| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : VOCATIONAL REGULATION ACT : REAL ESTATE AND BUSINESS AGENTS ACT 1978 (WA) CITATION : CAREY and COMMISSIONER FOR CONSUMER PROTECTION [2012] WASAT 237 MEMBER : JUDGE D R PARRY (DEPUTY PRESIDENT) MR J JORDAN (MEMBER)
MR G POTTER (SENIOR SESSIONAL MEMBER)
HEARD : 31 JULY 2012 FURTHER DOCUMENTS AND SUBMISSIONS FILED ON 7 AUGUST 2012, 24 AUGUST 2012, 27 AUGUST 2012 AND 20 SEPTEMBER 2012 DELIVERED : 5 DECEMBER 2012 FILE NO/S : VR 63 of 2012 BETWEEN : NORMAN PHILLIP CAREY Applicant
AND
COMMISSIONER FOR CONSUMER PROTECTION
Respondent
Catchwords: Vocational regulation Real estate agent Application for triennial certificate Whether applicant is no longer of good character and repute and a fit and proper person to hold a real estate agent's licence Honesty Adverse findings about applicant's evidence in court and tribunal proceedings Whether applicant no longer understands fully the duties and obligations imposed on agents
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Legislation: Fair Trading Act 1987 (WA), s 12(2)(b), s 81(1), s 82(2)
Real Estate and Business Agents Act 1978 (WA), s 27(1)(b), s 27(1)(c), s 27(1)(d), s 31, s 47(1), s 102(1), s 103(1)
State Administrative Tribunal Act 2004 (WA), s 27(1), s 27(2), s 60(2), s 87(2) Result: Triennial certificate granted subject to conditions
Summary of Tribunal's decision: The Commissioner for Consumer Protection refused to renew Mr Norman Carey's triennial certificate as a real estate agent because the Commissioner was not satisfied that Mr Carey is a person of good character and repute and a fit and proper person to hold a real estate agent's licence, and that he understands fully the duties and obligations imposed on agents. Mr Carey sought review by the Tribunal.
The Tribunal determined that it was not satisfied that Mr Carey, who had been a real estate agent for 32 years, was no longer a person of good character and repute and a fit and proper person to hold a real estate agent's licence or that he no longer understands fully the duties and obligations imposed on agents. In particular, the Tribunal was not satisfied on the basis of adverse findings in relation to Mr Carey in previous court and tribunal proceedings that he is a dishonest person or that his conduct and character are such that he is no longer suitable to be licensed as an agent.
The Tribunal determined that a triennial certificate should be granted to Mr Carey subject to conditions.
Category: B
Representation: Counsel:
Applicant : Mr M de Kerloy
Respondent : Mr GD Cobby with Ms K King
Solicitors:
Applicant : Mony De Kerloy
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Respondent : Department of Commerce
Case(s) referred to in decision(s):
Bernadt and Medical Board of Australia [2012] WASAT 185
Carey and Real Estate and Business Agents Supervisory Board [2008] WASAT 304
Carey v Commissioner for Consumer Protection [2012] WASC 8
Commissioner for Consumer Protection v Westpoint Realty & Ors (unreported, Magistrate's Court of Western Australia, Malone M, 11 February 2011)
Hughes and Vale Pty Ltd v New South Wales [No 2] [1955] HCA 28; (1955) 93 CLR 127
Real Estate and Business Agents Supervisory Board v Carey [2010] WASCA 109
Real Estate and Business Agents Supervisory Board v LJW [2011] WASCA 35
Stephenson and The Legal Practice Board [2007] WASAT 259
Tavelli v Johnson (unreported, WASC, Library No 960693, 25 November 1996)
Warwick Entertainment Centre Pty Ltd (Receivers and Managers Appointed) atf The Warwick Entertainment Centre Unit Trust v Silkchime Pty Ltd (Receivers and Managers Appointed) atf The Silkchime Unit Trust [No 2] [2012] WASC 275
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REASONS FOR DECISION OF THE TRIBUNAL:
Introduction 1 Mr Norman Carey was a real estate agent from 1979 until 8 March 2012. On that day, the Commissioner for Consumer Protection refused Mr Carey's application under s 31 of the Real Estate and Business Agents Act 1978 (WA) (REBA Act) for renewal of his triennial certificate to enable him to carry on business as a real estate agent. The Commissioner refused to renew Mr Carey's triennial certificate because the Commissioner was not satisfied that Mr Carey is a person of good character and repute and a fit and proper person to hold a certificate of registration, and that he understands fully the duties and obligations imposed by the REBA Act and its associated Code of Conduct on persons involved in negotiating real estate transactions. 2 Mr Carey sought review by the Tribunal of the Commissioner's decision. The issues for determination on review are whether the Tribunal is satisfied that Mr Carey no longer: Legal framework and principles 3 Section 31(1) of the REBA Act requires the Commissioner to grant a triennial certificate to the holder of a real estate agent's licence conferring on the licensee the right to carry on business as an agent for a period of three years. Section 31(2) of the REBA Act enables a triennial certificate to be renewed for subsequent periods of three years. Section 31(3) of the REBA Act provides that that the Commissioner may refuse to renew a licensee's triennial certificate if the Commissioner is satisfied that a specified provision of the Act relevant to the licensee 'does not apply, or no longer applies, in relation to the licensee'. 4 The specified provisions referred to in s 31(3) of the REBA Act which are relevant to Mr Carey are s 27(1)(b), s 27(1)(c) and s 27(1)(d). These provisions are in the following terms: (Page 5)
