Supreme Court New South Wales Medium Neutral Citation: Chelliah v NSW Police [2018] NSWSC 557 Hearing dates: 6 March 2018 Date of orders: 14 May 2018 Decision date: 14 May 2018 Jurisdiction: Common Law Before: Garling J Decision: (1) Further Amended Summons filed 14 December 2017, and the proceedings generally, are dismissed. (2) Plaintiff to pay the first and second defendant's costs of the proceedings. Catchwords: APPEALS – appeal from Local Court – appeal against decision under s 219 Law Enforcement (Powers and Responsibilities) Act 2002 for delivery of property – question of which party lawfully entitled to possession of vehicle – where vehicle stolen from second defendant and sold to plaintiff by a third party – application of nemo dat principle – whether exceptions to nemo dat under s 27 Sale of Goods Act 1923 and Personal Property Securities Act 2009 applied – where plaintiff did not seek leave to appeal on grounds disclosing mixed questions of fact and law – where interest of second defendant in the vehicle was not a security interest – where interest of second defendant instead derives from her being a residuary beneficiary under the Succession Act 2006 – where Magistrate was not satisfied that plaintiff did not have notice of any defect in title of the vendor – no inconsistency pursuant to s 109 of the Constitution where Commonwealth legislation does not apply to the factual circumstances – neither exception made out – no other errors demonstrated – proceedings dismissed Legislation Cited: Commonwealth Constitution Judiciary Act 1903 (Cth) Law Enforcement (Powers and Responsibilities) Act 2002 (NSW) Local Court Act 2007 (NSW) Personal Property Securities Act 2009 (Cth) Sale of Goods Act 1923 (NSW) Succession Act 2006 (NSW) Cases Cited: Browne v Dunn (1893) 6 R 67 Carolan v State of New South Wales and Anor [2013] NSWSC 1593 Commissioner of Police v Pecover [2014] NSWSC 1427 Fantakis v Commissioner of Police [2013] NSWSC 685 State of NSW v O'Mara and Ors [2015] NSWSC 428 Texts Cited: Not Applicable Category: Principal judgment Parties: Charles Chelliah (P) New South Wales Police (D1) Cheryl Hall (D2) Representation: Counsel: C P Carter (P) Submitting Appearance (D1) H Altan (D2) Solicitors: Vaikom Law (P) HWL Ebsworth (D1) (Submitting) Eddelbuttel Law (D2) File Number(s): 2017/235315 Publication restriction: Not Applicable Decision under appeal Court or tribunal: Local Court Jurisdiction: Civil Date of Decision: 28 June 2017 Before: Stafford LCM File Number(s): 2017/235315 Judgment 1. On 14 December 2017, Charles Chelliah, as plaintiff, filed a Further Amended Summons naming the New South Wales Police ("NSW Police") as the first defendant and Mrs Cheryl Hall as the second defendant. 2. The Further Amended Summons sought to appeal from a judgment of the Local Court which was delivered on 8 July 2017. Proceedings were initially commenced in this Court by a Summons in August 2017. NSW Police filed a submitting appearance in this Court. The active parties have been the plaintiff and the second defendant. 3. Mr Chelliah challenges the decision of the Local Court (Stafford LCM) to find in favour of the second defendant, Mrs Hall, in proceedings brought by the NSW Police in the Local Court, under s 219 of the Law Enforcement (Powers and Responsibilities) Act 2002 (NSW) ("LEPRA"). 4. Because there are proceedings in two courts where the parties were designated differently, it will be convenient to refer to them by name and not by their roles. Factual Background 1. On 20 March 2015, Mrs Hall's late husband, Mr Keith Hall, died. The residue of his Estate passed to her by reason of his Will, which was admitted to probate with Mrs Hall as the executor of the estate. 2. Prior to his death, Mr Keith Hall owned a Lamborghini Espada ("the Espada"), which he had purchased in the 1970s. The Espada was unregistered and garaged in a locked shed located on a property on Mitchells Island, where Mrs Hall and her husband once lived. Mitchells Island is at the mouth of the Manning River. 3. The Lamborghini Espada is a 4-seat grand touring coupe built during a 10 year period between 1968 and 1978. It is a much prized collector's car which exists in limited numbers. 4. At some unknown point in time the Espada was removed from the shed and sold without authority from either the late Mr Hall or Mrs Hall. Putting it shortly, the Espada was stolen. 5. In June 2016 Mrs Hall discovered that the Espada was no longer in the shed. She immediately contacted the Police. 