BR and MM
[2016] WASAT 112
•20 OCTOBER 2016
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: REAL ESTATE AND BUSINESS AGENTS ACT 1978 (WA)
CITATION: COMMISSIONER FOR CONSUMER PROTECTION and THE KING AND I PTY LTD (ACN 060968809) [2016] WASAT 125
MEMBER: JUSTICE J C CURTHOYS (PRESIDENT)
MS D QUINLAN (MEMBER)
MR R ADAMS (SESSIONAL MEMBER)
HEARD: 14 AND 15 JUNE 2016
DELIVERED : 20 OCTOBER 2016
FILE NO/S: VR 112 of 2014
VR 125 of 2014
BETWEEN: COMMISSIONER FOR CONSUMER PROTECTION
Applicant
AND
THE KING AND I PTY LTD (ACN 060968809)
First RespondentCOLIN MAXWELL KING
Second RespondentPAUL ANTHONY KING
Third Respondent
Catchwords:
Real estate and business agent - Real estate and business sales representative Jurisdiction when licence expired Agent and sales representative involved in original sale and on-sale Breach of Code of Conduct - Duty to act in the best interests of principal - Duty to act fairly and honestly Duty not to knowingly mislead or deceive Duty to disclose material facts - Conflict of interest Inferences from proven facts
Legislation:
Code of Conduct for Agents and Sales Representatives 1993, cl 1, cl 2, cl 5(1), cl 5(2), cl 6(2), cl 8(2), cl 10(1)
Interpretation Act 1984 (WA), s 1
Property, Stock and Business Agents Act 2002 (NSW), s 52(1)
Real Estate and Business Agents Act 1978 (WA), s 23(1), s 23(2)(a), s 27(1), s 30, s 31, s 31(3), s 53(2), s 101, s 102, s 103
Result:
Proper cause exists for disciplinary action against Paul King
Disciplinary proceedings against The King & I Pty Ltd and Colin King are dismissed
Colin King's application to hold a real estate agent's licence is dismissed
Summary of Tribunal's decision:
This case concerned an application brought by the Commissioner for Consumer Affairs under the Real Estate and Business Agents Act 1978 (WA), for disciplinary action against the three respondents. There was also an application by one respondent to review the Commissioner's decision to refuse to grant him a renewal of his real estate agent's licence. The three respondents were, literally, related entities. The King & I Pty Ltd is a company controlled by Colin King. The King & I employed Colin King's son, Paul King, as a sales representative. Another son, Michael King (not a licensed real estate agent or sales representative), was involved in all of the on-sale transactions.
The case involved the purchase and onsale of six properties. In each case, Mr Wong expressed an interest in the property after being advised of the fact that it was, or potentially was, for sale. A company of which Mark Palumbo was the sole director and shareholder then purchased the property and onsold it to a Wong Syndicate. Mr Palumbo was an associate of Michael King who was a frontman acting on Michael King's direction. There was a total markup of about $6,000,000 between the original purchase price and the subsequent onsale price. The original owners and the ultimate purchasers were not aware of the onsale. The settlement of the original sale and the on-sale occurred on the same day allowing the on-sale monies to be utilised to fund the original purchase price.
Ultimately, the case largely turned on the proper inferences to be drawn from the facts. The Tribunal drew the more probable inference that the three respondents knew of each of the six intended on-sales at the time of the original sales being perpetrated by Michael King, through Mr Palumbo, and acted in such a way as to facilitate the on-sale. The Tribunal found that with this knowledge the respondents were in breach of the Code of Conduct for Agents and Sales Representatives 1993 in that they failed to act in the best interests of their principal, failed to act fairly and honestly, knowingly misled the original sellers, failed to disclose material facts and had a conflict of interest.
The Tribunal found that by reason of the conduct of Paul King in breach of the Code, proper cause existed for disciplinary action. The Tribunal concluded that the only construction open on the text of the Act is that the Commissioner's claim against Colin King and The King & I must be dismissed on the ground that it was incompetent because the licence had expired. But for the Tribunal's finding that it did not have jurisdiction, the Tribunal would have found that the conduct of The King & I and Colin King was in breach of the Code and constituted proper cause for disciplinary action. The Tribunal also found that the conduct of Colin King in breach of the Code makes him not a person of good character and repute and not a fit and proper person to hold a real estate agent's licence.
Category: B
Representation:
Counsel:
Applicant: Mr J Derby
First Respondent : Mr JM Healy
Second Respondent : Mr JM Healy
Third Respondent : Mr JM Healy
Solicitors:
Applicant: Department of Commerce
First Respondent : Culshaw Miller Lawyers
Second Respondent : Culshaw Miller Lawyers
Third Respondent : Culshaw Miller Lawyers
Case(s) referred to in decision(s):
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41
Chamberlain v The Queen [No 2] (1984) 153 CLR 521
Hinton v Commissioner for Fair Trading [2007] NSWADTAP 17
Johnson v Sheppard [2005] WASCA 13
Jones v Dunkel (1959) 101 CLR 298
Luxton v Vines (1952) 85 CLR 352
Rayney and Legal Practice Board of Western Australia [2016] WASAT 7
Real Estate and Business Agents Supervisory Board v LJW [2011] WASCA 35
Stingel v Clark (2006) 226 CLR 442
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
This case concerns an application brought by the Commissioner for Consumer Affairs (the Commissioner), under the Real Estate and Business Agents Act 1978 (WA) (the Act), for disciplinary action against the three respondents. There is also an application by one of the respondents, Colin King, to review the Commissioner's decision to refuse to grant him a real estate agent's licence.
The King & I was granted a Real Estate and Business Agents Licence RA3965 on 27 August 1993. The King & I has not held a Real Estate and Business Agents Licence and Triennial Certificate since 27 August 2014 (Exhibit B). Colin King's licence expired on 15 April 2015. Paul King held a Certificate of Registration as a Real Estate and Business Sales Representative from 15 November 1990 to 4 September 2014 (Exhibit C).
The three respondents are, literally, related entities. The King & I Pty Ltd (The King & I) is a company controlled by Colin Maxwell King (Colin King). The King & I employed Colin King's son, Paul Anthony King (Paul King) as a sales representative.
Another son of Colin King, Michael King, was involved in all of the transactions detailed below. Michael King's company was Miscan Pty Ltd (Miscan). Michael King was not a licensed real estate agent or sales representative at the relevant times. Another of Colin King's sons, Darren King, was employed by Miscan.
The case involves the purchase and onsale of six properties. In each case, Khing Ping Wong (Mr Wong) expressed an interest in the property after being advised of the fact that it was, or potentially was, for sale. A company of which a Mark Palumbo was the sole director and shareholder then purchased the property and onsold it to Mr Wong and/or companies associated with him. The particular entities or persons associated with Mr Wong in the purchase of land varied from purchaser to purchaser. For convenience, they are referred to in these reasons as a Wong Syndicate or the Wong Syndicates. Nothing turns on the particular entities or persons who were associated with individual purchases.
Mark Palumbo was a frontman acting on Michael King's direction.
Between the six properties there was a combined markup of about $6,000,000 between the original purchase price and the subsequent onsale price. The original owners and the ultimate purchasers were not aware of the onsale.
Ultimately, this case largely turns on the proper inferences to be drawn against each of The King & I, Colin King and Paul King from facts that are largely undisputed.
The Commissioner's allegations against the respondents
The Commissioner has alleged in relation to the first three properties that the respondents:
1)failed to act in the best interests of their principal, the first in time seller;
2)failed to act fairly and honestly towards their principal;
3)misled or deceived their principal;
4)failed to disclose a material fact; and
5)acted in a situation of a conflict of interest.
The Commissioner has alleged in relation to the remaining three properties that the respondents acted unfairly and/or dishonestly.
