Zervos & ors v Commissioner for Fair Trading, NSW Office of Fair Trading [2007] NSWADT 50

CITATION: Zervos & ors v Commissioner for Fair Trading, NSW Office of Fair Trading [2007] NSWADT 50

DIVISION: General Division

APPLICANTS Michael Zervos PARTIES: Christopher Zervos Bondlist Pty Ltd RESPONDENT Commissioner for Fair Trading, NSW Office of Fair Trading

FILE NUMBER: 063342; 063343; 063344

HEARING DATES: 22/02/07

SUBMISSIONS CLOSED: 22 February 2007

DATE OF DECISION: 6 March 2007

BEFORE: Handley R - Acting Deputy President

CATCHWORDS: Motor Dealer - cancellation of licence - Motor Dealer - impose disqualification of licence

MATTER FOR DECISION: Principal matter

LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Motor Dealers Act 1974

Aria Jap International Pty Ltd v Commissioner for Fair Trading [2006] NSWADT 166 CASES CITED: Flanagan v Commissioner of Fair Trading [2004] NSWADT 166 Morrie Muller (NSW) Pty Ltd & anor v Director General, Department of Fair Trading [2002] NSWADT 163 Tosohn v Director General, Department of Fair Trading [2003] NSWADT 1

APPLICANTS S Hill, barrister REPRESENTATION: RESPONDENT V Griswold, solicitor

ORDERS: The decisions of the Commissioner for Fair Trading, NSW, dated 30 August 2006 are set aside, with the consequence that the disqualifications imposed on Michael and Christopher Zervos and Bondlist Pty Ltd must be lifted and Bondlist Pty Ltd's motor dealer's licence restored.