(b) he is a person of good character and repute and a fit and proper person to hold a licence; and (c) he has sufficient material and financial resources available to him to enable him to comply with the requirements of this Act; and (d) he understands fully the duties and obligations imposed by this Act on agents. 5 In Hughes and Vale Pty Ltd v New South Wales [No 2] [1955] HCA 28; (1955) 93 CLR 127 Dixon CJ and McTiernan and Webb JJ said at 156 that: The expression 'fit and proper person' is of course familiar enough as traditional words when used with reference to offices and perhaps vocations. But their very purpose is to give the widest scope for judgment and indeed for rejection. 6 After setting out this quotation, Wheeler J observed in Tavelli v Johnson (unreported, WASC, Library No 960693, 25 November 1996) (Tavelli) at page 7 as follows: It must be stressed therefore that there can be no inflexible rules and no policy but that the discretion falls to be exercised anew in the circumstances of each application in light of the statutory framework. 7 In Real Estate and Business Agents Supervisory Board v LJW [2011] WASCA 35 (LJW), Newnes JA, with whom Pullin and Buss JJA agreed, discussed the meaning of the expressions 'fit and proper' and 'good character and repute' in s 47(1) of the REBA Act which sets out criteria for registration as a real estate and business sales representative. The principles discussed by Newnes JA are also applicable to the meaning of the same expressions in s 27(1)(b) of the REBA Act. His Honour held at [25] [30] of LJW as follows: It is, I think, plain that the criteria of 'fit and proper' and 'good character and repute' are not entirely discrete. While they are not identical, they overlap to a significant degree. The expression 'fit and proper' takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities: Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321; The Registrar, Real Estate and Business Agents Supervisory Board v Barnett (Unreported, WASCA, Library No 970426, 26 August 1997). When used in connection with an office or vocation it normally comprises the three characteristics of honesty, knowledge and ability in the conduct of that office or vocation: Hughes and Vale Pty Ltd v New South Wales [No 2] [1955] HCA 28; (Page 6)
(1955) 93 CLR 127, 156 - 157; Real Estate and Business Agents Supervisory Board v Barnett, (4 - 5). In Real Estate and Business Agents Supervisory Board v Barnett, Kennedy J (5), in considering the meaning of 'fit and proper' in s 47(1)(b) of the Act, referred to what was said by Walters J in Sobey v Commercial and Private Agents Board (1979) 22 SASR 70 as follows: The issue whether an appellant has shown himself to be 'a fit and proper person', within the meaning of s 16(1) of the [Commercial and Private Agents] Act, is not capable of being stated with any degree of precision. But for the purposes of the case under appeal, I think all I need to say is that, in my opinion, what is meant by that expression is that an applicant must show not only that he is possessed of a requisite knowledge of the duties and responsibilities devolving upon him as the holder of the particular licence under the Act, but also that he is possessed of 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 (cf Ex parte Meagher (1919) 19 SR (NSW) 433, at 442) (76). It is not the case, however, that the requirement of 'good character and repute' is subsumed by that of 'fit and proper'. The expression 'good character and repute' itself involves two discrete elements. While 'good character' does not have a precise meaning, it ordinarily refers to a person's moral qualities (whether known to others or not), as opposed to the estimation in which (fairly or unfairly) the person is held by others, that is, their repute: Irving v Minister for Immigration, Local Government and Ethnic Affairs (1996) 68 FCR 422, 431 - 432; Re T & Director of Youth & Community Services [1980] 1 NSWLR 392, 398 - 399. In Melbourne v The Queen [1999] HCA 32; (1999) 198 CLR 1, McHugh J put it as follows: In its strict sense, character refers to the inherent moral qualities of a person or what the New Zealand Law Reform Commission has called 'disposition - which is something more intrinsic to the individual in question.' It is to be contrasted with reputation, which refers to the public estimation or repute of a person, irrespective of the inherent moral qualities of that person (15). Or as Lord Denning succinctly stated it (albeit, in another context) in Plato Films v Speidel [1961] AC 1090: A man's character, it is sometimes said, is what he in fact is whereas his 'reputation' is what other people think he is (1137 1138). (original emphasis) (Page 7)
I would understand 'good character' and 'repute' respectively to be used in s 47(b)(1) of the Act in their ordinary sense. Thus, a person may be of good repute but, unbeknown to those who hold that opinion, have serious deficiencies in their moral character, and conversely, a person may not be of good repute because of a widespread but mistaken belief that (for instance) he or she is dishonest, but in fact be possessed of good moral qualities. And as Lee J pointed out in Irving v Minister for Immigration (432), a person who has been convicted of a serious crime and thereafter held in contempt in the community nonetheless may show that he or she has reformed and is of good character. It is, as Miles CJ observed in Clearihan v Registrar of Motor Vehicle Dealers in the Australian Capital Territory (1994) 122 ACTR 24, 31, a matter of common experience that a person's character is capable of development over time and that even people who have demonstrated evil character are capable of reform. His Honour pointed out that a whole philosophy of sentencing for serious criminal offences is built on that philosophy. 8 Tavelli was an appeal from a decision of the Court of Petty Sessions refusing to grant an inquiry agent's licence under the Inquiry Agents Licensing Act 1954 (WA) to the appellant. In Tavelli Wheeler J stated the following principles in relation to the significance of criminal convictions in determining whether someone is a fit and proper person to be licensed in a vocation at pages 7 9 of the judgment: … [S]ome factors relevant to prior convictions can be listed. Convictions will, in my view, generally be regarded as more serious in the statutory context if: (1) they occur in the course of or relate to the carrying out of the occupation of inquiry agent. See New Broadcasting Ltd v Australian Broadcasting Tribunal (1987) 73 ALR 420; (2) they are offences of dishonesty, broadly understood. This is so because, as I apprehend it, the Act is concerned with the integrity of the gathering and presenting of material in Court and that material may be suspect, where the character of the agent suggests dishonesty. (3) they occur while the person is the holder of a licence under the Act; (4) they are otherwise so serious, either in themselves or as representing a course of disregard for the law, as to reflect particularly adversely on the character of the person committing them. Indications that a person may be of good character and a fit and proper person notwithstanding previous convictions may be gleaned from the following factors: (Page 8)
