DISTRICT COURT OF QUEENSLAND
CITATION:
Campbell v Backshall & Anor [2018] QDC 156
PARTIES:
NORMAN PATON CAMPBELL
(Plaintiff)
v
JOSHUA BACKSHALL
(First Defendant)
And
VERONICA MELROSE
(Second Defendant)
FILE NO/S:
4213/17
DIVISION:
Civil
PROCEEDING:
Application
ORIGINATING COURT:
Brisbane
DELIVERED ON:
10 August 2018
DELIVERED AT:
Brisbane
HEARING DATE:
28 March 2018
JUDGE:
Williamson QC DCJ
ORDER:
1. The Plaintiff’s application for summary judgment filed on 15 March 2018 is allowed.
2. The Second defendant’s cross-application filed 19 March 2018 is dismissed.
CATCHWORDS:
PROCEDURE – DISTRICT COURT PROCEDURE – QUEENSLAND – PROCEDURE UNIFORM CIVIL PROCEDURE RULES – SUMMARY JUDGMENT – where first defendant convicted of stealing jewellery from the plaintiff – where first defendant sold stolen jewellery to a third party – where second defendant purchased stolen jewellery from the third party in good faith and with no notice of any defect of title or fraud – where plaintiff seeks order for return of stolen jewellery - whether the ownership of the jewellery vests in the plaintiff under s 26(1) of the Sale of Goods Act 1896 (Qld)- whether second defendant has a real prospect of successfully defending the claim – whether there is a need for a trial of the claim
LEGISLATION:
Sale of Goods Act 1896 (Qld) ss 25, 26 and 27
CASES:
DCT v Salcedo [2005] 2 Qd R 232
Douglas Financial Consultants P/L v Price [1992] 1 Qd R 243
Rich v CGU Insurance Ltd (2015) 214 ALR 370
Sorley & Stirling v Surawski; Ex parte Sorley & Stirling [1953] St R Qd 110
Theseus Exploration NL v Foyster (1972) 126 CLR 507
COUNSEL:
Mr D de Jersey for the Plaintiff/Applicant
Mr J Todman for the Second defendant/Respondent
SOLICITORS:
Clayton Utz for the Plaintiff/Applicant
Carroll Fairon Solicitors for the Second defendant/Respondent
Introduction
On 2 November 2017, a Claim and Statement of Claim was filed on behalf of Mr Campbell who seeks declaratory and consequential relief against two defendants, Mr Backshall and Ms Melrose. The proceeding is an action in detinue about a valuable piece of jewellery, namely a ring with a pink argyle diamond.
In March 2016, Mr Backshall, by his own plea of guilty, was convicted of stealing and fraud. The circumstances of the offending involved Mr Backshall stealing jewellery from Mr Campbell. The stolen jewellery included the ring with a pink argyle diamond. Mr Backshall pawned the stolen jewellery, including the ring, to Cash Converters at Toombul. Ms Melrose purchased the ring from Cash Converters, and has retained possession of it. She declined to deliver up the ring to Mr Campbell notwithstanding a request from his solicitor that she do so. The purpose of this proceeding is to compel Ms Melrose to deliver up the ring. In her defence, Ms Melrose calls in aid sections 25, 26(2) and 27(2) of the Sale of Goods Act 1896 (“the Act”). It is said that these provisions of the Act provide a complete defence to the Claim.
There are competing applications before the court. Mr Campbell applies for summary judgment under r.292 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”). Ms Melrose has cross applied for an order that the proceeding be struck out, or alternatively, seeks summary judgment under r.293(2) of the UCPR. For the reasons that follow, I allow Mr Campbell’s application for summary judgment and dismiss the cross-application. I will hear from the parties as to the form of final orders and costs.
Summary judgment principles
Mr Campbell seeks summary judgement under r.292 of the UCPR. Subsection (2) of that rule provides as follows:
“(2) If the court is satisfied that -
(a) the defendant has no real prospect of successfully defending all or part of the plaintiff’s claim; and
(b) there is no need for a trial of the claim or part of the claim;
the court may give judgment for the plaintiff against the defendant for all or part of the plaintiff’s claim and may make any other order the court considers appropriate.”
It is well established that the discretion to grant summary judgment should only be exercised in the clearest of cases[1]. Ordinarily, a party is not to be denied the opportunity to place their case before a court[2]. The strictness of the test means that any prospect of defending the claim, not just those arguments raised in the defence, is to be considered.
[1]DCT v Salcedo [2005] 2 Qd R 232, [3].
