Carr v Department of Services, Technology and Administration
[2012] NSWADT 216
•22 October 2012
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Carr v Department of Services, Technology & Administration [2012] NSWADT 216 Hearing dates: 4 June 2012 Decision date: 22 October 2012 Jurisdiction: General Division Before: S Montgomery, Judicial Member Decision: The decision is affirmed
Catchwords: Real Estate Agent Licence - disciplinary action - disqualified person - not fit and proper Legislation Cited: Administrative Decisions Tribunal Act 1997 Cases Cited: Australian Broadcasting Commission v Bond (1990) 170 CLR 321
Carr v Director-General, Department of Finance and Services (formerly Department of Services, Technology and Administration) [2011] NSWADT 157
Director General, Department of Finance and Services v Carr (GD) [2011] NSWADTAP 64
Hughes & Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127
McBride v Walton (NSW Court of Appeal), unreported, 15 July 1994
Watson v Director General, Department of Finance and Services [2012] NSWADT 64Category: Principal judgment Parties: Rory Carr (Applicant)
Department of Services, Technology & Administration (Respondent)Representation: Counsel
G Evans (Applicant)
Jemmeson and Fisher Solicitors (Applicant)
Fair Trading Legal Services (Respondent)
File Number(s): 123006
REasons for decision
GENERAL DIVISION (S MONTGOMERY, (JUDICIAL MEMBER)): This is a reconsideration of the application commenced by Rory Carr ("the Applicant"), against a determination by the Director-General of the Department of Services, Technology & Administration ("the Respondent"), to take disciplinary action against him under section 198 of the Property, Stock and Business Agents Act 2002 ("the Act").
The matter was previously heard and determined with the decision recorded as Carr v Director-General, Department of Finance and Services (formerly Department of Services, Technology and Administration) [2011] NSWADT 157 ("the earlier decision"). The Respondent successfully appealed that decision: Director General, Department of Finance and Services v Carr (GD) [2011] NSWADTAP 64 ("the Appeal Panel decision"). The matter was remitted to the Tribunal differently constituted for reconsideration.
Background
The background and relevant facts and the applicable legislation are set out in the earlier decision. For the most part I will not repeat them here. The Appeal Panel decision provides the following summary:
6 The primary events of concern were seven trust account transactions in the period 2006-2007. Six of the transactions involved the respondent taking money that would in due course be payable to him prior to becoming entitled to it to meet employee wages and business expenses. The money was the commission element of the deposit held in trust for vendors for whom he was acting in respect of pending sales. The seventh transaction was of a different kind. He drew $475,000 from the trust account to pay the balance due in respect of a commercial property which he wished to purchase. The sum was restored to the account from which it was drawn within five weeks. So in no instance did any client suffer an actual loss by reason of the respondent's conduct. The details of all these matters are set out in the administrator's reasons for decision, and outlined in the Tribunal's reasons. The administrator's and the Tribunal's reasons refer to the trust account provisions that were contravened. The final event of significance was the respondent's entry into voluntary bankruptcy in April 2009.
7 All of the transactions involved a breach of trust. The withdrawal of the amount of $475,000, on any view, involved a grave breach of trust. This was not a case where it might be said that he acted prematurely in respect of moneys that he could expect to receive in due course once sales had been completed.
8 Before the Tribunal, the respondent accepted that he had violated the trust account rules in respect of the seven transactions. He sought to explain his conduct in relation to the six misappropriations used to meet business expenses by reference to the pressures he was under. In the case of the misappropriation of the $475,000 he submitted that he had taken the money under a mistaken belief that the account had been put in funds for this amount.
9 In relation to his entry into voluntary bankruptcy, he submitted that he had taken all reasonable steps to avoid the event, and the discretion not to treat it as a ground for disqualification should be exercised in his favour. The respondent acknowledged that, if his case failed, he would no longer be entitled to a licence. But he pressed a case that he remained sufficiently fit to be allowed to continue to work as a salesperson. He stated that he was prepared to submit to conditions if desired in relation to dealing with trust accounts.
On 22 June 2010 the Respondent determined to take disciplinary action against the Applicant and to:
(a) declare the Applicant to be a disqualified for the purpose of the Act for a period of 10 years; and
(b) to disqualify the Applicant for a period of 10 years from being involved in the direction, management or conduct of the business of a licensee.
