RJK Automotive Pty Ltd -v- Director General, Department of Fair Trading [2002] NSWADT 158

CITATION: RJK Automotive Pty Ltd -v- Director General, Department of Fair Trading [2002] NSWADT 158 DIVISION: General Division APPLICANT PARTIES: RJK Automotive Pty Ltd RESPONDENT Director General, Department of Fair Trading FILE NUMBER: 023172 HEARING DATES: 29/08/02 SUBMISSIONS CLOSED: 08/29/2002 DATE OF DECISION: 09/02/2002

BEFORE: Hennessy N (Deputy President) APPLICATION: Fair Trading Act 1987 - Motor Vehicle Repairer - suspension of licence - Motor Vehicle Repairer - suspension of licence MATTER FOR DECISION: Principal matter Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Fair Trading Act 1987 Motor Vehicle Repairs Act 1980 CASES CITED: George v Rockett and Anor (1990) 170 CLR 104 APPLICANT REPRESENTATION: R Nair, barrister RESPONDENT A Wilson, solicitor ORDERS: The decision of the Director General to suspend the motor vehicle repairer's licence of RJK Automotive Pty Ltd is affirmed

Introduction 1 On 31 July 2002, the Director General of the Department of Fair Trading (the Department) suspended the motor vehicle repairer's licence of RJK Automotive Pty Ltd (RJK) for a period of 60 days. Mr Riza Kurkcu and Ms Julie Kurkcu are the directors and proprietors of RJK. 2 The crux of the allegations against Mr Kurkcu are that he issued "blue slips" in relation to at least two vehicles in a dishonest or unfair manner because he knew, or should have known, that there were irregularities in relation to the identity of those vehicles. "Blue slips" are Unregistered Vehicle Inspection Reports issued by Authorised Inspection Stations such as RJK indicating whether the vehicle met NSW registration standards at the time of inspection. The "blue slip" states that A Written-off Vehicle check is a visual inspection designed to help detect vehicle identity irregularities that require further investigation and is not an inspection of the structural integrity of the vehicle. 3 The Reports are forwarded to the Roads and Traffic Authority (RTA). 4 On 7 August 2002, RJK lodged an application with the Tribunal for a stay of the decision and to suspend his licence. On 12 August 2002, the Tribunal stayed the decision to suspend the licence subject to the condition that RJK not be permitted to issue "blue slips." The matter was then listed for hearing on 29 August 2002. Jurisdiction of Tribunal 5 The Tribunal has power to review the decision to suspend RJK's licence under s 64A(8) of the Fair Trading Act 1987 and s 38 of the Administrative Decisions Tribunal Act 1997 (ADT Act). Section 63 of the ADT Act sets out the duties and powers of the Tribunal when reviewing a reviewable decision. In summary, the Tribunal may affirm, vary or set aside that decision. Relevant legislation 6 The Department made its decision to suspend RJK's licence under s 64A(2) of the Fair Trading Act 1987. That sub-section states that: (2) If the Director-General is of the opinion that there are reasonable grounds to believe that: (a) a licensee has engaged in conduct that, under legislation administered by the Minister, constitutes grounds for suspension or cancellation of the licence, and (b) it is likely that the licensee will continue to engage in that conduct, and (c) there is a danger that a person or persons may suffer significant harm, or significant loss or damage, as a result of that conduct unless action is taken urgently, the Director-General may, by notice served on the licensee, suspend the licence for a period of not more than 60 days specified in the notice, commencing on service of the notice. Grounds for suspension 7 It was not in dispute that the Motor Vehicle Repairs Act 1980 is legislation administered by the Minister as required by s 64A(2)(a). The grounds for suspension set out in the Department's Notice were as follows: (a) RJK has engaged in conduct that under s 42(1) of the Motor Vehicle Repairs Act 1980 (the Act) constitutes grounds on which a holder of a licence may be dealt with under the Part 4 Disciplinary Proceedings provisions of the Act, in that the business to which the licence relates is being carried on in a dishonest or unfair manner, and (b) it is likely that the holder of the licence will continue to engage in this conduct, and (c) there is a danger that a person or persons will suffer significant harm or significant loss or damage, as a result of the conduct unless action is taken urgently. 8 Section 42(1) of the Motor Vehicle Repairs Act 1980 states that: The following are the grounds on which a holder of a licence may be dealt with under this Part: (h) that the business to which the licence relates is being carried on in a dishonest or unfair manner. 