REASONS FOR DECISION 1 Michael Zervos, Christopher Zervos and Bondlist Pty Ltd (collectively referred to as 'the Applicants') have applied to the Tribunal for the review of decisions of the Commissioner for Fair Trading, NSW, dated 30 August 2006: (1) to disqualify Michael Zervos from being concerned in the direction, management or conduct of the business to which a motor dealer's licence relates for a period of five years, (2) to disqualify Christopher Zervos from being concerned in the direction, management or conduct of the business to which a motor dealer's licence relates for a period of three years, and (3) to cancel Bondlist's motor dealer's licence, to disqualify Bondlist from holding a licence for a period of five years, and to require Bondlist to pay specified compensation to nominated consignors. Background 2 Bondlist was incorporated on 20 May 1997. There are two directors of the company: Michael Zervos, the Managing Director, and his wife Kay Zervos, who performs bookkeeping duties for the company but is otherwise not involved in its day to day management. On 25 June 1997, Bondlist was granted a motor dealer's licence (MD 16179), valid to 25 June 2007. Michael Zervos has also held a wholesaler licence (MD 13206) since 1993. From about 1999, Bondlist employed Michael and Kay Zervos' son Christopher Zervos as a salesperson. On 10 October 2002, Christopher Zervos was granted a motor dealer's licence in his own name and, while still working for Bondlist, commenced trading under the business name South Coast Autos, although operating from Bondlist's premises. 3 When Bondlist first commenced business, it would purchase vehicles from wholesalers or customers and then on-sell the vehicles as a retailer. During 2000, Bondlist commenced selling vehicles on consignment from customers. According to Michael Zervos, this part of the business grew until it represented about 40% of turnover. At the relevant time in 2003/2004 when Bondlist was selling vehicles on consignment, it was trading as South Coast Motors. While it is not clear what arrangement existed between Bondlist and Christopher Zervos which enabled Bondlist to trade under this business name, it is not pertinent to the outcome in this matter. 4 On 17 March 2004, Robert Hughes, whose car South Coast Motors had sold on consignment, complained to the Office of Fair Trading ('OFT') about the transaction. The OFT spoke with both Michael Zervos and Christopher Zervos on the phone about the complaint and, on 16 April 2004, Stephen Crowe, a Supervising Inspector of the OFT, visited Bondlist's premises to discuss the matter. Because of what Mr Crowe regarded as "anomalies" in the motor's dealer's documentation maintained by Bondlist, Mr Crowe decided to expand his investigation. On a further visit to Bondlist's premises on 23 June 2004 with another OFT inspector, Glen Baxter, Mr Crowe asked to examine all consignment agreements for the previous 12 months (numbering about 100, according to Michael Zervos). On examining these, they alleged that a pattern was indicated whereby in a substantial number of agreements, the amount of the reserve price agreed by the consignor (the customer) that he or she was prepared to accept for the vehicle, was reduced, albeit by agreement, after the sale transaction had commenced. 5 Mr Crowe and Mr Baxter obtained copies of the consignment agreements (Memoranda of Consignment) and corresponding contracts of sale with a view to continuing their investigation. Over the ensuing months, they contacted 11 consignors where an amended reserve price was indicated by the documentation. Of these, nine were interviewed and provided statements about the consignment process. Mr Crowe concluded that these statements indicated deceptive practices by Bondlist to bring about the amended reserve price, with the result that Bondlist's profit was increased. 6 On 26 April 2005, a delegate of the Commissioner issued a 'Notice to Show Cause' to Bondlist stating that there were reasonable grounds for believing that the business to which its motor dealer's licence related was being carried on in a dishonest or unfair manner. On 17 May 2005, Bondlist responded through its solicitors. There was some further correspondence between the parties leading to a meeting on 21 July 2005, followed by a further letter to the OFT from Bondlist's solicitors dated 3 August 2005. 7 On 30 August 2006, a delegate of the Commissioner made the determinations set out in paragraph 1, above. In addition, Kay Zervos was disqualified from being concerned in the direction, management or conduct of the business to which a motor dealer's licence relates for a period of two years. I note that Michael Zervos' disqualification does not apply to his wholesaler licence (MD 13206). 8 On 8 September 2006, the solicitors acting for Bondlist and Michael and Christopher Zervos sought an internal review of the decisions. On 15 September 2006, Bondlist and Michael and Christopher Zervos applied to the Tribunal for a review of the decisions dated 30 August 2006 and for an urgent 'Stay' of the decisions. On 20 September 2006, the Tribunal granted a 'Stay' pending the determination of the applications, subject to conditions including that the Applicants will not sell or undertake to sell any motor vehicles on consignment during the currency of the Stay Order. 9 There has been no response from the OFT to the applications for an internal review which, pursuant to s 53(9)(b) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act'), are taken to have been finalised 21 days after the applications were lodged. On 9 November 2006, the Commissioner filed the Respondent's documents pursuant to s 58 of the ADT Act. Michael Zervos' Evidence 10 Michael Zervos provided a statement dated 19 December 2006 and gave oral evidence at the hearing. He said that when he originally started selling cars on consignment, he contacted Mr Crowe and invited him to Bondlist's premises to discuss the proper process for making such sales. At the meeting, at which Mr Zervos' salesperson, Simon Fitton was also present, Mr Zervos showed Mr Crowe a draft agreement (a Memorandum of Consignment) he had drafted. Mr Crowe suggested some minor amendments, which Mr Zervos made, and also suggested a further document – an acknowledgement by which the owner/consignor indicated his or her acceptance of the agreed reserve amount for the sale of the car. Mr Zervos said he subsequently had the draft agreement and acceptance form printed and they were used in all the consignment transactions. 