CITATION: Tran -v- Director General, Department of Fair Trading [2002] NSWADT 9 DIVISION: General Division APPLICANT PARTIES: Hung Phuoc Huy Tran RESPONDENT Director General, Department of Fair Trading FILE NUMBER: 013292 HEARING DATES: 21/01/2002 SUBMISSIONS CLOSED: 01/21/2002 DATE OF DECISION: 01/29/2002 BEFORE: Hennessy N (Deputy President) APPLICATION: Pawnbrokers & Second-Hand Dealers Act - pawnbrokers licence - revocation or suspension of licence - Pawnbrokers licence - revocation or suspension of licence MATTER FOR DECISION: Principal matter LEGISLATION CITED : Pawnbrokers and Second-hand Dealers Act 1996 Pawnbrokers and Second-hand Dealers Regulation 1997 CASES CITED: Altavilla v Director General, Department of Fair Trading [2000] NSWADT 110 APPLICANT REPRESENTATION: In person RESPONDENT A Wilson, solicitor ORDERS: The Director General's decision to revoke Mr Tran's licence under the Pawnbrokers and Second-hand Dealers Act 1996 is affirmed. The Director General's decision that Mr Tran not be granted a further licence for a period of three years is varied. A period of one year is substituted for a period of three years. Introduction 1 On 23 October 2001, a delegate of the Director General of the Department of Fair Trading (Director General) revoked Mr Tran's licence under the Pawnbrokers and Second-hand Dealers Act 1996 (the Act). The Director General also specified that Mr Tran could not be granted a licence for a period of 3 years. 2 The three grounds for the Director General's decision were that: - Mr Tran had been convicted of offences under the Act; (See s 34(1)(c) of the Act) - Mr Tran had incurred in excess of 12 demerit points as defined in the Act within a period of 3 years; (See s 34(1)(g) of the Act) and - Mr Tran was carrying on business in a dishonest manner in that he made statements to a departmental investigator knowing them to be false. (See s 34(1)(i) of the Act.) 3 Mr Tran's pawnbroking and second-hand dealers business is a small family business which his wife helps him to run. Neither Mr Tran nor his wife speak English very well. A Vietnamese interpreter assisted them at the hearing. 4 Mr Tran engaged solicitors to formulate submissions at various stages of the department's investigation and during the prosecution for breaches of the Act. He was not legally represented before the Tribunal. Relevant legislation 5 Under the Act anyone carrying on the business of a pawnbroker or second hand dealer must be licensed. The then Minister for Fair Trading, Ms Lo Po', said in the Second Reading Speech introducing the Bill, at p 440 that: The Government is intent on enhancing the capacity of the Police Service to target thieves and those who trade with them and of the Department of Fair Trading to remove dishonest traders from the marketplace. 6 Demerit points scheme . Section 27 of the Act provides for a demerit points scheme. Conviction for certain offences attracts demerit points. Under section 27(3) and section 34 of the Act, the Director General may issue a notice to show cause why a licence should not be revoked if, among other things, a licensee incurs a total of 12 or more demerit points within any 3 year period. 7 Notice to Show Cause. The provisions relied on by the Director General in the Notice to Show Cause were s 34(1)(c), s 34(1)(g) and s34(1)(i) of the Act. These provisions are set out below: (1) The Director-General may serve a notice on any licensee: (c) who, or one of whose employees, has been convicted of an offence involving dishonesty in relation to the licensed business or of an offence against this Act, or (g) who has incurred a number of demerit points as referred to in section 27 (3), or (i) who the Director-General considers, in light of evidence acceptable to the Director-General, is carrying on the licensed business in a dishonest or unfair manner, requiring the licensee to show cause, within a time (not less than 14 days) limited by the notice, why the licensee's licence should not be revoked. 8 If, after considering any response to the Notice to Show Cause, the Director General is satisfied that the grounds in the Notice have been substantiated, he may revoke the licence or make certain other decisions. The relevant parts of s 36 of the Act state that: (1) The Director-General may undertake such inquiry and investigation in relation to the matters to which a notice under section 34 relates, and any submissions made and evidence adduced by or on behalf of the licensee in elation to those matters, as the Director-General thinks fit. If, after such inquiry and investigation, the Director-General is satisfied on the balance of probabilities that the ground of any notice under section 34 has been substantiated against the licensee, the Director-General may: (a) revoke the licence, or suspend it for such portion