[2]Rich v CGU Insurance Ltd (2005) 214 ALR 370, [18] citing Agar v Hyde (2000) 201 CLR 552.
As to the second limb of r.292(2), a trial will be required where there are triable facts in issue. Even where the facts are settled, a hearing may be required having regard to the extent and complexity of legal issues.[3] Gibbs J (as he then was) in Theseus Exploration NL v Foyster (1972) 126 CLR 507 at 515 said:
“No doubt the remarks in these cases were not intended to preclude the exercise of some discretion by a judge to whom application for summary judgment is made in deciding whether the question of law raised is so difficult that it ought not be decided summarily, and no doubt also sometimes some explanation or reference to authorities will necessary to enable a judge to decide whether a question is really unarguable. However in the present case the questions were serious and disputable and, assuming that the learned primary judge had a discretion, it was entirely proper for him to decline to dispose of them in chambers.”
[3]Theseus Exploration NL v Foyster (1972) 126 CLR 507, 515.
The disputed issues between the parties
The matter was argued before me on the basis that the facts of the case, as summarised in paragraphs [1] to [3] above, are uncontroversial. The nature of the dispute between the parties is therefore not a factual one, rather, the dispute turns on one question: in whom does the property in the ring vest having regard to the provisions of the Act?
There is no dispute that the property in the ring vested in Mr Campbell prior to Mr Backshall stealing and selling it to Cash Converters. Mr Campbell contends, by reason of Mr Backshall’s prosecution to conviction for stealing, the property in the stolen ring vests in him by operation of s.26(1) of the Act. This provision states:
“26 Revesting of property in stolen goods on conviction of offender
(1)When goods have been stolen and the offender is prosecuted to conviction, the property in the goods so stolen revests in the person who was the owner of the goods, or the person’s personal representative, notwithstanding any intermediate dealing with them.”
It was submitted by Mr de Jersey that the property in the ring vests in Mr Campbell notwithstanding the fraudulent actions of Mr Backshall in selling the ring to Cash Converters. The fraudulent sale of the ring was submitted to be an intermediate dealing for the purposes of s.26(1) of the Act and, as a consequence, did not divest Mr Campbell of property in the ring.
The Claim is resisted by Ms Melrose on the premise that she purchased the ring in good faith from a seller who, she believed, was entitled to sell it. Further, at the time the ring was purchased, it was said that she had no notice of any defect of title or fraud. On this basis, it was submitted that ss.25, 26(2) and 27(2) of the Act protect her as the innocent buyer; provide her with good title over Mr Campbell; and provide her with a complete defence to the Claim.
Section 25 of the Act provides:
“25 Sale under voidable title
When 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, if the buyer buys them in good faith and without notice of the seller’s defect of title.”
Section 26(2) of the Act provides:
“26 Revesting of property in stolen goods on conviction of offender
…
(2)Notwithstanding any enactment to the contrary, when goods have been obtained by fraud or other wrongful means not amounting to stealing, the property in such goods does not revest in the person who was the owner of the goods, or the person’s personal representative, by reason only of the conviction of the offender.”
Section 27(2) of the Act provides:
“27 Seller or buyer in possession after sale
…
(2)When a person having bought or agreed to buy goods obtains, with the consent of the seller, possession of the goods or the documents of title to the goods, the delivery or transfer by that person, or by a mercantile agent acting for the person, of the goods or documents of title under any sale, pledge, or other disposition thereof, to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods, has the same effect as if the person making the delivery or transfer were a mercantile agent in possession of the goods or documents of title with the consent of the owner.”
It was submitted by Mr Todman that the above provisions of the Act provide a statutory exemption to protect innocent third parties who are deceived by a seller’s apparent physical possession of property, in circumstances where the innocent third party obtains property in good faith and without notice of defect in title. In the circumstances of this case, it was submitted:
(a) Cash Converters purchased the property from Mr Backshall in good faith without notice in defect of title and therefore acquired title, which is protected by operation of section 26(2) of the Act;
(b) Ms Melrose purchased the ring from Cash Converters in the ordinary course of business as a mercantile agent with no notice of defect in title, honestly and good faith, which is protected by operation of section 27(2) of the Act; and
(c) As Cash Converters obtained the ring by the fraud of Mr Backshall, the ring does not revert to the original owner of the ring by operation of section 26(2) of the Act.
Mr Campbell’s application for summary judgment
To succeed, Mr Campbell must demonstrate that the pleaded defence, and any further arguments made in support of the defence to the Claim, have no real prospect of success, and there is no need for a trial of the raised defences. Each of these matters are now considered in turn.