Procedural matters
There are two proceedings before the Tribunal for determination.
In VR 112 of 2014 (the Disciplinary Proceedings), the Commissioner alleges pursuant to s 102 of the Act that there is proper cause for disciplinary action against each of The King & I, Colin King and Paul King.
In VR 125 of 2014 (the Review Proceedings), Colin King has applied to review the decision of the Commissioner pursuant to s 31(3) of the Act to refuse to renew his triennial certificate.
By order dated 11 August 2015 in the Review Proceedings, the Commissioner was ordered to file a bundle of documents other than those already filed in the Disciplinary Proceedings. The Commissioner relied upon the material filed in the Disciplinary Proceedings for the purposes of the Review Proceedings.
By order of the Tribunal dated 8 December 2015, the witness statements filed in the Disciplinary Proceedings were admissible in the Review Proceedings.
The Disciplinary Proceedings and the Review Proceedings were heard together.
Respondents' witness statements
On 8 December 2015, the respondents were ordered to file any witness statements on which they relied by 8 February 2016. On 8 March 2016, the time was extended to 17 May 2016. On the same date, the matter was listed for a final hearing commencing on 13 June 2016.
No witness statement was filed by Colin King. The witness statement of Paul King was filed on 15 June 2016, after the commencement of the hearing.
Relevant statutory provisions
Disciplinary Proceedings VR 112 of 2014
Section 101 of the Act provides that:
The Commissioner may from time to time prescribe, and publish in the manner prescribed by the regulations
(a)a code of conduct for agents; and
(b)a code of conduct for sales representatives.
The relevant code of conduct published pursuant to s 101 of the Act which applied to the conduct in these proceedings was the Code of Conduct for Agents and Sales Representatives 1993 (Code) (Western Australia, Government Gazette No 89 (29 June 1993)). The Code provides:
1.In this Code
'agent' means an agent or a sales representative.
'commission' includes fees charges reward or other remuneration whether monetary or otherwise.
'principal' in relation to a sales representative means the principal of the agent by whom the sales representative is employed.
'the Act' means the Real Estate and Business Agents Act 1978 as amended.
2.An agent must act in the best interests of his or her principal except where it would be unreasonable or improper to do so.
…
5.(1) An agent must act fairly and honestly.
(2)An agent must not knowingly mislead or deceive any parties in negotiations or a transaction.
…
8.(2) If an agent ascertains a fact which is material to a transaction
in which the agent's principal is involved the agent must promptly communicate that fact to any person who may be affected by it unless it is clear that person was already aware of that fact.
…
10.(1) An agent must not accept an engagement to act, or continue
to act, where to do so would place his or her interest in conflict with that of the principal.
The duty to act fairly and honestly was explained by the Full Court in Johnson v Sheppard [2005] WASCA 13 at [13][14] (Murray J):
In Peters v The Queen [1998] HCA 7; (1998) 192 CLR 493 the High Court considered the concept of honesty as an element of the offence of conspiracy to defraud. The Court held that dishonesty in the context of that offence involved no special use of the word 'honesty' but merely the need to find whether the conduct in question was dishonest according to the standards of ordinary, decent people. That, in my opinion, is the sense in which the word is used in this context. The question was whether the appellant's conduct breached the duty to act fairly and honestly in the sense in which that word is ordinarily used. The question therefore was whether the appellant's conduct was dishonest according to the standards of ordinary decent people. That made it necessary to identify the quality of the conduct and the knowledge, belief or intention said to render it dishonest: see Peters per Toohey and Gaudron JJ at 504 [18].
There is no reason to suppose that standards of fairness and honesty applicable to real estate agents differ in any way from those applicable in the community at large, in relation to the standards to be observed when a person is acting for another, with a duty to act in the best interests of the principal, but not in such a way as to advance those interests improperly, according to the ordinary standards of reasonable, honest people. In particular, it would be no answer to say that the person concerned, whose honesty was under consideration, did not appreciate that ordinary, decent people would view his or her conduct as dishonest: Harle v Legal Practitioners Liability Committee [2003] VSCA 133 per Chernov JA, with whom Callaway and Buchanan JJA agreed[.]
Guidance as to the duty to not knowingly mislead or deceive any parties is provided by the decision of the New South Wales Administrative Decisions Tribunal Appeal Panel (Tribunal Appeal Panel) in Hinton v Commissioner for Fair Trading [2007] NSWADTAP 17 (Hinton). In that case, the Tribunal Appeal Panel considered whether the failure by an agent to disclose to prospective purchasers of a house that had approximately three years previously been the site of a triple murder contravened s 52(1) of the Property, Stock and Business Agents Act 2002 (NSW), which provided:
A person who, while exercising or performing any function as a licensee or registered person, by any statement, representation or promise that is false, misleading or deceptive (whether to the knowledge of the person or not) or by any concealment of a material fact (whether intended or not), induces any other person to enter into any contract or arrangement is guilty of an offence against this Act.
There is no relevant difference between a 'material fact' and a 'fact which is material'. In relation to whether or not a fact is material, the Tribunal Appeal Panel said in Hinton at [37]:
A fact may become 'material' within the meaning of s 52 in two ways it can become 'material' because in the particular circumstances it is known by the agent to be material to the particular consumer, even though agents and consumers may not typically regard the matter as 'material'. The other way in which it may become 'material' is by the application of an objective standard which has regard to what a reasonably informed consumer with a fair minded understanding of the real estate market, including the role of a real estate agent, would regard as 'material'.
Facts may become material in one of two ways: firstly, because the fact is one which the particular person has made known to the agent is of importance to that person although it may not be ordinarily regarded as important or material; or secondly, because the fact is one which, objectively, any reasonably informed, fair minded person would regard as material.
Section 102(1) of the Act provides:
The Commissioner may allege to the State Administrative Tribunal that
(a)there is proper cause for disciplinary action, as mentioned in section 103(2), against an agent; or
(b)there is proper cause for disciplinary action, as mentioned in section 103(4), against a sales representative.
Section 103(2)(c)(iii) of the Act provides that there shall be proper cause for disciplinary action against an agent if the agent has acted in breach of the agents code of conduct.
Section 103(4)(c)(iii) of the Act provides that there shall be proper cause for disciplinary action against a sales representative if the sales representative has acted in breach of the code of conduct for sales representatives.
By reason of the definition of an agent in the Code, the Code is the relevant Code for both agents and sales representatives under s 103 of the Act.
Review Proceedings VR 125 of 2014
Section 27(1) of the Act provides:
Subject to this Act, a person, not being a body corporate, who applies to the Commissioner for a licence and pays to the Commissioner the prescribed fee for the licence shall be granted and may hold a licence if the Commissioner is satisfied that
…
(b)he is a person of good character and repute and a fit and proper person to hold a licence; and
…
(d)he understands fully the duties and obligations imposed by this Act on agents.
In Real Estate and Business Agents Supervisory Board v LJW [2011] WASCA 35 at [25][30], Newnes JA summarised the principles relevant to whether a person is fit and proper and of good character and repute as follows:
a)the requirements of 'fit and proper' and 'good character and repute' are not entirely discrete and they overlap to a significant degree;
b)'fit and proper' ordinarily comprises the three characteristics of honesty, knowledge and ability;
c)an applicant must show 'sufficient moral integrity and rectitude of character as to permit him to be safely accredited to the public, without further inquiry, as a person to be entrusted with the sort of work which the licence entails';
d)'good character' ordinarily refers to a person's moral qualities, whether known to others or not; and
e)'repute' is the estimation in which, fairly or unfairly, a person is held by others.'
Section 30 of the Act provides that subject to the Act, a licence is continuous but a licence does not confer on a licensee the right to carry on business as an agent unless he holds a current triennial certificate in respect of the licence.
