Cheryl Hall thought her late husband's prized possession was still in the shed of their rural New South Wales property.

But the rare Lamborghini Espada had been stolen, advertised for sale among car enthusiasts and purchased, all before she even realised it was missing.

The prized collector's car took centre stage in an extraordinary appeal case in the NSW Supreme Court, in which the buyer of the stolen car claimed to be the vehicle's rightful owner.

Key points: The Lamborghini Espada is stolen from Mrs Hall's shed

The Lamborghini Espada is stolen from Mrs Hall's shed The car is purchased by Charles Chelliah in February 2016

The car is purchased by Charles Chelliah in February 2016 Mrs Hall discovers the classic car has been stolen in June 2016

The court heard that Mrs Hall first discovered the theft in June 2016, four months after car enthusiast Charles Chelliah bought the classic vehicle from a man on the NSW central coast.

NSW Police contacted Mr Chelliah on June 17, 2016 to tell him the car was suspected of being stolen.

Over the next two days, Mr Chelliah did a search and discovered there was no security interest listed for the vehicle on the Personal Property Securities Register (PPSR), the court heard.

He then had the car mechanically inspected, obtained the relevant certificate and registered the Espada with Roads and Maritime Services in his name before obtaining and fitting the car with historical number plates.

After taking these steps, Mr Chelliah surrendered the Espada to police.

A collector's item

Mrs Hall's late husband Keith had been an avid fan of the four-seater grand touring coupe when he bought it in the 1970s.

His was one of just 1217 Lamborghini Espadas ever made.

When he died in March 2015, he left the vehicle in his will to Mrs Hall, who stored it in a shed on the property the couple owned on Mitchells Island, near the mouth of the Manning River.

Once police had the car in their possession, they brought proceedings in the local court to determine whether Mrs Hall or Mr Chelliah were lawfully entitled to the property.

The local court heard that, some time after Mr Hall's death, the Espada was moved 270 kilometres south to the central coast where it came into possession of a man who made it known among car enthusiasts that he had the Espada and it was for sale.

Only 1217 Lamborghini Espadas were ever made. ( Supplied: Wikimedia commons )

Two days before Mr Chelliah inspected the vehicle in February 2016, it had an asking price of $70,000.

By the time Mr Chelliah had arrived on the central coast and after negotiation, the price had been reduced to $32,500, the court heard.

The magistrate concluded that Mr Chelliah did not act honestly and that he did not honestly or reasonably believe that the seller was entitled to sell the car on behalf of the owner.

The magistrate also highlighted the "objectively suspicious circumstances" surrounding the transaction and noted that Mr Chelliah was a "highly experienced individual in the purchasing and selling of classic cars".

She said it could "not be readily accepted that a person of such experience would believe they were legitimately obtaining a car, supported by documents which were unconvincing".

Local court decision appealed

The magistrate awarded the car to Mrs Hall but Mr Chelliah appealed the decision in the Supreme Court, claiming that Mrs Hall's interest in the car had not been registered on the Personal Property Securities Register (PPSR). He also claimed that he had no notice of her claim to the car and that, given that his interest in the car had been registered first, he was the rightful owner.

But the Supreme Court found that Mrs Hall was not required to register a security interest in the Espada on the PPSR because she had been gifted the car in her husband's will and was therefore the outright owner.

In his judgment Justice Peter Garling found that Mr Chelliah had no right to the vehicle.

"The dispute was about the absolute ownership of the Espada in circumstances where Mr Chelliah, who was not acting in good faith, purchased or purported to purchase the vehicle from a vendor who did not have title to it."