CAPITAL FINANCE AUSTRALIA LIMITED v Elana Claire Clough [2015] NSWSC 1327

Supreme Court New South Wales

Medium Neutral Citation: CAPITAL FINANCE AUSTRALIA LIMITED v Elana Claire Clough [2015] NSWSC 1327 Hearing dates: 03 September 2015 Date of orders: 03 September 2015 Decision date: 03 September 2015 Jurisdiction: Equity Before: Rein J Decision: See [15] and [16] Catchwords: EQUITY - Securities - Personal property securities - Personal property securities register - Amendment demand pursuant to s 178 of the Personal Property Securities Act 2009 Legislation Cited: Personal Property Securities Act 2009 (Cth) Cases Cited: Macquarie Leasing Pty Ltd v Deqmo Pty Ltd [2014] NSWSC 1466 Sandhurst Golf Estates Pty Ltd v Coppersmith Pty Ltd [2014] VSC 217 Toyota Finance New Zealand Ltd v Christie [2009] NZHC 829 Quality Bakers Australia Pty Ltd v Yassin Modern Bakery Pty Ltd t/as Yassin Lebanese Bakery [2007] NSWSC 804 Texts Cited: Nil Category: Principal judgment Parties: CAPITAL FINANCE AUSTRALIA LIMITED (Plaintiff) Elana Claire Clough (First Defendant) Registrar of Personal Property Securities (Second Defendant) Representation: Counsel: L.T Livingston (Plaintiff)

Solicitors: Kemp Strang (Plaintiff) Australian Government Solicitor (Second Defendant) File Number(s): 2014/357752 Publication restriction: nil