11 Mr Zervos said he insisted that his sales staff followed what he called a 'script' when contacting potential customers to try and persuade them to sell their cars on consignment. This was to ensure the correct information was given to customers. The typed 'script', which was written in about 2000, approximately a week after the discussion with Mr Crowe, was kept on a desk in the office where sales staff used to work on consignments, make phone calls etc. The script had to be followed religiously, and Mr Zervos said he regarded it as a sackable offence not to follow it. (The script was admitted into evidence and provides clear guidance on what to say to potential customers when trying to persuade them to sell their cars on consignment. Mr Zervos also produced a further handwritten script which he said provided guidance to the sales staff on 'follow up' with customers who have consigned their vehicles for sale and where the salesperson has a potential purchaser for a vehicle.) 12 Mr Zervos explained the normal procedure for a consignment transaction. The salesperson would discuss with the consignor the net amount the consignor wished to realise. This would involve the salesperson obtaining the 'Redbook' (which he described as the "dealer's bible") valuation for the car, which was usually printed and given to the customer. An initial reserve price was agreed for the car between the consignor and the salesperson with the salesperson emphasising that this was the amount the consignor would 'clear' on the sale. The initial reserve price was usually above the Redbook valuation and the salesperson would explain to the consignor that car buyers would usually haggle about the price and that a process of offer and counter-offer could be expected. 13 The consignor was advised that the actual sale price for the car would be greater than the net reserve price the consignor would receive, because the dealer would be required to pay GST, provide the relevant statutory warranty, pay business overheads, and itself realise a profit on the deal. The attention of the consignor was specifically drawn to clause 6 of the Memorandum of Consignment, which states, "The consignee is entitled to all monies above the agreed and accepted reserve price", and the consignor was specifically asked to sign against this clause. Once the Memorandum was signed, the consignor was given a copy. The vehicle was then placed in the car yard for sale. 14 Mr Zervos estimated overheads at $500 for a vehicle selling up to $10,000 and $1,250 for those selling for a price exceeding $10,000. The average cost of providing the statutory warranty was $500 for non-warrantable vehicles (a car with more than 160,000 kms on the clock, or more than 10 years old, or a commercial vehicle), and $1,250 for warrantable vehicles. The sales staff were instructed to inform consignors that the dealer was obliged to provide a warranty to the customer and that this was factored into the sale price. Mr Zervos estimated that the business averaged a profit of $2,000 per car sold on consignment. He said he did not advise consignors of this, and also did not reveal to consignors the price at which the car was sold because he had been told not to do so by the OFT for privacy reasons. Only one customer, (the complainant) Mr Hughes asked for the sale price. Mr Zervos informed him this could not be revealed for privacy reasons and suggested that Mr Hughes contact the OFT if he wanted confirmation of this. 15 Mr Zervos stated that because the initial price for consigned vehicles was commonly optimistically high, the vehicles were often slow to sell. If a car did not sell after a period of usually six to eight weeks, the consignor would be contacted to seek permission to reduce the agreed reserve price. This could happen more than once. When an offer was obtained from a prospective purchaser that would give a consignor less than the agreed reserve price, the salesperson would try and contact the consignor to discuss this or, failing this, a written offer or contract for sale conditional upon acceptance by the owner or dealer was completed. It was then up to the consignor to agree to the amended reserve price and, if not, the contract for sale would be terminated. Prospective purchasers would also sometimes require finance, in which case the offer to purchase and Contract of Sale would, in addition, be conditional upon finance being approved. In a few instances, neither purchaser nor consignor would move on their price position, in which case a salesperson would seek his (Mr Zervos') approval to reduce Bondlist's margin in order to facilitate a sale. 16 In cross-examination, Mr Zervos was asked about the nine consignors from whom the OFT had obtained statements. With regard to Mr Juric, Mr Zervos denied that their conversation had become loud and heated as Mr Juric claimed in his statement. Mr Zervos said he explained to Mr Juric that overheads were involved when a car is consigned, including GST, payment for the sales staff, and the costs of the warranty. The warranty was of particular concern in this instance because Mr Juric's car was highly modified and presented a greater risk than usual. Mr Zervos offered to pay Mr Juric more if he was prepared to cover the cost of the warranty. Mr Juric declined. 