of the remainder of its duration as the Director-General thinks fit, or (b) attach one or more conditions to it, or (c) determine that the licence is not to be renewed, or that a licence is not to be granted to the same licensee in future, unless one or more conditions are attached to it on grant or renewal. (2) Without limiting the generality of subsection (1) (b), the Director-General may specify, as a condition to be imposed in accordance with that paragraph in respect of the licence of a corporate licensee, that a particular director or officer of the corporation must not (either for a specified period or permanently, as the Director-General may determine) be concerned in the management of the licensed business. (3) The Director-General, on revoking a licence, may specify a period during which the licensee cannot be granted a further licence, and such a specification precludes the grant of a licence during that period. (4) The Director-General, on revoking or suspending a licence, may, where the licensed business consisted of or included pawnbroking, make such order as the Director-General thinks fit in relation to the redemption of goods held in the course of that business. 9 Provisions breached by Mr Tran . Mr Tran breached several provisions of the Act including s 14, s 16, s 21 and s 28(2)(a). Section 14 requires a licensee to record the name, address, date of birth and signature of the pledgor. Under s 16(1) of the Act a licensee must keep records of all transactions involving the redemption of any pawned goods. Section 28(2)(a) provides that a record must include "a fair and reasonable description of the goods, including any serial number or other identifying number and any hallmark, inscription or engraving appearing on the goods." Under s 21 of the Act, a licensee must keep all second-hand goods on the premises for 14 days. Evidence 10 The evidence consisted of a copy of the department's file, a statement from Mr Tran and a bundle of references. Mr and Ms Tran both gave oral evidence at the hearing. Most of the evidence was not disputed. 11 Mr Tran was born in 1964 and left Vietnam as a refugee in 1983. He was unemployed for about a year after he arrived in Australia and then worked as a process worker for 2 to 3 years. He then purchased a fishing boat and worked as a fisherman for 6 or 7 years. In March 1999 he purchased a pawnbroking business. He did not have any experience in pawnbroking but the previous owner provided him with some training and assistance. 12 The previous owner had computer software installed to record data involving transactions made during the course of his business. Mr Tran continued to use that software until about July 1999. At that time police officers informed Mr Tran that the system for collecting information had to change because police now required data of transactions to be provided on disc every week. A police officer gave Mr Tran a list of 10 names of approved software providers who could supply software which met the needs of the Police Service in relation to this data. Mr Tran chose Mr Kim Dang from this list because he was also a Vietnamese person who spoke the same language as Mr Tran. 13 Mr Dang provided new computer software but there were some problems with it. For example, the date of birth of the pledgor appeared on the computer screen when that information was entered, but did not appear on the receipt when it was printed out. Mr Tran asked Mr Dang to fix this problem five or six times. Mr Dang assured Mr Tran that the software complied with police and departmental requirements. Mr Tran said he had no reason to doubt Mr Dang's word as he was on the list of approved suppliers provided by the police. 14 It was Ms Tran who routinely entered the data into the computer. She gave evidence that there was no field on the software program to record the serial number of the battery of a mobile phone. When recording a mobile phone she would enter a specific code for mobile phones, namely TEL 233. A screen would appear on the computer prompting the recording of information about the phone in various fields. While Ms Tran agreed the serial number of the battery could be recorded in the general field headed "description" there was no specific field on the software program to record that information. Ms Tran said that Mr Dang eventually changed the software program so that there was a field to record the serial number of mobile phone batteries. 15 Ms Tran did not know until they received the infringement notice that they were required to record the serial number for the battery. In fact she said that a police officer had told her that she did not have to record those numbers. 