(1) where the person convicted demonstrates genuine remorse and contrition, true insight and understanding of the earlier turpitudes. See Good v Medical Board of WA; unreported; SCt of WA; Library No 940678; 6 December 1994 at 31 and the cases there cited. The understanding demonstrated will generally carry more weight if it can be shown that it is demonstrated by the person's actions as well as by the person's words; (2) if the offences were committed a substantial time ago. I would not suggest, however, that any set period will result in the expunging of the effect of previous convictions on character and much will depend on the additional factors I list and, in appropriate cases, on others; (3) any change in the person's circumstances from the time of the commission of the offences which indicates that the factors giving rise to the offences have been eliminated; (4) a person's character generally since his commission of the offences including his lack of offending, age, family support, paid and voluntary work and character references. As to character references, I would caution that they will often be of more value if it appears from their terms that they were made in full knowledge of the fact of the commission of the offences. 9 Section 23 of the REBA Act confers a right of review by the Tribunal of the Commissioner's decision to refuse to renew a triennial certificate. Under s 27(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act), the review of the Commissioner's decision to refuse to grant Mr Carey's application for renewal of his triennial certificate is to be by way of a hearing de novo and may involve the consideration of new material whether or not it existed at the time the Commissioner made her decision. Under s 27(2) of the SAT Act, the purpose of the review is to produce 'the correct and preferable decision at the time of the decision upon the review'.
Factual background 10 Mr Carey was the principal of the Westpoint Group of Companies which consisted of 157 or more related corporate entities and trusts before it collapsed in 2005 2006. In June 2007, the Real Estate and Business Agents Supervisory Board refused Mr Carey's application for renewal of his triennial certificate as a real estate agent because the Board was not satisfied that Mr Carey was of good character and a fit and proper person to hold a licence. The Board came to that conclusion on the basis of Mr Carey's conduct in relation to the receivership of companies within the Westpoint Group and the criticism of his evidence by the presiding Judge (Page 9)
in Federal Court proceedings which followed the collapse of the Westpoint Group. 11 Mr Carey sought review of the Board's decision by the Tribunal. The Tribunal determined that it was not satisfied that Mr Carey was no longer a person of good character and repute and a fit and proper person to hold a real estate agent's licence: Carey and Real Estate and Business Agents Supervisory Board [2008] WASAT 304 (earlier SAT decision). The Tribunal came to that decision notwithstanding concerns which it expressed in relation to the frankness of some of Mr Carey's evidence in the Federal Court and in SAT, describing his evidence in the Federal Court as 'somewhat evasive and uncooperative' and his evidence to the Tribunal on the same point as 'unreliable' (at [25]), and despite the fact that the Tribunal did not accept Mr Carey's evidence that he personally managed the agency business of Westpoint Realty Pty Ltd (Westpoint Realty), of which he was a director, as required by the Code of Conduct under the REBA Act. 12 The Tribunal came to its decision for essentially four reasons. The first was that Mr Carey had held a real estate agent's licence for some thirty years without any disciplinary issues having arisen. The second was that, 'despite very exhaustive investigations going back as far as 2003, and considerable litigation concerning the receiverships and liquidations of companies within the Westpoint Group, there have been no final determinations against Mr Carey of any breaches of legislation or other illegal conduct' (at [92]). Third, there had been no suggestions of any irregularity in the trust accounts maintained by Westpoint Realty and no complaints by any member of the public about the operations of that company. Finally, the Tribunal noted that 'the effect of declining to renew the triennial certificate is to deprive Mr Carey of his entitlement to make a living as a real estate agent' and held that 'in the context of imposing disciplinary penalties, it is necessary for a Tribunal to bear in mind the right of every person to earn their living in whatever way they choose, unless that right is taken away by law' (at [94]). 13 The Tribunal concluded its reasons for decision at [95] as follows: None of the conclusions we have reached in these proceedings would, in our view, provide a basis to cancel Mr Carey's licence and any triennial certificate in respect of it. Despite the concerns which we have expressed, we do not consider that it can be fairly determined, on the basis of the materials before us, that Mr Carey is not fit and proper to hold a real estate agent's licence. It may be that, as a result of what we assume are ongoing investigations into the Westpoint Group (although the extent of ongoing (Page 10)
