Auzora Pty Ltd v Commissioner of Consumer Affairs - [2008] SADC 139

DISTRICT COURT OF SOUTH AUSTRALIA
(District Court Administrative and Disciplinary Division)
AUZORA PTY LTD v COMMISSIONER OF CONSUMER AFFAIRS
[2008] SADC 139
Judgment of Her Honour Judge Cole
30 October 2008
ADMINISTRATIVE LAW
Indemnity fund - claim for compensation in respect of an investment arranged through G C Growden Pty Ltd.
Land Agents Act 1994; Conveyancers Act 1994; Land Agents (Indemnity Fund - Growden Default) Amendment Act 2004; District Court Act 1991; Real Property Act 1886; Law of Property Act 1936, referred to.
Jarrett v Commissioner for Consumer Affairs [2006] SADC 56; Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 92 ALR 93, considered.

AUZORA PTY LTD v COMMISSIONER OF CONSUMER AFFAIRS
[2008] SADC 139
Introduction

Auzora Pty Ltd (“Auzora”) made a claim for compensation from an indemnity fund which is administered by the Commissioner for Consumer Affairs (“the Commissioner”) pursuant to the Land Agents Act 1994 (“the Land Agents Act”). The Commissioner made a determination in relation to that claim, and Auzora has appealed to this Court against that determination.
At the hearing of the matter, Mr Ross-Smith appeared for the appellant, and Ms Geyer and Mr Soetratma appeared for the respondent.
The Facts
The facts of this matter have been gleaned from the Copy Documents and from other documents filed by the parties. They are mostly uncontentious.
In the 1990s, G C Growden Pty Ltd (“Growdens”) was a registered company, which carried on business as a finance broker. Growdens was also registered as a conveyancer pursuant to the Conveyancers Act 1994 (“the Conveyancers Act”) and its predecessor. Growdens matched investors to borrowers. Sometimes multiple investors would contribute to a single loan, which would be secured against real property. Growdens would lend up to 70% of the “value” of the real property. Properties were valued by valuers who were nominated by Growdens. Growdens charged the borrowers an interest rate which was higher than the interest rates offered by the banks, and paid monthly instalments of interest to the investors.
In April 1993, Mr David Morgan provided the sum of $70,000 to Growdens. Growdens advanced that sum to Mr Gordon Hampel. Mr Hampel gave a first mortgage over a property as security. The mortgagee was Shelvan Pty Ltd (“Shelvan”), although the mortgage investment authority was in the name of David Morgan. Shelvan had two shareholders, who were also its only two directors: David Morgan and his accountant, who held one share on trust for David Morgan. In December 1995, Mr Hampel repaid the loan to Growdens and the mortgage was discharged.
On 12 December 1995, Growdens sent a further proposal and mortgage investment authority in the name of Shelvan to Mr Morgan. Mr Morgan amended the authority to the name of Auzora Pty Ltd (“Auzora”), and returned it to Growdens. Auzora came into existence on 15 December 1995, upon its registration with ASIC. Pursuant to the authority, Growdens proceeded, on behalf of Auzora, to lend $70,000 to Share Investment Concepts Pty Ltd (“SIC”). This was part of a larger loan to SIC of $935,000, involving other investors as well as Auzora. From the time that it was repaid by Mr Hampel to the time it was advanced to SIC, the $70,000 was in Growdens’ trust account.
The sum advanced through Growdens to SIC was secured by a mortgage against the land at 420 Aldinga Beach Road, Aldinga (“the land”). Growdens represented to investors that the value of the land was $1.5million. At settlement, on 27 December 1995, the land was transferred to SIC for $435,000. Monthly interest payments were made to Auzora through Growdens until October 1996. Interest was paid monthly in arrears, until the default in the payment of interest, which occurred on 27 October 1997. SIC then went into liquidation, and a receiver was appointed. Growdens also went into liquidation.
In December 1998, the receiver sold the land for $400,000. On 18 December 1998, Auzora received $25,652.39, which was its proportional share of the net proceeds of the sale of the land.
Auzora made a number of attempts to recover its loss, by pursuing various parties who were involved in the transaction, but none of those attempts was successful. It was agreed by the parties to this action that the quantum of costs incurred in those recovery actions was $137,613.72. It was agreed that the Commissioner had required the appellant to exhaust all legal remedies before he would consider a claim against the indemnity fund.