6. The Espada had passed into the possession of Mr Chelliah, who when contacted by the Police, surrendered it to them. 7. The circumstances in which Mr Chelliah came to hold the ownership of the Espada will be described shortly in more detail. However, once the Police had the car in their possession, they brought the proceedings in the Local Court to enable them to return the Espada to its rightful owner. Relevant Legislation 1. Section 219 of LEPRA governed the proceedings in the Local Court. It is in the following form: "219 Disposal of property on application to court (1) A court may, on application by any person, make an order that property to which this Division applies: (a) be delivered to the person who appears to be lawfully entitled to the property, or (b) if that person cannot be ascertained, be dealt with as the court thinks fit. (2) In determining an application the court may do any one or more of the following things: (a) adjust rights to property as between people who appear to be lawfully entitled to the same property or the same or different parts of property (including adjusting rights by extinguishing, whether in whole or in part, any interests in the property of such persons), (b) make a finding or order as to the ownership and delivery of property, (c) make a finding or order as to the liability for and payment of expenses incurred in keeping property in police custody, (d) order, if the person who is lawfully entitled to the property cannot be ascertained, that the property be forfeited to the Crown, (e) make any necessary incidental or ancillary orders. (3) ..." 1. Section 219 must be construed by reference to its purpose: Commissioner of Police v Pecover [2014] NSWSC 1427 at [34] per Adamson J. One of the objects of s 219 is the protection of the Police in circumstances where the Police entertain a doubt as to whether the person applying for the delivery of property does in fact have lawful title to that property: Carolan v State of New South Wales and Anor [2013] NSWSC 1593 at [6] per Johnson J; Pecover at [34] per Adamson J; State of NSW v O'Mara and Ors [2015] NSWSC 428 at [9] per Beech-Jones J. 2. Proceedings brought under s 219 of LEPRA are accordingly not normal adversary litigation inter partes, nor are they criminal in nature. Rather, a person claiming lawful entitlement to the property in dispute bears a civil onus of establishing their entitlement: Fantakis v Commissioner of Police [2013] NSWSC 685 at [44] per Adamson J; Carolan at [7] per Johnson J; O'Mara at [9] per Beech-Jones J; Pecover at [34]-[35] per Adamson J. 3. In hearing these proceedings, this Court is exercising a statutory jurisdiction derived from the Local Court Act 2007. Section 39 is in the following form: "39 Appeals as of right (1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law. (2) ..." 1. Section 40 is in the following form: "40 Appeals requiring leave (1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court. (2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court." (a) an interlocutory judgment or order, (b) a judgment or order made with the consent of the parties, (c) an order as to costs." 1. It is to be observed that a party to Local Court proceedings does not have any entitlement to appeal or to seek leave to appeal to this Court against a finding of fact. 2. Mr Chelliah did not seek leave to appeal in these proceedings. 3. The other legislation which is central to the argument relied upon by Mr Chelliah is the Personal Property Securities Act 2009 (Cth) ("PPS Act") and the Sale of Goods Act 1923 (NSW) ("SG Act"). 4. The two relevant provisions of the PPS Act are ss 12 and 45. They are as follows: "12 Meaning of security interest (1) A security interest means an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property). (2) For example, a security interest includes an interest in personal property provided by any of the following transactions, if the transaction, in substance, secures payment or performance of an obligation: (a) a fixed charge; (b) a floating charge; (c) a chattel mortgage; (d) a conditional sale agreement (including an agreement to sell subject to retention of title); (e) a hire purchase agreement; (f) a pledge; (g) a trust receipt; (h) a consignment (whether or not a commercial consignment); (i) a lease of goods (whether or not a PPS lease); (j) an assignment; (k) a transfer of title; (l) a flawed asset arrangement. (3) … 45 Taking motor vehicles free of security interest Incorrect or missing serial number (1) A buyer or lessee, for new value, of a motor vehicle of a kind prescribed