investigations is unclear) that action might be taken against Mr Carey in future. Conditions which require him to report any such action are appropriate. However, until such time as there are adverse findings made against Mr Carey in proceedings which have been already commenced or specific allegations of serious conduct are made against him, all of which may never occur, there is no basis to decline the renewal of Mr Carey's triennial certificate. … 14 The Tribunal ordered that Mr Carey should be issued with a triennial certificate for a period of three years subject to specified conditions. The Board sought an extension of time in which to seek leave to appeal from the Tribunal's decision to the Court of Appeal. The Court of Appeal refused the Board's application for an extension of time, but in the course of its reasons considered the application for leave to appeal and determined that it would have dismissed that application and the appeal against the Tribunal's decision: Real Estate and Business Agents Supervisory Board v Carey[2010] WASCA 109 (appeal decision). In the appeal decision, Owen JA, with whom Buss and Newnes JJA agreed, succinctly summarised the Tribunal's reasoning in the earlier SAT decision at [62] as follows: The Tribunal took the view, in essence, that until concrete findings of misconduct or dishonesty were made against [Mr] Carey, he ought to be entitled to earn a living. 15 On 11 February 2011, Mr Carey was convicted by Magistrate Malone in the Perth Magistrate's Court of five breaches of s 12(2)(b) of the Fair Trading Act 1987 (WA) (FT Act) in respect of false or misleading representations made by three real estate agents who were registered representatives of Westpoint Realty: Commissioner for Consumer Protection v Westpoint Realty & Ors (unreported, Magistrate's Court of Western Australia, Malone M, 11 February 2011) (Magistrate's Court decision). 16 Westpoint Realty was the selling agent for the Regent Apartments Project, a development carried out by Lanepoint Enterprises Pty Ltd (Lanepoint), another company in the Westpoint Group of which Mr Carey was a director. The Regents Apartments Project consisted of the refurbishment and conversion of 77 motel units into 40 residential apartments, known as Stage 1A, and the construction of a new building comprising 12 residential apartments, known as Stage 1B. In late 2004 and early 2005, each of the 40 units in Stage 1A were sold to purchasers 'off the plan'. These contracts provided the purchasers with a certain entitlement to common property within the development comprising Stage 1A and Stage 1B. However, in planning review proceedings (Page 11)
brought by Lanepoint in the Tribunal, a different building form for Stage 1B was subsequently agreed between Lanepoint and the local government in mediation and endorsed by the Tribunal by consent orders. Although the modified form of Stage 1B did not affect the physical form of the units in Stage 1A, it meant that the units in Stage 1A had a larger entitlement to common property under the executed contracts than could in fact be provided. As Magistrate Malone observed, because of the change in the building form of Stage 1B, 'the original contracts were untenable within their terms' (at [59]). 17 In late October 2005, Mr Carey wrote a memorandum to the agents and their immediate superiors in which he required the agents to meet with the Stage 1A purchasers and resolve the problem. Magistrate Malone was highly critical of Mr Carey's memorandum. His Honour described various statements in the memorandum as 'a gross oversimplification' (at 79 and 80), 'not true' (at 79) and of 'doubt[ful] … accuracy' (at 85). His Honour regarded the doubt as to the accuracy of matters stated in the memorandum as 'reflect[ing] directly, and adversely, on Mr Carey's credibility' (at 85). 18 After they received Mr Carey's memorandum, the three agents met with purchasers of units in Stage 1A, including five particular purchasers. Magistrate Malone found that the agents made false or misleading representations to these five purchasers concerning the use to which the land the subject of the development was capable of being put, contrary to s 12(2)(b) of the FT Act, in that the agents represented that the project, including Stage 1A, was not going ahead, might never be finished, was indefinitely delayed, or was not going anywhere. The purchasers agreed to terminate their contracts. The units were later resold to other purchasers for a higher price. 19 The agents who made the false or misleading representations pleaded guilty to offences contrary to s 12(2)(b) of the FT Act. Magistrate Malone found that 'in each case, the representation made by the agents can be attributed to Westpoint Realty', because 'the actions of the agents in making the misrepresentations that they did were the actions of the company' (at 53). Section 82(2) of the FT Act provides, in part, that 'any conduct engaged in on behalf of a body corporate … by … [an] agent of the body corporate within the scope of the person's actual or apparent authority … shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate'. On the basis of this provision, Magistrate Malone convicted Westpoint Realty of five counts of false or misleading representations contrary to s 12(2)(b) of the FT Act. (Page 12)
20 Where a corporation is convicted of an offence against the FT Act, s 81(1) of the Act deems each person who, at the time of the commission of the offence, was a director of the corporation or was the manager, secretary or other similar officer of that body, to be: also guilty of an offence unless he proves (a) that the offence was committed without his knowledge, or that he did not authorise or permit the commission of the offence; and (b) that he was not in a position to influence the conduct of that corporation or body or, being in such a position, could not by the exercise of reasonable diligence have prevented the commission of the offence[.] 21 In consequence, Mr Carey, who was a director of Westpoint Realty, was deemed to have committed the same offences as the company, unless he could prove the elements of each of paragraphs (a) and (b) of s 81(1) of the FT Act. Mr Carey sought to do just that. He succeeded in relation to paragraph (a) of s 81(1). Magistrate Malone specifically found that the offences were committed without Mr Carey's knowledge and that he did not authorise or permit the commission of the offences. However, having made these findings, his Honour added that 'I conclude that Mr Carey was part of the process whereby the agents understood they were to obtain termination of all of the Stage 1A contracts on the basis that each of the properties were to be resold to others' and that 'Mr Carey wanted that outcome and it was achieved' (at 98). 