17 With regard to Karen and Spiro Kontopoulos, Mr Zervos said he always emphasises to the consignor the amount the consignor will net from the transaction and not the sale price. Mr Zervos explained that the time difference between the purchaser completing the contract of sale on 9 January 2004 and the date on which the amended reserve price was agreed with the Kontopouloses and the car was delivered - 16 January 2004, may have been because of the purchaser's need to arrange finance. Mr Zervos said he did not know whether the information that Simon Fitton gave the Kontopouloses, referred to in Mrs Kontopulos' statement, was correct. However, Mr Zervos emphasised that he ensures customers are not pressured by his sales staff's tactics and denied that misleading statements were made to customers. His insistence on his staff following the script is to avoid this. Mr Zervos denied that at various times over the preceding years he had told Mr Crowe that Mr Fitton was a crook and that he had fired him. Mr Fitton resigned and then later returned to work for him, which was the situation at the relevant time in 2003/2004. 18 With regard to Mr Hughes, Mr Zervos said that when Mr Hughes came to see him, his car was in the yard, and he told Mr Hughes that if he did not want sell the car at that price, he need not do so. Mr Hughes indicated that he wanted to go ahead, and Mr Zervos wrote him a cheque for the $7,000 he was owed on the transaction even before the car was delivered. Mr Zervos said only Mr Hughes Senior was present during this discussion and not Mr Hughes' son. 19 Mr Zervos noted that Mr Crowe had selected examples to follow up where the greatest reductions in the initial reserve price had been made. Mr Zervos said he sold hundreds of cars by consignment and not all involved a reduction in the initial reserve price agreed with the consignor. He stated that after he was told by the OFT of the complaint, the volume of cars sold on consignment "gradually tapered off", and the last such sale, made at the request of a previous customer, was in May 2006. Mr Zervos said he has now relocated his business to a smaller yard with less employees and: "This whole episode has convinced me that I should not accept cars for sale by consignment. I am prepared to give an undertaking to that effect or would accept an appropriate endorsement on my licence." Christopher Zervos' Evidence 20 Christopher Zervos provided a statement dated 19 December 2006 and gave oral evidence at the hearing. He stated that he terminated his employment with Bondlist at the end of December 2005 and, from January 2006, has conducted his own business as South Coast Autos. The business operates from the same address as his father's business. He has never sold a car on consignment in his own business. 21 Mr Zervos said that when Bondlist started selling cars by consignment from the year 2000, he and the other salesperson, Simon Fitton were required to follow a procedure set out in the 'script'. This was kept on the desk in the upstairs office which was used for making phone calls in connection with sales by consignment. Mr Zervos said his father had not previously fired Mr Fitton as Mr Crowe has alleged. 22 In cross-examination, Mr Zervos was asked about the specific statements obtained by the OFT from consignors. With regard to Mr Juric, Mr Zervos said his car was highly modified and so presented a greater than usual warranty risk. Mr Zervos denied that Mr Juric was very upset when he came in to discuss the situation with Mr Zervos' father. After their discussion, "he [Mr Juric] was fine". With regard to Mr Hughes, Mr Zervos said when Mr Hughes Senior signed the Memorandum of Consignment, he (Mr Zervos) drew his attention to clause 6 and the consignee's (the dealer's) entitlement to all moneys above the agreed and accepted reserve price. Mr Hughes agreed to the reduced reserve of $7,000 and that was the price he received for the car. 23 With regard to Mr and Mrs Clarke, Mr Zervos confirmed that the sale price for their car was $22,900 and that they received $17,000. However, in this case, the purchaser insisted on a high trade-in. Mr Zervos surmised this was higher than would normally have been allowed for the vehicle in question, as not uncommonly happens in order to keep a purchaser happy. The purchaser also required that the car he was buying (Mr and Mrs Clarke's) should be fully detailed and have a new battery installed, and the purchaser needed finance to complete the deal. 24 With regard to Mr Mitchell, Mr Zervos agreed that Mr Mitchell's car was sold for $22,990 and that Mr Mitchell received the amended reserve of $16,500. Mr Zervos said it is clear from Mr Mitchell's fax dated 28 November 2003 that he understood the terms of the transaction. Mr Zervos denied that he pressured Mr Mitchell as alleged in paragraph 6 of Mr Mitchell's statement. Stephen Crowe's Evidence 25 Mr Crowe provided a statement dated 9 November 2006 and gave oral evidence at the hearing. He stated that "as a result of anomalies at the dealership", following his enquiries concerning the complaint made by Mr Hughes, he decided to expand the investigation. When Mr Crowe visited South Coast Motor's premises to discuss Mr Hughes' complaint, Michael Zervos told him that Simon Fitton had left his employment six days previously. Mr Crowe said he had had several conversations with Mr Zervos about Mr Fitton in about 2000 when Mr Zervos had criticised Mr Fitton for dishonesty and tardiness. However, Mr Zervos had said that Mr Fitton was a good salesman and it was for that reason that he retained his employment. In about 2002, Mr Zervos told him that "he had finally got rid of Mr Fitton for his dishonesty" and that Mr Crowe should keep an eye on him. In his statement, Mr Crowe said Mr Zervos told him he had sacked Mr Fitton, but in cross-examination Mr Crowe acknowledged that he did not recall Mr Zervos using the word "sacked" in relation to Mr Fitton. Mr Crowe said he was surprised, when he first went to see Mr Zervos about Mr Hughes' complaint in April 2004, to see Mr Fitton on the premises and engaged by the business. 26 Mr Crowe said he has never seen or heard mention of the 'scripts' referred to in oral evidence on the 10 or so occasions when he has visited the premises and spoken with either Michael or Christopher Zervos. 