The Claim Against the Agents Indemnity Fund
Auzora gave notice of its claim against the indemnity fund to the Commissioner by document dated 14 December 2004. After an exchange of correspondence, the Commissioner determined that claim, and communicated his determination to Auzora by letter of 17 August 2007. The letter said:
I refer to your claim on the Agents Indemnity Fun [sic] on behalf of Auzora Pty Ltd (“Auzora”), in relation to the above investment with G.C. Growden Pty Ltd, and my Office’s previous letter to you of 14 June 2007, wherein you were advised that the Office of Consumer and Business Affairs had requested further advice about this matter in order to finalise your claim.
I am pleased to advise that your claim has been assessed following the passage of amendments to the Land Agents Act 1994 and the Conveyancers Act 1994 particularly insofar as those amendments extend the definitions of fiduciary default.
In the course of considering the reasonableness of the quantum of costs as claimed by you, the Office of Consumer and Business Affairs sought further legal advice. This advice confirmed that Auzora made its payment to Growdens after 1 June 1995. This date is significant in that claims where investments were made after 1 June 1995 are treated differently to claims where investments were made before 1 June 1995. In Auzora’s case the applicable provision for the assessment of its entitlement to compensation under the Fund are those in Schedule 2A of the Land Agents Act 1994. According to subclause 2(2) of that Schedule, Auzora is not entitled to claim against the Fund for the legal costs it incurred in its attempts to mitigate the loss arising from the fiduciary default of Growdens. However, as the funds for this investment were invested with G.C. Growden Pty Ltd after 1 June 1995, Auzora is entitled to recover its investment less any amounts recovered.
Utilising my powers under section 29(4) of the Land Agents Act 1994, I have determined that Auzora is entitled to compensation from the Agents Indemnity Fund amounting to $44,347.61 calculated as follows:
Amount invested by Auzora  $70,000.00
less amount recovered by Auzora  $25,652.39
resulting from sale of the property
Total “eligible capital loss”  $44,347.61
Please advise at your earliest convenience whether this amount is accepted in full and final satisfaction of Auzora’s entitlement. Please refer to the discharge document enclosed. If you accept this amount in full and final payment of Auzora’s entitlement, please sign the discharge and return it to me.
Upon receipt of your written acceptance of the above terms, a cheque in the sum of $44,347.61 will be forwarded to you.
If, however, you disagree with the amount of this compensation award, section 37 of the Land Agents Act 1994 provides that you may appeal to the District Court:-
Appeal against Commissioner’s determination
37.(1)     The claimant or the conveyancer or former conveyancer by whom the fiduciary default was committed or to whom the fiduciary default relates may, within three months after receiving notice of the Commissioner’s determination, appeal to the Court against the determination.
(2)Where an appeal is not instituted within the time allowed, the claimant’s entitlement to compensation is finally determined for the purposes of this Division.
(3)On an appeal, the Court may –
(a)     affirm or quash the determination appealed against or substitute a determination that the Court thinks appropriate; and
(b)     make an order as to any other matter that the case requires (including an order for costs).
Yours sincerely
Mark Bodycoat
Commissioner for Consumer Affairs
Auzora appealed on the following grounds:
1.    That the Respondent ought to have determined that the Conveyancers Act 1994 applied to its claim.
2. That the Respondent ought to have determined that pursuant to the provisions of Schedule 2 of the Conveyancers Act 1994 the Appellant is entitled to the actual pecuniary loss suffered less any amount that the claimant has received back on its investment.
3.    That the Respondent ought to have determined that the actual pecuniary loss suffered by the Appellant is:
(i)the Principal advance of $70,000.00 with no adjustment for moneys recovered on the investment;
(ii)legal fees expended in order to try and recover the investment, being in the sum of $153,251.87;
(iii)the interest income lost on the investment.
2(sic) That the Respondent having by letter dated the 23^rd of January 2007 conveyed that a determination had been made to pay reasonable counsel fees (subject only to a sequestration order against a Guarantor having no prospect of yielding a recovery).
The Respondent is precluded and estopped from:
(i)determining that element of the Appellant’s claim otherwise; or
(ii)affording compensation to the Appellant at least for its reasonable counsel fees.