22 Mr Carey did not establish the elements of paragraph (b) of s 81(1). In particular, his Honour found that Mr Carey was in a position to influence the conduct of Westpoint Realty and its agents and that he could, by the exercise of reasonable diligence, have prevented the commission of the offences. Mr Carey was, therefore, convicted of each of the five offences. Mr Carey's appeal from Magistrate Malone's decision to a single judge of the Supreme Court was unsuccessful: Carey v Commissioner for Consumer Protection [2012] WASC 8. The Court of Appeal has granted leave to appeal from this decision. The appeal is yet to be heard. 23 In the course of his reasons in relation to Mr Carey's attempt to establish the defence provided in s 81(1) of the FT Act, Magistrate Malone made a number of adverse credibility findings in relation to Mr Carey's evidence. Most significantly, his Honour made the following findings: (Page 13)
In my judgment there was considerable room to question the contents of Mr Carey's evidence when he descended into the specifics of the Regents Apartments complex. (73) Mr Carey said he first started hearing of problems with the project around March/April 2005. He said it became clear to him and to Greg Rowe (who was indicating this to him) that the Councillors had a different view of what they wanted on the site to the planning officers. When it went to Council and the Councillors is when there was the issue raised around a landmark building that forms a gateway to the City of Belmont. In my judgment there [is] no evidence to support this proposition and it could not be reconciled with the evidence that was presented. (74) I will deal with some further aspects of the memo shortly, but in my judgment, there is good reason to doubt the accuracy of matters stated in the memo. This reflects directly, and adversely, on Mr Carey's credibility. (85) In crossexamination (TS p 31, 29/11/10) it was put to Mr Carey that if the SAT order rendered his contractual obligations to the purchasers of Stage 1A incapable of implementation that would have been apparent to him and his advisers as soon as they had absorbed the content of the orders. Mr Carey denied this and said 'that it took some considerable time to reach that point'. In my judgment this was not true and the evidence showed that people in August 2005 were alert to this problem. (98) Mr Carey's evidence was to the effect that Ms James and Mr Worthington [two of the agents] were both not completely cognisant of everything that was happening and that it was Irdi Legal who understood and effectively had control of the situation. In my judgment this was completely untrue. (107) Mr Carey was critical of both Ms James and Ms [sic] Worthington and dismissive of the memo. He suggests he was being guided by Irdi Legal. In my judgment Mr Carey is not to be believed on these matters. (108) What, in my judgment, I can conclude is that there is considerable doubt about the credibility of Mr Carey's evidence, explanations and the contents of his memo. At times what he said or stated was not true. (109) (Page 14)
In my judgment Mr Carey adopted the untruthful position of saying that the legal advice changed after his memo had been circulated and that contracts had to be terminated and new ones entered into. (112) 24 Finally, in terms of background matters, Mr Carey was a witness in a trial before Le Miere J in October and December 2011 in which Warwick Entertainment Centre Pty Ltd (Receivers and Managers Appointed) (Warwick) sued Silkchime Pty Ltd (Receivers and Managers Appointed) (Silkchime) for the sum of $12,706,904 which Warwick asserted it had loaned to Silkchime. Warwick and Silkchime were both members of, or associated with, the Westpoint Group, and Mr Carey was a director of each company at the relevant time. Mr Carey was called to give evidence by Silkchime and said that he signed a joint venture agreement and applied the Silkchime company seal to it in July 1995, gave it to Mr Hewitt, then the financial controller of the Westpoint Group, some time between July 1995 and October 1997, instructed a solicitor as to the terms of the joint venture agreement in July 2007 and found a copy of the joint venture agreement in or shortly before December 2007. 25 Le Miere J delivered his judgment on 1 August 2012 and found that Silkchime was indebted to Warwick for most of the sum claimed: Warwick Entertainment Centre Pty Ltd (Receivers and Managers Appointed)atf The Warwick Entertainment Centre Unit Trust v Silkchime Pty Ltd (Receivers and Managers Appointed) atf The Silkchime Unit Trust [No 2] [2012] WASC 275 (Silkchime). Le Miere J did not accept Mr Carey's evidence referred to in the preceding paragraph. His Honour also did not accept Mr Carey's explanation in the course of his evidence that he did not look at management accounts of Warwick and Silkchime which were inconsistent with the contractual relationship between those companies contained in the joint venture agreement referred to by Mr Carey. 26 The decision in Silkchime was published shortly after the hearing in this matter but before the date by which the parties were required to file agreed draft licence conditions in the event that the Tribunal determined to approve Mr Carey's application for the renewal of his triennial licence. The parties agreed that the decision in Silkchime is relevant to the Tribunal's decision in this case and brought it to the attention of the Tribunal. Each party filed written submissions in relation to the significance of that judgment. The parties agreed that the proceeding can be determined on the basis of those submissions, without the need for any further hearing. The parties also agreed that the Tribunal should be (Page 15)
advised that Mr Carey (in his capacity as a director) has filed an appeal against the Silkchime decision.
