So the answer to this story is that theres no use doing the full ownership checks on a car if you dont actually check with the owner that he ok's the sale.
No surprise in the court case result here.
The problem is working out whom the owner actually is. If you buy a car via a LMCT in Victoria, the LMCT guarantees the title. (And therefore they also guarantee the vehicle is free of any emcumbrances).
The waters muddy considerably with a private sale. A registration certificate is not a certificate of title. It even says so on the certificate. Just because the sellers' licence and the vehicle's registration certificate match in name, doesn't make it theirs. You need to see a bill of sale in their name as well. Or if not, authority to act on the sellers behalf, such as a trustee of an estate, someone acting with power of attorney or even simply selling a car on behalf of a friend who's moved overseas.
Sometimes cars end up with no paperwork at all. Grandpa dies and left his pride and joy in the barn 35 years ago unregistered and subsequently all the documentation was thrown out when the relatives cleaned up his house. Usually that can be sorted by due diligence with regards to checking the grant of probate and taking it up with the trustee and beneficiaries of the will.
In the case of the 250 PF, whilst I'm not privy to the details of the case, it appears the usual checks were not performed because all parties were known to each other through personal relationships that spanned over 20 years.