by the regulations for the purpose of this section, takes the motor vehicle free of a security interest in the motor vehicle if: (a) the regulations provide that motor vehicles of that kind may, or must, be described by serial number; and (b) there is a time during the period between the start of the previous day and the time of the sale or lease by reference to which a search of the register (by reference otherwise only to the serial number of the motor vehicle) would not disclose a registration that perfected the security interest; and (c) the seller or lessor is: (i) the person who granted the security interest; or (ii) if the person who granted the security interest has lost the right to possess the motor vehicle, or is estopped from asserting an interest in the motor vehicle--another person who is in possession of the motor vehicle. (2) Subsection (1) does not apply if: (a) the secured party is in possession of the motor vehicle immediately before the time of the sale or lease; or (b) the motor vehicle is bought at a sale held by or on behalf of an execution creditor; or (c) the buyer or lessee holds the motor vehicle: (i) as inventory; or (ii) on behalf of a person who would hold the motor vehicle as inventory; or (d) the buyer or lessee buys or leases the motor vehicle with actual or constructive knowledge of the security interest. Taking from prescribed persons (3) A buyer or lessee, for new value, of a motor vehicle of a kind prescribed by the regulations for the purpose of this section takes the motor vehicle free of a security interest in the motor vehicle if: (a) the regulations provide that motor vehicles of that kind may, or must, be described by serial number; and (b) the seller or lessor is in a class of persons prescribed by the regulations for the purposes of this subsection. (4) Subsection (3) does not apply if: (a) the secured party is in possession of the motor vehicle immediately before the time of the sale or lease; or (b) the motor vehicle is bought at a sale held by or on behalf of an execution creditor; or (c) the buyer or lessee holds the motor vehicle: (i) as inventory; or (ii) on behalf of a person who would hold the motor vehicle as inventory; or (d) the buyer or lessee buys or leases the motor vehicle with actual or constructive knowledge that the sale or lease constitutes a breach of the security agreement that provides for the security interest." 1. Section 27 of the SG Act is also relied upon by Mr Chelliah. It is in the following form: "27 Sale under voidable title Where the seller of goods has a voidable title thereto but the seller's title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided the buyer buys them in good faith and without notice of the seller's defect of title." Local Court Judgment 1. In the Local Court, the learned Magistrate identified the nature of the application by NSW Police and the competing claims of Mrs Hall and Mr Chelliah. There were three issues identified for determination: 1. who was lawfully entitled to possession of the vehicle; 2. whether the Court should order the Police to deliver the Espada to that person; and 3. whether the Court should make any other order. 1. The judgment went on to identify facts which were not in issue. The Magistrate noted that at some time after the death of the late Mr Hall, the Espada was removed from the shed and offered for sale. It was moved to the Central Coast where it came into the possession of Kevin Lincoln, who made it known amongst car enthusiasts that he had the Espada and that it was for sale. 2. On 29 February 2016, Mr Chelliah met Mr Lincoln and inspected the vehicle. The asking price two days earlier had been $70,000 – but by the time Mr Chelliah visited, and after negotiation, Mr Lincoln agreed to a sale price of $32,500. After the balance of the price was paid, Mr Chelliah took possession of the Espada and arranged for it to be transported to Sydney. 3. Mrs Hall found out that the Espada was missing from the property at Mitchells Island in June 2016, and promptly reported it missing to the NSW Police on 14 June 2016. 4. The NSW Police contacted Mr Chelliah on 17 June 2016, and informed him that the Espada in his possession was suspected of being stolen. 5. The next day, on 18 June 2016, Mr Chelliah performed a check of the Personal Property Securities Register ("PPSR") and found that there was no security interest listed on that register. He arranged for the Espada to be mechanically inspected and obtained the relevant certificate. On the following day, 19 June 2016, Mr Chelliah registered the Espada with Roads and Maritime Services in his name and obtained historical numberplates, which were fitted to the Espada. 