3.    The Respondent having by his letter of 23^rd January 2007 determined the Appellant’s entitlement to counsel fees the Respondent necessarily made that determination pursuant to the Conveyancers Act and is now precluded from maintaining that the determination of the Appellant’s entitlement can be made other than pursuant to that Act.
4.    In the alternative to appeal ground 1 if the claim is properly to be determined pursuant to the Land Agents Act 1994 (which is not agreed) then in such an event the Respondent should have determined:
(i)that the amount paid to the Appellant for its entitlement should be the sum of $70,000.00 (with no reduction the sum of $25,652.39 not being a “capital amount recovered”) being the Appellants “eligible capital loss” as defined in Schedule 2A of the Land Agents Act 1994.
(ii)that the Appellant’s entitlement to interest on its claim the requirement on the Respondent being that he “must, as soon as practicable” after the 21^st of December 2004 determine the claim pursuant to Section 4(3) of Schedule 2A of the Land Agents Act 1994.
The Legislation
The indemnity fund was created and is maintained pursuant to the Land Agents Act (Part 3, Division 3). Money is also paid into it pursuant to the Conveyancers Act (Part 4 Division 3). Both the Land Agents Act and the Conveyancers Act make provision for the making of claims for compensation from the fund.
The Land Agents (Indemnity Fund – Growden Default) Amendment Act 2004 came into operation on 1 September 2004. It amended the Land Agents Act and the Conveyancers Act. The purpose of the amendments was to give some recourse to the indemnity fund to those investors who had suffered a specified type of loss as a result of the activities of Growdens.
The Conveyancers Act provides, in Schedule 2, which is entitled “Transitional provisions”:
2(1) In this clause –
mortgage financier means a person who –
(a)is –
(i)a conveyancer; or
(ii)an associate of a conveyancer; and
(b)engages in mortgage financing;
…
(2) …
(3)This clause applies –
(a)to trust money received by a mortgage financier before the commencement of this Act; and
(b)where trust money received by a mortgage financier was lent to another on the security of a mortgage before the commencement of this Act – to trust money received by the mortgage financier (whether before or after that commencement) by way of payment of principal or interest, or both, under that loan.
(4)Part 4 applies to a mortgage financier as if –
(a)a reference in that Part to a conveyancer were a reference to a mortgage financier; and
(b)a reference in that Part to trust money were a reference to trust money to which this clause applies.
(5)…
3(1)A failure on the part of Growden Investments to disclose material facts with respect to the investment of trust money to which clause 2 applies will be taken to be a fiduciary default for the purposes of Part 4.
(2)Subclause (1) applies with respect to any such failure on the part of Growden Investments (and accordingly the Commissioner must, to the extent that a relevant claim based on a failure on the part of Growden Investments to disclose material facts has been rejected, on application by the claimant, reassess the claim.)
(3)Despite clause 2(4), no interest is payable under section 39(2) with respect to an entitlement to compensation arising from fiduciary default on the part of Growden Investments.
(4)In this clause –
Growden Investments means G C Growden Pty Ltd and includes any associate of G C Growden Pty Ltd (as in existence at any time).
(5)…
Schedule 2A Land Agents Act provides, relevantly:
1—Interpretation
(1) In this Schedule—
eligible capital loss of an eligible claimant is the qualifying capital investment made by the eligible claimant less any capital amount recovered by the eligible claimant with respect to that investment before the qualifying date and less any other amount that the eligible claimant has received or may reasonably be expected to recover (apart from this Schedule) in reduction of the eligible claimant's pecuniary loss;
eligible claimant means a person who—
(a)has made a qualifying capital investment; and
(b)has suffered pecuniary loss with respect to that investment as a result of fiduciary default on the part of Growden Investments; and
(c)as at the qualifying date, has been unable to recover with respect to that loss an amount or amounts equal to or totalling the amount of the qualifying capital investment,
but does not include a person who is (or has at any time been) an associate of G.C. Growden Pty. Ltd.;
Fund means Part B of the indemnity fund (see section 29A);
Growden Investments means G.C. Growden Pty. Ltd. and includes any associate of G.C. Growden Pty. Ltd. (as in existence at any time);
prescribed period means the period commencing on the day on which this Schedule comes into operation and ending on 21 December 2004;
qualifying capital investment means—
(a)any investment of money effected by making a payment to Growden Investments, or to another person on the advice of Growden Investments, on or after 1 June 1995, on the understanding that the money would be lent to a person on the security of a mortgage; or
(b)any reinvestment of money effected by Growden Investments, or on the advice of Growden Investments, on or after 1 June 1995, where the money was originally paid to Growden Investments, or invested on the advice of Growden Investments, on the understanding that the money would be lent to a person on the security of a mortgage (including in a case where the original payment or investment occurred before 1 June 1995),
but does not include any investment or reinvestment of money that constitutes trust money to which clause 2 of Schedule 2 of the Conveyancers Act 1994 applies (by virtue of the operation of clause 2(3) of that Schedule);
qualifying date means the date on which this Schedule comes into operation.
