New South Wales Supreme Court CITATION : St George Bank Limited v Giffen & Ors [2001] NSWSC 1143 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 1891 of 2001 HEARING DATE(S) : 29 November 2001 JUDGMENT DATE : 12 December 2001 St George Bank Limited (Plaintiff/Cross-Defendant) PARTIES : Matthew Giffen (First Defendant/Cross-Claimant) Christian Ramos (Second Defendant) The Commissioner of Police (Third Defendant) JUDGMENT OF : Windeyer J at 1 Mr R I Bellamy (Plaintiff/Cross-Defendant) COUNSEL : Mr J S Wheelhouse (Defendant/Cross-Claimant) Second Defendant not served Third Defendant no appearance Gray & PerkinsLaurence & Laurence (Plaintiff/Cross-Defendant) SOLICITORS : Delaney Lawyers (Defendant/Cross-Claimant) Second Defendant not served Third Defendant no appearance CATCHWORDS : SALE OF GOODS - transfer of title by non-owners - rights of an unpaid seller against goods - Factors (Mercantile Agents) Act 1923 - agency - agency by estoppel Factors (Mercantile Agents) Act 1923 s5(1) LEGISLATION CITED : Motor Dealers Act 1974 Motor Car Traders Act 1986 (Vic) CASES CITED : Heap v Motorists Advisory Agency Limited [1923] 1 KB 577 National Employers Mutual General Insurance Assocation v Jones [1988] 2 All ER 425 DECISION : See paragraphs 23 to 28 - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION WINDEYER J WEDNESDAY 12 DECEMBER 2001 1891/01 ST GEORGE BANK LIMITED V MATTHEW GIFFEN & ORS JUDGMENT 1 Question 2 The question for decision is which of two innocent parties was entitled to a 1995 Porsche motor vehicle – and now the proceeds of sale of that vehicle. Both are innocent parties and both it seems the victims of fraud, although not necessarily the same fraudulent act. Facts 3 In July 1998, the first defendant, Michael Giffen (Giffen) purchased a 1995 model Porsche from Scott Beasley Motors (SBM) for $180,000. In March 1999, Giffen decided to sell the vehicle and contacted Mr Scott Beasley (Beasley), who was known to him and asked if he would consider taking the vehicle for sale. Beasley agreed to sell the vehicle stating. "I'll do everything I can to get the best price for you". In early March 1999 two employees of SBM collected the vehicle from Giffen advising him the car would be delivered to the lot at Waterloo. It was Giffen's impression at all times the car would be sold in New South Wales. 4 On 26 March 1999, the vehicle appears to have been sold to Terry Hogan (Hogan) of Brighton Victoria. An invoice/receipt was issued by SBM for the sale. The price recorded was $142,000. Insofar as it was a receipt the document says: Received from Terry Hogan … the sum of zero cents 0.00 being deposit on vehicle". The conditions of sale, while not expressly saying so, carried the implication that title was not to pass before payment. An Inter Trade owner disposal form 7 under the Motor Dealers Act 1974 showed this trade sale as being made on 26 March 1999. 5 The evidence about Hogan is quite unclear. Mr Powell, Group Administrator of Auto Group Limited (AGL), a car dealer subsidiary of which acquired the vehicle, gave the following evidence: Q. Who is Mr Terry Hogan? A. Terry Hogan was the manager of that business. Q. Where was he situated, Victoria or New South Wales? A. New South Wales Q. Did Mr Hogan have some sort of licence to your knowledge? A. I don't know. Q. He operated under a licence held by Auto Group Prestige is that right? A. Yes, that's right. 6 Mr Powell only commenced employment with AGL on 31 July 2000. He had no direct knowledge of the events relevant to this matter. His evidence was that the Group had companies in New South Wales and Victoria, that in New South Wales being Auto Group Prestige (NSW) Pty Ltd and in Victoria Auto Group Prestige (Victoria). However, the New South Wales subsidiary operated in both New South Wales and Victoria holding different dealer's licences for each State. His evidence, which I have set out, was that Hogan was situated in New South Wales. 7 Some time in early April 1999, Beasley told Giffen that he had a buyer for the vehicle and that it would be sold for $170,000 by mid-April. Later in April there were severe hailstorms in Sydney. Beasley used this as an excuse for not making payment, as he said he was busy buying hail damaged vehicles and committing his funds to that. This would, of course, indicate a sale had been made, but a facsimile prepared by Giffen and signed as accepted by Beasley would have cast doubt on this as it confirmed a sale by Giffen to Beasley for $170,000 with payment to be made not later than 30 May 1999 when "title will pass from MG to SB". 8 Shortly after this Beasley told Giffen the car was in Victoria. Giffen protested about this, saying this was not with his permission. Numerous promises about payment and conflicting statements about a barrister supposedly wishing to buy the car took place between Beasley, his employees and Giffen up to the end of 1999. A cheque for $20,000 from Scott Beasley Motors Pty Limited to Giffen was dishonoured in December 1999. One cheque for $10,000 received in November 1999 was paid. The evidence suggested that Scott Beasley Motors Pty Limited may have been wound up this is not established by the documentary evidence. 9 It is now necessary to return to other events in March and April 1999. There is in evidence a page from the Dealings Book apparently kept by Auto Group or one of its subsidiaries pursuant to the Motor Car Traders Act 1986. That is a Victorian Act. Whether it was kept for the New South Wales subsidiary under its Victorian dealer's licence, or Victoria subsidiary, I do not know, but on the evidence of Mr Powell, it was probably the former. He said that the entries showed details of the date of purchase, the car, from whom it was purchased and to whom it was sold. There is no doubt that the particular entry refers to the car in question and on the evidence shows Scott Beasley Motors as vendor. It also shows a sale or transfer to Auto Group Prestige at Enfield, New South Wales, on 22 April 1999. 