9 Under s 44 the Motor Vehicle Repairs Act 1980 , the Motor Vehicle Repair Industry Authority may suspend or cancel the licence if any of the grounds in s 42(1) have been made out. Conduct of RJK falling within s 42(1) of the Act 10 The Department relied on certain alleged conduct of RJK as amounting to carrying on business in "a dishonest or unfair manner". Some particulars of this conduct were not relied on at the hearing. The Department relied on the following matters: 1. On 30 July 2002 information was received from the NSW Police Service identifying an extensive criminal enterprise in which the directors and the licensee are identified as willing participants. 2. The information identified Riza Kurkcu as being directly involved in that criminal activity. The information identifies Riza Kurkcu as being further involved with other vehicle repair companies and persons associated with those companies in the carrying out of this extensive criminal insurance fraud. 3. The information indicates that on 9 May 2002 Riza Kurkcu was issued with a summons by the Police in relation to the making of a false instrument. It is alleged that Riza Kurkcu forged letters purporting to be from Workcover so that he could finance demolition work on a property he owns at 35 Northmead Avenue, Northmead. 4. The information discloses that Riza Kurkcu had previously been convicted of the offence of make a false instrument in 1994. 11 There was no evidence led by the Department in relation to point 3. I have not included consideration of those allegations in these reasons. The focus of the evidence was on allegations that Mr Kurkcu had issued "blue slips" in relation to at least two vehicles in a dishonest or unfair manner. Although these allegations did not form part of the alleged conduct against Mr Kurkcu in the Department's Notice of Suspension, no objection was taken to the inclusion of this conduct and Mr Kurkcu gave evidence which specifically addressed those allegations. 12 The Department further submitted that RJK will continue to engage in the above conduct unless the licence is suspended and that such conduct will cause significant harm to the insurance business through fraudulent claims and to the community in general. Evidence 13 By letter dated 30 July 2002, the Police alerted the Department to alleged organised criminal activity relating to car theft, re-birthing and the export of stolen cars and parts to Jordan and Lebanon. Police requested the assistance of the Department in "suspension of both licensed motor vehicle repairers and motor dealers" listed in the letter. 14 Detective Acting Sergeant Casserly gave evidence that he is involved with a covert investigation into two criminal syndicates, one relating to the El Hassan family and the other relating to the El Far family. The syndicates were allegedly involved in a process which includes: · the theft of a motor vehicle; · replacing the identification details (engine number, chassis number and VIN number) from a wrecked car onto the stolen car; · obtaining a "blue slip" from an Authorised Inspection Station; and · having the car registered with the Roads and Traffic Authority (RTA). 15 On 1 August 2002, Police conducted searches of various premises, including those of RJK and seized certain documents. Several members of the El Hassan and El Far families were arrested and 50 cars were seized. Mr Kurkcu was not charged with any offence and none of the cars on his premises were seized. 16 Mr Kurkcu says that he met Brian El Hassan approximately 11 months ago at "Auto Saloon", a car show at Homebush Stadium. Mr Kurkcu said that he told Mr El Hassan that he had a motor repair business and gave him his business card. Some time later, Mr El Hassan phoned him and asked if he could do a "blue slip" inspection for him. Mr Kurkcu made an appointment and carried out the inspection. He has completed between six and eight "blue slips" for Mr El Hassan during the period he has known him. 17 Detective Acting Sergeant Casserly gave evidence that authorised inspectors must check the identification details on the car to ensure that they match the documents provided and, in relation to vehicles which have been repaired after being "written off", check the receipts in relation to the repairs. He agreed that the inspection of the identification details is a visual inspection only and that authorised inspectors are not required to remove any part of the vehicle to determine the legitimacy of those details. 