6. On 21 June 2016, Mr Chelliah, having taken all these steps, surrendered the Espada to the NSW Police, in whose possession it remains. 7. Almost 12 months later, and on the day before the hearing in the Local Court commenced on 1 June 2017, Mr Chelliah registered a security interest in the Espada on the PPSR. No other security interests were registered at that time, nor have any since been registered, including by Mrs Hall. 8. After reciting the facts, the learned Magistrate was satisfied: "… on the balance of probabilities, that, unless an exception to the nemo dat rule applies, Mrs Hall is lawfully entitled to the possession of the vehicle." 1. Although the learned Magistrate made this finding on all of the evidence, it is appropriate to note that counsel for Mr Chelliah, conceded in his written submissions to the Local Court that the application of the nemo dat rule would result in an order that Mrs Hall was entitled to possession and legal ownership of the vehicle. That concession was adhered to in this Court. 2. The Magistrate then set out the argument put forward on behalf of Mr Chelliah for a conclusion that he was entitled to the vehicle. The argument appears to be identical to that which is now before this Court. 3. Mr Chelliah submitted to the Magistrate that the nemo dat rule, which would ordinarily operate in favour of the Mrs Hall so that she would have possession of the Espada returned to her, was displaced by two statutory exceptions. 4. The first is that created by s 45 of the PPS Act. The second was the exception provided under s 27 of the SG Act. This exception was relied upon as an alternative to the first exception. 5. The Magistrate considered the argument with respect to the PPS Act and concluded that the interest that Mrs Hall had in the Espada which entitled her to possession of it was not a security interest within the meaning of s 12 of the PPS Act. The learned Magistrate rejected the argument that s 45 of the PPS Act had the effect of allowing Mr Chelliah to take the car free of any other security interest (including Mrs Hall's so‑called security interest) because he was a buyer for value, and secondly, because no other security interest was registered in priority to his. 6. In rejecting the proposition that Mrs Hall's interest fell within the definition of "security interest" under the PPS Act, the Magistrate held that the ownership of the Espada obtained by Mrs Hall by reason of her husband's bequest, was not, within the meaning of s 12(1) of the PPS Act: "…an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation." 1. Secondly, the Magistrate held that the PPS Act was intended to regulate the priority and enforcement of competing security interests, and was not designed, nor intended, to determine legal title or ownership. Accordingly, the Magistrate held that the exception created by the PPS Act did not apply. 2. The Magistrate next considered the terms of s 27 of the SG Act, which, it was claimed, gave Mr Chelliah good title because, although the seller (Mr Lincoln) had a voidable title, his title had not been avoided at the time of sale, and that Mr Chelliah had bought the car in good faith without notice of any defect in Mr Lincoln's title. 3. After reviewing the evidence, the Magistrate concluded that the evidence did not satisfy the Court that Mr Lincoln was acting as an agent for a disclosed principal when he sold the Espada to Mr Chelliah. She further concluded that Mr Chelliah did not act honestly and that he did not honestly or reasonably believe that Mr Lincoln was entitled to sell the car as an agent of the owner. 4. Accordingly, the Magistrate concluded that Mr Chelliah had failed to satisfy the Court that Mr Lincoln had any title at all, including any form of a voidable title which had not been avoided at the time of sale. 5. Further, as a matter of fact, the Magistrate concluded that Mr Chelliah had not satisfied the Court that he bought the Espada in good faith and without notice of Mr Lincoln's defect in title. 6. Unsurprisingly, the Magistrate pointed to the objectively suspicious circumstances surrounding the transaction. The Magistrate also noted that Mr Chelliah was a highly experienced individual in the purchasing and selling of classic cars, and that it could not be readily accepted that a person of such experience would believe they were legitimately obtaining a car supported by documents which were obviously unconvincing with respect to Mr Lincoln's title to sell the vehicle. 