Thomas Farkas v Chris El Khouri [2008] NSWSC 1342

New South Wales Supreme Court

CITATION : Thomas Farkas v Chris El Khouri [2008] NSWSC 1342

HEARING DATE(S) : 12 December 2008

JUDGMENT DATE : 12 December 2008

JUDGMENT OF : Sackville AJ

EX TEMPORE JUDGMENT DATE : 12 December 2008

DECISION : 1. Judgement for the plainitff against the defendant in the sum of $165,750. 2. The defendant must pay the plaintiff's costs of the proceedings.

CATEGORY : Principal judgment

CASES CITED : Flowfill Packing Machines Pty Ltd v Fytor (Supreme Court of NSW Equity Division, 22 September 1993) Schemmeller v Pommeroy (1989) 50 SASR 450

PARTIES : Thomas Farkas (Plaintiff) Chris El Khouri (Defendant)

FILE NUMBER(S) : SC 5989/2007

COUNSEL : P E Cullen (Plaintiff)

SOLICITORS : Jackson Lalic Lawyers, Sydney (Plaintiff)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Acting Justice Sackville

Date 12 December 2008

5989 of 2007 THOMAS FARKAS v CHRIS EL KHOURI

JUDGMENT

1 The plaintiff seeks damages for the conversion of a BMW M3 CSL coupe, 2004 model, bearing Queensland registration number QTF832 ("the Vehicle"). 2 The defendant carries on business in Sydney under the name "Sydney Prestige Car Repairs". He was served with the summons and supporting affidavits on 23 May 2008. He was also served with the amended summons on or about 12 June 2008 in accordance with an order for substituted service made by a Registrar of the Court on 5 June 2008. The defendant was advised in writing of the date of the final hearing, but has elected not to appear. 3 Since the defendant has not appeared, the affidavit evidence read on behalf of the plaintiff has not been challenged. It shows that the plaintiff purchased the Vehicle in Queensland on 14 December 2005 for approximately $176,470. He paid a deposit of 15% ($26,470) and obtained finance for the balance of approximately $150,000 from BMW Finance Australia Ltd. 4 In June 2006, the plaintiff decided to sell the vehicle. Through his business partner, the plaintiff made contact with the defendant in Sydney. The plaintiff's business partner made arrangements with the defendant for him to sell the car on the plaintiff's behalf. 5 The plaintiff arranged for the Vehicle to be delivered by carrier to a depot in Silverwater, a suburb of Sydney. The Vehicle was duly delivered on or about 27 July 2006 and, so I infer from the evidence, was collected shortly afterwards by or on behalf of the defendant. 6 From December 2006, the plaintiff received a number of penalty infringement notices, each of which related to a driving offence committed in New South Wales by somebody using the Vehicle. The plaintiff asked his business partner to sort out the fines and to ascertain what was happening with the sale of the Vehicle in Sydney. He apparently received no satisfactory response. 7 In April 2007, the plaintiff telephoned the defendant and demanded the return of the Vehicle. The defendant told the plaintiff that moneys were due for repairs that had been undertaken to the Vehicle. The plaintiff agreed to pay the amounts that were said to be due and repeated his demand for the Vehicle to be returned. 8 The plaintiff made a further demand for the return of the Vehicle in a telephone conversation with the defendant in May 2007. On this occasion, the defendant informed the plaintiff that the mechanical costs were now "considerably higher" and that the car was "in pieces because the engine is busted". 9 In August 2007, BMW Australia Pty Ltd issued a statement of claim in the District Court of Queensland seeking to recover moneys due under the finance agreement. The statement of claim was apparently not served on the plaintiff but was served on his father, who had apparently guaranteed the loan made by the finance company to the plaintiff. It appears that the plaintiff's father is paying the principal and interest due under the finance agreement and that he has made a formal demand on the plaintiff for reimbursement of the amounts paid by him. 10 A solicitor acting on behalf of the plaintiff made further demands on the defendant for the return of the Vehicle on 11 and 17 October 2007. The defendant was evasive in these conversations, but claimed that he was owed about $40,000 for repairs and storage charges in respect of the Vehicle. 