Supreme Court New South Wales Medium Neutral Citation: Toyota Finance Australia Limited v Ali Serhan [2015] NSWSC 1454 Hearing dates: 30 September 2015 Date of orders: 30 September 2015 Decision date: 30 September 2015 Jurisdiction: Equity - Duty List Before: Kunc J Decision: Orders for substituted service and directions Catchwords: PRACTICE AND PROCEDURE – Sale of goods – Motor vehicles – Vendor seeking to recover car held by Customs – Customs Act 1901 (Cth) Legislation Cited: Australian Border Force Act 2015 (Cth) Customs Act 1901 (Cth) Category: Procedural and other rulings Parties: Toyota Finance Australia Limited ABN 48 002 435 181 (Plaintiff) Ali Serhan (First Defendant) The Australian Border Force Commissioner of the Australian Border Force (Second Defendant) Representation: Counsel: D. Farrar (Solicitor) (Plaintiff) B. May (Solicitor) (Second Defendant) Solicitors: Farrar Lawyers (Plaintiff) Australian Government Solicitor (Second Defendant) File Number(s): 2015/281330 Publication restriction: No EX TEMPORE Judgment 1. On or about 28 August 2015 the first defendant, Mr Ali Serhan, purchased a Toyota Kluger (the "Kluger"). He did so under a contract of finance (the "Contract") from the plaintiff, Toyota Finance Australia Limited ("Toyota"). In circumstances which I will shortly describe, the Kluger is currently in the possession of the Comptroller-General of Customs (the "CG"). These proceedings have been brought by Toyota to recover possession of the Kluger. I have said that the Kluger is in the possession of the CG. The second defendant is named as the Australian Border Force Commissioner. However, under the provisions of the Australian Border Force Act 2015 (Cth) the CG and the Australian Border Force Commissioner are one and the same person. 2. These proceedings first came before McDougall J as duty judge on 25 September 2015. His Honour granted an injunction restraining the CG from transporting or releasing the Kluger for transportation except as provided for by further order of this Court. Orders were made for service of the proceedings on the CG. However, it appears that no orders were made in relation to service on the first defendant. That is a matter which will need to be dealt with. 3. The facts appear to be that the first defendant purchased the Kluger and entered into the Contract with Toyota. The first payment under the Contract is not due until tomorrow. However, in the meantime, Toyota has been contacted by a law enforcement officer in some way connected with the CG or his department informing Toyota that the Kluger is in the possession of the CG in a shipping container awaiting export to Lebanon. There is evidence that the first defendant has left Australia with no return date. There is no evidence as to where he has gone, although there is some suggestion that he is not in Lebanon. 4. In obtaining finance from Toyota, the first defendant informed Toyota that he was employed by Kalnosa Pty Ltd. He provided Toyota with a bank statement showing deposits between 2 July 2015 and 20 August 2015 said to be from Kalnosa Pty Ltd. Further enquiries have disclosed that Kalnosa Pty Ltd was placed into liquidation in April of this year. Those enquiries have also revealed that the deposits apparently made by Kalnosa Pty Ltd in fact originated from a bank account in the name of a third person. 5. This short recitation of the facts is sufficient to demonstrate that the circumstances surrounding the purchase of the Kluger are, at the very least, suspicious. Under clause 12.2 of the Contract, the borrower is said to be in default if, among other things, Toyota "believes on reasonable grounds that it was induced to enter into the contract by a fraud on [the borrower's] part". The Court is satisfied that Toyota has reasonable grounds to believe that it was induced to enter into the contract by a fraud of the first defendant, that fraud being the deception in relation to his alleged employment. 6. Clause 12.2 goes on to provide that if, in circumstances such as those referred to in the preceding paragraph, the borrower is in default, then the balance due under the Contract is immediately due and payable and, among other things, "unless it is restricted by law from doing so, [Toyota is entitled to] take possession of the" Kluger. Accordingly, the Court is satisfied on the evidence that Toyota has a present right to take possession of the Kluger if it is not restricted by law from doing so. 7. The Court informed the parties that, if it could, it would make an order today requiring the CG to deliver up the Kluger to Toyota. However, there are two complications. 8. The first complication is that there is no evidence that the first defendant has any notice of these proceedings. The Court is not satisfied that the evidence is sufficient to justify an order today that service of these proceedings on the first defendant ought to be dispensed with. The evidence is that such information as has been tendered concerning the first defendant's whereabouts was provided by his brother, Mr Ahmad Serhan. Mr Ahmad Serhan was one of the referees for the first defendant in obtaining the Contract with Toyota. There is evidence both of Mr Ahmad Serhan's address and his telephone number. The appropriate course is that before anything in the nature of final orders are made, some attempt is necessary to bring these proceedings to the attention of the first defendant. Accordingly, I will make an order for substituted service of the proceedings on the first defendant by service on his brother. 9. The second complication arises from the provisions of the Customs Act 1901 (Cth) (the "Act") which appear to create a restriction by law impeding Toyota's right to possession. It may be observed, without disrespect, that the Act is not a straightforward piece of legislation. The Court has been assisted by the helpful and clear exposition of Mr May, solicitor, for the CG as to the relevant provisions. 10. The difficulty arises under s 33(1) of the Act which provides: 33 Persons not to move goods subject to customs control (1) If: (a) a person intentionally moves, alters or interferes with goods that are subject to customs control; and (b) the movement, alteration or interference is not authorised by or under this Act; the person commits an offence punishable, on conviction, by a penalty not exceeding 500 penalty units. 