…
(3)For the purposes of this Schedule, a reinvestment of money within the ambit of paragraph (b) of the definition of qualifying capital investment in subclause (1) will be taken to be a qualifying capital investment made by the person who originally paid or invested the money.
(4)For the purposes of this Schedule, fiduciary default on the part of Growden Investments will be taken to include—
(a)a defalcation, misappropriation or misapplication of another person's money; or
(b)a failure to disclose material facts with respect to the investment of another person's money.
…
2 – Entitlement to claim compensation
(1)Subject to this Schedule, an eligible claimant may claim compensation under this Schedule.
(2)A claim for compensation under this Schedule by an eligible claimant cannot exceed the eligible claimant's eligible capital loss.
(3)To avoid doubt, an eligible claimant is not prevented from making a claim under this Schedule by virtue only of the fact that he or she has made a claim under clause 2 of Schedule 2 of the Conveyancers Act 1994 (but recognising that a claim that gives rise to an entitlement under that clause cannot be the subject of a successful claim under this Schedule).
3—Time within which claim must be made
(1)A claim for compensation must be made within the prescribed period.
(2)The Commissioner must, within 21 days after the commencement of this Schedule, by notice published in a newspaper circulating generally throughout Australia, give notice to persons who may qualify as eligible claimants under this Schedule of—
(a)the ability to make a claim under this Schedule; and
(b)the fact that a claim for compensation must be made within the prescribed period.
(3)A claim that is not made within the prescribed period is barred for the purposes of this Schedule unless the Court, on application, otherwise determines.
4—Establishment of claims
(1)A claim for compensation under this Schedule must be made to the Commissioner in a manner and form determined by the Commissioner.
(2)The Commissioner may require a person making a claim—
(a)to furnish further information specified by the Commissioner;
(b)to verify, by statutory declaration, information furnished for the purposes of making or establishing a claim.
(3)The Commissioner must, as soon as practicable after the end of the prescribed period, determine, with respect to each person who has made a claim to the Commissioner in accordance with this Schedule—
(a)whether the Commissioner is satisfied that the person is an eligible claimant under this Schedule; and
(b)if the claim is accepted on that basis, the amount of the person's eligible capital loss for the purposes of paying compensation under this Schedule.
(4)The Commissioner must, by notice in writing, inform each person who has made a claim of the Commissioner's determination with respect to that person under subclause (3).
(5)A person who is dissatisfied with a determination with respect to the person under subclause (3) may, within one month after receiving notice of the Commissioner's determination, appeal to the Court against the determination.
5—Entitlement to compensation
Subject to the provisions of this Schedule, a person whose claim is accepted is entitled to the payment of compensation under this Schedule for the person's eligible capital loss.
The Appeal
Mr Ross-Smith, counsel for Auzora, submitted that his client’s claim was made under the Conveyancers Act, and, in the alternative, under the Land Agents Act. The Commissioner has made an express determination under the Land Agents Act. I take it that the Commissioner by his determination implicitly rejected the claim under the Conveyancers Act. Auzora’s notice of appeal does not state the legislative provision under which the appeal is brought. The Land Agents Act provides, in clause 4(5) of Schedule 2A:
A person who is dissatisfied with a determination with respect to the person under subclause (3) may, within one month after receiving notice of the Commissioner’s determination, appeal to the Court against the determination.

The Land Agents Act defines “Court” to mean this Court.
Auzora’s appeal in relation to the Commissioner’s determination pursuant to the Land Agents Act must be under clause 4(5) of Schedule 2A.