11 On 6 November 2007, the plaintiff's solicitors wrote a letter of demand in the following terms: "We note that you received the vehicle in July 2006 for the purpose of selling it on behalf of our client. Despite numerous demands, you have failed or refused to return the vehicle to our client. We also note your verbal advices that you have undertaken mechanical work on the vehicle for which you are owed money. Our client has never requested nor authorised any mechanical work to be undertaken on the vehicle and we note you have never issued an invoice to our client in respect of any work allegedly undertaken. It is also relevant to note that you have been using the vehicle for your own purposes and benefit as evidenced by the significant number of speeding and other traffic offence tickets received by our client as registered owner. For your information, the matter has been referred to Queensland and New South Wales Police for investigation. WE are also instructed to commence legal proceedings in the New South Wales Supreme Court for recovery of possession of the vehicle. Unless the vehicle is made available for collection within 7 days, the proposed legal proceedings will be commenced without further notice. Such action will include a claim for damages for wrongful detention of property and fraud. Our client will also claim costs and interest. In the meantime, our client reserves his right in respect of all losses incurred to date. Please contact our office urgently to make arrangements for the vehicle to be collected.' 12 No response was received to this letter and the present proceedings were instituted on 13 December 2007. 13 The plaintiff's counsel, Mr Cullen, submits that, on the basis of these findings, the relationship between the plaintiff and the defendant was that of bailor and bailee of the Vehicle. The bailment could be terminated at any time upon the bailee committing a wrongful act. The defendant had acted wrongfully by using or permitting the vehicle to be used in a manner inconsistently with the bailment and by incurring penalties for speeding and other offences involving the Vehicle. In addition, so Mr Cullen argues, the defendant acted wrongfully in carrying out unauthorised repairs to the Vehicle. 14 It is not clear that the bailment constituted by delivery of the Vehicle by the plaintiff to the defendant terminated only when the bailee acted in a manner inconsistent with the terms of the bailment. The evidence is consistent with the bailment being terminable at the will of the bailor, or at least after reasonable notice was given to the bailee. In any event, the bailment was terminated in March 2007 when the plaintiff demanded the return of the Vehicle and undertook to pay the costs of the repairs that had been carried out, albeit without authority. 15 In Flowfill Packing Machines Pty Ltd v Fytor Pty Ltd (Supreme Court of NSW Equity Division, 22 September 1993), Young J reviewed the authorities dealing with a claim of conversion by a bailor against a bailee who refused or failed to return the goods subject to the bailment. His Honour concluded (at 12) that the: "cases show that the mere detention by A of B's goods will not necessarily amount to conversion nor will the mere handling of them. But once the degree of user amounts to employing the goods as if they were one's own then a conversion is established. That point may be reached without any subjective intention and may be demonstrated by, for instance, wearing the plaintiff's jewellery or locking up the plaintiff's tools or her stock so that the plaintiff cannot use them without lawful excuse". 16 In the present case, the evidence establishes that the Vehicle was delivered to the defendant for the purpose of selling it on behalf of the plaintiff. The unauthorised use of the Vehicle went beyond, for example, a mere joy ride (cf Schemmeller v Pommeroy (1989) 50 SASR 450) but, so I infer, involved extensive use of the Vehicle. Moreover, if the defendant's claims in the conversations recounted in the affidavits are to be believed, he undertook extensive unauthorised "repairs" and even dismantled the engine. These actions by the defendant amounted to treating the Vehicle as his own and thus constituted conversion of the Vehicle. 17 The valuation evidence adduced on behalf of the plaintiff, in the absence of any challenge to it, satisfies me that the value of the Vehicle in May 2007 was $150,000. 18 I granted leave to the plaintiff to amend his summons to claim interest. Mr Cullen seeks pre-judgment interest in the sum of $15,750, being interest on the sum of $150,000 at 7% per annum for a period of eighteen months. 19 I therefore give judgment for the plaintiff against the defendant in the sum of $165,750. The defendant must pay the plaintiff's costs of the proceedings. ********