CITATION:	Warrehe Pty Ltd t/a Activfreight v Millards Noosa Motors Pty Ltd & Ors (No 2) [2015] QCAT 151	

PARTIES:	Warrehe Pty Ltd t/a Activfreight
(Applicant)	
	v	
	Millards Noosa Motors Pty Ltd
Brian Lennox Millard
Lee Millard
(Respondents)	

APPLICATION NUMBER:	GAR231-14	

MATTER TYPE:	General administrative review matters	

HEARING DATE:	On the papers	

HEARD AT:	Brisbane	

DECISION OF:	Member Paratz	

DELIVERED ON:	29 April 2015	

DELIVERED AT:	Brisbane	

ORDERS MADE:	1.	The claim is allowed in the sum of $55,745.45 pursuant to s 105 and s 106 of the Agents Financial Administration Act 2014.
2.	The Chief Executive must pay to Warrehe Pty Ltd t/as Activfreight the sum of $55,745.45 from the Claim Fund, pursuant to s 112 of the Agents Financial Administration Act 2014, and if there is an appeal, payment must not be made until after the appeal is finally decided.
3.	Millards Noosa Motors Pty Ltd, Brian Lennox Millard and Lee Millard are named as the persons liable for the financial loss of Warrehe Pty Ltd t/as Activfreight , pursuant to s 105(3)(c) of the Agents Financial Administration Act 2014.
4.	Upon payment from the Claim Fund, Millards Noosa Motors Pty Ltd, Brian Lennox Millard and Lee Millard are jointly and severally liable to reimburse the Claim Fund by paying the sum of $55,745.45 to the Chief Executive, Department of Justice and Attorney-General, pursuant to s 116 and s 106 of the Agents Financial Administration Act 2014.	

CATCHWORDS:	PAMDA – CLAIM AGAINST THE FUND – where the lessor put a car on consignment for sale with a car dealer – where the dealer sold the car but did not pay out the finance owing – where the car has not been repossessed – where the financier has made demand for moneys owing against a third party guarantor – whether the claimant lessee has suffered financial loss – where the parties were invited to make submissions as to financial loss – where an alternative basis for calculation of financial loss is accepted – where the financial loss was accepted as the proceeds of sale that were not disbursed

Property Agents and Motor Dealers Act 2000 (Qld), s 470(1), s 488(2)
Agents Financial Administration Act 2014 (Qld) s 80, s 105, s 106, s 112, s 116

Dowson v Mata & Sons Pty Ltd and Anor [2013] QCAT 67
Money 3 Corporation Ltd v Schwenke and Anor [2011] QCAT 512
Powell v Sunshine CCC Pty Ltd t/a Sunshine Coast Cars and Caravans & Ors [2014] QCAT 004 
Cornish v Vacchini [2013] QCAT 002	

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).