7. The Magistrate was not satisfied that the evidence given by Mr Chelliah was to be accepted. In particular, the fact that the security interest was registered on the PPSR one day before the date fixed for hearing, many months after the application had been filed in the Local Court, in circumstances where Mr Chelliah had acted inconsistently with respect to another valuable vehicle, supported the conclusion which the Magistrate came to. 8. Ultimately, the Magistrate found that Mr Chelliah had not acted honestly in acquiring title to the Espada. In so doing, the Magistrate's conclusion was expressed in this way: "However, this is not an instance of negligence or oversight on [Mr Chelliah's] behalf. In light of all of the surrounding circumstances, there was clearly suspicion attaching to Lincoln's entitlement to sell the car. [Mr Chelliah] was put on notice by Lincoln's words and actions that Lincoln's title was defective, but he turned a blind eye to that notice. I find that he did not honestly believe that Lincoln was entitled to sell the vehicle. Taking all of the evidence into account, I am not satisfied that Mr Chelliah acted honestly in acquiring title to the vehicle from Lincoln." 1. In light of those conclusions, the Magistrate held that Mr Chelliah had failed to satisfy the Court that the two exceptions to the nemo dat rule were established. Accordingly, Mrs Hall was entitled to possession of the Espada, subject to payment of a small sum of money to Mr Chelliah to reimburse him for the costs of mechanical inspection and registration of the car. 2. In approaching the determination of the claim in this way, the Magistrate applied the onus of proof which accorded with authority: Pecover at [35]; Carolan at [7]. Proceedings in this Court 1. In the Further Amended Summons in this Court, Mr Chelliah sought the following orders: "1. Judgment of 28 June 2017 in the Court below be stayed pending outcome of Appeal. 2. Judgment and orders of 28 June 2017 in the Court below be set aside. 3. The motor vehicle the subject of the proceedings be delivered forthwith to the Plaintiff. 4. A declaration that Cheryl Hall has no interest in or entitlement to the motor vehicle the subject of the proceedings below. 5. The First and Second Defendants pay the costs of this appeal. 6. The First and Second Defendants to pay the Plaintiff's costs in the Court below." 1. Those orders were supported by the following grounds contained in the Summons: "1. The Court erred in law by applying the rule of nemo dat quod non habet in the proceedings. 2. The Court erred in law in failing to apply the Personal Property Securities Act 2009 (Cth). 3. The Court erred in law in failing to apply section 27 of the Sale of Goods Act 1923 (NSW). 4. The Court erred in finding that the transfer of the motor vehicle pursuant to the Succession Act 2006 (NSW) to Cheryl Hall took priority over the security interest of Charles Chelliah registered pursuant to the Personal Property Securities Act 2009 (Cth). 5. The Court erred in law by declaring that Cheryl Hall was entitled to possession of the motor vehicle the subject of the proceedings in the Court below pursuant to section 219 of the Law Enforcement (Powers and Responsibilities) Act 2002. 6. The Court erred in failing to declare that Charles Chelliah was entitled to possession of the motor vehicle the subject of the proceeding sin the Court below pursuant to section 219 of the Law Enforcement (Powers and Responsibilities) Act 2002. 7. The Court took into account irrelevant considerations. 8. The Court erred in law by ordering that the Plaintiff was required to pay his own legal costs of the proceedings in the Court below." Submissions of the Plaintiff 1. I observe at the outset that Mr Chelliah asserted that he had a right to appeal pursuant to s 39 of the Local Court Act 2007, and did not seek leave to appeal. He asserted his right to appeal on the basis that the Magistrate had fallen into legal error. 