The disciplinary action taken by the Respondent was based on the following findings:
(a) that the Applicant had contravened provisions of the Act and the Regulations on a number of occasions. The alleged contravening conduct included the pre-drawing of commissions and goods and services tax payments from several deposits, received and banked into the company's trust account, prior to the settlement of the sale of the property and an alleged fraudulent withdrawal of $475,000 from the company trust account on 31 May 2007;
(b) that the Applicant, in the course of carrying on the business or exercising the functions under his licence, acted unlawfully, improperly, unfairly, or incompetently;
(c) by reason of his bankruptcy the Applicant was a 'disqualified person' and not eligible to hold a licence; and
(d) that the Applicant was not fit and proper to be involved in the direction, management or conduct of the business of a licensee.
On 6 July 2010, the Tribunal granted a stay of the Respondent's decision pending the determination of the Applicant's application. The stay was granted subject to conditions, including that he not be appointed as licensee in charge of any office of any licensee under the Act, or as signatory of a trust account conducted by any licensee under the Act and that he not be appointed as a director or manager of any agency business conducted by any licensee under the Act. The Applicant was also required to notify the Respondent in writing of any change of his employment and to notify any new employer of the stay orders and conditions.
The Earlier Decision
In the earlier decision the Tribunal found that at relevant times the Applicant conducted real estate activities through a company called Misdan Pty Ltd ("the company"). The company held a corporation licence under the Act. The Applicant was a director of the company and also the nominated licensee of the company for the purpose of the Act. The alleged contravening conduct occurred during the time the Applicant was the licensee in charge of the licensed real estate business of the company.
The Tribunal found that the Applicant entered into bankruptcy, on 30 April 2009, and that he continued to be an undischarged bankrupt as at the time of the decision. The Tribunal also found that the Applicant did not take "all reasonable steps" to avoid the bankruptcy and therefore he is a disqualified person pursuant to section 16(1A)(a) of the Act. It also made the factual findings that the Applicant drew a cheque of $475,000 from the company's real estate trust account in breach of sections 86 and 88 of the Act and pre-drew 6 commissions from the trust account in contravention of section 86(1) of the Act.
In the case of the withdrawal of $475,000 from the trust account on 1 June 2007, the Applicant reimbursed the money to that account by 5 July 2007. In the case of the other defalcations, the Company subsequently became entitled to the deposits so that there was no consumer loss arising. Nevertheless, at paragraph [47] of the earlier decision the Tribunal observed:
47In my view, on the basis of the applicant's admissions, his conduct in drawing the cheque for $475,000 was a fundamental breach of section 86 and 88 of the Act. Accordingly, the grounds in paragraph 191(a) and (c) of the Act are established.
Having regard to those breaches, the Tribunal found that the Applicant was not fit and proper to be the holder of a licence under the Act and not fit and proper to be a licensee or to direct or manage the business of a licensee.
Section 192 of the Act sets out the disciplinary action that the Respondent can take against a person under the Act. Section 192(1)(h) provides that the Respondent can "declare the person to be a disqualified person for the purposes of this Act, either permanently or for a specified period".
In the earlier decision the Tribunal determined that the period of disqualification should be reduced from 10 years to 5 years, expiring in April 2015. It also found that the scope of the disqualification should be limited to the direction and management (including the operation of the trust account) of the business of a licensee.
The Appeal Panel Decision
The Appeal Panel decision considered the scope of disciplinary action under paragraph 192(1)(h). At paragraphs [24] - [33] the Appeal Panel held:
24 The administrator submits that the imposition of a general order of disqualification under s 192(1)(h) is not limited to one or other of the statutory grounds for disqualification. Nor can an order under s 192(1)(h) be restricted to disqualification from holding a licence (unless there is an express provision to that effect, as applies to voluntary bankruptcy).
25 In our view, this submission is correct.
26 Disqualification in our view carries the connotation of removal entirely from the area to which the qualifications relate. The word 'disqualify' in its usual meaning refers to outright exclusion from an event, activity or field. So for example the primary meanings given in the Macquarie Dictionary (4th ed. 2005) are:
' disqualify . 1. To deprive of qualification or fitness; render unfit; incapacitate. 2. to deprive of legal or other rights or privileges; to pronounce unqualified.'