Section 31 of the Act provides that the Commissioner shall grant a certificate to carry on business for three years commencing on the date on which it is first granted and then it may be renewed for subsequent periods of three years each.
Section 31(3) of the Act provides that the Commissioner may refuse to renew a licensee's triennial certificate if the Commissioner is satisfied that s 27(1)(b), (c) or (d) as is relevant to the licensee does not apply, or no longer applies, in relation to the licensee.
A person aggrieved by a reviewable decision may apply to the Tribunal for a review of that decision (s 23(1) of the Act). A decision of the Commissioner to refuse to renew a triennial certificate is a reviewable decision (s 23(2)(a) of the Act).
Onus and standard
The Commissioner bears the onus of proof.
In Rayney and Legal Practice Board of Western Australia [2016] WASAT 7 (Rayney), the Tribunal set out the principles relating to the onus and standard of proof:
35In Legal Profession Complaints Committee and Wells [2014] WASAT 112 at [8] and [9] the Tribunal stated:
The Committee bears the onus of proof. It is to the civil, not criminal standard but the principles of Briginshaw v Briginshaw (1938) 60 CLR 336 (Briginshaw) apply. That is, while needing to be proved only on the balance of probabilities, the nature and seriousness of the allegations are relevant to the question whether the issues are proved to the reasonable satisfaction of the Tribunal and the process by which reasonable satisfaction is attained.
By reason of the nature of the allegations, the Tribunal must feel an actual persuasion of the occurrence or existence of the relevant facts in determining whether or not the case against the practitioner is made out: Medical Board of Western Australia and Wright [2010] WASAT 48 at [31]; and see Medical Board of Western Australia and Bham [2006] WASAT 190 at [144].
(See also Rejfek v McElroy (1965) 112 CLR 517 (Reifek))
36In Briginshaw v Briginshaw (1938) 60 CLR 336 at 362, Dixon J, as he then was, observed '[i]n such matters ''reasonable satisfaction'' should not be produced by inexact proofs, indefinite testimony or indirect inferences'.
37The standard of proof required in a civil case where serious allegations are made was stated in Rejfek where Barwick CJ, Kitto, Taylor, Menzies and Windyer JJ observed at 521 that:
The 'clarity' of the proof required, where so serious a matter as fraud is to be found, is an acknowledgment that the degree of satisfaction for which the civil standard of proof calls may vary according to the gravity of the fact to be proved. …
But the standard of proof to be applied in a case and the relationship between the degree of persuasion of the mind according to the balance of probabilities and the gravity or otherwise of the fact of whose existence the mind is to be persuaded are not to be confused.
38In NOM v Director of Public Prosecutions (2012) 38 VR 618 at [124], the Victorian Court of Appeal stated:
… mere mechanical comparison and probabilities independent of a reasonable satisfaction will not justify a finding of fact. The fact finder must feel an actual persuasion of the occurrence or existence of the fact in issue before it can be found. Where, as in the present case, the standard of proof is to be applied to circumstantial evidence, satisfaction as to a reasonable and definite inference is required.
When the evidence is circumstantial, in order for the Commissioner to discharge his onus of proof, an inference is required to be drawn from the circumstances of the case.
An inference can only be proved if the inference is more probable based on the evidence as found: Luxton v Vines (1952) 85 CLR 352 at 358; Chamberlain v The Queen [No 2] (1984) 153 CLR 521 at 536.
Accepted facts
The parties are to be commended for agreeing to most of the facts.
The respondents either admitted or did not dispute the facts set out in a schedule of the accepted facts which was prepared by the Commissioner and annexed to his closing submissions (see respondents' closing submissions paragraph 44). Those accepted facts have been incorporated into these reasons. Where the facts are 'Accepted facts' the notation 'AF' appears thereafter.
The onsales
In each of the six properties detailed below, Michael King established a company of which his acquaintance, Mr Palumbo, was the sole director and secretary for the purpose of interposing that company into the sale of rural land from the original owners to overseas investors represented by Mr Wong (AF). The companies of which Mr Palumbo was the sole director and secretary are referred to as the Palumbo companies.
Throughout the transactions Mr Palumbo took instructions from Michael King (AF).
In each case, the company controlled by Mr Palumbo:
a)entered into a contract to purchase the property from the original owners;
b)within a short period of time entered into a contract to sell the property to the overseas investors or a company controlled by them at a substantially higher price; and
c)used the deposit paid by the ultimate purchaser, or a loan from Michael King or a company controlled by Mr Wong, to pay the deposit under the contract with the original owners.
(AF)
Michael King told Mr Palumbo that the plan for the property deals was to purchase properties and have a long settlement time to allow him time to arrange the sale of the property so that settlement for the purchase and the sale would occur on the same day (Exhibit U paragraph 42).
In each case, the contract of sale with the original owners and the subsequent onsale contract were settled on the same date allowing the second purchase price to be utilised to fund the original purchase price (AF).
In all the properties except Property 1, the ultimate purchaser was a Wong Syndicate.
In relation to Property 1, the ultimate purchasers were ten individuals who purchased Property 1 jointly in their personal capacity (AF).
Summary of the six properties and associated transactions
A summary of the properties and the relevant transactions in table format was admitted as Exhibit W.
The respondents
The King & I carried on business under the name 'Colin King Real Estate' (the Business) (AF). The Business operated from 108 Avon Terrace, York.
Colin King held a real estate and business agent's licence that expired on or about 15 April 2014 (AF).
At all material times until 15 April 2014, Colin King was the licensed director of The King & I and the person in bona fide control of the Business (AF). His evidence was that he worked at the office 40 hours per week (Exhibit A page 1619).
At all material times, Paul King was employed by the Business (AF), that is, The King & I.
The occupants of 108 Avon Terrace York
The King & I had three people who usually worked in the office: Colin King, Paul King and Stacey Begley. Stacey Begley worked in administration. There were also two parttime sales representatives who attended the office from time to time, neither of whom played a part in the relevant transactions (Exhibit A pages 21542157).
Michael King operated a separate business under the name Miscan (AF).
Michael King operated Miscan from the same building at 108 Avon Terrace, York from which The King & I operated and Colin King and Paul King worked (Exhibit Q paragraph 14, Exhibit U paragraph 12). Darren King used that office occasionally.
There is some dispute as the period during which Michael King actually used the office at 108 Avon Terrace. Colin King stated that Michael King was 'physically there' for part of 2007 and part of 2008. He said that Michael King might have popped in and out in 2008 and 2009 (Exhibit A page 2226). During 2009, Colin King described Mr Palumbo as 'just using the computer for Michael or sending stuff to Michael … he might have been responding to stuff for Michael or whatever' (Exhibit A pages 22462247).
Colin King observed Mr Palumbo visiting Michael King at the office. It remained the business address of Miscan throughout the relevant period. Officers of the Commissioner executed a search warrant at that office.
Colin King stated that Paul King often emailed Michael King a title or a fax. Paul King 'just about drove himself crazy' (Exhibit A pages 22302231).
The King & I and Mr Wong's business relationship
A large part of the Business involved being engaged to sell rural land. This land was often sold to overseas investors, particularly from Malaysia (AF).
The King & I and Colin King had an ongoing business relationship with Mr Wong who represented persons located overseas, particularly Malaysians, who were interested in purchasing rural land in Western Australia (AF).
Mr Wong first had business dealing with Colin King and The King & I in 2007 or 2008 (Exhibit Q paragraphs 5-11; Exhibit A page 2199).
After Mr Wong's first purchase involving The King & I, Colin King introduced him to his son Michael King. Thereafter, Mr Wong dealt principally with Michael King, although over the years he has dealt with all three of Colin King's sons, Michael, Paul and Darren. Mr Wong believed that Michael King was a real estate agent (Exhibit Q paragraphs 5-11).