2. Mr Chelliah argued that, by operation of either s 27 of the SG Act or, alternatively, s 45 of the PPS Act, the general rule of law nemo dat quod non habet was displaced in the particular circumstances due to: 1. Mrs Hall's interest was not registered on the PPSR and, accordingly, Mr Chelliah had no notice of her claim; and 2. Mr Chelliah had a first in time registered interest in the Espada on the PPSR. 1. The argument with respect to the PPS Act is relatively briefly stated. Mr Chelliah submitted that the Espada was personal property that was identifiable by a serial number (being the chassis number). He then submitted that pursuant to the PPS Act, his interest was able to be properly registered on the PPS Register, and that as a matter of fact, he did so register his interest. Mr Chelliah argued that the effect of that registration, which was first in time, meant that, in the absence of any registration of an interest by Mrs Hall (and there was none), he was entitled to ownership rights by reason of the provisions of s 45 of the PPS Act. 2. Mr Chelliah also argued, somewhat faintly, that the application by the Court of LEPRA, a State Act, in preference to the PPS Act, an Act of the Commonwealth, contravened s 109 of the Constitution and s 79 of the Judiciary Act 1903 (Cth). When confronted with the need, if such argument was pressed, for the issue of a Notice of a Constitutional Matter under s 78B of the Judiciary Act, Mr Chelliah seemed to withdraw reliance on this point. 3. This last submission was incorporated in a further submission that because the Court had recognised Mrs Hall's right of ownership in the vehicle, obtained via the Succession Act 2006 (NSW), with the result that she did not need to register her interest under the PPS Act, the Local Court had applied NSW law in preference to Commonwealth law in an impermissible way, contrary to s 109 of the Constitution. 4. Ultimately, I determined that the matter could proceed without the need to consider, at least in the first instance, any issue arising under the Constitution. 5. In dealing with the SG Act argument, Mr Chelliah submitted that the Magistrate ought not to have made the finding that "Mr Chelliah was on notice of Mrs Hall's interest in the Vehicle" because Mr Chelliah's evidence that he knew of no such interest on the subject was not challenged in cross‑examination. It was suggested that there was procedural unfairness because the rule in Browne v Dunn (1893) 6 R 67 had not been complied with. 6. Mr Chelliah finally submitted that the Magistrate had fallen into error by taking into account an irrelevant consideration, namely the amount of compensation which either party was prepared to pay to the other party. Mr Chelliah characterised this as amounting to an impermissible open exchange of settlement offers. The Second Defendant's Submission 1. Mrs Hall in her submissions noted, specifically, the concessions made by counsel for Mr Chelliah in the Local Court with respect to her ownership. She noted that counsel expressly conceded that but for the two exceptions which have been described earlier, the nemo dat rule would operate in her favour. Counsel here submitted that what that demonstrated was that Mrs Hall's entitlement was established in the Local Court and, in effect, without opposition and by concession. 2. It follows from that, as it is submitted, that those claiming entitlement to ownership (Mr Lincoln and others named) did not have any interest in the Espada and could not have passed on any greater interest to the plaintiff than they themselves had. 3. Counsel for Mrs Hall noted that the definition of security interest in the PPS Act is of significance, and supports the conclusion of the Local Court. Counsel drew attention to the words in s 12 of the PPS Act, which provide that the interest in personal property provided for in the Act is a transaction that in substance "secures payment or performance of an obligation". Counsel submitted that the Local Court was correct to conclude that when a car is acquired as a consequence of a bequest in a Will, of which probate has been granted, the owner's interest in that property, having been received in that way, was not an interest provided for by a transaction that secured payment or performance of an obligation. 4. Counsel for Mrs Hall argued that the Magistrate's conclusion, namely that Mr Chelliah did not purchase the Espada in good faith and that he did not have an honest belief as to the entitlement of the vendor to sell the Espada to him, are findings of fact which are not open to challenge. Mrs Hall submitted that Mr Chelliah's allegation of failure to provide procedural fairness contrary to the principle in Browne v Dunn was misguided, and that the approach of the Magistrate did not indicate an error of law of a kind which would lead the Court to intervene. 