied upon by the parties. That is so, it seems to me, even where the point relied upon is a matter of law which does not require any additional evidence or fact finding. It needs to be remembered that the right of appeal being exercised by the plaintiff is constrained by s 73 LCA. It is not an appeal such as would lie to the Court of Appeal from a single judge of this Court where points of law can in certain circumstances be raised even though they were not relied upon at first instance. In my opinion s 73 LCA prevents a new point such as this being taken for the first time on appeal. 32 There is, however, another difficulty confronting the plaintiff. The defendant submitted that for the submission to be properly considered, further factual issues needed to have been considered such as what constituted the necessity and the benefit and to whom? Had the matter been raised before her Honour, it would have been open to the defendant to have called evidence on these questions. Certainly the plaintiff could not rule out the possibility that such evidence could have been given and that such evidence might well have prevented the point from succeeding. The defendant relied upon Suttor v Gundowda Pty Limited (1950) 81 CLR 418 at 438 and Coulton v Holcombe (1986) 162 CLR 1 at 7 to support its submission. On the basis of that authority and because of the provisions of s 74 LCA, the plaintiff should not have leave to raise this issue on appeal. 33 It follows that the plaintiff's challenge to her Honour's judgment on this issue fails. That is sufficient to deal with the matter.

Restitutionary Argument - Merits 34 In deference to the considered arguments which were put by the plaintiff and because the Court was advised that this matter has repercussions for the towing industry generally, I propose to consider the plaintiff's submissions although my remarks in this regard are strictly obiter. 35 The plaintiff accepted that in Australia and the United Kingdom, the case law is against the proposition upon which it seeks to rely. The most recent statement of principle by the High Court was in Lumbers v W Cook Builders Pty Limited (in liq) [2008] HCA 27; (2008) 82 ALJR 1037 at [80]: "Likewise, it is essential to consider whether the facts of the present case yield to analysis as a claim for work and labour done, or money paid, because where one party (in this case, Builders) seeks recompense from another (here the Lumbers) for some service done or benefit conferred by the first party for or on the other, the bare fact of conferral of the benefit or provision of the service does not suffice to establish an entitlement to recovery. As Bowen LJ said in Falcke v Scottish Imperial Insurance Company . "The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will."

