RAS INTERNATIONAL LIMITED V VENTURE FINANCIAL SERVICES (NZ) LIMITED HC AK CIV 2009-404-008209

RAS INTERNATIONAL LIMITED V VENTURE FINANCIAL SERVICES (NZ) LIMITED HC AK CIV 2009-404-008209 14 May 2010IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2009-404-008209BETWEEN RAS INTERNATIONAL LIMITED Applicant AND VENTURE FINANCIAL SERVICES (NZ) LIMITED Respondent Hearing: 14 May 2010 Appearances: S Carey for the Applicant G Brown-Haysom for the Respondent Judgment: 14 May 2010ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSENSolicitors/Counsel: M Carson, Carson Fox Legal, Parnell – matthew.carson@carsonfox.co.nz S Carey, Barrister, Auckland – sam@samuelcarey.co.nz G Brown-Haysom, Papatoetoe – godfreybbhlaw.@xtra.co.nz[1] On 30 November 2009 the applicant (RAS) was served with the respondent's (VFS) statutory demand seeking payment of the sum of $24,048.19. The statutory demand noted the debt:... is due and owing ... in respect of the decision of the Motor Vehicle Disputes Tribunal ... AK43/2005 and AK089/2003 dated 24 March 2005 and 20 June 2005 the benefit of which judgment has been transferred to [VFS] by the decision of the District Court at Auckland under CIV 2005 004 1756 and further decision of the MVDT dated 30 October 2007.[2] In support of its application RAS asserts: 1. The decisions of the Motor Vehicle Dealers Tribunal (MVDT) relied upon were quashed by the decision of the District Court under CIV 2005 004 1756, dated 4 October 2005. 2. The benefit of any transfer of the vehicle purchaser's rights and obligations to the purchaser's funders that was provided by the MVDT's decisions in 2005 was negated by the District Court decision of 4 October 2005. 3. The further decision of the MVDT dated 30 October 2007 contained no order transferring those benefits pursuant to section 89(2) of the Motor Vehicles Sales Act (2003) (the Act). [3] The application is opposed. VFS relies upon an order of the District Court at Auckland dated 15 May 2009 upon a without notice application, and by which the Court ordered that the rights vested in Provincial Finance Limited (Provincial) by the decision of the MVDT on 24 March 2005, be vested in VFS. [4] The issue for the Court is whether that part of the MVDT decision of 24 March 2005, reiterated by its decision of 20 June 2005 by which the vehicle purchaser's rights were transferred by section 89(2) of the Act survives the decision of the District Court dated 4 October 2005 whereby the said MVDT decisions were quashed.Background[5] RAS is a motor vehicle trader. On about 19 February 2004 RAS sold a second-hand Nissan vehicle to Mr Toutai. Mr Toutai purchased the vehicle with a loan of around $13,000 upon which interest of around $6,000 was payable as well. [6] Subsequent to purchase Mr Toutai took issue with aspects of the vehicle. Those issues ended up before the MVDT. [7] In its decision of 24 March 2005 (first decision) the MVDT held that Mr Toutai appropriately and justifiably cancelled the purchase contract and rejected the vehicle sold to him. The MVDT directed the vehicle be returned to RAS, to refund the trade and deposit, and to pay a sum of about $5,250. [8] RAS was not present at that hearing. [9] Within the time allowed RAS applied for a rehearing. That was the subject of the MVDT's decision dated 20 June 2005 – described by it as its second and final decision (second decision). In large part it confirmed the first decision. Importantly and in relation to both decisions the MVDT ordered:That pursuant to section 89(2) of the Motor Vehicles Sales Act (2003), the rights and obligations of the purchaser under the collateral credit agreement made between the purchaser and Provincial Finance Limited shall forthwith be vested in the trader, RAS International Limited trading as Evolution Motors, and may hereafter be enforced by and against the trader as if it were the purchaser.[10] The second decision was appealed to the District Court where it was heard by Judge Hole on 4 October 2005. Judge Hole determined that the underlying basis of the two MVDT decisions was an assumption that the vehicle in question was held by or on behalf of Provincial pending the outcome of the MVDT proceedings. This assumption was incorrect. Judge Hole heard evidence that the finance company had "got rid of it", that "the vehicle was long gone". Therefore RAS was unable to receive the vehicle in consideration of its assuming the obligations imposed upon it by the MVDT. Judge Hole said that result was unfair to RAS and had a prejudicial affect on the result. Judge Hole held:In those circumstances the appeal is allowed and the decision of the Tribunal is quashed. The proceedings are admitted back to the Tribunal in order that it may reassess the damages which are payable by [RAS] to [Mr Toutai]. In doing this no doubt the Tribunal will give a credit to [RAS] for the sale price of the van, if it is possible to ascertain this. If not the credit will be in respect of its value as at the date of repossession.