5. Finally, counsel submitted that the procedure adopted by the Magistrate with respect to ascertaining submissions about the appropriate amount of compensation was appropriate, and agreed to by counsel for Mr Chelliah. Discernment 1. It is convenient first to consider the argument regarding s 27 of the SG Act. In essence, for the successful application of this provision, it must be accepted as a matter of fact that the buyer, here Mr Chelliah, bought the Espada in good faith and without notice of the seller's defective title. 2. The Magistrate found that Mr Chelliah did not act in good faith. She found that Mr Chelliah did not honestly believe that Mr Lincoln, the vendor, was entitled to sell the vehicle. 3. The Magistrate further found that in light of all of the surrounding circumstances, there was clearly suspicion attaching to the sale of the vehicle. This finding was amply based in the evidence. Her Honour also found that Mr Chelliah had failed to make any enquiries with respect to the title of the vendor, because he turned a blind eye to Mr Lincoln's words and actions. 4. As a consequence of this, the Magistrate found that Mr Chelliah did not have an honest belief that Mr Lincoln was entitled to sell the vehicle. This was a finding of fact, which is not open to challenge in this Court. 5. Even if it was open to challenge, it was clearly a finding available on the evidence. Mr Chelliah complained in his submissions that he was not put on notice that such a finding may be made because he was not cross-examined to suggest that he did not have the requisite honest belief. He contended that he was not accorded procedural fairness. 6. However, even if his evidence was unchallenged, that does not mean that the Local Court was obliged to accept it. This proposition is particularly so when the evidence is inconsistent with other objectively ascertainable evidence. Here the Magistrate's finding took into account all of the evidence. On the basis of that evidence, she came to her conclusion. 7. Mr Chelliah bore the onus of demonstrating that s 27 of the SG Act applied. He failed so to do in the Local Court because of an adverse finding of fact. Not only was that finding a fact open to the Magistrate, it was properly made. There was no denial of any procedural fairness with respect to that finding. 8. Given that the appeal with respect this ground turns on a finding of fact which is unreviewable, the ground must fail. 9. Even if I were called upon to review the finding of fact, I would have been satisfied that the Magistrate had made the plainly correct finding. 10. Further, I would note that, in any event, and despite the terms of s 40 of the Local Court Act, Mr Chelliah did not seek leave of this Court to bring proceedings. Even if the findings of the Magistrate, which related to his credibility as a witness, were properly described as findings of mixed fact and law (and they were not), no application for leave to appeal was made by Mr Chelliah. 11. Section 27 of the SG Act accordingly provides no basis for upholding a claim to the Espada by Mr Chelliah. 12. The next principal argument advanced by Mr Chelliah depended upon an interpretation of the PPS Act. In my view, the Local Court was correct in its interpretation of the PPS Act and in its application or, perhaps more correctly, its non-application, in the circumstances here. 13. The first question which needs to be determined is whether Mrs Hall had an interest of a kind to which the PPS Act applied. The Local Court found that she did not. It was correct to do so. 14. In order to be an interest with which the PPS Act is concerned, the acquisition of that interest must have occurred in circumstances of a transaction which, in substance, "… secures payment or performance of an obligation…". It is the notion of a transaction which secures payment, or performance of obligation, which gives rise to a security interest of the kind which can be registered on the PPSR. Thus it is not every transaction for the sale or purchase of an item involving a transfer of title or a legal interest which creates a security interest. 15. For example, a simple purchase and sale transaction where the consideration paid is cash and the property is promptly delivered does not create any interest with which the PPS Act is concerned. 16. Here, Mrs Hall acquired ownership of the Espada through the mechanism of being the beneficiary of her husband's Estate. In legal terms, her late husband gifted his Estate to her. He did so by the terms of his Will. That gift came into being after his death. Mrs Hall did not have to pay for any of the items which she received, nor were the terms of the Will such that she only received the Espada on the condition that she performed some obligation with respect to it. The terms of the Will do not support any such conclusion. 