The Wong Syndicates represented by Mr Wong had been involved in a lot of land purchases through The King & I, particularly around the Geraldton area, prior to the transactions in issue (Exhibit Q paragraphs 1220).
Mr Wong facilitated the purchase of such lands by setting up a company of which he and the overseas investors were directors. This company would be used to purchase property in Western Australia (AF). Mr Wong had set up many companies for different land purchases (Exhibit Q paragraph 21). On all occasions, Mr Wong acted for the Wong Syndicates.
It is more probable that the course of dealing between The King & I and Colin King, Paul King and Michael King must have instilled confidence in each of them that the Wong Syndicates were a reliable source of investment funds and that he had buyers who were interested in the purchase of rural land.
It is also apparent from the evidence that follows that although the respondents were never formally appointed buyers' agents for the Wong Syndicates, The King & I, through Colin King or Paul King, advised Mr Wong of the existence of suitable properties.
Property 1 Lot 5 Henry Road, Greenough
In 2008, the Royces owned Lot 5 Henry Road, Greenough (Property 1) (AF).
Mr Royce had listed the property with Landmark Realty in July 2006 for $1,500,000 (Exhibit F paragraph 6).
Mr Royce was approached by The King & I who offered to locate a buyer for Property 1 (AF). Mr Royce was approached in March 2008. He was unsure which of the Kings approached him but it is common ground that it was Colin King (Exhibit F paragraphs 1112).
Colin King approached Mr Royce because the Wong Syndicates already owned land in the area. In the course of his interview, Colin King stated that the 'Malaysians were interested in everything along the flats and they'd already bought along the flat' (Exhibit A page 2262). Lot 5 was in the area of the flats. Lot 6, which is the next purchase dealt with, was also in the area of the flats.
In his interview, Colin King stated that the Royce land was being bought by the Malaysians as long term investors. He stated that he believed that the company was a vehicle to buy the land. He went on to say:
… the properties that was already owned along there by this group had no sea front, had no sea views whatever, so I obviously thought this was a chance to show them, when Royce rang me, to buy something that was going to have - give them some sea views. Cos they were looking for long term development, that was my intention. That was my thought of their intention when they bought it, so they speculate, they buy and - and then obviously they become clients eventually if that's what they decide and change their mind to do.
(Exhibit A pages 22562257)
Later on in the interview referring to the Royce property and the onsale, Colin King stated 'there was an incentive for them (the Malaysians) to pay that price because they were joining up two other properties, to join the balance of their land' (Exhibit A pages 22582259).
The Tribunal finds that Colin King believed, correctly, that the Wong Syndicates did have an incentive to, and an interest in, purchasing the Royce land.
Colin King showed Property 1 to Mr Wong (AF). Mr Wong gave evidence that Michael King also showed him the property (Exhibit Q paragraph 40). The obvious purpose of Colin King and Michael King in showing Mr Wong the property was to interest him in causing the Wong Syndicates to buy it. The Tribunal finds that Colin King and Michael King were successful in creating an interest by the Wong Syndicates in the purchase of the Royce property. Mr Wong in fact recommended that his Malaysian investors purchase the land (Exhibit Q paragraph 42). The Tribunal finds that Colin King believed that he had a buyer, the Wong Syndicates, for the Royce land.
On 24 January 2008, International Land Guru Pty Ltd (ILG) was incorporated (AF). ILG was a company established by Mr Palumbo but controlled by Michael King. Colin King knew that Mr Palumbo was the sole director of ILG, at least because he caused a search of ILG to be conducted (Exhibit A pages 23002301). In his interview, Colin King stated that he repeatedly asked Michael King if he was involved with ILG (Exhibit A pages 23532354).
On 12 March 2008, prior to Property 1 being put on the market, $17,000.24 was deposited into Perth Settlement Lawyers trust account by Lau and others (Lau) with respect to the purchase of Property 1 (AF). Lau was a Wong Syndicate although not incorporated.
In the course of his interview, Colin King stated that Mr Wong said to him that he was 'not a bit interested in the land'. He claimed that Mr Wong was not interested in Lot 5 because Lot 6 (Mr Hammarquist's land, immediately adjacent) was not available. Colin King stated that Mr Wong became interested again when Lot 6 became available. However, Lot 6 did not become available until June, some three months later and well after the on-sale of Lot 5 occurred (Exhibit A page 2291, pages 22962297 and pages 2307-2309). The Tribunal finds that the issue of Lot 6 the Hammarquist land - was clearly fabricated by Colin King in an effort to explain his conduct in failing to inform the Royces of another potential buyer. The Tribunal finds that the more probable inference is that Colin King fabricated that explanation because he wished to conceal his knowledge of the intended on-sale.
Mr Wong's evidence was that he did not tell Michael King or Colin King that he was not interested in buying this property (T:34; 15.06.16). The Tribunal accepts this evidence from Mr Wong for the following reasons. Colin King claimed that he contacted Mr Wong once ILG had listed the property with The King & I and Mr Wong was again interested and wanted to purchase the land (Exhibit A page 2270). If Mr Wong had said he was not interested in the land there would have been no reason for Colin King to again contact Mr Wong once the land was listed for re-sale with The King & I. Alternatively, if Colin King thought that he could still get the Wong Syndicates interested in purchasing the land after the sale to ILG, there would have been no reason for him not to:
a)attempt to get them interested again before Mr Royce sold the land; and
b)advise Mr Royce to hold off on selling to ILG whilst he attempted to persuade Mr Wong to cause the Wong Syndicates to purchase the land.
In the course of his interview, Colin King offered no plausible explanation as to why the Wong Syndicates would lose interest in Lot 5. Colin King's various explanations were simply not credible. The Tribunal finds that the Wong Syndicates did not lose interest in Lot 5 and that they continued to have an interest in purchasing the land. The Tribunal finds that Colin King advanced the explanation that the Wong Syndicates were no longer interested in purchasing the Royce land in order to explain away why he did not inform the Royces of a potential offer.
Colin King's initial explanation was that he informed Mr Palumbo of the availability of the Royce land (Exhibit A page 2262, see also page 2265). Later, he suggested that Michael King might have told Mr Palumbo (Exhibit A page 2264).
Colin King did not know if Mr Palumbo had bought other blocks of land in the area of the Royces' property (Exhibit A page 2262). Colin King accepted that Mr Palumbo was not buying for a 20 year plan (Exhibit A page 2266). In the course of his interview, Colin King stated that 'this guy [Mark Palumbo] bought it to make money on it and these people [the Wong Syndicates] bought it because they wanted long term' (Exhibit A page 2266).
The Tribunal finds that Colin King did not inform the Royces that there were two potential offers for their property. The Tribunal finds that the most probable inference is that Colin King failed to do so because he did not want the Royces to be aware of the interest of a Wong Syndicate in their property (Exhibit A page 1140).
Throughout the course of the sale, Mr Royce dealt with Colin King, Michael King and Darren King (Exhibit F paragraph 12). Mr Royce was aware that 'the Kings' were working for overseas investors (Exhibit F paragraph 14). Colin King admitted that he probably told Mr Royce that he was acting for overseas investors (Exhibit A page 2279). Mr Royce stated that he was aware that 'the property was going to be on-sold because the Kings were working for a third party' (Exhibit F paragraph 31). Mr Royce believed that 'the Kings were working for a third party' (Exhibit G paragraph 24). In his oral evidence, Mr Royce explained that the reference to a 'third party' was a reference to the overseas investors. Mr Royce did not realise that there would be, or was, a back-to-back sale of the property (T:22-23; 14.06.16).
It is clear from Mr Royce's evidence that he was not using 'third party' as a legal term but that he was referring to the overseas investors that the respondents represented. Mr Royce's evidence was that 'if he was aware that the Kings were receiving $1,8000,000 for the property', while he 'would have expected them to make some money', he 'would have wanted to receive somewhere between' $1,500,000 and $1,600,000 (Exhibit F paragraph 37).