REASONS FOR DECISION

[1]	I gave a written decision in this matter on 9 February 2015, addressing the Claim and raising issues as to financial loss, and inviting the parties to make further submissions.
[2]	The Chief Executive filed a further submission on 6 March 2015, and Mr Paul Shaw on behalf of Warrehe Pty Ltd t/a Activfreight filed further submissions on 6 March 2015. No further submissions have been received from Millards Noosa Motors Pty Ltd, Brian Lennox Millard and Lee Millard.
[3]	For convenience, I will restate the facts, and the basis for a claim against the fund, as set out in my previous decision.
The facts of the matter
[4]	Warrehe Pty Ltd t/a Activfreight (‘Warrehe’) purchased a 2011 Mercedes Benz C250 CDI Avantgarde sedan on 24 November 2011, by obtaining an Asset Loan from Mercedes Benz Financial Services (‘Mercedes’). The loan was secured by a Chattel Mortgage over the vehicle, and the interest was registered on the Personal Property Securities Register. The loan provided for monthly repayments of $1,173.62 with a residual of $34,909.00 due on 26 November 2014.
[5]	Warrehe placed the car on consignment to sell with Millards Noosa Motors Pty Ltd t/a Millards Noosa Motors (‘Millards’) on 6 November 2012.
[6]	Millards sold the vehicle on 22 December 2012 for $65,500.00, but did not pay out the finance at the time.
[7]	The Directors of Millards at all material times were Brian Lennox Millard and Lee Millard.
[8]	Millards paid Warrehe an amount of $3,800.00 on 15 January 2013, saying this represented the “profit” on the sale. It said that it would pay out the finance. 
[9]	Millards did not pay out the finance. Mercedes debited the usual payment of $1,173.62 from Warrehe’s account on January 2013. Warrehe contacted Millards who agreed to pay future monthly payments until the finance was paid out.
[10]	Warrehe made monthly payments of the finance from 23 December 2012 until 24 April 2014 when it ceased making payments. The amount paid by Warrehe to Mercedes was $19,951.54. In that period Millards paid Warrehe $9,384.62 representing 8 monthly payments
[11]	Warrehe instructed solicitors to take legal proceedings against Warrehe on or about 17 October 2013 and incurred legal costs of $2,449.52.
[12]	On 8 April 2014 Warrehe lodged a Claim against the fund pursuant to the Property Agents and Motor Dealers Act 2000 (Qld). The claim was for $54,508.15 calculated as follows:
Mercedes Finance payout	$43,843.29
7 x missed monthly payments	$ 8,215.34
Current legal costs	$ 2,449.52
[13]	Mr Millard wrote to the Office of Fair Trading on 16 May 2014. He did not dispute any of the facts and apologised for the situation. He said he was hoping to be able to recoup some monies from some property sales.
[14]	The claim was initially referred to the Tribunal by the Chief Executive for determination under the Act on 9 July 2014. Directions were made on 14 July 2014 for the filing of material by the parties. On 27 August 2014 the Chief Executive further advised as to the inclusion of Lee Millard as a respondent, based on further company searches, and further Directions were made on 7 October 2014 allowing for Lee Millard to file material. 
[15]	Mr Millard provided a submission by an email dated 8 September 2014 to the Tribunal as follows:
Due to the collapse of the above business the above claim has no defence and I am in agreement with the applicants version of what has happened.
There is a winding up order on the company due to go before the courts on the 24th September and again there is no funds to repeal the action.
As for myself, I need to wait and see if I have any way of paying these debts I am about to incur, otherwise I will have to go bankrupt.
[16]	Lee Millard made a written submission dated 17 October 2014 saying that she was bankrupt, but not addressing or contesting any of the issues.
The basis of a claim against the Fund
[17]	The Chief Executive made submissions dated 8 July 2014. It noted that:
In order to establish to establish a valid claim against the Claim Fund, the Second Applicant must demonstrate that it suffered financial loss due to the happening of an event mentioned in section 470(1) of PAMDA by a relevant person. Section 470(1) relevantly provides that:-
(1)	A person may make a claim against the fund if the person suffers financial loss because of the happening of any of the following events –
(a)	The contravention of any of the following provisions by a relevant person –
•	Section 573
(e)	a stealing, misappropriation or misapplication by a relevant person of property entrusted to the person as agent for someone else in the person’s capacity as a relevant person.
[18]	The Chief Executive submitted that Warrehe was the proper applicant; and that the vehicle was sold on consignment, but that the dealer had failed to remit the net proceeds of the sale, and that an event within the meaning of s 470(1) of the Act had occurred.
[19]	The basis of a claim by Warrehe is not disputed by the respondents, and is supported by the submissions of the Chief Executive. I accept that a claim against the claim fund by Warrehe is made out, if financial loss can be established.
Financial Loss
[20]	In my previous decision, I canvassed the difficulties presented in relation to establishment of financial loss in this matter where Warrehe has not paid out the loan, and an issue arises as to whether a financial loss has crystallised which can be paid out from the fund.
[21]	The Chief Executive has submitted in its further submissions that there is an alternative way for the Tribunal to determine financial loss that does not require the Applicant’s indebtedness to crystallise in the manner described by me. It submits that because Millards stole, misappropriated or misapplied the net sale proceeds after the vehicle was sold, that Warrehe has not received the net proceeds.
[22]	It submits that a loss crystallised when Warrehe was entitled to be paid the net proceeds and they were not paid, and that any obligation that Warrehe may have had to Mercedes after the sale is a matter between Warrehe and Mercedes.
[23]	It also submits that the Tribunal could additionally view Warrehe’s financial loss as the net proceeds from the sale because:
(a)	The Tribunal has previously held that what an applicant may or may not owe on its vehicle finance should not be considered when assessing financial loss and the Tribunal should instead focus on the Event, and
(b)	Section 82(1) AFAA confines the financial loss that the Fund can compensate to what has been suffered because of the Event only
[24]	It submits that the net sale proceeds that Warrehe was entitled to receive can be calculated as follows:-
(a)	$65,500.00 total sale price; less
(b)	$ 5,954.55 GST; less
(c)	$ 3,800.00 (Millards partial payment of the net sale proceeds); less
(d)	Any fees or commission as agreed between Warrehe and Millards