27 These primary meanings bring that point out, especially the second meaning under heading 2 ('to pronounce unqualified').
28 The scheme of s 192(1) supports this view. In our view, the expression used in s 192(1)(h) 'disqualified for the purposes of the Act ' (emphasis added) is intended to be an all-encompassing expression.
29 Disqualification is the most draconian sanction in the scheme of the Act, and is intended, as we see it, to apply to the most egregious cases. It would not be consistent with this view, in our opinion, to draw a line that allowed the person to remain in the field regulated by the statute, in particular at the level of holding public authorities to deal directly with consumers, as is authorised by the holding of an agent's licence or a salesperson's certificate. The reference to 'the purposes of the Act' is seeking, as we see it, to reinforce the ordinary meaning of disqualification.
30 Our understanding is borne out by other provisions of the Act. A 'disqualified person' is excluded from eligibility for a licence (s 14(1)(d)). A 'disqualified person' is excluded from eligibility for a certificate (s 14(3)(d)). The Note to s 14(3) states 'The grounds of disqualification in section 16(1A) do not disqualify a person from eligibility to hold a certificate of registration.' Our understanding is reinforced by s 16(1A)(a) (the voluntary bankruptcy provision), previously mentioned. As noted, that provision specifically excepts from its operation the holding of certificates of registration.
31 Section 43 of the Act makes it an offence for licensees to employ disqualified persons 'in any capacity in connection with the carrying on of the business conducted by the licensee'. Thus, the usual effect of a disqualification order would be to exclude the subject of the order from working in the industry at a managerial level and possibly at any level ('in any capacity'). That s 43 is intended to have a comprehensive effect is reflected in the express exception of cases where 'disqualification is on a ground that does not disqualify the person from eligibility to hold a certificate of registration'. In our opinion, the Parliament saw disqualification as ordinarily having a comprehensive effect. The same point is reflected in the opening words of s 16(1A): 'A person is also a disqualified person for the purposes of this Act (except for the purposes of eligibility to hold a certificate of registration) if the person:'.
32 The conclusion that an order under s 192(1)(h) is all encompassing is also supported, we consider, by the giving of a power to specify the period of disqualification. This is to be contrasted with the position in relation to the exercise of the power of cancellation (s 192(1)(g)) which makes no reference to a power to impose a period during which a re-application might not be considered. (Nor, we, note is there a power to impose a time bar given in s 192(1)(i), though it appears (as here) to be customary for the administrator to set one, an issue the subject of comment in Stojanovic v Commissioner for Fair Trading, New South Wales Office of Fair Trading [2008] NSWADT 109 (15 April 2008) at para [18] by Handley DP.)
33 We uphold the appeal in relation to Question 1. In our view the Tribunal erred in seeking to give an effect to an order under s 192(1)(h) which confined its scope to licences.
Section 192(1)(i) provides that the Respondent can disqualify a person from being involved in the direction, management or conduct of the business of a licensee. At paragraph [34] the Appeal Panel concluded that:
34 Once an order is made under s 192(1)(h) it is difficult to see what if any work is left to be done by an order under s 192(1)(i). If a person is excluded from the industry for all purposes, then, in principle, they cannot be involved in the direction, management or conduct of a business. The administrator explained at hearing that this additional power was useful for cases where a disqualified person sought through extra-legal arrangements to continue to direct, manage or conduct a business. It is backed by an offence provision (see further below). It is also theoretically conceivable that a disciplinary case might arise where there is no disqualification order under s 192(1)(h) but only a 'direction, management and conduct' order under s 192(1)(i).
The Rehearing
The matter came before me for rehearing on 4 June 2012. The material relied on in the earlier hearing was brought forward to this matter. Each of the parties also relied on additional material that addressed events that had occurred since the earlier hearing.
I note that the Applicant has admitted to the seven defalcations of the company's trust account. While it is my understanding that the parties were in agreement that the matter should proceed on the basis of the findings made in the earlier decision, I have nevertheless reconsidered the material presented. Having done so I have reached the same conclusions in regard to the facts as in the earlier decision. Accordingly, I find that the Applicant drew a cheque of $475,000 from the company's real estate trust account in breach of sections 86 and 88 of the Act and pre-drew 6 commissions from the trust account in contravention of section 86(1) of the Act.