EX TEMPORE JUDGMENT 1. In this matter the plaintiff, Capital Finance Australia Limited ("Capital"), entered into a financial contract with C&J Concrete Pty Ltd ("CJC") on 29 April 2011 in connection with a vehicle known as a KIA Carnival van. The obligations of CJC were guaranteed by a Miss Herewine Simpson. A copy of that document can be found as part of exhibit A of the Court book in this matter. The facts set out in the balance of these reasons are taken from the affidavits and annexures contained in Exh A. 2. Capital registered its interest in the vehicle on 11 May 2011 and its registration was migrated to the Personal Properties Security Register on 10 October 2013. In November 2012 CJC defaulted under the terms of the agreement to pay $18,765 due, and on 1 September 2013 Capital repossessed the vehicle. 3. On 24 September 2013 Capital arranged for the vehicle to be auctioned by Pickles, licenced auctioneer. The vehicle was sold at public auction on 9 October 2013. On 10 October 2013 Capital removed its security interest to ensure clear title could be given to the purchaser at the auction. On 29 September 2013, unbeknown to Capital (or I infer, Pickles) the defendant registered a security interest in the vehicle. Capital reregistered its interest in the vehicle on 23 October 2013. The sale to the purchaser at the auction fell through, I was informed, because of the existence of the encumbrance on title in the register brought about by the defendant's registration. Capital has sought to have the defendant remove the encumbrance caused by her registration of the interest. A copy of that registration is found on page 207 annexed to the affidavit of Mr Glen Bradley of 19 November 2014. 4. There was correspondence between Capital and the defendant in which the defendant contended that she had bought the vehicle from CJC on 24 May 2013. There is in evidence a receipt which the defendant provided to Capital. It is found at page 29 annexed to Mr Bradley's affidavit. The receipt has an NRMA heading and records, as the amount received by CJC, "$5,000 cash/$18,765 paid to Capital Finance" ("Capital"). Capital agreed with the defendant that it would split the proceeds of sale of the vehicle equally with the defendant on condition that the defendant provided copies of registration of the vehicle and proof that the amount of $18,765 was paid to Capital upon the purchase of the vehicle. That might seem a somewhat strange agreement to make given that Capital itself could check whether or not it had received the money, but that was the arrangement made. Capital's evidence is that although copies of the Queensland registration papers for the vehicle were supplied by the defendant and she provided a document headed "Bill Payment Receipt", which is found at page 35 to Mr Bradley's affidavit, in fact that document presents a false image of what actually has been paid to the plaintiff. 5. The plaintiffs, with the assistance of its bank, has made enquiries in respect of the document at 35 including by requesting its bank to undertake a tracing of B-Pay payments, and has also inspected its own books and records. According to Mr Bradley, what was paid on or close to 24 May 2013 was in fact $1, and not the amount of $18,765 that was required to be paid. The document at 35 has the appearance of being a cut and paste job and on the evidence before me, I am satisfied that the amount recorded on that page as having been paid, has not in fact been paid to Capital. 6. Capital obtained an order in the proceedings for substituted service which order was made on 22 May 2015. Capital has, in accordance with that order for substituted service, served the defendant at each of the addresses referred to in the order. Evidence that that has been complied with is under Tab 5 and is the affidavit of Capital's solicitor Mr Michael Brian Wirth of 31 August 2015. 7. The matter was called this morning in Court and outside Court and there was no appearance of the first defendant. I am satisfied that the defendant has been given proper notice of these proceedings and has chosen not to defend them. The second defendant is the Registrar of Personal Property Security and he has been joined by reason of the fact that the relief which the plaintiff seeks, includes an order in relation to the register, and the Registrar has filed a submitting appearance. 8. After Capital discovered the nature of the problem with the registration by the defendant, it wrote to the defendant seeking removal of the encumbrance and when that did not occur, it served a notice in accordance with s 178 of the Personal Property Securities Act 2009 (Cth) ("the Act"). There was no response from the defendant to that notice and in due course, the Registrar removed the encumbrance that had been originally lodged by the defendant. On the day that the Registrar removed that encumbrance, the defendant lodged another registration and that registration remains on the title. In the circumstances, Capital had no alternative but to commence proceedings for the removal of that second registration. The vehicle remains in the possession of Pickles as agent for the plaintiff and cannot practically be sold until the removal of the interest claimed by the defendant. 9. There is an inconsistency between the first registration by the defendant (see pp 20 - 22 of the annexure of Mr Bradley's affidavit) and the second registration (pp 50- 52) because the first describes itself as a purchase money security interest and the second says it is not. 10. On the material presented Capital has established that it has a security interest in the vehicle. No evidence has been presented which supports the claim of the defendant to a security interest. Indeed the evidence presented tells against such an interest since even on her best case the defendant purchased a vehicle from CJC without obtaining possession of it. She may have paid $5000 to CJC but she has not paid the $18,765 to CJC. There is no evidence of any agreement between the defendant and CJC creating an interest in favour of the defendant, and nothing in writing. Further s 12 of the Act provides that a security interest is an interest that in substance secures payment or performance of an obligation and what has occurred meets none of the examples in s 12(2) or (3). That is not determinative but there is no evidence of any grant of any interest by CJC to the defendant of any kind except the right of a purchaser to delivery- ie akin to a purchasers' lien. Purchasers' liens are not, by virtue of s 8, recognised by the Act as giving rise to a registrable interest. S 8(1)(c) of the Act is in the following terms: "(1) This Act does not apply to any of the following interests (except as provided by subsection (2) or (3)): ….. (c) a lien, charge, or any other interest in personal property, that is created, arises or is provided for by operation of the general law" 1. By reason of s 20(1) and (2) of the Act where the party claiming the interest does not possess or control "the collateral" the absence of an instrument in writing precludes any registrable interest arising. 2. As I noted in the case of Macquarie Leasing Pty Ltd v Deqmo Pty Ltd [2014] NSWSC 1466 if a party wishes to resist the order sought by Judicial process specified in s 182 of the Act it must establish the basis of its security interest: see also Toyota Finance New Zealand Ltd v Christie [2009] NZHC 829 at [16] to [18]. I also draw from the failure of the defendant to appear the inference that she was unable to produce any evidence that could support her claim. It is not strictly necessary to decide whether the reasoning in Quality Bakers Australia Pty Ltd v Yassin Modern Bakery Pty Ltd t/as Yassin Lebanese Bakery [2007] NSWSC 804 per Brereton J which dealt with the failure of a defendant to appear in answer to a case pleaded by Statement of Claim extends to a case commenced by Summons and supported by affidavit. 3. Macquarie Leasing was a case in which the defendant had sought to reregister an interest after it had been struck out by the Registrar. I noted in those reasons that s 207 of the Act confers jurisdiction upon the Court and power to make orders of the kind which are now sought by Capital in this case. I gave consideration as to whether or not orders should be made for removal of registration, but also to prevent any future registration being made by the person who lodged the registration about which complaint was made in that case. I made orders similar to those made by Robson J in Sandhurst Golf Estates Pty Ltd v Coppersmith Pty Ltd [2014] VSC 217 at 123. 4. I am satisfied that similarly here the plaintiff is entitled to the relief which it seeks and that it is appropriate to make orders in accordance with the short minutes of order prepared by Mr Livingston, counsel for the plaintiff, and which orders I will now make. 5. I make orders in accordance with the short minutes of order initialled by me and dated with today's date and placed with the papers. 6. I direct the solicitor to notify the defendant of the orders made today and to do so by notification at the three addresses previously referred to in the order previously made by the Court and to which I have just referred. 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. Decision last updated: 10 September 2015