The only possible overseas investors interested were the Wong Syndicates. Mr Palumbo, according to Colin King, was financed by local York farmers - clearly not overseas investors. Clearly, Colin King did not inform the Royces that the sale was to a Palumbo company which was not an overseas investor.
On or around 17 March 2008, Colin King presented an offer from ILG to the Royces to purchase Property 1 for an unknown amount. This offer was rejected (AF).
The Royces counter-offered with a purchase price of $1,250,000 which was accepted (AF).
On 18 March 2008, the Royces appointed The King & I as exclusive agents to sell Property 1 (AF) (Exhibit A page 1429). Colin King signed the selling agency agreement on behalf of The King & I (Exhibit A page 2254).
On 19 March 2008, the Royces and ILG entered into a contract for the sale of Property 1 for $1,250,000 (AF) (Exhibit A page 1131). Michael King's signature appeared on the contract as a witness to Mr Palumbo's signature (Exhibit A pages 2559 and 2255).
The Tribunal finds that at the time the contract was entered into on 19 March 2008, Colin King was aware that the Wong Syndicates were interested in buying the Royce land. Colin King was aware that the Wong Syndicates were long term investors. He was aware of an association between Michael King and Mr Palumbo. He was aware that Mr Palumbo was a speculative purchaser. The Tribunal finds that Colin King informed Mr Palumbo or Michael King of the availability of the Royce land.
None of 'the Kings' told Mr Royce that any of them or their family members had any links to the purchasers - ILG (Exhibit F paragraph 25).
On 20 March 2008, ILG appointed The King & I as its agent to sell Property 1 (AF) (Exhibit A page 1137). The selling agency agreement was signed on behalf of The King & I by Colin King (Exhibit A page 1443).
On 28 March 2008 Michael King sent a fax thanking an unidentified party for:
… your instructions relating to the individual buyer names and confirmation you will be depositing $185,000 AUD into Perth Settlement Lawyers Trust Account tomorrow, Please use reference Lot 5 Geraldton on the deposit slip or fax me all deposit slips on +618 96412277 att: Mike King
(Exhibit A page 1440)
The fax number was that for The King & I (Exhibit A page 1411). This instruction was given nine days after the first sale.
On 31 March 2008, ILG and Lau entered into a contract for the sale of Property 1 for $1,845,375 (AF), (Exhibit A pages 1140-1142). The seller's signature was witnessed by Colin King (Exhibit A page 1141). The onsale occurred 12 days after the first sale.
In his interview, Colin King states that he sold the Royces' property to a Wong Syndicate (Exhibit A page 2253). He also stated that:
[T]he whole intention from these people buying, they were buying long term not short term. Difference is they came up with (indistinct) quick sale and they sold it and that there is a price we were able to get for it.
(Exhibit A page 2258).
On 21 May 2008, both sales of Property 1 were settled simultaneously (AF).
The purchase price paid by ILG was financed by the on-sale to Lau (AF).
The profit generated from the second sale, being $595,375, was divided between Michael King, a company controlled by Mr Wong and a company controlled by Michael King (AF).
The King & I, by Colin King and/or Paul King, acted for the Royces as sellers and for ILG as sellers (AF).
The King & I received commission from the Royces of $37,500. No commission was paid by ILG (AF).
The silence of The King & I and Colin King towards the Royces concerning another possible purchaser supports the Tribunal finding that the more probable inference is that they knew of the onsale at the time of the first transaction. This is because if they did not, it is highly likely that they would have informed Mr Royce that a second buyer had emerged and informed Mr Wong that he was at risk of being beaten to the purchase property by another buyer.
This inference is also supported by the fact that there is no evidence of the existence or involvement of the second potential buyer and ultimate buyer ILG before the time that it made the offer to Mr Royce. Mr Palumbo, that is ILG, never viewed the property. In contrast, Mr Wong was shown the property by both Michael King and Colin King.
All of the above evidence leads to the more probable inference that at the time of contacting Mr Royce, and throughout the dealing with him, both The King & I and Colin King were aware of the on-sale being perpetrated by Michael King, through Mr Palumbo, and acted in such a way as to facilitate the on-sale. The onsale was not completely coincidental.
Having found that Colin King and, through him, The King & I were aware of the on-sale of Property 1, it provides a basis for drawing an inference that in each of the subsequent transactions it was more probable that the King & I and Colin King were similarly aware of what was occurring. The Tribunal finds accordingly.
The respondents submitted that as this was the first transaction no inference can be drawn from any prior conduct. Given the evidence, there is no need to rely on any previous conduct.
Property 2 Lot 6 Henry Road, Greenough
In 2008, the Hammarquists owned Lot 6 Henry Road, Greenough (Property 2) (AF).
On 15 June 2008, the Hammarquists appointed another real estate agent to sell Property 2 at a listing price of $1,150,000(AF). The property was listed with Landmark Geraldton represented by John Drummond (Exhibit G, paragraphs 612).
Colin King offered Property 2 to a member of Wong's family (AF).
On 2 July 2008, WA Pastoral Company Pty Ltd (WAPC) was incorporated (AF). Mr Palumbo was again the sole director and shareholder. Colin King stated in his evidence that he did a company search (Exhibit A page 2321). In his interview, Colin King stated that he repeatedly asked Michael King if he was involved with WAPC (Exhibit A pages 23532354).
In late June 2008, Mr Hammarquist was contacted by a person from The King & I (Exhibit G paragraphs 17-20). He can no longer recall whether it was Paul King or Colin King (T:27-28; 14.06.16). The respondents state that it was Colin King who contacted Mr Hammarquist (respondents' SIFC paragraph 25). Mr Hammarquist was told by the caller that he was working for an overseas interest and represented a potential buyer at $1,125,000. Mr Hammarquist referred him to Mr Drummond (Exhibit G paragraphs 21 and 22). The 'overseas interest' can only be the Wong Syndicates. As mentioned above, Mr Palumbo was not associated with overseas interests.
Colin King admitted that the Malaysians were interested in Lot 6 because it enabled them to join parcels of land. In his interview Colin King stated that he was 'pretty sure that he offered it to the Malaysian buyers because it did join them before any of this happened'. He claimed that he could not get them interested at all at the lesser amount for which it was sold to WAPC (Exhibit A pages 23292330 and 2332). This claim does not sit well with the fact that the ultimate purchaser of the land was by the Wong Syndicates. In his interview, Colin King was not able to offer any explanation for his claim of an initial lack of interest by the Wong Syndicates (Exhibit A page 2332). The Tribunal finds that the more probable inference is that the Wong Syndicates continued to be interested but Colin King intentionally did not tell the Hammarquists of an alternative purchaser so that an onsale could be effected just like with Property 1.
Around 4 July 2008, Paul King contacted Mr Drummond and negotiated a conjunctional selling agency agreement. The King & I would receive 50% of the commission for selling Property 2 (AF).
On 7 July 2008, the Hammarquists and WAPC entered into a contract for the sale of Property 2 for $1,125,000 (AF) (Exhibit A pages 2590-2592). Paul King witnessed Mr Palumbo's signature on the offer and acceptance (Exhibit A page 2320).
On 21 July 2008, Colin King wrote to Landmark Realty requesting a variation of the contract to extend the time for inspection (Exhibit A page 1449). Two variations to this contract were negotiated that extended the settlement period (AF). On 21 July 2008, a variation of the contract was entered into (Exhibit A page 2596). Colin King witnessed Mr Palumbo's signature on the variation (Exhibit A page 2322). On 7 August 2008, a second variation was executed (Exhibit A page 2597). Michael King witnessed Mr Palumbo's signature (Exhibit A page 2323). The second variation increased the deposit to $112,500 and released that deposit to the Hammarquists.