18 For "written off" vehicles the authorised inspector sends a facsimile to the RTA requesting a summary of the repairs that would have been necessary in relation to that vehicle. The RTA then provides a summary of the damage caused to the vehicle (See, for example, document 35 in the Department's bundle of documents). On receipt of this report from the RTA the authorised inspector must then examine the receipts for the repairs and check that they correspond with the areas of the vehicle that have been damaged. If the authorised inspector stamps the "blue slip" with "ISSUED SUBJECT TO RTA IDENTITY CHECK" the RTA will generally organise an inspection of the vehicle prior to making a decision about registration. 19 Records in relation to two vehicles were the main focus of the Department's case. The first vehicle was a Honda with registration plates AKW 60Q. The second vehicle was a Subaru WRX sedan bearing custom plates NOCOMP. Honda 20 The evidence in relation to the Honda was that it was involved in a collision and that S & B Body Works provided a quotation for the repair of the vehicle on 11 February 2002. The total cost of repairs was $33,574.82. The vehicle was then sold at auction on 19 April 2002 to Mr Brian El Hassan for $37,000 as an "economic loss write off." Mr El Hassan then apparently sold the vehicle to Mr Youssef El Hassan on 15 May 2002. 21 Mr Brian El Hassan asked Mr Kurkcu to provide a "blue slip" in relation to the vehicle. Mr Kurkcu contacted the RTA to request a vehicle damage report in relation to the Honda. That report noted that there was damage to four areas of the vehicle. These areas were noted on the "blue slip". The receipts that Mr El Hassan gave to Mr Kurkcu in relation to the repair of the vehicle totalled approximately $5,000. These receipts were from "Mr CRX Motorsports Pty Limited" where Mr Brian El Hassan was employed. 22 On 16 May 2002, Mr Kurkcu filled out the "blue slip" (Document 36 in the Department's bundle). In the box asking "Any evidence of vehicle identity irregularity?" Mr Kurkcu ticked "No." He noted on the form that the vehicle was "written off" and, in accordance with his understanding in relation to "written off" vehicles, he stamped the form "ISSUED SUBJECT TO RTA CHECK". 23 It was put to Mr Kurkcu that given that the new price of this vehicle is $69,950.00 (Glass's Guide, February 2002) he should have been suspicious that the vehicle had been "written off" when it was ultimately repaired for only $5,000. Mr Kurkcu's response was that new parts are a great deal more expensive than spare parts and that if the repairs were conducted using spare parts it is not surprising that the cost would be much lower. Subaru 24 The second vehicle under consideration was a Subaru WRX. Mr El Hassan requested that Mr Kurkcu complete a "blue slip" in relation to this vehicle. Because the vehicle had no compliance plate, Mr Kurkcu filled out a form entitled "Unregistered Vehicle - No Compliance Plate." That form contains a four column table with the headings "Item", "Detail direct from vehicle", "Detail from registration certificate, statement from registration authority, or FORS approval" and "Tick if Column 2 is same as Column 1." Under the item "VIN/chassis or frame number" Mr Kurkcu recorded in column 1, the number JF2GC8ROBG008885. He recorded the same number in Column 2 and ticked the box in Column 3 stating that the details in each column were the same. The correct VIN/Chassis number, recorded on the "blue slip", is JF2GC8BROBG008885. (Emphasis added.) When asked how he could have omitted the letter "B" twice on the No Compliance Plate Form when he should have obtained one number from the vehicle and the other from documentary records, Mr Kurkcu said that he copied the number from the vehicle and must have missed the letter "B". He also said that he checked the number on the Proof of Registration form and that the number was recorded correctly on the "blue slip" and he filled out the No Compliance Plate Form at the same time. 25 On the "blue slip" completed by Mr Kurkcu in relation to this vehicle on 10 September 2001, there is no response to the question "Any evidence of vehicle identity irregularity?" On other "blue slips" which were in evidence before the Tribunal, Mr Kurkcu had ticked the "No" box in response to this question. 26 Mr Kurkcu said he must have forgotten to fill in this part of the form. The form does not bear the stamp "ISSUED SUBJECT TO RTA CHECK". Other "blue slips" in evidence bear this stamp. Mr Kurkcu's explanation for this is that he stamps the "blue slips" when the vehicle is written off, when the receipts are not sufficient to justify the apparent level of damage or when there are irregularities in the identification details on the vehicle. Mr Kurkcu provided examples from his records where he had stamped "blue slips" in line with his understanding as set out above. 