Auzora’s appeal to this Court against the Commissioner’s determination in relation to a claim under Schedule 2 of the Conveyancers Act is provided for in s 37 and clause 2(4) of Schedule 2 of the Conveyancers Act.
Implicitly, this matter was argued as if both appeals were before the Court. I will refer to the appeal in the singular for convenience.
Division 2 of the District Court Act 1991 applies to the conduct of these appeals.
Which Act?
The decision of the Commissioner was the determination of a claim made by Notification of Claim dated 14 December 2004. The Notification of Claim does not specify whether the claim was made pursuant to the Conveyancers Act or the Land Agents Act. The Notification of Claim was not made expressly on behalf of Auzora: it was signed by David Morgan “as director of Morgan Solicitors”. The Notification of Claim said that it was made in relation to the mortgage investment loan, brokered by G C Growden Pty Ltd, “Share Investment Concepts Pty Ltd [8045699] 420 Aldinga Beach Road Aldinga $70,000”. It is clear, however, from the agreed facts, that the investor in question was Auzora. This must also have been clear to the Commissioner from the documents he had before him, because the Commissioner treated the claim as a claim by Auzora.
The Commissioner decided that Auzora’s investment through Growdens was made after 1 June 1995. Consequently, Schedule 2A of the Land Agents Act applied to the claim. The Commissioner assessed the claim accordingly.
On appeal, it was argued on behalf of Auzora that the Conveyancers Act applied to the claim, rather than the Land Agents Act. It was agreed that the date upon which the payment the subject of the claim was made to Growdens was critical to the question of which Act applied. The Conveyancers Act, in Schedule 2, clause 2, provides for claims to be made pursuant to the Conveyancers Act in relation to investments involving a mortgage financier. Clause 2(3) of Schedule 2 says:
(3) This clause applies -
(a)to trust money received by a mortgage financier before the commencement of this Act; and
(b)where trust money received by a mortgage financier was lent to another on the security of a mortgage before the commencement of this Act – to trust money received by the mortgage financier (whether before or after that commencement) by way of payment of principal or interest, or both, under that loan.
The date for the commencement of the Conveyancers Act was 1 June 1995. The complementary provisions in Schedule 2A of the Land Agents Act provide for the making of a claim pursuant to the Land Agents Act by an ‘eligible claimant’ who has made a “qualifying capital investment” (among other things). A “qualifying capital investment” is defined in clause 1 of Schedule 2A to mean:
(a) any investment of money effected by making a payment to Growden Investments, or to another person on the advice of Growden Investments, on or after 1 June 1995, on the understanding that the money would be lent to a person on the security of a mortgage; or
(b) any reinvestment of money effected by Growden Investments, or on the advice of Growden Investments, on or after 1 June 1995, where the money was originally paid to Growden Investments, or invested on the advice of Growden Investments, on the understanding that the money would be lent to a person on the security of a mortgage (including in a case where the original payment or investment occurred before 1 June 1995).
In other words, money given to Growdens to invest (or reinvest) prior to 1 June 1995 may be the subject of a claim under the Conveyancers Act but not the Land Agents Act. Money given to Growdens on or after 1 June 1995 may be the subject of a claim pursuant to the Land Agents Act, but not the Conveyancers Act. The Land Agents Act provides, in Schedule 2A, clause 2(3):
To avoid doubt, an eligible claimant is not prevented from making a claim under this Schedule by virtue only of the fact that he or she has made a claim under clause 2 of Schedule 2 of the Conveyancers Act 1994 (but recognising that a claim that gives rise to an entitlement under that clause cannot be the subject of a successful claim under this Schedule).
It was argued on behalf of Auzora that, because Growdens had a conveyancing division, the Conveyancers Act “naturally” applied to it. This is irrelevant. The question of which Act applies to the claim falls to be decided in accordance with the relevant provisions of the Acts purely by determining whether the date of the payment to Growdens occurred before 1 June 1995 or on or after 1 June 1995.