27 In cross-examination, Mr Crowe said that in response to his request for all the consignment agreements entered into over the past 12 months, he received over 100, from which he selected 11 where there was an amended reserve price. He agreed there was nothing untoward on the face of the other 89 or more consignment agreements. Either he or Mr Baxter phoned the consignors in the 11 selected matters. One failed to respond, one stated he was satisfied with the transaction, and the remaining nine were interviewed and provided statements. In his statement, Mr Crowe said (at par 23): "In each case the nine consignors were disappointed to learn the sale circumstances may have been something other than they were lead to believe by dealership staff." No evidence was given Mr Crowe as to what either he or Mr Baxter told the consignors. 28 Mr Crowe went on (par 25): "The consignor statements clearly indicated deceptive practices on the part of the dealer to bring about the amended reserve." As a result, Mr Crowe sought legal advice as to the appropriate course of action and the matter then proceeded as set out at par 6, above. The Applicants' Submissions 29 In written submissions, Mr Hill, for the Applicants, stated that contrary to the assertion made on behalf of the Commissioner, the figures provided to consignors were not purchase offers but rather net figures, and the consignors agreed that the dealer was entitled to any amount obtained in excess of the reserve price. A fair examination of the Memorandum of Consignment reveals that the attention of consignors was drawn to clause 6, which stated that the dealer was "entitled to all moneys above the agreed and accepted reserve price". Each of the consignors signed against this clause. In any event, commonsense would clearly indicate to any reasonable person that the dealer was in business and necessarily had to add a margin above the reserve price for overheads, GST, warranty repairs and profit. In return for the margin, the consignor was provided with the services of professional sales staff in an established yard that was open seven days a week. It is not credible for a consignor to claim that he or she would get 100% of the actual sale price. 30 Mr Hill noted that with the exception of Mr Hughes, all statements were provided 10 or 11 months after the transaction had been completed and no information has been provided about what Mr Crowe or Mr Baxter told the consignors when asking them to provide a statement. Moreover, it took the OFT from April 2004, when Mr Hughes lodged his complaint, until April 2005 to issue a show cause notice, and it was not until 30 August 2006 that a determination was made. This does not suggest the OFT perceived an urgent need to protect the public. 31 Mr Hill stated there is evidence that at least two of the consignors – Mr Mitchell (fax dated 28 November 2003) and Michael Coric (statement dated 23 August 2004), were aware that they would receive the agreed reserve price on the sale of their cars. Mr Hill said Mr Coric's brother was also doing work experience at the car yard and would have been aware of the advertised price for the car. Even Mr Hughes was aware that the consignment transaction involved a profit element for the dealer (letter dated 10 March 2004). Both Michael and Christopher Zervos' evidence is that a script was used when telephoning consignors to ensure that the correct information was given. Mr Hill submitted that there was no requirement for the dealer to disclose to the consignor the ultimate price paid by the purchaser. The dealer's duty was to disclose the net amount the consignor would receive, and if this was less than the agreed reserve, then the consignor had a choice: to agree to a reduction in the reserve, maintain the reserve, or withdraw the car from sale. Mr Hill submitted that contracts of sale executed by purchasers were conditional upon acceptance by the consignor. 32 With regard to the allegation that pressure was applied to consignors to agree to a revised, lower reserve price, Mr Hill pointed out that clause 4 of the Memorandum of Consignment enabled consignors to take their car away at any time. Michael Zervos gave evidence that he emphasised this to Mr Hughes when Mr Hughes asked to be told the sale price of his car. Mr Hill submitted that improper conduct did not occur. It will also not occur in the future given that Bondlist no longer accepts vehicles for sale on consignment, and Christopher Zervos, who now conducts business on his own account, does not have a licence that would permit him to engage in that type of sale. The principal consideration is the protection of the public. If the alleged breaches are found to have occurred, the public would be protected by the imposition of a condition on the respective licenses prohibiting the licensees from engaging in sales by consignment. The Commissioner's Submissions 33 In written submissions, Ms Griswold, for the Commissioner, stated that of the 11 individuals involved in the investigation, nine were dissatisfied with their dealings with Applicants, one was not contactable, and only one was satisfied. The statements provided by the nine individuals who provided statements indicate a strikingly similar strategy used by the Applicants to reduce the amount of money received by the consignor and increase the profit received by the Applicants. As a result of false representations by the Applicants, consignors were led to believe that a purchaser had offered an amount lower than the agreed reserve price, and consignors felt pressured to accept a lower agreed reserve price to facilitate the completion of the sale. In fact, in all cases, the sale price achieved exceeded the original agreed reserve price: "The applicants made dishonest misrepresentations, the consumers relied upon the facts as represented, the consumers realised a detriment in receiving less money than originally agreed, and the applicants increased their profits by providing false and misleading information." 34 With regard to the 'script' the Applicants claimed to have used, Ms Griswold submitted that par 10 of the script suggests that the difference between the amount the car was sold for over and above the agreed reserve price was the profit to be made by the dealer. In any event, statements by the consignors indicate the 'script' was not followed. She pointed to the statement from Mr Juric dated 21 July 2004 which indicated he was given false and misleading information that his car had failed to reach the agreed reserve price. 