27 The Department tendered expert evidence in a statement from Michael Patrick Lee dated 27 August 2002. Mr Lee, a licensed motor mechanic and qualified plant mechanic fitter, examined the Subaru on 27 August 2002. He concluded that: Records indicate that this vehicle was originally fitted with an engine numbered 124296. The engine bearing this number was located, and visual inspection of the engine number showed that it was inconsistent with factory appearance. All digits of the engine number were out of alignment and larger than a factory engine number. This irregularity was visible with the naked eye and without specialised equipment. A restoration process was carried out on this number, which revealed the full original engine number to be 306683. Inquiries . . . showed that the engine numbered 306683 was originally fitted to a 1995 model silver Subaru WRX sedan, which had been reported stolen on 1 June 1997. This vehicle is still an outstanding stolen vehicle. Based wholly or substantially on my specialised knowledge and above qualifications, I am of the opinion that an examination of the identification points on the yellow Subaru sedan "NOCOMP' would reveal discrepancies and irregularities in the VIN area and engine number. I am of the opinion that these irregularities would have been observable without specialised equipment or training. 28 The engine number recorded by Mr Kurkcu on 10 September 2001 was 124296. Mr Kurkcu said that he is not required to do anything other than record the identification details and note if there is any irregularity. He said that Mr Lee's statement was made almost 12 months after he inspected the vehicle and that "anything can happen in that time." Other matters 29 Mr Kurkcu gave evidence that he leases part of his premises to Sass Smash Repairs. Evidence by way of diagrams and photographs were tendered in support of a claim that the police may have confused his business with that of Sass Smash Repairs. The Department pointed out that all the documents under consideration contain the stamp of RJK and Mr Kurkcu's signature. 30 Mr Kurkcu gave evidence that the RTA had sent him a warning letter following an audit of his business. Mr Kurkcu had been recording incorrect details on occasions. It was not clear from the evidence exactly when this warning was given but Mr Kurkcu volunteered that he had since started to wear glasses and that he thinks this will improve the situation. It was put to Mr Kurkcu that he had no difficulty reading the documents in court without glasses. Reasons and decision 31 On 9 June 2000, s 64A and other provisions were introduced into parliament through the Fair Trading Amendment (Enforcement and Compliance Powers) Bill. In the second reading speech introducing the Bill, the Hon Mr Watkins, Minister for Fair Trading, noted that the purpose of s 64A(2) is to give the Department the ability to "act swiftly" to suspend licences in order to protect the public from "unscrupulous and dishonest" traders. During the period of suspension, further long term action can be taken through "show cause" procedures. The Minister noted that show cause actions "can be cumbersome and may take many months to finalise." Consequently, further suspension orders not exceeding 60 days can be made. 32 The first question for the Tribunal is whether there are reasonable grounds to believe that Mr Kurkcu's business, RJK, is being carried on in a dishonest or unfair manner. The belief is not one which must be held with certainty, or even on the balance of probabilities. In George v Rockett and Anor (1990) 170 CLR 104 at 116, Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ explained the distinction between reasonable grounds to believe and establishment on the balance of probabilities adding: ". . . the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture. . ." In short, reasonable belief may exist even if there is contrary material which, if correct, would show that the belief is incorrect. 33 The evidence in this case is that Mr El Hassan has been arrested for his alleged involvement in a car re-birthing syndicate. Mr Kurkcu has known Mr El Hassan for approximately 11 months. During that time he has prepared "blue slips" for him in relation to between 6 and 8 vehicles. It has subsequently been alleged that two of those vehicles were part of organised criminal activity targeted by police in a recent covert operation. 