(a) Prospect of successfully defending the claim
The submissions made on behalf of Ms Melrose advance two defences to the Claim. First, at the time of purchase, Ms Melrose bought the ring in good faith from a seller who she believed was entitled to sell it. In addition, she contends that at the time of purchase, she had no notice of any defect of title or fraud. Second, and in combination with the first defence, it is contended that Ms Melrose has a complete defence to the proceeding having regard to the facts, and ss.25, 26(2) and 27(2) of the Act.
I am satisfied that Ms Melrose has no real prospect of successfully defending all or part of Mr Campbell’s claim on these bases. This is so for the following four reasons.
First, s.26(1) of the Act provides that title in stolen goods will revest in the original owner where the offender is prosecuted to conviction. Mr Campbell has established that Mr Backshall was prosecuted to conviction. Further, s.26(1) also provides that Mr Campbell’s property in the ring was unaffected by any intermediate dealings. In this case that means the step taken by Mr Backshall to sell the ring to Cash Converters and the consequential fraud is essentially irrelevant to the question of title. The fraudulent sale is an intermediate dealing for the purpose of s.26(1).
It has been recognised that s.26 was included in the Act to encourage the owner of goods to prosecute thieves. If that successfully occurs, the owner avoids any argument as to title dependant on intermediate dealing with the goods[4]. Put another way, for the purposes of this case, the prosecution of Mr Backshall to conviction for stealing means that Mr Campbell avoids any argument as to title dependant on intermediate dealings with the stolen ring. There is no reason why Mr Campbell does not secure the benefit that s.26(1) of the Act provides in this regard.
[4]Sorley & Stirling v Surawski [1953] St R Qd 110, per Stanley J at 119.
Second, the defences advanced on Ms Melrose’s behalf do not confront s.26(1) of the Act. This is a specific provision of the Act applicable to the circumstances of this case. It is engaged because Mr Backshall was prosecuted to conviction for stealing. Given the provision is engaged only where a specific precondition is satisfied, one would expect a clear statement in the Act that s.26(1) is subservient to, and of no application where ss.25, 26(2) or 27(2) may also be said to be engaged having regard to the facts of the case. There is no such statement or provision in the Act suggesting s.26(1) is subservient to ss.25, 26(2) and 27(2).
There is, in my view, a strong indicator in the language of the Act that s.26(1) is intended to be the dominant provision where it is said that the facts of the case also engage ss. 25, 26(2) and 27. Section 26(1) provides that property in stolen goods will vest in the person who was the owner, “notwithstanding any intermediate dealings”. The exclusion of any intermediate dealings is, in my view, a strong indicator that s.26(1) of the Act, where properly engaged, is intended to prevail over other provisions of the Act that are directed towards matters fairly described as intermediate dealings. The intermediate dealings in this case, being the fraudulent sale by Mr Backshall and Ms Melrose’s purchase from Cash Converters, might be said to engage ss.25, 26(2) and 27 of the Act, but the legislature has provided that those intermediate acts do not alter who has property in the stolen ring given the thief was prosecuted to conviction.
Third, Ms Melrose’s reliance upon ss.25, 26(2) and 27(2) of the Act is in my view misplaced. The position adopted by Ms Melrose in this respect necessarily assumes that the two points of focus are: (1) that Cash Converters obtained the ring by the fraud of Mr Backshall; and (2) Ms Melrose purchased the ring from Cash Converters in the ordinary course of business as a mercantile agent.
Absent the stealing conviction, the argument advanced on behalf of Ms Melrose may have some force. However, the stealing conviction is uncontroversial and, in my view, is the relevant point of focus. This is dictated by s.26(1) of the Act. The fraud by Mr Backshall is an intermediate dealing for the purposes of this provision for which the consequences are clear. The intermediate dealings, being the two points of focus for Ms Melrose’s submissions do not provide her with title to the ring over Mr Campbell.
Fourth, a consistent theme in the defence and submissions made on behalf of Ms Melrose is that she obtained the ring in good faith from a bona fide purchaser in market overt, without notice of defect in title. This may be accepted as correct having regard to the evidence and uncontroversial facts. That, however, is no defence to the proceeding given it forms no part of s.26(1) of the Act or the law of Queensland. This is confirmed by two Full Court decisions.
In Sorley & Stirling v Surawski [1953] St R Qd 110, eighteen head of cattle had been stolen from Sorley and Stirling by an unidentified thief and sold on behalf of the thief in cattle yards at Cannon Hill and Ipswich. The cattle was sold to Humphreys and thereafter resold to Surawski who bought them in good faith and without notice of any defect or want of title on the part of the seller.