35 Ms Griswold submitted that the documentation indicates that legally binding contracts were entered into between the dealer and the purchaser of the car even though, at the time of signing the contract, the consignor had not yet agreed to reduce the amount of the agreed reserve. Ms Griswold contended that apart from Mr Hughes, who complained to the OFT, the other eight consignors did not complain because they did not know the ultimate sale price for their vehicle. 36 Ms Griswold submitted that having regard to the public interest, the misconduct of the applicants and their failure either to accept responsibility for their conduct or express remorse, the appropriate disciplinary measure is disqualification for a period of time. The Relevant Legislation 37 The Motor Dealers Act 1974 ('the MD Act'), s 20(1) empowers the Commissioner, where he or she is of the opinion that there are reasonable grounds for believing that, amongst other things, "the business to which a licence relates is being carried on in a dishonest or unfair manner" (s 20D(1)(e)), to give notice to the holder of a licence to show cause why the holder should not be dealt with in accordance with that Division of the Act. Section 20E(1) provides that where the Commissioner is satisfied that any matter referred to in s 20D(1) has been established, the Commissioner may do any one or more of the following: "(a) reprimand the holder of the licence, (b) require the holder of the licence to comply within a specified time with a requirement specified by the Director-General, (c) suspend the licence for a period not exceeding 12 months, (d) disqualify the holder of the licence or any person concerned in the direction, management or conduct of the business to which the licence relates from holding a licence or from being concerned in the direction, management or conduct of a business for the carrying on of which a licence is required, either permanently or for such period as the Director-General thinks fit, (e) impose a condition or restriction to which the licence shall be subject, (f) cancel the licence." 38 Section 20F enables a person whose licence is cancelled or on whom a disqualification is imposed, to apply to the Tribunal for a review of that decision. Discussion 39 Section 63(1) of the ADT Act requires that in determining an application for review, "the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it". The decision under review, the Commissioner's determination set out in par 1 above, was based on being of the opinion that there are reasonable grounds for believing that Bondlist's business was carried on in a dishonest or unfair manner. 40 In conducting its review, the Tribunal must bear in mind that the protection of the public is a principal objective of the MD Act. The interests of the Applicants in continuing to operate their motor dealer's business must be weighed against the desirability of protecting the public from repetition of any improper conduct found to have occurred: Flanagan v Commissioner of Fair Trading [2004] NSWADT 166, at par 31. 41 In this case, the Tribunal must review the evidence before it to determine whether there are reasonable grounds for believing that improper conduct – namely carrying on the business in a dishonest or unfair manner – occurred. In determining the appropriate disciplinary measures if such misconduct is found to have occurred, consideration must also be given to the circumstances in which it occurred, the consequences of any such misconduct, and whether any such misconduct is likely to re-occur. (See the discussion in Morrie Muller (NSW) Pty Ltd & anor v Director General, Department of Fair Trading [2002] NSWADT 163, at par 101; Tosohn v Director General, Department of Fair Trading [2003] NSWADT 1, at par 144; Aria Jap International Pty Ltd v Commissioner for Fair Trading [2006] NSWADT 166, at par 52 ff.) 42 I have reviewed the documentary evidence provided by the Commissioner together with the evidence of the witnesses. The alleged misconduct came to the attention of the OFT as a result of a complaint made by Mr Hughes on 17 March 2004 that South Coast Motors would not reveal the sale price for his vehicle. The complaint was logged and followed up by the OFT phoning South Coast Motors on 1 April 2004. The matter was then passed to Mr Crowe who, on 16 April 2004, visited South Coast Motors and spoke to Christopher Zervos. Mr Zervos was unable to provide Mr Crowe with the relevant documentation concerning the sale of Mr Hughes' car on that day, the sale contract being at his home where his mother did the books, but Mr Zervos agreed to provide this to Mr Crowe at the OFT on the following Monday, 19 April 2004, which he did. 43 Mr Crowe returned to Bondlist's premises with Mr Baxter on 23 June 2004, when Mr Crowe asked for and was provided with all Memoranda of Consignments for the past 12 months. He and Mr Baxter selected for further investigation 11 Memoranda (including that of Mr Hughes) where the agreed reserve price was reduced after the sale transaction had commenced. The dates on which the Memoranda were initially signed were between November 2003 and March 2004. In the months following 23 June 2004, Mr Crowe and Mr Baxter attempted to contact the 11 consignors by phone – one failed to respond and, Mr Crowe stated: "one stated he was satisfied with the transaction (even though a discrepancy was identified). However, the nine remaining consignors were interviewed and subsequently provided statements concerning the consignment process with South Coast Motors. In each case the nine consignors were disappointed to learn the sale circumstances may have been something other than they were lead to believe by dealership staff." 