Is Mr Carey no longer a person of good character and repute and a fit and proper person to hold a real estate agent's licence? 27 The Commissioner contended that Mr Carey is not a fit and proper person to hold a licence on essentially three bases. 28 First, the Commissioner submitted that Mr Carey has been shown by the adverse findings in relation to him in the earlier SAT decision, the Magistrate's Court decision and Silkchime, and by his crossexamination in this proceeding, to lack the necessary attribute of honesty which is central to practise as a real estate agent. 29 In relation to Mr Carey's evidence in this proceeding, Mr GD Cobby, who appeared with Ms K King on behalf of the Commissioner, submitted that Mr Carey's evidence in chief in his witness statement showed a very different picture than the truth which emerged during crossexamination in two respects. First, in his witness statement, Mr Carey said that he has assisted both the Commissioner and the liquidator of Westpoint Realty to reconcile that company's trust account and that accordingly both the Commissioner and the liquidator have placed reliance on his knowledge and understanding of the REBA Act and its requirements. Although in crossexamination Mr Carey maintained that he assisted the Commissioner, it appears from correspondence between the liquidator and Mr Carey that the reconciliation of the trust account was carried out with the knowledge and for the assistance of the Department of Commerce, rather than the Commissioner, in addition to the liquidator. However, what Mr Carey was essentially saying in his evidence, both written and oral, was that he assisted the relevant authority in facilitating the reconciliation of the Westpoint Realty trust account, which is true. 30 Secondly, Mr Cobby submitted that whereas the impression given in Mr Carey's witness statement was that he agreed to facilitate the reconciliation of the Westpoint Realty trust account for free, it emerged during crossexamination that Mr Carey's company, Keyworld Investments Pty Ltd, would receive a total of $20,000 for this work. However, Mr Carey did not say in his evidence in chief that the work would be done for free. We do not consider that his evidence to the Tribunal in this proceeding casts any doubt on Mr Carey's honesty. 31 Mr Cobby referred to the adverse findings about Mr Carey's evidence in the earlier SAT decision, the Magistrate's Court decision and the (Page 16)
Silkchime decision which were set out earlier in these reasons. He submitted that, in the Magistrate's Court decision and the Silkchime decision, the court held that Mr Carey's version of business dealings carried out over substantial periods of time could not be accepted. Mr Cobby stressed that, on three occasions over the last four years, a court or tribunal has been unable to accept Mr Carey's evidence given on oath. Mr Cobby pointed out that, on various occasions, Mr Carey's evidence on oath has been described by the court or tribunal as 'vague', 'unreliable', 'not accepted', 'not to be believed', 'not true', 'completely untrue' and 'untruthful'. Mr Cobby relied most strongly on Magistrate Malone's findings about Mr Carey's memorandum to the agents which his Honour found to contain statements which were an oversimplification or untrue. Mr Cobby also stressed that Magistrate Malone found that 'Mr Carey adopted the untruthful position of saying that the legal advice changed after his memo had been circulated and that contracts had to be terminated and new ones entered into' (at 112) and rejected Mr Carey's evidence that existing purchasers were to be offered new contracts. Mr Cobby submitted that these findings were central, and not peripheral, to the Magistrate's Court decision and go directly to the issue of whether Mr Carey should be regarded as possessing the essential attribute of honesty. 32 Although Magistrate Malone's findings were expressed in very strong and robust terms, and were obviously central to the determination of that case, we do not consider that those findings, even taken together with the adverse findings in relation to Mr Carey's evidence in the earlier SAT decision and the Silkchime decision, demonstrate that Mr Carey is a dishonest person and, therefore, not a fit and proper person to hold a real estate agent's licence. The findings in each case, including Magistrate Malone's findings, were made in the context of assessing and weighing Mr Carey's evidence against other evidence in order to determine disputed facts. In particular, in the Magistrate's Court decision, the adverse credibility findings made in relation to Mr Carey's evidence were in the context of determining whether he had proved the elements of the defence set out in s 81(1) of the FT Act. 33 Furthermore, Mr Carey has not been found guilty, in the Magistrate's Court proceedings or any other proceeding, of any dishonesty offence. In the Magistrate's Court proceeding, Mr Carey was found guilty of an offence which he was deemed, as a director of Westpoint Realty, to have committed. Moreover, while the agents made false or misleading representations, Mr Carey proved that the offences were committed without his knowledge, authorisation or permission. Ultimately, (Page 17)
Mr Carey failed to prove the second element of paragraph (b) of the defence, namely, that being in a position to influence the conduct of the corporation, he could not, by the exercise of reasonable diligence, have prevented the commission of the offence. As Mr M de Kerloy, who appeared for Mr Carey, submitted, Mr Carey was ultimately convicted because of a 'systems failure', not because of any dishonesty on his part. 34 In the earlier SAT decision, the Tribunal said, at [25], that 'it is not possible in the context of these proceedings to make any findings as to the truthfulness of Mr Carey's evidence' in the Federal Court. Nevertheless, the Tribunal characterised Mr Carey's evidence in the Federal Court on one aspect as 'evasive and uncooperative' and regarded his evidence to the Tribunal on that point as 'unreliable' (at [25]). The Tribunal also rejected Mr Carey's evidence that he personally managed Westpoint Realty's agency business fulltime, although it found that he did exercise a general supervisory role. Nevertheless, the Tribunal was not satisfied that Mr Carey was no longer a person of good character and repute and a fit and proper person to hold a licence. 35 In Silkchime, the Supreme Court rejected Mr Carey's evidence as to what he said he did in 1995 and subsequently. However, the Court did not find that he deliberately lied or that he was dishonest. 