16 Mr Wilson asked the Tribunal to reject Ms Tran's evidence that a police officer told her she did not have to record the serial number for mobile phone batteries. He said that Mr Tran had never mentioned that conversation during the course of the department's investigation. I think it is understandable that Mr Tran did not mention the conversation either because Ms Tran did not tell him about it or because he forgot about it. Both Mr and Ms Tran gave credible evidence which I accept. 17 In October 1999 Mr Hancock, a departmental officer, attended Mr Tran's premises and issued five infringement notices for breaches of the Act. Infringement Notices are generally issued in relation to first time offences and/or circumstances where there are relatively few offences. For subsequent offences, or multiple offences, action is generally taken by way of prosecution in the Local Court. 18 The offences for which Mr Tran received infringement notices, and a brief description of the party's submissions in relation to each of them, are set out below. - Failure to record a reasonable description of a pledge. The goods were described as "Lady Jewellery chain, gold 24 ct, 15.2 g" and "Men Jewellery ring, gold 9ct, 1.8 g". According to the Director General, the ring was a lady's ring with a small diamond. Mr Tran says that the error is a minor one and the goods themselves were correctly described. - Failure to record reasonable description of pledge. The goods were described as "Lady jewellery Ring Gold 18ct, 2.7 grams" and "Jewellery bracelet, gold 9ct, 9.8 grams." According to the Director General, Mr Tran failed to state that there was also a large diamond and four smaller diamonds on the ring. Mr Tran says that this is a minor offence and all the other details were correctly recorded. - Failure to record a reasonable description of a pledge. The goods were described as Samsung SGH600 (R36K858479L) Mobile phone with charger; The "K" should have been "H" and the numbers 84 should have been 48. In addition, the serial number from the battery and charger were not recorded. Mr Tran said that this was a typing error and the goods were described accurately and were available for inspection. - Parting with goods prior to 14 days from date of sale. The goods were a television and remote control which the Director General said were sold within 14 days of purchase. Mr Tran said that the television was returned to the wife of the man who sold it after she became very upset. The goods were not sold, but were returned to the owner. - Parting with goods prior to 14 days from date of sale. The goods were a telephone which was not produced at the premises. Mr Tran said that the phone had been taken next door to be repaired. 19 Mr Tran was fined $500 for each infringement, making a total of $2,500. After representations by his solicitor to departmental officers, the fine was reduced to $1,050.00. Mr Tran has paid this amount. Mr Tran incurred 10 demerit points for the infringements set out above. 20 In November 2000, Mr Hancock attended Mr Tran's premises a second time. After speaking with Mr Tran, Mr Hancock requested that Mr Tran be interviewed by departmental officers. On 28 November 2000, Mr Tran attended an interview with departmental officers. The interview was recorded and a Vietnamese interpreter was present. 21 In March 2000 Mr Tran received 21 summons for breaches of the Act. He was required to appear at Fairfield Local Court on 20 March 2001. Mr Tran pleaded guilty to each of these offences and was fined $12,076 including costs. The offences for which Mr Tran was convicted and a short summary of the party's submissions in relation to each offence, is set out below: - Licence particulars not displayed. Section 14(1) of the Act and Clause 12(2) of the Pawnbrokers and Second-hand dealers Regulation 1997 (the Regulations) provides that a licensee must display the licence in the manner prescribed by the Regulation namely using letters not less than 5 cm in height. Mr Tran was convicted because the letters were 2 cm less than the height required by the Regulations. Mr Tran says that he used the sign of the previous owner which he assumed complied with the legislative requirements. He immediately replaced the sign when it was brought to his attention. - Three counts of failing to provide evidence of identity and title of supplier of goods. Section 15(3) of the Act requires that the licensee comply with requirements relating to ascertaining the title to the goods. Mr Tran was convicted because no form was completed in relationship to the ownership of certain goods, including an 18k ladies gold chain, - Two counts of fail to keep records regarding acquisition and disposal of goods. Section s 16(1) provides that a licensee must keep records of all transactions in the manner and containing the particulars prescribed by the Regulations. These offences related to not recording information including the dates of birth