FEDERAL COURT OF AUSTRALIA CONTRACT - cheques - contract for sale of car - car delivered to purchaser without transfer documents in return for personal cheque - cheque dishonoured - whether sale illegal under Motor Vehicle Safety Act 1980 (Qld) because of absence of roadworthiness certificate - whether total failure of consideration - cheque presumed to have been taken for value Motor Vehicle Safety Act 1980 (Qld) s 32 Cheques and Payment Orders Act 1986 (Cth) s 37 IVAN MATAS v JOLANDA BARTULIN AG 78 OF 1997 EINFELD, FINN AND MERKEL JJ 7 JULY 1998 CANBERRA IN THE FEDERAL COURT OF AUSTRALIA DISTRICT REGISTRY AG 78 OF 1997 ON APPEAL FROM THE SUPREME COURT THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: ivan matas appellant AND: jolanda bartulin respondent JUDGES: einfeld, finn and merkel jj DATE OF ORDER: 7 july 1998 WHERE MADE: canberra THE COURT ORDERS THAT: 1. The appeal is allowed. 2. The judgments of the Magistrates Court and of the Supreme Court are set aside. 3. The respondent pay to the appellant the sum of $4,500, with statutory interest. 4. The respondent pay two thirds of the appellant's taxed costs in the Magistrates Court and all of the appellant's taxed costs in the Supreme Court and of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA DISTRICT REGISTRY ag 78 of 1997 ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: ivan matas appellant AND: jolanda bartulin respondent JUDGES: einfeld, finn and merkel jj DATE: 7 july 1998 PLACE: canberra REASONS FOR JUDGMENT THE COURT The present appeal involves a saga over the proposed sale of a used car for $4,500. Unfortunately the real legal issues only emerged in the course of the appeal to the Full Court. As we are of the clear view that the appeal must succeed, little purpose is served by reserving the matter for further consideration. Briefly the relevant facts may be summarised as follows. The appellant and the respondent, who lived together in Queensland, owned the car which was registered in Queensland. When the appellant was proposing to return to the Australian Capital Territory the respondent, who was remaining in Queensland, suggested that the appellant's interest in their car be sold to her son. After the appellant had returned to Canberra, as the respondent's son did not have his own cheque account, the respondent drew a cheque for $4,500 payable to the appellant for the purchase of his interest in the car. She handed the cheque to her son who was to go to Canberra and hand it over to the appellant in return for a signed transfer of the appellant's interest in the car, the car itself and a certificate of roadworthiness. The appellant had previously indicated that he would sell his interest in the car for $4,500 upon presentation of a bank cheque or cash. In anticipation of the sale he had prepared transfer documents transferring his interest in the car to the respondent. When the respondent's son arrived in Canberra he produced his mother's personal cheque to the appellant. The appellant stated that he required a bank cheque or cash and declined to hand over the documents without one or the other. He was however, prepared to allow the respondent's son to take the car in return for the respondent's cheque. Subsequently the respondent dishonoured the cheque and her son later sold the car. The appellant, who did not receive the purchase price and had lost the car, sued the respondent on the cheque. He failed in the Magistrate's Court and on appeal to the Supreme Court. Little purpose is served in outlining the detailed reasons for the appellant having failed on both occasions as the case emerged in a different light on appeal before this Court. It will suffice to note that in the courts below it was found that the appellant sold the motor vehicle. As a consequence the respondent succeeded on the basis that the sale was found to be illegal under s 32 of the Motor Vehicle Safety Act 1980 (Qld) ("the Act") because the sale was not accompanied by a roadworthy certificate. Accordingly, it was held, there was a total failure of consideration for the cheque. Two points arose on the appeal which are, in our view, fatal to the respondent's defence. Section 32 of the Act prohibits a disposition of a secondhand motor vehicle without a certificate of roadworthiness. Section 6 defines a secondhand motor vehicle as a motor vehicle that has been used or reconstructed. The definition in s 32 does not apply to the disposition of an interest in a vehicle by one co-owner to another. On the case put by the respondent, and we would add on any fair or reasonable view of the evidence, there was not a sale of a secondhand motor vehicle within the meaning of the Act. On the facts that have emerged, the appellant intended to dispose, and only disposed, of his interest as a co-owner in the vehicle. Therefore the case based on illegality arising on the sale of a secondhand motor vehicle must fail. There is a further difficulty for the respondent. In our view the appellant did not intend, and did not contract, to dispose of the vehicle or his interest in it until he was paid. Prior to that point he entered into a contract of bailment pursuant to which possession, but not title, of the vehicle was to pass on the handing over of the respondent's cheque. Section 37 of the Cheques and Payment Orders Act 1986 (Cth) provides as follows: "Where value has at any time been given for a cheque the holder shall, as regards the drawer and endorsers who became endorsers before that time, be conclusively presumed to have taken the cheque for value." Value, that is the bailment, has in any event been given. For that reason and because of the conclusive presumption of value as against the drawer (the respondent), the failure of consideration defence is not available. Accordingly, we have concluded that the appeal must succeed and the orders of the Magistrate's Court and the Supreme Court are to be set aside. The appellant will have judgment in the sum of $4,500 plus interest calculated pursuant to statute. Two thirds of the appellant's taxed costs of the proceedings in the Magistrate's Court and all of his costs in the Supreme Court and of the appeal in this Court will be paid by the respondent. There is one final matter. As was pointed out by the learned Chief Justice in the Supreme Court, the cases put by the respective parties have not been easy to understand from the pleadings, such as they are, or from the manner in which the proceedings have been conducted from time to time. Whilst, as the learned Chief Justice also correctly pointed out, that is no bar to the relief sought, the present saga does show the need for parties and their legal advisers to define carefully the issues, and demonstrates the high cost to all, not least the justice system, when they fail to do so. I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justices Einfeld, Finn and Merkel Associate: Dated: 7 July 1998 Counsel for the Appellant: Mr C Erskine Solicitor for the Appellant: Romano & Co Counsel for the Respondent: Mr R Refshange Solicitor for the Respondent: Deacons Graham & James Date of Hearing: 7 July 1998 Date of Judgment: 7 July 1998