44 Of concern is that no explanation is given as to what the consignors were told when approached by either Mr Crowe or Mr Baxter. Only one of the nine, Mr Hughes, had made a complaint. The statements of the other eight consignors were obtained after contact by either Mr Crowe or Mr Baxter six to nine months after the sales of their vehicles had been concluded. Only Mr Hughes implicitly suggested dishonesty by the Applicants and in all cases the consignors agreed to the reduced reserve price that they would receive when the sale of their car was concluded. The evidence of both Michael and Christopher Zervos is that the terms of the consignment were carefully explained to potential consignors in accordance with a script, and there is no specific evidence to the contrary. Moreover, the Memorandum of Consignment that each signed clearly stated the terms under which their vehicles were consigned for sale. 45 Turning to the documentation associated with each of the nine consignors, it is appropriate to examine that concerning Mr Hughes first. An examination of the documentation associated with the others follows. The Nine Consignment Sales 46 In Mr Hughes' case, in his letter to the OFT dated 10 March 2004, he stated that when he consigned his car to South Coast Motors for sale on 25 January 2004, the initial reserve price agreed was $10,000 on the basis that South Coast Motors would try to sell the car "for $12,000 so they could realise $2,000 from the deal". However, he acknowledged that he was advised that this price was a bit optimistic. On 17 February 2004, Christopher Zervos phoned Mr Hughes' son, Robert Hughes Junior, who undertook most of the dealings with South Coast Motors on behalf of his father. According to Mr Hughes Junior, Mr Zervos said he had had a few offers for the car "most of around $5,000 - $6,000 and one offer of $7,000". Mr Zervos assured Mr Hughes Junior that this was the best they could do, and Mr Hughes Junior reluctantly agreed to accept the offer. Mr Zervos said he would call him back after confirming with the buyer. In the meanwhile, Mr Hughes Junior phoned his father to discuss this, and he too reluctantly agreed to take the offer. Mr Zervos then phoned again to confirm the sale. 47 When on 6 March 2004, Mr Hughes Senior and Mr Hughes Junior went together to collect the cheque for $7,000 from South Coast Motors, they asked for proof of the sale price. This was refused, but Mr Hughes Senior said he reluctantly signed the papers and accepted the cheque for $7,000. By letter dated 10 March 2004, Mr Hughes Senior complained to the OFT about not being supplied with the sale price for his car. He said: "I feel I am entitled to know, as anything under $10,000 should come to me". 48 According to Christopher Zervos (statement dated 19 December 2006), when Mr Hughes Senior signed the Memorandum of Consignment, Mr Zervos drew his attention to clause 6, which provides that "The consignee is entitled to all moneys above the agreed and accepted reserve price", and Mr Hughes Senior signed in recognition of this clause. The Memorandum shows that the initial reserve price was $10,000 and that this was reduced to $7,000 on 17 February 2004. Mr Zervos said when he phoned Mr Hughes Junior, he told him they had received a number of offers for the car but that the best offer would net Mr Hughes Senior $7,000. In his statement of the same date, Michael Zervos said when Mr Hughes Senior came into the office to collect the cheque, Mr Zervos told him he did not have to accept the amount of $7,000 – there was no compulsion to sell. Mr Zervos said he refused to divulge details of the sale because of advice previously give to him by Mr Crowe. 49 I have examined the Contract of Sale for Mr Hughes Senior's car. This indicates that on 15 February 2004 Christopher Zervos wrote, under the heading "Special Conditions", that the sale was subject to the owner's approval. The terms of the contract of sale provided for a sale price of $10,990 but with an allowance of $2,000 for the trade-in of an older car. The purchaser's delivery receipt for the car was signed on 25 February 2004. I note that on 6 March 2004, Mr Hughes Senior signed an acknowledgement that he accepted the sum of $7,000 in full payment for the car. 50 It was Christopher Zervos' evidence that a dealer will not uncommonly inflate the trade-in price allowed on a car in order to keep the purchaser happy. As a matter of general knowledge, I accept that this occurs. It is not clear whether this occurred in the case of the sale on Mr Hughes' car, but it may have done. It should, however, be noted, therefore, that the difference between the price at which the car is sold and the reserve price agreed by the consignor is not necessarily a reliable indicator of the amount realised by the dealer on the sale. 51 I accept that the dealer has to provide a warranty for the vehicle sold, has to pay overheads for both the premises and the business more generally, including the salaries of the sales representatives, and has to pay GST on the sum earned by the dealer from the transaction. In return for the dealer being entitled under the Memorandum of Consignment "to all moneys above the agreed and accepted reserve price", the consignor's car is displayed on the dealer's premises which, in this case, according to the evidence, were open on seven days a week, when Bondlist's sales representatives were on hand to speak with potential customers. 52 In my view, it is clear from the evidence that Mr Hughes Senior was aware that the dealer was entitled to all moneys received for the car above the agreed reserve price. The statement in his letter dated 10 March 2004 that he was entitled to "anything under $10,000" is not borne out by all the other evidence. I note there is a discrepancy between Michael Zervos' evidence that on 6 March 2004 he told Mr Hughes that he did not need to sell the car on the basis of his receiving the amended reserve of $7,000, and the evidence of the purchaser's acknowledging receipt of the vehicle on 25 February 2004, suggesting the transaction was completed on 25 February 2004. Nevertheless, the evidence clearly establishes that Mr Hughes Junior agreed to the amended reserve of $7,000 on 17 February 2004. Thus, I am not satisfied that the material before me establishes any dishonesty or unfair dealing by the Applicants in relation to Mr Hughes. 