I also find that the Applicant continues to be an undischarged bankrupt and that he did not take "all reasonable steps" to avoid the bankruptcy. Therefore he is a disqualified person pursuant to section 16(1A)(a) of the Act.
The issues for determination are whether the Applicant is a fit and proper person to be issued with an authority under the Act and if not, the period of disqualification for which it is appropriate to disqualify him from being the holder of an authority under the Act or from being involved in the direction, management or conduct of the business of a licensee under the Act.
The Additional Material
The Additional Material concerns the Applicant's conduct since he commenced proceedings in the Tribunal.
It is not in dispute that in the earlier proceedings the Applicant was granted a stay that permitted him to work at certificate level, with conditions restricting his access to trust accounts. As noted at paragraph [4] of the earlier decision:
By consent, on 6 July 2010, the Tribunal granted a stay of the respondent's decision pending the determination of the applicant's application. The stay was granted subject to conditions, including that he not be appointed as licensee in charge of any office of any licensee under the Act, or as signatory of a trust account conducted by any licensee under the Act and that he not be appointed as a director or manager of any agency business conducted by any licensee under the Act.
The stay order also required the Applicant to notify the Respondent, in writing, of any change of his employment and to notify the new employer of the stay orders and conditions. It is not in dispute that the Applicant changed his employment and did not comply with that condition.
The Respondent also contends that the stay was removed by the earlier decision.
The Respondent relies on further evidence filed in these proceedings. That evidence includes:
a. employment records of the Applicant whilst employed with 818 No.8 Property Agents Pty Ltd trading as Platinum Property ("Platinum");
b. copies of advertisements of properties the subject of real estate transactions with Platinum;
c. a copy of the record of interview of Ms Maria Toskas, one of the directors of Platinum, conducted by Fair Trading on 23 March 2012.
The Applicant also relies on further evidence filed in these proceedings. He relies on his affidavit dated 30 May 2012 as well as his evidence given at the hearing.
Each of the parties also filed written submissions and their solicitors made oral submissions at the hearing.
The Respondent's Case
It is not in dispute that Platinum operated as a real estate corporation pursuant to the Act between 19 April 2011 and 18 April 2012. The Applicant commenced employment with Platinum on 23 May 2011 and continued in employment with Platinum until some time in late January or early February 2012. At the time of commencing employment with Platinum, the Applicant retained the benefit of the stay. He had lodged an application for renewal of his licence in December 2010 and by operation of section 19(5) of the Licensing and Registration (Uniform Procedures) Act 2002 he was entitled to work as a licensed real estate agent until such time as the application for renewal was determined.
It is not in dispute that whilst employed with Platinum, the Applicant did not inform his employer that his licence operated by virtue of the stay order subject to conditions granted by the Tribunal on 6 July 2010. Ms Toskas confirmed this in her interview on 23 March 2012. As noted above, one of the conditions of the stay order required him to notify his employer of the stay and its conditions.
The Applicant first notified his employer that he was not licensed on 31 January 2012.
The Respondent also relies on the answer provided by Ms Toskas in response to the question "can you describe in detail Mr Carr's duties with [Platinum]?"
Ms Toskas answered:
"Yes, as I said before, he would basically have a desk in the office and continue - through all the years that he's basically been in the industry his main purpose is to obtain future development sites and contacts with developers."
The purpose of this role was to procure an agreement between developers and Platinum for the rights of sale of the relevant sites.
The earlier decision was delivered on 29 June 2011. The Respondent contends that by operation of section 62(2)(b) of the Administrative Decisions Tribunal Act 1997 ("the ADT Act") the stay ceased to have effect when the Tribunal delivered its decision.
In mid July 2011 the Applicant was notified that his licence renewal application was refused. However, he remained in employment with Platinum between mid July 2011 and February 2012.
The Respondent contends that during this period the Applicant did not hold a licence or certificate of registration under the Act. Further, the Respondent contends that as a disqualified person, the Applicant was not entitled to be employed by Platinum by operation of section 43 of the Act.
