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Thousands of motor vehicles are sold privately in Australia each month.
A small portion of these sales involve vehicles which have been stolen and subsequently ‘rebirthed’, by way of their vehicle identification and registration numbers being changed.
It is invariably the case that these rebirthed vehicles are then sold privately.
Unfortunately, when the purchaser in this scenario obtains a Personal Property Securities Register (PPSR) certificate in reliance on the fraudulent vehicle identification number (VIN) visible on the vehicle, the PPSR certificate will not show anything untoward due to the VIN being misdescribed, and the innocent purchaser will simply pay the agreed price and take possession of the vehicle.
What then transpires is the rebirthed vehicle is discovered by the police, who are then required to seize and impound the vehicle. When this happens, the question of who is lawfully entitled to possession of the subject vehicle is often in contest between the person from whom the vehicle was stolen (or their insurer), and the innocent person who privately purchased the vehicle.
A dispute as to ownership of the vehicle in this context fundamentally involves the consideration of two ostensibly competing common law principles; namely that of “nemo dat quod non habet” and the doctrine of a “bona fide purchaser for value without notice”.
The nemo dat principle provides that no person can give what he or she does not possess and own. That is, a person cannot assign a greater interest than the interest possessed. Conversely, the bona fide purchaser doctrine provides a defence to an equitable propriety claim or restitutionary personal claim which is available to a defendant who has acquired the legal title to the property in question from a third party for valuable consideration in good faith and without notice of the seller’s defect in title.
Both principles have been effectively codified in each state and territory in Australia; for example.
In short, the position of the Courts in determining proper ownership of a rebirthed vehicle that has been unwittingly purchased is that the thief of the vehicle did not acquire good title to it, and any person who possessed it thereafter cannot maintain ownership of it.
Accordingly, ownership of the stolen and recovered vehicle will ultimately vest in the original owner (or their insurer), notwithstanding that the innocent purchaser carried out reasonable due diligence and provided valuable consideration at the time of the transaction.
The approach of the Courts in recognising that the nemo dat principle prevails over the bona fide purchaser doctrine provides a stark illustration of the risks of purchasing vehicles privately, and the potentially significant financial loss to private individuals of electing to transact in an environment which does not afford the statutory protections available to consumers who buy a used vehicle from a licensed motor dealer.
If you have any inquiries regarding motor vehicle property purchases, ownership disputes, or insurance claims, please don’t hesitate to contact us.
Article written by Alex Canavan of our Brisbane office.
