Page 2221 - Week 08 - Wednesday, 6 June 1990
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encumbered goods cannot be passed to a purchaser without the encumbrance also passing. As always, the law has a Latin maxim for this rule - nemo dat qui non habet. This rule perhaps was adequate in a medieval market - a medieval "market overt", as it was described - but it clearly worked great injustice with the rise of hire purchase and other credit arrangements in the 1950s, 1960s and 1970s.
A purchaser in good faith would often lose the vehicle - as the injustice most often occurred in the case of motor vehicles - to the creditor, the vendor would be difficult to locate, and once located would often not be worth suing. In either case, the purchaser would be involved in expensive litigation and inevitably was the person to lose out. The finance company could usually recover; the vendor had disappeared; it was the innocent purchaser in good faith who ended up with no car and legal expenses.
There were two possible solutions to this dilemma. The South Australian Consumer Transactions Act in 1972 provided simply for the reversal of the nemo dat rule so that a purchaser, who in good faith and for valuable consideration acquired title to goods where the goods were subject to consumer mortgage, took good title. A system of insurance was instituted to cover losses from fraudulent sales and reimburse finance companies who were owed on the goods. That was one solution to the problem.
The alternative solution, established in New South Wales in 1986 by the Wran Labor Government, is the Registration of Interests in Goods Act 1986, which is the Act that this Assembly is adopting for the ACT. That Act provides a system of public registration of financial securities held over goods. I understand that, by the end of this year, every State and Territory in Australia will have in place this type of legislation. This is a good example of the constructive role that State parliaments can play in the Australian federal system - a difficulty emerges, alternative solutions are tried in different States, and over time uniformity results.
The system that we are adopting has proved to be successful in New South Wales. I understand that administrative arrangements in New South Wales are such that an individual purchaser or a would-be purchaser of a used vehicle can search the titles register merely by ringing the number of the registration of encumbered vehicles scheme at Parramatta. Country callers are provided with a 008 number, which I expect would be available to ACT callers. While the Act provides a fairly complex mechanism for account customers to be set up for commercial dealers in motor vehicles, I understand that administratively the REV scheme has a bankcard arrangement so that consumers can ring on the 008 number, quote their bankcard or credit card number and for $5 or $6 have a registration certificate mailed to them, or they can pick it up. The registration certificate, of course, is evidence that the title was clear at the date of the search.
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