The Respondent further contends that the additional evidence establishes that between 14 July 2011 and February 2012, the Applicant operated as a real estate agent in breach of the Act, notwithstanding his disqualification by the Tribunal from holding a licence under the Act. Further, following the refusal of his licence application on 14 July 2011, he held no authority under the Act to operate as a real estate agent.
The Respondent submits that the Applicant's actions show a flagrant disregard for the provisions of the Act and the authority of the Tribunal and seriously undermines his fitness and propriety to hold any authority under the Act. In particular his actions in continuing to work unlicensed in the real estate industry show a flagrant breach of trust placed in him by the Tribunal when it granted a stay on 6 July 2010 subject to a condition that he notify his new employer of the terms of the stay order.
Mr Nicoletti referred to the Tribunal's finding in the earlier decision that the Applicant's conduct amounted to a "fundamental breach" of the Act. He noted that the Respondent agrees with that finding.
In particular, the Respondent submits that the withdrawal of the $475,000 was a very serious contravention of the Act that had the potential to seriously affect numerous consumers. At the time that the withdrawal was made the Applicant lacked the capacity to reimburse the trust account.
Mr Nicoletti referred to the Tribunal's view expressed at paragraph [63] in the earlier decision:
63The applicant's drawing of the $475,000 cheque on the company sales trust account was perpetrated by the applicant. The fact that, shortly after the cheque was drawn on the company sales trust account, the applicant was able to secure a loan so as to replenish the deficit in the company's sales trust account, is not an excuse. This the applicant readily acknowledges. On the basis of the applicant's evidence I am inclined to accept, in part, his evidence that he had an arrangement with a developer friend for a loan. What I find difficult to accept is that on the day in question he was given a cheque by the developer.
It is not in dispute that the Applicant ultimately reimbursed the funds to the trust account. He contributed $78,000 of his own funds and the remainder was by way of a high interest loan. However the Respondent submits that given the serious financial position that the Company and the Applicant were in at the time, the obtaining of a significant loan was at best an extremely speculative endeavour to rectify a serious breach of the Act.
The Respondent contends that in considering the objective seriousness of the breaches committed by the Applicant it is not a relevant consideration to take into account the fact that the trust account deficiencies were later reimbursed or that the Company subsequently became entitled to retain the money.
Mr Nicoletti further submits that the Tribunal should not accept the Applicant's contention that he did not perform the duties of a real estate agent whilst employed by Platinum. He argues that the wage that the Applicant was paid by Platinum was comparable to that which he received as an agent and that it is implausible that he would be paid that same wage to merely undertake administrative tasks.
Mr Nicoletti also submits that the Tribunal should not accept the Applicant's evidence that he forgot to inform Platinum of the existence and conditions of the stay. Further, the Tribunal should find that the Applicant did not take the reasonable steps of informing himself of the consequences that flowed to him from the earlier decision and the Appeal Panel decision.
The Respondent submits that the nature of disciplinary proceedings is both protective and punitive: Watson v Director General, Department of Finance and Services [2012] NSWADT 64. The Respondent submits that the disciplinary provisions of section 192 of the Act are to be taken to have both a protective purpose and also a punitive effect.
The Respondent further submits that in the present matter, having regard to the Applicant's conduct, it is both appropriate and necessary for this Tribunal to impose a disciplinary action that sufficiently protects the public and also serves a deterrent effect on the Applicant and others within the real estate industry context. It submits that it is appropriate to disqualify the Applicant under section 192(1)(h) and (192(1)(i) of the Act for a period of 8 years from the date of hearing.
The Applicant's Case
In his affidavit the Applicant referred to the roles that he undertook prior to his employment with Platinum and up until the time he ceased that employment. After the period of employment with the company he was employed with 818 Property Agents Pty Ltd ("818 Property Agents"), a company of which his brother was a director. He stated:
2. From May 2009 until 22 June 2010 I was a licensed real estate agent and employed with 818 Property Agents Pty Ltd trading as Ray White Caringbah.
...
9. In or about August 2010 I was granted a stay on the determination pending the outcome of the ADT proceedings. As a result I was entitled to keep my licence on certain conditions, including not being a director or manager of any agency business of a licensee (Order 2(c)).
10. As a result of the Stay Order I continued employment in the terms thereby permitted and confined. I was removed as a signatory on the trust accounts and no longer had access to the trust account.