The respondents submit that no adverse inference can be drawn against the respondents based on the early release of the deposit. They submit that this points to the risk being taken by the Palumbo company as purchaser. The Tribunal does not accept this submission. The Tribunal finds that the more probable inference to be drawn from the early release of the deposit is that Michael King was confident that the on-sale would proceed despite some delays in assembling the investors. Why else would the deposit be released early?
The Tribunal finds that WAPC must have been very confident of an onsale if it was prepared to release a deposit of $112,500 to the seller.
On 9 August 2008, WAPC engaged The King & I to sell Property 2 (AF) (Exhibit A page 2600). Colin King witnessed Mr Palumbo's signature on the selling agency agreement between WAPC and The King & I (Exhibit A pages 2323 and 2324).
A contract to sell Property 2 to Land Border International Pty Ltd (LBI), of which Mr Wong was a director, for $2,212,500 was signed between WAPC and LBI on 9 August 2008 (AF) (Exhibit A pages 25272531). Paul King was one of two witnesses (along with Michael King) of Mr Palumbo's signature on the on-sale offer and acceptance document (Exhibit A page 2327). LBI was a company in the Wong Syndicate.
The price differential between the two sales was $1,087,500.
The time period between the two sales was two months.
The commission paid to The King & I was $16,500 or 0.007%. Colin King was unable to explain why the commission was so low (Exhibit A pages 2324-2326).
Colin King denied any involvement in the sale of Lot 6 (Exhibit A pages 2328 and 2329). Yet, earlier on in the interview, he had asserted that the reason why the Malaysians became interested in Lot 5 again was because Lot 6 was available.
On 15 December 2008, both sales of Property 2 were settled simultaneously (AF).
The King & I, by Colin King and/or Paul King, acted as agent for the Hammarquists as sellers and WAPC as seller (AF).
The King & I received $16,500 commission from WAPC and $30,937.50 commission from the Hammarquists (AF).
If Mr Hammarquist had known the second sale price was in excess of $2,000,000 he would never have agreed to a $1,125.000 price. All he knew of the buyers at the time was that they were overseas investors (Exhibit G paragraphs 59 and 60). Clearly, neither Colin King nor Paul King informed the Hammarquists that the sale was to a Palumbo company which was not an overseas investor.
Paul King was involved in this transaction. The silence of the respondents towards the Hammarquists supports the Tribunal finding that the more probable inference is that they knew of the intended onsale at the time of the first transaction. This is because if they did not, it is highly likely that they would have informed the Hammarquists that a second buyer had emerged and informed Mr Wong that the Wong Syndicate was at risk of being beaten to the purchase property by another buyer.
This inference is also supported by the fact that there is no evidence of the existence or involvement of the second potential buyer and ultimate buyer WAPC before the time that it made the offer to Mr Hammarquist. Mr Palumbo, that is WAPC, never viewed the property.
All of the above evidence leads to the more probable inference that at the time of contacting Mr Hammarquist, and throughout the dealing with him, both Paul King and Colin King were aware of the intended on-sale being perpetrated by Michael King through Mr Palumbo, and acted in such a way as to facilitate the on-sale. The onsale was not completely coincidental.
Having found that Colin King, and through him The King & I and Paul King were aware of the on-sale in the sale of the property, it provides a basis for the Tribunal drawing an inference that in each of the subsequent transactions it was more probable that the King & I and Paul King and Colin King were similarly aware of what was occurring. The Tribunal draws that inference and makes such relevant findings.
Property 3 Lot 10 Brand Highway, South Greenough
In 2008, Le and others (Le) owned Lot 10 Brand Highway, South Greenough (Property 3) (AF).
No evidence was led by the Commissioner from Le.
On 20 January 2008, Le appointed another agent to sell Property 3 for a listing price of $1,900,000 (AF). The other agent was Barber Real Estate represented by Murray Wellington (Exhibit J paragraphs 5-11).
On 9 March 2009, Mr Wellington was approached by Paul King who negotiated a conjunctional selling arrangement for The King & I to receive 1% of the commission for the sale of Property 3 (AF) (T:41; 14.06.16).
On 8 April 2009, Le and WAPC entered into a contract for the sale of Property 3 for $1,340,000 (AF) (Exhibit A page 2541). Paul King witnessed Mr Palumbo's signature on the offer and acceptance for the first sale (Exhibit A pages 23622363).
On 19 May 2009, there was a variation of the contract (Exhibit A page 2543). In his interview, Colin King's explanation was that 'the Malaysians do it a tremendous amount'. It was pointed out to Colin King that the Malaysians were not involved in this sale (Exhibit A pages 23702371).
On 1 June 2009, WAPC appointed The King & I to sell Property 3 (AF) (Exhibit A page 2545). Paul King witnessed Mr Palumbo's signature on the selling agency agreement between WAPC and The King & I (Exhibit A page 2366).
On 8 June 2009, WAPC and Vintage Red Pty Ltd (Vintage), of which Mr Wong was a director, entered into a contract for the sale of Property 3 for $1,866,250 (AF) (Exhibit A page 2548). Vintage was a Wong Syndicate.
There was a two month gap between the first and second sales.
The selling fee of $20,240 was 0.01% of the sale price of the property. Colin King's explanation was that he knew that The King & I had sold it twice and that might have been taken into consideration (Exhibit A page 2370).
On 10 August 2009, both sales of Property 3 were settled simultaneously (AF).
The profit generated from the second sale, being $452,790, was divided between Michael King and a company controlled by Mr Wong (AF).
The King & I, by Colin King and/or Paul King, acted as agent for both Le as seller and WAPC as seller (AF).
Although Colin King stated in his interview that he was not involved in this sale on a day-to-day basis (Exhibit A page 2372), he knew that the deal would have happened based on his evidence in his interview as to his involvement in the agency set out below.
Mr Wellington was unaware of the on-sale (Wellington paragraphs 6971).
Based on the Tribunal's previous findings on the knowledge of Colin King, and therefore The King & I and Paul King, the Tribunal finds that the respondents were aware of the onsale. This is because if they did not, it is highly likely that they would have informed Le that a second buyer had emerged and informed Mr Wong that the Wong Syndicate was at risk of being beaten to the purchase property by another buyer.
This inference is also supported by the fact that there is no evidence of the existence or involvement of the second potential buyer and ultimate buyer WAPC before the time that it made the offer to Le. Mr Palumbo, that is WAPC, never viewed the property.
All of the above evidence leads to the Tribunal finding that the more probable inference is that at the time of contacting Le, and throughout the dealing with him, both The King & I and Colin King were aware of the on-sale being perpetrated by Michael King, through Mr Palumbo, and acted in such a way as to facilitate the on-sale. The onsale was not completely coincidental.
Property 4 Lot 733 Mundijong Road, Baldivis
In 2009, Mr Franck Teissier owned Lot 733 Mundijong Road, Baldivis (Property 4) (AF).
Mr Teissier appointed two agents, Mr Longwood and Mr Robertson, to sell Property 4 by tender (AF). Mr Longwood represented Ron Farris Real Estate and Mr Robertson represented Acton Dalkeith (Exhibit O paragraphs 4148).
In his interview, Colin King stated that at this time he had Malaysian buyers looking for properties that had subdivision potential. Colin King knew that this property had subdivision potential (Exhibit A pages 23942397).
On or around 6 August 2009, Mr Longwood was approached by Michael King who wanted information about properties for sale in the Baldivis area generally (AF).
On or around 7 August 2009, Mr Robertson received a call from Colin King who said he had a potential buyer (AF). Michael King made a general inquiry with Mr Longwood about the property (Exhibit P paragraphs 3840). Initial negotiations occurred with Michael King (Exhibit P paragraphs 47-60 and 73-80). He subsequently dealt with Michael King and Paul King (Exhibit P paragraphs 82-103).