36 As noted earlier, in the appeal decision, Owen JA summarised the Tribunal's reasoning in the earlier SAT decision as 'in essence, that until concrete findings of misconduct or dishonesty were made against [Mr] Carey, he ought to be entitled to earn a living'. We do not consider that the adverse findings in relation to Mr Carey constitute concrete findings of dishonesty which would demonstrate that he is no longer a fit and proper person to hold a licence. 37 The Commissioner also argued that the rejection of Mr Carey's evidence in the Tribunal, Magistrate's Court and Supreme Court proceedings demonstrates that Mr Carey lacks good character, and that the fact that the adverse credibility findings are on the public record means that he lacks good repute. Moreover, as noted from the survey of principles set out earlier in these reasons, it is recognised in the authorities that the expression 'a fit and proper person' includes possession of sufficient moral integrity and rectitude of character as to permit the person 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. (Page 18)
38 We have given some anxious consideration to the question of whether the findings of the Magistrate's Court, when taken together with adverse findings about Mr Carey's evidence in the earlier SAT proceeding and in the Supreme Court proceeding, demonstrate that he has serious deficiencies in his moral character, or that his public estimation or repute is no longer good, or that he is not possessed of sufficient moral integrity and rectitude of character as to permit him to be safely accredited as a real estate agent. Although, as we have said, the Magistrate's findings were expressed in very strong and robust terms, for the reasons set out earlier and for the following three reasons, we do not consider that those findings, on their own or taken with findings in the earlier SAT decision and the Supreme Court decision, show that Mr Carey is no longer a person of good character and repute and a fit and proper person to be licensed as a real estate agent. 39 First, Mr Carey has been a real estate agent for 32 years and, with the exception of the convictions in the Magistrate's Court decision, has an apparently unblemished professional record. 40 Second, the Commissioner did not bring disciplinary proceedings in the Tribunal under s 102(1) of the REBA Act alleging that there is proper cause for disciplinary action against Mr Carey when the Magistrate's Court's decision was published. Under s 103(1) of the REBA Act, if the Tribunal is satisfied that proper cause exists for disciplinary action against an agent, it may impose a range of penalties, including the suspension or cancellation of the agent's licence and triennial certificate and the disqualification of the agent from holding a licence and/or triennial certificate, whether permanently, temporarily or until the fulfilment of any condition. The Commissioner did not seek to prevent Mr Carey from practising as a real estate agent for over 12 months after the Magistrate's Court decision, but rather waited for the expiry of his triennial certificate and then refused to renew it. 41 Third, the liquidator of Westpoint Realty, apparently with the knowledge of the Department of Commerce, has relied on Mr Carey to facilitate the reconciliation of the Westpoint Realty trust account. This demonstrates confidence in Mr Carey's integrity and character. 42 The second basis on account of which the Commissioner contended that Mr Carey is not a fit and proper person to hold a licence is that the offences of which he was convicted by the Magistrate's Court involved, on Magistrate Malone's findings, Mr Carey failing to: (Page 19)
• act in the interests of the purchasers; • adequately supervise the sales representatives, in breach of rule 6(2) of the Code of Conduct; • be diligent concerning the management of Westpoint Realty, in breach of rule 7 of the Code of Conduct; and • take decisive action over the period July to late October 2005 (when he wrote the memorandum to the agents) on an important issue directly concerning the purchasers' interests in land, in breach of rule 7 of the Code of Conduct. 43 Mr Cobby submitted that those matters, together with Magistrate Malone's findings as to Mr Carey's credibility, 'go to the heart of [Mr Carey's] suitability to act as a licensed real estate agent' in that they occurred in the course of, or relating to, his occupation as a real estate agent, occurred while he held a licence under the REBA Act, and reflect adversely on his character. 44 Certainly, as Wheeler J said in Tavelli, convictions will generally be regarded as more serious in the statutory context if they occur in the course of, or relating to, the relevant vocation, and while the person is licensed to carry out the vocation under the relevant Act. Mr Carey committed the offences in the course of, or relating to, carrying out his occupation as a real estate agent, and while he was licensed under the REBA Act. However, Wheeler J also said that convictions will generally be regarded as more serious in the statutory context if they are offences of dishonesty, broadly understood. The offences of which Mr Carey was convicted were not, relevantly to him, offences of dishonesty. The agents who made the false or misleading representations to the purchasers did act dishonestly. However, Mr Carey was only convicted of the same offences as the agents because he was a director of Westpoint Realty and could not prove each element of the defence set out in s 81(1) of the FT Act. Furthermore, Mr Carey did prove that the offences were committed without his knowledge, authority or permission. As noted earlier, he did not establish the defence because he did not prove that, being in a position to influence the conduct, he could not by the exercise of reasonable diligence have prevented the commission of the offences. As Mr de Kerloy argued, these findings mean 'no more than that the system (Page 20)