11. In or about May 2011 818 Property Agents Pty Ltd transferred its business assets to 818 No 8 Pty Ltd. Maria Toskis was the licensee of 818 No 8 Pty Ltd which traded as "Platinum Property". All the sales listing and advertisements also transferred to Platinum Property.
12. At or about this time I had discussions with Maria Toskis that I could possibly be employed with 818 No 8 Pty Ltd from May 2011 onwards to introduce developers to Platinum. In return I would be paid wages.
13. After my employment commenced from May 2011 I also performed the following administrative or clerical duties such as:
a. Answering telephone calls
b. Scouting for potential development sites and forming an opinion whether or not the land was capable of development and then passing on my views as to location of possible sites to Leanne Bruce, the licensed real estate agent with 818 Property Agents Pty Limited.
c. Administration things such as putting up signs, writing advertisement, organising professional photos.
14. I remained at Platinum performing those duties until 20 January 2012. I never sold any property while employed with Platinum Property.
15. At no time was I advised by my solicitors, either subsequent to the hearing of the review application by Deputy President Higgins, nor between that hearing and the Appeal, nor subsequent to that hearing and the hearing of the reconsideration ordered by the Appeal Panel, that my position was not still covered by the Stay referred to in paragraph 10 above. It was my understanding that I was not prohibited from being employed, by a licenced business.
...
16. My solicitors provided to me documents which I have reviewed. I understand that they were supplied by the Respondent. The following documents were shown to me:
a. A letter from Platinum Property to me dated 6 January 2012;
b. A photocopy of the front and back of a business card which has my name on it;
c. Details of payroll from 1st July 2011 to 9 March 2012;
d. Platinum Employee information extracted from a database dated 22 March 2012 (three pages);
e. Advertisements for properties for sale including Caringbah, Cronulla, and Caringbah South which were properties advertised for sale under Platinum Property all having my name as the contact person.
17. In relation to the letter dated 16 September 2012 I agree that my employment with Platinum Property ended on 20 January 2012. However, my employment was purely to introduce Platinum Property to developers. I was not a sales person.
18. In relation to the business cards I say they were created in or about May 2011 while I had my licence. To my knowledge they were not used any time after 29 June 2011. They were certainly not used by me after that date.
19. In relation to the MYOB extract I say that I was never aware of the information before nor was I advised of that the title of "Sales Manager" was used.
20. In relation to the advertisement and marketing material in relation to properties for sale in the Sutherland Shire area I say those advertisements were created while I was employed with Ray White in or about December 2010. I marketed those properties in or about that time. Those advertisements were transferred and amended in May 2011 for the new corporate licensee, Platinum Properties, and forwarded on to the newspapers. To my knowledge those properties did not circulate after July 2011.
...
26. I confirm that at question 40 [of the Transcript Interview of Ms Toskis] that both I and Ms Leanne Bruce were employed. I was not a sales person.
27. I also confirm at question 42 that Ms Bruce was the main sales person.
28. In relation to question 44 I confirm that I transferred over to 818 Number 8 Pty Limited with the rest of the business but purely to introduce developers to Platinum Properties.
29. In relation to question 47 I agree that I introduced business people to Platinum Property, including land developers with whom I had formed friendships over time. These were not people whom I canvassed but those who were already known to me. At no time did I make myself out to be a sales person or perform any function other than personal introductions. I believed that introduction of friends who were land developers, or other business acquaintances, to Platinum were tasks that were not impermissible to perform.
The Applicant also gave evidence at the hearing. He agreed that he had performed the duties of a real estate agent when he worked with 818 Property Agents. He also agreed that he commenced employment with Platinum to introduce developers to Platinum. However he did not agree that his role with Platinum was similar to that which he performed at 818 Property Agents. He accepted that some of the functions he performed were those that a real estate agent could perform on a day-to-day basis.
He asserted that during the time of his employment with Platinum, any introductions that he made of developers to Platinum were of a social nature. He gave as an example a situation where a developer known to him went to the Platinum office to speak to the salesperson and met the Applicant. As a courtesy, the Applicant introduced the developer to Ms Toskis. He denied that he did anything to persuade developers to enter into any real estate transactions.