Mr Robertson and Colin King negotiated a conjunctional arrangement whereby The King & I would receive 1% of the commission for selling Property 4.
On 3 October 2008, Kwinana Ranges Pty Ltd (KR) was incorporated (AF). In his interview, Colin King claimed that he conducted a company search to ascertain that Mr Palumbo was a director. There was no record of such a search on the file (Exhibit A page 2434)
On 18 August 2009, Mr Teissier and KR entered into a contract to sell Property 4 for $3,250,000 (AF) (Exhibit A page 412). Mr Palumbo's signature was witnessed by Paul King.
One of the conditions of sale was that the 'For Sale' sign on the property was to be taken down. Mr Teissier presumed that the buyer included this condition (Exhibit O paragraph 173, Exhibit A page 413). Around 22 August 2009, Mr Tessier visited the property and saw that the 'For Sale' sign had been taken down, as had the 'For Sale' signs on two of his neighbouring properties that were for sale (Exhibit O paragraph 180). Another condition was that the deposit of $119,000 was to be released to Mr Teissier within 10 days of payment.
On 28 August 2009, KR appointed The King & I to sell Property 4 (AF) (Exhibit A page 2517). Paul King witnessed Mr Palumbo's signature on the selling agency agreement between KR and The King & I (Exhibit A, pages 23942395).
On 2 September 2009, KR and Evernex Holdings Pty Ltd (Evernex Holdings), of which Mr Wong was a director, entered into a contract for the sale of Property 4 for $5,040,000 (AF) (Exhibit A page 2520). Evernex Holdings was a company in the Wong Syndicates.
There was about two weeks between the two sales.
On this occasion the commission was 3%. In his interview, Colin King stated that this was The King & I's normal rate of commission (Exhibit A page 2407).
On 15 December 2009, both sales of Property 4 were settled simultaneously (AF).
The price differential between the two sales was $1,790,000.
The Tribunal finds that during the course of his interview Colin King gave a confused and rambling attempt to explain that the increase in price was attributable to subdivision approval (Exhibit A pages 2410-2418). That attempt was not successful.
The King & I received $151,000 commission from KR (AF).
Although a conjunctional arrangement was negotiated, no commission was received from Mr Teissier (AF).
Mr Tessier knew nothing about Evernex Holdings, the Wong Syndicate or the second sale (Exhibit O paragraph 241).
Based on the Tribunal's previous findings on the knowledge of the respondents' involvement in the transactions, the Tribunal finds that the respondents were aware of the intended onsale.
Property 5 Lot 15 Mt Horner Road, West Bookara
In 2008, Mr Martin Lundy owned Lot 15 Mt Horner Road, West Bookara (Property 5) (AF).
On 29 August 2008, Mr Lundy appointed another agent to sell Property 5 (AF). The agent was B.J. Clarke & Co represented by Ben Clarke (Exhibit K paragraph 7).
On 4 September 2009, Z Farms Pty Ltd (Z Farms) was incorporated (AF), with Mr Palumbo as director.
Around 10 or 11 November 2009, Mr Clarke was approached with a possible seller although no conjunctional arrangement was negotiated (AF). Mr Clarke was approached by a telephone call from Darren King who indicated he had a buyer (Exhibit L paragraphs 1718). The process of negotiating the sales and exchanging documents occurred through Darren King (Exhibit L paragraphs 19-36).
The King & I fax number, 08 9641 2277, was used for sending documents to Mr Clarke (Exhibit A page 2448). Colin King claimed that The King & I had no involvement in the sale at the same time as he said that Paul King knew the property (Exhibit A page 2451).
On 15 January 2010, Mr Lundy and Z Farms entered into a contract of sale for Property 5 for $1,150,000 (AF).
On 2 February 2010, Z Farms appointed The King & I to sell Property 5 (AF) (Exhibit A page 2609). Paul King witnessed Mr Palumbo's signature on the selling agreement between Z Farms Pty Ltd and The King & I (Exhibit A pages 24402441).
The King & I only acted as selling agent for the onsale of Property 5 and was paid a commission for the onsale.
On 3 February 2010, Z Farms and Dongara International Pty Ltd (Dongara), of which Mr Wong was a director, entered into a contract of sale for Property 5 for $2,380,000 (AF) (Exhibit A page 2612). Colin King witnessed Mr Palumbo's signature on the offer and acceptance for the on-sale (Exhibit A page 24422443 and page 2613). Dongara was a company in the Wong Syndicate.
There was a two week gap between the two sales.
The price differential between the sales was $1,230,000.
On 6 April 2010, both sales were settled simultaneously (AF).
The profit generated by the second sale was distributed largely to Michael King and two companies of which Palumbo was a director (AF).
The King & I, by the Colin King and/or Paul King, acted as agent for Z Farms as seller (AF).
The King & I received $52,360 commission from Z Farms in respect of the onsale (AF).
At the time of settlement, Mr Lundy was not aware of any on-sale or further sale of the property. If he had known a buyer was being organised to purchase the property and settle on the same day for $2,380,000, he would never have accepted the offer from Z Farms (Exhibit K paragraphs 3132).
Based on the Tribunal's previous findings on the knowledge of the respondents' involvement in the transactions, the Tribunal finds that the respondents were aware of the intended onsale.
Property 6 Lot 20 Yarra Road, Bowes
In 2010, OE (LT) Pty Ltd (OE) owned Lot 20 Yarra Road, Bowes (Property 6) (AF). The four persons who 'owned' OE were Richard Simpson, Blane Kidd, Adam Lenegan and Lesley Tenger (Exhibit M paragraph 11).
On 9 August 2010, OE appointed another agent to sell Property 6 (AF). The agent was the Professionals Real Estate Geraldton represented by Chris Turner (Exhibit M paragraphs 2021).
The other agent approached Paul King to see if he had any clients who would be interested in buying Property 6 (AF). Mr Turner approached Paul King as part of marketing the property (Exhibit N paragraphs 14-16).
In the course of his interview, Colin King described the property as typical of the land that Mr Wong wanted to buy (Exhibit A pages 24702471).
On 7 September 2019, Mr Turner received an email from Paul King expressing an interest (Exhibit N paragraph 17, Exhibit A page 762). Paul King informed Mr Turner, or his sales representative Michael Warren, that he was a buyer's agent (Exhibit N paragraphs 18, 19 and 28).
On 8 September 2010, Colin King and Paul King viewed Property 6 (AF) (Exhibit H paragraphs 11-14). In the course of his interview, Colin King stated that Mr Wong did not make up his mind on the day he inspected it (Exhibit A page 2474).
Shortly thereafter, Paul King viewed Property 6 in company with a member of Mr Wong's family (AF). Paul King later brought another member of Mr Wong's family to view the property. One of Paul King's brothers also attended. During a brief conversation with Paul King and his brother Mr Warren was told that 'we are meeting our buyer here. The buyer would be on-selling the property and we represent the buyer'. Mr Warren was advised that they did not want a conjunctional sale or a referral as they 'represented the buyer' (Exhibit H paragraphs 21-28).
Colin King also stated that he thought that the price being sought was a bit low as a means of explaining why he did not seek a conjunctional sale. He was unable to offer any plausible explanation as to why he did not therefore say to Mr Wong that it was a bargain. He then said that he probably did. Colin King was unable to explain why, when he had Malaysians whom he worked with on a regular basis and who were prepared to pay premium prices, he did not encourage them to buy. Later, Colin King said that he was convinced that Mr Wong was not going to buy the property (Exhibit A pages 2474-2481). The Tribunal does not accept that Colin King believed that Mr Wong was not going to buy the property. The Tribunal finds that the most probable inference is that Colin King saw an opportunity for an on-sale.
