Parties Dispute Terms of Multiple Pawnbroking Loan Contracts
Payne v Melbourne Cash Jewellery Pty Ltd (Civil Claims) [2021] VCAT 480 (3 May 2022)
The parties are in dispute over an alleged agreement not to sell the items secured by the pawnbroking contracts. The respondent asserts that under the alleged agreement, the applicant must pay all contracts together and cannot choose to pay certain individual contracts and recover pledges on those contracts only. The Court, in ruling upon this dispute, relied upon the Second-hand Dealers and Pawnbrokers Act 1989 (Vic).
Facts:
The applicant in proceeding C3583/2020 is Danielle Payne. Ms Payne brought proceeding C3583/2020 against the respondent, Melbourne Cash and Jewellery Pty Ltd trading as Treasures of Prahran (Treasures of Prahan), in relation to 27 pawnbroking contracts (27 contracts) that Ms Payne had entered into with Treasures of Prahran between November 2017 and August 2018. Several of the 27 contracts were secured by multiple pledges. A total of 48 goods were pledged across the 27 contracts.
There was a dispute between Treasures of Prahran and Ms Payne as to an arrangement made in September 2019 in relation to selling pledges and the redemption of individual pledges. Treasures of Prahran commenced selling Ms Payne’s pledges in February 2020. Ms Payne initially sought an interim injunction to stop Treasures of Prahran selling her pledges. The interim injunction was refused.
In proceeding C3583/2020 Ms Payne seeks that: all interest accrued under the 27 contracts be waived from 24 April 2020; treasures of Prahran pay Ms Payne $24,720 that Ms Payne says is the replacement cost (at today’s value for new items) for eight pawned items sold between 20 February and 24 April 2020; treasures of Prahran pay Ms Payne $17,000 that Ms Payne says is the replacement cost for pawned items sold between 24 April 2020 and 4 July 2020; Ms Payne be released from any liability to Treasures of Prahran under eight of the 27 contracts. Further, Treasures of Prahran pay Ms Payne $4,560, being the value the pledged items under the surrendered contracts; Ms Payne be allowed to inspect each of the pledged items prior to determining whether to pay on those contracts and Ms Payne reserves the right to make further claims for losses against Treasures of Prahran in the event damage, destruction or loss of any pawned items; and legal costs.
On 1 September 2020, Treasures of Prahran commenced a counterclaim proceeding C5009/2020 against Ms Payne seeking that: the 27 contracts be treated as one contract (One contract); Ms Payne be ordered to pay the principal and interest on the One contract, including compound interest at the rate of 20% for late repayment; Ms Payne be ordered to pay $1506.90 for the costs of selling the 15 items sold at that date; Ms Payne be ordered to pay $2085, being the loss Treasures of Prahran calculated on the difference between the value of the loan principal and interest less the sale value of the 15 items sold; Ms Payne be ordered to pay the future loss on goods sold, being the shortfall between the principal and interest less the sale value; Loss of time value of money calculated at $4000; Repayment of the principal of $800 and $700 plus interest on loan contracts L18001121 and L18001152 and the authentication fees of $70 for pledges of two bags that Treasures of Prahran allege are fake replica bags; and legal costs.
Issue:
Whether or not all 27 contracts can be treated as one contract.
Applicable law:
Second-hand Dealers and Pawnbrokers Act 1989 (Vic) - defines ‘reasonable costs of sale’ as ‘does not include any prescribed costs.’
Second-Hand Dealers and Pawnbrokers (General, Exemption and Record Keeping) Regulations 2018 (Vic) - permits a person who has pawned goods to redeem the goods at any time before the pawnbroker sells or disposes of them despite the expiry of the period of the loan.
Australian Consumer Law and Fair Trading Act 2012 (Vic) s 184(4) - pursuant to which the Tribunal cannot order damages in the nature of interest in excess of the rate fixed.
National Consumer Credit Protection Act 2009 (Cth) (National Credit Act) - incorporates the National Credit Code.
National Consumer Credit Regulations 2010 (Cth) - regulates credit activities in relation to consumer credit.
Australian Woollen Mills v The Commonwealth [1954] HCA 20; (1954) 92 CLR 424 - provides that a binding legal agreement requires that, with the exception for deeds, consideration (value) must pass.
Walton Stores Ltd v Maher (1988) 164 CLR 387 - relied upon in finding that Ms Payne’s evidence as to her conversation with Danny does potentially give rise to a promissory or equitable estoppel.
Analysis:
The law provides that if the period of a loan expires and is not extended and the goods pawned as security on the loan are unredeemed, the pawnbroker must offer the goods for sale as soon as practicable and so as to receive the best price reasonably obtainable. In the event the pawnbroker sells unredeemed pawned goods after the expiry of the loan, the person who pawned the goods is entitled, for a period of 12 months after the sale, to claim from the pawnbroker the residual equity, if any, in respect of the goods.
If the pawnbroker sells unredeemed pawned goods after the expiry of the loan period and the residual equity in respect of the goods is $10 or more, the pawnbroker must, within 14 days after the sale, send to the person who pawned the goods a notice in the prescribed form advising the person that the pawned goods have been sold and that the person is entitled to claim the residual equity from the pawnbroker within the period of 12 months after the sale. A total of eight pledges were sold by Treasures of Prahran between 20 February 2020 and 22 April 2020 (eight pledges sold prior to 24 April 2020).
If any of the eight pledges sold prior to 24 April 2020 had a residual equity of $10 or more then Treasures of Prahran was required by the Pawnbrokers Act to send a notice to Ms Payne within 14 days of the sale. Treasures of Prahran did not send any notices advising of sale to Ms Payne. Ms Payne did not agree to all of her 27 contracts being treated as one contract. Mr Le cannot unilaterally introduce a requirement that all 27 contracts be treated as one contract.
If Treasures of Prahran had complied with the Pawnbrokers Regulations for record-keeping, then Mr Le would have been able to provide Ms Payne with the information she sought in relation to the 27 contracts on 24 April 2020. Treasures of Prahran were able to sell any of the pledges after the expiry of the loan period until 24 April 2020 when the conduct of Treasures of Prahran prevented Ms Payne from redeeming her pledges notwithstanding her ability to do so up to the value of $10,000.
Conclusion:
Ms Payne has no entitlement to damages for the eight pledges sold pre-24 April 2020. Treasures of Prahran is not entitled to any interest on any of the loans from 24 April 2020 until 60 days following the date of these orders. Treasures of Prahran is liable to Ms Payne for any damages that Ms Payne has suffered by reason of the five pledges sold post 24 April 2020 when the conduct of Treasures of Prahran prevented Ms Payne from redeeming her pledges.