of compliance was not adequate or appropriate' and cannot lead to a conclusion that Mr Carey has a disregard for the interests of purchasers. 45 Furthermore, in our view, the determination that Mr Carey could, by the exercise of reasonable diligence, have prevented the commission of the offences is not equivalent to a determination that he inadequately supervises sales representatives, or was not diligent concerning the management of Westpoint Realty. Furthermore, even if the Tribunal were to make such a determination in vocational disciplinary proceedings (which the Commissioner has not brought), it would not automatically lead to a finding that Mr Carey is not a fit and proper person to hold a licence. Other consequences, such as education or training, may be warranted. 46 Finally, although Magistrate Malone made a specific finding and was critical of Mr Carey for 'a failure to take decisive action on an important and fundamental issue' (at 78) and 'a matter of fundamental importance to the purchasers of Stage 1A' (at 77) by not acting to resolve the contract issue after the consent orders for three months, the criticism is curious given the complexity of the town planning and property law issues that the change in the approved building form of Stage 1B gave rise to. In any case, in our view, the Magistrate's criticism of Mr Carey's failure to act more quickly does not demonstrate that his character is such that he should not be permitted to be safely accredited to the public, without further inquiry, as a person to be entrusted with the work of a real estate agent. 47 Two further factors referred to by Mr de Kerloy, which we consider are relevant in determining the significance of the convictions in this case, are that the offences occurred seven years ago and that Mr Carey has worked as a real estate agent for approximately 32 years without any other conviction or adverse disciplinary determination over that period. 48 The third basis on account of which the Commissioner contended that Mr Carey is not a fit and proper person to hold a real estate agent's licence is that his conduct since his conviction demonstrates a lack of insight and contrition and a failure to understand the obligations of a licensed real estate agent. However, as Mr de Kerloy argued, the actions of Mr Carey since his conviction, namely to appeal and maintain his legal position in relation to s 81(1) of the FT Act, which is a complex provision, cannot fairly lead to the conclusions advanced by the Commissioner. Furthermore, before the Commissioner refused to renew Mr Carey's triennial certificate, Mr Carey suggested that if the Commissioner had any (Page 21)
concerns that he does not understand his duties consequent upon the conviction or otherwise, he would embrace attendance at specific education or training courses. This indicates a willingness on the part of Mr Carey to learn and to avoid the commission of the same offence again. 49 For the foregoing reasons, we are not satisfied that Mr Carey is no longer a person of good character and repute and a fit and proper person to hold a licence as a real estate agent.
Does Mr Carey no longer understand fully the duties and obligations imposed by the Act? 50 In the earlier SAT decision, the Tribunal said the following at [86]: Having seen Mr Carey crossexamined at very considerable length before us, we are satisfied that he has a firm understanding of the requirements of the Act and the Code of Conduct. 51 The Commissioner submitted that Mr Carey no longer fully understands the nature of a licensee's duties and obligations under the REBA Act, because his position before the Magistrate's Court that, in Magistrate Malone's words, Mr Carey could not have 'done any better' (at 101) was rejected by the Court and his subsequent conduct demonstrates a failure to understand both the impact of his conduct upon the clients of Westpoint Realty and the obligations of a licensed real estate agent. 52 We are not satisfied that Mr Carey no longer understands fully the duties and obligations imposed by the REBA Act and the associated Code of Conduct. He was ultimately convicted because he did not prove that he could not by the exercise of reasonable diligence have prevented the commission of the offences. This demonstrates a failure of his compliance system, not a failure to understand fully the duties and obligations imposed by the REBA Act on agents. His subsequent conduct also does not demonstrate a failure to fully understand the duties and obligations imposed on agents. He cannot be fairly criticised for having maintained a legal position during appeal in relation to a complex provision. Furthermore, as noted earlier, Mr Carey has been willing to undertake any specific education or training courses required by the Commissioner.
Conclusion 53 The Tribunal is not satisfied that Mr Carey is no longer a person of good character and repute and a fit and proper person to hold a real estate (Page 22)
agent's licence or that he no longer understands fully the duties and obligations imposed by the REBA Act on agents. The Commissioner did not contend that Mr Carey no longer has sufficient material and financial resources available to him to enable him to comply with the requirements of the REBA Act. It follows that Mr Carey's application to renew his triennial certificate may not be refused under s 31(3) of the REBA Act. 54 In accordance with the Tribunal's usual practice in review proceedings concerning the refusal of an application by an original decisionmaker which could be approved by the Tribunal subject to conditions, the parties were directed to provide draft conditions on a 'without prejudice' basis which could be imposed by the Tribunal if the application is approved. The parties filed agreed draft licence conditions to be imposed in those circumstances. We consider that the agreed draft conditions are reasonable and should be imposed. 55 Finally, in his application for review, Mr Carey foreshadowed an application for costs under s 87(2) of the SAT Act. The Tribunal's established practice in relation to the exercise of its discretion as to costs under s 87(2) of the SAT Act in review, including vocational review, proceedings is that normally each party should bear its own costs of the proceeding: Stephenson and The Legal Practice Board[2007] WASAT 259 at [47], [49]; Bernadt and Medical Board of Australia [2012] WASAT 185 at [139]. However, Mr Carey should be given a short opportunity to consider whether to seek an order for costs and, if so, to file and serve submissions as to why the Tribunal should depart from its usual practice as to costs in the particular circumstances of this case. The Commissioner should have an opportunity to respond to any submissions. If an order for costs is ultimately sought, then, subject to any further order, the issue is to be determined entirely on the documents, pursuant to s 60(2) of the SAT Act.
Orders 56 For these reasons, the Tribunal makes the following orders: (Page 23)
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3. By 12 December 2012 the applicant may file and serve any application for costs and, if so, must by that date file and serve his submissions in support. 4. By 19 December 2012 the respondent may file and, if so, must serve any submissions in response in relation to costs. 5. The issue of costs, if sought by the applicant, is, subject to any further order, to be determined entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA). |