How Do You Dispose of a Customer’s Uncollected Vehicle?

The vagaries of the economy can impact in unexpected ways, especially in the motor trades world.

Businesses in the motor trades can be especially vulnerable if customers refuse to pay a service or repair bill and instead simply abandon their vehicle.

If they refuse to collect the vehicle and pay their bill, can you sell it to defray your costs? Yes, you can, but there’s a detailed legal process to be followed, and you have to be meticulous in adhering to it.

The legislation is The Disposal of Uncollected Goods Act 1967 and it sets out the specific protocols to be followed if a customer has asked you to do work on their vehicle, and then abandoned it without paying.

Sadly, this sort of thing happens all the time, someone wants a vehicle fixed, some panel beating work done, but their circumstances change, they can’t afford to pay the bill or they decide the cost is more than the car is worth to them.

Case study

An example I am aware of is someone working in the mining industry who committed to $30,000 worth of work on his car, but lost his job and could not afford to pay the bill. He’s trying to sell the vehicle and asking $45,000 for it but the motor trades repairmen say it’s barely worth half that sum.

Panel beaters and others in the vehicle servicing and repair trades are especially vulnerable to clients who balk at paying their bills. It’s a constant but the reasons differ from case to case. Someone simply does not have the money to pay the car bill, retirees struggling with their bills, a person’s financial circumstances change unexpectedly, or they simply decide the car is not worth the money now.

Before we look at how to fix the problem of uncollected vehicles, it’s worth exploring some possible preventive measures first. You could ask a client for some payment up front for work on their vehicle If they refuse, then it’s an alarm bell for you.

Another option is to require a written contract for the work. It’s won’t overcome the problem of an uncollected vehicle or an account default, however, it can be a form of ‘moral’ guarantee that may encourage owners to step up with the money.

But if calls and reminders fail to resolve your problem, you have legislation to follow. The Disposal of Uncollected Goods Act 1967 (“the Act”) prescribes how to go about the disposal of uncollected goods.

For motor traders there are the special provisions in the Act applicable to the disposal of uncollected motor vehicles so let’s focus on these provisions.

Any motor vehicles that are accepted by a business for any work can be sold under the provisions of the Act if they are not collected and the work paid for. The term ‘work’ includes inspection, custody, storage, repairs and so on.

To avoid confusion, the term ‘motor vehicles’ embraces cars, trucks, motorcycles, tractors and indeed any motorised vehicle powered by gas, steam, oil or electricity.

The definition of inspection includes accepting a vehicle for the purpose of providing a quotation for work to be carried out on it.

Criteria under the Act

You can only sell an uncollected motor vehicle if you have met various criteria under the Act. These include:

A sign

You must have prominently displayed at your premises, at the time of accepting the motor vehicle, a sign indicating that the acceptance of the motor vehicle for inspection, custody, storage, repair or other work is subject to the Act and if after 6 months of the motor vehicle being ready for return to the owner but is not collected, then you have a right to sell it under the Act.

Notice that the vehicle is ready

The Act requires you to give written notice to the customer that their motor vehicle is ready for them to collect. This notice must also state that the  vehicle is liable to be sold under the Act if the customer fails to pay your costs or if the customer pays your costs but fails to collect the vehicle.

Notice of intention to sell

There’s no instant fix for an uncollected vehicle or unpaid debt. After six months from the date the notice was given that the motor vehicle is ready for the customer you have to give a further notice to the customer of your intention to sell the uncollected vehicle. This notice must contain a full description of the vehicle and must be given at least 28 days before the intended date of sale of the vehicle.

Advertise your notice of intention to sell

The notice must be published in a local newspaper, a newspaper published in Brisbane and circulating throughout Queensland and in the Queensland Government Gazette.

In addition to all of the above requirements Section 19 of the Act provides that if you intend to sell a motor vehicle you must do so before you make an application to Court, give notice to the Commissioner of Police of your intention to sell it.

Details required

The notice to the Commissioner of Police must include details of the following:

• Make of motor vehicle
• Model of vehicle
• Colour of vehicle
• Registration number
• Chassis number (if any)
• Body number (if any)
• Engine number
• Details of how the vehicle came into your possession

The Commissioner of Police will then carry out a search of the police records and provide you with a certificate as to whether or not the motor vehicle is recorded as stolen.

If you follow the legal procedures and sell the vehicle, the next issue is who gets the money?  The Act states that the business owed money is entitled to retain that money from the sale proceeds.  If the sale proceeds exceed the money owed to you you must, within 14 days after the sale, pay those monies to the Public Trustee unless they have previously been paid to the person entitled to it.

Checklist

To summarise, here’s a useful checklist to consider when contemplating any action under the Act:

1. Make sure you have a sign displayed prominently in the area where a customer hands over possession of the motor vehicle.
2. If a customer has not paid or paid and not collected their motor vehicle have you given them notice in writing (either personally or sent to their last known address) that their motor vehicle is ready for collection or delivery to them? Make sure you keep a copy of the notice for your records.
3. Do you know of anyone else with an interest in the vehicle? If so make sure written notice is also given to them and copies kept for your records.
4. Have you complied with time periods stipulated in the Act?
5. Have you advertised the notice of intention to sell?
6. Have you given special notice to the police about the motor vehicle?
7. And most Importantly, have you obtained legal advice? The provisions of the Act can be complex and failure to comply with just one section can affect and delay your subsequent rights to dispose of an uncollected motor vehicle. It should be noted that this article is for practical assistance only, and does not address all the provisions of the Act.

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).