53 In Mr and Mrs Clarke's case, they reluctantly agreed to an amended reserve of $17,000 (down from an initial reserve of $21,000), and their car was sold for $22,990. I note this transaction also included a trade-in, and the conditions of sale required the dealer to have the car detailed and a new battery installed. In his statement dated 24 August 2004, while noting his and his wife's reluctance in agreeing to the amended reserve of $17,000, Mr Clarke did not say he was dissatisfied with the transaction. 54 In Mr Pryor's case, he agreed to reduce the agreed reserve from $7,000 to $6,000, and his car was sold for $8,500, with the transaction including a trade-in. In his statement dated 26 July 2004, Mr Pryor gave a factual account of what happened. He did not say that he was dissatisfied although he said he was reluctant to reduce the agreed reserve. I do note, however, that the amendment to the agreed reserve occurred on 11 November 2003, apparently on the day after the car was delivered to the new purchaser under the contract of sale on 10 November 2003. 55 In Mr Mitchell's case, he agreed to reduce the reserve from $18,000 to $16,500, and his car was sold for $22,990. It is clear from his fax dated 28 November 2003 and his statement dated 26 August 2004, that Mr Mitchell understood that he would receive the agreed reserve of $16,500 and not the price at which the car was sold, which I note was with the benefit of finance, apparently arranged by South Coast Motors. Mr Mitchell does not say nor intimate that he was dissatisfied with the transaction. 56 In Mr Juric's case, he agreed to reduce the reserve from $15,000 to $13,000, and his car was sold for $16,000. In his statement dated 15 July 2004, Mr Juric said he "felt pressured and reluctantly accepted the offer to get the matter over with". Mr Juric was clearly dissatisfied with the transaction despite his having accepted the terms of the Memorandum of Consignment. 57 In his statement dated 19 December 2006, Michael Zervos said: "I spoke to Mr Juric when he came in to pick up his cheque. I explained to him that we had to cover overheads, GST and warranty obligations. I invited him to examine my books to see the breakdown. His was a heavily modified vehicle and I was concerned about warranty claims. I did offer to pay him an additional amount provided he paid the cost of meeting any warranty claims. However, he declined that offer." 58 In cross-examination, Mr Zervos denied that the conversation became loud and heated or that Mr Juric was angry. Christopher Zervos confirmed this. 59 I am not satisfied that the material before me establishes any dishonesty or unfair dealing by the Applicants in relation to Mr Juric. 60 In Mr and Mrs Kontopoulos' case, they agreed to reduce the reserve from $26,000 to $24,000, and their car sold for $26,000. The sale included a trade-in. In her statement dated 15 July 2004, Mrs Kontopoulos provided a factual account of the transaction and gave no indication of being dissatisfied with it. 61 In Mr Coric's and Ms Buchanan's case, they agreed to reduce the reserve from $17,000 to $14,000, and their car sold for $17,000. In his statement dated 23 August 2004, Mr Coric said that his brother was doing work experience at South Coast Motors, and it is apparent from his statement that Mr Coric was aware that the price at which his and Ms Buchanan's car was initially offered for sale was about $20,000, which in his opinion was too much. Mr Coric did not state that he was dissatisfied with the transaction. 62 In Ryan Clarke's case, he agreed to reduce the reserve from $12,500 to $11,500, and his car sold for $15,990. The sale involved a trade-in and was subject to finance. Mr Clarke did not state he was dissatisfied with the transaction. I note, however, that the amendment to the agreed reserve occurred on 23 November 2003, apparently on the day after the car was delivered to the new purchaser under the contract of sale on 22 November 2003. 63 In Mr Allit's case, he agreed to reduce the agreed reserve from $18,500 to $17,000, and his car was sold for $18,990 with a trade-in allowance of $990, no vehicle being specified in the contract of sale. Mr Allit did not state he was dissatisfied with the transaction. 64 Thus, apart from Mr Hughes, only Mr Juric indicated his dissatisfaction with the transaction. Several others were obviously reluctant to reduce the agreed reserve they would receive on the sale of their vehicle, but nevertheless did so. Such reluctance is understandable in circumstances where a person has a higher (and possibly optimistic) expectation of what may be received. However, it does not, of itself, evidence that pressure was brought to bear. Only Mr Juric says specifically that he felt pressured. All the consignors signed the Memorandum of Consignment, the terms of which are clear, and later agreed to a reduced reserve. None of this establishes unfair or dishonest dealing. 65 I have noted some discrepancies in the dates on the documentation. Whilst those referred to above have not been satisfactorily explained, I am not satisfied that those discrepancies are sufficient to establish dishonest or unfair dealing. The evidence indicates that Michael and Christopher Zervos have co-operated with the OFT throughout and are open to advice from the OFT on the conduct of their business and compliance with the relevant provisions of the law. Despite the discrepancies, I am satisfied that the public interest is adequately protected. 66 In conclusion, I am not satisfied on the material before me that there are reasonable grounds for believing the Applicants have been involved in improper conduct, namely unfair or dishonest dealing. The correct and preferable decision, therefore, is that the decisions under review must be set aside – the disqualifications lifted, and Bondlist's motor dealer's licence restored. Decision 67 The decisions of the Commissioner for Fair Trading, NSW, dated 30 August 2006 are set aside, with the consequence that the disqualifications imposed on Michael and Christopher Zervos and Bondlist Pty Ltd must be lifted and Bondlist Pty Ltd's motor dealer's licence restored.