[11] The MVDT issued a further decision on 30 October 2007 (third decision). That notes that the MVDT referred the matter back to the District Court for a further order but in response Judge Hole, in a Minute, noted that the Court could not do that because following his judgment of 4 October 2005 the matter became and remainedfunctus officio. [12] In its further assessment the MVDT ruled that no credit was due to RAS. In the circumstances it reaffirmed its calculations of monies due to Mr Toutai, given by its second decision. [13] Importantly by that decision the MVDT did not direct that Mr Toutai's rights and obligations under the collateral credit agreement were transferred to VFS. There was no reference to s 89(2). [14] On a date unknown VFS purchased the loan book of Provincial, including the loan to Mr Toutai. Following that VFS by without notice application, obtained orders vesting in it the rights vested in Provincial by virtue of the decision of the MVDT dated 24 March 2005. There is no reference in that order of the Auckland District Court to the proceeding number by which Judge Hole dealt with the matter nearly four years earlier.Opposition to Application[15] Mr Brown-Haysom submits: (a) Although the vesting order refers to the first decision of the MVDT it is wide enough to refer to the second and third decisions also.(b) VFS notes that Provincial was not a party to the District Court appeal hearing, had received no notice of the hearing and did not have the opportunity to make submissions in respect of its position as lender. Therefore the vesting order made by the Tribunal should not be affected or quashed by the decision of the District Court. That decision, it is submitted relates to Mr Toutai. As Provincial was not a party to the appeal, the right to recover its loan advance should remain otherwise Provincial (and VST as assignee) is left without remedy in respect of the loan monies advanced and the benefits conferred by the loan agreement. (c) When the District Court sent the matter back to the MVDT the MVDT would not have been on notice to address the issue of the Provincial loan. Reasonably it could have assumed there was no reason for it to have to deal with it again. This could explain why the MVDT did not revisit the matter of the Provincial loan. It might also explain why the District Court did not refer to the loan – it not being a matter for argument on the appeal. (d) Nothing before the MVDT in October 2007 required a decision in respect of the Provincial loan and the original vesting order made pursuant to s 89(2).Considerations[16] There is much about the respondent's submissions that assumes what the Court or the MVDT would have done had certain matters been brought to its attention. Those assumptions might be correct but the fact is issues concerning the vesting order were not raised in the District Court or before the MVDT in October 2007.[17] The second decision of the MVDT replaced its first decision. The second decision affirmed the first decision. In both a s 89(2) vesting order was made. Arguably the order of the District Court made on 15 May 2009 refers, incorrectly, to the first MVDT decision whereas it should have referred to the second MVDT decision. But, because the second decision replaced the first and largely affirmed it, it is arguable on a broad reading of that District Court vesting order that it applies also to the second decision. It follows I do not accept the applicant's submissions that the rights vested by the Court order dated 15 May 2009 did not also affect the MVDT's second decision. [18] That said, I do not accept that the third decision effected a vesting of rights to Provincial which in turn were vested in VFS by the order dated 15 March 2009. Unlike its predecessors the third decision did not transfer Mr Toutai's rights and obligations under the collateral credit agreement to the applicant. [19] The reason why the decisions of the MVDT vesting Mr Toutai's rights to Provincial did not transfer to the third decision is because the orders made under the first and second decisions by then had been quashed by the order of Judge Hole on 4 October 2005. By that order the first and second decisions of the MVDT ceased to have any affect. I accept the submission that to "quash" is to nullify, void, or declare invalid and that a quashed order or decision is a nullity. [20] I agree, as the respondent assumes, that had the matter been brought to the attention of Judge Hole or to the MVDT on the third occasion appropriate orders could have been made which would have avoided the consequence of the decision I am bound to make.Result[21] The application is granted. The respondent is ordered to pay the applicant's costs on a 2B basis.Associate Judge Christiansen