Fine
The Tribunal can impose a separate fine for each allegation. The Tribunal also has discretion to impose a global fine where there are multiple allegations. The maximum penalty for each allegation is $3,000. The Tribunal found that there was no evidence of Paul King's involvement in the first transaction but Paul was found to have committed 13 contraventions of the Code of Conduct in relation to the other five transactions. The Commissioner submitted that the total maximum fine is therefore $39,000.
Paul King submitted that the Tribunal's findings are all species of a single finding that Paul King was involved in an onsale scheme in relation to the properties.
Paul King submitted that a penalty:
… should only be applied to the conduct in respect to the underlying transactions that is found to be in breach of the Code [of Conduct]. … the conduct that Paul King engaged in which was in breach of multiple clauses of the Code [of Conduct] is the knowledge that he was found to have of the on-sale scheme. Paul King has not engaged in multiple acts of conduct in respect to the sale of [the] Properties … which would warrant individual consideration of sanctions in respect to the breaches of each of clauses 2, 5(2), 8(1) and 10(1) of the Code [of Conduct]. That is to be contrasted with a situation where duplicitous findings were made that there had been a breach of the Code in respect to the sale of a property and a further breach in respect to how commissions were to be paid.
On a proper interpretation of s 103(3) of the REBA Act, one penalty should be applied to Paul King's conduct in respect to the transactions involving Properties 2 and 3. Construed in this way, the maximum penalty should be $6,000, being $3,000 each for the conduct in respect of transactions involving Properties 1 and 2.
The Tribunal accepts the Commissioner's submissions that there are 13 separate breaches of the Code of Conduct. The maximum fine is therefore $39,000, that is 13 x $3,000.
However, in assessing what fine is appropriate, the Tribunal has taken into account the principles of totality and double jeopardy identified in Paul King's submissions (Real Estate and Business Agents Supervisory Board v Landa [2009] WASCA 191 at [15][18], McClure P, Newnes JA agreeing).
There were five separate properties and thus five separate transactions that Paul King's conduct related to. The Tribunal rejects Paul King's submissions that there was only 'one transaction' that is Paul King's involvement in the onsale scheme.
The Tribunal finds that the appropriate 'maximum' fine to consider is therefore $15,000, that is 5 x $3,000.
However, having regard to the long period of suspension imposed on Paul King and the impact as to his personal circumstances, a fine is not appropriate.
Costs
In Medical Board of Western Australia and Roberman [2005] WASAT 81 (S) at [30] (Roberman S), the Tribunal held that where a regulator successfully brings a complaint which justifies disciplinary action, there will usually be a strong case for the awarding of costs to that regulator.
Although the decision in Roberman S does not limit the discretion of the Tribunal in awarding costs, the public obligations of the Commissioner to prosecute agents who breach the Code of Conduct is an important factor to be considered.
The Tribunal has considered the Commissioner's schedule of costs and is satisfied that they are reasonable.
The Commissioner submits that the appropriate orders are that Colin King and Paul King pay 95% of the Commissioner's costs of the disciplinary proceedings and that there be no order for costs as regards The King & I Pty Ltd or in respect of the review proceedings.
The Commissioner submitted that he has been wholly successful in the disciplinary proceedings against Paul King and against Colin King in the review proceedings.
The Commissioner further submitted that whilst he was unsuccessful in the disciplinary proceedings against Colin King, he relied upon all of the same evidence in the review proceedings as he did in the disciplinary proceedings and therefore, even if the Commissioner had not continued with the disciplinary proceedings against Colin King, he would have run entirely the same case and it is highly likely that there would have been a similar joint hearing of the review application and the disciplinary proceedings against Paul King given the complete cross-over of issues and the joint defence of the respondents.
The Commissioner further submitted that although it may be technically appropriate to make the order for costs against Paul in the disciplinary proceedings and Colin King in the review proceedings, it would be artificial to make separate costs orders in each proceeding given the complete overlap of the evidence and issues and the joint defence of the respondents. It is simpler to make the order against Colin King in the disciplinary proceedings.
The Commissioner accepted that a small reduction in the costs awarded should be made in view of the Commissioner's lack of success on the jurisdictional argument. The argument occupied only a small amount of time at hearing of the matter (during counsel for the Commissioner's opening statement) and was otherwise dealt with in written submissions. Given the scope of the remainder of the case, a reduction of 5% is appropriate.
For the following reasons, the respondents submit that there ought to be no order as to costs. It is fair to say that there were mixed results in respect to the proceedings:
1)the primary actions against The King & I and Colin King were found to be incompetent under the REBA Act;
2)Colin King's review proceedings were unsuccessful;
3)orders were only made against Paul King in respect to the transactions involving Properties 26.
The respondents submitted that looking at the totality of the matter each party only achieved approximately half of what they were seeking in the matters before the Tribunal. If costs were to be ordered in respect to the matters which each party was successful in respect to, they would effectively cancel each other out.
If the Tribunal were to apportion costs, then the respondents say that the costs should be that the Commissioner pay 60% of their costs, with such amount to be assessed rather than fixed in an englobo amount as sought by the Commissioner. The partial success by a regulatory authority has been found to be a justification for awarding only part of that authority's costs: Commissioner for Consumer Protection and Samykannu Pty Ltd [2013] WASAT 129 (S) at [27].
Contrary to the position advanced by the Commissioner, the respondents also submitted that it would not be appropriate to make each of them jointly and severally responsible for the Commissioner's costs of the proceedings because each of the respondents had different complaints/matters that they were pursuing.
If costs were to be awarded in favour of the Commissioner, the respondents say that the costs order should not be by way of an indemnity by reference to the costs scale for proceedings in the Tribunal but in a set amount which reflects that the Commissioner has dedicated resources and funding to cover the costs of such regulatory action and that no external counsel was briefed. Awards of costs for a fixed amount were awarded in this way in Paridis at [38] in an amount of $3,000 and in Real Estate and Business Agents Supervisory Board and Carmello [2008] WASAT 115 in an amount of $1,000.
In determining the award of costs, the Tribunal adopts a practical broad brush approach. On that basis, the Commissioner was substantially successful.
The reality is that the disciplinary and review proceedings were heard together because the factual evidence was relevant to both proceedings. In Colin King's case, although he was successful in the disciplinary proceedings, he was unsuccessful in his application for a licence with the the net effect being that he lost the factual case. The Commissioner was successful against Paul King in five of the six onsales. No extra costs would have been incurred by The King & I Pty Ltd in addition to those of Colin King and Paul King.
The Tribunal is satisfied that the costs in the Commissioner's Schedule of Costs are reasonable.
Colin King and Paul King are to pay the Commissioner's Costs.
The Commissioner's costs in the disciplinary proceedings and the review proceedings are in effect, identical.
Colin King is to pay 5/6 of the Commissioner's costs in the review proceedings VR 125 of 2014.
Paul King is to pay 5/6 of the Commissioner's costs in the disciplinary proceedings VR 112 of 2014, fixed at $39,000.
Colin King and Paul King are jointly and severally liable for the Commissioner's costs of $39,000 in VR 112 of 2014 and VR 125 of 2014.
Orders
1.In relation to VR 112 of 2014, Paul Anthony King is disqualified for applying for a real estate sales representative's licence for 15 years.
2.Colin Maxwell King is to pay 5/6 of the Commissioner for Consumer Protection's costs in the review proceedings VR 125 of 2014.
3.Paul Anthony King is to pay 5/6 of the Commissioner for Consumer Protection's costs in the disciplinary proceedings VR 112 of 2014, fixed at $39,000.
4.Colin Maxwell King and Paul Anthony King are jointly and severally liable for the Commissioner for Consumer Protection's costs of $39,000 in VR 112 of 2014 and VR 125 of 2014.
I certify that this and the preceding [97] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE J C CURTHOYS, PRESIDENT
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