of the pledgors. Mr Tran says that this was not complied with because the software did not allow the dates of birth to be printed on the receipts. - Fail to keep employee records. Section 16(2) of the Act requires a licensee to keep records as prescribed by the Regulation. This offence relates to the fact that Mr Hao was not recorded as an employee even though she was working at the shop. Mr Tran said that she was not there all the time. He accepts that he should have recorded her as an employee and did so after the matter was pointed out to him. - Six counts of fail to record a pledge as prescribed. Section 28 of the Act requires a licensee to record a fair and reasonable description of the goods including an 18k gold bracelet with six charms, a Ryobi cordless Drill and charger (serial number of batteries not recorded), Nokia mobile phone and charger (serial number of battery and charger not recorded), Ericsson mobile phone (serial number of battery not recorded). Mr Tran said that the former owner did not record these details and there was no field for them in the computer program. 22 Mr Tran appealed to the District Court against the severity of the penalty imposed but his appeal was dismissed. Mr Tran is currently paying this fine and his legal costs totalling $16,986.00 at the rate of $600 per month. These offences incurred a further 23 demerit points under the Act. 23 The third ground for the Director General's decision to revoke Mr Tran's licence was an allegation that Mr Tran was carrying on business in a dishonest manner. Mr Tran gave evidence which was consistent with the facts as alleged by the Director General. On 6 November 2000 Mr Hancock, an investigator with the department, went to Mr Tran's premises and saw a woman assisting customers. When Mr Hancock asked who she was and whether she was employed by Mr Tran, Mr Tran said she was a relative visiting the shop. On 15 November 2000 Mr Hancock visited the premises again and saw the same woman carrying out sales assistant activities. When Mr Tran was interviewed he admitted that Ms Hao was employed by him and was working in the shop on the days that Mr Hancock had visited. He did eventually record Ms Hao in the employer record book. 24 On 26 July 2001, the Director General issued Mr Tran with a Notice to Show Cause why his licence should not be revoked. Mr Tran's solicitor prepared a response on Mr Tran's behalf. On 6 November 2001 Mr Tran received advice from the Director General that his licence had been revoked and that he could not be granted a licence for three years. 25 Mr Tran provided ten references from customers and friends. Two of the references were written in Vietnamese. Rather than obtain an official translation of these references, I asked the interpreter to translate them during the Tribunal hearing. The respondent did not object to the tender of these references with the proviso that because they were from customers they could not attest to Mr Tran's compliance with legislative requirements. 26 The references are from clients and attest to Mr and Ms Tran's honesty and professional abilities. Applicant's submissions 27 Mr Tran submitted that he had relied on advice from the police to update his computer software but that the software provided by Mr Dang did not ensure that he complied with all the requirements of the Act. He is now doing exactly what Mr Hancock has told him to do. After his wife records the details in the computer, he checks the information. Now that he knows what the requirements of the Act are, he is complying with them. 28 Mr Tran said he has a wife and three young children to support and he needs to pay back the money he owes. He has no income and very little opportunity for other employment. He said he has spoken to another software developer who he is confident will be able to provide him with a reliable software program that meets the legislative requirements. Respondent's submissions 29 Mr Wilson, on behalf of the Director General, submitted that it was Mr Tran's responsibility to understand the requirements of the legislation. It was no excuse for him to rely on other people's expertise and to complain that he was not given the correct advice or adequate services. Mr Wilson also pointed out that even after Mr Tran had received an infringement notice for not recording the serial number of the battery of a mobile phone, he failed to record the serial number of the battery of a cordless drill. In his submission, Mr Tran did not alter his practices sufficiently after receiving the infringement notices. 