10 On the same date as the Dealings Book of Auto Group Prestige records the sale or transfer of the vehicle to Auto Group Prestige (NSW) Pty Limited, the vehicle was purchased by St George Bank Limited from Auto Group Prestige (NSW) Pty Ltd for $170,000. The RTA records indicate the acquisition and registration of the vehicle by Auto Group Prestige (NSW) Pty Ltd occurred on 6 April 2001, which may indicate the Victorian subsidiary was not involved. 11 St George Bank Ltd entered into a hire purchase agreement with a Christian Ramos of Pitt Street, Sydney on 22 April 1999. Obviously the bank purchased the car with the purpose of putting the hire purchase agreement in place. 12 Mr Ramos is the second defendant. He has not been served. One document in evidence indicates that Auto Group Prestige signed a warranty on disposal on 30 April 1999. The purchaser's name was shown on this as Christian Ramos but this was struck through and "Finance and Loan Brokers" inserted instead as purchaser. What part this played in the fraud and by whom is not really established. 13 The plaintiff terminated the hire purchase agreement on 2 August 2000, as the instalments had not been paid. In October 2000 the plaintiff bank made unsuccessful attempts to recover the vehicle. 14 The vehicle was finally recovered by the police of 4 November 2000 and was held as evidence pending proceedings in the District Court. By agreement between the parties the vehicle was then sold. The entitlement to the proceeds from that sale is the only issue requiring decision in this matter. 15 The strange thing about this action is the paucity of evidence on the part of the plaintiff. It is accepted that for the bank to succeed it must establish title through Auto Group Prestige (NSW) Pty Ltd. It is not suggested it has a better title than that of the vendor to it. Thus it needed to establish that the vendor obtained title to the car. There is no evidence from Mr Hogan, who was an obvious witness. Mr Powell had no knowledge of the transaction under which Hogan or Auto Group bought from Beasley, assuming that one of them did. The documentary evidence tendered by the defendant for the most part, only shows departmental records which do not prove ownership. Plaintiff's contentions 16 The general rule is that summarised in the phrase nemo dat quod non habet – no one can give what he does not have himself. There are however, many exceptions to this rule. The plaintiff argued entitlement to the proceeds of sale on the basis of three different exceptions: (a) Factors (Mercantile Agents) Act 1923 (b) Estoppel (c) Agency 17 I will deal with these in that order because and I will consider them all against the defendants' main submission, namely that the vehicle was stolen by Scott Beasley Motors Pty Ltd or SBM so that no one could obtain title from that company. Factors (Mercantile Agents) Act 1923 18 The plaintiff relies on s5(1) of the Act. I consider Beasley or his company to be a mercantile agent. The earlier association of Giffen and Beasley, the fact he was a dealer in motor vehicles, with authority to sell, does I think establish this. (s3). He was entrusted with the car for sale by Giffen as a mercantile agent. However, for the protection of s5 to arise it needs to be established that the sale was made by Beasley in the ordinary course of business and that the purchaser from Beasley acquired the vehicle in good faith and with no knowledge with lack of authority. In my opinion these matters are not established. It is not clear that Auto Prestige (NSW) was the buyer rather than Hogan; there is no evidence from either that the sale was in the ordinary course of business, nor any evidence of good faith or lack of knowledge of want of authority. There is no evidence of payment. It is for the buyer to establish the elements of the proviso; Heap v Motorists Advisory Agency Limited [1923] 1 KB 577. It cannot do so without evidence. 19 Mr Wheelhouse relied on cases which establish that there can be no entrustment by a thief; see National Employers Mutual General Insurance Association v Jones [1988] 2 All ER 425, but cases such as that have no bearing on the question here where entrustment came from the owner. As the ability of Auto Group to rely on s5 has not been established, the plaintiff bank cannot obtain any benefit from that section. Agency by estoppel 20 Counsel for the plaintiff asserted that by placing the car with Beasley as a second hand licensed dealer Giffen held him out as an agent with authority to sell. While I consider such a case could often be made out it is difficult to see how it could be made out without evidence. It is perfectly clear that fraud occurred some time in March or April 1999. Evidence by the purchaser from Beasley of statements made by Beasley and of reliance on apparent authority is completely lacking. The claim is not made. Agency 21 Beasley had authority to sell. While he may have been acting outside his authority in taking the car to Melbourne to sell, it is likely he was acting within his ostensible authority. The difficulty is that there is no reliable evidence as to the purchaser; there is no evidence of details of the transaction; and if Auto Group Prestige was the purchaser from Beasley, it appears to have sold the vehicle to both St George Bank Limited and Finance and Loan Brokers within eight days. The evidence is not sufficient to show good title in Auto Prestige. In those circumstances the plaintiff has not proved title. Result 22 The plaintiff's claim has failed. It was accepted that if this were the decision the proceeds of sale must be paid to Mr Giffen and I allowed a cross-claim to be filed for that purpose. As this was not done until after the hearing concluded I do not think that the plaintiff should have to pay the filing fee on the cross-claim, but otherwise it does not seem to me that there were any additional costs which arose by reason of the cross-claim. Orders 23 The summons be dismissed with costs. 24 Declare the cross-claimant is entitled to the proceeds of sale of Porsche motor vehicle Engine number 63T50508. 25 Order that the plaintiff pay such proceeds of sale to the first defendant. 26 No order as to costs on the cross-claim. 27 No order as to costs of the third defendant. 28 Exhibits may be returned. ********** Last Modified: 12/17/2001 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.