He conceded that the purpose of the introductions was to benefit Platinum but he stated that he did not introduce anyone who was not an existing client of his previous employer. He said that these introductions were made in the transition period when the 818 Property Agents business was being transferred to Platinum.
He said that after the earlier decision was handed down he only performed menial jobs within the Platinum business. He said he understood that he could perform administrative tasks. He disagreed that that was a convenient understanding. He agreed that the salary that he received for his work at Platinum was similar to the rate that he had been paid when he worked as a real estate agent.
In regard to the Respondent's assertion that he remained in employment with Platinum when, because of his disqualification, he was not entitled to be employed by Platinum, the Applicant asserted that he understood that he still had the benefit of the stay, notwithstanding the earlier decision, the Appeal Panel decision and the refusal of his renewal application. His evidence is that he relied on his legal advisors and that he was not informed that he was not entitled to be employed by Platinum until he discussed the appeal panel decision with his legal advisors in about late 2011 or January 2012.
He said that prior to that time it was his belief that he could undertake work that did not require him to hold a certificate. When he became aware that he was not permitted to work within the industry in any capacity he informed Ms Toskis and resigned his position.
The Applicant conceded that he did not inform Platinum that he had been granted a stay or that it was a condition of the stay that he notify his new employer of the terms of the stay order. He said that he was not aware of that condition until late 2011 or January 2012. He agreed that to not inform Platinum was not the proper thing to do, but said that he had forgotten to do so.
When shown a copy of the stay conditions he conceded that he was required to notify Platinum. He also conceded that he had been given a copy of those conditions and that he had understood them at the time. He said that he did not understand that the stay would only remain in place until the earlier decision was handed down. He agreed that he could have sought advice in regard to the stay but said that his solicitor had been difficult to contact.
He said that he had understood that he could continue to work in the industry provided that he did not perform work that required a certificate or a licence.
The Applicant denied that the reason that he had failed to inform Platinum of the stay and the decisions was that he was concerned that he would lose his job.
The Applicant stated that he has substantial knowledge and experience in real estate to offer clients. He said that he is a reliable person who has always acted in the best interests of vendors and purchasers in an effort to achieve a positive outcome for all.
He concedes the trust account misappropriations. He says that they occurred during a black period of his life in which he experienced difficulties of both an emotional and a business nature. He is now out of that period and understands the obligations at a higher level than he did previously.
Mr Evans submitted that while the Applicant's understanding that he could work within the industry between June 2011 and January 2012 was misconceived and wrong, on the evidence before the Tribunal it would not find that the Applicant was working as a real estate agent or salesperson in that period.
He submitted that the Tribunal should accept that the introduction of developers to Platinum only took place during the transition period and were merely social introductions. He said that there is no basis to find that the Applicant acted in relation to any real estate transactions nor did he induce any such transactions.
Mr Evans conceded that the Tribunal could take account of the fact that the Applicant was working in the industry when he should not have done so. He should have taken advice earlier. However, the Tribunal should accept that the Applicant now has sufficient insight into the workings of the Act as they relate to him.
He does not seek to minimise, detract from or excuse the trust account misappropriations. He accepts that these constitute serious breaches. However, he submits that the Tribunal should take account of the time since those events and also the fact that the events were confined to a narrow time period.
He concedes that the Tribunal can find that the Applicant is not a fit and proper person to hold a licence. However, he submits that the Tribunal should find that he is a fit and proper person to work within the industry in some capacity. The only way to permit the Applicant to work as a sales person is to set aside the disqualification.
The Applicant is a bankrupt and is therefore a disqualified person. However that disqualification does not prevent him from holding a certificate.
Consideration
As noted above, I have reached the same findings of fact as set out in the earlier decision insofar as they relate to the Applicant's misappropriation of trust funds and his bankruptcy.
In regard to the Applicant's failure to comply with the condition of the stay that he advise Platinum, I find it implausible that he would not have been aware of the conditions. At the time he commenced his application in the Tribunal he was clearly aware of the need for a stay in order that he might continue to work in the industry. I do not accept the Applicant's evidence that he forgot to advise Platinum. I agree with Mr Nicoletti that it was convenient to the Applicant that he not inform Platinum and that to do so would place his employment at risk.