1. The Kluger is "subject to customs control" for the purpose of s 33(1) by reason of s 30(1)(e): 30 Customs control of goods (1) Goods shall be subject to customs control as follows: … (e) as to goods made or prepared in, or brought into, a prescribed place for export that are no longer for export--from the time the goods are made or prepared in, or brought into, the prescribed place until the goods are moved from the place in accordance with a permission given under section 119AC. 1. There is no doubt that this Court has jurisdiction "with respect to matters arising under [the Act]": s 277A of the Act. The difficulty is that there is no power expressly conferred on the Court by the Act to order release of the Kluger. On the other hand, there is the possibility that a person, even if acting pursuant to a Court order made under the general law, may be committing an offence by removing the Kluger from the possession of the CG by reason of the provisions of s 33(1). This is not the case for that question - perhaps of great interest to lawyers but no one else - to be determined. The CG wishes to be co-operative in resolving what I am informed from the Bar table is a situation which has not been encountered in his department before. 2. Section 30(1)(e) of the Act refers to s119AC, which when read with s119AB provides a procedure whereby a person can apply for permission to move goods such as the Kluger that are no longer for export: 119AB Application for permission to move, alter or interfere with goods that are no longer for export (1) If goods are subject to customs control under paragraph 30(1)(e), a person may apply to the Department for permission to move, alter or interfere with the goods in a particular way. (2) An application under subsection (1) may be made by document or electronically. (3) A documentary application must: (a) be communicated to the Department by sending or giving it to an officer doing duty in relation to export entries; and (b) be in an approved form; and (c) contain such information as is required by the form; and (d) be signed in a manner specified in the form. (4) An electronic application must communicate such information as is set out in an approved statement. (5) The CG may approve different forms for documentary applications, and different statements for electronic applications, made under this section in different circumstances or by different classes of persons. 119AC Dealing with an application for a permission to move etc. goods that are no longer for export (1) If an application is made under subsection 119AB(1), an officer may direct the applicant to ensure that the goods to which the application relates are held in the place where they are currently located until a decision is made on the application. (2) If a direction is not given under subsection (1) of this section, or a reasonable period has elapsed since the giving of such a direction to enable the making of an informed decision on the application, an officer must give a message by document, or send a message electronically, to the applicant: (a) giving the applicant permission to move, alter or interfere with the goods in accordance with the application either unconditionally or subject to such conditions as are specified in the message; or (b) refusing the application and setting out the reasons for the refusal. (3) If a person moves, alters or interferes with goods otherwise than in accordance with a permission under subsection (2) of this section, the movement of the goods is, for the purposes of paragraph 229(1)(g), taken not to have been authorised by this Act. 1. Toyota has made an application under s 119AB. Mr May has informed the Court that the relevant decision maker will be assisted in reaching a conclusion that the Kluger is no longer for export if there is an order of the Court requiring delivery up of the Kluger to Toyota. To avoid the possibility of a collision between the orders of this Court and the requirements of the Act, Mr May has suggested (and Mr Farrar, solicitor, appearing for Toyota has not demurred) that any order for delivery up be expressed to be subject to the provisions of the Act. The intention of doing so is to ensure that the order does not interfere with the restraint under s 33(1) of the Act and to respect the procedure required under s 119AB of the Act. That seems to be an entirely sensible and appropriate way to proceed. 2. Bearing all of these matters in mind, I will stand these proceedings over for final disposition to the Duty Judge on 13 October 2015. The intention of the orders which I will shortly pronounce is to ensure that in the intervening period some attempt is made to bring these proceedings to the attention of the first defendant. While the Court is satisfied that Toyota has, subject to the provisions of the Act, a right to possession of the Kluger, the two week delay will also enable evidence to be filed on the next occasion by Toyota that, if it be the case, the first defendant has failed to make the first payment under the Contract which is due tomorrow. Such a failure would only reinforce the already established entitlement of Toyota to possession of the Kluger subject to the Act. 3. The orders of the Court are that: Service of the summons, affidavit of Adam Hopkins sworn 25 September 2015 and the exhibit thereto, affidavit of Trudy Maria Payne sworn 25 September 2015, notice of motion filed 25 September 2015, the orders of McDougall J of 25 September 2015 and these orders be effected on the first defendant on or before 7 October 2015 by: personal service on Mr Ahmad Serhan or in default of personal service on Mr Ahmad Serhan by being left addressed to Mr Ahmad Serhan at XXX, Sefton NSW 2162; and a text message being sent to Mr Ahmad Serhan on XXX to this effect: Toyota has commenced Supreme Court proceedings for orders to recover a Kluger purchased by Ali Serhan currently being held by Customs. Please inform Mr Ali Serhan that he is entitled to be heard by the Court to oppose that order. If he does not appear in Court an order in favour of Toyota may be made in his absence when the matter is next before the Court on 13 October 2015. For further information please telephone the sender of this message or send an email to Mr D Farrar, Toyota's solicitor, at XXX. 2. These proceedings are stood over the to the Duty Judge on 13 October 2015. These orders are to be taken out forthwith. ********** Amendments 01 October 2015 - First name of defendant changed from Alia to Ali in Case Name 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: 01 October 2015