30 Mr Wilson likened Mr Tran's case to that of Altavilla v Director General, Department of Fair Trading [2000] NSWADT 110. In that case I affirmed the Director General's decision to revoke Mr Altavilla's licence and not to grant a new licence for a period of three years. Mr Altavilla incurred 84 demerit points. I found that for a period of over three years Mr Altavilla failed to take sufficient steps to ensure that pledged goods were fairly and reasonably described. Reasons and decision 31 The Director General was satisfied pursuant to s 34(1)(i) of the Act that Mr Tran is "carrying on the licensed business in a dishonest or unfair manner". The evidence on which the Director General relied in coming to that conclusion was that Mr Tran provided false information to departmental officers by stating that Ms Hao was a visitor to the shop when she was in fact an employee. Mr Tran admitted at the hearing that he had told departmental officers that Ms Hao was a visitor. Mr Wilson made it clear that the allegation related to Mr Tran's statement to departmental officers, not to his failure to record Ms Hao as an employee. While such statements were dishonest, they were not made in the course of carrying on the licensed business. They related to an investigation about the business by departmental officers, not to the carrying on of the business itself. While lying to departmental officers is a serious matter, I do not agree that in this case it amounts to carrying on the licensed business in a dishonest or unfair manner. 32 This finding leaves two grounds for the Director General's revocation of Mr Tran's licence. Mr Tran has accumulated the relevant number of demerit points within the specified period to enable the Director General to exercise his discretion under s 36(1)(g) of the Act to revoke, suspend or place conditions on the licence. Mr Tran has also been convicted of an offence under the Act pursuant to s 36(1)(c). Mr Wilson said that both these provisions were necessary because some offences do not attract demerit points, but may still justify action under s 36. 33 The discretion in s 36 is not limited by any factors set out in the legislation. The objects of the Act are not spelt out in the Act but, based on the Second Reading Speech, those objects include targeting thieves and removing dishonest traders from the marketplace. In particular, the matching of descriptions of pledged goods with goods reported as being stolen, is one way of deterring people from stealing goods and from disposing of them through pawnbrokers. 34 There is no evidence that either Mr or Ms Tran is dishonest in the sense that they intentionally misdescribed pledged goods or committed any of the other breaches of the Act. I find that the breaches of the Act they committed were a result of their ignorance of the legislative requirements. This ignorance was made worse by the fact that the computer software they were using did not assist them to comply with all those requirements. Despite Mr Tran's problems with computer software, he cannot rely on the inadequacies of that software to protect him from the consequences of repeatedly breaching the Act. 35 Because Mr Tran continued to breach the Act despite infringement notices being issued for the first offences, I am satisfied that the Director General made the correct decision in cancelling his licence. However, I am not satisfied that a three year cancellation period is justified. Mr Altavilla's offences were more numerous and occurred over a longer period of time. Mr Altavilla incurred 84 demerit points whereas Mr Tran incurred 33. (See Altavilla v Director General, Department of Fair Trading [2000] NSWADT 110.) Mr Tran attempted to respond to his difficulties by asking Mr Dang to alter the software. It appears that Mr Dang did not respond quickly to Mr Tran's requests. I also find that Mr Tran is disadvantaged to some extent by the fact that English is not his first language. That fact makes it difficult for him to obtain access to the legislative requirements in a form which he can easily understand. For these reasons I am satisfied that the period of one year is the appropriate period during which Mr Tran should not be granted a further licence. 36 I appreciate that this decision means that Mr Tran will have to close his business and find alternative employment for that period. I understand that this will cause him and his family some hardship, especially given the fact that he is attempting to repay fines. However, the objectives of the legislation are clear. Those who repeatedly breach the Act, even after they have been given an opportunity to change their ways, cannot be permitted to stay in the industry. Orders The Director General's decision to revoke Mr Tran's licence under the Pawnbrokers and Second-hand Dealers Act 1996 is affirmed. The Director General's decision that Mr Tran not be granted a further licence for a period of three years is varied. The period of one year is substituted for the period of three years. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.