Mr David Morgan paid $70,000 to Growdens in April 1993. It was invested by way of a loan from Shelvan to Mr Hampel, and then repaid in full to Growdens by Mr Hampel in December 1995. At the point of repayment to Growdens by Mr Hampel, the $70,000 must have been the property of Shelvan, the lender. Subsequent to the repayment by Mr Hampel, Growdens sought from Shelvan an authority to lend the money again. Mr Morgan instead provided an authority on behalf of Auzora. It seems to me that in doing so, Mr Morgan, who was a shareholder in both Shelvan and Auzora, was indicating to Growdens that the beneficial interest in the $70,000 had been transferred from Shelvan to Auzora. The $70,000 was then loaned to SIC pursuant to the authority, and Auzora became a mortgagee of 420 Aldinga Beach Road, Aldinga, by way of security. That all occurred in December 1995.
I reject the argument advanced on behalf of Auzora that the transaction complained of falls within clause 2(3) of Schedule 2 of the Conveyancers Act. Auzora was the lender, and Auzora did not come into existence until 15 December 1995. Auzora could not, therefore, have either provided funds or entered into a loan prior to 15 December 1995. I understand that Mr David Morgan controlled both Shelvan and Auzora. However, that does not mean that Mr Morgan, Shelvan and Auzora can be treated as one entity for the purpose of the claim. They are separate legal entities, and must be treated accordingly. Growdens could not have received trust moneys on account of Auzora until 15 December 1995 at the earliest. Growdens must have held the $70,000 on account of Shelvan until the authority in Auzora’s name was received, at which point Growdens must be treated as having ceased to hold the money on account of Shelvan and as having received it on account of Auzora. Mr Ross-Smith argued that the payment made to Growdens by Mr Morgan in April 1993 was “the trust money received” for the purposes of clause 2(3) of Schedule 2, and that the identity of the entity from which the money was received was irrelevant. I reject this argument. It is implicit in clause 2(3) that the entity from which the money was received by Growdens is the entity which made the investment.
The payment to Growdens the subject of this claim was made in December 1995. A claim against the indemnity fund can therefore only be made pursuant to the Land Agents Act.
Heads of Claim and Quantum
The receiver of SIC sold the land and paid Auzora $25,652.39, which was Auzora’s proportional share of the net proceeds of the sale of the land.
The Commissioner determined the quantum of Auzora’s claim to be $44,347.61, being the capital investment of $70,000, less the amount of $25,652.39 received by Auzora from the proceeds of the sale of the land.
Auzora claims to be entitled to payments from the indemnity fund on account of loss of capital, loss of interest on capital, legal costs of its claim and these proceedings and legal and other costs of seeking to recover against various participants in the investment scheme in civil actions.
The Land Agents Act provides, in clause 2(2) of Schedule 2A:
A claim for compensation under this Schedule by an eligible claimant cannot exceed the eligible claimant’s eligible capital loss.
In Schedule 2A 1(1), eligible capital loss is defined as follows:
Eligible capital loss of an eligible claimant is the qualifying capital investment made by the eligible claimant less any capital amount recovered by the eligible claimant with respect to that investment before the qualifying date and less any other amount that the eligible claimant has received or may reasonably be expected to recover (apart from this Schedule) in reduction of the eligible claimant’s pecuniary loss.
Auzora’s qualifying capital investment was $70,000. The sum of $25,652.39 was paid to Auzora by the receiver of SIC on 18 December 1998. Mr Ross-Smith argued that the decision in Jarrett v Commissioner for Consumer Affairs [2006] SADC 56 applied to Auzora’s claim. That matter dealt with the Conveyancers Act. The Conveyancers Act provided, in s 32(2):
The amount of a claim cannot exceed the actual pecuniary loss suffered by the claimant in consequence of the fiduciary default less any amount that the claimant has received or may reasonably be expected to recover (apart from this Division) in reduction of that loss. (my underlining)
Herriman J found in that matter that the claimant’s “actual pecuniary loss” was $10,000, which was the amount of his initial capital investment. Herriman J referred to clause 28 of the mortgage in that matter, which gave the mortgagee absolute discretion to determine the priority for the application of moneys received under the mortgage, whether towards the repayment of outstanding interest or principal. Herriman J also referred to s 135 of the Real Property Act 1886 and s 50 of the Law of Property Act 1936, which also permit the application of moneys repaid to interest owing ahead of principal. Herriman J decided that the claimant in that matter was entitled to apply moneys recovered under the mortgage to outstanding interest before principal so that the moneys were not then an amount “in reduction of that loss” within the meaning of s 32(2) as they did not reduce the “actual pecuniary loss” which was the capital sum invested.
