Doesn't sound dodgy at all. 8 months is a long time and I'd rather have a refund of my remaining rego than let it set there and go to waste.
I don't know how hard it is to re register a car in melbourne, but I don't see how it could be more expensive than 8 months worth of rego. (Feel free to correct me if I'm wrong)
I'd still get it checked out to see if was stolen though, I'm just saying what he's done doesn't sound dodgy.