17. For this reason, Mrs Hall did not have a security interest in the Espada of any kind, which meant that she could not register her interest on the PPSR. Mrs Hall's interest was as outright owner of the vehicle. 18. It follows that s 45 of the PPS Act has no application. Section 45 provides, in short, that a buyer of a motor vehicle of a particular kind takes that motor vehicle free from any security interest in the motor vehicle. For s 45 to have effect, it is necessary that there must first be a security interest. Mrs Hall did not have a security interest. Section 45 had no application, because it does not on its face apply to all interests in a motor vehicle, but rather only security interests. 19. This analysis demonstrates that the provisions of the PPS Act did not apply to the facts and circumstances of the matter in dispute in the Local Court. The dispute was about the absolute ownership of the Espada in circumstances where Mr Chelliah, who was not acting in good faith, purchased or purported to purchase the vehicle from a vendor who did not have title to it. 20. Because the PPS Act had no application, in accordance with its own terms, to the facts and circumstances before the Local Court, no constitutional issue of a kind suggested under s 109 of the Constitution arose. There is no inconsistency when Commonwealth legislation does not apply to the factual circumstances being considered by the Court. 21. In these circumstances, there is no reason for the Court, notwithstanding the submission of Mr Chelliah's counsel, to consider the effect of s 109 of the Constitution, which would have necessitated the issue of notices under s 78B of the Judiciary Act. 22. Mr Chelliah argued that the registration of his interest onto the PPSR meant that he gained absolute ownership. The Magistrate rejected this argument, and correctly so. 23. The register is created by the legislation in order to record security interests so as to give notice to any potential lenders or purchasers or others interested in a transaction of other claims to interests in, in this case, the Espada which can be described as security interests. 24. The fact of registering a security interest on the PPSR does not of itself and without more establish any right to ownership of the vehicle. It is a register which records underlying transactions and notifies the public of claims arising from these transactions. The PPSR is used as the means by which priority of competing security interests is determined. Here, the Local Court held that the underlying transaction was not effective to give Mr Chelliah any title to or interest in the Espada. In those circumstances, registration on the PPSR did not improve that position. 25. For that reason as well, Mr Chelliah's claim must fail. 26. Mr Chelliah's final submission, that the Magistrate had taken into account an irrelevant circumstance or consideration by, in Mr Chelliah's characterisation, requiring the parties to make open settlement offers, is entirely mistaken. 27. Appropriately, the Magistrate asked the parties to make submissions about what consequential orders should be made in the event that she was persuaded one way or the other about the ownership of the vehicle. Such orders could be made under LEPRA, and it was proper that the Magistrate invited submissions from the parties about them. 28. Mr Chelliah's counsel in the Local Court agreed with such an approach and made submissions about the appropriate orders. 29. It is a mischaracterisation of what occurred to suggest that the Magistrate forced on two unwilling parties an open exchange of settlement offers. That is not what occurred, and it is erroneous to so regard it. 30. The Magistrate's approach to this question was entirely conventional and one acquiesced in by both parties. There is no room now on appeal to complain. 31. In all the circumstances, Mr Chelliah has not made out any case for a finding that the orders made in the Local Court ought be set aside. 32. In those circumstances, it is appropriate that the appeal be dismissed. There is no reason to find that costs should not follow the event. Orders 1. I make the following orders: 1. Further Amended Summons filed 14 December 2017, and the proceedings generally, are dismissed. 2. Plaintiff to pay the first and second defendant's costs of the proceedings. ********** 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: 14 May 2018