[25]	It submits that no material has been provided relevant to the amount of any fees or commission by Millards, and that no deduction should be made for those. It submits that as a result, the net sale proceeds can be quantified as $55,745.45 in accordance with its calculations, and has submitted a draft order accordingly.
[26]	Warrehe in its further submissions argues that the first and most significant event was the failure to pay out the finance facility as agreed upon the sale of the vehicle, It says that upon the happening of this event that it suffered immediate loss because it retained a liability to pay Mercedes that should have been discharged by the consignment sale.
[27]	Warrehe has not stated what the amount required to pay out the finance facility was at the time of sale. I raised this issue at [29] of my earlier decision. In the absence of this information it is not possible to calculate the financial loss that Warrehe says arose because of the failure to pay out the finance at the time of sale.
[28]	Warrehe has claimed the compensation it seeks from the fund in its further submissions to be $57,126.39 calculated as follows:
Payout figure as at 20 January 2015 	$34,447.49
Missed payments	$18,777.92
Interest	$1,362.21
Total	$57,126.39
[29]	This calculation by Warrehe brings into account interest arising between it and Mercedes which arose subsequent to the sale.
[30]	Warrehe has now provided further information as to what transpired after the sale. It did not come to any arrangement with Mercedes, and did not engage Solicitors to deal with Mercedes. It appears that the concern of Warrehe was to avoid any default on the loan facility which would affect the credit rating of the company.
[31]	It is understandable why Warrehe would act in this way, but it unfortunately creates technical issues as to the claiming of financial loss from the fund under the legislation that it did not foresee.
[32]	As I indicated in my earlier decision, the determination of financial loss in this matter is problematic, and Warrehe has put forward a number of different claims which have varied.
[33]	It is clear that Warrehe has a valid claim against the fund, and this matter should be brought to a proper conclusion as soon as possible. Warrehe have submitted that if its arguments are rejected that:
the proceeding should not be ended, but this argument should be treated as a preliminary question and the proceeding stand adjourned until the loss is crystallised by Mercedes obtaining judgment against the applicant and I so that we may make further submissions (with leave granted to any liquidator of the applicant or trustee in bankruptcy to make such submission if it comes to that).
[34]	This submission by Warrehe would have the result of prolonging the matter even further, and apprehends the undesirable consequence of Warrehe being put into liquidation, or Mr Shaw going into personal bankruptcy. The amounts that Warrehe and the Chief Executive each propose are only $1,380.94 different. That amount of money would not justify the additional cost incurred by the parties and the Tribunal in seeking to determine those arguments. The matter should, in the interest of the parties, and in the public interest, be determined at this stage without further proceedings.
[35]	The Chief Executive has made a cogent and simple submission in its further submissions as to a basis of calculation of loss as being the amount not disbursed on the sale. That is a precise amount. The submissions by Warrehe involve considerations of the finance arrangement between it and Mercedes that arose after the sale, and are governed by the arrangements between them, their actions, and the course of action pursued by Warrehe, but do not flow directly from the Event at the time.
[36]	A possible difficulty with the approach suggested by the Chief Executive is that there is no assurance that Warrehe will actually use the funds to pay out the finance owing, and the vehicle may remain encumbered, which could still lead to a claim by the third party purchaser against the fund. It is to avoid such a scenario that financial loss is usually ascertained after demand has been made by the financier or payment made to it.
[37]	In the circumstances, as the Chief Executive is agreeable to paying Warrehe from the Fund, I will leave it to the Chief Executive to work out a mechanism with the claimant by which it can be satisfied that a further claim will not arise.
[38]	I accept the further submissions of the Chief Executive which identify the Event in this matter as being the failure to disburse the proceeds of sale, and accept its calculations in that regard. I will make an order in terms of the draft prepared by the Chief Executive, which refers to the relevant sections of the Agents Financial Administration Act 2014 (Qld) which now administers the Fund.
Costs
[39]	Warrehe submits that it should be entitled to compensation for the legal cost of taking direct action against Millards, and that this should be seen as mitigation of loss. 
[40]	In this matter, the financial loss is accepted as arising at the time when the sale proceeds were not disbursed. The submissions by Warrehe refer to consequential loss. There is a difference between damages at common law which comprehend consequential loss, and “financial loss” under the Act which has a limited meaning. 
[41]	Warrehe has claimed $2,449.52 for legal costs. These were costs it incurred in pursuing Millards outside the Claims Fund process through Magistrates Court action. 
[42]	As the Chief Executive has noted in other matters, the Tribunal has previously held that the Fund should not pay an applicant’s legal costs to obtain judgment before making a claim against the Fund; and the Fund should not bear the costs of an applicant’s decision to pursue a course of action that it was not required to pursue before making a claim.
[43]	I am not satisfied that the legal cost claimed as consequential loss falls within the treatment of financial loss under the Act, or is a proper impost on the Fund, and will not order that the costs of $2,449.52 be paid from the Fund.
Order
[44]	I order that:
1.	The claim is allowed in the sum of $55,745.45 pursuant to s 105 and s 106 of the Agents Financial Administration Act 2014.
2.	The Chief Executive must pay to Warrehe Pty Ltd t/as Activfreight the sum of $55,745.45 from the Claim Fund, pursuant to s 112 of the Agents Financial Administration Act 2014, and if there is an appeal, payment must not be made until after the appeal is finally decided.
3.	Millards Noosa Motors Pty Ltd, Brian Lennox Millard and Lee Millard are named as the persons liable for the financial loss of Warrehe Pty Ltd t/as Activfreight , pursuant to s 105(3)(c) of the Agents Financial Administration Act 2014.
4.	Upon payment from the Claim Fund, Millards Noosa Motors Pty Ltd, Brian Lennox Millard and Lee Millard are jointly and severally liable to reimburse the Claim Fund by paying the sum of $55,745.45 to the Chief Executive, Department of Justice and Attorney-General, pursuant to s 116 and s 106 of the Agents Financial Administration Act 2014.