In relation to the Applicant's conduct between June 2011 and January 2012 I also find it implausible that the Applicant would have considered that the stay would continue after the earlier decision had been handed down. Given that he was aware of the need for the stay, it is probable that he would have been unaware that it was in place only until the matter was determined. In any event he must have known that his application for renewal of his licence had been refused. That refusal should have alerted him to the possibility that it impacted on his employment. He should have made appropriate inquiries to determine what impact it had.
Nevertheless he continued in his employment with Platinum and by doing so he placed Platinum at risk in that it could be subject to action for employing a disqualified person.
The Applicant stressed the period of time that he had worked in the industry. He maintained that he is an experienced real estate agent and he has held positions of responsibility. His evidence of his lack of understanding in regard to the conditions of the stay and his entitlement to work within the industry does not fit comfortably with this background.
However, I do accept his evidence that his introduction of developers to Platinum did not constitute work as a real estate agent. I accept that the introductions did not result in a benefit to Platinum. While that may have been more circumstantial that intentional, I do not find that he worked as an agent in the period between June 2011 and January 2012.
That finding does not greatly lessen the significance of my finding that he was working in the industry at a time when he was prohibited from doing so.
Even if the Applicant was not aware of the conditions of the stay and the fact that he was not entitled to work in the industry after June 2011, the fact remains that he did not make an effort to ascertain whether or not that was the case. In my view he had an obligation to make reasonable inquiries to inform himself of those matters and he did not do so.
The term fit and proper has been considered in numerous cases before this Tribunal. The issue was also discussed in the earlier decision. As the Tribunal noted, the term was considered by the High Court in Hughes & Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127, at [9], where Dixon CJ, McTiernan and Webb JJ said:
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. 'Fit' (or 'idoneus') with respect to an office is said to involve three things, honesty knowledge and ability: 'honesty to execute it truly, without malice affection or partiality; knowledge to know what he ought duly to do; and ability as well in estate as in body, that he may intend and execute his office, when need is, diligently, and not for impotency or poverty neglect it.
It is well accepted that the expression 'fit and proper' involves a value judgement having regard to the activity for which the person seeks a licence or other authority and ' depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur': see Australian Broadcasting Commission v Bond (1990) 170 CLR 321.
Where there is evidence of misconduct, it has been held that relevant factors in determining a person's fitness and propriety are (a) the person's explanation for the misconduct, (b) its seriousness to the particular activity, (c) the motivation of the person, (d) whether the misconduct is an isolated incident, (e) the person's underlying qualities of character, and (f) the person's conduct since the incident and whether this demonstrates recognition of the misconduct and subsequent reform: see McBride v Walton (NSW Court of Appeal, unreported, 15 July 1994: see, in particular, the judgments of Kirby P, at [21] to [26], and Powell JA, at [59] to [73]).
There is no doubt or disagreement about the seriousness of the trust account misappropriations. Those breaches involve dishonesty. Honesty is a relevant to any consideration of an applicant's fitness and propriety: Hughes & Vale Pty Ltd v New South Wales (No 2). It is a relevant consideration in regard to both a licence and a certificate.
I note the period of time since the misappropriation offences occurred and I also note the potential impact on the Applicant if he is disqualified from involvement in the industry.
As noted above, a person's conduct since an incident of misconduct and whether this demonstrates recognition of the misconduct and subsequent reform, is a relevant factor in determining a person's fitness and propriety. In different circumstances, the amount of time that has passed since the offences might have given an applicant the opportunity to demonstrate that he had reformed and was once again a fit and proper person to hold a licence or certificate. However, the Applicant has not taken that opportunity.
I accept that in the earlier decision the Tribunal had attempted to frame orders in a way that would permit the Applicant to remain in the industry. However, in my view his conduct since that decision does not support a finding to that effect.
By his conduct in failing to comply with the conditions of the stay and then continuing to work in the industry when he was not entitled to do so, he has demonstrated that he does not have sufficient insight into the workings of the Act. He has not demonstrated that he is a person who can be held out to the public as someone who is able to meet the standards required of those holding either a certificate or a licence under the Act. In my view he is not a fit and proper person to hold either of those credentials.
In the circumstances, it is my view that the appropriate order is that urged by the Respondent. The correct and preferable decision is that the determination be affirmed.
Order
The decision is affirmed
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Decision last updated: 22 October 2012
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