34 In relation to the documentation relating to the Honda, Mr Kurkcu stamped the form "ISSUED SUBJECT TO RTA IDENTITY CHECK" thus alerting the RTA to the fact that the vehicle was written off and required checking. Mr Kurkcu should have been aware that given that the vehicle was approximately $70,000 new, and had been written off, the repair bill was unduly low. Although Mr Kurkcu did not have access to the original quotation for repairs totalling $33,574.82, he should have made a comment in the comment box alerting the RTA to the situation. However, by stamping the "blue slip" "ISSUED SUBJECT TO RTA IDENTITY CHECK", Mr Kurkcu was ensuring that the vehicle would be inspected by the RTA. Consequently, his failure to record discrepancies in relation to the damage and the receipts for repairs does not, by itself, provide reasonable grounds for believing that he conducted his business in a dishonest or unfair manner. 35 There is greater cause for concern in relation to Mr Kurkcu's conduct in relation to the Subaru. This was another vehicle brought in by Mr El Hassan. Mr Kurkcu was unable adequately to explain to the Tribunal two errors or irregularities in the documentation. Firstly in relation to the "No Compliance Plate" form, Mr Kurkcu has written the incorrect VIN/Chassis number in two places on that form. While he entered the correct number on the "blue slip", it appears that he has then omitted the letter "B" when copying the number onto the "No Compliance Plate" Form. He has not independently checked the numbers on the vehicle and on the documentation as required. 36 Mr Kurkcu's explanation for this error is unconvincing. It is clear that he has failed to obtain the information from the sources from which that information should have been obtained. While this conduct may not have been dishonest, it is certainly "unfair" in the sense that he has failed to comply with a critical part of the checking process which is designed, among other things, to prevent vehicle "re-birthing". 37 The second matter is Mr Kurkcu's failure to respond to the question "Any evidence of vehicle identity irregularity" and to alert the RTA to the forged engine number. The expert evidence, while untested, was unequivocal. The expert found that "an examination of the identification points . . . would reveal discrepancies and irregularities in the VIN area and engine number" and that "these irregularities would have been observable without specialised equipment or training." Mr Kurkcu gave evidence that he had received training in his responsibilities in relation to the completion of "blue slips" from the RTA in 1999. The training materials contain exercises which provide examples of forged VIN and engine numbers and genuine VIN and engine numbers. Consequently Mr Kurkcu was trained to identify false numbers and should have identified the false numbers in relation to the Subaru. 38 Mr Kurkcu attempted to deflect any criticism of his conduct in relation to this matter by saying that "anything could have happened" to the vehicle in the 12 month period from when he inspected the engine number to the date when the expert made his comment. This is an unconvincing point given that Mr Kurkcu recorded the same engine number as the one that the expert found to have been forged. 39 This evidence provides reasonable grounds for a belief that Mr Kurkcu conducted his business in a dishonest or unfair manner by failing to alert the RTA to the forged engine identification number. In reaching this conclusion I have not taken into account Mr Kurkcu's previous conviction. 40 The next question for the Tribunal is whether it is likely that Mr Kurkcu will continue to engage in that conduct. One factor which suggests that he will not continue to engage in that conduct is that the person with whom Mr Kurkcu was dealing, Mr Brain El Hassan, is in custody. While the Tribunal is satisfied that there are reasonable grounds for believing that he has engaged in such conduct, Mr Kurkcu has not admitted engaging in the conduct. In those circumstances, it is likely that if he has been engaging in such conduct, he will continue to do so, to assist other disreputable operators. 41 The final question for the Tribunal is whether there is a danger that a person or persons may suffer significant harm, or significant loss or damage, as a result of that conduct unless action is taken urgently. Mr Kurkcu's alleged role in the re-birthing of motor vehicles means that if he continues to be authorised to issue "blue slips" these criminal activities will be facilitated and the community will suffer significant loss through the theft of motor vehicles and increased insurance premiums. Orders 42 The decision of the Director General to suspend the motor vehicle repairer's licence of RJK Automotive Pty Ltd is affirmed