The Magistrate at first instance found that the sales were in market overt and that Surawski acquired good title to the cattle. This was reversed on appeal to the Full Court. At 112 to 114, Macrossan CJ, within whom Mansfield SPJ agreed said:
“The law relating to sale of goods has been codified in this State by The Sale of Goods Act of 1896. This Statute in the main is modelled on the English Statute entitled the Sale of Goods Act, 1893. But there are material differences between the two Acts which, in my opinion, are of crucial importance in relation to the matter which arises for determination here.”
After setting out section 26 of the Act, his Honour continued:
“The corresponding section in the English Act is s.24 in which sub-s. (1) the words “whether by sale in market overt or otherwise” appear after the words “notwithstanding any intermediate dealing with them.” There is in fact in the Queensland Statute no references whatever to sale in market overt.”
And in the context of section 26(1) of the Act and the phrase “intermediate dealing” his Honour said:
“But there is no indication in this subsection as to what intermediate dealing with the goods might have divested the property in the goods from their owner. If some intermediate dealing with the goods might have had this effect one must seek elsewhere in the Statute to discover what that intermediate dealing is and one seeks in vain for any indication that a sale by a thief in market overt would be an intermediate dealing which could divest the property in the goods from the owner.”
The third member of court, Stanley J, agreed that the principle of market overt forms no part of the law of Queensland.
In a more recent decision of the Full Court, Ambrose J in Douglas Financial Consultants Pty Ltd v Price [1992] 1 Qd R 243 said at 259:
“It is clearly open to the Queensland Legislature to enact legislation to permit in certain circumstances a person without good title to goods to sell goods in circumstances which permit the purchaser to acquire good title. Thus under s. 22(1) of the Sale of Goods Act 1893 (Eng.) where goods are sold in market overt according to the usage of the market the buyer acquires a good title to the goods provided he buys them in good faith and without notice of any defect or want of title on the part of the seller. This rule of course does not operate in Queensland having regard to the provisions of the Sale of Goods Act 1896. See Sorley & Sterling v. Surawski [1953] ST. R. Qd 110.”
It was submitted by Mr de Jersey that s.26(1) of the Act leaves no room for consideration of the matters pleaded in paragraph 17 of the defence and the notion of market overt. Having regard to what I have said above, this is a submission I accept.
(b) Need for trial of defences
As I have noted earlier, there is no dispute between the parties as to the relevant facts. There does not, as a consequence, remain a triable factual issue for determination. Rather, all that is left for determination is a question of construction of the Act and application of the uncontroversial facts to that construction. The question of construction is not a complicated one that requires a trial. The application of the uncontroversial facts to the construction of the Act is also not complicated.
I am therefore satisfied that there is no need for a trial of the claim, be it in whole or in part.
(c) Summary: summary judgment
I am satisfied that the two limbs of r.292(2) of the UCPR are satisfied. Mr Campbell’s application for summary judgment should succeed, absent some discretionary consideration that militates against granting the relief sought.
Ms Melrose did not contend there were factors militating against exercising the discretion in Mr Campbell’s favour, assuming it was engaged under rule 292. Accordingly, I am satisfied that this is a clear case for the exercise of the discretion it discretion should be exercised in Mr Campbell’s favour.
Ms Melrose’s cross-application for summary judgment
Ms Melrose’s cross-application involves an assertion that the Claim discloses no reasonable cause of action or, alternatively, is an abuse of process. This is said to found an order under r.171 of the UCPR striking out the proceeding or an order under r.293 founding an order for summary judgment.
Mr Todman fairly conceded that the Claim and Statement of Claim did disclose a cause of action and did not press that the proceeding was an abuse of process. Rather, he submitted that the matter could be resolved by way of granting summary judgment in his client’s favour. This of course assumed that the Act was construed as his client contended, and that construction represented a complete defence to the claim.
Given the findings I have made above, I reject any submission to the effect that the claim lacks a reasonable basis, or is an abuse of process. I also reject the submission that ss. 25, 26(2) and 27(2) of the Act provide a complete defence to the claim.
Accordingly, Ms Melrose’s cross-application for strike out or, alternatively summary judgment, is dismissed.
Conclusion
I order that:
(a) Mr Campbell’s application for summary judgment is allowed; and
(b) Ms Melrose’s cross-application filed 19 March 2018 is dismissed.
I will hear from the parties as to the final form of orders and costs.