The provisions of the Land Agents Act with which the present case is concerned are different from the provisions the subject of the decision in Jarrett’s case. The definition of eligible capital loss is quoted above. It means the “qualifying capital investment”, which in this case is the $70,000 acquired by Auzora from Shelvan on or after 15 December 1995, less “any capital amount recovered by the eligible claimant with respect to that investment before the qualifying date” (which is 1 September 2004) and less “any other amount that the eligible claimant has received… in reduction of the eligible claimant’s pecuniary loss”. The sum of $25,652.39, which was Auzora’s share of the proceeds of the sale of the land, was “a capital amount”. It was recovered “with respect to that investment”, that is, the qualifying capital investment. It was received by Auzora on 18 December 1998. In the alternative, it is an amount received in reduction of Auzora’s pecuniary loss. “Pecuniary loss” is used in distinction to “qualifying capital investment” in the definition. I refer also to clause 7 of Schedule 2A of the Land Agents Act, which provides:
(1) If a person who is entitled to, or who has received, a payment of compensation under this Schedule recovers from another person or source an amount in respect of the fiduciary default for which compensation is payable under this Schedule –
(a)…
(b)the person’s entitlement to compensation under this Schedule is reduced by the amount recovered; and
(c)if the recovery of the amount and any previous payment of compensation under this Schedule results in the person recovering a total amount in respect of a qualifying capital investment that exceeds the person’s eligible capital loss, then the person must immediately pay the excess to the Commissioner for crediting to the Fund (and that excess will, until paid, be a debt due to the Crown).
(2) A person must not fail to comply with subclause (1)(a).
Maximum penalty: $10,000.
The intention of Schedule 2A in these circumstances is that the amount of $25,652.39 should be deducted from the qualifying capital investment to arrive at the eligible capital loss. The statutory provisions in this case yield a different result from the differently worded provisions of the Conveyancers Act applicable in Jarrett’s case.
The determination of the Commissioner was the only determination the Commissioner could have made, consistent with Schedule 2A of the Land Agents Act and Schedule 2 of the Conveyancers Act.
Counsel Fees
On 23 January 2007, the Deputy Commissioner for Consumer Affairs wrote to Mr Morgan in the following terms:
I write to confirm my advice to you on 17 January 2007, in relation to the above matter.
As discussed, the Commissioner for Consumer Affairs has agreed that the Counsel fees should be paid in this matter subject to the following conditions:
· That you provide this office with written evidence confirming that the order for sequestration in the Federal Magistrates Court has no prospect of yielding a recovery of Auzora’s loss; and
· That a cost expert report, obtained by the Commissioner, advises that the quantum of the costs is reasonable.
In the interest of finalising this matter, could you provide your written evidence to me as soon as possible.
I will advise you of the outcome after all of the above matters have been considered.
It was argued on behalf of Auzora that the Commissioner is now prevented from asserting that Auzora is not entitled to the payment of its counsel fees. I reject this argument. It is well established that the Crown cannot, by a representation of its servant or agent, bind itself to act ultra vires (see Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 92 ALR 93). For the same reason, I reject the argument (which was not pressed in any event) that the Commissioner is prevented in these proceedings from asserting that the Land Agents Act applies.
Damages
Auzora sought interest on its claim by way of damages for an alleged breach of statutory duty by the Commissioner in omitting to determine Auzora’s claim within a reasonable time. No reasons for the delay in determining the claim were provided to the Court. A claim for damages in this way is not within the jurisdiction of this Court in these proceedings.
Summary and Conclusion
Auzora came into existence on 15 December 1995. Auzora must have acquired its beneficial interest in the $70,000 the subject of this matter on or after that date. Growdens could not have held that money in its trust account on account of Auzora prior to 15 December 1995. The $70,000 was loaned to SIC on 27 December 1995. On a proper interpretation of Schedule 2 clause 2(3) of the Conveyancers Act, no claim can be made pursuant to that Act by Auzora in relation to the money held by Growdens and then loaned to SIC. However, Auzora has a valid claim under the Land Agents Act. The quantum of that claim is limited by the definition of “eligible capital loss” to the qualifying capital investment ($70,000) less the $25,653.39 recovered from the receiver of SIC, which gives an entitlement of $44,347.61, as the Commissioner has correctly determined.
The appeal is dismissed. The decision of the Commissioner is upheld.