The principle is not unqualified. Bowen LJ identified salvage in maritime law as one qualification. Other cases, including other cases of necessitous intervention, may now be seen as further qualifications to the principle but it is not necessary to examine in this case how extensive are those further qualifications or what is their content. For the purposes of this case the critical observations to make are first that Builders' restitutionary claim does not yield to analysis as a claim for work and labour done or money paid and secondly, that Builders' restitutionary claim, if allowed, would redistribute not only the risks but also the rights and obligations for which provision was made by the contract the Lumbers made with Sons." 36 The plaintiff submitted that the facts of this case came within the "cases of necessitous intervention" referred to by the High Court. The plaintiff submitted that whether a situation of "necessity" had arisen was a matter to be determined on the facts of any particular case. It submitted that in the present case a situation of "necessity" arose for two related reasons. First there was public interest necessity because the police, having identified a likely breach of the criminal law, were duty bound to take all reasonable steps to investigate it. That could only be done by requiring the vehicle to be towed to an appropriate place for forensic analysis. 37 The second reason was that the plaintiff had no practical choice but to tow and store the car. It had no choice as to whether it received any particular job under the job allocation scheme and, once it had been allocated a job, was required to tow the car in accordance with the direction of the call centre (clauses 32 and 35 of the Regulation). It was an offence to fail to tow in accordance with an authority issued under the Act. 38 In support of that proposition, the plaintiff relied upon a 1976 decision of the County Court at Stockton in the United Kingdom. There is no proper report available of that decision, although the bare statement of facts would seem to support the plaintiff's proposition, i.e. P was a crane hirer and D a haulage contractor. One of D's lorries became jammed under a bridge in a busy thoroughfare of a large town. Police were unable to contact D and telephoned P asking for a crane to be sent to the site to free the lorry. P successfully sued D alleging an agency of necessity claiming its fees for the removal of the truck and was successful. Given the absence of a report setting out the Court's reasoning process, the plaintiff accepted that this case was of only limited value. 39 Another case which appeared to be directly in point was Surrey Breakdown Limited v Knight [1999] RTR 84, a decision of the Court of Appeal in England (a two judge bench). The facts of that case were that the defendant's car was stolen and left at the edge of a pond. The police instructed the plaintiffs, who provided break down services, to remove and store the car. The defendant refused to pay the plaintiffs' removal and storage charges. The plaintiffs commenced proceedings in the County Court to recover those charges and were successful at first instance in the County Court. On appeal, the County Court judgment was set aside. 40 The leading judgment was delivered by Sir Christopher Staughton. On this issue he said: "The doctrine of agency of necessity is not wholly settled in English law. It is well established in maritime cases that there may be what is called officious intervention creating, as it were, an agency. Whether the same is the case on land is not settled. Bowstead and Reynolds on Agency (16th ed 1996) at 156 states: "Any attempt at development within [this] category has to contend initially with the dictum of Bowen LJ in 1886 that "work or labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved, or even, if standing alone, create any obligation to repay the expenditure."" That is a reference to Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234. However, the modern view is to be found at chapter 15 in Goff & Jones, The Law of Restitution (4th ed, 1993), and in particular at 373. There it is said that to support an agency of necessity: "Necessity must have compelled the intervention. The emergency must be so pressing as to compel intervention without the property owner's authority." It seems to me that it cannot reasonably be said that Surrey Breakdown Limited in taking the car out of the pond at 4.35 in the morning were doing so because necessity compelled them to do so without the authority of Mr Knight, the owner. Plainly, they were doing it because the police invited them to do it. It may have been very proper for the police to take that course under the Act of 1984 and the Regulations. That is why the Act and the Regulations are there. But in my judgment it was not a common law case of agency of necessity." 41 The plaintiff distinguished that case on the basis that the legislation authorised the police to request assistance from a towing company but did not compel the towing company to perform the service. In that regard, the facts could be distinguished from the present case. Otherwise the statement of principle was correct and counsel for the plaintiff conceded that it did not support the submission. 42 The plaintiff also relied upon decisions in some American States which followed the Restatement of Restitution. Those American decisions support the plaintiff's submission. The most authoritative was First Federal Savings and Loan Association v A & M Road Service Inc, a 1998 decision of Ohio Court of Appeals. 43 The defendant submitted that the starting point in principle is that the law is reluctant to impose an obligation to pay for work on a person who neither agreed to it nor requested it, nor was under any duty which caused the work to be done. To overcome that fundamental principle, a clear basis in principle is required to justify the imposition of such an obligation and clear evidence is required to show that the test has been met in a particular case. The defendant submitted that both those components were missing in this case. 44 The defendant submitted that the plaintiff's use of the language of necessity focused the inquiry on the wrong person. In interventions where there is no pre-existing relationship between the parties the focus is on the forced "recipient" not the person who did the work and the reasons why that person did it. That is the case unless the situation is one of emergency which affects both the recipient and the person who did the work. It is the necessity of the recipient of the benefit which must ultimately be assessed so that there is a basis in principle and in evidence to impose on that person a payment obligation. It also has to be established that the intervention produced an indisputable benefit for the recipient of the services. The defendant submitted that outside of a true emergency the reason why the person did the work, even if required by statute to do so, is irrelevant to the application of the principle. 45 The defendant submitted that if the focus was not upon the recipient of the services there was the potential for considerable injustice. By way of illustration, an owner not carrying insurance could have his or her car stolen and destroyed. If that car were towed at police direction and stored, the owner would still be required to pay for those towing and storage services. 46 The defendant submitted that no emergency situation was established by the evidence and no incontrovertible benefit, beyond the initial removal of the vehicle, was established. It followed that the relevant necessity for the provision of the services had not been established. 47 In the alternative, the defendant submitted that if the plaintiff had established a restitutionary claim it would have to be restricted solely to those services which clearly benefited the defendant and in relation to which the concept of necessity operated. In that regard the defendant referred to the authority signed by the police officer which was restricted to towing the vehicle. 48 The law in this area is not clear. The latest edition of Goff & Jones (7th ed, 2007) at paragraph 17-102 states the authors' recommendations: "There is much to be said for the view that in English law an intervener should not only be exempted from tortious liability but should, in appropriate cases, be granted a restitutionary claim. A few American States, following the Restatement of Restitution, have allowed restitution. The limits of any restitutionary claim should, however, be carefully defined; and the nature of these limitations will inevitably reflect the extent to which courts wish to encourage strangers to intervene in an emergency. However, in accepting the desirability of such a claim, there is a danger that the Court may impose too great a burden on the owner of the land who has neither requested nor freely accepted the intervention." 49 As is clear from the extract from Lumbers v W Cook Builders Pty Limited (in liq) while the categories of "necessitous intervention" have not been closed, the development of the law in this area is still governed by the fundamental principle that an obligation to pay for work should not be imposed on a person who neither agreed to it nor requested it. Given the fact that this point was not taken at first instance and the real likelihood that had it been taken further evidence would have been required from both sides, this case is not an appropriate vehicle to explore whether a case of "necessitous intervention" as envisaged by the High Court has arisen. 50 On the limited evidence in this case, I would not be prepared to apply the restitutionary principle as advocated by the plaintiff. I am not satisfied that the test of necessity looked at from the point of view of the recipient of the benefits, has been established. I am not satisfied that the emergency was so pressing as to compel intervention without the defendant's authority. 51 I am not persuaded that the storage of the motor vehicle between November 2006 and the hearing before her Honour was reasonable and in the best interests of the defendant. Relevant to that last aspect, is the unexplained delay between November 2006 and the plaintiff's examination of the data available from REVS. 52 If I am wrong in that conclusion I would have restricted the plaintiff's right to charge for its services to the towing fee and the storage of the vehicle until after the police had carried out their forensic examination. Essential to the plaintiff's submission was that it was compelled to tow the vehicle and to store it. The authority, however, in its terms was restricted to towing. I am prepared to accept that implicit in the authority to tow was an authority to store until the forensic procedure had been completed. Thereafter if the plaintiff wished to rely upon the element of necessity being made out by its obligation to comply with the police direction, it was necessary for it to have that direction altered so that not only towing but also an indefinite storage was required. That was not done. 53 Accordingly, even if the plaintiff had been entitled to raise this issue in the appeal it would not have succeeded or if it did succeed, the amount which it would have recovered would have been restricted to the towing fee and storage charges for one month.

Orders 54 The orders which I make are as follows:

(2) The plaintiff is to pay the defendant's costs of the Supreme Court proceedings. **********

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